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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 1998
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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 .
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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, 1998 was approximately $314,000,000.
. 21,345,492 outstanding shares of the Registrant's common stock as of June 26,
1998.
(DOCUMENTS INCORPORATED BY REFERENCE)
Portions of the Proxy Statement relating to the Annual Meeting of Stockholders
to be held August 12, 1998, are incorporated into Part III of this report.
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DRAFT - June 26, 1998 (6:59 pm)
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EXIDE CORPORATION
TABLE OF CONTENTS
Page
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PART I
Item 1 Business 1
Item 2 Properties 14
Item 3 Legal Proceedings 16
Item 4 Submission of Matters to a Vote of Security Holders 17
PART II
Item 5 Market for Registrant's Common Equity and Related
Stockholder Matters 18
Item 6 Selected Financial Data 19
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations 21
Item 8 Financial Statements and Supplementary Data 26
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 26
PART III
Item 10 Directors and Executive Officers of the Registrant 26
Item 11 Executive Compensation 27
Item 12 Description of Capital Stock 27
Item 13 Certain Relationships and Related Transactions 27
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports
on Form 8-K 27
SIGNATURES 29
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE 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. The principal executive
offices of the Company are located at 1400 North Woodward Avenue, Bloomfield
Hills, Michigan 48304, telephone number (248) 258-0080. Principal
administrative offices are located at 645 Penn Street, Reading, Pennsylvania
19612-4205.
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. In addition, in 1997 Exide
also acquired DETA Akkumulatorenwerk GmbH, MAREG Accumulatoren GmbH and FRIWO
SILBERKRAFT GmbH, (together "DETA"), three related German companies which
produce and market both SLI and industrial batteries.
Rationalization and Consolidation
The Company is continuing to implement a comprehensive overall European
rationalization and consolidation strategy with respect to its European
businesses, including its acquisition of DETA, effective September 1, 1997. 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 largely due to
headcount reductions. 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, Magneti Marelli and Hagen.
At June 30, 1995, the Company had 30 automotive and industrial battery
producing plants in Europe. The DETA acquisition added four more manufacturing
plants. The Company's strategy is to reduce the number of automotive and
industrial plants to fourteen by the year 2000. As of March 31, 1998, fourteen
European plants have been closed.
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 three fiscal years.
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North America
Exide and its affiliates have the leading market share position in SLI
batteries 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's brands including
among others Exide, Prestolite, Willard, Exide NASCAR Select and Nautilus are
well recognized in the marketplace.
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 February
1998, the Company acquired Refined Metals Corporation, 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, 1998, 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, one in 1995 and one in 1997 (DETA). 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 Gemala Battery. In 1997, Exide purchased
DETA for approximately $34 million, plus approximately $64.6 million of assumed
debt.
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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 46%, respectively, of the net sales of
Exide's European operations for the fiscal year ended March 31, 1998. The
Company plans to focus its SLI battery marketing efforts on certain of its
strong brands. The Company's 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, 1998, 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 16 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, CEAc, and more recently, DETA,
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.
Products
SLI Batteries. SLI batteries represented 67% of consolidated revenues of
Exide for the fiscal year ended March 31, 1998. In the United States and
Canada, Exide believes it 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 fiscal 1997, the Company introduced its
Exide NASCAR Select batteries which provide substantially higher gross profit
per battery due to their premium quality and the strong brand loyalty of NASCAR
fans. 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.
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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 29% of
consolidated revenues of Exide for the fiscal year ended March 31, 1998. Exide
is the largest manufacturer and marketer in Europe of industrial batteries.
Standby (also known as "stationary") batteries are used primarily for backup
power for applications such as telecommunications, security and emergency
systems 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 power
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, Inc., an entity in which the Company has a 13.5% interest. Yuasa, which
is a leading manufacturer of industrial batteries in North America, supplies the
Company with motorcycle batteries built to Exide's specifications. See Note 13
to the Company's Consolidated Financial Statements appearing elsewhere herein.
Other Products. 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
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. Sales of products
other than SLI and industrial batteries represented 4% of consolidated revenues
of Exide for the fiscal year ended March 31, 1998.
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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 Central Tractor, John Deere, E-Z-GO, Ford
New Holland, 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, battery chargers, battery cables and remanufactured starters
and alternators.
Europe. The Company's European revenues are diversified across many European
countries. 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.
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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. See Note 1 to the Company's
Consolidated Financial Statements appearing elsewhere herein.
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 parts 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 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 parts 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.
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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.
Research and Development; Quality
The Company's commitment to research and development has allowed the Company
to introduce many new products in the last five years, including the Exide
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 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 as well as a wound cell design with significantly higher power
density than conventional lead acid batteries. 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 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, Ford New Holland Quality Award, and
the ADAP Stores Vendor of the Year. In 1998, 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.
In 1997, Exide's North American quality systems achieved another milestone by
being recognized for their compliance to QS-9000 standards.
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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
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 nine 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 domestic lead
requirements through the operation of six 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. 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.
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Other key raw materials and components in the production of batteries include
lead oxide and chemicals, which are generally available from multiple sources.
The Company currently produces substantially all of its North 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 subsidiary 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
one-third of its European 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. 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 rationalization and
consolidation strategy with respect to its European acquisitions. The Company
continues 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 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 stock keeping 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 and GNB Incorporated (a subsidiary of Pacific Dunlop, Ltd.). Regional
manufacturers are also significant, accounting for approximately 13% of the
United States market based on information provided by an industry trade
association.
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Europe. The automotive and industrial battery markets are very competitive.
Reduced demand due to European economic conditions in the recent past caused
excess capacity and resulted in more intense competition. As in the North
American automotive and industrial battery markets, European manufacturers
compete primarily on the basis of price, quality, warranty and service. The
excess capacity caused pressure from large customers in both the automotive and
industrial battery markets for price concessions. Exide's strategy to
consolidate manufacturing and excess capacity, while lowering unit costs, has
resulted in more stable pricing. Higher lead prices in 1997 resulted in higher
battery prices on pass-through pricing. Lead prices were much lower and more
stable in 1998. Currency fluctuations among the European countries, depending on
where competitors manufacture, 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, 1998, the Company employed approximately
1,604 salaried employees and approximately 4,447 hourly employees in North
America. Approximately 48% of such salaried employees are engaged in sales,
service and marketing and approximately 43% in manufacturing and engineering.
Approximately 30% of its hourly employees are represented by unions. Relations
with the unions are generally good. Contracts covering approximately 185 and
207 of the Company's union employees expire in fiscal 1999 and 2000,
respectively, and the remainder thereafter.
Europe. As of March 31, 1998, the Company employed approximately 4,076
salaried employees and approximately 7,056 hourly employees in Europe.
Approximately 32% of such salaried employees are engaged in sales, service and
marketing and approximately 58% 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
entered into is an agreement with the National Association for Stock Car Auto
Racing, Inc. ("NASCAR") pursuant to which Exide has the exclusive rights to
market batteries and related accessories bearing the NASCAR name and logo. In
1997, the Company launched a program to market a line of very high quality
batteries and accessories bearing the name Exide NASCAR Select. The market
acceptance of these products has been 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 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.
10
<PAGE>
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
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") or state agencies that it is a "Potentially
Responsible Party" ("PRP") under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") or similar state laws at 75
federally defined Superfund or state equivalent sites. At 35 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. Other than this site, 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, 1998. The current volumetric
allocation at these five sites averages 13.1%
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. In 1992, the EPA issued a Record of Decision ("ROD")
identifying several alternate remedies. During fiscal 1997, the Company signed a
consent decree and paid $3.0 million of the EPA's past costs and is not
responsible for any other past costs. The Company has established its reserves
based upon its estimates of the remediation cost using the approved remedy.
11
<PAGE>
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 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 16 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 fiscal 1997, the Company reached a settlement with most of its insurance
carriers, whereby the insurance companies reimbursed and indemnified the Company
for certain response costs, property damage and bodily injury claims allegedly
resulting from environmental conditions.
During fiscal 1998, the Company reached an agreement with former owners
of the Company whereby the Company agreed to release and indemnify the former
owners from all environmental matters relative to certain sites. In exchange for
this release the Company received $4,500 in the third quarter and remaining
$5,500 will be received in three annual installments.
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.
12
<PAGE>
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 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. 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.
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 12 to
the Company's Consolidated Financial Statements appearing elsewhere herein.
13
<PAGE>
(d) Financial Information About Foreign and Domestic Operations and Export
Sales
See Note 16 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. All owned
properties and the leases for the leased properties are subject to liens under
the Senior Secured Global Facilities Credit Agreement. See Note 5 to the
Company's Consolidated Financial Statements appearing elsewhere herein. 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.
Approximate
Location Square Footage Use
- -------------------- ------------------------- ---------------------------
North America:
Auburn Hills, MI 5,000 (leased) OEM Engineering and Sales
Baton Rouge, LA 176,000 Secondary Lead Smelting
Beechgrove, IN 77,000 Secondary Lead Smelting
Bloomfield Hills, MI 10,000 (leased) Executive Offices
Bristol, TN 220,000 (leased) Automotive Accessory
Manufacturing
Bristol, TN 631,000 (leased) Battery Manufacturing
Burlington, IA 193,000 Battery Manufacturing
Cannon Hollow, MO 137,000 Secondary Lead Smelting
Cooper, TX 30,000 (leased) Starter and Alternator
Manufacturing
Corydon, IN 161,000 Separator Manufacturing
Drummondville, 90,000 Distribution Center
Quebec, Canada
Frankfort, IN 211,000 Distribution Center
Hamburg, PA 30,000 Distribution Center
Lampeter, PA 82,000 Battery Plastics
Manufacturing
Logansport, IN 197,000 Battery Manufacturing
Manchester, IA 286,000 Battery Manufacturing
Maple, Ontario, Canada 169,000 Distribution and
Administration
Memphis, TN 41,382 Secondary Lead Smelting
Muncie, IN 174,000 Secondary Lead Smelting
North Bay, Ontario, 30,000 Battery Charger
Manufacturing
Canada
Reading, PA 72,000 (leased) 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
14
<PAGE>
Approximate
Location Square Footage Use
- -------------------- ------------------------- ---------------------------
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
Bolton, England 274,000 Industrial Battery
Manufacturing
Bristol, England 4,800 Warehouse
Corbyl, England 44,000 SLI Battery Manufacturing
Auxerre, France 176,000 SLI Battery Manufacturing
Gennevilliers, France 55,000 Executive Offices
Lille, France 484,000 Industrial Battery
Manufacturing
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
Bad Lauterberg, 458,500 Manufacturing,
Administrative and
Germany Warehouse
Budingen, Germany 258,000 Industrial Battery
Manufacturing
Budingen, Germany 15,000 Lithium Cells Manufacturing
Duisburg, Germany 48,387 Manufacturing,
Administrative and
Warehouse
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
Poznan, Poland (five) 887,000 SLI Battery Manufacturing
Warsaw, Poland 34,100 Industrial Battery
Manufacturing and Offices
Ilhavo, Portugal 54,000 Manual Tools Manufacturing
Azambuja (Sonalur), 21,000 Secondary Lead Smelting
Portugal
Azambuja (Azai), 21,000 Lids and Containers
Portugal Manufacturing
15
<PAGE>
Approximate
Location Square Footage Use
- -------------------- ------------------------- ---------------------------
Lisbon, Portugal 12,000 Executive Offices
Cubas, Spain 323,000 Secondary Lead Smelting
Azuqueca de Henares, 434,000 SLI Battery Manufacturing
Spain and Research
Torrejon de Ardoz, 54,000 Industrial Battery and
Spain NiCad Manufacturing
Loeches, Spain 12,000 (leased) Traction Chargers
Manufacturing
Malpica, Zaragoza, 213,000 SLI Battery Manufacturing
Spain
Manzanares, Spain 438,000 SLI Battery Manufacturing
Bonmati, Spain 57,000 Recycling Facilities
S. Esteban de Gormaz, 63,000 Secondary Lead Smelting
Spain
Madrid, Spain 7,200 (leased) Executive Offices
Zaragoza, Spain 269,000 Industrial Battery
Manufacturing
Nol, Sweden 447,000 SLI and Industrial Battery
Manufacturing
Manisa, Turkey 145,000 SLI Battery Manufacturing
Cwmbran, Wales 105,000 Executive Offices and SLI
Battery Manufacturing
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 the Company for $5.4 million. 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 and five
days later plaintiffs filed a cross appeal. The appeal was argued before the
U.S. Court of Appeals for the Federal Circuit Court on March 5, 1998.
Management and its outside patent 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 during
fiscal 1999. No reserve has been established for this matter.
16
<PAGE>
The Company is now or recently has been involved in several related lawsuits
containing similar allegations pending in state and federal courts in Alabama,
North Carolina, South Carolina and Texas, two of which were brought as purported
class actions. These actions contain allegations that the Company sold old or
used batteries as new batteries. In all of the cases, submitted for judicial
determination the Company has prevailed. In others, the Company has not been
obliged to present a defense. 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 will vigorously defend itself.
Five purported class action lawsuits have recently been filed against the
Company and three of its senior officers who are also directors alleging
violations of Section 10(b) of the Securities Exchange Act and Rule 10b-5
promulgated thereunder. Specifically, the complaints allege that the market
price of the Company's stock was artificially inflated over a period from June
27, 1995 through April 3, 1998 as a result of alleged misstatements and
omissions. The named plaintiff in each case seeks to represent a class of
persons who purchased Exide stock on the open market during the period in which
the stock was allegedly artificially inflated. Plaintiffs in each case seek
compensatory damages in an unspecified amount. The Company has not yet answered
the complaints and no discovery has occurred. The Company denies any wrongdoing
and plans to vigorously defend itself against these charges.
Under its civil investigative authority, the Florida Attorney General issued
subpoenas to the Corporation on March 3, 1998 and May 21, 1998. The Attorney
General has focused this inquiry into allegations including the sale of
defective and used batteries, mislabeling of batteries and improper crediting of
customer accounts. No action has been taken and the matter is pending under
review by the Florida Attorney General. The Corporation is actively cooperating
with the Attorney General and does not believe that it has acted improperly.
The Board of Directors has asked its non-management members to look into
matters raised in the class actions and Florida investigation referred to above.
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 $5.5 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
cost of sales.
Item 4. Submission of Matters to a Vote of Security Holders
None
17
<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.
Sales Prices Quarterly
----------------- Cash
High Low Dividends
-------- ------- ---------
(per share)
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
Fiscal 1998:
First Quarter $23-1/8 $ 14-5/8 $ 0.02
Second Quarter 23-1/8 18-3/4 0.02
Third Quarter 34-1/4 20-9/16 0.02
Fourth Quarter 27 16-5/16 0.02
At June 26, 1998 the reported last sale price of the stock was $ 17-1/8. As
of June 17, 1998, there were 473 record holders of Common Stock.
18
<PAGE>
Item 6. Selected Financial Data (In thousands, except per-share data):
<TABLE>
<CAPTION>
Fiscal Year Ended March 31
---------------------------------------------------------------------------
1994 1995 1996 1997 1998
---------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Income Statement Data:
Net sales $679,649 $ 1,198,546 $ 2,342,616 $ 2,333,230 $ 2,273,126
Gross profit 161,003 264,018 552,806 595,276 602,718
Operating expenses 99,245 199,856 429,131 453,798 464,211
Operating income 61,758 64,162 123,675 141,478 138,507
Interest expense, net 33,150 52,565 120,600 118,837 112,301
Income taxes 10,794 5,160 6,300 14,732 13,475
Income before extraordinary loss
and cumulative effect of
accounting change 17,217 4,491 939 18,992 18,697
Extraordinary loss -- (3,597)/(1)/ (9,600)/(2)/ (2,767)/(3)/ (28,513)/(4)/
Cumulative effect of accounting
change/(5)/ (12,711) -- -- -- --
Net income (loss) 4,506 894 (8,661) 16,225 (9,816)
Basic net income (loss) per share 0.44 0.06 (0.44) 0.79 (0.48)
Diluted net income (loss) per share 0.41 0.06 (0.42) 0.77 (0.45)
Balance Sheet Data (at end of
year):
Working capital 153,711 395,875 598,895 616,128 538,916
Property, plant and equipment, net 181,147 423,876 578,722 521,836 535,113
Total assets 629,090 1,637,589 2,711,429 2,452,807 2,348,616
Total debt 291,821 645,135 1,340,025 1,289,682 1,248,983
Common stockholders' equity 164,450 413,230 439,400 371,410 294,948
Other Data:
EBITDA/(6)/ 91,465 110,759 230,131 267,309 259,552
Ratio of earnings to fixed
charges/(7)/ 1.7x 1.2x 1.0x 1.2x 1.2x
Capital expenditures 47,164 61,257 106,385 84,200 87,315
Net cash provided by (used in)
operating activities 49,364 (69,134) 36,058 78,126 187,723
Net cash used in investing
activities (54,859) (322,896) (499,830) (61,652) (96,406)
Net cash provided by (used in)
financing activities 38,701 418,314 449,473 (17,000) (95,446)
</TABLE>
(1) During fiscal 1995, the Company recorded a loss of $3,597 (net of a tax
benefit of $2,300) resulting from the early retirement of the former U.S.
Credit Agreement in connection with entering into a new U.S. Credit
Agreement.
(2) During fiscal 1996, the Company recorded a loss of $9,600 (net of a tax
benefit of $5,958) from the early retirement of debt under the U.S. Credit
Agreement.
(3) During fiscal 1997, the Company recorded a loss of $2,767 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 3/4% Senior Notes.
19
<PAGE>
(4) During fiscal 1998, the Company recorded a loss of $28,513 (net of tax
benefit of $3,667) resulting from a modification of debt in connection with
entering a bond swap agreement for $7,500 (principal amount) of its 10%
Senior Notes; the retirement of its 10.75% Senior Notes and the remainder of
its 12.25% Senior Subordinated Deferred Coupon Debentures; the retirement of
the U.S. Credit Agreements and European Facilities Agreement in connection
with entering into the Senior Secured Global Credit Facilities Agreement; a
modification of debt in connection with reducing the maximum commitment on
the European Facilities Agreement; a modification of debt in connection with
entering into a series of bond swap agreements for $13,500 (principal
amount) of its 10% Senior Notes; and the redemption of $108,119 (face value)
of its outstanding 12.25% Zero-Coupon Bonds.
(5) Effective April 1, 1993, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 106, "Accounting for Postretirement
Benefits Other Than Pensions," 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 plus fixed charges (excluding
capitalized interest). Fixed charges consist of interest expense,
amortization of debt expense, capitalized interest, and one-third of rent
expense, representative of the interest factor.
20
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The mild winters of the past three years had a substantial adverse effect on
the Company's results of operations for fiscal 1996, 1997 and 1998. See
"Seasonality and Weather."
The Company through its European operations 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. It is the policy of the Company to reduce foreign currency risk by
balancing net foreign currency positions where possible. In addition, the
Company enters into foreign exchange contracts, including forward and purchased
option contracts. The Company enters into forward exchange contracts to reduce
the exposure to foreign currency fluctuations associated with certain monetary
assets and liabilities, as well as certain firm commitments and highly
anticipated cash flows. The Company also enters into purchased option contracts
which, if exercised, involve the sale or purchase of foreign currency at a fixed
exchange rate for a specified time. As of March 31, 1998, the net fair value of
open foreign exchange contracts and the related gains and losses were not
material.
During fiscal 1998, $67.9 million of the decrease in stockholders' equity was
due to foreign currency translation adjustments associated with the continued
weakening of most European currencies relative to the U.S. dollar.
Results of Operations
Year Ended March 31, 1998 Compared With Year Ended March 31, 1997
Net sales decreased 2.6% ($60.1 million) to $2,273.1 million in fiscal 1998
from $2,333.2 million in fiscal 1997. The decrease was principally attributable
to the impact of changes in foreign exchange rates ($171.4 million) and the
fiscal 1997 divestiture of Evanite ($27.3 million) offset by the fiscal 1998
acquisition of DETA ($123.5 million). See Note 2 to the Company's Consolidated
Financial Statements appearing elsewhere herein. Industrial battery sales
(included above) for fiscal year 1998 were $691.4 versus $631.1 million in
fiscal 1997.
Although sales decreased 2.6% in fiscal 1998 as compared to fiscal 1997,
gross profit actually increased $7.4 million in fiscal 1998 versus 1997. The
gross profit margin was 26.5% in fiscal 1998 versus 25.5% in fiscal 1997. The
increase in gross profit is largely the result of the acquisition of DETA in
fiscal 1998 ($34.9 million), manufacturing cost reductions related to the
continuing European rationalization/consolidation process and the favorable
effects of certain environmental developments during fiscal 1998. These
favorable items were offset in part by the effects of weaker European currencies
($52.4 million) and the fiscal 1997 divestiture of Evanite which contributed
$5.7 million of gross profit in fiscal 1997. The gross profit was also favorably
affected by the higher gross margins (28.3%) of the DETA acquisition and product
mix, including the higher margin Exide NASCAR Select products.
21
<PAGE>
Selling, marketing and advertising expenses increased $21.6 million or 7.4%
largely due to the acquisition of DETA ($17.6 million), higher U.S. advertising
costs for the launch of the Exide NASCAR Select line of products and higher
provisions ($2.4 million) for accounts receivable losses primarily as a result
of the bankruptcy filings by certain major U.S. retailers mostly during the
fourth fiscal quarter. Offsetting these increases were the effects of weaker
currencies ($24.1 million), the 1997 Evanite divestiture ($0.6 million) and
savings from headcount reductions in Europe resulting from the rationalization/
consolidation. General and administrative expenses decreased $10.3 million or 7%
in fiscal 1998 versus 1997 due to the effects of weaker currencies ($10.4
million), the 1997 Evanite divestiture ($3.0 million) and savings from headcount
reductions in Europe resulting from rationalization/consolidation offset by the
increase due to DETA ($10.8 million). Goodwill amortization decreased slightly
as a result of the weakening of European currencies offset by the increased
amortization resulting from the DETA acquisition. See Note 2 to the Company's
Consolidated Financial Statements appearing elsewhere herein.
Operating income decreased $3.0 million, or 2.1%, as a result of the matters
discussed above.
Interest expense decreased $6.5 million, or 5.5%, primarily due to the effect
of changes in foreign exchange rates ($5.5 million) and to the lower rates
related to the refinancing of debt in fiscal 1998 (see Note 5 to the Company's
Consolidated Financial Statements appearing elsewhere herein), offset by the
increased expense for the borrowing related to the acquisition of DETA.
Other income, net was $5.9 million for fiscal 1998 versus $12.4 million for
fiscal 1997. The $6.5 million decrease principally relates to the fiscal 1997
gain on sale of Evanite ($8.3 million), increased losses on the sales of
accounts receivable and associated fees in Europe in fiscal 1998 ($7.6 million)
(see Note 10 to the Company's Consolidated Financial Statements appearing
elsewhere herein), offset by a gain from an involuntary conversion due to a fire
in fiscal 1998 ($5.6 million).
Net income decreased $26.0 million to a loss of $9.8 million in fiscal 1998,
primarily as a result of a $28.5 million extraordinary loss (net of income tax
benefit of $3.7 million) related to the early retirement of debt. See Note 5 to
the Company's Consolidated Financial Statements appearing elsewhere herein.
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.
22
<PAGE>
Gross profit increased $42.5 million (7.7%) and gross profit margin increased
by 1.9 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 from the European manufacturing rationalization/consolidation
process, North American and European selling price increases, and the absence of
a $5.5 million judgment recognized in fiscal 1996 related to a patent
infringement claim, 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 $17.8 million, or 14.4%, 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 income, net was $12.4 million for fiscal 1997 versus $3.7 million for
fiscal 1996. This $8.7 million increase principally relates to the $8.3 million
gain on the sale of Evanite.
Income before income taxes, minority interest and extraordinary loss
increased $28.3 million 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.
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.
23
<PAGE>
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. Historically, the Company has met these liquidity requirements
through operating cash flows, with borrowed funds and the proceeds of sales of
accounts receivable. The Company is party to a U.S. receivables purchase
agreement and a European receivables purchase agreement under which the other
parties have committed (subject to certain exceptions) to purchase selected
accounts receivable of the Company, up to a maximum commitment of $75.0 million
and $175.0 million, respectively. See Note 10 to the Company's Consolidated
Financial Statements appearing elsewhere herein. The Company's greatest cash
demands from operations occur during the months of June through October. During
fiscal 1999 and beyond, the Company also expects to meets its liquidity
requirements in the same manner.
Cash flows from operating activities were $36.1 million, $78.1 million and
$187.7 million in 1996, 1997, and 1998, respectively. Because of the seasonality
of the Company's business, more funds are typically generated in its third and
fourth fiscal quarters. During fiscal 1998, $136.7 million of cash provided from
operations was due to sales of European accounts receivable. Offsetting this was
the payment of $40.3 million for the Company's European restructuring
activities, primarily severance associated with plant closures. During fiscal
1998, the Company closed five plants in Europe. 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 and other closure costs. While the
Company believes that a large portion of its cash requirements for its European
consolidation activities will be generated from operations, it has substantial
liquidity and capital resources through its Senior Secured Global Credit
Facilities Agreement, as discussed below.
The Company's capital expenditures were $106.4 million in fiscal 1996, $84.2
million in fiscal 1997, and $87.3 million in fiscal 1998. Capital expenditures
in fiscal 1996, 1997, and 1998 were principally due to the European acquisitions
and the acquisition of Schuylkill Metals in fiscal 1996 and on-going capital
expenditures in Europe and North America. The Senior Secured Global Credit
Facilities Agreement restricts 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.
24
<PAGE>
As of March 31, 1998, the Company had $503.0 million outstanding on its
Senior Secured Global Credit Facilities Agreement, including letters of credit.
Obligations under the Senior Secured Global Credit 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 Senior Secured Global Credit Facilities Agreement is fully
secured by guarantees of the European subsidiaries and certain fixed assets,
inventory and receivables. The Company has an interest rate collar agreement
which reduces the impact of changes in interest rates on a portion of the
Company's floating rate debt. The collar agreement effectively limits the PIBOR
base interest rate on 593.1 million French francs (U.S. $100.0 million) of
borrowings to no more than 6.6% and no less than 3.5% through December 23, 2000.
The Company has two currency and interest rate swap agreements which effectively
converts $175 million of borrowings under the Senior Secured Global Credit
Facilities Agreement into 778.8 million French francs (U.S. $133 million) and
25.2 million British pound sterling (U.S. $42 million). The Company receives
LIBOR and pays PIBOR and pound sterling LIBOR. Additionally, the Company
entered into a series of bond swaps agreements which effectively converted $40.6
million (principal amount) of the 10% Senior Notes into a variable LIBOR
interest rate through April 15, 2000. The Company has the right to terminate
the $40.6 million bond swap agreements at any time before maturity.
As of March 31, 1998, the Company had $135.4 million available under its
Senior Secured Global Credit Facilities Agreement after consideration of $30.9
million of outstanding letters of credit. See Note 5 to the Company's
Consolidated Financial Statements appearing elsewhere herein.
As of March 31, 1998, the Company has significant NOL carryforwards in Europe
and in the United States which are available, subject to certain restrictions,
to offset future U.S. and European taxable income. See Note 9 to the Company's
Consolidated Financial Statements appearing elsewhere herein.
Year 2000 Issue
The Year 2000 issue results from the fact that some computer systems and
applications utilizing two-digit date fields to designate years may not
correctly interpret the year 2000. As a result, some date-sensitive systems may
recognize the year 2000 as 1900, or not at all, which may cause systems to
process financial and operational information incorrectly. The Company has
assessed the impact of the Year 2000 issue, including cost estimates to complete
required changes. Plans to address the Year 2000 issue have been developed and
are being implemented. Currently, the Company does not expect that the costs to
be incurred will be material to the results of operations or financial
condition, and expects all affected systems and applications to be modified or
replaced in advance of the year 2000.
25
<PAGE>
Recently Issued Accounting Standards
In the second quarter of fiscal 1997, the Financial Accounting Standards
Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income," and SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." In the fourth quarter of
fiscal 1998, the FASB issued SFAS No. 132, "Employer's Disclosure about Pensions
and Other Postretirement Benefits." The Company will be required to adopt these
new standards in fiscal 1999. These new pronouncements will be a change in the
currently required disclosures to the consolidated financial statements, which
the Company is currently in the process of determining.
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 potential standards could cause an increase in the
Company's capital expenditures and operating costs. Unless and 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, 1998, is hereby incorporated by reference.
In addition to the executive officers named in the biographical section,
Messr. William J. Rankin is an executive officer.
26
<PAGE>
Mr. Rankin (age 60), 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, 1998, 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,
1998, 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, 1998, 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.
(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.
27
<PAGE>
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.
28
<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
By: /s/ Alan E. Gauthier
------------------------
Alan E. Gauthier
Principal Financial and
Accounting Officer
Date: June 29, 1998
------------------
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
29
<PAGE>
Exhibits:
- --------
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 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.
4.2 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.
4.3 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.
4.4 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, incorporated by reference to Exhibit 4.9
to the 1997 Form 10-K.
10.1 Receivables Purchase Agreement, dated as of March 31, 1997, among Exide
U.S. Funding Corporation, Three Rivers Funding Corporation and the
Registrant, incorporated by reference to Exhibit 10.1 to the 1997 Form 10-
K.
10.2 Sale Agreement, dated March 31, 1997, between the Registrant and Exide U.S.
Funding Corporation, incorporated by reference to Exhibit 10.2 to the 1997
Form 10-K.
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 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.
30
<PAGE>
10.8 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.
10.9 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.
10.10 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.
10.11 Second Amendment to Lease Agreement dated July 1, 1995 between the
Registrant and Chippewa Trail Lodge, Inc.
10.12 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.
10.13 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.
10.14 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.
10.15 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.
10.16 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.
10.17 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.
10.18 EC Acquisition, Inc. 1993 Stock Award Plan, incorporated by reference to
Exhibit 10.23 to the 1993 Registration Statement.
10.19 Exide 1993 Long Term Incentive Plan, incorporated by reference to Exhibit
10.25 to the 1993 Registration Statement.
10.20 Exide 1997 Stock Option Plan
31
<PAGE>
10.21 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.
10.22 Credit and Guarantee Agreement dated December 19, 1997 among the
Registrant, certain of the Registrant's subsidiaries, Lehman Brothers
Inc., Credit Suisse First Boston, Lehman Commercial Paper Inc. and
other lenders and related amendment dated May 27, 1998.
10.23 Receivables Sale Agreement, dated June 3, 1997 among CMP Batteries
Limited, Exide (Dagenham) Limited, Fulmen (U.K.) Limited, B.I.G.
Batteries Limited and Exide Europe Funding LTD.
10.24 Lease Agreement dated February 7, 1994, pertaining to the Bristol,
Tennessee manufacturing facility and related amendment dated May 1995
incorporated by reference to Exhibit 10.27 to the 1996 Form 10-K.
21.1 Subsidiaries of the Registrant.
23.1 Consent of independent public accountants.
27.1-27.8 Financial data schedules.
32
<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-36
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, 1997 and
1998, 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, 1998. 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, 1997 and 1998, and the results of their operations
and their cash flows for each of the three fiscal years in the period ended
March 31, 1998, 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 26, 1998
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
---------------------------------------------
1996 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
NET SALES $ 2,342,616 $ 2,333,230 $ 2,273,126
COST OF SALES 1,789,810 1,737,954 1,670,408
------------ ------------ ------------
Gross profit 552,806 595,276 602,718
------------ ------------ ------------
OPERATING EXPENSES:
Selling, marketing and advertising 276,076 290,076 311,683
General and administrative 137,086 145,869 135,606
Goodwill amortization 15,969 17,853 16,922
------------ ------------ ------------
429,131 453,798 464,211
------------ ------------ ------------
Operating income 123,675 141,478 138,507
INTEREST EXPENSE, net 120,600 118,837 112,301
OTHER INCOME, net (3,655) (12,382) (5,852)
------------ ------------ ------------
Income before income taxes, minority
interest and extraordinary loss 6,730 35,023 32,058
INCOME TAX PROVISION 6,300 14,732 13,475
------------ ------------ ------------
Income before minority interest
and extraordinary loss 430 20,291 18,583
MINORITY INTEREST (509) 1,299 (114)
------------ ------------ ------------
Income before extraordinary loss 939 18,992 18,697
EXTRAORDINARY LOSS RELATED TO EARLY
RETIREMENT OF DEBT, net of income tax
benefit of $5,958, $0 and $3,667 (9,600) (2,767) (28,513)
------------ ------------ ------------
Net income (loss) $ (8,661) $ 16,225 $ (9,816)
============ ============ ============
BASIC EARNINGS PER SHARE:
Income before extraordinary loss $ 0.05 $ 0.92 $ 0.91
Extraordinary loss (0.49) (0.13) (1.39)
------------ ------------ ------------
Net income (loss) $ (0.44) $ 0.79 $ (0.48)
============ ============ ============
DILUTED EARNINGS PER SHARE:
Income before extraordinary loss $ 0.05 $ 0.90 $ 0.87
Extraordinary loss (0.47) (0.13) (1.32)
------------ ------------ ------------
Net income (loss) $ (0.42) $ 0.77 $ (0.45)
============ ============ ============
WEIGHTED AVERAGE SHARES:
Basic 19,586,594 20,502,014 20,587,782
============ ============ ============
Diluted 20,384,805 21,204,241 21,641,786
============ ============ ============
</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)
March 31
--------------------------
ASSETS 1997 1998
------ ----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 42,706 $ 35,613
Receivables, net of allowance for doubtful
accounts of $38,486 and $37,488 569,683 434,679
Inventories 533,514 572,188
Prepaid expenses and other 21,889 32,455
Deferred income taxes 23,667 14,896
----------- -----------
Total current assets 1,191,459 1,089,831
----------- -----------
PROPERTY, PLANT AND EQUIPMENT:
Land 50,873 50,401
Buildings and improvements 205,826 221,168
Machinery and equipment 500,883 419,242
Construction in progress 40,190 53,354
----------- -----------
797,772 744,165
Less- accumulated depreciation and amortization (275,936) (209,052)
----------- -----------
Property, plant and equipment, net 521,836 535,113
----------- -----------
OTHER ASSETS:
Goodwill, net 596,254 570,251
Investments in affiliates 24,016 24,620
Deferred financing costs, net 26,770 20,050
Deferred income taxes 54,618 61,461
Other 37,854 47,290
----------- -----------
739,512 723,672
----------- -----------
Total assets $ 2,452,807 $ 2,348,616
=========== ===========
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
-------------------------------
1997 1998
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S> <C> <C>
CURRENT LIABILITIES:
Short-term borrowings $ 16,123 $ 17,953
Current maturities of long-term debt 37,488 35,112
Accounts payable, trade and other 236,889 255,952
Accrued interest 24,671 26,865
Accrued compensation 98,316 66,160
Product warranty reserve 36,243 35,192
Other current liabilities 125,601 113,681
----------- -----------
Total current liabilities 575,331 550,915
----------- -----------
LONG-TERM DEBT 1,236,071 1,195,918
----------- -----------
NONCURRENT RETIREMENT OBLIGATIONS 107,756 114,480
----------- -----------
OTHER NONCURRENT LIABILITIES 142,791 173,051
----------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 12 and 14)
MINORITY INTEREST 19,448 19,304
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 60,000,000 shares authorized;
21,336,757 and 21,328,439 shares issued and outstanding 213 213
Additional paid-in capital 489,427 489,851
Accumulated deficit (21,569) (33,084)
Notes receivable--stock award plan (1,696) (1,609)
Unearned compensation (516) (322)
Minimum pension liability adjustment (4,993) (2,767)
Cumulative translation adjustment (89,456) (157,334)
----------- -----------
Total stockholders' equity 371,410 294,948
----------- -----------
Total liabilities and stockholders' equity $ 2,452,807 $ 2,348,616
=========== ===========
</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, 1996, 1997 and 1998
(In thousands, except per-share data)
<TABLE>
<CAPTION>
Notes Minimum
Additional Receivable- Pension Cumulative
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, 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 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)
Net loss for fiscal 1998 -- -- (9,816) -- -- -- --
Common stock issued under
employee stock purchase plan -- 172 -- -- -- -- --
Common stock issued pursuant
to Board of Directors grants -- 318 -- -- -- -- --
Forfeiture of common stock grants -- (66) -- 66 -- -- --
Payment for common stock grants -- -- -- 21 -- -- --
Amortization of unearned
compensation -- -- -- -- 194 -- --
Cash dividends paid ($0.08/share) -- -- (1,699) -- -- -- --
Minimum pension liability
adjustment -- -- -- -- -- 2,226 --
Translation adjustment -- -- -- -- -- -- (67,878)
--------- --------- --------- --------- --------- --------- ---------
Balance at March 31, 1998 $ 213 $ 489,851 $ (33,084) $ (1,609) $ (322) $ (2,767) $(157,334)
========= ========= ========= ========= ========= ========= =========
</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
---------------------------------------------
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (8,661) $ 16,225 $ (9,816)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities-
Depreciation and amortization 106,717 115,308 109,167
Extraordinary loss 9,600 2,767 28,513
Gain on sale of business -- (8,344) --
Deferred income taxes 300 6,255 6,515
Original issue discount on notes 12,411 19,502 10,080
Provision for losses on accounts receivable 4,016 4,638 7,060
Minority interest (509) 1,299 (114)
Net proceeds from sale of European receivables -- -- 136,666
Changes in assets and liabilities excluding effects
of acquisitions and divestitures-
Receivables (24,973) (27,382) (10,553)
Inventories 46,832 22,717 (29,871)
Prepaid expenses and other 16,522 (6,766) (7,801)
Payables and accrued expenses (131,035) (72,424) (32,899)
Other, net 4,838 4,331 (19,224)
--------- --------- ---------
Net cash provided by operating activities 36,058 78,126 187,723
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of certain businesses (401,325) (15,057) (40,455)
Capital expenditures (106,385) (84,200) (87,315)
Equipment purchase held for sale -- -- (8,015)
Proceeds from sales of assets 7,880 37,605 50,303
Insurance proceeds from fire damage -- -- 9,300
Costs incurred related to fire damage -- -- (20,224)
--------- --------- ---------
Net cash used in investing activities (499,830) (61,652) (96,406)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in short-term borrowings (71,701) 9,080 2,743
Borrowings under Global Credit Facilities Agreement -- -- 540,022
Repayments under Global Credit Facilities Agreement -- -- (67,886)
Borrowings under U.S. Credit Agreement -- 17,000 272,500
Repayment of U.S. Credit Agreement borrowings (194,500) -- (289,500)
Repayment of Former European Facilities Agreement (156,873) -- --
Borrowings under European Facilities Agreement 436,940 -- 151,884
Repayment of European Facilities Agreement -- (25,329) (474,854)
Repayment of European Term Loans (51,265) (11,138) --
Repayment of Guaranteed Unsecured Loan Notes (35,282) -- --
Repayment of Spanish Convertible Notes (23,675) -- --
Repayment of Acquired Debt -- -- (64,644)
Issuance of 9.125% Senior Notes -- -- 102,130
Issuance of 2.9% Convertible Senior Subordinated Notes 287,797 -- --
Issuance of 10% Senior Notes 300,000 -- --
Retirement of 10.75% Senior Notes -- -- (150,000)
Retirement of 12.25% Senior Subordinated Notes -- -- (106,002)
Increase (decrease) in other debt (9,455) (3,445) 7,002
Debt issuance costs (30,890) (1,495) (17,142)
Dividends paid (1,623) (1,673) (1,699)
--------- --------- ---------
Net cash provided by (used in) financing activities 449,473 (17,000) (95,446)
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (1,803) (4,027) (2,964)
--------- --------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (16,102) (4,553) (7,093)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 63,361 47,259 42,706
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 47,259 $ 42,706 $ 35,613
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for -
Interest (net of amounts capitalized) $ 86,557 $ 92,726 $ 96,415
Income taxes $ 9,243 $ 15,224 $ 6,423
</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>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Major Customers and Concentration of Credit
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. During fiscal 1998 three of the
Company's North American retail customers declared bankruptcy. In connection
with these bankruptcies, the Company recorded additional provisions of $6,300.
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 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
income, net. The Company recorded transaction gains of $6,453, $5,796 and $6,815
in fiscal 1996, 1997 and 1998, respectively.
For disclosure purposes, foreign currency amounts have been translated into U.S.
dollars using the March 31, 1998 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.
Prepaid expenses and other
Prepaid expenses and other consists principally of the current portion of
deferred financing costs, the current portion of customer incentives, deferred
sponsorship costs and equipment purchased for subsequent sale and leaseback.
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:
Buildings and improvements 5 to 40 years
Machinery and equipment 3 to 10 years
F-9
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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 $2,341, $2,444 and $1,277 of interest costs
during fiscal years 1996, 1997 and 1998, respectively. Depreciation expense was
$77,397, $82,842 and $78,097 for fiscal years 1996, 1997 and 1998, respectively.
The Company recorded a gain of $5,600 on an involuntary conversion of certain
property and equipment due to fire damage in fiscal 1998. Such gain is reflected
in other income in the accompanying statements of operations.
Goodwill
Goodwill is amortized over 40 years on a straight-line basis. Accumulated
amortization as of March 31, 1997 and 1998, was $44,229 and $58,379,
respectively. It is the Company's policy to review goodwill (and other long-
lived assets) for possible impairment when an indication of impairment exists 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 would indicate that the carrying amount of goodwill and/or other long-
lived assets is not recoverable, then the Company's policy is to reduce the
carrying amount of such assets to fair value. No such reductions are reflected
in the accompanying financial statements.
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 Company enters into currency and interest rate hedge agreements to manage
interest costs associated with long-term debt. The differential to be paid or
received on these agreements 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 the
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.
F-10
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Noncurrent Retirement Obligations
Noncurrent retirement obligations consist principally of reserves for pension
obligations, postretirement health care and other retirement benefits.
Other Noncurrent Liabilities
Other noncurrent liabilities consist principally of reserves for environmental
cleanup, the deferred gain related to the sale/leaseback of machinery and
equipment (see Note 14) and severance associated with restructurings and plant
closures.
Earnings Per Share
During 1997, the Financial Accounting Standards Board ("FASB"), issued SFAS No.
128, "Earnings per Share," which specifies the computation, presentation and
disclosure requirements for earnings per share ("EPS") for public companies.
Basic EPS is computed using only the weighted average number of common shares
outstanding for the period while diluted EPS is computed assuming conversion of
all dilutive securities such as options. The Company adopted this statement in
the third quarter of fiscal 1998 and earlier periods presented have been
restated. Included below is a reconciliation of shares for the basic and diluted
EPS computations.
1996 1997 1998
---------- ---------- ----------
Basic EPS Shares 19,586,594 20,502,014 20,587,782
Effect of Dilutive Securities 798,211 702,227 1,054,004
---------- ---------- ----------
Diluted EPS Shares 20,384,805 21,204,241 21,641,786
========== ========== ==========
There is no difference between the basic and diluted EPS calculations for income
before extraordinary loss. The Effect of Dilutive Securities in the above table
is primarily comprised of stock options and grants.
Options to purchase 496,000 shares ranging from $25-7/8 to $50 were outstanding
at March 31, 1998 but were not included in the computation of diluted EPS
because the option's exercise price was greater than the average market price of
the common shares. These options expire in the years 2000 to 2006.
The Convertible Senior Subordinated Notes (see Note 5), which if converted would
result in an additional 4,992,571 shares, have not been included in the diluted
EPS calculation for all periods presented since the effect would be
antidilutive.
Revenue Recognition
The Company records sales upon product shipment.
F-11
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Advertising
The Company generally expenses advertising costs as incurred. The Company is
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, 1997 and 1998.
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 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 fiscal
1997 and 1998, major European currencies weakened significantly which resulted
in large reductions of stockholders' equity.
The Company, enters into foreign exchange contracts, including forward and
purchased option contracts. The Company enters into forward exchange contracts
to reduce the exposure to foreign currency fluctuations associated with certain
monetary assets and liabilities, as well as certain firm commitments and highly
anticipated cash flows. The Company is also party to purchased option contracts
which, if exercised, involve the sale or purchase of foreign currency at a fixed
exchange rate for a specified period of time. As of March 31, 1998 the net value
of open forward exchange and purchased option contracts and the related gains
and losses were not material.
Reclassifications
Certain prior period amounts have been reclassified to conform to the fiscal
1998 presentation.
F-12
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Recently Issued Accounting Standards
In the second quarter of fiscal 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income," and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." In the fourth quarter of fiscal 1998, the
FASB issued SFAS No. 132, "Employer's Disclosure about Pensions and Other
Postretirement Benefits." The Company will be required to adopt these new
standards in fiscal 1999 and restate prior periods presented. The effect of
adopting these new pronouncements will be a change in the currently required
disclosures to the consolidated financial statements which the Company is
currently in the process of determining.
2. ACQUISITIONS AND DIVESTITURES:
Effective September 1, 1997, the Company acquired three related German producers
and marketers of starter, lighting and ignition ("SLI") batteries and industrial
batteries, DETA Akkumulatorenwerk GmbH, MAREG Accumulatoren GmbH and FRIWO
SILBERKRAFT GmbH (together "DETA") for approximately $34,000 plus assumed debt
of approximately $64,600. This acquisition was accounted for as a purchase and
the results of DETA's operations are included in the Company's consolidated
statements of operations effective September 1, 1997. The cost of the
acquisition has been allocated on the basis of the estimated fair value of the
assets acquired and the liabilities assumed. With respect to the acquisition of
DETA, the Company recorded liabilities of $27,800, related to severance benefits
to be paid to certain employees who will be terminated as a result of targeted
DETA plant closings and other associated closing costs. Through March 31, 1998,
$400 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. This acquisition resulted in
goodwill of approximately $33,600.
In May 1995, the Company acquired 99.7% of the outstanding stock of Compagnie
Europeene d'Accumulateurs S.A. ("CEAc"), which was one of the largest SLI
producers and largest industrial battery manufacturer in Europe, for
approximately $425,000 in cash ($553,500 less assumed debt of $131,900 plus
interest from March 31, 1995, of $3,400). 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. Subsequent open
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.
In October 1994, and through subsequent purchases, the Company acquired
approximately 95.8% of the outstanding capital stock and approximately 25% of
the convertible bonds of Sociedad Espanola del Acumulador Tudor, S.A.
("Tudor") for approximately $241,000 (before fees and expenses).
F-13
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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 received 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.
With respect to its CEAc and Tudor 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, 1998, $95,000 of severance benefits have been
paid. Remaining expenditures will 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.
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, including the $10,000 recorded
in the fourth quarter of fiscal 1996.
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 was included in
other income
F-14
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(Continued)
in the accompanying consolidated statements of operations in fiscal 1997.
The following summarized unaudited pro forma consolidated results of operations
for the fiscal year ended March 31, 1996, illustrate the estimated effects of
the CEAc and SHI acquisitions, as if the transactions were consummated as of
April 1, 1995.
1996
------------
Net sales $2,474,640
==========
Loss before extraordinary item $ (5,271)
==========
Net loss $ (14,871)
==========
Pro forma basic and diluted earnings per share:
Loss before extraordinary item $ (0.27)
==========
Net loss $ (0.76)
==========
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 and 1998 acquisitions are not material.
3. INVENTORIES:
March 31,
-------------------
1997 1998
--------- ---------
Raw materials $117,038 $143,652
Work-in-process 70,805 78,004
Finished goods 345,671 350,532
-------- --------
$533,514 $572,188
======== ========
At March 31, 1997 and 1998, inventories valued by the LIFO method were
approximately 33% and 30% of consolidated inventories, respectively. If all
inventories had been determined using the first-in, first-out method, such
inventories would have been $516,447 and $555,121 at March 31, 1997 and 1998,
respectively. The carrying amount of inventories on a LIFO basis exceeds
replacement cost. LIFO inventories primarily 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
F-15
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(Continued)
possible changes in the market value of the commodity contracts; however, such
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, 1998, the Company had
outstanding contracts hedging lead purchases through December 31, 1998 at fixed
prices of approximately $5,914 for 10.9 metric tons.
4. SHORT-TERM BORROWINGS:
At March 31, 1997 and 1998, 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 and/or property. These facilities, which are typically for one-year
renewable terms, generally bear interest at the current market rates plus up to
4.5%. As of March 31, 1997 and 1998, the weighted average interest rate on
these borrowings was 12.0% and 15.8%, respectively.
F-16
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
5. LONG-TERM DEBT:
Following is a summary of the Company's long-term debt at March 31, 1997 and
1998:
<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Senior Secured Global Credit Facilities Agreement
borrowings primarily at LIBOR plus 2.0% - 2.25%
(at a weighted average rate of 7.85% at March 31, 1998) $ -- $ 472,136
U.S. Credit Agreement borrowings primarily
at LIBOR plus 2.5% at March 31, 1997 (8.2%) 17,000 --
9.125% Senior Notes, (Deutsche mark
denominated) due April 15, 2004 -- 94,644
10% Senior Notes, due April 15, 2005 300,000 300,000
10.75% Senior Notes, due December 15, 2002 150,000 --
12.25% Senior Subordinated Deferred Coupon
Debentures, due December 15, 2004 101,187 --
Convertible Senior Subordinated Notes, due
December 15, 2005 298,295 307,036
European Facilities Agreement borrowings
primarily at LIBOR plus 2% (ranging from
4.8% to 7.8% at March 31, 1997) 356,865 --
Other, including capital lease obligations and
short-term loans at interest rates ranging from
2.25% to 23.0% due in installments through 2015 50,212 57,214
----------- -----------
1,273,559 1,231,030
Less- Current maturities (37,488) (35,112)
----------- -----------
$ 1,236,071 $ 1,195,918
=========== ===========
</TABLE>
On February 27, 1998, the Company entered into a bond swap agreement for $7,500
(principal amount) of its 10% Senior Notes. Under the agreement, 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 agreement, the
counterparty is guaranteed repayment of its open market purchase price of the
Notes which exceeded face value by $497. 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 $619. No income tax benefit on the
extraordinary loss was recognized.
On January 21, 1998, the Company retired all $150,000 of its 10.75% Senior Notes
and the remaining $1,881 of its 12.25% Senior Subordinated Deferred Coupon
Debentures. The Company recognized a $10,800 extraordinary loss related to these
retirements which included unamortized deferred financing costs and premium
costs for early retirement, reduced by benefits from the retirement of all swaps
related to the 10.75% Senior Notes. No income tax benefit on the extraordinary
loss was recognized.
F-17
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(Continued)
On December 23, 1997, the Company replaced the existing U.S. Credit Agreement
and European Facilities Agreement with a $650,000 Senior Secured Global Credit
Facilities Agreement. This facility has three borrowing Tranches: a $150,000 six
year multi-currency term A loan, a $250,000 seven and one-quarter year U.S.
dollar term B loan, and a $250,000 six year multi-currency revolving credit
line. The new facility contains a number of financial and other covenants
customary for such agreements including restrictions on new indebtedness, liens,
leverage rates, acquisitions and capital expenditures. After consideration of
amendments entered into after year end, which were effective March 31, 1998, the
Company was in compliance with all these covenants. Payment on non-revolving
debt started March 1998 and will continue through March 2005. The Senior Secured
Global Credit Facilities Agreement is fully secured by guarantees of the
European subsidiaries and certain fixed assets, inventory and receivables. As of
March 31, 1998 the Company has $30,900 of letters of credit outstanding which
reduce availability under the Senior Secured Global Credit Facilities Agreement.
The write-off of the remaining deferred financing costs related to the debt
retired resulted in an extraordinary loss of $8,336 (net of income tax benefit
of $2,899).
On July 10, 1997, the European Facilities Agreement was amended to reduce the
maximum commitment to 1,718 million French francs (U.S. $277,000) from the
original 2,569 million French francs (U.S. $415,000). The write-off of the
related unamortized deferred financing costs associated with this early
retirement of debt resulted in an extraordinary loss of $1,364 (net of income
tax benefit of $768).
In June 1997, the Company entered into a series of bond swap agreements for
$13,150 (principal amount) of its 10% 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 $653. 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 $902. No income tax
benefit on the extraordinary loss was recognized.
On May 7, 1997, the Company redeemed its outstanding 12.25% Zero-Coupon Bonds
for $104,095. The Company financed the tender offer through borrowings under
the U.S. Credit Agreement, $50,000 of which was from the Tranche D variable rate
term loan and the balance from the revolver. This redemption resulted in an
extraordinary loss of $6,492 related to the write-off of unamortized deferred
financing costs and the premium paid associated with the early extinguishment of
substantially all of the 12.25% Senior Subordinated Deferred Coupon Debentures.
No income tax benefit on the extraordinary loss was recognized.
On April 23, 1997, the Company issued 175 million Deutsche mark (U.S. $94,675)
9.125% Senior Notes due on April 15, 2004. The Company used the funds to repay
indebtedness under the European Facilities Agreement.
In December 1995, the Company issued 2.9% Convertible Senior Subordinated Notes
due December 15, 2005, with a face amount of $397,000 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 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
F-18
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(Continued)
former U.S. Credit Agreement.
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.
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 currency and interest rate hedge agreements to manage
interest costs associated with long-term debt. Effective December 23, 1997, the
Company entered into two three-year currency interest rate swap agreements.
These agreements effectively converted $175,000 of the Tranche B loan into
788,756 French francs (U.S. $133,000) and 25,225.2 Pounds sterling (U.S.
$42,000) under the Global Credit Facilities Agreement. The Company will receive
an interest rate of LIBOR plus 2.25% and pay PIBOR plus 2.27% and Pounds
sterling LIBOR plus 2.28%, respectively. Additionally, effective December 23,
1997, the Company entered into two three-year 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 PIBOR base
interest rate on 593,050 French francs (U.S. $100,000) of borrowing under the
Global Credit Facilities Agreements to no more than 6.6% and no less than 3.5%.
During fiscal 1998, the Company recognized $3,171 of additional interest expense
related to these swap and collar agreements.
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 8.0% 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 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
F-19
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(Continued)
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 pesetas
(U.S. $70,000) of borrowings and the PIBOR base interest rate of 575,000 French
francs (U.S. $93,000) of borrowings under the European Facilities Agreement to
no more than 7.5% and 6.0%, respectively, and no less than 3.5% and 2.0%,
respectively. These agreements expired before year end. During fiscal 1996, 1997
and 1998, the Company recognized $580, $1,952 and $1,444, 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.
Annual principal payments required under long-term debt obligations at March 31,
1998 are as follows:
Fiscal Year Amount
----------- ------
1999 $ 35,112
2000 29,904
2001 34,200
2002 36,288
2003 336,721
Thereafter 758,805
6. EMPLOYEE BENEFIT 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.
European subsidiaries of the Company sponsor several defined benefit 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 America plans.
F-20
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(Continued)
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, 1996, 1997 and 1998, are as follows:
<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Defined benefit plans:
Service cost of current period $ 2,119 $ 3,112 $ 5,213
Interest cost on projected benefit obligation 9,718 11,841 14,261
Actual return on plan assets (11,721) (7,980) (37,595)
Net amortization and deferrals 7,274 2,280 26,705
-------- ------- --------
Net defined benefit pension expense 7,390 9,253 8,584
Defined contribution plan 2,167 2,150 2,058
-------- ------- --------
Total pension expense $ 9,557 $11,403 $ 10,642
======== ======= ========
</TABLE>
It is the Company's policy to make contributions sufficient to meet the minimum
contributions required by law and regulation.
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, 1997 March 31, 1998
------------------------------ -------------------------------
Accumulated Assets Exceed Accumulated Assets Exceed
Benefits Accumulated Benefits Accumulated
Exceed Assets Benefits Exceed Assets Benefits
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation $112,837 $54,745 $117,445 $105,117
======== ======= ======== ========
Accumulated benefit obligation $117,946 $68,330 $121,457 $107,750
======== ======= ======== ========
Actuarial present value of:
Projected benefit obligation $124,672 $69,243 $125,108 $125,565
Plan assets at fair value 43,225 84,198 32,341 135,474
-------- ------- -------- --------
Plan assets (less) greater than projected
benefit obligation (81,447) 14,955 (92,767) 9,909
Prior service cost 1,354 203 618 1,853
Unrecognized net loss (gain) 7,735 (2,093) 2,879 4,463
Unrecognized initial obligation (423) 123 2,276 (5,660)
Additional minimum liability recognized (9,106) -- (6,454) --
-------- ------- -------- --------
Prepaid (accrued) pension cost $(81,887) $13,188 $(93,448) $ 10,565
======== ======= ======== ========
</TABLE>
The weighted average discount rate used in determining the projected benefit
obligation ranged from 6.5% to 8.5% and from 6.0% to 7.75% as of March 31, 1997
and March 31, 1998, respectively. The rate of increase in future compensation
levels and the expected long-term rate of return on plan assets ranged from 3.5%
to 7.0% and 9.0% to 9.5%, respectively, as of March 31, 1997 and from 2.5% to
6.0% and 7.5% to 9.5%, respectively, as of March 31, 1998.
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
F-21
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(Continued)
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 $9,106 and $6,454 consists of intangible assets
of $1,424 and $2,197 and charges against equity of $7,682 and $4,257 (tax
effected to $4,993 and $2,767) at March 31, 1997 and 1998, respectively.
7. 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:
1997 1998
------- -------
Accumulated postretirement benefit obligation:
Retirees, beneficiaries and dependents $13,203 $14,322
Fully eligible actives 534 552
Not fully eligible actives 1,552 1,763
------- -------
Total 15,289 16,637
Unrecognized loss (2,410) (3,937)
------- -------
Accrued postretirement benefit cost $12,879 $12,700
======= =======
The net periodic postretirement benefit cost for fiscal 1996, 1997 and 1998
included the following components:
1996 1997 1998
------ ------ ------
Service cost $ 95 $ 102 $ 79
Interest cost 1,032 1,121 1,185
------ ------ ------
Net periodic postretirement benefit cost $1,127 $1,223 $1,264
====== ====== ======
The significant assumptions used to calculate the net periodic postretirement
benefit cost and the accumulated postretirement benefit obligation as of March
31, 1997 and 1998, were a discount rate of 7.75% and 7.25%, respectively, and
medical costs that are assumed to increase at a rate of 8% 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, 1998, by approximately $1,326,
and the aggregate of the service and interest cost components of net periodic
postretirement benefit cost by approximately $113.
F-22
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(Continued)
8. STOCK GRANTS AND OPTIONS:
On April 29, 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 within the Company. Upon completion of vesting, participants must
pay $2.25 per share, the estimated fair value at the grant date, prior to the
transferring of such shares. In fiscal 1996 and 1997, the Board of Directors
approved accelerated vesting periods for certain employees.
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"). All of the awards to date have been nonqualified stock options,
none of which were accompanied by Rights. All awards vest ratably over periods
ranging from four to five years, with the maximum term of the awards ranging
from five years and three months to ten years. The maximum aggregate number of
shares of common stock with respect to options, restricted shares, Performance
Units or 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) was recorded as unearned compensation and shown as
a separate component of stockholders' equity. In fiscal 1996, 20,000 of these
shares were canceled. Unearned compensation is being amortized to expense over
the five year vesting period and amounted to $387, $194 and $194 in fiscal 1996,
1997 and 1998, respectively.
On May 23, 1996, the Board of Directors adopted the 1996 Non-Employee Directors
Stock Plan (the "Directors Stock Plan") whereby Directors of the Company are
granted common stock as part of their compensation. The maximum aggregate
number of shares of common stock that may be granted pursuant to the Directors
Stock Plan as amended May 1, 1997 is 32,210 shares. Under this plan, 1,500 and
17,608 shares were granted during fiscal 1997 and 1998, respectively. The market
value of the shares awarded on the date of the fiscal 1997 and fiscal 1998
grants was $39 and $319, respectively, and was charged to expense at the grant
date.
The May 1, 1997 Stock Option Plan authorizes the granting of stock options to
key employees of the Company covering up to 2,000,000 shares of common stock. No
options become vested or exercisable before May 1, 2007 unless the market price
of the common stock increases to certain levels. If the market price increases
to $30.00 per share, 40% of the granted options become vested, if it reaches
$50.00, another 40% become vested and if it achieves $75.00 the remainder will
become vested, provided, that in the case of each such percentage which so
vests, the vested options are then only exercisable as follows; 40% on the date
of vesting and 20% each on the first, second and third anniversaries. The
exercise price for each share is equal to the fair market value of the common
stock on the date of the grant of the option ($16.625). These options will
expire on June 1, 2007.
F-23
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -(Continued)
Stock grant and option transactions are summarized as follows:
<TABLE>
<CAPTION>
Weighted
Average
Incentive Exercise Price
Compensation Stock of Stock
Plan Options Options
------------- --------- --------------
<S> <C> <C> <C>
Shares under option:
Outstanding at April 1, 1995 788,472 --
Granted -- 102,000 $ 31.91
Exercised (10,822) --
Forfeited (23,972) --
------------ ---------
Outstanding at April 1, 1996 753,768 102,000 $ 31.91
Granted -- 577,000 $ 26.59
Exercised -- --
Forfeited -- --
------------ ---------
Outstanding at April 1, 1997 753,768 679,000 $ 27.39
Granted -- 2,000,000 $ 16.625
Exercised (9,275) --
Forfeited (34,013) (206,500) $ 26.68
------------ ---------
Outstanding at March 31, 1998 710,390 2,472,500 $ 18.69
============ =========
Options available for grant
at March 31, 1998 -- 21,000
============ =========
Exercisable at April 1, 1996 -- 17,850 $ 31.91
Exercisable at April 1, 1997 -- 95,917 $ 28.71
Exercisable at March 31, 1998 -- 439,040 $ 19.69
</TABLE>
Options for 12,000 shares granted in fiscal 1996 have an exercise price of $50
with a market value of $29.50 on the date of the grant. The grant-date market
value of all other options granted is equal to their respective exercise prices.
Outstanding stock options have an average remaining contractual life of nine
years at March 31, 1998 with the exercise prices for these options ranging from
$16.63 to $50.00.
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 share would have been the
pro forma amounts indicated below:
F-24
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
<TABLE>
<CAPTION>
Fiscal Year Ended
March 31
------------------------------------------------
1996 1997 1998
----------- ------------- ------------
<S> <C> <C> <C>
Net income (loss):
As reported $ (8,661) $ 16,225 $ (9,816)
Pro forma $ (8,858) $ 15,617 $ (19,596)
Basic net income (loss) per share:
As reported $ (0.44) $ 0.79 $ (0.48)
Pro forma $ (0.45) $ 0.76 $ (0.95)
Diluted net income (loss) per share:
As reported $ (0.42) $ 0.77 $ (0.45)
Pro forma $ (0.45) $ 0.74 $ (0.95)
</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 six option grants which occurred during fiscal 1996, 1997 and 1998:
<TABLE>
<CAPTION>
Fiscal Year Ended
March 31
------------------------------------------------
1996 1997 1998
----------- ------------- ------------
<S> <C> <C> <C>
Volatility 34.3% 31.3% - 33.5% 31.0%
Risk-free interest rate 6.4% 6.3% - 6.5% 6.8%
Expected life in years 5.5 5.25 - 10.0 10
Dividend yield 0.4% 0.4% 0.4%
</TABLE>
9. 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, 1996,
1997 and 1998, are as follows:
1996 1997 1998
-------- -------- --------
Current:
Federal $ -- $ -- $ --
State 700 -- (1,040)
Foreign 5,300 8,477 8,000
-------- -------- --------
6,000 8,477 6,960
-------- -------- --------
Deferred:
Federal (23,838) -- 1,334
State (2,347) -- --
Foreign 26,485 6,255 5,181
-------- -------- --------
300 6,255 6,515
-------- -------- --------
Total provision $ 6,300 $ 14,732 $ 13,475
======== ======== ========
F-25
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Major differences between the federal statutory rate and the effective tax rate
are as follows:
1996 1997 1998
------ ----- -----
Federal statutory rate 35.0% 35.0% 35.0%
State taxes, net of federal benefit (22.6) -- (2.7)
Nondeductible goodwill 87.1 16.6 19.2
Difference in rates on foreign subsidiaries 11.5 (6.8) (0.4)
Other, net (17.4) (2.7) (9.1)
----- ---- ----
Effective tax rate 93.6% 42.1% 42.0%
===== ==== ====
During fiscal 1998, the Company finalized a state tax audit which resulted in a
favorable adjustment of $600.
The following is a summary of the significant components of the Company's
deferred tax assets and liabilities as of March 31, 1997 and 1998:
1997 1998
---------- ----------
Deferred tax assets:
Operating loss and tax credit carryforwards $ 146,199 $ 184,211
Compensation reserves 45,572 30,486
Environmental reserves 15,507 12,811
Interest 14,155 --
Retirement benefits 11,740 9,095
Self-insurance 3,805 19,574
Warranty 3,212 3,044
Other 13,664 12,915
Valuation allowance (152,718) (157,569)
--------- ---------
101,136 114,567
--------- ---------
Deferred tax liabilities:
Depreciation/property basis (12,695) (22,134)
Inventory basis difference (7,183) (7,378)
Other (4,180) (9,917)
-------- --------
(24,058) (39,429)
-------- --------
Net deferred tax assets $ 77,078 $ 75,138
======== ========
Included in other noncurrent liabilities is $1,207 and $1,219 of deferred tax
liabilities at March 31, 1997 and 1998, respectively.
As of March 31, 1998, the Company has net operating loss carryforwards for U.S.
income tax purposes of approximately $107,300, which expire in years 2005
through 2018. For financial reporting purposes, a valuation allowance has been
recognized to reduce the deferred tax assets for which it is more likely than
not that the benefits will not be realized.
F-26
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
As of March 31, 1998, certain of the Company's European subsidiaries have net
operating loss carryforwards for income tax purposes of approximately $303,262,
of which $108,128 expire in years 1999 through 2005. Most of these carryforwards
are preacquisition tax attributes, which will reduce goodwill if realized. For
financial reporting purposes, a valuation allowance has been recognized to
reduce the deferred tax assets related to these preacquisition tax attributes
and certain nondeductible reserves for which it is more likely than not the
related tax benefits will not be realized.
Non-U.S. pre-tax income of the Company was $71,900, $72,300 and $73,858 in
fiscal 1996, 1997 and 1998, respectively (see Note 16). The increase in the
valuation allowance in fiscal 1998 is due to the DETA acquisition offset, in
part by the effects of currency.
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. In fiscal 1997 and fiscal 1998, the Company
implemented certain tax planning strategies which utilized a portion of such
deferred tax assets. Failure to achieve forecasted future taxable income might
affect the ultimate realization of any remaining recorded net deferred tax
assets.
As of March 31, 1998, 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 or substantially offset
by available foreign tax credits.
10. RECEIVABLES SALE AGREEMENTS:
In July 1997, certain of the Company's European subsidiaries sold selected
receivables to a wholly-owned bankruptcy remote subsidiary of the Company, Exide
Europe Funding Ltd., who in turn established a multi-currency receivable sale
facility (collectively the "European Agreement") with a financial institution,
whereby the financial institution has committed to purchase, with limited
recourse, all right, title and interest in these receivables up to a maximum net
investment of $175,000. The net proceeds from the initial sale of accounts
receivable under the European Agreement were used to repay borrowings under the
European Facilities Agreement. As of March 31, 1998, net uncollected receivables
sold under the multi-currency receivable sale facility was $136,666. Losses and
expenses related to receivables sold under this agreement for fiscal 1998 were
$7,550, and are included in other income, net in the Consolidated Statements of
Operations.
The Company entered into a Receivables Sale Agreement (the "U.S. 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 U.S. Company, up to a maximum net
investment of $75,000 (increased from $40,000 effective December 20, 1995). In
connection with the U.S. Agreement, during fiscal 1997 the Company established a
wholly owned, bankruptcy remote subsidiary, Exide U.S. Funding Corporation, to
purchase accounts receivable at a discount from the Company on a continuous
basis, subject to certain limitations as described in the U.S. Agreement. Exide
U.S. Funding Corporation
F-27
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
simultaneously sells the accounts receivable at the same discount to the
Purchasers. As of March 31, 1997 and 1998, net uncollected receivables sold
under the U.S. Agreement were $68,161 and $65,682, respectively. Losses and
expenses related to receivables sold under this agreement for fiscal years 1996,
1997 and 1998 were $2,554, $4,290 and $4,084, respectively, and are included in
other income, net in the Consolidated Statements of Operations.
The above transactions qualify as sales under the provisions of SFAS No. 125
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities."
11. RELATED-PARTY TRANSACTIONS:
The Company purchased $20,290, $4,920 and $5,979 of product from Yuasa, Inc.,
("Yuasa"), a 13.5%-owned affiliate, during fiscal 1996, 1997 and 1998,
respectively. The Company also sold $10,618, $6,580 and $2,601 of product to
Yuasa during fiscal 1996, 1997 and 1998, respectively. In addition, the Company
provides certain administrative services and pays certain expenses for Yuasa.
Yuasa reimbursed the Company for these costs totaling $2,282, $1,753 and $1,673
during fiscal 1996, 1997 and 1998, respectively. As of March 31, 1997 and 1998,
the Company had a net receivable of $5,051 and $2,342, respectively from Yuasa.
12. 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")
or state agencies that it is a "Potentially Responsible Party" ("PRP") under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
or similar state laws at 75 federally defined Superfund or state equivalent
sites. At 35 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.
F-28
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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. Other than this site, 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, 1998. The current volumetric allocation at these five
sites averages 13.1%
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. In 1992, the EPA issued a Record of Decision ("ROD")
identifying several alternate remedies. During fiscal 1997, the Company signed a
consent decree and paid $3,000 of the EPA's past costs and is not responsible
for any other past costs. The Company has established its reserves based upon
its estimates of the remediation cost using the approved remedy.
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 probable and reasonably estimable, the costs of
such projects have been reserved 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,
1998, the amount of such reserves on the Company's balance sheet was $29,805. Of
this amount, $20,389 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 fiscal 1997, the Company reached a settlement with most of its insurance
carriers, whereby the insurance companies reimbursed and indemnified the Company
for certain response costs,
F-29
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
property damage and bodily injury claims allegedly resulting from environmental
conditions. In connection with these settlements, the Company received $17,309
which was reflected as an offset to cost of sales, a reduction of legal costs
incurred in fiscal 1997 and elimination of $7,000 of legal fees deferred in
fiscal 1996. During the fourth quarter of fiscal 1997, the Company recorded a
$5,250 receivable from the remaining insurance carrier based on the status of
negotiations, and during fiscal 1998, the Company received $5,800 from this
carrier.
During fiscal 1998, the Company reached an agreement with former owners of the
Company whereby the Company agreed to release and indemnify the former owners
from environmental matters relative to certain sites. In exchange for this
release the Company received $4,500 in the third quarter and a remaining $5,500
will be received in three annual installments.
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.
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 consolidation of its European manufacturing
operations, it is probable that certain environmental costs will be incurred. An
estimate of the probable liability was included in the Tudor and CEAc purchase
price allocations.
13. 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
F-30
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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:
. 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, 1998.
. Investments in affiliates--The estimated fair value of these investments
could not be obtained without incurring excessive costs as they 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 Senior Secured Global Credit
Facilities 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.
The 9.125% and 10% Senior Notes and Convertible Senior Subordinated
Debentures are traded occasionally in public markets. The carrying
values and estimated fair values of these obligations are as follows at
March 31, 1998:
Estimated
Carrying Fair
Value Value
-------- ---------
10.00% Senior Notes $300,000 $309,750
9.125% Senior Notes (Deutsche Mark Denominated) 94,644 97,010
2.90% Convertible Senior Subordinated Notes 307,036 247,295
Interest rate protection agreements and bond swap agreements have no
carrying value; however, if the Company were to terminate these
agreements at March 31, 1998, the Company would have collected $5,502,
based on quotes from financial institutions.
. Lead forward and futures contracts--The estimated fair value of the
outstanding contracts at March 31, 1998, exceeds the contract value by
$346, based on quotes from brokers.
F-31
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
. Foreign currency contracts--The fair value is based on quotes obtained
from financial institutions. As of March 31, 1998, the fair value of
foreign currency contracts approximated contract value.
14. 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 and five days
later plaintiffs filed a cross appeal. The appeal was argued before the U.S.
Court of Appeals for the Federal Circuit Court on March 5, 1998. Management and
its independent patent 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. Based
on the above, the Company has not recorded a reserve related to this matter. The
Company anticipates receiving a decision on the appeal during fiscal 1999.
The Company is now or recently has been involved in several related lawsuits
containing similar allegations pending in state and federal courts in Alabama,
North Carolina, South Carolina and Texas, two of which were brought as purported
class actions. These actions contain allegations that the Company sold old or
used batteries as new batteries. In all of the cases, submitted for judicial
determination, the Company has prevailed. In others, the Company has not been
obliged to present a defense. 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 will vigorously defend itself.
Five purported class action lawsuits have recently been filed against the
Company, and three of its senior officers who are also Directors alleging
violations of Section 10(b) of the Securities Exchange Act and Rule 10b-5
promulgated thereunder. Specifically, the complaints allege that the market
price of the Company's stock was artificially inflated over a period from June
27, 1995 through April 3, 1998 as a result of alleged misstatements and
omissions. The named plaintiff in each case seeks to represent a class of
persons who purchased Exide stock on the open market during the period in which
the stock was allegedly artificially inflated. Plaintiffs in each case seek
compensatory damages in an unspecified amount. The Company has not yet answered
the complaints and no discovery has occurred. The Company denies any wrongdoing
and plans to vigorously defend itself against these charges.
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 such claims or litigation to which the Company is a
party both individually and in the aggregate 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 in cost of sales.
F-32
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
On December 23, 1997, the Company entered into a Sale / Leaseback transaction,
where the Company sold certain machinery and equipment with a book value of
$16,400 for $49,500 and leased the same machinery and equipment back over eight
years. The gain of $33,100 has been deferred and will be recognized ratably over
the life of the lease.
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, 1998, are:
Fiscal Year Operating Capital
----------- --------- -------
1999 $ 44,484 $ 2,103
2000 30,131 2,115
2001 21,086 1,918
2002 15,304 1,722
2003 12,019 1,501
Thereafter 27,930 15,359
--------- -------
Total minimum payments $ 150,954 24,718
=========
Less- Interest on capital leases (6,917)
-------
Total principal payable on capital
leases (included in Note 5) $17,801
=======
Rent expense amounted to $47,837, $52,701 and $48,973 for fiscal years 1996,
1997 and 1998, 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.
F-33
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
15. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):
The following is a summary of the Company's unaudited quarterly consolidated
results of operations for fiscal years 1997 and 1998:
<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)
Basic earnings per share:
Income (loss) before extraordinary item (0.54) 0.57 1.28 (0.38)
Extraordinary loss -- -- -- (0.13)
----------- ----------- ----------- -----------
Net income (loss) (0.54) 0.57 1.28 (0.51)
Diluted earnings per share:
Income (loss) before extraordinary item (0.54) 0.55 1.24 (0.38)
Extraordinary loss -- -- -- (0.13)
----------- ----------- ----------- -----------
Net income (loss) $ (0.54) $ 0.55 $ 1.24 $ (0.51)
=========== =========== =========== ===========
<CAPTION>
Fiscal Quarter Ended
-----------------------------------------------------------------------
June 29, September 28, December 28, March 31,
1997 1997 1997 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 490,365 $ 552,389 $ 691,715 $ 538,657
Gross profit 124,308 148,346 189,715 140,349
Income (loss) before extraordinary loss (7,445) 8,154 23,050 (5,062)
Net income (loss) (14,758) 6,709 14,714 (16,481)
Basic earnings per share:
Income (loss) before extraordinary item (0.36) 0.40 1.12 (0.25)
Extraordinary loss (0.36) (0.07) (0.41) (0.55)
----------- ----------- ----------- -----------
Net income (loss) (0.72) 0.33 0.71 (0.80)
Diluted earnings per share:
Income (loss) before extraordinary item (0.36) 0.38 1.05 (0.25)
Extraordinary loss (0.36) (0.07) (0.38) (0.55)
----------- ----------- ----------- -----------
Net income (loss) $ (0.72) $ 0.31 $ 0.67 $ (0.80)
=========== =========== =========== ===========
</TABLE>
F-34
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
16. 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, 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 1,656,758 171,777 (238,938) 2,452,807
Year ended March 31, 1998:
Sales to unaffiliated
customers 844,411 1,432,542 -- (3,827) 2,273,126
Income (loss) before income
taxes, minority interest
and extraordinary loss 2,081 74,213 -- (44,236) 32,058
Identifiable assets 800,607 1,632,206 160,742 (244,939) 2,348,616
</TABLE>
Other includes cash and cash equivalents, deferred tax assets, investments and
deferred financing costs.
F-35
<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, 1998:
Allowance for doubtful accounts $38,486 $7,060 $(5,484) $(2,574) $37,488
======= ====== ======= ======= =======
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
======= ====== ======= ======= =======
</TABLE>
/(1)/Represents primarily acquisitions of certain businesses in fiscal 1996 and
1998 and currency translation in fiscal 1997.
F-36
<PAGE>
EXHIBIT 10.11
SECOND AMENDMENT TO LEASE
-------------------------
THIS SECOND AMENDMENT TO LEASE ("Amendment") is made this 1st day of July,
1995 but effective the 1st day of July, 1995 by and between CHIPPEWA TRAIL
LODGE, INC., a Delaware corporation, whose address is 1400 N. Woodward, Suite
130, Bloomfield Hills, Michigan 48304 ("Landlord"), and EXIDE CORPORATION, a
Delaware corporation, whose address is 1400 N. Woodward, Suite 130, Bloomfield
Hills, Michigan 48304 ("Tenant").
R E C I T A L S :
-----------------
WHEREAS, Samuel Fried, as landlord, and the Tenant, as tenant, entered into
that certain Lease dated July 1, 1988, as amended by Amendment to Lease dated
October 24, 1988 (as amended, the "Lease"), for the lease of certain property
located in the Township of Milton, Antrim County, Michigan, as more particularly
described on Exhibit A attached hereto ("Premises");
---------
WHEREAS, Samuel Fried's interest in the Lease, as landlord, was transferred
to Landlord pursuant to that certain Assignment of Lease dated October 24, 1988;
WHEREAS, Tenant requested, and Landlord agreed, to extend the term of the
Lease for an additional seven (7) year term commencing July 1, 1995; and
WHEREAS, Landlord and Tenant desire to amend the Lease as is more
particularly set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereby agree as follows:
1. The recitals set forth above are incorporated herein by reference and
shall form a part of this Amendment. Capitalized terms used herein shall have
the same meaning as in the Lease unless otherwise set forth herein.
2. All references in the Lease to the term "Lease" or "lease" shall mean
the Lease as amended by this Amendment.
3. Landlord and Tenant agree that the term of the Lease shall be extended
for an additional seven (7) year term, commencing July 1, 1995 through June 30,
2002 ("Additional Term"). The Tenant shall pay unto Landlord for the rent of
said Premises for said Additional Term the sum of $733,701.64 in lawful money of
the United States payable in quarterly installments in advance commencing on the
first day of July, 1995 and on the first day of each third month thereafter
throughout the entire Additional Term. Each quarterly rental payment shall be
in the amount of $26,203.63.
<PAGE>
4. Except as amended hereby, the Lease is restated and republished in its
entirety and remains in full force and is hereby ratified and confirmed.
5. This Amendment shall be binding and upon and shall enure to the benefit
of the parties hereto in their respective successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
and year first written above.
WITNESSES: CHIPPEWA TRIAL LODGE, INC.,
a Delaware corporation
/s/ Regina Ganetson
- ---------------------------
Print name Regina Ganetson By: /s/ Douglas N. Pearson
---------------- -------------------------------
Print name Douglas N. Person
-------------------
/s/ Julie Sayen Its: Vice President
- --------------------------- -------------------------
Print name Julie Sayen
---------------
"Landlord"
EXIDE CORPORATION,
a Delaware corporation
/s/ Robert A. Pesek
- ---------------------------
Print name Robert A. Pesek By: /s/ William J. Rankin
---------------- ------------------------------
Print name William J. Rankin
-----------------------
/s/ Leland E. Coulter Its: Vice President
- --------------------------- -----------------------------
Print name Leland E. Coulter
----------------
"Tenant"
Attachment: Exhibit A - Legal Description
2
<PAGE>
July 19, 1983
EXHIBIT "A" 83-055
DESCRIPTIONS: Per abstract of title
The S1/2 of the SW1/4 of the NW1/4 of Section 12, T28N, R9W, Antrim
County, Michigan.
Commencing 1727 feet west of E1/4 Post of Section 11, T28N, R9W, running
thence West on quarter line about 801 feet to the shore of Elk Lake; thence
Southerly along the shore of Elk Lake to a point 255 feet South of said East and
West Quarter Line; thence East parallel with the East and West Quarter line to a
Point Due South of the place of beginning, thence North 255 feet to the Place of
Beginning.
A parcel of land described as Commencing at the E1/4 post of Section 11,
T28N, R9W and running thence West 2528 feet along the 1/4 line to Elk Lake;
thence South 15 degrees West along the lake shore 264 feet; thence East 2596
feet to the Section line; thence North 255 feet to the place of beginning, being
15 acres off Government Lot 3, Section 11, EXCEPTING commencing 1727 feet West
of the E1/4 post of Section 11, T28N, R9W, running thence West on the 1/4 line
about 801 feet to the shore of Elk Lake; thence Southerly along the shore of Elk
Lake to a point 255 feet South of the E & W 1/4 line; thence East parallel with
the E & W 1/4 line to a point due South of the place of beginning; thence
North 255 feet to the place of beginning. ALSO EXCEPTING commencing at the E1/4
post of Section 11, T28N, R9W; and running thence West on the 1/4 line 460 feet;
thence South 235 feet; thence East 460 feet; thence North 235 feet to the Point
of Beginning. ALSO EXCEPTING commencing 235 feet South of E1/4 post of Section
11, T28N, R9W and running West from East 1/4 line 460 feet; thence South 20
feet; thence East 460 feet; thence North 20 feet to the Point of Beginning.
DESCRIPTION: per this survey (Note: Description per this survey is the same
property as that described in the abstract description) BEGINNING at the E1/4
Corner of Section 11, T28N, R9W, Milton Township, Antrim County, Michigan;
thence N89 degrees 21 feet 44 inches W 460.00 feet; thence S00 degrees 35 feet
45 inches W 255.0 feet; thence N89 degrees 21 feet 44 inches W 2122.01 feet;
thence Northerly along the shore of Elk Lake in the following four (4) courses:
N18 degrees 56 feet 37 inches E 343.77 feet
N08 degrees 40 feet 14 inches W 321.80 feet
N04 degrees 39 feet 27 inches E 165.85 feet
N08 degrees 59 feet 31 inches W 109.54 feet
thence S89 degrees 24 feet 39 inches E 2532.11 feet; thence S89 degrees 00 feet
04 inches 1314.53 feet; thence S00 degrees 38 feet 12 inches W 664.65 feet;
thence N88 degrees 59 feet 43 inches W 1314.06 feet along the E-W 1/4 line of
Section 12, T28N, R9W to the Point of Beginning, being a part of the SW1/4 of
the NW1/4 of said Section 12 and a part of Government Lots 2 & 3, Section 11,
T28N, R9W, containing 70.41 acres of land more or less. Said property extends
to waters edge of Elk Lake with riparian rights thereon.
<PAGE>
Exhibit 10.20
EXIDE CORPORATION
1997 STOCK OPTION PLAN
----------------------
SECTION 1. Definitions.
When the following terms are used herein with initial capital letters, they
shall have the following meanings:
AWARD. An Option Agreement granted under this Plan, which shall be vested
ten (10) years after the Award is granted, or as otherwise provided in Section 5
hereof.
CODE. The Internal Revenue Code of 1986, as it has been and may hereafter
be amended from time to time, and any proposed, temporary or final Treasury
Regulations promulgated thereunder.
COMMITTEE. A committee of the Board of Directors of the Company designated
by such Board to administer this Plan, which shall consist of members appointed
from time-to-time by the Board of Directors and shall be comprised of not less
than such number of directors as shall be required to permit the Plan to satisfy
the requirements of Rule 16b-3 of the Rules. Each member of the Committee shall
be a "Non-Employee Director" within the meaning of Rule 16b-3. All members of
the Committee shall be "outside directors" within the meaning of Section 162(m)
of the Code or its successor as then amended, to the extent applicable.
COMPANY. Exide Corporation, a Delaware corporation.
OPTION. The contract right of a Participant to purchase a defined number
of shares of the Company, at the closing price on May 1, 1997 of $16.625 per
share on the New York Stock Exchange, or at such other closing price on such
other date as is set by the Committee, and subject to the terms of this Plan.
OPTION AGREEMENT. Any written agreement, contract or other instrument or
document evidencing any Option to purchase shares granted under this Plan, such
as the attached form "Stock Option Agreement", or such other form agreement as
may be adopted by the Committee.
PARTICIPANT. Employees of the Company and its subsidiaries and affiliates
designated by the Committee.
PLAN. This Exide Corporation 1997 Stock Option Plan.
RULES. The Rules and Regulations under the Securities Exchange Act of
1934, as it has been and may hereafter be amended from time to time, and any
temporary or final Securities and Exchance Commission Rules or Regulations
promulgated thereunder.
1
<PAGE>
STOCK. The shares of Common Stock, $.01 par value, of the Company or such
other securities or property as may become subject to Options pursuant to an
adjustment made under Section 3.3 of this Plan.
SECTION 2. Administration.
2.1 COMMITTEE. This Plan shall be administered by the Committee. Subject
to the express provisions of the Plan and to applicable law, including without
limitation the provisions of Section 162(m) of the Code, the Committee shall
have full power and authority to: (i) designate Participants; (ii) determine the
type or types of Awards to be granted to each Participant under the Plan; (iii)
determine the number of shares of Stock to be covered by each Option Agreement;
(iv) determine the terms and conditions of any Award; (v) amend the terms and
conditions of any Award and/or accelerate the exercisability of Options or the
lapse of restrictions relating to any Awards; (vi) interpret and administer the
Plan and any instrument or agreement relating to, or Award made under, the Plan;
(vii) establish, amend, suspend or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of the
Plan; and (viii) make any other determination and take any other action that the
Committee deems necessary or desirable for the administration of the Plan.
Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, and may
be made at any time and shall be final, conclusive and binding upon any
Participant, any holder or beneficiary of any Award and any employee of the
Company or any affiliate thereof.
2.2 PARTICIPANT DETERMINATIONS. Not later than 60 days after this Plan is
established, and subject to annual review as appropriate, the Committee shall
designate Participants who are eligible to receive Awards.
2.3 STOCKHOLDER APPROVAL. The material terms of this Plan shall be
disclosed to and approved by the stockholders of the Company at the Company's
1997 annual meeting of stockholders in accordance with Section 162(m) of the
Code. No exercise of an Option shall occur under this Plan unless such
stockholder approval has been obtained.
SECTION 3. Options.
3.1 GRANT. The Committee is hereby authorized to Award Options to
Participants with the terms and conditions provided herein, with the terms and
conditions provided in the attached form "Stock Option Agreement" which is
incorporated herein, and/or with such additional terms and conditions not
inconsistent with provisions of the Plan as the Committee shall determine,
subject to stockholder approval.
(a) EXERCISE PRICE. The purchase price per Share purchasable under an
Option Agreement shall be determined by the Committee; provided, however, that
such purchase price shall not be less than 100% of the fair market value of a
share of Stock on the date of grant of such Option as reasonably determined by
the Committee.
2
<PAGE>
(b) OPTION TERM. The term of each Option shall be fixed by the
Committee.
(c) TIME AND METHOD OF EXERCISE. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part and the
method or methods by which, and the form or forms (including, without
limitation, cash, Shares, promissory notes, other securities or other property,
or any combination thereof, having a fair market value on the exercise date
equal to the relevant exercise price) in which payment of the exercise price
with respect thereto may be made or deemed to have been made.
3.2 SHARES AVAILABLE. Subject to adjustment as provided in Section 3.3
hereof, the aggregate number of shares of Stock available for granting Options
pursuant to Option Agreements under the Plan shall be 2,000,000. Shares to be
issued under the Plan may be either shares of Stock reacquired and held in the
treasury or authorized but unissued shares. If any shares of Stock covered by
an Option are not purchased or are forfeited, or if an Option otherwise
terminates without delivery of any shares, then the number of Shares counted
against the aggregate number of shares of Stock available under the Plan with
respect to such Option, to the extent of any such forfeiture or termination,
shall again be available for granting Options under this Plan.
3.3 ADJUSTMENT. In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, shares of Stock,
other securities, or other property), recapitalization, stock split, reverse
stock split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase or exchange of shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company or other similar corporate transaction or event
affects the shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of shares (or other securities or other property) which
thereafter may be made the subject of Options, (ii) the number and type of
shares (or other securities or other property subject to outstanding Options)
and securities or other property subject to outstanding Options) and (iii) the
purchase or exercise price with respect to any Options; provided, however, that
the number of shares covered by any Option or to which such Options relate shall
always be a whole number.
3.4 WITHHOLDING. In order to comply with all applicable federal, state or
other governmental income tax laws or regulations in the United States of
America or other jurisdictions where the Company employs personnel, the Company
may take such action as it deems appropriate to ensure that all applicable
federal, state or other jurisdiction payroll, withholding, income or other
taxes, which are the sole and absolute responsibility of a Participant, are
withheld or collected from such Participant. In order to assist a Participant
in paying all or a portion of the federal, state or other jurisdiction taxes to
be withheld or collected upon exercise or receipt of (or the lapse of
restrictions relating to) an Option, the Committee, in its sole discretion and
subject to such additional terms and conditions as it may adopt, may permit the
Participant to satisfy such tax obligation by (i) electing to have the Company
withhold a portion of the Stock otherwise to be delivered upon exercise or
receipt of such Option with a fair market value, as reasonably determined by the
Committee, equal to the amount of such taxes or (ii) delivering to the Company
Stock other than Stock issuable upon
3
<PAGE>
exercise or receipt of such Option with such fair market value equal to the
amount of such taxes. The election, if any, must be made on or before the date
that the amount of tax to be withheld is determined.
3.5 TERM OF PLAN. This Plan shall end June 1, 2007.
SECTION 4. Limitations.
4.1 AWARDS. Awards pursuant to this Plan shall not be made after May 1,
1998 except as otherwise determined by the Committee, and/or to re-award
previously forfeited Awards.
4.2 LIMITATION ON EXERCISE OF AWARDS. No Options may be exercised after
June 1, 2007.
4.3 COMMITTEE MAY REDUCE AWARD. With respect to any Participant, except
for Participants who received awards as of the May 1, 1997 date of adoption of
the Plan, the Committee retains sole discretion to reduce the amount of any
Award under this Plan.
4.4 INDIVIDUAL LIMIT. No Participant shall be granted Options covering
more than a total of 1,000,000 shares of Stock.
SECTION 5. Exercise of Stock Options.
5. TIME AND FORM OF OPTION EXERCISE. Subject to rules established by the
Committee and to Section 6(c), Options may be exercised by the Participant
pursuant to an Option Agreement only if the Participant is an active employee of
the Company at the time exercise of the Option is to occur (i.e., a Participant
who leaves the employ of the Company for any reason forfeits both Options not
vested, and in the instance of vested Options, forfeits all Options which have
vested but have not been exercised).
(a) 100% vesting ten (10) years after the 1997 date of the Award of
the Option Agreement, i.e., upon May 1, 2007, or
(b) Forty percent (40%) vesting upon the Company Stock price once
reaching thirty dollars ($30.00) per share, an additional forty percent (40%)
vesting upon Company Stock price once reaching fifty dollars ($50.00) per share,
and an additional twenty percent (20%) vesting upon Company Stock price once
reaching seventy-five dollars ($75.00) per share (i.e., an aggregate 100%
vesting when $75.00 per share has been once attained). The Stock price shall be
determined by the closing price on the stock exchange on which the Company is
listed. In the event of vesting pursuant to this Section 5(b), a vested Option
may only be exercised as follows:
4
<PAGE>
DATE PERCENT OF EACH SEPARATE VESTED
---- -------------------------------
OPTION WHICH MAY BE EXERCISED
-----------------------------
Immediately upon Vesting 40%
1st Anniversary Date of Vesting 20%
2nd Anniversary Date of Vesting 20%
3rd Anniversary Date of Vesting 20%
Total 100%
PROVIDED HOWEVER, all Options shall be vested May 1, 2007 and may be
exercised until June 1, 2007, at which time Options not exercised are forfeited,
when the Plan then terminates.
SECTION 6. General Terms of Awards.
(a) NO CASH CONSIDERATIONS FOR AWARDS. Awards shall be granted for no
cash consideration or for such minimal cash consideration as may be required by
applicable law.
(b) AWARDS MAY BE GRANTED SEPARATELY OR TOGETHER. Awards may, in the
sole discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award or any award granted under
any plan of the Company. Awards granted in addition to or in tandem with other
Awards or in addition to or in tandem with awards granted under any such other
plan of the Company may be granted either at the same time as or at a different
time from the grant of such other Award or awards.
(c) LIMITS ON TRANSFER OF AWARDS. No Award and no right under any
such Award shall be transferable by a Participant otherwise than by will or by
the laws of descent and distribution. Any Option transferred by will or the laws
of descent and distribution may only be exercised to the extent it was
exercisable on the date of death and only within one year of death. Each Award
or right under any Award shall be exercisable during the Participant's lifetime
only by the Participant or, if permissible under applicable law, by the
Participant's guardian or legal representative; provided however no Award may be
exercised except by an active employee of the Company. No Award or right under
any such Award may be pledged, alienated, attached or otherwise encumbered, and
any purported pledge, alienation, attachment or encumbrance thereof shall be
void and unenforceable against the Company or any affiliated Company.
(d) RESTRICTIONS; SECURITIES EXCHANGE LISTING. All certificates for
Stock or other securities delivered under the Plan pursuant to the exercise of
any Option shall be subject to such stop transfer orders and other reasonable
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations and other requirements of the Securities and Exchange Commission and
any applicable federal or state securities laws, and the Committee may cause a
legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions. If the Stock or other securities are traded on a
securities exchange, the Company shall not be required to deliver
5
<PAGE>
any Stock or other securities have been admitted for trading on such securities
exchange. The Company shall use its reasonable efforts to provide for the
registration of the securities covered by the Options pursuant to Form S-8 under
the Securities Act of 1933, as amended.
SECTION 7. AMENDMENT AND TERMINATION; ADJUSTMENTS. Except to the extent
prohibited by applicable law and unless otherwise expressly provided in an Award
or in the Plan:
(a) AMENDMENTS TO THE PLAN. The Board of Directors of the Company
may amend, alter, suspend, discontinue or terminate the Plan; provided, however,
that, notwithstanding any other provision of the Plan or any Award, without the
approval of the stockholders of the Company, no such amendment, alteration,
suspension, discontinuation or termination shall be made that, absent such
approval, would violate the rules or regulations of the NYSE, any other
securities exchange or the National Association of Securities Dealers, Inc. that
are applicable to the Company.
(b) AMENDMENTS TO AWARDS. The Committee may waive any conditions of
or rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof, except as otherwise
herein provided.
(c) CORRECTION OF DEFECTS, OMISSIONS AND INCONSISTENCIES. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to carry the Plan into effect.
SECTION 8. Miscellaneous.
8.1 EFFECTIVE DATE. The Plan shall be effective as of May 1, 1997, and an
Award may be granted pursuant to the Plan at any time on or after the effective
date, subject to stockholder approval.
8.2 HEADINGS. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not
be deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
8.3 APPLICABILITY TO SUCCESSORS. This Plan shall be binding upon and
inure to the benefit of the Company and each signatory Participant, the
successors and assigns of the Company, and the beneficiaries, personal
representatives and heirs of each Participant.
8.4 EMPLOYMENT RIGHTS AND OTHER BENEFIT PROGRAMS. The provisions of this
Plan shall not give any Participant any right to be retained in the employment
of the Company. In the absence of any specific agreement to the contrary, this
Plan shall not affect any right of the Company, or of any affiliate of the
company, to terminate, with or without cause, the participant's employment at
any time. This Plan is in addition to, and not in lieu of, any other employee
benefit plan or program in which any Participant may be or become eligible to
participate by reason of employment with the Company. Receipt of benefits
hereunder shall have such effect on
6
<PAGE>
contributions to and benefits under such other plans or programs as the
provisions of each such other plan or program may specify.
8.5 NO RIGHTS TO AWARDS. No Participant shall have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of
treatment of Participants or holders or beneficiaries of Awards under the Plan.
The terms and conditions of awards need not be the same with respect to any
Participant or with respect to different Participants.
8.6 NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained in the
Plan shall prevent the Company from adopting or continuing in effect other or
additional compensation arrangements, and such arrangements may be either
generally applicable or applicable only in specific cases.
8.7 NO TRUST OR FUND CREATED. This Plan shall not create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship
between the Company or any affiliate and a Participant or any other person. To
the extent that any person acquires a right to receive payments from the Company
or any affiliate pursuant to this Plan, such right shall be no greater than the
right of any unsecured general creditor of the Company or of any affiliate.
8.8 GOVERNING LAW. The validity, construction and effect of the Plan or
any bonus payable under the Plan shall be determined in accordance with the
internal laws, and not the laws of conflicts, of the State of Delaware.
8.9 SEVERABILITY. If any provision of the Plan is or becomes or is deemed
to be invalid, illegal or unenforceable in any jurisdiction such provision shall
be construed or deemed amended without, in the determination of the Committee,
materially altering the purpose or intent of the Plan, such provision shall be
stricken as to such jurisdiction, and the remainder of the Plan shall remain in
full force and effect.
This Plan was approved by the Board of Directors at 11:10 a.m. as of May 1,
1997 at Wilmington, Delaware.
____________________________
Corporate Secretary
7
<PAGE>
[LOGO]
THE BUREAU OF NATIONAL AFFAIRS INC. 2012 MEADOW RIDGE, COMMERCE TWP, MI 48390
JOHN C VARCIE PHONE: 248 960-0652 FAX: 248 960-0692
DISTRICT REPRESENTATIVE CUSTOMER RELATIONS: 1-800-372-1003
June 16, 1998
JOHN R VAN ZILE
Exide Corp
1400 N Woodward Ste 130
Bloomfield Hills, MI 48304
Mr. Van Zile,
You are invited to review a copy of the newest addition to the BNA
Corporate Law series. Please review this synopsis and I will call next week to
arrange a free trial:
CORPORATE GOVERNANCE MANUAL*
&
CORPORATE GOVERNANCE LIBRARY ON CD*
The Corporate Governance Manual (CGM) is a one-binder practical reference
service that gives you quickly accessible, yet thorough, guidance on managing
core corporate governance areas, including annual meetings of shareholders,
board of directors, audit committees, and compensation committees. Each section
of the Corporate Governance Manual is extensively footnoted and contains expert
analyses written by top practitioners in the field of coverage.
You'll find the Corporate Governance Manual worksheets to be an invaluable
time-saving resource. The worksheets keep you from "reinventing the wheel" by
providing checklists, agendas, forms, minutes, time-tables, annual meeting
scripts, etc. that can be easily customized to your own situation.
The monthly newsletter reports on the latest developments in case law, industry
practices, key speeches by government officials, and pertinent conferences. The
state coverage, with an emphasis on Delaware, includes legislative and
regulatory developments affecting securities and corporate law.
The CD-ROM version of the Corporate Governance Manual includes all of the
features mentioned above as well as the complete text of federal and state cases
cited in the manual. The CD also contains statutory materials, including the
text of the Delaware Code, Title 8. You will find the worksheets to be even more
valuable as you simply "cut and paste" them into your own work product.
John Varcie
<PAGE>
Exhibit 21.1
Jurisdiction
Subsidiary Name Ownership of Incorporation
- --------------------------------------------------------------------------------
Exide Canada, Inc. 100.00% Canada
8301 Keele St.
Maple, Ontario
Canada L6A 1T2
General Battery Corporation 100.00% Delaware
645 Penn St.
Reading, PA 19601
Sociedad Espanola del Acumulador Tudor, S.A. 95.77% Spain
Condesa de Venadito, 1
28027 Madrid, Spain
Gaztambide, S.A. 100.00% Spain
Condesa de Venadito, 1
28027 Madrid, Spain
Terrenos y Construcciones, S.A. 100.00% Spain
Condesa de Venadito, 1
28027 Madrid, Spain
Sociedade Portuguesa do Acumulador Tudor, S.A.(SPAT) 84.40% Portugal
Rua Actor Tasso, 1
1050 Lisbon, 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
<PAGE>
Exhibit 21.1
Jurisdiction
Subsidiary Name Ownership of Incorporation
- --------------------------------------------------------------------------------
Amsteldjik 166
1079 LH Amsterdam, Netherlands
Tudor Hellenic S.A. 100.00% Greece
3 Plastira St.
GR 144-52 Metamorfosi, Greece
Tudor India 51.00% India
147 Jolly Maker Chambers 2 - 14th Fl.
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 100.00% Belgium
93 rue de Florival
1390 Archennes, Belgium
CMP Batterijen NV 100.00% 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 Vlaardingen, Netherlands
<PAGE>
Exhibit 21.1
Jurisdiction
Subsidiary Name Ownership of Incorporation
- --------------------------------------------------------------------------------
ATSA Batterijen BV 100.00% Netherlands
Energieweg 105 Postbus 26
3640 AA Mijdrecht, Netherlands
Exide Automotive BV 100.00% Netherlands
Energieweg 105
3641 RT Mijdrecht, Netherlands
Industria Composizione Stampate (ICS) 100.00% Italy
Via bergamo, 1
Canonica d'Adda Bergamo 28040, Italy
Societa Industriale Accumulatori Srl (SINAC) 100.00% Italy
Via Dante Allghieri 100/106
Romano Di Lombardia, Italy
Compagnie Generale Accumulatori Spa 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 99.90% Germany
Thiergarten
63654 Budingen
Sonnenschein Lithium GmbH 49.95% Germany
Industriestrasse 22
63654 Budingen
CENTRA Spolka Akcyjna (CENTRA) 96.05% Poland
Gdynska 31/33
61-0166 Poznen, Poland
INCI CEAC Aku Sanayi; Anomi Sirketi 50.00% Turkey
Organize Sanayi Bolgesi
45030 Maines, Turkey
Fulmen Iberica 96.12% Spain
Poligono Industrial El Pla
<PAGE>
Exhibit 21.1
Jurisdiction
Subsidiary Name Ownership of Incorporation
- --------------------------------------------------------------------------------
C/Miguel Torello Pages, 11-13
06750 Molin de rel, Spain
TUDOR AB 100.00% Sweden
8-44041 Sweden
Exide Sonnak A/S 100.00% Norway
Molovelen 25
N-3191 Horten, Norway
Exide Oy 100.00% Finland
Sahkotie, 8
8F-01510 Vantaa, Finland
CMP Batteries Ltd 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 81.50% United Kingdom
PO Box 1 Salford Road Over Hulton
Bolton BL5 1DD
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, Emerainville
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
<PAGE>
Exhibit 21.1
Jurisdiction
Subsidiary Name Ownership of Incorporation
- --------------------------------------------------------------------------------
Chequers Lane
Dagenham, Essex RM9 6PX
Exide Batterrier AB 81.50% Sweden
Box 458
651 10 Karistad, Stockholm, Sweden
DETA USA Inc. 100.00% Delaware
802 West St. Suite 209
Delaware, DE 19801
I.C.C.S. Batterie Vertrieb GmbH 100.00% Germany
Miramstrasse 74
34123 Kassel, Germany
Refined Metals 100.00% Delaware
257 W. Mallary St.
Memphis, TN 38109
DETA Akkumulatorenwerk GmbH 100.00% Germany
Postfach 11 64
D. 37421 Bad Lauterberg, Germany
Middland Batteries 100.00% United Kingdom
P.O. Box 1 Salford Road Over Hulton
Bolton BL 1 DD
FRIWO Siberkraft GmbH 100.00% Germany
Postfach 11 64
D. 37421 Bad Lauterberg, Germany
<PAGE>
Exhibit 10.22
================================================================================
EXIDE CORPORATION,
CERTAIN BORROWING SUBSIDIARIES
AND
CERTAIN GUARANTORS
__________________________________
$650,000,000
CREDIT AND GUARANTEE AGREEMENT
_________________
DATED AS OF
DECEMBER 19, 1997
____________________________
LEHMAN COMMERCIAL PAPER INC.,
as Syndication Agent
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent
____________________________
LEHMAN BROTHERS INC.
and
CREDIT SUISSE FIRST BOSTON,
as Arrangers
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
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SECTION 1. DEFINITIONS............................................................. 2
1.1 Defined Terms........................................................... 2
1.2 Other Definitional Provisions........................................... 33
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS......................................... 33
2.1 Term Loan Commitments................................................... 33
2.2 Procedure for Term Loan Borrowing....................................... 33
2.3 Repayment of Term Loans................................................. 34
2.4 Revolving Credit Commitments............................................ 35
2.5 Procedure for Revolving Credit Borrowing................................ 36
2.6 Swing Line Commitment................................................... 37
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans....... 37
2.8 Reallocation of Swing Line Maximums..................................... 40
SECTION 3. PROVISIONS RELATING TO EXTENSIONS OF CREDIT; FEES AND
PAYMENT................................................................. 40
3.1 Repayment of Loans; Evidence of Debt.................................... 40
3.2 Facility Fees, Commitment Fees, etc..................................... 41
3.3 Termination or Reduction of Revolving Credit Commitments................ 42
3.4 Optional Prepayments.................................................... 42
3.5 Mandatory Prepayments and Commitment Reductions......................... 43
3.6 Conversion and Continuation Options..................................... 44
3.7 Minimum Amounts and Maximum Number of Eurocurrency Tranches............. 45
3.8 Interest Rates and Payment Dates........................................ 45
3.9 Computation of Interest and Fees........................................ 47
3.10 Inability to Determine Interest Rate.................................... 47
3.11 Pro Rata Treatment and Payments......................................... 48
3.12 Requirements of Law..................................................... 51
3.13 Taxes................................................................... 52
3.14 Indemnity............................................................... 53
3.15 Illegality.............................................................. 54
3.16 Change of Lending Office................................................ 54
3.17 Replacement of Lenders under Certain Circumstances...................... 54
3.18 Controls; Currency Exchange Rate Fluctuations........................... 55
3.19 European Monetary Union................................................. 55
3.20 Reporting Requirements of Swing Line Lenders and Issuing Lenders........ 56
SECTION 4. LETTERS OF CREDIT....................................................... 56
4.1 L/C Commitment.......................................................... 56
4.2 Procedure for Issuance of Letters of Credit............................. 57
4.3 L/C Participations...................................................... 57
4.4 Reimbursement Obligation With Respect to Letters of Credit.............. 59
4.5 Obligations Absolute.................................................... 59
4.6 Commissions, Fees and Other Charges..................................... 60
</TABLE>
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<TABLE>
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4.7 Letter of Credit Payments............................................... 60
4.8 Applications............................................................ 60
4.9 Transitional Provisions................................................. 60
SECTION 5. REPRESENTATIONS AND WARRANTIES.......................................... 61
5.1 Financial Condition..................................................... 61
5.2 No Change............................................................... 62
5.3 Corporate Existence; Compliance with Law................................ 62
5.4 Corporate Power; Authorization; Enforceable Obligations................. 62
5.5 No Legal Bar............................................................ 62
5.6 No Material Litigation.................................................. 62
5.7 No Default.............................................................. 63
5.8 Ownership of Property; Liens............................................ 63
5.9 Intellectual Property................................................... 63
5.10 Taxes................................................................... 63
5.11 Federal Regulations..................................................... 63
5.12 Labor Matters........................................................... 63
5.13 ERISA................................................................... 64
5.14 Investment Company Act; Other Regulations............................... 64
5.15 Subsidiaries............................................................ 64
5.16 Use of Proceeds......................................................... 64
5.17 Environmental Matters................................................... 64
5.18 Accuracy of Information, etc............................................ 65
5.19 Security Documents...................................................... 66
5.20 Solvency................................................................ 67
5.21 Senior Indebtedness..................................................... 67
SECTION 6. CONDITIONS PRECEDENT.................................................... 67
6.1 Conditions to Initial Extension of Credit............................... 67
6.2 Conditions to Each Extension of Credit.................................. 70
SECTION 7. AFFIRMATIVE COVENANTS................................................... 71
7.1 Financial Statements.................................................... 71
7.2 Certificates; Other Information......................................... 71
7.3 Payment of Obligations.................................................. 73
7.4 Conduct of Business and Maintenance of Existence, etc................... 73
7.5 Maintenance of Property; Insurance...................................... 73
7.6 Inspection of Property; Books and Records; Discussions.................. 73
7.7 Notices................................................................. 73
7.8 Environmental Laws...................................................... 74
7.9 Interest Rate Protection................................................ 74
7.10 Additional Collateral, etc.............................................. 74
7.11 Clean-Down.............................................................. 76
SECTION 8. NEGATIVE COVENANTS...................................................... 76
8.1 Financial Condition Covenants........................................... 77
8.2 Limitation on Indebtedness.............................................. 78
8.3 Limitation on Liens..................................................... 79
8.4 Limitation on Fundamental Changes....................................... 81
8.5 Limitation on Sale of Assets............................................ 81
</TABLE>
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<TABLE>
<CAPTION>
Page
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8.6 Limitation on Dividends................................................ 82
8.7 Limitation on Capital Expenditures..................................... 83
8.8 Limitation on Investments, Loans and Advances.......................... 83
8.9 Limitation on Optional Payments and Modifications of Debt Instruments,
etc.................................................................... 85
8.10 Limitation on Transactions with Affiliates............................. 85
8.11 Limitation on Sales and Leasebacks..................................... 85
8.12 Limitation on Changes in Fiscal Periods................................ 86
8.13 Limitation on Negative Pledge Clauses.................................. 86
8.14 Limitation on Restrictions on Subsidiary Distributions................. 86
8.15 Limitation on Lines of Business........................................ 86
SECTION 9. EVENTS OF DEFAULT....................................................... 87
SECTION 10. GUARANTEE.............................................................. 90
10.1 Guarantee.............................................................. 90
10.2 No Subrogation, Contribution, Reimbursement or Indemnity............... 92
10.3 Amendments, etc........................................................ 92
10.4 Guarantee Absolute and Unconditional................................... 93
10.5 Reinstatement.......................................................... 93
10.6 Payments............................................................... 94
10.7 Limited Effect of Limitations on Guarantees............................ 94
SECTION 11. THE AGENTS............................................................. 94
11.1 Appointment............................................................ 94
11.2 Delegation of Duties................................................... 94
11.3 Exculpatory Provisions................................................. 94
11.4 Reliance by Agents..................................................... 95
11.5 Notice of Default...................................................... 95
11.6 Non-Reliance on Agents and Other Lenders............................... 95
11.7 Indemnification........................................................ 96
11.8 Agent in Its Individual Capacity....................................... 96
11.9 Successor Administrative Agent......................................... 96
11.10 Authorization to Release Liens......................................... 97
11.11 Public Deeds for Purposes of Spanish Law............................... 97
11.12 The Arranger........................................................... 97
SECTION 12. MISCELLANEOUS.......................................................... 97
12.1 Amendments and Waivers................................................. 97
12.2 Notices................................................................ 98
12.3 No Waiver; Cumulative Remedies......................................... 99
12.4 Survival of Representations and Warranties............................. 99
12.5 Payment of Expenses.................................................... 99
12.6 Successors and Assigns; Participations and Assignments................. 100
12.7 Adjustments; Set-off................................................... 103
12.8 Conversion of Loans.................................................... 104
12.9 Addition of Borrowing Subsidiaries..................................... 105
12.10 Collateral Agency and Intercreditor Agreement.......................... 106
12.11 Counterparts........................................................... 106
12.12 Severability........................................................... 106
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
12.13 Integration............................................................ 106
12.14 GOVERNING LAW.......................................................... 106
12.15 Submission To Jurisdiction; Waivers.................................... 106
12.16 Acknowledgements....................................................... 107
12.17 WAIVERS OF JURY TRIAL.................................................. 107
12.18 Confidentiality........................................................ 107
12.19 Enforceability; Usury.................................................. 108
12.20 Judgment............................................................... 108
12.21 German Limitations on Liability........................................ 109
12.22 Certain Waivers........................................................ 109
</TABLE>
ANNEXES
----------------------------------
A Pricing Grid
B Calculation of The MLA Cost
SCHEDULES
----------------------------------
1.1A Commitments
1.1B Addresses and Designated Maximums for Borrowing Subsidiaries
1.1C Currency Maximums
1.1D Mortgaged Property
1.1E Permitted Acquisitions
1.1F Certain Letters of Credit
1.1G Wholly Owned Subsidiaries
5.4 Consents, Authorizations, Filings and Notices
5.15 Subsidiaries
5.17 Assumed Environmental Liabilities
5.19(a) UCC Filing Jurisdictions
5.19(b) Mortgage Filing Jurisdictions
8.2(e) Existing Indebtedness
8.3(f) Existing Liens
8.5 Permitted Asset Sales
8.8(j) Existing Investments
8.14 Existing Restrictions on Subsidiary Distributions
10.1 Exceptions to Guarantees by Foreign Subsidiaries
EXHIBITS
----------------------------------
A Form of Collateral Agency and Intercreditor Agreement
B Form of Collateral Agreement
C Form of Compliance Certificate
D Form of Domestic Obligations Guarantor Joinder Agreement
E Form of Foreign Obligations Guarantor Joinder Agreement
F-1 Form of Tranche A Term Note
F-2 Form of Tranche B Term Note
F-3 Form of Revolving Credit Note
F-4 Form of Swing Line Note
G Form of Prepayment Option Notice
H Form of Exemption Certificate
I Form of Closing Certificate
-iv-
<PAGE>
J Form of Legal Opinion of Kirkland & Ellis
K Form of Assignment and Acceptance
L Form of Borrowing Subsidiary Joinder Agreement
-v-
<PAGE>
EXHIBIT 10.22
CREDIT AND GUARANTEE AGREEMENT, dated as of December 19, 1997, among:
(a) Exide Corporation, a Delaware corporation (the "Company");
-------
(b) the Borrowing Subsidiaries signatories hereto;
(c) the Guarantors signatories hereto;
(d) the several Lenders from time to time parties hereto;
(e) Lehman Brothers Inc. and Credit Suisse First Boston, as advisors and
arrangers (in such capacity, the "Arrangers");
---------
(f) Credit Suisse First Boston, as administrative agent (in such capacity,
the "Administrative Agent") for the Lenders; and
--------------------
(g) Lehman Commercial Paper Inc., as syndication agent (in such capacity,
the "Syndication Agent") for the Lenders.
-----------------
W I T N E S S E T H:
-------------------
WHEREAS, the Company is a party to the Credit Agreement, dated as of
August 30, 1994 (as amended, supplemented or otherwise modified from time to
time, the "Existing Domestic Credit Agreement"), with the lenders parties
----------------------------------
thereto and Bankers Trust Company, as administrative agent;
WHEREAS, certain foreign subsidiaries of the Company (including
certain of the Borrowing Subsidiaries) are parties to the Amended and Restated
Facilities Agreement, dated 3 July 1997 (as amended, supplemented or otherwise
modified from time to time, the "Existing Foreign Credit Agreement"; and
---------------------------------
together with the Existing Domestic Credit Agreement, the "Existing Credit
---------------
Agreements"), with the lenders parties thereto and Bankers Trust Company, as
- ----------
agent;
WHEREAS, the Company wishes to refinance the Existing Credit
Agreements and redeem its 10-3/4% Senior Notes due December 15, 2002 (the
"Senior 10-3/4% Notes");
--------------------
WHEREAS, the Company has requested that the Lenders make available
certain credit facilities, the proceeds of which would be used to refinance the
Existing Credit Agreements and (in the case of proceeds made available to the
Company) to redeem its Senior 10-3/4% Notes;
<PAGE>
2
WHEREAS, the Lenders are willing to make such credit facilities
available upon and subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
-------------
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
"Acquired Indebtedness": the difference (but not below zero) between
---------------------
(a) Indebtedness of a Subsidiary of the Company assumed or acquired as a
result of a Permitted Acquisition, so long as the respective Indebtedness
existed prior to the respective Permitted Acquisition and was not incurred
in connection with, or in contemplation of, the Permitted Acquisition or
the respective Person becoming a Subsidiary of the Company, and provided
that no Person other than the respective Subsidiary created or acquired as
a result of the respective Permitted Acquisition shall have any liability
(contingent or otherwise) with respect to any Acquired Indebtedness and (b)
the net working capital (defined as current assets minus current
liabilities) (but not below zero) of the Subsidiary acquired as a result of
such Permitted Acquisition.
"Adjustment Date": as defined in the Pricing Grid.
---------------
"Affiliate": as to any Person, any other Person which, directly or
---------
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
(or persons performing similar functions) of such Person or (b) direct or
cause the direction of the management and policies of such Person, whether
by contract or otherwise.
"Agents": the collective reference to the Syndication Agent and the
------
Administrative Agent.
"Aggregate Exposure": with respect to any Lender, an amount equal to
------------------
(a) until the Closing Date, the aggregate amount of such Lender's
Commitments and (b) thereafter, the sum of (i) the aggregate unpaid
principal amount of such Lender's Term Loans and (ii) the amount of such
Lender's Revolving Credit Commitment or, if the Revolving Credit
Commitments have been terminated, the amount of such Lender's Revolving
Extensions of Credit.
"Aggregate Exposure Percentage" with respect to any Lender, the ratio
-----------------------------
(expressed as a percentage) of such Lender's Aggregate Exposure to the
Aggregate Exposure of all Lenders.
<PAGE>
3
"Agreement": this Credit and Guarantee Agreement, as amended,
---------
supplemented or otherwise modified from time to time.
"Applicable Margin": for each Type of Loan, the rate per annum set
-----------------
forth under the relevant column heading below:
<TABLE>
<CAPTION>
Base Rate Loans and
Foreign Alternate Eurocurrency
Rate Loans Loans
--------------------- ---------------
<S> <C> <C>
Revolving Credit Loans .50% 1.50%
Tranche A Term Loans 1.00% 2.00%
Tranche B Term Loans 1.25% 2.25%
</TABLE>
provided, that on and after the first Adjustment Date occurring after the
--------
completion of two full fiscal quarters of the Company after the Closing
Date, the Applicable Margin will be determined pursuant to the Pricing
Grid.
"Application": an application, in such form as the Issuing Lender may
-----------
specify from time to time, requesting such issuing lender to open a Letter
of Credit.
"Asset Sale": any Disposition of Property or series of related
----------
Dispositions of Property (excluding any such Disposition permitted by any
of clauses (a) through (f) of Section 8.5 or any such Disposition described
in Section 8.11(b)) which yields gross proceeds (valued at the initial
principal amount thereof in the case of non-cash proceeds consisting of
notes or other debt securities and valued at fair market value in the case
of other non-cash proceeds) to the Company and any of its Subsidiaries in
excess of $500,000.
"Assignee": as defined in Section 12.6(c).
--------
"Assignor": as defined in Section 12.6(c).
--------
"Available ECF Amount": at any date on or after April 1, 1999, the
--------------------
portion of Excess Cash Flow for the fiscal year most recently ended which
was not required to be applied to prepay the Term Loans and reduce the
Revolving Credit Commitments pursuant to Section 3.5 (as set forth in the
certificate delivered by the Company pursuant to Section 7.2(a) with
respect to such prior fiscal year).
"Available Prepayment Amount": at any time during any fiscal year of
---------------------------
the Company, an amount equal to the lesser of:
(a) the difference between (i) $20,000,000 and (ii) the
aggregate principal amount of Eligible Prepayment Debt which prior to
such time has been prepaid, repurchased or redeemed during the term of
this Agreement;
(b) the amount equal to (i) the Available ECF Amount minus (ii)
the amount (to the extent positive) by which (A) the sum of (x) the
aggregate Purchase Prices for all Permitted Acquisitions consummated
since the Closing Date and (y) the aggregate principal amount of
Eligible Prepayment Debt
<PAGE>
4
which has been prepaid, repurchased or redeemed during such fiscal
year exceeds (B) $80,000,000.
"Available Revolving Credit Commitment": as to any Revolving Credit
-------------------------------------
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment over (b) the Dollar Equivalent of such
----
Lender's Revolving Extensions of Credit.
"Base Rate": for any day, a rate per annum (rounded upwards, if
---------
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day and (b) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. For purposes hereof: "Prime Rate"
----------
shall mean the rate of interest per annum publicly announced from time to
time by the Reference Lender as its prime or base rate in effect at its
principal office in New York City (the Prime Rate not being intended to be
the lowest rate of interest charged by the Reference Lender in connection
with extensions of credit to debtors). Any change in the Base Rate due to
a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective as of the opening of business on the effective day of such change
in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
---------------
based upon the Base Rate.
"Board": the Board of Governors of the Federal Reserve System of the
-----
United States (or any successor).
"Borrower" or "Borrowers": the individual or collective reference to
-------- ---------
the Company and the Borrowing Subsidiaries, in their respective capacities
as borrowers hereunder.
"Borrowing Date": any Business Day specified by a Borrower as a date
--------------
on which such Borrower requests the relevant Lenders to make Loans
hereunder.
"Borrowing Subsidiary": each Foreign Subsidiary of the Company set
--------------------
forth on the signature pages hereto as a Borrowing Subsidiary.
"Borrowing Subsidiary Joinder Agreement": the Borrowing Subsidiary
--------------------------------------
Joinder Agreement, substantially in the form of Exhibit L.
"Business": as defined in Section 5.17.
--------
"Business Day": a day other than a Saturday, Sunday or other day on
------------
which commercial banks in New York City or London, England are authorized
or required by law to close; provided that such day also (a) is a day upon
--------
which trading is conducted by and between banks in deposits for the
currency in which such Eurocurrency Loan is to be made in the relevant
interbank eurocurrency market, with respect to notices and determinations
in connection with, and payments of principal and interest on, Eurocurrency
Loans and (b) is not a day on which commercial banks in the principal
financial center in the country in which such Borrowing Subsidiary is
<PAGE>
5
organized are authorized or required by law to close, in the case of Loans
made to any Borrowing Subsidiary.
"Capital Expenditures": for any period, with respect to any Person,
--------------------
the aggregate of all expenditures by such Person and its Subsidiaries for
the acquisition or leasing (pursuant to a capital lease) of fixed or
capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which should be
capitalized under GAAP on a consolidated balance sheet of such Person and
its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP, and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
-------------
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any of
the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by, or
----------------
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition;
(b) certificates of deposit, time deposits, eurodollar time deposits or
overnight bank deposits having maturities of six months or less from the
date of acquisition issued by any Lender or by any commercial bank
organized under the laws of the United States of America or any state
thereof having combined capital and surplus of not less than $500,000,000;
(c) commercial paper of an issuer rated at least A-2 by Standard & Poor's
Ratings Services ("S&P") or P-2 by Moody's Investors Service, Inc.
---
("Moody's"), or carrying an equivalent rating by a nationally recognized
---------
rating agency, if both of the two named rating agencies cease publishing
ratings of commercial paper issuers generally, and maturing within six
months from the date of acquisition; (d) repurchase obligations of any
Lender or of any commercial bank satisfying the requirements of clause (b)
of this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
government; (e) securities with maturities of one year or less from the
date of acquisition issued or fully guaranteed by any state, commonwealth
or territory of the United States, by any political subdivision or taxing
authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory,
political subdivision, taxing authority or foreign government (as the case
may be) are rated at least A by S&P or A by Moody's; (f) securities with
maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; or (g) shares
of money market mutual or similar funds which invest
<PAGE>
6
exclusively in assets satisfying the requirements of clauses (a) through
(f) of this definition.
"Closing Date": the date on which the conditions precedent set forth
------------
in Section 6.1 shall have been satisfied, which date shall be no later than
January 15, 1998.
"Code": the Internal Revenue Code of 1986, as amended from time to
----
time.
"Collateral": all Property of the Loan Parties, now owned or
----------
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Collateral Agency and Intercreditor Agreement": the Collateral
---------------------------------------------
Agency and Intercreditor Agreement to be executed and delivered by the
Company and the Administrative Agent (on behalf of each of the Lenders),
substantially in the form of Exhibit A, as the same may be amended,
supplemented or otherwise modified from time to time.
"Collateral Agreement": the Collateral Agreement to be executed and
--------------------
delivered by the Company and each Domestic Subsidiary Guarantor,
substantially in the form of Exhibit B, as the same may be amended,
supplemented or otherwise modified from time to time.
"Commitment": as to any Lender, the sum of the Tranche A Term Loan
----------
Commitment, the Tranche B Term Loan Commitment and the Revolving Credit
Commitment of such Lender.
"Commonly Controlled Entity": an entity, whether or not incorporated,
--------------------------
which is under common control with the Company within the meaning of
Section 4001 of ERISA or is part of a group which includes the Company and
which is treated as a single employer under Section 414 of the Code.
"Compliance Certificate": a certificate duly executed by a
----------------------
Responsible Officer substantially in the form of Exhibit C.
"Confidential Information Memorandum": the Confidential Information
-----------------------------------
Memorandum dated November 1997 and furnished to the Lenders.
"Consolidated Current Assets": at any date, all amounts (other than
---------------------------
cash and Cash Equivalents) which would, in conformity with GAAP, be set
forth opposite the caption "total current assets" (or any like caption) on
a consolidated balance sheet of the Company and its Subsidiaries at such
date.
"Consolidated Current Liabilities": at any date, all amounts which
--------------------------------
would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet
of the Company and its Subsidiaries at such date, but excluding (a) the
current portion of any Funded Debt and any short-term lines of credit of
the Company and its Subsidiaries and (b) without duplication of clause (a)
above, all Indebtedness consisting of Revolving Credit Loans or Swing Line
Loans to the extent otherwise included therein.
<PAGE>
7
"Consolidated EBITDA": for any period, Consolidated Net Income for such
-------------------
period plus, without duplication and to the extent reflected as a charge in
----
the statement of such Consolidated Net Income for such period, the sum of
(a) income tax expense, (b) interest expense, amortization or writeoff of
debt discount and debt issuance costs and commissions, discounts and other
fees and charges associated with Indebtedness (including the Loans), (c)
depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (e) any
other non-cash charges and (f) any foreign currency translation losses
required to be recognized in accordance with GAAP with respect to
intercompany obligations, and minus, to the extent included in the
-----
statement of such Consolidated Net Income for such period, the sum of (a)
interest income, (b) any extraordinary, unusual or non-recurring income or
gains (including, whether or not otherwise includable as a separate item in
the statement of such Consolidated Net Income for such period, gains on the
sales of assets outside of the ordinary course of business), (c) any other
non-cash income, all as determined on a consolidated basis and (d) any
foreign currency translation gains required to be recognized in accordance
with GAAP with respect to intercompany obligations.
"Consolidated Fixed Charge Coverage Ratio": for any period, the ratio
----------------------------------------
of (a) Consolidated EBITDA for such period less (i) the aggregate amount
actually paid by the Company and its Subsidiaries in cash during such
period on account of Capital Expenditures and (ii) any Restructuring
Charges during such period to (b) Consolidated Fixed Charges for such
period.
"Consolidated Fixed Charges": for any period, the sum (without
--------------------------
duplication) of (a) Consolidated Interest Expense (net of consolidated
interest income) for such period, (b) cash income taxes paid by the Company
or any of its Subsidiaries on a consolidated basis in respect of such
period, (c) scheduled payments made during such period on account of
principal of Indebtedness of the Company or any of its Subsidiaries
(including scheduled principal payments in respect of the Term Loans and
scheduled reductions of the Revolving Credit Commitments) and (d) any
dividends paid in cash during such period in accordance with the provisions
of Section 8.6(c).
"Consolidated Interest Expense": for any period, total cash interest
-----------------------------
expense (including that attributable to Capital Lease Obligations) of the
Company and its Subsidiaries for such period with respect to all
outstanding Indebtedness of the Company and its Subsidiaries (including,
without limitation, all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance financing
and net costs under Interest Rate Protection Agreements to the extent such
net costs are allocable to such period in accordance with GAAP).
"Consolidated Leverage Ratio": as at the last day of any period of
---------------------------
four consecutive fiscal quarters, the ratio of (a) Consolidated Total Debt
on such day to (b) Consolidated EBITDA for such period; provided that for
--------
purposes of calculating Consolidated EBITDA of the Company and its
Subsidiaries for any period, the Consolidated EBITDA of any Person acquired
by the Company or its Subsidiaries during such period shall be included on
a pro forma basis for such period (assuming the consummation of each such
--- -----
acquisition and the incurrence or assumption of any
<PAGE>
8
Indebtedness in connection therewith occurred on the first day of such
period) if the consolidated balance sheet of such acquired Person and its
consolidated Subsidiaries as at the end of the period preceding the
acquisition of such Person and the related consolidated statements of
income and stockholders' equity and of cash flows for the period in respect
of which Consolidated EBITDA is to be calculated (i) have been previously
provided to the Administrative Agent and the Lenders and (ii) either (A)
have been reported on without a qualification arising out of the scope of
the audit by independent certified public accountants of nationally
recognized standing or (B) have been found acceptable by the Administrative
Agent.
"Consolidated Net Income": for any period, the consolidated net
-----------------------
income (or loss) of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
--------
excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes a Subsidiary of the Company or is merged into or
consolidated with the Company or any of its Subsidiaries, (b) the income
(or deficit) of any Person (other than a Subsidiary of the Company) in
which the Company or any of its Subsidiaries has an ownership interest,
except to the extent that any such income is actually received by the
Company or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the
Company to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by
the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.
"Consolidated Total Debt": at any date, the aggregate principal
-----------------------
amount of all Indebtedness of the Company and its Subsidiaries at such
date, determined on a consolidated basis in accordance with GAAP.
"Consolidated Working Capital": at any date, the excess of
----------------------------
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Continuing Directors": the directors of the Company on the Closing
--------------------
Date, and each other director, if, in each case, such other director's
nomination for election to the board of directors of the Company is
recommended by at least 66-2/3% of the then Continuing Directors.
"Contractual Obligation": as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Convertible Indenture": the Indenture, dated as of December 15,
---------------------
1995, between the Company and The Bank of New York, as trustee, pursuant to
which the Convertible Notes were issued, as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof
and thereof.
"Convertible Notes": the 2.9% Convertible Senior Subordinated Notes
-----------------
due 2005 of the Company, issued pursuant to the Convertible Indenture.
<PAGE>
9
"Currency Maximum": with respect to any Optional Currency, the amount
----------------
set forth opposite such Optional Currency on Schedule 1.1C hereto.
"Default": any of the events specified in Section 9, whether or not
-------
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Designated Disposition Proceeds": at any date, the amount equal to
-------------------------------
the aggregate Net Cash Proceeds received from Asset Sales with respect to
assets which were acquired by the Company and its Subsidiaries within 12
months prior to the date of such Asset Sale; provided that, within 30 days
--------
following the date of their acquisition by the Company and its
Subsidiaries, the Company provided to the Agents a written notice which (a)
clearly identified such assets, (b) set forth the Company's good faith
estimate of the fair market value thereof and (c) designated such assets as
being non-core assets held for disposition. Notwithstanding anything to
the contrary contained herein, the Net Cash Proceeds received by the
Company and its Subsidiaries on account of the sale of the Company's
Italian plastics Subsidiary in an aggregate amount not to exceed
$15,000,000 shall be deemed to constitute Designated Disposition Proceeds.
"Designated Equity Amounts": at any date, the amount equal to the sum
-------------------------
of (i) the aggregate amount of Net Cash Proceeds received by the Company
and its Subsidiaries from the issuance of Capital Stock and (ii) the value
of any shares of common stock of the Company directly issued to the sellers
as part of the consideration for any Permitted Acquisition (valued at fair
market value (as determined in good faith by the Board of Directors of the
Company)), in each case, which (a) have been designated in writing by the
Company to the Administrative Agent as "Designated Equity Amounts" and (b)
are utilized by the Company and its Subsidiaries within 45 days after such
receipt to finance Permitted Acquisitions pursuant to Section 8.8(h).
"Designated Maximum": with respect to any Borrowing Subsidiary, the
------------------
amount set forth opposite such Borrowing Subsidiary's name on Schedule 1.1B
hereto.
"DM Agreement": the Fiscal and Paying Agent Agreement, dated as of
------------
April 23, 1997, between EHE, the Company, The Bank of New York, as U.S.
fiscal and paying agent and Deutsche Bank Aktiengesellschaft, as DM fiscal
and paying agent, pursuant to which the DM Notes were issued, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.
"DM Notes": the 9.125% Senior Notes due 2004 of EHE, issued pursuant
--------
to the DM Agreement.
"Disposition": with respect to any Property, any sale, lease, sale
-----------
and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
------- -----------
meanings.
"Dollar Equivalent": with respect to any amount at any date of
-----------------
determination thereof, the sum of (x) for any such amount denominated in
Dollars, such amount and
<PAGE>
10
(y) for any such amount denominated in any currency other than Dollars, an
amount in Dollars equivalent to such principal amount or such other amount
calculated on the basis of the Spot Rate of Exchange on such date of
determination.
"Dollars" and "$": dollars in lawful currency of the United States of
------- -
America.
"Domestic Obligations": the unpaid principal of and interest on
--------------------
(including, without limitation, interest accruing after the maturity of the
Loans made to the Company and Reimbursement Obligations of the Company and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to the Company, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans made to the Company and
all other obligations and liabilities of the Company to the Administrative
Agent or to any Lender (or, in the case of Interest Rate Protection
Agreements, any affiliate of any Lender), whether direct or indirect,
absolute or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit, any Interest
Rate Protection Agreement entered into with any Lender or any affiliate of
any Lender, any foreign currency hedge agreement or swap entered into with
any Lender or any affiliate of any Lender, or any other document made,
delivered or given in connection herewith or therewith, whether on account
of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees, charges and
disbursements of counsel to the Administrative Agent or to any Lender that
are required to be paid by the Company pursuant hereto) or otherwise.
"Domestic Obligations Guarantor Joinder Agreement": the Domestic
------------------------------------------------
Obligations Guarantor Joinder Agreement, substantially in the form of
Exhibit D.
"Domestic Receivables Facility": the collective reference to (i) the
-----------------------------
Receivables Purchase Agreement, dated as of February 17, 1994, between the
Company, as seller, and Three Rivers Funding Corporation, as buyer, as such
Receivables Purchase Agreement is in effect on the Closing Date, but giving
effect to (x) extensions of the termination date thereunder, (y) increases
in the committed amount thereof after the Closing Date, but only if the
respective increases are approved in writing by the Required Lenders, and
(z) other changes thereto approved by the Agents and (ii) any additional or
substitute or replacement receivables facility so long as such facility and
all documentation therefor, and the committed amount thereof, is approved
in writing by the Required Lenders.
"Domestic Receivables Facility Attributed Indebtedness": the
-----------------------------------------------------
aggregate amount theretofore paid to the Company or any of its Subsidiaries
in respect of the receivables sold by it pursuant to the Domestic
Receivables Facility, in each case to the extent the respective receivables
have not yet been repaid by the respective account debtor or repurchased by
the Company (it being the intent of the parties that the amount of Domestic
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 Domestic Receivables
Facility if
<PAGE>
11
same were structured as a secured lending agreement rather than a purchase
agreement).
"Domestic Receivables Facility Commitment": the aggregate commitments
----------------------------------------
to purchase receivables pursuant to the Domestic Receivables Facility as in
effect from time to time.
"Domestic Receivables Financier": Three Rivers Funding Corporation or
------------------------------
any other purchaser pursuant to the Domestic Receivables Facility as then
in effect.
"Domestic Receivables Maximum Commitment Amount": initially,
----------------------------------------------
$75,000,000; provided that such amount may be increased from time to time
--------
after the Closing Date to a maximum of $90,000,000 as the Domestic
Receivables Facility Commitment pursuant to the Domestic Receivables
Facility (or the various facilities comprising the Domestic Receivables
Facility) is increased.
"Domestic Subsidiary": any Subsidiary of the Company organized under
-------------------
the laws of any jurisdiction within the United States of America.
"Domestic Subsidiary Guarantor": each Domestic Subsidiary and each
-----------------------------
Foreign Subsidiary which has guaranteed all or any portion of the Domestic
Obligations.
"ECF Percentage": 75%; provided, that, with respect to each fiscal
-------------- --------
year of the Company ending on or after March 31, 2000, the ECF Percentage
shall be reduced to 50% if the aggregate principal amount of the Term Loans
outstanding as of the last day of such fiscal year is less than
$200,000,000.
"EHE": Exide Holding Europe S.A., a corporation organized under the
---
laws of the Republic of France.
"Eligible Prepayment Debt": Indebtedness of the type described in
------------------------
clause (c) of the definition of such term which is not expressly
subordinated by its terms to the Obligations.
"Environmental Insurance Recoveries": any recoveries (whether
----------------------------------
consisting of payments of claims or amounts received pursuant to, or in
settlement of, litigation) from insurance carriers representing amounts
asserted as owing to the Company or its Subsidiaries under insurance
policies in respect of environmental claims or liabilities.
"Environmental Laws": any and all foreign, Federal, state, local or
------------------
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of any Governmental Authority or other Requirements
of Law (including common law) regulating, relating to or imposing liability
or standards of conduct concerning protection of human health or the
environment, as now or may at any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
<PAGE>
12
"Eurocurrency Base Rate": with respect to each day during each
----------------------
Interest Period pertaining to a Eurocurrency Loan, the rate per annum
determined by the Administrative Agent at approximately 11:00 A.M., London
time, on the date which is two Business Days prior to the beginning of such
Interest Period (or, with respect to Loans or Letters of Credit in Pounds,
on the first Business Day of such Interest Period) by reference to the
"British Bankers' Association Interest Settlement Rates" for deposits in
the currency of such Loan (as set forth by any service selected by the
Administrative Agent which has been nominated by the British Bankers'
Association as an authorized information vendor for the purpose of
displaying such rates) for a period equal to such Interest Period (rounded,
if necessary, upward to the nearest whole multiple of 1/16th of 1%) plus,
in the case of any such Eurocurrency Loan denominated in Pounds, the MLA
Cost. In the event that such rate is not ascertainable pursuant to the
foregoing provisions of this definition, the Eurocurrency Base Rate shall
be determined by reference to the rate at which the Administrative Agent is
offered deposits in the currency of such Loan at or about 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest
Period (or, with respect to Loans or Letters of Credit in Pounds, on the
first Business Day of such Interest Period) in the interbank eurocurrency
market where its eurocurrency and foreign currency and exchange operations
are then being conducted for delivery on the first day of such Interest
Period for the number of days comprised therein.
"Eurocurrency Loans": Loans the rate of interest applicable to which
------------------
is based upon the Eurocurrency Rate.
"Eurocurrency Rate": with respect to each day during each Interest
-----------------
Period pertaining to a Eurocurrency Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurocurrency Base Rate
------------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurocurrency Reserve Requirements": for any day as applied to a
---------------------------------
Eurocurrency Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on such
day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a
member bank of the Federal Reserve System.
"Eurocurrency Tranche": the collective reference to Eurocurrency
--------------------
Loans the then current Interest Periods with respect to all of which begin
on the same date and end on the same later date (whether or not such Loans
shall originally have been made on the same day).
"European Receivables Facility": the receivables purchase or
-----------------------------
refinancing agreements among EHE and/or its Subsidiaries and one or more
European Receivables Financiers; provided, that no recourse shall be
--------
provided to the Company
<PAGE>
13
or any of its Subsidiaries (other than the European Receivables
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 the European Receivables Subsidiaries) in
connection therewith.
"European Receivables Facility Attributed Indebtedness": at any time,
-----------------------------------------------------
the amount equal to (a) the aggregate amount theretofore paid to EHE 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 EHE and/or its Subsidiaries minus (b) any cash and
Cash Equivalents then held as collateral security by the European
Receivables Financier on account of amounts owing to the European
Receivables Financier under the European Receivables Facility (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, after reduction for such cash and Cash Equivalent collateral, 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 EHE and its
Subsidiaries) pursuant to the European Receivables Facility as then in
effect.
"European Receivables Maximum Commitment Amount": $175,000,000.
----------------------------------------------
"European Receivables Subsidiaries": shall mean two Wholly-Owned
---------------------------------
Subsidiaries of EHE 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 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 by filing with the Administrative Agent an
officer's certificate of the
<PAGE>
14
Company certifying that, to the best of such officer's knowledge and belief
after consultation with counsel, such designation complies with the
foregoing conditions.
"Event of Default": any of the events specified in Section 9,
----------------
provided that any requirement for the giving of notice, the lapse of time,
--------
or both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Company, the excess,
----------------
if any, of (a) the sum, without duplication, of (i) Consolidated Net Income
for such fiscal year, (ii) an amount equal to the amount of all non-cash
charges (including depreciation and amortization) deducted in arriving at
such Consolidated Net Income, (iii) decreases in Consolidated Working
Capital for such fiscal year, (iv) an amount equal to the aggregate net
non-cash loss on the Disposition of Property by the Company and its
Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent deducted in arriving at such
Consolidated Net Income and (v) the net increase during such fiscal year
(if any) in deferred tax accounts of the Company over (b) the sum, without
----
duplication, of (i) an amount equal to the amount of all non-cash credits
included in arriving at such Consolidated Net Income, (ii) the aggregate
amount actually paid by the Company and its Subsidiaries in cash during
such fiscal year on account of Capital Expenditures (excluding the
principal amount of Indebtedness incurred in connection with such
expenditures and any such expenditures financed with the proceeds of any
Reinvestment Deferred Amount), (iii) the aggregate amount of all
prepayments of Revolving Credit Loans and Swing Line Loans during such
fiscal year to the extent accompanying permanent optional reductions of the
Revolving Credit Commitments, other than as a result of the commitment
reductions set forth in Section 3.5, (iv) all optional prepayments of the
Term Loans during such fiscal year, other than as a result of the mandatory
prepayments set forth in Section 3.5, (iv) the aggregate amount of all
regularly scheduled principal payments of Funded Debt (including, without
limitation, the Term Loans) of the Company and its Subsidiaries made during
such fiscal year (other than in respect of any revolving credit facility to
the extent there is not an equivalent permanent reduction in commitments
thereunder), (v) increases in Consolidated Working Capital for such fiscal
year, (vi) an amount equal to the aggregate net non-cash gain on the
Disposition of Property by the Company and its Subsidiaries during such
fiscal year (other than sales of inventory in the ordinary course of
business), to the extent included in arriving at such Consolidated Net
Income, (vii) the net decrease during such fiscal year (if any) in deferred
tax accounts of the Company and (viii) any cash Restructuring Charges
during such fiscal year.
"Excess Cash Flow Application Date": as defined in Section 3.5(c).
---------------------------------
"Existing Mortgage Assignment": the Assignments of Mortgage and/or
----------------------------
Deed of Trust, in form and substance reasonably satisfactory to the Agents,
executed by Bankers Trust Company, as agent under the Existing Domestic
Credit Agreement, as assignor pursuant to which Bankers Trust Company, as
agent under the Existing Domestic Credit Agreement shall assign all of its
right, title and interest in, to and under each of the Existing Mortgages
to the Administrative Agent for the benefit of the Lenders.
<PAGE>
15
"Existing Mortgage Amendments": the Amendments to Mortgage and/or
----------------------------
Deed of Trust, in form and substance reasonably satisfactory to the Agents,
executed by the Loan Party party to the Existing Mortgage, pursuant to
which, inter alia, each Existing Mortgage shall be amended to reflect the
----- ----
refinancing of the Existing Domestic Credit Agreement.
"Existing Mortgages": the mortgages and deeds of trust made by any of
------------------
the Loan Parties in favor of Bankers Trust Company, as agent under the
Existing Domestic Credit Agreement, pursuant to the Existing Domestic
Credit Agreement, other than the mortgages and deeds of trust encumbering
real property which is sold pursuant to the GE Sale-Leaseback.
"Facility": each of (a) the Tranche A Term Loan Commitments and the
--------
Tranche A Term Loans made thereunder (the "Tranche A Term Loan Facility"),
----------------------------
(b) the Tranche B Term Loan Commitments and the Tranche B Term Loans made
thereunder (the "Tranche B Term Loan Facility") and (c) the Revolving
----------------------------
Credit Commitments and the extensions of credit made thereunder (the
"Revolving Credit Facility").
-------------------------
"Facility Fee Rate": 1/2 of 1% per annum; provided, that on and after
----------------- --------
the first Adjustment Date occurring after the completion of two full fiscal
quarters of the Company after the Closing Date, the Facility Fee Rate will
be determined pursuant to the Pricing Grid.
"Federal Funds Effective Rate"; for any day, the weighted average of
----------------------------
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Reference Lender from three federal funds brokers of recognized
standing selected by it.
"Foreign Alternate Rate Loans": Loans in any Optional Currency the
----------------------------
rate of interest applicable to which is based upon:
(a) in the case of Swing Line Loans denominated in any Optional
Currency, the rate of interest per annum maintained by the relevant
Swing Line Lender as the rate of interest (in the absence of a
eurocurrency rate) it charges borrowers of similar quality as the
relevant Borrower of such Loans in effect at its principal office for
dealings in such Optional Currency; and
(b) in the case of each Loan (other than Swing Line Loans)
denominated in any Optional Currency, the rate of interest per annum
which is negotiated in good faith by the Administrative Agent and the
relevant Borrower from time to time and approved by the Lenders
holding not less than 80% of the affected Loans.
Notwithstanding anything to the contrary contained herein, Loans (other
than Swing Line Loans) may be made or maintained as Foreign Alternate Rate
Loans only to the extent specified in Section 3.10 or 3.15.
<PAGE>
16
"Foreign Lender": any Lender which has (i) a Tranche A Term Loan
--------------
Commitment or made Tranche A Term Loans, (ii) made Tranche B Term Loans to
any Borrowing Subsidiary or (iii) a Revolving Credit Commitment or made
Revolving Credit Loans to any Borrowing Subsidiary or purchased
participating interests in Letters of Credit or Swing Line Loans issued for
the account of or made to any Borrowing Subsidiary.
"Foreign Obligations": the unpaid principal of and interest on
-------------------
(including, without limitation, interest accruing after the maturity of the
Loans made to any of the Borrowing Subsidiaries and Reimbursement
Obligations of any Borrowing Subsidiary and interest accruing after the
filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to any of the
Borrowing Subsidiaries, whether or not a claim for post-filing or post-
petition interest is allowed in such proceeding) the Loans made to any of
the Borrowing Subsidiaries and all other obligations and liabilities of any
of the Borrowing Subsidiaries to the Administrative Agent or to any Lender
(or, in the case of Interest Rate Protection Agreements, any affiliate of
any Lender), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under,
out of, or in connection with, this Agreement, any other Loan Document, the
Letters of Credit, any Interest Rate Protection Agreement entered into with
any Lender or any affiliate of any Lender, any foreign currency hedge
agreement or swap entered into with any Lender or any affiliate of any
Lender, or any other document made, delivered or given in connection
herewith or therewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by any
of the Borrowing Subsidiaries pursuant hereto) or otherwise.
"Foreign Obligations Guarantor Joinder Agreement": the Foreign
-----------------------------------------------
Obligations Guarantor Joinder Agreement, substantially in the form of
Exhibit E.
"Foreign Subsidiary": any Subsidiary of the Company that is not a
------------------
Domestic Subsidiary.
"Foreign Subsidiary Guarantor": each Domestic Subsidiary and each
----------------------------
Foreign Subsidiary which has guaranteed all or any portion of the Foreign
Obligations.
"Franc Equivalent": with respect to any amount at any date of
----------------
determination thereof, the sum of (x) for any such amount denominated in
Francs, such amount and (y) for any such amount denominated in any currency
other than Francs, an amount in Francs equivalent to such principal amount
or such other amount calculated on the basis of the Spot Rate of Exchange
on such date of determination.
"Francs" and "Ffr": francs in lawful currency of the Republic of
------ ---
France.
"Funded Debt": as to any Person, all Indebtedness of such Person that
-----------
matures more than one year from the date of its creation or matures within
one year from such date but is renewable or extendible, at the option of
such Person, to a date more than one year from such date or arises under a
revolving credit or similar agreement
<PAGE>
17
that obligates the lender or lenders to extend credit during a period of
more than one year from such date, including, without limitation, all
current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the
date of its creation and, in the case of the Company, Indebtedness in
respect of the Loans.
"Funding Office": with respect to any currency the office specified
--------------
from time to time by the Administrative Agent as its funding office for
such currency by notice to the relevant Borrower and the Lenders.
"GAAP": generally accepted accounting principles in the United States
----
of America as in effect from time to time, except that for purposes of
Section 8.1, GAAP shall be determined on the basis of such principles in
effect on the date hereof and consistent with those used in the preparation
of the most recent audited financial statements delivered pursuant to
Section 5.1(b). In the event that any "Accounting Change" (as defined
below) shall occur and such change results in a change in the method of
calculation of financial covenants, standards or terms in this Agreement,
then the Company and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Company's financial condition shall be the same
after such Accounting Changes as if such Accounting Changes had not been
made. Until such time as such an amendment shall have been executed and
delivered by the Company, the Administrative Agent and the Required
Lenders, all financial covenants, standards and terms in this Agreement
shall continue to be calculated or construed as if such Accounting Changes
had not occurred. "Accounting Changes" refers to changes in accounting
principles required by the promulgation of any rule, regulation,
pronouncement or opinion by the Financial Accounting Standards Board of the
American Institute of Certified Public Accountants or, if applicable, the
Securities and Exchange Commission (or successors thereto or agencies with
similar functions).
"GE Sale-Leaseback": the sale by the Company to General Electric
-----------------
Capital Corporation of up to $50,000,000 of certain manufacturing and
related equipment of the Company and the subsequent lease by the Company
from General Electric Capital Corporation of such facility pursuant to the
sale and lease documentation in connection therewith as in effect on the
Closing Date (and any amendments thereto which do not adversely impact the
Lenders in any material respect).
"Governmental Authority": any nation or government, any state or
----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government (including, without limitation, for purposes of
Section 3.12 only, the National Association of Insurance Commissioners).
"Guarantee Obligation": as to any Person (the "guaranteeing person"),
-------------------- -------------------
any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to
induce the creation of which the guaranteeing person has issued a
reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness,
<PAGE>
18
leases, dividends or other obligations (the "primary obligations") of any
-------------------
other third Person (the "primary obligor") in any manner, whether directly
---------------
or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (i) to purchase any such
primary obligation or any Property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or payment
of any such primary obligation or (2) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase Property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation or (iv) otherwise to assure or hold harmless the
owner of any such primary obligation against loss in respect thereof;
provided, however, that the term Guarantee Obligation shall not include
-------- -------
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount equal
to the stated or determinable amount of the primary obligation in respect
of which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the Company in
good faith.
"Guaranteed Party": any of the Company or any Borrowing Subsidiary,
----------------
in its capacity as the party whose obligations under this Agreement and
under the other Loan Documents are guaranteed as provided in Section 10.
"Guarantor" or "Guarantors": the individual or collective reference
--------- ----------
to the Company (in its capacity as guarantor of the Foreign Obligations)
and the Subsidiary Guarantors.
"Indebtedness": of any Person at any date, without duplication, (a)
------------
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of Property or services (other
than current trade payables incurred in the ordinary course of such
Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to Property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such Property), (e)
all Capital Lease Obligations of such Person, (f) all obligations of such
Person, contingent or otherwise, as an account party under acceptance,
letter of credit or similar facilities, (g) all obligations of such Person,
contingent or otherwise, to purchase, redeem, retire or otherwise acquire
for value any Capital Stock (other than common stock) of such Person, (h)
all Guarantee Obligations of such Person in respect of obligations of the
kind referred to in clauses (a) through (g) above; (i) all obligations of
the kind referred to in clauses (a) through (h) above secured by (or for
which the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien
<PAGE>
19
on Property (including, without limitation, accounts and contract rights)
owned by such Person, whether or not such Person has assumed or become
liable for the payment of such obligation, (j) for the purposes of Section
9(e) only, all obligations of such Person in respect of Interest Rate
Protection Agreements and foreign currency hedges and swaps and (k) the
liquidation value of any mandatorily redeemable preferred Capital Stock of
such Person or its Subsidiaries held by any Person other than such Person
and its Wholly Owned Subsidiaries.
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intellectual Property": the collective reference to all rights,
---------------------
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses, technology, know-how and
processes, and all rights to sue at law or in equity for any infringement
or other impairment thereof, including the right to receive all proceeds
and damages therefrom.
"Interest Payment Date": (a) as to any Base Rate Loan, the third
---------------------
Business Day of each January, April, July and October (commencing with
April 3, 1998) for the period ending on (and including) the last day of the
immediately preceding December, March, June or September, respectively, and
the final maturity date of such Loan, (b) as to any Eurocurrency Loan
having an Interest Period of three months or less, the last day of such
Interest Period, (c) as to any Eurocurrency Loan having an Interest Period
longer than three months, each day which is three months, or a whole
multiple thereof, after the first day of such Interest Period and the last
day of such Interest Period, (d) as to any Foreign Alternate Rate Loan, the
date or dates determined in good faith by the Administrative Agent (and
notified to the Company) as being customary in the relevant jurisdiction
for the payment of interest on borrowings utilizing such interest rate
basis and (e) as to any Loan (other than any Revolving Credit Loan that is
a Base Rate Loan and any Swing Line Loan), the date of any repayment or
prepayment made in respect thereof.
"Interest Period": as to any Eurocurrency Loan, (a) initially, the
---------------
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurocurrency Loan and ending one, two, three or six
months thereafter, as selected by the relevant Borrower in its notice of
borrowing or notice of conversion, as the case may be, given with respect
thereto; and (b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurocurrency Loan and
ending one, two, three or six months thereafter, as selected by the
relevant Borrower by irrevocable notice to the Administrative Agent not
less than three Business Days prior to the last day of the then current
Interest Period with respect thereto; provided that, all of the foregoing
--------
provisions relating to Interest Periods are subject to the following:
<PAGE>
20
(i) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be extended to
the next succeeding Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month in
which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period that would otherwise extend
beyond the Scheduled Revolving Credit Termination Date or beyond the
date final payment is due on the Tranche A Term Loans or the Tranche B
Term Loans, as the case may be, shall end on the Revolving Credit
Termination Date or such due date, as applicable;
(iii) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period; and
(iv) each Borrower shall select Interest Periods so as not
to require a payment or prepayment of any Eurocurrency Loan during an
Interest Period for such Loan.
"Interest Rate Protection Agreement": any interest rate protection
----------------------------------
agreement, interest rate futures contract, interest rate option, interest
rate cap or other interest rate hedge arrangement, to or under which the
Company or any of its Subsidiaries is a party or a beneficiary on the date
hereof or becomes a party or a beneficiary after the date hereof.
"Issuing Lender": the collective reference to (a) Credit Suisse First
--------------
Boston and (b) any other Revolving Credit Lender (together with any of its
Affiliates) selected by the Company with the approval of the Administrative
Agent (and with the consent of such proposed Issuing Lender), in each case
in its capacity as issuer of any Letter of Credit; provided that, with
--------
respect to each letter of credit which is listed on Schedule 1.1F and which
is a "Letter of Credit" hereunder pursuant to the provisions of Section
4.9, the Issuing Lender shall be the Lender who is the issuer thereof.
"L/C Commitment": at any date, the amount equal to (a) $20,000,000
--------------
plus (b) so long as any Letter of Credit described on Schedule 1.1F (or any
replacement thereof) remains outstanding, the amount set forth on said
Schedule 1.1F with respect thereto.
"L/C Fee Payment Date": the third Business Day of each January,
--------------------
April, July and October (commencing with April 3, 1998) for the period
ending on (and including) the last day of the immediately preceding
December, March, June or September, respectively, and the last Business Day
of the Revolving Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a) the
---------------
aggregate then undrawn and unexpired amount of the then outstanding Letters
of
<PAGE>
21
Credit and (b) the aggregate amount of drawings under Letters of Credit
which have not then been reimbursed pursuant to Section 4.4.
"L/C Participants": the collective reference to all the Revolving
----------------
Credit Lenders other than the Issuing Lender.
"Letters of Credit": as defined in Section 4.1(a).
-----------------
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
----
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention agreement
and any capital lease having substantially the same economic effect as any
of the foregoing).
"Lira" and "Lit": lira in lawful currency of Italy.
---- ---
"Loan": any loan made by any Lender pursuant to this Agreement.
----
"Loan Documents": this Agreement, the Security Documents and the
--------------
Notes.
"Loan Parties": the Company, the Borrowing Subsidiaries and each
------------
other Subsidiary of the Company which is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
-------------------------
holders of more than 50% of the aggregate unpaid principal amount of the
Term Loans (and, in the case of the Tranche B Term Loan Facility, the
undrawn portion thereof) or the Total Revolving Extensions of Credit, as
the case may be, outstanding under such Facility (or, in the case of the
Revolving Credit Facility prior to any termination of the Revolving Credit
Commitments, the holders of more than 50% of the Total Revolving Credit
Commitments).
"Majority Foreign Lenders": with respect to any Optional Currency,
------------------------
the holders of more than 50% of the sum of (i) aggregate unpaid principal
amount of the Tranche A Term Loans made in such Optional Currency and (b)
the Total Revolving Extensions of Credit in such Optional Currency.
"Majority Revolving Credit Facility Lenders": the Majority Facility
------------------------------------------
Lenders in respect of the Revolving Credit Facility.
"Majority Subsidiary": a Subsidiary of a Wholly Owned Subsidiary of
-------------------
the Company that has been capitalized with an investment permitted under
Section 8.8(i).
"Marks" and "DM": deutsche marks in lawful currency of Germany.
----- --
"Material Adverse Effect": a material adverse effect on (a) the
-----------------------
business, assets, property, condition (financial or otherwise) or prospects
of the Company and its Subsidiaries taken as a whole or (b) the validity or
enforceability of this Agreement or
<PAGE>
22
any of the other Loan Documents or the rights or remedies of the Agents or
the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by the Company
-----------------------------
and/or its Subsidiaries on account of remedial costs, compliance costs
(other than amounts expended in the ordinary course of business and
consistent with past practice in order to avoid creating new liability
under Environmental Laws), compensatory damages, punitive damages, fines,
penalties or any combination thereof relating to environmental matters
which, in the aggregate with all other such payments made during any period
of 12 consecutive calendar months, is in excess of $5,000,000 (without
regard to amounts as to which reserves in conformity with GAAP have been
provided on the books of the Company or its Subsidiaries, as the case may
be, and which are disclosed in the Company's March 31, 1997 annual audited
financial statements provided to the Lenders).
"Material Subsidiary": any Subsidiary of the Company which has assets
-------------------
with a book value in excess of $250,000.
"Materials of Environmental Concern": any gasoline or petroleum
----------------------------------
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls, urea-formaldehyde insulation and lead.
"MLA Cost" means, with respect to any Lender, the cost imputed to such
--------
Lender of compliance with the Mandatory Liquid Assets requirements of the
Bank of England during the relevant Interest Period, determined in
accordance with Annex B.
"Mortgaged Properties": the real properties listed on Schedule 1.1D,
--------------------
as to which the Administrative Agent for the benefit of the Lenders shall
be granted a Lien pursuant to the Mortgages.
"Mortgages": each of the Existing Mortgages, as assigned pursuant to
---------
the relevant Existing Mortgage Assignment and as amended by the relevant
Existing Mortgage Amendment, and as each of the same may be further
amended, supplemented, restated, replaced or otherwise modified from time
to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
-----------------
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, reasonable amounts consistent
with past business practices of the Company and its Subsidiaries which are
required to prepare for sale the asset which is the subject of such Asset
Sale, amounts required to be applied to the repayment of Indebtedness
secured by a Lien expressly permitted
<PAGE>
23
hereunder on any asset which is the subject of such Asset Sale or Recovery
Event (other than any Lien pursuant to a Security Document) and other
customary fees and expenses actually incurred in connection therewith and
net of taxes paid or reasonably estimated to be payable as a result thereof
(after taking into account any available tax credits or deductions and any
tax sharing arrangements) and (b) in connection with any issuance or sale
of equity securities or debt securities or instruments or the incurrence of
loans, the cash proceeds received from such issuance or incurrence, net of
attorneys' fees, investment banking fees, accountants' fees, underwriting
discounts and commissions and other customary fees and expenses actually
incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 3.13(a).
------------------
"Non-U.S. Lender": as defined in Section 3.13(d).
---------------
"Notes": the collective reference to any promissory note evidencing
-----
Loans.
"Obligations": the collective reference to the Domestic Obligations
-----------
and the Foreign Obligations.
"Optional Currencies": Marks, Pounds, Francs and, with respect to
-------------------
Swing Line Loans and Letters of Credit only, Pesetas, and, with respect to
Letters of Credit only, Lira and any other foreign currency which is
acceptable to the Issuing Lender in its sole discretion.
"Other Taxes": any and all present or future stamp or documentary
-----------
taxes or any other excise or property taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement.
"Participant": as defined in Section 12.6(b).
-----------
"Payment Office": with respect to any currency the office specified
--------------
from time to time by the Administrative Agent as its payment office for
such currency by notice to the relevant Borrower and the Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Acquisition": the acquisition by the Company or any of its
---------------------
Subsidiaries of (a) all or substantially all of the assets of any Person or
any product line or division thereof or (b) all of the Capital Stock (other
than directors' qualifying shares) of any Person (whether by purchase or
merger); provided, that any such acquisition shall be a Permitted
--------
Acquisition only if the assets acquired will be used solely in, or the
business of the Person whose stock is acquired consists solely of, any or
all of the same business lines to the extent permitted by Section 8.15.
Notwithstanding the foregoing, any acquisition described on Schedule 1.1E
shall be deemed to constitute a Permitted Acquisition for purposes of this
definition.
<PAGE>
24
"Permitted Acquisition Maximum Amount": at any time during any fiscal
------------------------------------
year of the Company, an amount equal to the difference (but not less than
zero) between:
(i) the sum of (x) $80,000,000 and (y) the Available ECF Amount;
and
(ii) the sum of (x) the aggregate Purchase Prices of all
Permitted Acquisitions consummated since the Closing Date and (y) the
aggregate principal amount of Eligible Prepayment Debt which has been
prepaid, repurchased or redeemed during such fiscal year.
"Permitted Acquisition Notice": with respect to any Permitted
----------------------------
Acquisition, a written notice from the Company to the Agents and the
Lenders setting forth (in reasonable detail) (i) the date upon which such
Permitted Acquisition is scheduled to be consummated (it being understood
that any delay in such date shall not, in itself, render such notice
invalid), (ii) the estimated Purchase Price for such Permitted Acquisition
and the nature of the consideration to be paid, (iii) a description of the
stock and/or assets to be acquired in connection with such Permitted
Acquisition, (iv) the sources of cash to be utilized by the Company and its
Subsidiaries to finance such Permitted Acquisition and (v) in the case of
Designated Equity Amounts in the form of common stock of the Company issued
as consideration to the seller in connection with a Permitted Acquisition,
a description of the common stock to be issued in connection with the
consummation of such Permitted Acquisition and the estimated fair market
value thereof.
"Permitted Joint Venture": the acquisition by the Company (by merger,
-----------------------
purchase or otherwise) not constituting a Permitted Acquisition of shares
of the capital stock of or other equity interests in a Person or an
interest in a product line or division of a Person, pursuant to negotiated
joint venture or similar agreements with one or more other third-party
Persons that own or will own the remaining shares of the capital stock or
other equity interests in such Person or in such product line or division;
provided, that any such acquisition shall be a Permitted Joint Venture only
--------
if the assets acquired will be used solely in, or the business of the
Person whose stock is acquired consists solely of, any or all of the same
business lines to the extent permitted by Section 8.15.
"Person": an individual, partnership, corporation, limited liability
------
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Pesetas": pesetas in lawful currency of the Republic of Spain.
-------
"Plan": at a particular time, any employee benefit plan which is
----
covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreements": each of the pledge agreements which are executed
-----------------
by a Foreign Subsidiary with respect to Capital Stock it owns of another
Subsidiary or
<PAGE>
25
intercompany loans or receivables owing to it by another Subsidiary,
whether on or after the Closing Date (including, without limitation,
pursuant to Section 7.10).
"Pledged Stock": shall have the meaning assigned to such term (or any
-------------
analogous term) in the Pledge Agreements.
"Pounds" and "(Pounds)": pounds sterling in lawful currency of the
------ --------
United Kingdom.
"Pricing Grid": the pricing grid attached hereto as Annex A.
------------
"Pro Forma Balance Sheet": as defined in Section 5.1(a).
-----------------------
"Projections": as defined in Section 7.2(c).
-----------
"Properties": as defined in Section 5.17.
----------
"Property": any right or interest in or to property of any kind
--------
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Purchase Price": with respect to any Permitted Acquisition, the sum
--------------
(without duplication) of (a) the amount of cash paid by the Company and its
Subsidiaries in connection with such Permitted Acquisition, (b) Designated
Equity Amounts in connection with such Permitted Acquisition, (c) the
principal amount (or, if less, the accreted value) at the time of such
Permitted Acquisition of all Acquired Indebtedness in connection with such
Permitted Acquisition and (d) the aggregate fair market value of all other
consideration (including any contingent obligations and affiliated
contracts) given by the Borrower and its Subsidiaries in connection with
such Permitted Acquisition.
"Recovery Event": any settlement of or payment in respect of any
--------------
property or casualty insurance claim or any condemnation proceeding
relating to any asset of the Company or any of its Subsidiaries.
"Reference Lender": the Administrative Agent.
----------------
"Refunded Swing Line Loans": as defined in Section 2.7(b).
-------------------------
"Refunding Date": as defined in Section 2.7(c).
--------------
"Register": as defined in Section 12.6(d).
--------
"Regulation G": Regulation G of the Board as in effect from time to
------------
time.
"Regulation U": Regulation U of the Board as in effect from time to
------------
time.
"Reimbursement Obligation": the obligation of the relevant Borrower
------------------------
to reimburse the relevant Issuing Lender pursuant to Section 4.4 for
amounts drawn under Letters of Credit.
<PAGE>
26
"Reinvestment Deferred Amount": with respect to any Reinvestment
----------------------------
Event, the aggregate Net Cash Proceeds received by the Company or any of
its Subsidiaries in connection therewith which are not applied to prepay
the Term Loans or reduce the Revolving Credit Commitments pursuant to
Section 3.5(b) as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
------------------
which the Company has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
-------------------
Officer stating that no Event of Default has occurred and is continuing and
that the Company (directly or indirectly through a Subsidiary) intends and
expects to use all or a specified portion of the Net Cash Proceeds of an
Asset Sale or Recovery Event to acquire assets useful in its business;
provided that no such Reinvestment Notice shall be required to be delivered
--------
with respect to Asset Sales or Recovery Events, the Net Cash Proceeds with
respect to which do not exceed $5,000,000 (it being understood that this
shall not affect the obligation of the Company and its Subsidiaries to
apply the Net Cash Proceeds of such Asset Sale or Recovery Sale to the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments pursuant to Section 3.5(b)).
"Reinvestment Prepayment Amount": with respect to any Reinvestment
------------------------------
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Company's business.
"Reinvestment Prepayment Date": with respect to any Reinvestment
----------------------------
Event, the earlier of (a) the date occurring one year after such
Reinvestment Event and (b) the date on which the Company shall have
determined not to, or shall have otherwise ceased to, acquire assets useful
in the Company's business with all or any portion of the relevant
Reinvestment Deferred Amount.
"Related Guaranteed Obligations": with respect to any Guarantor, the
------------------------------
obligations of each Guaranteed Party which such Guarantor is guaranteeing
pursuant to Section 10.
"Related Guaranteed Party": with respect to any Guarantor, the
------------------------
Guaranteed Party whose obligations it is guaranteeing pursuant to Section
10.
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b) of
----------------
ERISA, other than those events as to which the thirty day notice period is
waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg. (S)
2615.
"Required Foreign Lenders": the holders of more than 50% of (a) until
------------------------
the Closing Date, the sum of the Tranche A Term Loan Commitments and the
Revolving Credit Commitments and (b) thereafter, the sum of the Dollar
Equivalent of (i) the
<PAGE>
27
aggregate unpaid principal amount of the Tranche A Term Loans, (ii) the
aggregate unpaid principal amount of the Tranche B Term Loans (and, in the
case of the Tranche B Term Loan Facility, the undrawn portion thereof) made
to any Borrowing Subsidiary and (iii) the Total Revolving Credit
Commitments or, if the Revolving Credit Commitments have been terminated,
the Total Revolving Extensions of Credit in respect of any Borrowing
Subsidiary.
"Required Lenders": the holders of more than 50% of (a) until the
----------------
Closing Date, the Commitments and (b) thereafter, the sum of the Dollar
Equivalent of (i) the aggregate unpaid principal amount of the Term Loans
(and, in the case of the Tranche B Term Loan Facility, the undrawn portion
thereof) and (ii) the Total Revolving Credit Commitments or, if the
Revolving Credit Commitments have been terminated, the Total Revolving
Extensions of Credit.
"Required Prepayment Lenders": the Majority Facility Lenders in
---------------------------
respect of each Facility.
"Requirement of Law": as to any Person, the Certificate of
------------------
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Responsible Officer": the chief executive officer, president or
-------------------
chief financial officer of the Company, but in any event, with respect to
financial matters, the chief financial officer of the Company.
"Restructuring Charges": the aggregate amount of any cash
---------------------
expenditures made by the Borrower and its Subsidiaries which constitute a
utilization by the Borrower and its Subsidiaries of reserves maintained for
severance, plant closings and similar restructuring charges.
"Revolving Credit Commitment": as to any Revolving Credit Lender, the
---------------------------
obligation of such Lender, if any, to make Revolving Credit Loans and
participate in Swing Line Loans and Letters of Credit, the Dollar
Equivalent of which shall be in an aggregate principal and/or face amount
not to exceed the amount set forth under the heading "Revolving Credit
Commitment" opposite such Lender's name on Schedule 1.1A, as the same may
be changed from time to time pursuant to the terms hereof. The original
amount of the Total Revolving Credit Commitments is $250,000,000, of which
not more than $100,000,000 in the aggregate may be borrowed by the Company.
"Revolving Credit Commitment Period": the period from and including
----------------------------------
the date hereof to but not including the Termination Date or such earlier
date on which the Revolving Credit Commitments shall terminate as provided
herein.
"Revolving Credit Lender": each Lender which has a Revolving Credit
-----------------------
Commitment or which has made Revolving Credit Loans.
<PAGE>
28
"Revolving Credit Loans": as defined in Section 2.4.
----------------------
"Revolving Credit Percentage": as to any Revolving Credit Lender at
---------------------------
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the Total Revolving Credit Commitments (or, at any time
after the Revolving Credit Commitments shall have expired or terminated,
the percentage which the Dollar Equivalent of the aggregate principal
amount of such Lender's Revolving Extensions of Credit then outstanding
constitutes of the Dollar Equivalent of the aggregate principal amount of
the Revolving Extensions of Credit then outstanding).
"Revolving Credit Termination Date": the earlier of (a) the Scheduled
---------------------------------
Revolving Credit Termination Date and (b) the date on which the Tranche A
Term Loans shall be paid in full.
"Revolving Extensions of Credit": as to any Revolving Credit Lender
------------------------------
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding,
(b) such Lender's Revolving Credit Percentage of the L/C Obligations then
outstanding and (c) such Lender's Revolving Credit Percentage of the sum of
all Swing Line Maximums then in effect.
"Scheduled Revolving Credit Termination Date": December 18, 2003.
-------------------------------------------
"Schumacher Acquisition": the acquisition by the Company of an
----------------------
Illinois incorporated battery charger company for an aggregate Purchase
Price of approximately $35,000,000.
"Security Documents": the collective reference to the Collateral
------------------
Agreement, the Pledge Agreements, the Mortgages, the UK Mortgages, the
Collateral Agency and Intercreditor Agreement, and all other security
documents hereafter delivered to the Administrative Agent granting a Lien
on any Property of any Person to secure the obligations and liabilities of
any Loan Party under any Loan Document.
"Senior 10% Note Indenture": the Indenture, dated as of April 28,
-------------------------
1995, between the Company and The Bank of New York, as trustee, pursuant to
which the Senior 10% Notes were issued, as amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof
and thereof.
"Senior 10% Notes": the 10% Senior Notes due 2004 of the Company,
----------------
issued pursuant to the Senior 10% Note Indenture.
"Senior 10-3/4% Notes": the 10-3/4% Senior Notes due December 15,
--------------------
2002 of the Company.
"Single Employer Plan": any Plan which is covered by Title IV of
--------------------
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
-------
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such
<PAGE>
29
Person on a going concern basis will, as of such date, exceed the amount of
all "liabilities of such Person, contingent or otherwise", as of such date,
as such quoted terms are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors, (b)
the present fair saleable value of the assets of such Person on a going
concern basis will, as of such date, be greater than the amount that will
be required to pay the liability of such Person on its debts as such debts
become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they mature.
For purposes of this definition, (i) "debt" means liability on a "claim",
and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured or (y) right to an equitable remedy for breach of performance if
such breach gives rise to a right to payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured or
unmatured, disputed, undisputed, secured or unsecured.
"Specified Change of Control": either (a) a "Change of Control" as
---------------------------
defined in the DM Agreement or the Senior 10% Note Indenture or (b) a
"Fundamental Change" as defined in the Convertible Indenture.
"Spot Rate of Exchange": with respect to any Optional Currency, at
---------------------
any date of determination thereof, the spot rate of exchange in London that
appears on the display page applicable to such Optional Currency on the
Telerate System Incorporated Service (or such other page as may replace
such page on such service for the purpose of displaying the spot rate of
exchange in London) for the conversion of such Optional Currency into
Dollars; provided that if there shall at any time no longer exist such a
--------
page on such service, the spot rate of exchange shall be determined by
reference to another similar rate publishing service selected by the
Administrative Agent and if no such similar rate publishing service is
available by reference to the published rate of the Administrative Agent in
effect at such date for similar commercial transactions.
"Standard Securitization Undertakings": representations, warranties,
------------------------------------
covenants and indemnities entered into by the Company or any of its
Subsidiaries in connection with the Domestic Receivables Facility or the
European Receivables Facility which are reasonably customary in an accounts
receivable transaction.
"Subsidiary": as to any Person, a corporation, partnership, limited
----------
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the happening
of a contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the time
owned, or the management of which is otherwise controlled, directly or
indirectly through one or more intermediaries, or both, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Company.
<PAGE>
30
"Subsidiary Guarantor" or "Subsidiary Guarantors": the individual or
-------------------- ---------------------
collective reference to the Domestic Subsidiary Guarantors and the Foreign
Subsidiary Guarantors.
"Swing Line Approval Limit": with respect to each Swing Line Lender
-------------------------
providing Swing Line Loans in Optional Currencies, the amount set forth
below opposite the name of such Lender.
<TABLE>
<CAPTION>
Swing Line Lender Amount
----------------- ------
<S> <C>
Credit Suisse First Boston FFr 240,000,000
</TABLE>
"Swing Line Commitment": the obligation of the Swing Line Lenders to
---------------------
make Swing Line Loans pursuant to Section 2.6 in an aggregate principal
amount at any one time outstanding not to exceed (a) in the case of Swing
Line Loans made to the Company, $10,000,000 and (b) in the case of Swing
Line Loans made to the Borrowing Subsidiaries, the Franc Equivalent of Ffr
240,000,000.
"Swing Line Lender": with respect to (a) Swing Line Loans to be made
-----------------
to the Company in Dollars, CoreStates Bank, N.A. (acting in its capacity as
a lender of Swing Line Loans) and (b) Swing Line Loans to be made to the
Borrowing Subsidiaries in any Optional Currency, the Lender (acting in its
capacity as a lender of Swing Line Loans) set forth below opposite such
Optional Currency:
<TABLE>
<CAPTION>
Currency Swing Line Lender
-------- -----------------
<S> <C>
Dollars CoreStates Bank, N.A.
Francs To be Determined
Marks To be Determined
Pounds Credit Suisse First Boston
Pesetas To be Determined
</TABLE>
; provided that, (x) no Swing Line Lender shall make Swing Line Loans in
--------
any currency other than the Optional Currency set forth above opposite its
name and Dollars and (y) with the consent of the Administrative Agent, the
Company may from time to time remove any of the foregoing Swing Line
Lenders (or any successor thereto) as a "Swing Line Lender" and substitute
therefor any other Lender who agrees (in its sole discretion) to serve in
such capacity with respect to the relevant currency.
"Swing Line Loans": as defined in Section 2.6.
----------------
"Swing Line Maximum": at any date, with respect to each Swing Line
------------------
Lender making Swing Line Loans in an Optional Currency, the amount set
forth below
<PAGE>
31
opposite the name of such Swing Line Lender (as such amount may be have
been adjusted through such date in accordance with the provisions of
Section 2.8);
Swing Line Lender Amount
----------------- ------
Credit Suisse First Boston FFr 240,000,000
"Swing Line Participation Amount": as defined in Section 2.8.
-------------------------------
"Term Loan Lender" or "Term Loan Lenders": the individual or
---------------- -----------------
collective reference to the Tranche A Term Loan Lenders and the Tranche B
Term Loan Lenders.
"Term Loans": the collective reference to the Tranche A Term Loans
----------
and Tranche B Term Loans.
"Total Revolving Credit Commitments": at any time, the aggregate
----------------------------------
amount of the Revolving Credit Commitments at such time.
"Total Revolving Extensions of Credit": at any time, the aggregate
------------------------------------
amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders at such time.
"Tranche A Term Loan": as defined in Section 2.1.
-------------------
"Tranche A Term Loan Commitment": as to any Lender, the obligation of
------------------------------
such Lender, if any, to make a Tranche A Term Loan to a Borrowing
Subsidiary hereunder in a principal amount not to exceed the amount set
forth under the heading "Tranche A Term Loan Commitment" opposite such
Lender's name on Schedule 1.1A. The original amount of the aggregate
Tranche A Term Loan Commitments of all Lenders is $150,000,000.
"Tranche A Term Loan Lender": each Lender which has a Tranche A Term
--------------------------
Loan Commitment or which has made a Tranche A Term Loan.
"Tranche A Term Loan Percentage": as to any Tranche A Term Loan Lender
------------------------------
at any time, the percentage which such Lender's Tranche A Term Loan
Commitment then constitutes of the aggregate Tranche A Term Loan
Commitments (or, at any time after the Closing Date, the percentage which
the aggregate principal amount of such Lender's Tranche A Term Loans then
outstanding constitutes of the aggregate principal amount of the Tranche A
Term Loans then outstanding).
"Tranche B Term Loan": as defined in Section 2.1.
-------------------
"Tranche B Term Loan Commitment": as to any Tranche B Term Loan Lender
------------------------------
the obligation of such Lender, if any, to make a Tranche B Term Loan to the
Company hereunder in a principal amount not to exceed the amount set forth
under the heading "Tranche B Term Loan Commitment" opposite such Lender's
name on Schedule 1.1A. The original amount of the aggregate Tranche B Term
Loan
<PAGE>
32
Commitments of all Lenders is $250,000,000, of which not more than
$75,000,000 in the aggregate may be borrowed by the Company.
"Tranche B Term Loan Lender": each Lender which has a Tranche B Term
--------------------------
Loan Commitment or which has made a Tranche B Term Loan.
"Tranche B Term Loan Percentage": as to any Lender at any time, the
------------------------------
percentage which such Lender's Tranche B Term Loan Commitment then
constitutes of the aggregate Tranche B Term Loan Commitments (or, at any
time after the Closing Date, the percentage which the aggregate principal
amount of such Lender's Tranche B Term Loans and commitment to make Tranche
B Term Loans after the Closing Date then outstanding constitutes of the
aggregate principal amount of the Tranche B Term Loans then outstanding and
the aggregate principal amount of the commitments of the Tranche B Term
Loan Lenders to make Tranche B Term Loans after the Closing Date);
provided, that solely for purposes of calculating the amount of each
--------
installment of Tranche B Term Loans (other than the last installment)
payable to a Term Loan Lender pursuant to Section 2.3(c), such Term Loan
Lender's Tranche B Term Loan Percentage shall be calculated as if it had
received the portion of any prior mandatory or optional prepayment
attributable to such Term Loan Lender's Tranche B Term Loans which shall
have been declined by such Term Loan Lender (or, in the case of any Term
Loan Lender which shall have acquired its Tranche B Term Loans by
assignment from another Person, by such other Person).
"Transferee": as defined in Section 12.18.
----------
"Type": as to any Loan, its nature as a Base Rate Loan or a
----
Eurocurrency Loan.
"UK Mortgages": each of (i) the Deed of Mortgage made by Big
------------
Batteries Limited in favor of the Administrative Agent for the benefit of
the Lenders with respect to the real property located in Cwmbran, Wales and
(ii) the Deed of Mortgage made by CMP Batteries Limited in favor of the
Administrative Agent for the benefit of the Lenders with respect to the
real property located in Hulton, England, and as each of the same may be
further amended, supplemented, restated, replaced or otherwise modified
from time to time.
"Uniform Customs": the Uniform Customs and Practice for Documentary
---------------
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
-----------------------
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries; provided, however, that each of the Foreign
-------- -------
Subsidiaries of the Company set forth in Schedule 1.1G shall be deemed to
be a "Wholly Owned Subsidiary" to the extent that the Company owns
beneficially at least the percentage of such Foreign Subsidiary set forth
opposite such Foreign Subsidiary's name on Schedule 1.1G.
<PAGE>
33
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that is
---------------------------------
a Wholly Owned Subsidiary of the Company.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
-----------------------------
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Company and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments. Subject to the terms and conditions
---------------------
hereof, (a) each Tranche A Term Loan Lender severally agrees to make term loans
in Dollars and Optional Currencies (a "Tranche A Term Loan") to each of the
-------------------
Borrowing Subsidiaries on the Closing Date in an aggregate amount for all the
Borrowing Subsidiaries not to exceed the amount of the Tranche A Term Loan
Commitment of such Lender and (b) each Tranche B Term Loan Lender severally
agrees to make a term loan in Dollars (a "Tranche B Term Loan") to each of the
-------------------
Borrowers on the Closing Date and to make up to one additional term loan to the
Borrowers during the period prior to February 22, 1998 in an aggregate amount
for all the Borrowers not to exceed the amount of the Tranche B Term Loan
Commitment of such Lender. The Term Loans may from time to time be Eurocurrency
Loans or Base Rate Loans, as determined by the relevant Borrower and notified to
the Administrative Agent in accordance with Sections 2.2 and 3.6 and, to the
extent permitted pursuant to the definition of such term, Foreign Alternate Rate
Loans.
2.2 Procedure for Term Loan Borrowing. The Company shall give the
---------------------------------
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 A.M., New York City time, in the case of
borrowings by the Company, and 12:00 Noon, London time, in the case of
borrowings by any Borrowing Subsidiary, in each case (a) three Business Days
prior to the requested Borrowing Date, in the case of Eurocurrency Loans, or (b)
one Business Day prior to the requested Borrowing Date, in the case of Base Rate
Loans) requesting that the Term Loan Lenders make the Term Loans to be made by
them on the requested Borrowing Date and specifying the amount to be borrowed;
provided that the aggregate amount of Tranche B Term Loans made by the Tranche B
- --------
Term Loan Lenders after the Closing Date (after giving effect to the making of
such requested Tranche B Term Loans) shall not exceed $75,000,000. Upon receipt
of such
<PAGE>
34
notice the Administrative Agent shall promptly notify each Term Loan Lender
thereof. Not later than (x) 12:00 Noon, New York City time with respect to
borrowings by the Company and (y) 12:00 Noon, London time with respect to
borrowings by the Borrowing Subsidiaries, on the requested Borrowing Date each
Term Loan Lender shall make available to the Administrative Agent at the Funding
Office an amount in immediately available funds in the relevant currency equal
to the Term Loan or Term Loans to be made by such Lender on such requested
Borrowing Date. The Administrative Agent shall make available to each Borrower
the aggregate of the amounts for such Borrower made available to the
Administrative Agent by the Term Loan Lenders in immediately available funds.
2.3 Repayment of Term Loans. (a) The Tranche A Term Loan of each
-----------------------
Tranche A Term Loan Lender shall mature in 24 consecutive quarterly installments
(other than with respect to the last installment, which shall be due on December
18, 2003), commencing on March 31, 1998, each of which shall be in an aggregate
amount equal to such Lender's Tranche A Term Loan Percentage of the amount equal
to (i) the Dollar Equivalent of the initial aggregate principal amount of the
Tranche A Term Loan of such Lender times (ii) the percentage set forth below
opposite the date upon which such installment is due:
Installment Percentage
----------- ----------
March 31, 1998 1.50%
June 30, 1998 1.50%
September 30, 1998 3.50%
December 31, 1998 3.50%
March 31, 1999 2.00%
June 30, 1999 2.00%
September 30, 1999 4.66%
December 31, 1999 4.66%
March 31, 2000 2.50%
June 30, 2000 2.50%
September 30, 2000 5.83%
December 31, 2000 5.83%
March 31, 2001 2.75%
June 30, 2001 2.75%
September 30, 2001 6.42%
December 31, 2001 6.42%
March 31, 2002 2.75%
June 30, 2002 2.75%
September 30, 2002 6.42%
December 31, 2002 6.42%
March 31, 2003 3.50%
June 30, 2003 3.50%
September 30, 2003 8.17%
December 18, 2003 8.17%
Notwithstanding anything to the contrary contained herein, amounts due pursuant
to this Section 2.3(a) need not be applied to repay the Tranche A Term Loans
owing in any particular currencies but rather shall be applied against any such
amounts owing in any such currencies as the Company shall elect.
<PAGE>
35
(b) The Tranche B Term Loan of each Tranche B Lender shall mature in
29 installments (other than with respect to the last installment, which shall be
due on March 18, 2005), commencing on March 31, 1998, each of which shall be in
an amount equal to such Lender's Tranche B Term Loan Percentage of the amount
equal to (i) the Dollar Equivalent of the initial aggregate principal amount of
the Tranche B Term Loans of such Lender times (ii) the percentage set forth
below opposite the date upon which such installment is due:
Installment Percentage
----------- ----------
March 31, 1998 .15%
June 30, 1998 .15%
September 30, 1998 .35%
December 31, 1998 .35%
March 31, 1999 .15%
June 30, 1999 .15%
September 30, 1999 .35%
December 31, 1999 .35%
March 31, 2000 .15%
June 30, 2000 .15%
September 30, 2000 .35%
December 31, 2000 .35%
March 31, 2001 .15%
June 30, 2001 .15%
September 30, 2001 .35%
December 31, 2001 .35%
March 31, 2002 .15%
June 30, 2002 .15%
September 30, 2002 .35%
December 31, 2002 .35%
March 31, 2003 .15%
June 30, 2003 .15%
September 30, 2003 .35%
December 31, 2003 .35%
March 31, 2004 6.6%
June 30, 2004 6.6%
September 30, 2004 15.4%
December 31, 2004 15.4%
March 18, 2005 50.0%
(c) Any outstanding Tranche A Term Loans shall be due and payable on
December 18, 2003 and any outstanding Tranche B Term Loans shall be due and
payable on March 18, 2005.
2.4 Revolving Credit Commitments. (a) Subject to the terms and
----------------------------
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans in Dollars and in the Optional Currencies ("Revolving
---------
Credit Loans") to each of the Borrowers from time to time during the Revolving
- ------------
Credit Commitment Period in an aggregate principal amount at any one time
outstanding the Dollar Equivalent of which, when added to such Lender's
Revolving Credit Percentage of the sum of the Dollar Equivalent of (i) the L/C
<PAGE>
36
Obligations then outstanding and (ii) the aggregate principal amount of the
Swing Line Loans then outstanding, does not exceed the amount of such Lender's
Revolving Credit Commitment; provided, that:
--------
(i) no Borrower shall request and no Revolving Credit Lender shall
have any obligation to make any Revolving Credit Loan in any Optional
Currency to the extent that after giving effect to the making of such
Revolving Credit Loan, (A) the Dollar Equivalent of the Total Revolving
Extensions of Credit denominated in such Optional Currency would exceed the
Currency Maximum with respect to such Optional Currency or (B) the Dollar
Equivalent of the Total Revolving Extensions of Credit denominated in all
Optional Currencies would exceed $200,000,000; and
(ii) no Borrowing Subsidiary shall request and no Revolving Credit
Lender shall have any obligation to make any Revolving Credit Loan to the
extent that after giving effect to the making of such Revolving Credit
Loan, the Dollar Equivalent of the Total Revolving Extensions of Credit
with respect to such Borrowing Subsidiary would exceed such Borrowing
Subsidiary's Designated Maximum; and
(iii) SEA Tudor S.A. shall be permitted to borrow only Swing Line
Loans which are denominated in Pesetas (and any Revolving Credit Loans
necessary to refund such Swing Line Loans in accordance with the provisions
of Section 2.7).
During the Revolving Credit Commitment Period each of the Borrowers may use the
Revolving Credit Commitments by borrowing, prepaying the Revolving Credit Loans
in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
(b) Each of the Borrowers shall repay all outstanding Revolving
Credit Loans made to it on the Revolving Credit Termination Date.
2.5 Procedure for Revolving Credit Borrowing. (a) Each of the
----------------------------------------
Borrowers may borrow under the Revolving Credit Commitments during the Revolving
Credit Commitment Period on any Business Day, provided that the relevant
--------
Borrower shall give the Administrative Agent irrevocable notice (which notice
must be received by the Administrative Agent prior to 12:00 Noon, New York City
time, in the case of borrowings by the Company, and 12:00 Noon, London time, in
the case of borrowings by any Borrowing Subsidiary, in each case (a) three
Business Days prior to the requested Borrowing Date, in the case of Eurocurrency
Loans or Foreign Alternate Base Rate Loans, or (b) one Business Day prior to the
requested Borrowing Date, in the case of Base Rate Loans), specifying (i) the
amount and Type of Revolving Credit Loans to be borrowed, (ii) the requested
Borrowing Date, (iii) the currency in which such Revolving Credit Loans are to
be made and (iv) in the case of Eurocurrency Loans, the respective amounts of
each such Type of Loan and the respective lengths of the initial Interest Period
therefor. Each borrowing under the Revolving Credit Commitments shall be in an
amount equal to the Dollar Equivalent of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof (or, if such borrowing is to be made in any
Optional Currency, an amount in such Optional Currency approximately equal to
such amount); provided, that the Swing Line Lender may request, on behalf of the
--------
relevant Borrower, borrowings under the Revolving Credit Commitments which are
Base Rate Loans (in the case of Loans denominated in Dollars) or Eurocurrency
Loans (in the case of Loans denominated in any Optional Currency) in other
amounts pursuant to Section 2.6. Upon
<PAGE>
37
receipt of any such notice from a Borrower, the Administrative Agent shall
promptly notify each Revolving Credit Lender thereof. Each Revolving Credit
Lender will make the amount of its pro rata share of each borrowing available to
--- ----
the Administrative Agent for the account of the Company at the Funding Office
prior to 12:00 Noon, New York City time, in the case of borrowings by the
Company, and 12:00 Noon, London time, in the case of borrowings by any Borrowing
Subsidiary, in each case, on the Borrowing Date requested by the relevant
Borrower in funds immediately available to the Administrative Agent. The
Administrative Agent shall make available to the relevant Borrower the aggregate
of the amounts for such Borrower made available to the Administrative Agent by
the Revolving Credit Lenders in immediately available funds.
2.6 Swing Line Commitment. (a) Subject to the terms and conditions
---------------------
hereof, the Swing Line Lenders agree to make a portion of the credit otherwise
available to the Borrowers under the Revolving Credit Commitments from time to
time during the Revolving Credit Commitment Period by making swing line loans in
Dollars or any Optional Currency ("Swing Line Loans") to the Borrowers; provided
---------------- --------
that (i) the aggregate principal amount of Swing Line Loans outstanding to the
Company or the Borrowing Subsidiaries at any time shall not exceed the relevant
Swing Line Commitment then in effect, (ii) none of the Borrowers shall request,
and none of the Swing Line Lenders shall make, any Swing Line Loan in any
Optional Currency if, after giving effect to the making of such Swing Line Loan,
the aggregate amount of the Total Revolving Extensions of Credit denominated in
such Optional Currency would exceed the Currency Maximum with respect to such
Optional Currency, (iii) none of the Borrowers shall request, and none of the
Swing Line Lenders shall make, any Swing Line Loan in Pesetas if, after giving
effect to the making of such Swing Line Loan, the aggregate amount of Swing Line
Loans denominated in Pesetas would exceed the Franc Equivalent of Ffr 96,000,000
and (iv) none of the Borrowing Subsidiaries shall request, and none of the Swing
Line Lenders shall make, any Swing Line Loan if, after giving effect to the
making of such Swing Line Loan, (A) the aggregate amount of the Available
Revolving Credit Commitments would be less than zero, (B) the Total Revolving
Extensions of Credit with respect to such Borrowing Subsidiary would exceed such
Borrowing Subsidiary's Designated Maximum or (C) the aggregate amount of Swing
Line Loans made by such Swing Line Lender shall exceed the Swing Line Maximum
applicable to such Swing Line Lender. During the Revolving Credit Commitment
Period, the Borrowers may use the Swing Line Commitment by borrowing, repaying
and reborrowing, all in accordance with the terms and conditions hereof. Swing
Line Loans denominated in Dollars shall be Base Rate Loans and Swing Line Loans
denominated in any Optional Currency shall be Foreign Alternate Rate Loans.
(b) The relevant Borrower or Borrowers shall repay all outstanding
Swing Line Loans on the Revolving Credit Termination Date.
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line
-----------------------------------------------------------
Loans. (a) Whenever the Company desires that the relevant Swing Line Lender
make Swing Line Loans to it, the Company shall give such Swing Line Lender
irrevocable telephonic notice (which telephonic notice must be received by such
Swing Line Lender not later than 1:00 P.M., New York City time, on the proposed
Borrowing Date) confirmed promptly in writing (with a copy to the Administrative
Agent), specifying (i) the amount to be borrowed and (ii) the requested
Borrowing Date (which shall be a Business Day during the Revolving Credit
Commitment Period). Each borrowing by the Company under the Swing Line
Commitment
<PAGE>
38
shall be in an amount equal to $500,000 or a whole multiple of $100,000 in
excess thereof. Not later than 3:00 P.M., New York City time, on the requested
Borrowing Date, such Swing Line Lender shall make available to the Company, in
immediately available funds, the proceeds of such requested Swing Line Loan.
(b) Whenever a Borrowing Subsidiary desires that a Swing Line Lender
make Swing Line Loans to it, such Borrowing Subsidiary shall give to such Swing
Line Lender irrevocable telephonic notice (which telephonic notice must be
received by such Swing Line Lender not later than 10:00 A.M., London time (or
such other time as the Administrative Agent and the Swing Line Lender may
consent), on the proposed Borrowing Date) confirmed promptly in writing (with a
copy to the Administrative Agent), specifying (i) the amount and currency to be
borrowed, (ii) the requested Borrowing Date (which shall be a Business Day
during the Revolving Credit Commitment Period) and (iii) any other information
requested by the Swing Line Lender in accordance with its particular borrowing
procedures. Each borrowing under the Swing Line Commitment by a Borrowing
Subsidiary shall be in the amount equal to the Dollar Equivalent of $500,000 or
a whole multiple of $100,000 in excess thereof (or, if such borrowing is to be
made in any Optional Currency, an amount in such Optional Currency approximately
equal to such amount). Not later than 3:00 P.M., London time, on the requested
Borrowing Date, such Swing Line Lender shall make available to the relevant
Borrowing Subsidiary, in immediately available funds, the proceeds of such
requested Swing Line Loan.
(c) Each Swing Line Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of the relevant Borrower (which
hereby irrevocably directs the Swing Line Lender to act on its behalf), on (x)
one Business Day's notice in the case of Swing Line Loans made to the Company in
Dollars or (y) three Business Days' notice, otherwise, given by the Swing Line
Lender through the Administrative Agent no later than 12:00 Noon, New York City
time, in the case of borrowings by the Company, and 12:00 Noon, London time, in
the case of borrowings by any Borrowing Subsidiary, request each Revolving
Credit Lender to make, and each Revolving Credit Lender hereby agrees to make, a
Revolving Credit Loan, in an amount equal to such Revolving Credit Lender's
Revolving Credit Percentage of the aggregate amount of the outstanding Swing
Line Loans (the "Refunded Swing Line Loans") with respect to which such notice
-------------------------
has been given, to repay the requesting Swing Line Lender. Each Revolving Credit
Lender shall make the amount of such Revolving Credit Loan available to the
Administrative Agent at the Funding Office in immediately available funds, not
later than 1:00 P.M., New York City time, in the case of borrowings by the
Company, and 1:00 P.M., London time, in the case of borrowings by any Borrowing
Subsidiary, in each case, one Business Day (or three Business Days, as the case
may be) after the date of such notice. The proceeds of such Revolving Credit
Loans shall be immediately applied by the Swing Line Lender to repay the
Refunded Swing Line Loans. The relevant Borrower irrevocably authorizes the
Administrative Agent to charge such Borrower's accounts with the Administrative
Agent (up to the amount available in each such account) in order to immediately
pay the amount of such Refunded Swing Line Loans to the extent amounts received
from the Revolving Credit Lenders are not sufficient to repay in full such
Refunded Swing Line Loans.
(d) If prior to the time a Revolving Credit Loan would have otherwise
been made pursuant to Section 2.7(c), one of the events described in Section
9(f) shall have occurred and be continuing with respect to the Company or the
relevant Borrowing
<PAGE>
39
Subsidiary or if for any other reason, as determined by the Swing Line Lender in
its sole discretion, Revolving Credit Loans may not be made as contemplated by
Section 2.7(c), each Revolving Credit Lender shall, on the date such Revolving
Credit Loan was to have been made pursuant to the notice referred to in Section
2.7(c) (the "Refunding Date"), purchase for cash an undivided participating
--------------
interest in an amount equal to (i) its Revolving Credit Percentage times (ii)
-----
the aggregate principal amount of Swing Line Loans then outstanding which were
to have been repaid with such Revolving Credit Loans (the "Swing Line
----------
Participation Amount").
- --------------------
(e) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's Swing Line Participation Amount,
the Swing Line Lender receives any payment on account of the Swing Line Loans,
the Swing Line Lender will distribute to the Administrative Agent for
distribution to such Lender its Swing Line Participation Amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Lender's participating interest was outstanding and funded and, in
the case of principal and interest payments, to reflect such Lender's pro rata
--- ----
portion of such payment if such payment is not sufficient to pay the principal
of and interest on all Swing Line Loans then due); provided, however, that in
-------- -------
the event that such payment received by the Swing Line Lender is required to be
returned, such Revolving Credit Lender will return to the Administrative Agent
for distribution to the Swing Line Lender any portion thereof previously
distributed to it by the Swing Line Lender.
(f) Each Borrower hereby irrevocably and unconditionally authorizes
the Swing Line Lender to convert into Dollars (at the actual exchange rate then
available to it) all amounts then owing to it on account of any Swing Line Loan
which is denominated in Pesetas. Such Swing Line Lender and each Revolving
Credit Lender hereby irrevocably and unconditionally agrees that (i) no
Revolving Credit Lender shall have any obligation to make any Loans or purchase
any participating interests contemplated by Section 2.7(d) or (e) on account of
such Peseta-denominated Swing Line Loan until such time as such Swing Line
Lender has effected the conversion described above and provided written notice
to the Administrative Agent (which shall promptly forward such notice to the
Revolving Credit Lenders) of the amount of Dollars owing to it as a result of
such conversion and (ii) from and after the date upon which such conversion is
effected, the obligations of the Revolving Credit Lenders under Sections 2.7(d)
and (e) shall be satisfied only by the payment to such Swing Line Lender of such
Revolving Credit Lender's Revolving Credit Percentage of the amount of Dollars
so notified to the Administrative Agent.
(g) Each Revolving Credit Lender's obligation to make the Loans
referred to in Section 2.7(c) and to purchase participating interests pursuant
to Section 2.7(d) shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender, the Company or the relevant Borrowing Subsidiary may have against the
Swing Line Lender, the Company, the relevant Borrowing Subsidiary or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 6; (iii) any adverse change in the condition
(financial or otherwise) of the Company or the relevant Borrowing Subsidiary;
(iv) any breach of this Agreement or any other Loan Document by the Company, any
other Loan Party or any other Revolving Credit Lender; or (v) any other
<PAGE>
40
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing.
(h) Notwithstanding anything to the contrary contained herein, no
Revolving Credit Lender shall be required to make a Revolving Credit Loan
pursuant to Section 2.7(c) or acquire a participation pursuant to Section 2.7(d)
in a Swing Line Loan if an Event of Default shall have occurred and be
continuing at the time such Swing Line Loan was made and such Revolving Credit
Lender shall have notified the relevant Swing Line Lender and the Administrative
Agent in writing, at least one Business Day prior to the time such Swing Line
Loan was made, that such Event of Default has occurred and that such Revolving
Credit Lender will not acquire participations in Swing Line Loans made while
such Event of Default is continuing.
2.8 Reallocation of Swing Line Maximums. (a) The Company (on its
-----------------------------------
own behalf and as agent of the Borrowing Subsidiaries) may from time to time
(but, unless the Administrative Agent shall otherwise agree, not more frequently
than one time per calendar month) request that the amount of any one or more
Swing Line Maximums be increased and/or the amount of any one or more Swing Line
Maximums be decreased by delivering a written request for such re-allocation to
the Administrative Agent. Each such request shall specify the amount (in Francs)
of the increase or decrease, as the case may be, applicable to each affected
Swing Line Lender. The Administrative Agent shall deliver to each affected Swing
Line a copy of such request promptly following receipt thereof.
(b) Unless the revised Swing Line Maximum of any Swing Line Lender
will, after giving effect to the requested re-allocation of Swing Line Maximums,
be in excess of the Swing Line Approval Limit then in effect for such Swing Line
Lender, then the Swing Line Maximums shall be deemed to be so re-allocated and
the definition of the term "Swing Line Maximum" contained in Section 1.1 hereof
shall be deemed to be amended to reflect such re-allocation; provided that (i)
--------
no Swing Line Lender shall lend more than its Swing Line Maximum (as in effect
prior to the effectiveness of such re-allocation) until such Swing Line Lender
has received notice from the Administrative Agent of the effectiveness of such
re-allocation (which notice the Administrative Agent agrees to deliver promptly
upon such effectiveness), (ii) after giving effect to such re-allocation, the
aggregate amount of Swing Line Maximums shall not exceed the Swing Line
Commitment then in effect, (iii) the Dollar Equivalent of the sum of (a) the
aggregate principal amount of all Revolving Credit Loans then outstanding, (b)
the aggregate amount of all L/C Obligations then outstanding and (c) the sum of
all Swing Line Maximums then in effect, would exceed the aggregate amount of
Revolving Credit Commitments then in effect and (iv) SEA Tudor S.A. shall be
permitted to borrow only Swing Line Loans which are denominated in Pesetas (and
any Revolving Credit Loans necessary to refund such Swing Line Loans in
accordance with the provisions of Section 2.7).
SECTION 3. PROVISIONS RELATING TO EXTENSIONS OF CREDIT;
FEES AND PAYMENT
3.1 Repayment of Loans; Evidence of Debt. (a) Each Borrower hereby
------------------------------------
unconditionally promises to pay to the Administrative Agent for the account of
the appropriate Revolving Credit Lender or Term Loan Lender, as the case may be,
(i) the then unpaid principal amount of each Revolving Credit Loan made to it by
such Revolving Credit
<PAGE>
41
Lender on the Revolving Credit Termination Date (or such earlier date on which
the Loans become due and payable pursuant to Section 9), (ii) the then unpaid
principal amount of each Swing Line Loan made to it by such Swing Line Lender on
the Revolving Credit Termination Date (or such earlier date on which the Loans
become due and payable pursuant to Section 9), (iii) the principal amount of
each Tranche A Term Loan made to it by such Term Loan Lender in installments
according to the amortization schedule set forth in Section 2.3 (or on such
earlier date on which the Loans become due and payable pursuant to Section 9)
and (iv) the principal amount of each Tranche B Term Loan made to it by such
Term Loan Lender in installments according to the amortization schedule set
forth in Section 2.3 (or on such earlier date on which the Loans become due and
payable pursuant to Section 9). Each Borrower hereby further agrees to pay
interest on the unpaid principal amount of the Loans made to it from time to
time outstanding from the date hereof until payment in full thereof at the rates
per annum, and on the dates, set forth in Section 3.8.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrowers to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent, on behalf of the Borrowers, shall
maintain the Register pursuant to Section 12.6(e), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type thereof and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from each Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from each Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 3.1(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
----- -----
obligations of the Borrowers therein recorded; provided, however, that the
-------- -------
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the relevant Borrower to repay (with applicable interest) the
Loans made to such Borrower by such Lender in accordance with the terms of this
Agreement.
(e) The relevant Borrower agrees that, upon the request to the
Administrative Agent by any Lender, such Borrower will execute and deliver to
such Lender a promissory note of such Borrower evidencing any Term Loans,
Revolving Credit Loans or Swing Line Loans, as the case may be, of such Lender,
substantially in the forms of Exhibit F-1, F-2, F-3 or F-4, respectively, with
appropriate insertions as to date and principal amount.
3.2 Facility Fees, Commitment Fees, etc. (a) The Company agrees to
------------------------------------
pay to the Administrative Agent for the account of each Revolving Credit Lender
a facility fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment Period, computed at the Facility Fee Rate
on the amount of the Revolving Credit Commitment of such Lender during the
period for which payment is made, payable quarterly in arrears on the third
Business Day of each January, April, July and October (commencing on April 3,
1998) for the period ending on (and including) the last day of the
<PAGE>
42
immediately preceding December, March, June or September, respectively, and on
the Revolving Credit Termination Date.
(b) The Company agrees to pay to the Administrative Agent for the
account of each Tranche B Term Loan Lender a commitment fee for the period from
and including the Closing Date to February 22, 1998, computed at a rate per
annum equal to .50% on the amount by which the average daily Tranche B Term Loan
Commitment of such Lender during the period for which payment is due exceeds the
average daily principal amount (without giving effect to any prepayments or
repayments thereof) during such period of all Tranche B Term Loans made by such
Lender. Such commitment fee shall be payable in arrears on February 22, 1998.
(c) The Company agrees to pay to the Syndication Agent and the
Administrative Agent the fees in the amounts and on the dates previously agreed
to in writing by the Company, the Syndication Agent and the Administrative
Agent.
(d) The Company agrees to pay to the Administrative Agent the
administrative agent fees in the amounts and on the dates from time to time
agreed to in writing by the Company and the Administrative Agent.
3.3 Termination or Reduction of Revolving Credit Commitments. The
--------------------------------------------------------
Company shall have the right, upon not less than three Business Days' notice to
the Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, to reduce the amount of the Revolving Credit Commitments; provided
--------
that no such termination or reduction of the Revolving Credit Commitments shall
be permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans and Swing Line Loans made on the effective date thereof,
the Total Revolving Extensions of Credit would exceed the Total Revolving Credit
Commitments. Any such reduction shall be in an amount equal to $1,000,000, or a
whole multiple thereof, and shall reduce permanently the Revolving Credit
Commitments then in effect.
3.4 Optional Prepayments. The relevant Borrower may at any time and
--------------------
from time to time prepay the Loans made to it, in whole or in part, without
premium or penalty, upon irrevocable notice delivered to the Administrative
Agent by 10:00 A.M., New York City time, in the case of prepayments by the
Company, and 10:00 A.M., London time, in the case of prepayments by any
Borrowing Subsidiary, in each case, at least three Business Days prior thereto
in the case of Foreign Alternate Rate Loans which are not Swing Line Loans or
Eurocurrency Loans and at least one Business Day prior thereto in the case of
Base Rate Loans (or, in the case of Swing Line Loans, on the date of such
prepayment), which notice shall specify the date and amount of prepayment and
whether the prepayment is of Eurocurrency Loans, Base Rate Loans or Foreign
Alternate Rate Loans; provided, that if a Eurocurrency Loan is prepaid on any
--------
day other than the last day of the Interest Period applicable thereto, the
relevant Borrower shall also pay any amounts owing pursuant to Section 3.14.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each relevant Lender thereof. If any such notice is given, the amount specified
in such notice shall be due and payable on the date specified therein, together
with (except in the case of Revolving Credit Loans which are Base Rate Loans and
Swing Line Loans) accrued interest to such date on the amount prepaid. Partial
prepayments of Term Loans and Revolving Credit Loans shall be in an aggregate
principal amount of the Dollar Equivalent of $1,000,000 or a
<PAGE>
43
whole multiple thereof and partial prepayments of Swing Line Loans shall be in
an aggregate principal amount of $100,000 or a whole multiple thereof (or, if
any such prepayment is to be made in any Optional Currency, an amount in such
Optional Currency approximately equal to such amount). Subject to Section
3.11(d), any optional prepayments of the Term Loans pursuant to this Section 3.4
shall be made ratably to the Tranche A Term Loans and the Tranche B Term Loans
according to the respective outstanding principal amounts thereof held by the
Term Loan Lenders with such amounts applied to reduce the then remaining
installments of the respective Term Loans pro rata based upon the then remaining
--- ----
principal amount thereof. Amounts prepaid on account of the Term Loans may not
be reborrowed. Subject to the foregoing, amounts prepaid pursuant to this
Section 3.4 need not be applied to prepay the Tranche A Term Loans owing in any
particular currencies but rather shall be applied against any such amounts owing
in any such currencies as the Company shall elect.
3.5 Mandatory Prepayments and Commitment Reductions. (a) Unless the
-----------------------------------------------
Required Prepayment Lenders shall otherwise agree, if any Capital Stock shall be
issued, or Indebtedness incurred, by the Company or any of its Subsidiaries, an
amount equal to 100% of the Net Cash Proceeds thereof shall be applied on the
date of such issuance or incurrence toward the prepayment of the Term Loans and
the reduction of the Revolving Credit Commitments as set forth in Section
3.5(d); provided that no such prepayment or reduction shall be required with
--------
respect to (i) any Indebtedness incurred in accordance with Section 8.2, (ii)
Designated Equity Amounts, (iii) Capital Stock issued in connection with the
Company's stock plans or arrangements for directors and employees of the Company
and its Subsidiaries or (iv) Capital Stock issued to the Company or any Wholly-
Owned Subsidiary.
(b) Unless the Required Prepayment Lenders shall otherwise agree, if
on any date the Company or any of its Subsidiaries shall receive Net Cash
Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof, such Net Cash Proceeds shall be
applied on such date toward the prepayment of the Term Loans and the reduction
of the Revolving Credit Commitments as set forth in Section 3.5(d); provided,
--------
that, notwithstanding the foregoing, (i) the aggregate Net Cash Proceeds of
Asset Sales and Recovery Events that may be subject to the exclusion from the
foregoing requirement pursuant to a Reinvestment Notice shall not exceed
$20,000,000 at any one time and (ii) on each Reinvestment Prepayment Date, an
amount equal to the Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied toward the prepayment of the Term Loans and
the reduction of the Revolving Credit Commitments as set forth in Section
3.5(d).
(c) Unless the Required Prepayment Lenders shall otherwise agree, if,
for any fiscal year of the Company commencing with the fiscal year ending March
31, 1999, there shall be Excess Cash Flow, the Company shall, on the relevant
Excess Cash Flow Application Date, apply the ECF Percentage of such Excess Cash
Flow toward the prepayment of the Term Loans and the reduction of the Revolving
Credit Commitments as set forth in Section 3.5(d). Each such prepayment and
commitment reduction shall be made on a date (an "Excess Cash Flow Application
----------------------------
Date") no later than fifteen days after the earlier of (i) the date on which the
- ----
financial statements of the Company referred to in Section 7.1(a), for the
fiscal year with respect to which such prepayment is made, are required to be
delivered to the Lenders and (ii) the date such financial statements are
actually delivered.
<PAGE>
44
(d) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to Section 3.5 shall be applied, first, to
-----
the prepayment of the Term Loans and, second, to reduce permanently the
------
Revolving Credit Commitments. Subject to Section 3.11(d), any such prepayments
of the Term Loans shall be applied to the Tranche A Term Loans and the Tranche B
Term Loans pro rata according to the respective outstanding principal amounts
--- ----
thereof held by the Term Loan Lenders with such amounts applied to reduce the
then remaining installments of the respective Term Loans pro rata based upon the
--- ----
then remaining principal amount thereof. Amounts prepaid on account of the Term
Loans may not be reborrowed. Any such reduction of the Revolving Credit
Commitments shall be accompanied by prepayment of the Revolving Credit Loans
and/or Swing Line Loans to the extent, if any, that the Total Revolving
Extensions of Credit exceed the amount of the Total Revolving Credit Commitments
as so reduced, provided that if the aggregate principal amount of Revolving
--------
Credit Loans and Swing Line Loans then outstanding is less than the amount of
such excess (because L/C Obligations constitute a portion thereof), the Company
shall or shall cause the Borrowing Subsidiaries to, to the extent of the balance
of such excess, replace outstanding Letters of Credit and/or deposit an amount
in cash in a cash collateral account established with the Administrative Agent
for the benefit of the Lenders under the relevant Facility on terms and
conditions satisfactory to the Administrative Agent. The application of any
prepayment pursuant to Section 3.5 shall be made first to Base Rate Loans and
Foreign Alternate Rate Loans, ratably based on the outstanding principal amounts
thereof, and second to Eurocurrency Loans. Each prepayment of the Loans under
Section 3.5 (except in the case of Revolving Credit Loans that are Base Rate
Loans and Swing Line Loans) shall be accompanied by accrued interest to the date
of such prepayment on the amount prepaid. Subject to the foregoing, amounts
prepaid pursuant to this Section 3.5 need not be applied to prepay the Tranche A
Term Loans owing in any particular currencies but rather shall be applied
against any such amounts owing in any such currencies as the Company shall
elect.
3.6 Conversion and Continuation Options. (a) Each Borrower may elect
-----------------------------------
from time to time to convert Eurocurrency Loans denominated in Dollars to Base
Rate Loans by giving the Administrative Agent irrevocable notice of such
election by 10:00 A.M., New York City time, in the case of Loans to the Company,
and by 10:00 A.M., London time, in the case of Loans to any Borrowing
Subsidiary, in each case at least one Business Day prior to such conversion,
provided that any such conversion of Eurocurrency Loans may only be made on the
- --------
last day of an Interest Period with respect thereto. Each Borrower may elect
from time to time to convert Base Rate Loans or the Foreign Alternate Rate Loans
to Eurocurrency Loans by giving the Administrative Agent by 10:00 A.M., New York
City time, in the case of borrowings by the Company, and 10:00 A.M., London
time, in the case of borrowings by any Borrowing Subsidiary, in each case, at
least three Business Days' prior irrevocable notice of such election (which
notice shall specify the length of the initial Interest Period therefor),
provided that no Base Rate Loan under a particular Facility may be converted
- --------
into a Eurocurrency Loan (i) when any Event of Default has occurred and is
continuing and the Administrative Agent or the Majority Facility Lenders in
respect of such Facility have determined in its or their sole discretion not to
permit such conversions or (ii) after the date that is one month prior to the
final scheduled termination or maturity date of such Facility. Upon receipt of
any such notice the Administrative Agent shall promptly notify each relevant
Lender thereof.
<PAGE>
45
(b) Any Eurocurrency Loan may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
relevant Borrower giving irrevocable notice of such election by 10:00 A.M., New
York City time, in the case of Loans to the Company, and by 10:00 A.M., London
time, in the case of Loans to any Borrowing Subsidiary, in each case at least
three Business Days prior to such continuation, of the length of the next
Interest Period to be applicable to such Loans, provided that no Eurocurrency
--------
Loan denominated in Dollars under a particular Facility may be continued as such
(i) when any Event of Default has occurred and is continuing and the
Administrative Agent has or the Majority Facility Lenders in respect of such
Facility have determined in its or their sole discretion not to permit such
continuations or (ii) after the date that is one month prior to the final
scheduled termination or maturity date of such Facility, and provided, further,
-------- -------
that if the relevant Borrower shall fail to give any required notice as
described above in this paragraph or if such continuation is not permitted
pursuant to the preceding proviso any Eurocurrency Loans denominated in Dollars
shall be automatically converted to Base Rate Loans on the last day of such then
expiring Interest Period and any Eurocurrency Loan denominated in any Optional
Currency shall be continued as a Eurocurrency Loan with an Interest Period of
one month's duration. Upon receipt of any such notice the Administrative Agent
shall promptly notify each relevant Lender thereof.
3.7 Minimum Amounts and Maximum Number of Eurocurrency Tranches.
-----------------------------------------------------------
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurocurrency Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, (a) after giving effect
thereto, the aggregate principal amount of the Eurocurrency Loans comprising
each Eurocurrency Tranche shall be equal to the Dollar Equivalent of $5,000,000
or a whole multiple of $1,000,000 in excess thereof (or, with respect to
Eurocurrency Loans made in any Optional Currency, an amount in such Optional
Currency approximately equal to such amount) and (b) no more than 25
Eurocurrency Tranches shall be outstanding at any one time.
3.8 Interest Rates and Payment Dates. (a) Each Eurocurrency Loan
--------------------------------
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurocurrency Rate determined for such
day plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum equal
to the Base Rate plus the Applicable Margin.
(c) Each Foreign Alternate Rate Loan shall bear interest at a rate per
annum equal to the Foreign Alternate Rate plus the Applicable Margin in effect
at such time with respect to Base Rate Loans.
(d) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
which is equal to (x) in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section 3.8 plus
----
2%, (y) in the case of Reimbursement Obligations owing in Dollars, the rate
applicable to Base Rate Loans under the Revolving Credit Facility plus 2% and
----
(z) in the case of Reimbursement Obligations owing in Optional Currencies, the
rate
<PAGE>
46
applicable to Foreign Alternate Rate Loans under the Revolving Credit Facility
plus 2%, and (ii) if all or a portion of any interest payable on any Loan or
- ----
Reimbursement Obligation or any commitment fee or other amount payable hereunder
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum equal to
the rate applicable to Base Rate Loans (or, in the case of interest, fees or
amounts owing on account of obligations denominated in Optional Currencies,
Foreign Alternate Rate Loans) under the relevant Facility plus 2% (or, in the
----
case of fees, reimbursements or any such other amounts that do not relate to a
particular Facility, the Base Rate plus 3.25%), in each case, with respect to
----
clauses (i) and (ii) above, from the date of such non-payment until such amount
is paid in full (as well after as before judgment).
(e) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (d) of this Section
--------
3.8 shall be payable from time to time on demand.
(f) For the purposes of Articles L 313-1 to L 313-6 of the French
Code de la Consommation, the parties hereto acknowledge that the taux effectif
global may only be determined during the course of the Loans. By way of example,
the taux effectif global applicable on December 19, 1997 taking into account the
fees, commissions and expenses which are payable by the Borrowers and:
(i) in the case of a Eurocurrency Loan, assuming a base interest rate of
[___]% per annum (being the Eurocurrency Rate (as at December 19,
1997) for French Francs or, in the case of the Tranche B Term Loans,
Dollars with an Interest Period of three months), (A) in respect of
the Tranche A Term Loans would be [___]% per annum and the taux de
periode would be [___]% for a period of three months, (B) in respect
of the Tranche B Term Loans would be [___]% per annum and the taux de
periode would be [___]% for a period of three months and (C) in
respect of the Revolving Credit Loans made to the Borrowing
Subsidiaries (assuming that Revolving Credit Facilities were fully
drawn for a period of three months) would be Loans [___]% per annum
and the taux de periode would be [___]% for a period of three months;
(ii) in the case of a Base Rate Loan, assuming a base interest rate of
[___]% per annum (being the Base Rate (as at December 19, 1997) for
French Francs or, in the case of the Tranche B Term Loans, for a
period of three months), (A) in respect of the Tranche A Term Loans
would be [___]% per annum and the taux de periode would be [___]% for
a period of three months, (B) in respect of the Tranche B Term Loans
would be [___]% per annum and the taux de periode would be [___]% for
a period of three months and (C) in respect of the Revolving Credit
Loans made to the Borrowing Subsidiaries (assuming that Revolving
Credit Facilities were fully drawn for a period of three months) would
be Loans [___]% per annum and the taux de periode would be [___]% for
a period of three months; and
(iii) in the case of a Foreign Alternate Rate Loan, assuming a base interest
rate of [___]% per annum (being the Foreign Alternate Rate for Credit
Suisse First Boston (as at December 19, 1997) for French Francs or, in
the case of the
<PAGE>
47
Tranche B Term Loans, for a period of three months), (A) in respect of
the Tranche A Term Loans would be [___]% per annum and the taux de
periode would be [___]% for a period of three months, (B) in respect
of the Tranche B Term Loans would be [___]% per annum and the taux de
periode would be [___]% for a period of three months and (C) in
respect of the Revolving Credit Loans made to the Borrowing
Subsidiaries (assuming that Revolving Credit Facilities were fully
drawn for a period of three months) would be Loans [___]% per annum
and the taux de periode would be [___]% for a period of three months.
3.9 Computation of Interest and Fees. (a) Interest, fees and
--------------------------------
commissions payable pursuant hereto shall be calculated on the basis of a 360-
day year for the actual days elapsed, except that, (i) with respect to Base Rate
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, and any Loans or Letters of Credit denominated in Pounds, the interest
thereon shall be calculated on the basis of a 365- (or 366-, as the case may be)
day year for the actual days elapsed and (ii) with respect to Foreign Alternate
Rate Loans, the interest thereon shall be calculated in accordance with the
method customarily used for calculating interest on loans in the relevant
jurisdiction. The Administrative Agent shall as soon as practicable notify the
relevant Borrower and the relevant Lenders of each determination of a
Eurocurrency Rate. Any change in the interest rate on a Loan resulting from a
change in the Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
relevant Borrower and the relevant Lenders of the effective date and the amount
of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the relevant Borrower and the Lenders in the absence of manifest
error. The Administrative Agent shall, at the request of the relevant Borrower,
deliver to such Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to Section
3.8(a).
3.10 Inability to Determine Interest Rate. If prior to the first day
------------------------------------
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon each of the Borrowers)
that, by reason of circumstances affecting the relevant market, adequate
and reasonable means do not exist for ascertaining the Eurocurrency Rate
for such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurocurrency Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
relevant Borrower and the relevant Lenders as soon as practicable thereafter.
If such notice is given (i) any Eurocurrency Loans denominated in Dollars under
the relevant Facility requested to
<PAGE>
48
be made on the first day of such Interest Period shall be made as Base Rate
Loans, (ii) any Eurocurrency Loans denominated in any Optional Currency
requested to be made on the first day of such Interest Period shall be made as
Foreign Alternate Rate Loans, (iii) any Loans under the relevant Facility that
were to have been converted on the first day of such Interest Period to
Eurocurrency Loans shall be continued as Base Rate Loans, (iv) any outstanding
Eurocurrency Loans denominated in Dollars under the relevant Facility shall be
converted, on the first day of such Interest Period, to Base Rate Loans and (v)
any outstanding Eurocurrency Loans denominated in any Optional Currency shall be
converted, on the first day of such Interest Period, to Foreign Alternate Rate
Loans. Until such notice has been withdrawn by the Administrative Agent, no
further Eurocurrency Loans under the relevant Facility shall be made or
continued as such, nor shall any Borrower have the right to convert Loans under
the relevant Facility to Eurocurrency Loans.
3.11 Pro Rata Treatment and Payments. (a) Each borrowing by a
-------------------------------
Borrower from the Lenders hereunder (other than in the case of Swing Line
Loans), each payment by a Borrower on account of any commitment or facility fee
and any reduction of the Commitments of the Lenders shall be made pro rata
--- ----
according to the respective Tranche A Term Loan Percentages, Tranche B Term Loan
Percentages or Revolving Credit Percentages, as the case may be, of the relevant
Lenders.
(b) Subject to Section 3.4 and 3.5, each payment by a Borrower on
account of principal of and interest on the Term Loans under a particular
Facility shall be made pro rata according to the respective outstanding
--- ----
principal amounts of the Term Loans under such Facility then held by the Term
Loan Lenders (except as otherwise provided in Section 3.11(d)).
(c) Each payment (including each prepayment) by a Borrower on account
of principal of and interest on the Revolving Credit Loans shall be made pro
---
rata according to the respective outstanding principal amounts of the Revolving
- ----
Credit Loans then held by the Revolving Credit Lenders.
(d) Notwithstanding anything to the contrary in Sections 3.4, 3.5 or
3.11, so long as any Tranche A Term Loans are outstanding, each Tranche B Term
Loan Lender may, at its option, decline the portion of any optional prepayment
or mandatory payment applicable to the Tranche B Term Loans of such Lender;
accordingly, with respect to the amount of any optional prepayment described in
Section 3.4 or mandatory prepayment described in Section 3.5 that is allocated
to Tranche B Term Loans (such amounts, the "Tranche B Prepayment Amount"), at
---------------------------
any time when Tranche A Term Loans remain outstanding, the relevant Borrower
will, in lieu of applying such amount to the prepayment of Tranche B Term Loans
as provided in Section 3.4 (in the case of optional prepayments) or Section 3.5
(in the case of mandatory prepayments), on the date specified in Section 3.4 or
3.5, as the case may be, and so long as no Default or Event of Default shall
have occurred and is continuing, in the case of any mandatory prepayment
required to be made pursuant to Section 3.5, give the Administrative Agent
telephonic notice (promptly confirmed in writing) requesting that the
Administrative Agent prepare and provide to each Tranche B Lender a notice
(each, a "Prepayment Option Notice") as described below. As promptly as
------------------------
practicable after receiving such notice from such Borrower, the Administrative
Agent will send to each Tranche B Lender a Prepayment Option Notice, which shall
be in the form of Exhibit G, and shall include an offer by such Borrower to
prepay on the date (each a "Prepayment Date")
---------------
<PAGE>
49
that is 10 Business Days after the date of the Prepayment Option Notice, the
relevant Tranche B Term Loans of such Lender by an amount equal to the portion
of the Tranche B Prepayment Amount indicated in such Lender's Prepayment Option
Notice as being applicable to such Lender's Tranche B Term Loans. Each Tranche
B Term Loan Lender shall notify the Administrative Agent and the relevant
Borrower in writing, by no later than 10:00 A.M., New York City time, in the
case of prepayments by the Company, and by no later than 10:00 A.M., London
time, in the case of prepayments by a Borrowing Subsidiary, in each case, on the
fifth Business Day preceding the Prepayment Date, whether or not it accepts the
relevant Borrower's prepayment offer. Failure by such Lender to so notify the
Administrative Agent by such time shall be deemed to be notice that such Lender
accepts the relevant Borrower's prepayment offer. On the Prepayment Date, (i)
such Borrower shall pay to the Administrative Agent the aggregate amount
necessary to prepay that portion of the outstanding Tranche B Term Loans in
respect of which Tranche B Lenders have accepted prepayment as described above
(such Lenders, the "Accepting Lenders"), and such amount shall be applied to
-----------------
reduce the Tranche B Repayment Amounts with respect to each Accepting Lender and
(ii) such Borrower shall pay to the Administrative Agent an amount equal to the
portion of the Tranche B Prepayment Amount not accepted by the Accepting
Lenders, and such amount shall be applied first, to the prepayment of the
-----
Tranche A Term Loans, and second, to reduce permanently the Revolving Credit
------
Commitments with corresponding prepayments of the Revolving Credit Loans in the
manner set forth in the second sentence of Section 3.5(d).
(e) All payments (including prepayments) to be made by a Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and (except to the extent otherwise set
forth herein) shall be made (i) with respect to payments by the Company on
account of amounts denominated in Dollars, prior to 12:00 Noon, New York City
time, on the due date thereof to the Administrative Agent, for the account of
the relevant Lenders, at the Payment Office, in Dollars and in immediately
available funds, (ii) with respect to payments by the Company on account of
amounts denominated in Optional Currencies and with respect to payments by any
Borrowing Subsidiary, prior to 12:00 Noon, London time, on the due date thereof
to the Administrative Agent, for the account of the relevant Lenders, at the
Payment Office, in the relevant Optional Currency or in Dollars (as applicable)
and in immediately available funds. Payments received by the Administrative
Agent after such specified time shall be deemed to have been received on the
next Business Day. The Administrative Agent shall distribute such payments to
the Lenders promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurocurrency Loans) becomes due and
payable on a day other than a Business Day, such payment shall be extended to
the next succeeding Business Day. If any payment on a Eurocurrency Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day. In
the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate
during such extension. All payments hereunder shall be made in Dollars, or, in
the case of Eurocurrency Loans (and interest thereon) outstanding in any
Optional Currency, such Optional Currency.
<PAGE>
50
(f) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the relevant
Borrower a corresponding amount. If such amount is not made available to the
Administrative Agent by the required time on the Borrowing Date therefor, such
Lender shall pay to the Administrative Agent, on demand, such amount with
interest thereon at a rate equal to the rate of interest which reflects the cost
to the Administrative Agent of obtaining funds of the type utilized to fund such
amount for the period until such Lender makes such amount immediately available
to the Administrative Agent. A certificate of the Administrative Agent submitted
to any Lender with respect to any amounts owing under this Section 3.11(f) shall
be conclusive in the absence of manifest error. If such Lender's share of such
borrowing is not made available to the Administrative Agent by such Lender
within three Business Days of such Borrowing Date, the Administrative Agent
shall also be entitled to recover such amount with interest thereon at the rate
per annum applicable to Base Rate Loans or Foreign Alternate Rate Loans, as the
case may be, under the relevant Facility, on demand, from the relevant Borrower.
Any failure by a Lender to fund its share of any borrowing required hereunder
shall not relieve any other Lender of its obligation to fund its ratable share
of such borrowing as required hereunder.
(g) Unless the Administrative Agent shall have been notified in
writing by a Borrower prior to the date of any payment being made hereunder that
such Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that such Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the relevant Lenders their respective pro
---
rata shares of a corresponding amount. If such payment is not made to the
- ----
Administrative Agent by such Borrower within three Business Days of such
required date, the Administrative Agent shall be entitled to recover, on demand,
from each Lender to which any amount which was made available pursuant to the
preceding sentence, such amount with interest thereon at the rate per annum
equal to the rate of interest which reflects the cost to the Administrative
Agent of obtaining funds of the type utilized to fund any such amount. Nothing
herein shall be deemed to limit the rights of the Administrative Agent or any
Lender against any Borrower.
(h) Notwithstanding any other provision contained herein, in the
event that any Revolving Credit Lender gives three Business Days' prior notice
to the Administrative Agent that it is unable to fund Revolving Credit Loans
which are Eurocurrency Loans or Foreign Alternate Rate Loans in any Optional
Currency at a reasonable cost to it, the Administrative Agent shall, until such
notice is withdrawn and to the extent necessary in order to excuse such
Revolving Credit Lender from making any Revolving Credit Loans in such Optional
Currency, reallocate from time to time among the Revolving Credit Lenders the
outstanding Revolving Credit Loans in such Optional Currency based on the
Revolving Credit Percentages; provided that, no Revolving Credit Lender shall be
--------
required to make Revolving Credit Loans in excess of its Revolving Credit
Commitment; provided, further, that, in the event that the Revolving Credit
-------- -------
Lenders the Revolving Credit Percentages of which aggregate at least 51% give
such notice to the Administrative Agent, the Revolving Credit Lenders shall not
be required to make any Revolving Credit Loans in such Optional
<PAGE>
51
Currency until any such notices have been withdrawn so that the Revolving Credit
Lenders the Revolving Credit Percentages of which aggregate at least 51% have
either not given any such notice or have withdrawn any such notice.
3.12 Requirements of Law. (a) If the adoption of or any change in
-------------------
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever
with respect to this Agreement, any Letter of Credit, any Application or
any Eurocurrency Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Non-Excluded Taxes
covered by Section 3.13 and changes in the rate of tax on the overall net
income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurocurrency Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurocurrency Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the relevant Borrower shall promptly pay such
Lender, upon its demand, any additional amounts necessary to compensate such
Lender on an after-tax basis for such increased cost or reduced amount
receivable. If any Lender becomes entitled to claim any additional amounts
pursuant to this Section 3.12, it shall promptly notify the relevant Borrower
(with a copy to the Administrative Agent) of the event by reason of which it has
become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority made subsequent to the date hereof shall have the effect of reducing
the rate of return on such Lender's or such corporation's capital as a
consequence of its obligations hereunder or under or in respect of any Letter of
Credit to a level below that which such Lender or such corporation could have
achieved but for such adoption, change or compliance (taking into consideration
such Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time, after
submission by such Lender to the relevant Borrower (with a copy to the
Administrative Agent) of a written request therefor, such Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender on
an after-tax basis for such reduction.
<PAGE>
52
(c) A certificate as to any additional amounts payable pursuant to
this Section 3.12 submitted by any Lender to a Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of each Borrower pursuant to this Section 3.12 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
3.13 Taxes. (a) All payments made by any Borrower under this
-----
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on any Agent or any Lender as a result of a present or
former connection between such Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
such Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any
other Loan Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") or Other Taxes
------------------
are required to be withheld from any amounts payable to any Agent or any Lender
hereunder, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement, provided, however, that the Borrowers shall not be required to
-------- -------
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
the Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from a Borrower with respect to such Non-Excluded Taxes
pursuant to Section 3.13(a).
(b) In addition, the relevant Borrower shall pay any Other Taxes to
the relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by a
Borrower, as promptly as possible thereafter such Borrower shall send to the
Administrative Agent for the account of the relevant Agent or Lender, as the
case may be, a certified copy of an original official receipt received by such
Borrower showing payment thereof. If such Borrower fails to pay any Non-Excluded
Taxes or Other Taxes when due to the appropriate taxing authority or fails to
remit to the Agents the required receipts or other required documentary
evidence, such Borrower shall indemnify the Administrative Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by any
Agent or any Lender as a result of any such failure. The agreements in this
Section 3.13 shall survive the termination of this Agreement and the payment of
the Loans and all other amounts payable hereunder.
(d) Each Lender (or Transferee) that is not a citizen or resident of
the United States of America, a corporation, partnership or other entity created
or organized in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust
<PAGE>
53
that is subject to federal income taxation regardless of the source of its
income (a "Non-U.S. Lender") shall deliver to the Company and the Administrative
---------------
Agent (or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) two copies of either U.S. Internal
Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender
claiming exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest" a statement
substantially in the form of Exhibit H and a Form W-8, or any subsequent
versions thereof or successors thereto properly completed and duly executed by
such Non-U.S. Lender claiming complete exemption from, or a reduced rate of,
U.S. federal withholding tax on all payments by the Company under this Agreement
and the other Loan Documents. Such forms shall be delivered by each Non-U.S.
Lender on or before the date it becomes a party to this Agreement (or, in the
case of any Participant, on or before the date such Participant purchases the
related participation). In addition, each Non-U.S. Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify
the Company at any time it determines that it is no longer in a position to
provide any previously delivered certificate to the Company (or any other form
of certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this Section 3.13(d), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 3.13(d) that
such Non-U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the relevant
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the relevant Borrower
(with a copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the relevant Borrower, such properly
completed and executed documentation prescribed by applicable law as will permit
such payments to be made without withholding or at a reduced rate, provided that
--------
such Lender shall only be required to complete, execute and deliver such
documentation if in such Lender's reasonable judgment such completion, execution
or submission would not materially prejudice the legal position of such Lender.
3.14 Indemnity. Each Borrower agrees to indemnify each Lender and to
---------
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by such Borrower in making a borrowing
of, conversion into or continuation of Eurocurrency Loans after such Borrower
has given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by such Borrower in making any prepayment after such
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment of Eurocurrency Loans on a day which
is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans provided
for herein (excluding, however, the Applicable Margin included therein, if any)
over (ii) the amount of interest (as reasonably determined by such Lender) which
- ----
would have accrued to such Lender on such amount by placing such amount on
deposit for a comparable period with
<PAGE>
54
leading banks in the interbank eurocurrency market. A certificate as to any
amounts payable pursuant to this Section 3.14 submitted to a Borrower by any
Lender shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
3.15 Illegality. Notwithstanding any other provision herein, if the
----------
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurocurrency Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurocurrency Loans, continue Eurocurrency Loans as such
and convert Base Rate Loans or Foreign Alternate Rate Loans to Eurocurrency
Loans shall forthwith be cancelled and (b) such Lender's Loans then outstanding
as Eurocurrency Loans, if any, shall be converted automatically to Base Rate
Loans (in the case of Loans denominated in Dollars) or Foreign Alternate Rate
Loans (in the case of Loans denominated in any Optional Currency) on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law. If any such conversion
of a Eurocurrency Loan occurs on a day which is not the last day of the then
current Interest Period with respect thereto, the relevant Borrower shall pay to
such Lender such amounts, if any, as may be required pursuant to Section 3.14.
3.16 Change of Lending Office. Each Lender agrees that, upon the
------------------------
occurrence of any event giving rise to the operation of Section 3.12 or 3.13(a)
with respect to such Lender, it will, if requested by the relevant Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided, that such
--------
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section 3.16 shall
-------- -------
affect or postpone any of the obligations of any Borrower or the rights of any
Lender pursuant to Section 3.12 or 3.13(a).
3.17 Replacement of Lenders under Certain Circumstances. Any
--------------------------------------------------
Borrower shall be permitted to replace any Lender which (a) requests
reimbursement for amounts owing pursuant to Section 3.12 or 3.13 or (b) defaults
in its obligation to make Loans hereunder, with a replacement financial
institution; provided that (i) such replacement does not conflict with any
--------
Requirement of Law, (ii) no Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) prior to any such replacement,
such Lender shall have taken no action under Section 3.16 so as to eliminate the
continued need for payment of amounts owing pursuant to Section 3.12 or 3.13,
(iv) the replacement financial institution shall purchase, at par, all Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) such Borrower shall be liable to such replaced Lender under
Section 3.14 if any Eurocurrency Loan owing to such replaced Lender shall be
purchased other than on the last day of the Interest Period relating thereto,
(vi) the replacement financial institution, if not already a Lender, shall be
reasonably satisfactory to the Administrative Agent, (vii) the replaced Lender
shall be obligated to make such replacement in accordance with the provisions of
Section 12.6 (provided that such Borrower shall be obligated to pay the
registration and processing fee referred to therein), (viii) until such time as
such replacement shall be consummated, such Borrower shall pay all additional
amounts (if any) required pursuant to Section 3.12 or 3.13, as the case may be,
and (ix) any
<PAGE>
55
such replacement shall not be deemed to be a waiver of any rights which such
Borrower, the Administrative Agent or any other Lender shall have against the
replaced Lender.
3.18 Controls; Currency Exchange Rate Fluctuations. (a) The Company
---------------------------------------------
will implement and maintain internal controls to monitor the borrowings and
repayments of Loans by the Borrowers, with the object of preventing any request
for a Loan that would result in a breach of any of the aggregate or individual
limits or sub-limits set forth in this Agreement with respect to the Total
Revolving Extensions of Credit, the Designated Maximum of any individual
Borrowing Subsidiary or the Currency Maximum of any Optional Currency and of
promptly identifying and remedying any circumstance where, by reason of changes
in exchange rates, any of such limits or sub-limits shall have been breached.
In the event that at any time the Company determines that by reason of currency
exchange rates any of such limits or sub-limits shall have been breached, in
each case, by more than 5%, the Company will promptly notify the Administrative
Agent.
(b) The Administrative Agent will calculate the Aggregate Exposures
with respect to all of the Lenders on each date on which a borrowing is
requested or a Loan is converted or continued hereunder and on any other date in
its sole discretion.
(c) In the event that on any date the Administrative Agent calculates
that any of such limits or sub-limits shall have been breached, in each case, by
more than 5% or would be breached by any requested borrowing or issuance of a
Letter of Credit, the Administrative Agent will give notice to such effect to
the Company and the Lenders (except in the case of a breach which would result
from the making of a requested borrowing or the issuance of a requested Letter
of Credit, in which case, the Administrative Agent shall notify the requesting
Borrower (with a copy to the Company) that because of such potential breach the
requested borrowing or issuance will not be made). Within five Business Days
after receipt of such notice, the Company will, or will cause the Borrowing
Subsidiaries to, make such repayments or prepayments of Loans (together with
interest accrued to the date of such repayment or prepayment) as shall be
necessary to eliminate any excess above any such limit or sub-limit, unless by
the time such repayment or prepayment is required to be made, such limit or sub-
limit is no longer breached by reason of currency exchange rate fluctuations.
If by virtue of the second sentence of this paragraph (c) any such repayment or
prepayment of a Eurocurrency Loan pursuant to this Section occurs on a day which
is not the last day of the then current Interest Period with respect thereto,
the Company shall pay to the Lenders such amounts, if any, as may be required
pursuant to Section 3.14.
3.19 European Monetary Union. (a) If, as a result of the
-----------------------
implementation of European monetary union, (i) any currency ceases to be lawful
currency of the nation issuing the same and is replaced by a European single
currency or (ii) any currency and a European single currency are at the same
time recognized by the central bank or comparable authority of the nation
issuing such currency as lawful currency of such nation and the Administrative
Agent or the Required Foreign Lenders shall so request in a notice delivered to
the Company, then any amount payable hereunder by the Lenders to any Borrower,
or by any Borrower to the Lenders, in such currency shall instead be payable in
the European single currency and the amount so payable shall be determined by
translating the amount payable in such currency to such European single currency
at the exchange rate recognized by the European Central Bank for the purpose of
implementing European monetary union.
<PAGE>
56
(b) The Company agrees, at the request of any Lender, to compensate
such Lender for any reasonable loss, cost, expense or reduction in return that
shall be incurred or sustained by such Lender (other than through such Lender's
gross negligence or willful misconduct) as a result of the implementation of
European monetary union, that would not have been incurred or sustained but for
the transactions provided for herein and that, to the extent that such loss,
cost, expense or reduction is of a type generally applicable to extensions of
credit similar to the extensions of credit hereunder, is generally being
requested from borrowers subject to similar provisions. A certificate of a
Lender setting forth (x) the amount or amounts necessary to compensate such
Lender (y) describing the nature of the loss or expense sustained or incurred by
such Lender as a consequence thereof and (z) setting forth a reasonably detailed
explanation of the calculation thereof shall be delivered to the Company and
shall be conclusive absent manifest error. The Company shall pay such Lender the
amount shown as due on any such certificate within 10 days after receipt
thereof.
(c) The Company agrees, at the request of the Required Foreign
Lenders, at the time of or at any time following the implementation of European
monetary union, to enter into an agreement amending this Agreement in such
manner as the Required Foreign Lenders shall specify in order to reflect the
implementation of such monetary union to place the parties hereto in the
position they would have been in had such monetary union not been implemented.
3.20 Reporting Requirements of Swing Line Lenders and Issuing
--------------------------------------------------------
Lenders. (a) Within two Business Days following the last day of each calendar
month, each Swing Line Lender shall deliver to the Administrative Agent a
statement showing the average daily principal amount of the Swing Line Loans
outstanding in each currency during the calendar quarter most recently ended.
(b) Within two Business Days following the last day of each calendar
month, each Issuing Lender shall deliver to the Administrative Agent a report
detailing all activity during the preceding month with respect to any Letters of
Credit issued by any such Issuing Lender, including the face amount, the account
party, the beneficiary and the expiration date of such Letters of Credit and any
other information with respect thereto as may be requested by the Administrative
Agent.
SECTION 4. LETTERS OF CREDIT
4.1 L/C Commitment. (a) Subject to the terms and conditions hereof,
--------------
each of the Issuing Lenders, in reliance on the agreements of the other
Revolving Credit Lenders set forth in Section 4.3(a), agrees to issue letters of
credit ("Letters of Credit") for the account of any of the Borrowers (the
-----------------
Borrower for whose account such Letter of Credit shall have been issued, the
"Account Party") on any Business Day during the Revolving Credit Commitment
-------------
Period in such form as may be approved from time to time by the Issuing Lender;
provided that the Issuing Lender shall have no obligation to issue any Letter of
- --------
Credit for the account of any Borrower if, after giving effect to such issuance
(i) the Dollar Equivalent of the L/C Obligations would exceed the L/C
Commitment, (ii) the aggregate amount of the Available Revolving Credit
Commitments would be less than zero, (iii) in the case of a Letter of Credit
requested to be issued in an Optional Currency, the Dollar Equivalent of the
Total Revolving Extensions of Credit with respect to such Optional Currency
would exceed the Currency
<PAGE>
57
Maximum with respect to any Optional Currency or (iv) the Dollar Equivalent of
the Total Revolving Extensions of Credit with respect to such Borrowing
Subsidiary would exceed such Borrowing Subsidiary's Designated Maximum. Each
Letter of Credit shall (i) be denominated in Dollars or any Optional Currency
and (ii) expire no later than the earlier of (x) the first anniversary of its
date of issuance and (y) the date which is five Business Days prior to the
Scheduled Revolving Credit Termination Date, provided that any Letter of Credit
--------
with a one-year term may provide for the renewal thereof for additional one-year
periods (which shall in no event extend beyond the date referred to in clause
(y) above).
(b) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
4.2 Procedure for Issuance of Letters of Credit. Each Borrower may
-------------------------------------------
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender (with a copy to the Administrative Agent) at
its address for notices specified herein an Application therefor, completed to
the satisfaction of the Issuing Lender, and such other certificates, documents
and other papers and information as the Issuing Lender may request. Upon receipt
of any Application, the Issuing Lender will process such Application and the
certificates, documents and other papers and information delivered to it in
connection therewith in accordance with its customary procedures and shall
promptly issue the Letter of Credit requested thereby (but in no event shall the
Issuing Lender be required to issue any Letter of Credit earlier than three
Business Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed to by the Issuing Lender and the Account Party. The
Issuing Lender shall furnish a copy of such Letter of Credit to the Account
Party promptly following the issuance thereof. The Issuing Lender shall promptly
furnish to the Administrative Agent, which shall in turn promptly furnish to the
Revolving Credit Lenders, notice of the issuance of each Letter of Credit
(including the amount thereof).
4.3 L/C Participations. (a) The Issuing Lender irrevocably agrees
------------------
to grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Percentage in the Issuing Lender's obligations
and rights under each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender thereunder. Each L/C Participant
unconditionally and irrevocably agrees with the Issuing Lender that, if a draft
is paid under any Letter of Credit for which the Issuing Lender is not
reimbursed in full by the Account Party in accordance with the terms of this
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Revolving Credit Percentage of the amount of such draft,
or any part thereof, which is not so reimbursed.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 4.3(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within
<PAGE>
58
three Business Days after the date such payment is due, such L/C Participant
shall pay to the Issuing Lender on demand an amount equal to the product of (i)
such amount, times (ii) the rate of interest which reflects the cost to the
Issuing Lender of obtaining funds of the type utilized to fund such payment
during the period from and including the date such payment is required to the
date on which such payment is immediately available to the Issuing Lender, times
(iii) a fraction the numerator of which is the number of days that elapse during
such period and the denominator of which is 360. If any such amount required to
be paid by any L/C Participant pursuant to Section 4.3(a) is not made available
to the Issuing Lender by such L/C Participant within three Business Days after
the date such payment is due, the Issuing Lender shall be entitled to recover
from such L/C Participant, on demand, such amount with interest thereon
calculated from such due date at the rate per annum applicable to Eurocurrency
Loans under the Revolving Credit Facility. A certificate of the Issuing Lender
submitted to any L/C Participant with respect to any amounts owing under this
Section shall be conclusive in the absence of manifest error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
---
rata share of such payment in accordance with Section 4.3(a), the Issuing Lender
- ----
receives any payment related to such Letter of Credit (whether directly from the
Account Party or otherwise, including proceeds of collateral applied thereto by
the Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
--- ----
provided, however, that in the event that any such payment received by the
- -------- -------
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
(d) Each Borrower hereby irrevocably and unconditionally authorizes
the Issuing Lender to convert into Dollars (at the actual exchange rate then
available to it) all amounts then owing to it on account of any Letter of Credit
which is denominated in an Optional Currency other than Marks, Pounds or Francs
and is not reimbursed by the relevant Account Party in a timely manner and
otherwise in accordance with the provisions of Section 4.4. Such Issuing Lender
and each L/C Participant hereby irrevocably and unconditionally agrees that (i)
no L/C Participant shall have any obligation to make any payments or purchase
any participating interests contemplated by Section 4.3(b) or (c) on account of
such Letter of Credit until such time as such Issuing Lender has effected the
conversion described above and provided written notice to the Administrative
Agent (which shall promptly forward such notice to the L/C Participants) of the
amount of Dollars owing to it as a result of such conversion and (ii) from and
after the date upon which such conversion is effected, the obligations of the
L/C Participants under Sections 4.3(b) and (c) shall be satisfied only by the
payment to such Issuing Lender of such L/C Participant's Revolving Credit
Percentage of the amount of Dollars so notified to the Administrative Agent.
(e) Notwithstanding anything to the contrary contained in this
Section 4.4, no Revolving Credit Lender shall be required to acquire a
participating interest in a Letter of Credit if an Event of Default shall have
occurred and be continuing at the time such Letter of Credit was issued and such
Revolving Credit Lender shall have notified the Administrative Agent in writing,
at least one Business Day prior to the issuance date with respect to such Letter
of Credit, that such Event of Default has occurred and that such Revolving
Credit
<PAGE>
59
Lender will not acquire participations in Letters of Credit issued while such
Event of Default is continuing.
4.4 Reimbursement Obligation With Respect to Letters of Credit. The
----------------------------------------------------------
Account Party agrees to reimburse the Issuing Lender on each date on which the
Issuing Lender notifies the Account Party of the date and amount of a draft
presented under any Letter of Credit and paid by the Issuing Lender for the
amount of (a) such draft so paid and (b) any taxes, fees, charges or other costs
or expenses incurred by the Issuing Lender in connection with such payment.
Each such payment shall be made to the Issuing Lender at its address for notices
specified herein in the currency in which such Letter of Credit was denominated
and in immediately available funds. Interest shall be payable on any and all
amounts remaining unpaid by the Account Party under this Section from the date
such amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate set forth in Section 3.8(d). Each
drawing under any Letter of Credit denominated in Dollars or any Optional
Currency shall (unless an event of the type described in clause (i) or (ii) of
Section 9(f) shall have occurred and be continuing with respect to the Account
Party or the Company, in which case the procedures specified in Section 4.3 for
funding by L/C Participants shall apply) constitute a request by the Account
Party to the Administrative Agent for a borrowing pursuant to Section 2.5 of (i)
in the case of Letters of Credit denominated in Dollars, Base Rate Loans (or, at
the option of the Administrative Agent and the Swing Line Lender for Dollars in
their sole discretion, a borrowing pursuant to Section 2.7 of Swing Line Loans
in Dollars) in the amount of such drawing and (ii) in the case of Letters of
Credit denominated in any Optional Currency, Eurocurrency Loans (or, at the
option of the Administrative Agent and the Swing Line Lender for such Optional
Currency in their sole discretion, a borrowing pursuant to Section 2.7 of Swing
Line Loans in such Optional Currency) in the amount of such drawing. The
Borrowing Date with respect to such borrowing shall be the date of such drawing.
4.5 Obligations Absolute. Each of the Borrower's obligations under
--------------------
this Section 4 shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which such Borrower may have or have had against an Issuing Lender, any
beneficiary of a Letter of Credit or any other Person. Each Borrower also
agrees with the relevant Issuing Lender that such Issuing Lender shall not be
responsible for, and such Borrower's Reimbursement Obligations under Section 4.4
shall not be affected by, among other things, the validity or genuineness of
documents or of any endorsements thereon, even though such documents shall in
fact prove to be invalid, fraudulent or forged, or any dispute between or among
such Borrower and any beneficiary of any Letter of Credit or any other party to
which such Letter of Credit may be transferred or any claims whatsoever of such
Borrower against any beneficiary of such Letter of Credit or any such
transferee. None of the Issuing Lenders shall be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of Credit,
except for errors or omissions which have resulted from the gross negligence or
willful misconduct of such Issuing Lender. Each Borrower agrees that any action
taken or omitted by an Issuing Lender under or in connection with any Letter of
Credit or the related drafts or documents, if done in the absence of gross
negligence or willful misconduct and, if applicable, in accordance with the
standards of care specified in the Uniform Commercial Code of the State of New
York, shall be binding on such Borrower and shall not result in any liability of
an Issuing Lender to such Borrower.
<PAGE>
60
4.6 Commissions, Fees and Other Charges. (a) The relevant Borrower
-----------------------------------
will pay a commission on all outstanding Letters of Credit for its account at a
per annum rate equal to the Applicable Margin then in effect with respect to
Eurocurrency Loans under the Revolving Credit Facility, shared ratably among the
Revolving Credit Lenders and payable quarterly in arrears on each L/C Fee
Payment Date after the issuance date. In addition, such Borrower shall pay to
the relevant Issuing Lender for its own account a fronting fee in an amount
agreed between such Borrower and such Issuing Lender, payable quarterly in
arrears on each L/C Fee Payment Date after the Issuance Date.
(b) In addition to the foregoing fees and commissions, the relevant
Borrower shall pay or reimburse the relevant Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by such Issuing Lender
in issuing, negotiating, effecting payment under, amending or otherwise
administering any Letter of Credit.
4.7 Letter of Credit Payments. If any draft shall be presented for
-------------------------
payment under any Letter of Credit, the relevant Issuing Lender shall promptly
notify the relevant Borrower of the date and amount thereof. The responsibility
of such Issuing Lender to the relevant Borrower in connection with any draft
presented for payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are substantially in
conformity with such Letter of Credit.
4.8 Applications. To the extent that any provision of any
------------
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 4, the provisions of this Section 4 shall apply.
4.9 Transitional Provisions. Schedule 1.1F contains described
-----------------------
certain letters of credit issued prior to the date hereof for the account of the
Company. On the Closing Date, (i) such letters of credit (to the extent
outstanding and issued by a Lender hereunder in Francs, Marks, Pounds, Pesetas
or Lira) shall be automatically and without further action by the parties
thereto converted to Letters of Credit issued pursuant to this Section 4 for the
account of the Company and subject to the provisions hereof, and for this
purpose the fees specified in 4.6 shall be payable (in substitution for any fees
set forth in the reimbursement agreement relating to such letters of credit) as
if such letters of credit had been issued on the Closing Date, (ii) the face
amount of such letters of credit shall be included in the calculation of L/C
Obligations, and (iii) all liabilities of the Company and its Subsidiaries with
respect to such letters of credit shall constitute Obligations. No letter of
credit converted in accordance with this Section 4.9 shall be amended, extended
or renewed without the prior written consent of the Administrative Agent.
Notwithstanding anything set forth in Section 4.1, to the extent that any letter
of credit listed on Schedule 1.1F has an expiration date in excess of one year,
such letter of credit shall continue in full force and effect pursuant to the
terms hereof after the Closing Date through its stated expiration date (but
shall be cash collateralized upon terms reasonably satisfactory to the relevant
Issuing Bank during the period from the Termination Date through such stated
expiration date).
<PAGE>
61
SECTION 5. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement and
to make the Loans and issue or participate in the Letters of Credit, each of the
Borrowers hereby jointly and severally represent and warrant to each Agent and
each Lender that:
5.1 Financial Condition. (a) The unaudited pro forma consolidated
------------------- --- -----
balance sheet of the Company and its consolidated Subsidiaries as at September
30, 1997 (including the notes thereto) (the "Pro Forma Balance Sheet"), copies
-----------------------
of which have heretofore been furnished to each Lender, has been prepared giving
effect (as if such events had occurred on such date) to the Loans to be made on
the Closing Date and the use of proceeds thereof and the payment of fees and
expenses in connection with the foregoing. The Pro Forma Balance Sheet has been
prepared based on the best information available to the Company as of the date
of delivery thereof, and presents fairly on a pro forma basis the estimated
--- -----
financial position of Company and its consolidated Subsidiaries as at September
30, 1997, assuming that the events specified in the preceding sentence had
actually occurred at such date.
(b) The audited consolidated balance sheets of the Company and the
unaudited consolidating balance sheets of the Company's U.S. operations and the
Company's European operations, in each such case, as at March 31, 1996 and March
31, 1997, and the related consolidated and consolidating statements of income
and of cash flows for the fiscal years ended on such dates, reported on by and
accompanied by an unqualified report from (in the case of the consolidated
statements only) Arthur Andersen LLP, present fairly the consolidated financial
condition of the Company and the consolidating financial condition of the
Company's U.S. operations and the Company's European operations, as at such
date, and the consolidated and consolidating results of such operations and the
related consolidated and consolidating cash flows for the respective fiscal
years then ended. The unaudited consolidated balance sheet of the Company and
the unaudited consolidating balance sheet with respect to the Company's U.S.
operations and the Company's European operations, in each such case, as at
September 30, 1997, and the related unaudited consolidated and consolidating
statements of income and cash flows for the six-month period ended on such date,
present fairly the consolidated financial condition of the Company and the
unaudited consolidating financial condition of the Company's U.S. operations and
the Company's European operations as at such date, and the consolidated and
consolidating results of such operations and the related consolidated and
consolidating cash flows for the six-month period then ended (subject to normal
year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants and disclosed therein). The Company and its
Subsidiaries do not have any material Guarantee Obligations, contingent
liabilities and liabilities for taxes, or any material long-term leases or
unusual forward or long-term commitments, including, without limitation, any
interest rate or foreign currency swap or exchange transaction or other
obligation in respect of derivatives, which are not reflected in the most recent
financial statements referred to in this paragraph (b). During the period from
March 31, 1997 to and including the date hereof there has been no Disposition by
the Company or any of its Subsidiaries of any material part of the business or
Property of the Company and its Subsidiaries taken as a whole.
<PAGE>
62
5.2 No Change. Since March 31, 1997 there has been no development or
---------
event which has had or could reasonably be expected to have a Material Adverse
Effect.
5.3 Corporate Existence; Compliance with Law. Each of the Company and
----------------------------------------
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate
power and authority, and the legal right, to own and operate its Property, to
lease the Property it operates as lessee and to conduct the business in which it
is currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of Property or the conduct of its business requires such qualification
except to the extent that the failure to be so qualified could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect and (d) is
in compliance with all Requirements of Law except to the extent that the failure
to comply therewith could not, in the aggregate, reasonably be expected to have
a Material Adverse Effect.
5.4 Corporate Power; Authorization; Enforceable Obligations. Each
-------------------------------------------------------
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrowers, to borrow hereunder. Each Loan Party has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrowers, to
authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the Loan
Documents, except (i) consents, authorizations, filings and notices described in
Schedule 5.4, which consents, authorizations, filings and notices have been
obtained or made and are in full force and effect and (ii) the filings referred
to in Section 5.19. Each Loan Document has been duly executed and delivered on
behalf of each Loan Party party thereto. This Agreement constitutes, and each
other Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
5.5 No Legal Bar. The execution, delivery and performance of this
------------
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law or any Contractual Obligation of the Company or any of its
Subsidiaries and will not result in, or require, the creation or imposition of
any Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or any such Contractual Obligation (other than the Liens
created by the Security Documents). No Requirement of Law or Contractual
Obligation applicable to the Company or any of its Subsidiaries could reasonably
be expected to have a Material Adverse Effect.
5.6 No Material Litigation. No litigation, investigation or
----------------------
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Company, threatened by or against the Company or any of
its Subsidiaries or against any of
<PAGE>
63
their respective properties or revenues (a) with respect to any of the Loan
Documents or any of the transactions contemplated hereby or thereby, or (b)
which could reasonably be expected to have a Material Adverse Effect.
5.7 No Default. Neither the Company nor any of its Subsidiaries is
----------
in default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect.
No Default or Event of Default has occurred and is continuing.
5.8 Ownership of Property; Liens. Each of the Company and its
----------------------------
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other Property, and none of such Property is subject to any Lien except as
permitted by Section 8.3.
5.9 Intellectual Property. The Company and each of its Subsidiaries
---------------------
owns, or is licensed to use, all Intellectual Property necessary for the conduct
of its business as currently conducted. No material claim has been asserted and
is pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
the Company know of any valid basis for any such claim. The use of Intellectual
Property by the Company and its Subsidiaries does not infringe on the rights of
any Person in any material respect.
5.10 Taxes. Each of the Company and each of its Subsidiaries has
-----
filed or caused to be filed all Federal, state and other material tax returns
which are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
Property and all other taxes, fees or other charges imposed on it or any of its
Property by any Governmental Authority (other than any the amount or validity of
which are currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided on the
books of the Company or its Subsidiaries, as the case may be); no tax Lien has
been filed, and, to the knowledge of the Company, no claim is being asserted,
with respect to any such tax, fee or other charge.
5.11 Federal Regulations. No part of the proceeds of any Loans will
-------------------
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U as now
and from time to time hereafter in effect or for any purpose which violates the
provisions of the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Company will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in Regulation G or
Regulation U, as the case may be.
5.12 Labor Matters. There are no strikes or other labor disputes
-------------
against the Company or any of its Subsidiaries pending or, to the knowledge of
the Company, threatened that (individually or in the aggregate) could reasonably
be expected to have a Material Adverse Effect. Hours worked by and payment made
to employees of the Company and its Subsidiaries have not been in violation of
the Fair Labor Standards Act or any other applicable Requirement of Law dealing
with such matters that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. All payments
<PAGE>
64
due from the Company or any of its Subsidiaries on account of employee health
and welfare insurance that (individually or in the aggregate) could reasonably
be expected to have a Material Adverse Effect if not paid have been paid or
accrued as a liability on the books of the Company or the relevant Subsidiary.
5.13 ERISA. Neither a Reportable Event nor an "accumulated funding
-----
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code. No termination of a Single Employer Plan has occurred, and no Lien
in favor of the PBGC or a Plan has arisen, during such five-year period. The
present value of all accrued benefits under each Single Employer Plan (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date prior to the date on which this representation is made or deemed
made, exceed the value of the assets of such Plan allocable to such accrued
benefits by a material amount. Neither the Company nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan
which has resulted or could reasonably be expected to result in a material
liability under ERISA, and neither the Company nor any Commonly Controlled
Entity would become subject to any material liability under ERISA if the Company
or any such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made. No such Multiemployer Plan is
in Reorganization or Insolvent.
5.14 Investment Company Act; Other Regulations. No Loan Party is an
-----------------------------------------
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
5.15 Subsidiaries. The Subsidiaries listed on Schedule 5.15
------------
constitute all the Subsidiaries of the Company at the date hereof.
5.16 Use of Proceeds. The proceeds of the Term Loans shall be used
---------------
to refinance the Existing Credit Agreements and (other than the Term Loans made
to the Borrowing Subsidiaries) to redeem the Senior 10-3/4% Notes and to pay
related fees and expenses. The proceeds of the Revolving Credit Loans and the
Swing Line Loans, and the Letters of Credit, shall be used for general corporate
purposes.
5.17 Environmental Matters.
---------------------
(a) The facilities and properties owned, leased or operated by the
Company or any of its Subsidiaries (the "Properties") do not contain any
----------
Materials of Environmental Concern in amounts or concentrations or under
circumstances which (i) constitute or constituted a violation of, or (ii) could
give rise to liability under, any Environmental Law, except in either case
insofar as such violation or liability, or any aggregation thereof, could not
reasonably be expected to result in the payment of a Material Environmental
Amount.
<PAGE>
65
(b) The Properties and all operations at the Properties are in
material compliance, and have in the last five years been in material
compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Properties or violation of any
Environmental Law with respect to the Properties or the business operated by the
Company or any of its Subsidiaries (the "Business") which could materially
--------
interfere with the continued operation of the Properties or materially impair
the fair saleable value thereof. Except to the extent described in Schedule
5.17, neither the Company nor any of its Subsidiaries has assumed any liability
of any other Person under Environmental Laws.
(c) Neither the Company nor any of its Subsidiaries has received or
is aware of any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of the Properties or the Business,
nor does the Company have knowledge or reason to believe that any such notice
will be received or is being threatened, except insofar as such notice or
threatened notice, or any aggregation thereof, does not involve a matter or
matters that could reasonably be expected to result in the payment of a Material
Environmental Amount.
(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could give rise to liability under, any Environmental Law, nor have any
Materials of Environmental Concern been generated, treated, stored or disposed
of at, on or under any of the Properties in violation of, or in a manner that
could give rise to liability under, any applicable Environmental Law, except
insofar as any such violation or liability referred to in this paragraph, or any
aggregation thereof, could not reasonably be expected to result in the payment
of a Material Environmental Amount.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of the Company, threatened, under any
Environmental Law to which the Company or any Subsidiary is or will be named as
a party with respect to the Properties or the Business, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business, except insofar
as such proceeding, action, decree, order or other requirement, or any
aggregation thereof, could not reasonably be expected to result in the payment
of a Material Environmental Amount.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Properties, or arising from or related to
the operations of the Company or any Subsidiary in connection with the
Properties or otherwise in connection with the Business, in violation of or in
amounts or in a manner that could give rise to liability under Environmental
Laws, except insofar as any such violation or liability referred to in this
paragraph, or any aggregation thereof, could not reasonably be expected to
result in the payment of a Material Environmental Amount.
5.18 Accuracy of Information, etc. No statement or information
----------------------------
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum or any other document, certificate or statement furnished
to the Administrative Agent or the Lenders or any of them, by or on behalf of
any Loan Party for use in connection with the transactions contemplated by this
Agreement or the other Loan Documents, contained as of
<PAGE>
66
the date such statement, information, document or certificate was so furnished
(or, in the case of the Confidential Information Memorandum, as of the date of
this Agreement), any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. The projections and pro forma financial information
--- -----
contained in the materials referenced above are based upon good faith estimates
and assumptions believed by management of the Company to be reasonable at the
time made, it being recognized by the Lenders that such financial information as
it relates to future events is not to be viewed as fact and that actual results
during the period or periods covered by such financial information may differ
from the projected results set forth therein by a material amount. There is no
fact known to any Loan Party that could reasonably be expected to have a
Material Adverse Effect that has not been expressly disclosed herein, in the
other Loan Documents, in the Confidential Information Memorandum or in any other
documents, certificates and statements furnished to the Administrative Agent and
the Lenders for use in connection with the transactions contemplated hereby and
by the other Loan Documents.
5.19 Security Documents. (a) The Collateral Agreement is effective
------------------
to create in favor of the Administrative Agent, for the benefit of the Lenders,
a legal, valid and enforceable security interest in the Collateral described
therein and proceeds thereof. When financing statements in appropriate form are
filed in the offices specified on Schedule 5.19(a) and the Administrative Agent
receives possession of the Pledged Securities (as defined therein), the
Collateral Agreement shall, to the extent a security interest thereon can be
perfected by the filing of financing statements or by such posssession,
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in the Collateral described therein and the
proceeds thereof, as security for the Obligations (as defined in the Collateral
Agreement), in each case prior and superior in right to any other Person.
(b) Each Pledge Agreement constitutes a legal, valid and binding
obligation of the pledgor party thereto, enforceable against it in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles. Except as
set forth in the legal opinions provided to the Administrative Agent by counsel
in the relevant jurisdictions pursuant to Section 6.1(m), the security interests
in the capital stock or other equity interests or intercompany loans or
receivables of each Subsidiary that is a Foreign Subsidiary pledged pursuant to
the Pledge Agreements constitute valid, perfected first priority security
interests on such Pledged Stock or intercompany loans or receivables, as the
case may be (to the extent applicable under the relevant local laws or otherwise
reasonably acceptable to the Agents), enforceable as such against all creditors
of the respective pledgor and any Persons purporting to purchase any such
Pledged Stock or intercompany loans or receivables, as the case may be, from the
respective pledgor.
(c) (i) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
5.19(b), each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Mortgaged Properties and the proceeds thereof, as security for the Obligations
(as defined in the relevant Mortgage), in each case prior and superior in right
to any other
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67
Person and (ii) each of the UK Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the real properties which are the subject of the UK
Mortgages and proceeds thereof, and when appropriate steps under applicable law
are taken, each UK Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in such
properties and the proceeds thereof, as security for the Obligations, in each
case prior and superior in right to any other Person.
(d) With respect to each survey of the Mortgaged Properties more
particularly described on Schedule 1.1H (each, a "Survey"), there have been no
------
changes made to any of the premises shown on any such Survey and/or the
improvements situated on such premises subsequent to the date of such Survey as
set forth on Schedule 1.1H and accordingly, each such Survey remains
representative of the present configuration of such premises and/or
improvements.
5.20 Solvency. Each Loan Party is, and after giving effect to the
--------
incurrence of all Indebtedness and obligations being incurred in connection
herewith will be and will continue to be, Solvent.
5.21 Senior Indebtedness. The Obligations constitute "Senior
-------------------
Indebtedness" of the Company and the Borrowing Subsidiaries under and as defined
in the Convertible Indenture.
SECTION 6. CONDITIONS PRECEDENT
6.1 Conditions to Initial Extension of Credit. The agreement of each
-----------------------------------------
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
--------------
this Agreement, executed and delivered by a duly authorized officer of each
of the Borrowers and each of the Guarantors, (ii) the Collateral Agreement,
executed and delivered by a duly authorized officer of the Company and each
Domestic Subsidiary Guarantor, (iii) a Mortgage covering each of the
Mortgaged Properties, executed and delivered by a duly authorized officer
of each party thereto, (iv) a UK Mortgage covering each of the properties
which are the subject thereof, executed and delivered by a duly authorized
officer of each party thereto, (v) each of the Pledge Agreements, executed
and delivered by a duly authorized officer of each pledgor party thereto,
(vi) the Collateral Agency and Intercreditor Agreement, executed and
delivered by a duly authorized officer of the Company and (vii) for the
account of each Lender which has so requested, Notes conforming to the
requirements hereof and executed and delivered by a duly authorized officer
of the relevant Borrower.
(b) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
---------------------------------------------
have received (i) the Pro Forma Balance Sheet and (ii) the financial
statements referred to in Section 5.1(b), and such financial statements
shall not, in the reasonable judgment of the Lenders, reflect any material
adverse change in the consolidated financial
<PAGE>
68
condition of the Company, as reflected in the financial statements or
projections contained in the Confidential Information Memorandum.
(c) Approvals. All governmental and third party approvals (including
---------
landlords' and other consents) necessary in connection with the continuing
operations of the Company and its Subsidiaries and the transactions
contemplated hereby shall have been obtained and be in full force and
effect, and all applicable waiting periods shall have expired without any
action being taken or threatened by any competent authority which would
restrain, prevent or otherwise impose adverse conditions on the financing
contemplated hereby.
(d) Existing Credit Agreements. All amounts outstanding under the
--------------------------
Existing Credit Agreements shall have been assumed, absorbed and refinanced
by the Loans and other extensions of credit hereunder, and all collateral
security (other than the Mortgages) provided on account of the Existing
Facilities shall have been released.
(e) Redemption of Senior 10-3/4% Notes. The Agents shall have
----------------------------------
received forms of documents to be used in connection with the Company's
call for redemption of the Senior 10-3/4% Notes and shall be satisfied that
such call will be made promptly following the Closing Date (with the
Company hereby covenanting and agreeing to effect such call within 30 days
following the Closing Date).
(f) Sale and Leaseback Facility. The Company shall have received net
---------------------------
cash proceeds of at least $40,000,000 from the GE Sale/Leaseback under
terms satisfactory to the Agents.
(g) Fees. The Lenders, the Syndication Agent and the Administrative
----
Agent shall have received all fees required to be paid, and all expenses
for which invoices have been presented, on or before the Closing Date.
(h) Business Plan. The Lenders shall have received a satisfactory
-------------
business plan for fiscal years 1998-2006 and a satisfactory written
analysis of the business and prospects of the Company and its Subsidiaries
for the period from the Closing Date through the final maturity of the Term
Loans.
(i) Capital Structure. The legal and capital structure of the Loan
-----------------
Parties shall be satisfactory to the Agents.
(j) Lien Searches. The Administrative Agent shall have received the
-------------
results of a recent lien search in each of the domestic jurisdictions where
assets of the Loan Parties are located, and such search shall reveal no
liens on any of the assets of the Company or its Subsidiaries except for
liens permitted by Section 8.3 or liens to be discharged on or prior to the
Closing Date pursuant to documentation satisfactory to the Agents.
(k) Environmental Reports. The Administrative Agent shall have
---------------------
received the environmental reports with respect to the real properties
owned or leased by the Company and its Subsidiaries issued by Pilko &
Associates, Inc. in May 1997, with respect to the Company's European
operations, and October 1997, with respect to the
<PAGE>
69
Company's North American operations, and such reports shall be addressed to
the Agents.
(l) Closing Certificate. The Administrative Agent shall have
-------------------
received, with a counterpart for each Lender, a certificate of each Loan
Party, dated the Closing Date, substantially in the form of Exhibit I (or
such other form reasonably acceptable to the Administrative Agent), with
appropriate insertions and attachments.
(m) Legal Opinions. The Administrative Agent shall have received the
--------------
following executed legal opinions:
(i) the legal opinion of Kirkland & Ellis, counsel to the
Company and its Subsidiaries, substantially in the form of Exhibit J;
and
(ii) the legal opinion of local counsel in each jurisdiction
where (i) a Borrowing Subsidiary, (ii) a pledgor party to a Pledge
Agreement, (iii) an issuer whose stock is being pledged pursuant to a
Pledge Agreement or (iv) a Subsidiary Guarantor is organized and of
such other special and local counsel as may be required by the
Administrative Agent (other than those opinions with respect to the
Pledge Agreements referred to in paragraph 6.1(a)(v) above which will
not be obtained on the Closing Date).
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent may
reasonably require.
(n) Pledged Stock; Stock Power; Pledged Notes. The Administrative
-----------------------------------------
Agent shall, to the extent required under applicable law, have received (i)
the certificates representing the shares of Capital Stock pledged pursuant
to the Collateral Agreement and pursuant to any Pledge Agreement, together
with an undated stock power for each such certificate executed in blank by
a duly authorized officer of the pledgor thereof and (ii) each promissory
note pledged to the Administrative Agent pursuant to the Collateral
Agreement or any Pledge Agreement endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank satisfactory to the
Agents) by the pledgor thereof, and all other actions required under
applicable law to perfect the security interest of the Administrative Agent
in the shares of Capital Stock and the promissory notes pledged pursuant to
the Collateral Agreement or any Pledge Agreement entered into on the
Closing Date shall have been taken.
(o) Filings, Registrations and Recordings. Each document (including,
-------------------------------------
without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by
the Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 8.3), shall be in proper form for filing,
registration or recordation.
(p) Title Insurance Policy. The Administrative Agent shall have
----------------------
received in respect of each parcel covered by each Mortgage (other than the
UK Mortgages) a
<PAGE>
70
mortgagee's title policy (or policies) or marked up unconditional binder
for such insurance dated the Closing Date. Each such policy shall (i) be
in an amount satisfactory to the Administrative Agent; (ii) be issued at
ordinary rates; (iii) insure that the Mortgage insured thereby creates a
valid first Lien on such parcel free and clear of all defects and
encumbrances, except such as may be approved by the Administrative Agent;
(iv) name the Administrative Agent for the benefit of the Lenders as the
insured thereunder; (v) be in the form of ALTA Loan Policy - 1970 (Amended
10/17/70); (vi) contain such endorsements and affirmative coverage as the
Administrative Agent may request and (vii) be issued by title companies
satisfactory to the Administrative Agent (including any such title
companies acting as co-insurers or reinsurers, at the option of the
Administrative Agent). The Administrative Agent shall have received
evidence satisfactory to it that all premiums in respect of each such
policy, and all charges for mortgage recording tax, if any, have been paid.
(q) Flood Insurance. If requested by the Administrative Agent, the
---------------
Administrative Agent shall have received (i) a policy of flood insurance
which (A) covers any parcel of improved real property which is encumbered
by any Mortgage, (B) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by such Mortgage which is
reasonably allocable to such real property or the maximum limit of coverage
made available with respect to the particular type of property under the
National Flood Insurance Act of 1968 (as amended), whichever is less, and
(C) has a term ending not earlier than the maturity of the indebtedness
secured by such Mortgage and (ii) confirmation that the Company has
received the notice required pursuant to Section 208(e)(3) of Regulation H
of the Board of Governors of the Federal Reserve System.
(r) Copies of Documents. The Administrative Agent shall have
-------------------
received a copy of all recorded documents referred to, or listed as
exceptions to title in, the title policy or policies referred to in
subsection 6.1(p) and a copy, certified by such parties as the
Administrative Agent may deem appropriate, of all other documents affecting
the property covered by each Mortgage.
6.2 Conditions to Each Extension of Credit. The agreement of each
--------------------------------------
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct in all material respects on and as of such date
as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have occurred
----------
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of any of the
Borrowers hereunder shall constitute a representation and warranty by such
Borrower as of the date of such extension of credit that the conditions
contained in this Section 6.2 have been satisfied.
<PAGE>
71
SECTION 7. AFFIRMATIVE COVENANTS
Each of the Borrowers hereby jointly and severally agree that, so long
as the Commitments remain in effect, any Letter of Credit remains outstanding or
any Loan or other amount is owing to any Lender or any Agent hereunder, each of
the Borrowers shall and shall cause each of its Subsidiaries to:
7.1 Financial Statements. Furnish to each Agent and each Lender:
--------------------
(a) as soon as available, but in any event within 100 days after the
end of each fiscal year of the Company, a copy of the audited consolidated
balance sheet of the Company and its consolidated Subsidiaries and the
unaudited consolidating balance sheet of the Company's U.S. operations and
the Company's European operations as at the end of such year and the
related audited consolidated and unaudited consolidating statements of
income and of cash flows for such year, and, in the case of the
consolidated statements only, (i) setting forth in comparative form the
figures for the previous year and (ii) reported on without a "going
concern" or like qualification or exception, or qualification arising out
of the scope of the audit, by Arthur Andersen LLP or other independent
certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 50 days
after the end of each of the first three quarterly periods of each fiscal
year of the Company, the unaudited consolidated balance sheet of the
Company and its consolidated Subsidiaries and the unaudited consolidating
balance sheet of the Company's U.S. operations and the Company's European
operations as at the end of such quarter and the related unaudited
consolidated and unaudited consolidating statements of income and of cash
flows for such quarter and the portion of the fiscal year through the end
of such quarter, setting forth in each case in comparative form the figures
for the previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments);
all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).
7.2 Certificates; Other Information. Furnish to each Agent and each
-------------------------------
Lender, or, in the case of clause (f) or (g), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 7.1(a), (i) a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained
of any Default or Event of Default, except as specified in such certificate
and (ii) a certificate of a Responsible Officer containing all information
necessary for determining Excess Cash Flow for the fiscal year covered by
such financial statements;
<PAGE>
72
(b) concurrently with the delivery of any financial statements
pursuant to Section 7.1, a certificate of a Responsible Officer (i) stating
that, to the best of each such Responsible Officer's knowledge, each Loan
Party during such period has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this
Agreement and the other Loan Documents to which it is a party to be
observed, performed or satisfied by it, and that such Responsible Officer
has obtained no knowledge of any Default or Event of Default except as
specified in such certificate, (ii) setting forth all information necessary
for determining compliance by the Company and its Subsidiaries with the
provisions of Sections 8.1 and 8.7 as of the last day of the fiscal quarter
or fiscal year of the Company, as the case may be, and (y) to the extent
not previously disclosed to the Administrative Agent, a listing of any
actions required to be taken by the Administrative Agent in order to cause
the Company and its Subsidiaries to be in compliance with the provisions of
Section 4.6 of the Collateral Agreement;
(c) as soon as available, and in any event no later than 50 days
after the end of each fiscal year of the Company, a detailed consolidated
budget for the following fiscal year (including a projected consolidated
balance sheet of the Company and its Subsidiaries as of the end of the
following fiscal year, and the related consolidated statements of projected
cash flow, projected changes in financial position and projected income),
and, as soon as available, significant revisions, if any, of such budget
and projections with respect to such fiscal year (collectively, the
"Projections"), which Projections shall in each case be accompanied by a
-----------
certificate of a Responsible Officer stating that such Projections are
based on reasonable estimates, information and assumptions and that such
Responsible Officer has no reason to believe that such Projections are
incorrect or misleading in any material respect;
(d) within 50 days after the end of each fiscal quarter of the
Company, a narrative discussion and analysis of the financial condition and
results of operations of the Company and its Subsidiaries for such fiscal
quarter and for the period from the beginning of the then current fiscal
year to the end of such fiscal quarter, as compared to the portion of the
Projections covering such periods and to the comparable periods of the
previous year;
(e) within five days after the same are sent, copies of all financial
statements and reports which the Company sends to the holders of any class
of its debt securities or public equity securities and within five days
after the same are filed, copies of all financial statements and reports
which the Company may make to, or file with, the Securities and Exchange
Commission or any successor or analogous Governmental Authority;
(f) promptly, copies of all material environmental appraisals and
similar reports prepared for the Company and its Subsidiaries by
independent environmental consultants which any Lender may from time to
time reasonably request after notification of the preparation thereof by
the Company; the Company hereby agrees that it will promptly obtain from
Pilko & Associates (or other independent environmental consultants
reasonably acceptable to the Required Lenders) updates of the environmental
reports referenced in Section 6.1(k) upon the written request of the
<PAGE>
73
Administrative Agent or the Required Lenders (but not more frequently than
annually); and
(g) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
----------------------
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Company or its Subsidiaries, as the case may be.
7.4 Conduct of Business and Maintenance of Existence, etc. (a) (i)
------------------------------------------------------
Preserve, renew and keep in full force and effect its corporate existence and
(ii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case, as otherwise permitted by Section 8.4 and except, in the case of
clause (ii) above, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
7.5 Maintenance of Property; Insurance. (a) Keep all Property
----------------------------------
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted and (b) maintain with financially sound and
reputable insurance companies insurance on all its Property in at least such
amounts and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually insured
against in the same general area by companies engaged in the same or a similar
business.
7.6 Inspection of Property; Books and Records; Discussions. (a)
------------------------------------------------------
Keep proper books of records and account in which full, true and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities and (b)
permit representatives of any Lender (upon request through the Administrative
Agent) to visit and inspect any of its properties and examine and make abstracts
from any of its books and records at any reasonable time and to discuss the
business, operations, properties and financial and other condition of the
Company and its Subsidiaries with officers and employees of the Company and its
Subsidiaries and with its independent certified public accountants; provided
--------
that, unless a Default or an Event of Default has occurred and is continuing,
the Lenders shall coordinate their visits pursuant to this clause (b) so that,
in the aggregate, such visits, inspections and examinations by the Lenders
(without limiting the frequency of visits, inspections and examinations by the
Agents) occur not more frequently than quarterly.
7.7 Notices. Promptly give notice to the Administrative Agent and
-------
each Lender of:
(a) the occurrence of any Default or Event of Default;
<PAGE>
74
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the Company
or any of its Subsidiaries and any Governmental Authority, which in either
case, if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Company or any of its
Subsidiaries (i) which the Company believes, in good faith, could
reasonably be expected to result in liability to the Company and its
Subsidiaries (regardless of whether covered by insurance) in excess of
$2,500,000 or (ii) in which injunctive or similar relief is sought;
(d) the following events, as soon as possible and in any event within
30 days after the Company knows or has reason to know thereof: (i) the
occurrence of any Reportable Event with respect to any Plan, a failure to
make any required contribution to a Plan, the creation of any Lien in favor
of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC or
the Company or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Plan; and
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 7.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the Company or the relevant Subsidiary proposes
to take with respect thereto.
7.8 Environmental Laws. (a) Comply in all material respects with,
------------------
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
7.9 Interest Rate Protection. In the case of the Company, within 180
------------------------
days after the Closing Date, enter into Interest Rate Protection Agreements to
the extent necessary to provide that at least $100,000,000 of the aggregate
principal amount of the Term Loans is subject to either a fixed interest rate or
interest rate protection for a period and on other terms and conditions
reasonably satisfactory to the Agents.
7.10 Additional Collateral, etc. (a) With respect to any Property
--------------------------
acquired after the Closing Date by the Company or any of its Domestic
Subsidiaries (other than (x)
<PAGE>
75
any Property described in paragraph (b) or (c) below and (y) any Property
subject to a Lien expressly permitted by Section 8.3(g)) as to which the
Administrative Agent, for the benefit of the Lenders, does not have a perfected
Lien, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Collateral Agreement or such other documents as the
Administrative Agent deems necessary or advisable in order to grant to the
Administrative Agent, for the benefit of the Lenders, a security interest in
such Property and (ii) take all actions necessary or advisable to grant to the
Administrative Agent, for the benefit of the Lenders, a perfected first priority
security interest in such Property, including without limitation, the filing of
Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Collateral Agreement or by law or as may be requested by the
Administrative Agent.
(b) With respect to any fee interest acquired after the Closing Date
by the Company or any of its Subsidiaries in any real property located in the
United States having a fair market value (together with improvements thereof) of
at least $5,000,000, promptly (i) execute and deliver a first priority Mortgage
in favor of the Administrative Agent, for the benefit of the Lenders, covering
such real property, (ii) if requested by the Administrative Agent, provide the
Lenders with (x) title and extended coverage insurance covering such real
property in an amount at least equal to the purchase price of such real estate
(or such other amount as shall be reasonably specified by the Administrative
Agent) as well as a current survey thereof, together with a surveyor's
certificate if customary under local practice in the relevant jurisdiction and
(y) any consents or estoppels reasonably deemed necessary or advisable by the
Administrative Agent in connection with such mortgage or deed of trust, each of
the foregoing in form and substance reasonably satisfactory to the
Administrative Agent and (iii) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent; provided, however, that the
-------- -------
provisions of this clause (b) shall not apply with respect to fee interests in
real property to the extent that (x) such real property is subject to a Lien
expressly permitted by Section 8.3(g) or (y) the Administrative Agent determines
that the costs of obtaining a security interest in such real property are
excessive in relation to the value of the security to be afforded thereby.
(c) With respect to any new Subsidiary created or acquired after the
Closing Date by the Company or any of its Subsidiaries, promptly:
(i) execute and deliver to the Administrative Agent such amendments
to the Collateral Agreement or an additional Pledge Agreement, and take
such other actions, as the Administrative Agent or the Syndication Agent
deems necessary or advisable in order to grant to the Administrative Agent,
for the benefit of the relevant Lenders, a perfected first priority
security interest in the Capital Stock of such new Subsidiary which is
owned by the Company or any of its Subsidiaries, including, without
limitation, the delivery to the Administrative Agent of the certificates
representing such Capital Stock, together with undated stock powers, in
blank, executed and delivered by a duly authorized officer of the Company
or such Subsidiary, as the case may be;
(ii) in the case of any Domestic Subsidiary, cause such Subsidiary
(A) to become a party to the Collateral Agreement and to execute a Domestic
Obligations
<PAGE>
76
Guarantor Joinder Agreement and a Foreign Obligations Guarantor Joinder
Agreement and (B) to take such actions necessary or advisable to grant to
the Administrative Agent for the benefit of the Lenders a perfected first
priority security interest in the Collateral described in the Collateral
Agreement with respect to such new Subsidiary, including, without
limitation, the filing of Uniform Commercial Code financing statements in
such jurisdictions as may be required by the Collateral Agreement or by law
or as may be requested by the Administrative Agent;
(iii) in the case of any Foreign Subsidiary, cause such Subsidiary to
execute a Foreign Obligations Guarantor Joinder Agreement; and
(v) if requested by the Administrative Agent, deliver to the
Administrative Agent legal opinions and any other necessary documentation
relating to the matters described above, which opinions and documentation
shall be in form and substance, and, in the case of opinions, from counsel,
reasonably satisfactory to the Administrative Agent;
provided, however, that any actions described in this Section 7.10 need not be
- -------- -------
taken by or with respect to any Foreign Subsidiary to the extent that (x) such
Foreign Subsidiary and its Subsidiaries had consolidated revenues for the
immediately preceding four fiscal quarters and consolidated assets as of the
last day of the most recently completed fiscal quarter which were less than
$2,500,000, (y) the taking of such action would, in the good faith judgment of
the Company (which shall be promptly notified in writing to the Agents), cause
such the Company or any of its Subsidiaries to be subject to material adverse
tax consequences or would cause the Company or any of its Subsidiaries (or any
of its respective officers, directors or employees) to be subject to material
adverse legal consequences or (z) in the reasonable judgment of the Agents, the
costs related to the taking of such actions would be uneconomic relative to the
benefits which would reasonably be expected to be afforded therefrom.
7.11 Clean-Down. Cause the aggregate outstanding principal amount of
----------
Revolving Credit Loans and Swing Line Loans to be not more than $105,000,000 for
a period of 30 consecutive days during the period from and including February 1
through and including June 30 of each year.
SECTION 8. NEGATIVE COVENANTS
Each of the Borrowers hereby jointly and severally agree that, so long
as the Commitments remain in effect, any Letter of Credit remains outstanding or
any Loan or
<PAGE>
77
other amount is owing to any Lender or any Agent hereunder, each of the
Borrowers shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly:
8.1 Financial Condition Covenants.
-----------------------------
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
---------------------------
Ratio as at the last day of any period of four consecutive fiscal quarters of
the Company ending during any period set forth below to exceed the ratio set
forth below opposite such period:
<TABLE>
<CAPTION>
Consolidated
Period Leverage Ratio
------ --------------
<S> <C>
March 31, 1998 through June 30, 1998 5.00 to 1.0
July 1, 1998 through December 31, 1998 5.25 to 1.0
January 1, 1999 through June 30, 1999 4.70 to 1.0
July 1, 1999 through December 31, 1999 4.95 to 1.0
January 1, 2000 through June 30, 2000 3.75 to 1.0
July 1, 2000 through December 31, 2000 4.00 to 1.0
January 1, 2001 through June 30, 2001 3.25 to 1.0
July 1, 2001 through December 31, 2001 3.50 to 1.0
January 1, 2002 through June 30, 2002 2.75 to 1.0
July 1, 2002 through December 31, 2002 3.00 to 1.0
January 1, 2003 through June 30, 2003 2.75 to 1.0
July 1, 2003 through December 31, 2003 3.00 to 1.0
January 1, 2004 through June 30, 2004 2.75 to 1.0
July 1, 2004 through December 31, 2004 3.00 to 1.0
</TABLE>
(b) Consolidated Fixed Charge Coverage Ratio. Permit the
----------------------------------------
Consolidated Fixed Charge Coverage Ratio for any period of four consecutive
fiscal quarters of the Company ending during any period set forth below to be
less than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Consolidated Fixed
Period Charge Coverage Ratio
------ ---------------------
<S> <C>
March 31, 1998 through December 31, 1998 1.20 to 1.0
January 1, 1999 through December 31, 1999 1.30 to 1.0
January 1, 2000 through December 31, 2000 1.35 to 1.0
January 1, 2001 and thereafter 1.75 to 1.0
</TABLE>
(c) Minimum Consolidated EBITDA. Permit Consolidated EBITDA for any
---------------------------
period of four consecutive fiscal quarters of the Company ending during any
period set forth below to be less than the amount set forth below opposite such
period:
<TABLE>
<CAPTION>
Consolidated
Period EBITDA
------ ------------
<S> <C>
March 31, 1998 through December 31, 1998 $235,000,000
January 1, 1999 through December 31, 1999 260,000,000
</TABLE>
<PAGE>
78
<TABLE>
<S> <C>
January 1, 2000 through December 31, 2000 280,000,000
January 1, 2001 through December 31, 2001 300,000,000
January 1, 2002 and thereafter 320,000,000
</TABLE>
8.2 Limitation on Indebtedness. Create, incur, assume or suffer to
--------------------------
exist any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
(b) Indebtedness of the Company to any Subsidiary and of any Wholly
Owned Subsidiary Guarantor to the Company or any other Subsidiary;
(c) Indebtedness secured by Liens permitted by Section 8.3(g) in an
aggregate principal amount not to exceed $5,000,000 at any one time
outstanding;
(d) (i) Capital Lease Obligations with respect to the land and
building in Romano, Italy currently owned by an affiliate of Fiat S.p.A. in
an aggregate principal amount not to exceed $21,000,000 at any one time
outstanding, (ii) Capital Lease Obligations (if any) with respect to the GE
Sale-Leaseback and (iii) other Capital Lease Obligations in an aggregate
principal amount (in the case of this clause (iii) only) not to exceed
$10,000,000 at any one time outstanding;
(e) Indebtedness outstanding on the date hereof and listed on
Schedule 8.2(e) and any refinancings, refundings, renewals or extensions
thereof (without any increase in the principal amount thereof) which are
not otherwise prohibited under this Agreement and which do not have the
effect of reducing the collateral security and credit support provided on
account of amounts owing under any Facility hereunder;
(f) Indebtedness which may be deemed to exist pursuant to the
Domestic Receivables Facility, so long as the Domestic Receivables Facility
Attributed Indebtedness at no time exceeds the Domestic Receivables Maximum
Commitment Amount as then in effect;
(g) Acquired Indebtedness may be assumed or continued by a Subsidiary
of the Company acquired pursuant to, or created to effect, a Permitted
Acquisition, so long as the aggregate principal amount of all such Acquired
Indebtedness incurred or assumed during the term of this Agreement does not
exceed $30,000,000 (without regard to the amount of any Acquired
Indebtedness in connection with any of the Permitted Acquisitions set forth
on Schedule 1.1E);
(h) intercompany Indebtedness among the Company and its Subsidiaries
to extent permitted by Sections 8.8(e) through (i);
(i) Indebtedness of any Wholly Owned Subsidiary to the Company or to a
Wholly Owned Subsidiary Guarantor constituting the purchase price in
respect of intercompany transfers of goods made in the ordinary course of
business to the extent not constituting Indebtedness for borrowed money;
<PAGE>
79
(j) Indebtedness of EHE and/or its Subsidiaries which may be deemed
to exist pursuant to the European Receivables Facility, so long as the
European Receivables Facility Attributed Indebtedness at no time exceeds
the European Receivables Maximum Commitment Amount as then in effect;
(k) guarantees made in the ordinary course of business by the Company
or any of its Subsidiaries of obligations of the Company or any Wholly
Owned Subsidiary Guarantor;
(l) Indebtedness of the Company evidenced by the increase in the
principal amount of the Convertible Notes in connection with the accretion
thereof;
(m) short-term Indebtedness of Foreign Subsidiaries incurred for
working capital purposes in an aggregate principal amount not to exceed
$15,000,000 at any one time outstanding; and
(n) additional Indebtedness of the Company or any of its Subsidiaries
in an aggregate principal amount (for the Company and all Subsidiaries) not
to exceed $5,000,000 at any one time outstanding.
8.3 Limitation on Liens. Create, incur, assume or suffer to exist
-------------------
any Lien upon any of its Property or revenues, whether now owned or hereafter
acquired, except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings (provided that adequate reserves with
--------
respect thereto are maintained on the books of the Company or its
Subsidiaries, as the case may be, in conformity with GAAP);
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business which are
not overdue for a period of more than 30 days or which are being contested
in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the
Company or any of its Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 8.3(f),
securing Indebtedness permitted by Section 8.2(e), provided that no such
--------
Lien is spread to
<PAGE>
80
cover any additional Property after the Closing Date and that the amount of
Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Company or any other
Subsidiary incurred pursuant to Section 8.2(c) to finance the acquisition
of fixed or capital assets, provided that (i) such Liens shall be created
--------
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any Property other than
the Property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease (including any
capital lease) entered into by the Company or any other Subsidiary in the
ordinary course of its business and covering only the assets so leased; and
(j) Liens arising from precautionary UCC financing statement filings
regarding operating leases entered into by the Company or any of its
Subsidiaries in the ordinary course of business;
(k) Liens on accounts receivable and proceeds thereof, in each case
so long as (i) such accounts receivable are sold pursuant to the Domestic
Receivables Facility in accordance with the requirements of Section 8.5(d)
and (ii) the amount of Domestic Receivables Facility Attributed
Indebtedness at such time shall not exceed the Domestic Receivables Maximum
Commitment Amount;
(l) Liens on accounts receivable and proceeds thereof, in each case
so long as (i) such accounts receivable are sold pursuant to the European
Receivables Facility in accordance with the requirements of Section 8.5(e)
and (ii) the amount of European Receivables Facility Attributed
Indebtedness at such time shall not exceed the European Receivables Maximum
Commitment Amount;
(m) Liens securing Acquired Indebtedness; provided that (i) other
--------
than in the case of the Schumacher Acquisition, such Liens existed prior
to, and were not created in contemplation of, the respective Permitted
Acquisition, and (ii) such Liens apply only to the properties or assets so
acquired pursuant to the respective Permitted Acquisition;
(n) attachment, judgment or other similar Liens arising in connection
with court or arbitration proceedings, provided that (i) the same are
--------
discharged, or that execution or enforcement thereof is stayed pending
appeal, within 30 days or (in the case of any execution or enforcement
pending appeal) such lesser time during which such appeal may be taken and
(ii) the circumstances giving rise to such Liens do not constitute an Event
of Default hereunder; and
(o) other Liens not incurred in connection with Indebtedness or
Contingent Obligations which (i) are incidental to the conduct of the
business of the Borrower and its Subsidiaries or the ownership of any of
their assets and (ii) do not in any case
<PAGE>
81
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the business of the Borrower or any
of its Subsidiaries.
8.4 Limitation on Fundamental Changes. Enter into any merger,
---------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business except:
(a) any Domestic Subsidiary of the Company may be merged or
consolidated with or into the Company (provided that the Company shall be
--------
the continuing or surviving corporation) or with or into any Wholly Owned
Subsidiary Guarantor which is a Domestic Subsidiary (provided that the
--------
Wholly Owned Subsidiary Guarantor shall be the continuing or surviving
corporation);
(b) any Domestic Subsidiary of the Company may Dispose of any or all
of its assets (upon voluntary liquidation or otherwise) to the Company or
any Wholly Owned Subsidiary Guarantor which is a Domestic Subsidiary;
(c) any Foreign Subsidiary of the Company (other than any Borrowing
Subsidiary) may be merged or consolidated with or into, or may Dispose of
any or all of its assets (upon voluntary liquidation or otherwise) to, any
other Foreign Subsidiary of the Company; provided that the Administrative
--------
Agent shall not be required to release any security interests in assets
thereof, except in connection with the simultaneous grant by the surviving
entity to the Administrative Agent of security interests in the same
assets; and
(d) any Borrowing Subsidiary may (i) be merged or consolidated with
or into any other Borrowing Subsidiary or any other Foreign Subsidiary
(provided that, in the case of a merger or consolidation with or into a
--------
Foreign Subsidiary which is not a Borrowing Subsidiary, the Borrowing
Subsidiary shall be the surviving entity thereof) or (ii) Dispose of any or
all of its assets (upon voluntary liquidation or otherwise) to any other
Borrowing Subsidiary or to any Wholly Owned Subsidiary Guarantor which is a
Foreign Subsidiary; provided that none of the events described in this
paragraph (d) shall have the effect of reducing the collateral security and
credit support provided on account of amounts owing under any Facility
hereunder.
8.5 Limitation on Sale of Assets. Dispose of any of its Property or
----------------------------
business (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person,
except:
(a) the sale of inventory in the ordinary course of business;
(b) Dispositions permitted by Section 8.4;
(c) the sale or issuance of any Subsidiary's Capital Stock to (i) the
Company, (ii) any Wholly Owned Subsidiary Guarantor or (iii) in the case of
Capital Stock of any Foreign Subsidiary, any other Subsidiary of the
Company which (immediately prior to such sale or issuance) holds Capital
Stock of such Foreign Subsidiary (provided that, in the case of this clause
--------
(iii) only, the percentage of the issued and
<PAGE>
82
outstanding Capital Stock of such Foreign Subsidiary which is held by such
purchasing Subsidiary immediately prior to such sale or issuance is
identical to the percentage held by it after giving effect thereto);
(d) the sale of accounts receivable pursuant to the Domestic
Receivables Facility, so long as the amount of Domestic Receivables
Facility Attributed Indebtedness shall at no time outstanding exceed the
Domestic Receivables Maximum Commitment Amount;
(e) the sale of accounts receivable pursuant to the European
Receivables Facility, so long as the amount of European Receivables
Facility Attributed Indebtedness shall at no time outstanding exceed the
European Receivables Maximum Commitment Amount;
(f) the sale to an affiliate of Fiat S.p.A. in the ordinary course of
business and without recourse of accounts receivable owing to the Company
and its Subsidiaries by Fiat S.p.A. and its Subsidiaries, so long as the
aggregate undiscounted face amount of all receivables so sold (but
remaining outstanding) does not exceed $30,000,000 at any one time
outstanding;
(g) any Asset Sale by the Company and its Subsidiaries with respect
to (i) assets described on Schedule 8.5 and (ii) other assets having a fair
market value not to exceed $5,000,000 in the aggregate for any fiscal year
of the Company; provided, that (x) any such Asset Sale described in this
--------
clause (g) is consummated for fair market value, (y) at least 75% of the
consideration received by the Company and its Subsidiaries on account of
such Asset Sale shall be in the form of cash and (z) the proceeds of such
Asset Sale are applied in accordance with the provisions of Section 3.5(b);
(h) any Recovery Event, provided, that the proceeds of such Recovery
--------
Event are applied in accordance with the provisions of Section 3.5(b).
8.6 Limitation on Dividends. Declare or pay any dividend (other than
-----------------------
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of the Company or any
Subsidiary or any warrants or options to purchase any such Capital Stock,
whether now or hereafter outstanding, or make any other distribution in respect
thereof, either directly or indirectly, whether in cash or property or in
obligations of the Company or any Subsidiary (collectively, "Restricted
----------
Payments"), except that:
- --------
(a) any Subsidiary (i) may make Restricted Payments to the Company or
any Wholly Owned Subsidiary Guarantor and (ii) if such Subsidiary is not a
Wholly Owned Subsidiary, may make Restricted Payments to its shareholders
generally, so long as the Company or its Subsidiary which owns the equity
or other ownership interests in the Subsidiary making the Restricted
Payment receives at least its proportionate share of such Restricted
Payment (based upon its relative ownership interest in the Subsidiary
making such Restricted Payment);
<PAGE>
83
(b) so long as no Default or Event of Default shall have occurred and
be continuing, the Company may purchase its common stock or common stock
options from present or former directors, officers or employees of the
Company or any Subsidiary (i) upon the death, disability or termination of
employment of such director, officer or employee, provided, that the
--------
aggregate amount of such payments pursuant to this clause (b) shall not
exceed $2,000,000 during the term of this Agreement;
(c) so long as no Default or Event of Default shall have occurred or
be continuing or would occur as a result thereof, the Company may pay
regular quarterly dividends on its outstanding common stock, provided, that
--------
the aggregate amount of such dividends paid during any fiscal year of the
Company shall not exceed $4,000,000; and
(d) so long as no Default or Event of Default shall have occurred or
be continuing or would occur as a result thereof, the Company may redeem
rights granted to the shareholders of the Company pursuant to its
shareholder rights plan for a nominal amount.
8.7 Limitation on Capital Expenditures. Make or commit to make (by
----------------------------------
way of the acquisition of securities of a Person or otherwise) any Capital
Expenditure, except Capital Expenditures of the Company and its Subsidiaries in
the ordinary course of business not exceeding $100,000,000 during any fiscal
year of the Company; provided, that:
--------
(a) up to $10,000,000 of any such amount referred to above, if not so
expended in the fiscal year for which it is permitted, may be carried over
for expenditure in the next succeeding fiscal year;
(b) Capital Expenditures made during any fiscal year shall be deemed
made, first, in respect of amounts permitted for such fiscal year as
-----
provided above and, second, in respect of amounts carried over from the
------
prior fiscal year pursuant to subclause (i) above;
(c) Capital Expenditures made with the proceeds of Recovery Events to
repair, replace or reconstruct the assets on account of which such Recovery
Event occurred shall be deemed not to constitute Capital Expenditures for
purposes of this Section 8.7; and
(d) in the event that the Company and its Subsidiaries shall elect to
purchase the land and building in Romano, Italy currently owned by an
affiliate of Fiat S.p.A. (rather than entering into a Capital Lease with
respect thereto) during the 1998 fiscal year of the Company, the purchase
price paid for such land and building shall be deemed not to constitute a
Capital Expenditure for purposes of this Section 8.7.
8.8 Limitation on Investments, Loans and Advances. Make any advance,
---------------------------------------------
loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase
<PAGE>
84
any stock, bonds, notes, debentures or other securities of or any assets
constituting all or a material part of a business unit of, or make any other
investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 8.2;
(d) loans and advances to employees of the Company or its
Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation expenses) in an
aggregate amount for the Company and its Subsidiaries not to exceed
$5,000,000 at any one time outstanding;
(e) the Company or any of its Subsidiaries may make intercompany
loans to any Wholly Owned Subsidiary so long as each such intercompany loan
of the Dollar Equivalent of $1,000,000 or more in principal amount is
evidenced by a promissory note (in form and substance satisfactory to the
Administrative Agent) which is pledged in favor of the Administrative Agent
pursuant to the Collateral Agreement or a Pledge Agreement;
(f) investments existing on the Closing Date and set forth on
Schedule 8.8(j);
(g) investments in connection with (i) the Interest Rate Protection
Agreements described in Section 7.9 and other non-speculative Interest Rate
Protection Agreements, (ii) non-speculative commodities futures agreements
for raw materials reasonably related to the production needs of the Company
and its Subsidiaries and (iii) non-speculative foreign currency hedging
agreements;
(h) Permitted Acquisitions; provided that (i) the aggregate Purchase
--------
Prices paid by the Company and its Subsidiaries on account of all Permitted
Acquisitions as of any time during the term of this Agreement, other than
the acquisitions described on Schedule 1.1E and net of Designated
Disposition Proceeds, shall not exceed the Permitted Acquisition Maximum
Amount at such time, (ii) no Default or Event of Default shall have
occurred and be continuing immediately prior to or after the consummation
of such Permitted Acquisition, (iii) any Person which becomes a Subsidiary
of the Company by virtue of any such acquisition shall comply with the
provisions of Section 7.10(c) (without giving effect to the proviso
thereto), (iv) prior to consummating any Permitted Acquisition the Lenders
shall have received evidence reasonably satisfactory to them demonstrating
pro forma compliance by the Company with Section 8.1 both before and after
giving effect to such Permitted Acquisition and (v) the Company shall have
provided to the Agents and the Lenders a Permitted Acquisition Notice with
respect to such Permitted Acquisition at least 30 days' prior to the
consummation thereof; and
(i) investments in Permitted Joint Ventures in an aggregate amount
thereof not to exceed $3,000,000 individually and $10,000,000 for all
investments made pursuant to this paragraph (i).
<PAGE>
85
8.9 Limitation on Optional Payments and Modifications of Debt
---------------------------------------------------------
Instruments, etc. (a) Make or offer to make any payment, prepayment,
- -----------------
repurchase or redemption of or otherwise defease or segregate funds with respect
to the Convertible Notes, the DM Notes or the Senior 10% Notes (other than
scheduled interest payments required to be made in cash); provided, so long as
--------
no Default or Event of Default shall have occurred and is continuing, the
Company or any of its Subsidiaries may at any time prepay, repurchase or redeem
Eligible Prepayment Debt in an aggregate principal amount not to exceed the
Available Prepayment Amount at such time, (b) amend, modify, waive or otherwise
change, or consent or agree to any amendment, modification, waiver or other
change to, any of the terms of the Convertible Notes, the DM Notes or the Senior
10% Notes (other than any such amendment, modification, waiver or other change
which (i) would extend the maturity or reduce the amount of any payment of
principal thereof or which would reduce the rate or extend the date for payment
of interest thereon and (ii) does not involve the payment of a consent fee), (c)
designate any Indebtedness as "Designated Senior Indebtedness" for the purposes
of the Convertible Indenture or (d) amend its certificate of incorporation in
any manner determined by the Administrative Agent to be adverse to the Lenders
without the prior written consent of the Required Lenders.
8.10 Limitation on Transactions with Affiliates. Enter into any
------------------------------------------
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than the Company
or any Wholly Owned Subsidiary Guarantor) unless such transaction is (a)
otherwise permitted under this Agreement, (b) in the ordinary course of business
of the Company or such Subsidiary, as the case may be, and (c) upon fair and
reasonable terms no less favorable to the Company or such Subsidiary, as the
case may be, than it would obtain in a comparable arm's length transaction with
a Person which is not an Affiliate. Notwithstanding the foregoing, the Company
and its Subsidiaries may (i) pay customary fees to non-officer directors of the
Company and (ii) share proceeds of Environmental Insurance Recoveries with
predecessor entities and owners of such predecessor entities on terms deemed
fair and reasonable by the Board of Directors of the Company, as evidenced by a
board resolution.
8.11 Limitation on Sales and Leasebacks. Enter into any arrangement
----------------------------------
with any Person providing for the leasing by the Company or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Company or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Company or such Subsidiary, other than:
(a) any such transactions which are consummated upon terms
satisfactory to the Agents (or, to the extent that the gross proceeds from
such sale or transfer exceed $40,000,000 in the aggregate, the Required
Lenders) and the Net Cash Proceeds from such sale or transfer are applied
in accordance with the provisions of Section 3.5(b); and
(b) other transactions with respect to equipment which has been
acquired by the Company and its Subsidiaries within 12 months prior to such
transaction; provided that the consideration paid by the Company and its
--------
Subsidiaries on account of the acquisition of such equipment is not
required to be recorded as a Capital
<PAGE>
86
Expenditure in accordance with GAAP; and provided, further that the
--------
aggregate consideration with respect to all such transactions during any
fiscal year of the Company shall not exceed $20,000,000.
8.12 Limitation on Changes in Fiscal Periods. Permit the fiscal year
---------------------------------------
of the Company to end on a day other than March 31 or change the Company's
method of determining fiscal quarters.
8.13 Limitation on Negative Pledge Clauses. Enter into or suffer to
-------------------------------------
exist or become effective any agreement which prohibits or limits the ability of
the Company or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, to secure the Obligations other than (a) this Agreement and
the other Loan Documents, (b) the Convertible Indenture, the Senior 10% Note
Indenture and the DM Agreement and (c) any agreements governing any purchase
money Liens or Capital Lease Obligations otherwise permitted hereby (in which
case, any prohibition or limitation shall only be effective against the assets
financed thereby).
8.14 Limitation on Restrictions on Subsidiary Distributions. Enter
------------------------------------------------------
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of the Company to (a) pay dividends
or make any other distributions in respect of any Capital Stock of such
Subsidiary held by, or pay any Indebtedness owed to, the Company or any other
Subsidiary of the Company, (b) make loans or advances to the Company or any
other Subsidiary of the Company or (c) transfer any of its assets to the Company
or any other Subsidiary of the Company, except for such encumbrances or
restrictions existing under or by reason of (i) any restrictions existing under
the Loan Documents, (ii) any restrictions with respect to a Subsidiary imposed
pursuant to an agreement which has been entered into in connection with the
Disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary, (iii) restrictions existing on the date hereof set forth on Schedule
8.14 and any restrictions contained in any issue of Indebtedness which
refinances Indebtedness with restrictions set forth on Schedule 8.14, so long as
the restrictions contained in such refinancing Indebtedness are no more
restrictive than those contained in the Indebtedness being refinanced, (iv)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of the Company or any of its Subsidiaries, (v) customary
provisions restricting assignment of any licensing agreement entered into by the
Company or any of its Subsidiaries in the ordinary course of business and (vi)
any holder of a Lien permitted pursuant to this Agreement may restrict the
transfer of the respective asset or assets subject thereto.
8.15 Limitation on Lines of Business. (a) Enter into any business,
-------------------------------
either directly or through any Subsidiary, except for those businesses in which
the Company and its Subsidiaries (other than the Domestic Receivables Subsidiary
and the European Receivables Subsidiary) are engaged on the date of this
Agreement or which are reasonably related thereto, (b) permit the Domestic
Receivables Subsidiary to (i) engage in any business activities other than the
purchase, acquisition, sale and pledge of receivables (or interests therein)
pursuant to the Domestic Receivables Facility and borrowings thereunder and any
business activities reasonably incidental thereto, all in accordance with the
Domestic Receivables Facility, and (ii) have any 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
<PAGE>
87
activities or (c) permit the European Receivables Subsidiary to (i) engage in
any 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 (ii) have
any assets or liabilities, other than receivables purchased from or contributed
by the Subsidiaries of the Company engaging in such sales and contributions on
the Closing Date, cash collections therefrom, any investments of such cash
collections and other assets and liabilities reasonably incidental to the
foregoing activities.
SECTION 9. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Any Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
any Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any other amount payable hereunder or under any other Loan
Document, within five days after any such interest or other amount becomes
due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) (i) Any Loan Party sBall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section
7.4(a) (with respect to the Company only), Section 7.7(a), 7.11 or in
Section 8; or
(d) any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section), and
such default shall continue unremedied for a period of 30 days; or
(e) the Company or any of its Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness (including, without
limitation, any Guarantee Obligation, but excluding the Loans) on the
scheduled or original due date with respect thereto; or (ii) default in
making any payment of any interest on any such Indebtedness beyond the
period of grace (not to exceed 30 days), if any, provided in the instrument
or agreement under which such Indebtedness was created; or (iii) default in
the observance or performance of any other agreement or condition relating
to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is
to cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with
the giving of notice if required, such
<PAGE>
88
Indebtedness to become due prior to its stated maturity or (in the case of
any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided, that a default, event or condition described in clause
--------
(i), (ii) or (iii) of this paragraph (e) shall not at any time constitute
an Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the
aggregate $5,000,000; or
(f) (i) the Company or any of its Material Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment
of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or the Company or
any of its Material Subsidiaries shall make a general assignment for the
benefit of its creditors; or (ii) there shall be commenced against the
Company or any of its Material Subsidiaries any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60 days; or
(iii) there shall be commenced against the Company or any of its Material
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(iv) the Company or any of its Material Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) the Company or any of its Material Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Company or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Company or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or
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89
condition, together with all other such events or conditions, if any,
could, in the sole judgment of the Required Lenders, reasonably be expected
to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance as to which notice has been
provided to the relevant insurance company and such insurance company has
not disputed the claim made for payment thereof) of $2,500,000 or more, and
all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 30 days from the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason (other
than any termination in accordance with its terms), to be in full force and
effect, or any Loan Party or any Affiliate of any Loan Party shall so
assert, or any Lien created by any of the Security Documents shall (except
to the extent released in accordance with the terms hereof) cease to be
enforceable and of the same effect and priority purported to be created
thereby; or
(j) The guarantee contained in Section 10 shall cease, for any reason
(other than in connection with the release of all Guarantors parties
thereto in accordance with the terms hereof), to be in full force and
effect or any Loan Party or any Affiliate of any Loan Party shall so
assert; or
(k) (i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), shall become, or obtain rights (whether by means or
warrants, options or otherwise) to become, the "beneficial owner" (as
defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act), directly or
indirectly, of more than 20% of the outstanding common stock of the
Company; (ii) the board of directors of the Company shall cease to consist
of a majority of Continuing Directors; (iii) the Company shall cease to own
and control, of record and beneficially, directly, 100% of each class of
outstanding Capital Stock of any Borrowing Subsidiary free and clear of all
Liens (except Liens created by the Collateral Agreement); or (iv) a
Specified Change of Control shall occur; or
(l) (i) the Convertible Notes shall cease, for any reason, to be
validly subordinated to the Obligations, as provided in the Convertible
Indenture or (ii) any Loan Party, any Affiliate of any Loan Party, the
trustee in respect of the Convertible Notes or the holders of at least 25%
in aggregate principal amount of the Convertible Notes shall so assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above, automatically the Commitments
shall immediately terminate and the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the other Loan
Documents (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) shall immediately become due
and payable, and (B) if such event is any other Event of Default, any or all of
the following actions may be taken: (i) with the consent of the Majority
Revolving Credit Facility Lenders,
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90
the Administrative Agent may, or upon the request of the Majority Revolving
Credit Facility Lenders, the Administrative Agent shall, by notice to the
Company declare the Revolving Credit Commitments to be terminated forthwith,
whereupon the Revolving Credit Commitments shall immediately terminate; (ii)
with the consent of the Majority Facility Lenders in respect of the Tranche B
Term Loan Facility, the Administrative Agent may, or upon the request of the
Majority Facility Lenders in respect of the Tranche B Term Loan Facility, the
Administrative Agent shall, by notice to the Company, on behalf of itself and
the Borrowing Subsidiaries, declare the commitment of the Tranche B Term Loan
Lenders to make up to one additional term loan to the Borrowers after the
Closing Date as described in Section 2.1 to be terminated forthwith, whereupon
such commitment shall immediately terminate; and (iii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the Company,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents (including,
without limitation, all amounts of L/C Obligations, whether or not the
beneficiaries of the then outstanding Letters of Credit shall have presented the
documents required thereunder) to be due and payable forthwith, whereupon the
same shall immediately become due and payable. With respect to all Letters of
Credit with respect to which presentment for honor shall not have occurred at
the time of an acceleration pursuant to this paragraph, the Company shall at
such time deposit in a cash collateral account opened by the Administrative
Agent an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other obligations of the Borrowers hereunder and under the other Loan
Documents. After all such Letters of Credit shall have expired or been fully
drawn upon, all Reimbursement Obligations shall have been satisfied and all
other obligations of the Borrowers hereunder and under the other Loan Documents
shall have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Company (or such other Person as may be
lawfully entitled thereto).
SECTION 10. GUARANTEE
10.1 Guarantee. In order to induce the Administrative Agent and the
---------
Lenders to execute and deliver this Agreement and to make or maintain the Loans
hereunder, and in consideration thereof:
(a) Subject to the exceptions set forth in Schedule 10.1, each of the
Guarantors hereby unconditionally and irrevocably guarantees to the
Administrative Agent, for the ratable benefit of the Tranche A Term Loan
Lenders, the Tranche B Term Loan Lenders and the Revolving Credit Lenders
(and their respective affiliates), the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or
otherwise) of the Foreign Obligations, and each of the Guarantors further
agrees to pay any and all expenses (including, without limitation, all
reasonable fees, charges and disbursements of counsel) which may be paid or
incurred by the Administrative Agent or such Lenders in enforcing, or
obtaining advice of counsel in respect of, any of their rights under the
guarantee contained in this Section 10. Without limiting the generality of
the foregoing, each Guarantor's liability shall extend to all amounts that
constitute part of the Foreign Obligations and
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91
would be owed by the Borrowing Subsidiaries but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving a Borrowing Subsidiary. The
guarantee contained in this Section 10, subject to Section 10.5, shall
remain in full force and effect until the Foreign Obligations are paid in
full, notwithstanding that from time to time prior thereto any or all of
the Borrowing Subsidiaries may be free from any Foreign Obligations.
(b) Each of the Domestic Subsidiary Guarantors hereby unconditionally
and irrevocably guarantees to the Administrative Agent, for the ratable
benefit of the Tranche B Term Loan Lenders and their respective affiliates
(with respect to Tranche B Term Loans made to the Company) and the
Revolving Credit Lenders and their respective affiliates (with respect to
Revolving Credit Loans made to, and Letters of Credit issued for the
account of, the Company), the prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the
Domestic Obligations, and each of the Domestic Subsidiary Guarantors
further agrees to pay any and all expenses (including, without limitation,
all reasonable fees, charges and disbursements of counsel) which may be
paid or incurred by the Administrative Agent or such Lenders in enforcing,
or obtaining advice of counsel in respect of, any of their rights under the
guarantee contained in this Section 10. Without limiting the generality of
the foregoing, each of the Domestic Subsidiary Guarantor's liability shall
extend to all amounts that constitute part of the Domestic Obligations and
would be owed by the Company but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy, reorganization or
similar proceeding involving the Company. The guarantee contained in this
Section 10, subject to Section 10.5, shall remain in full force and effect
until the Domestic Obligations are paid in full, notwithstanding that from
time to time prior thereto the Company may be free from any Domestic
Obligations.
(c) Each Guarantor agrees that whenever, at any time, or from time to
time, it shall make any payment to the Administrative Agent or any Lender
on account of its liability under this Section 10, it will notify the
Administrative Agent and such Lender in writing that such payment is made
under the guarantee contained in this Section 10 for such purpose. No
payment or payments made by a Guaranteed Party or any other Person or
received or collected by the Administrative Agent or any Lender from a
Guaranteed Party or any other Person by virtue of any action or proceeding
or any setoff or appropriation or application, at any time or from time to
time, in reduction of or in payment of the Related Guaranteed Obligations
of such Guarantor, shall be deemed to modify, reduce, release or otherwise
affect the liability of such Guarantor under this Section 10 which,
notwithstanding any such payment or payments, shall remain liable for its
Related Guaranteed Obligations until, subject to Section 10.5, its Related
Guaranteed Obligations are paid in full.
Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the maximum liability of each Domestic Subsidiary Guarantor under this
Section 10 and under the other Loan Documents shall in no event exceed the
amount which can be guaranteed by such Domestic Subsidiary Guarantor under
applicable federal and state laws relating to the insolvency of debtors.
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92
10.2 No Subrogation, Contribution, Reimbursement or Indemnity.
--------------------------------------------------------
Notwithstanding anything to the contrary in this Section 10, each Guarantor
hereby irrevocably waives all rights which may have arisen in connection with
the guarantee contained in this Section 10 to be subrogated to any of the rights
(whether contractual, under the United States Bankruptcy Code (or similar action
under any successor law or under any comparable law), including Section 509
thereof, under common law or otherwise) of the Administrative Agent or any
Lender against the Related Guaranteed Party of such Guarantor or against the
Administrative Agent or any Lender for the payment of its Related Guaranteed
Obligations, nor shall any of the Guarantors seek or be entitled to seek any
contribution or reimbursement from any of its Related Guaranteed Parties in
respect of payments made by such Guarantor hereunder, until all amounts owing to
the Administrative Agent and the Lenders hereunder and under any other Loan
Document shall have been paid in full, no Letters of Credit shall be outstanding
and the Commitments shall have been terminated. If any amount shall be paid to
a Guarantor on account of such subrogation rights at any time when all amounts
owing to the Administrative Agent and the Lenders hereunder and under any other
Loan Document shall not have been paid in full, any Letter of Credit shall be
outstanding and the Commitments shall not have been terminated, such amount
shall be held by such Guarantor in trust for the Administrative Agent and the
relevant Lenders, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the Administrative
Agent in the exact form received by such Guarantor (duly indorsed by such
Guarantor to the Administrative Agent, if required), to be held as collateral
security for and/or then applied against such Guarantor's Related Guaranteed
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine. The provisions of this Section 10.2 shall survive the term
of the guarantee contained in this Section 10 and the payment in full of the
Obligations and the termination of the Commitments.
10.3 Amendments, etc. Each Guarantor shall remain obligated for its
----------------
Related Guaranteed Obligations under this Section 10 notwithstanding that,
without any reservation of rights against such Guarantor, and without notice to
or further assent by such Guarantor, any demand for payment of or reduction in
the principal amount of any of its Related Guaranteed Obligations made by the
Administrative Agent or any Lender may be rescinded by the Administrative Agent
or such Lender, and any of its Related Guaranteed Obligations continued, and its
Related Guaranteed Obligations, or the liability of any other party upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and this
Agreement, any other Loan Document, and any other documents executed and
delivered in connection herewith or therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the requisite group of
Lenders specified by this Agreement may deem advisable from time to time, and
any collateral security, guarantee or right of offset at any time held by the
Administrative Agent or any Lender for the payment of its Related Guaranteed
Obligations may be sold, exchanged, waived, surrendered or released. Neither
the Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for any
Guarantor's Related Guaranteed Obligations or for the guarantee contained in
this Section 10 or any property subject thereto.
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93
10.4 Guarantee Absolute and Unconditional. Each Guarantor waives any
------------------------------------
and all notice of the creation, renewal, extension or accrual of any of its
Related Guaranteed Obligations and notice of or proof of reliance by the
Administrative Agent or any Lender upon the guarantee contained in this Section
10 or acceptance of the guarantee contained in this Section 10; each Guarantor's
Related Guaranteed Obligations, and any of them, shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived, in reliance upon the guarantee contained in this Section 10; and all
dealings between any of the Guarantors or any of their Related Guaranteed
Parties, on the one hand, and the Administrative Agent and the Lenders, on the
other, shall likewise be conclusively presumed to have been had or consummated
in reliance upon the guarantee contained in this Section 10. Each Guarantor
waives diligence, presentment, protest, demand for payment and notice of default
or nonpayment to or upon such Guarantor or any of its Related Guaranteed Parties
with respect to its Related Guaranteed Obligations. The guarantees contained in
this Section 10 shall be construed as continuing, absolute and unconditional
guarantees of payment without regard to (a) the validity or enforceability of
this Agreement or any other Loan Document, any of the Obligations or any
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Administrative Agent or any
Lender, (b) any defense, setoff or counterclaim (other than a defense of payment
or performance) which may at any time be available to or be asserted by any of
the Guaranteed Parties against the Administrative Agent or any Lender, or (c)
any other circumstance whatsoever (with or without notice to or knowledge of any
Guarantor or any of its Related Guaranteed Parties) which constitutes, or might
be construed to constitute, an equitable or legal discharge of a Guaranteed
Party for any of the Obligations, or of any Guarantor under the guarantee
contained in this Section 10, in bankruptcy or in any other instance. When the
Administrative Agent or any Lender is pursuing its rights and remedies under
this Section 10 against any Guarantor, the Administrative Agent or any Lender
may, but shall be under no obligation to, pursue such rights and remedies as it
may have against any of such Guarantor's Related Guaranteed Parties or any other
Person or against any collateral security or guarantee for any of the
Obligations or any right of offset with respect thereto, and any failure by the
Administrative Agent or any Lender to pursue such other rights or remedies or to
collect any payments from any of a Guarantor's Related Guaranteed Parties or any
such other Person or to realize upon any such collateral security or guarantee
or to exercise any such right of offset, or any release of any of such Related
Guaranteed Parties or any such other Person or of any such collateral security,
guarantee or right of offset, shall not relieve such Guarantor of any liability
under this Section 10, and shall not impair or affect the rights and remedies,
whether express, implied or available as a matter of law, of the Administrative
Agent and the Lenders against such Guarantor.
10.5 Reinstatement. The guarantees contained in this Section 10
-------------
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of a Guarantor's Related Guaranteed
Obligations is rescinded or must otherwise be restored or returned by the
Administrative Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of any of such Guarantor's Related Guaranteed
Parties or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, any of such Guarantor's
Related Guaranteed Parties or any substantial part of any of their Property, or
otherwise, all as though such payments had not been made.
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94
10.6 Payments. Each of the Guarantors hereby agrees that its Related
--------
Guaranteed Obligations will be paid to the Administrative Agent without set-off
or counterclaim at the Payment Office in the currency in which such obligations
were originally denominated.
10.7 Limited Effect of Limitations on Guarantees. Except as
-------------------------------------------
expressly stated therein, nothing in Schedule 10.1 shall limit or prejudice, or
shall be deemed to limit or prejudice, in any fashion any obligations of any
Loan Party (including, without limitation, where the guarantee of such Loan
Party is subject to limitations described on Schedule 10.1) as a Loan Party
under this Agreement or any other Loan Document.
SECTION 11. THE AGENTS
11.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints the Agents as the agents of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes each Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto (including, without limitation, with respect to
the Administrative Agent, the execution of certain of, and the holding,
maintenance and application of the collateral under, the Security Documents and
the Collateral Agency and Intercreditor Agreement). Notwithstanding any
provision to the contrary elsewhere in this Agreement, no Agent shall have any
duties or responsibilities, except those expressly set forth herein, or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against any Agent.
11.2 Delegation of Duties. Each Agent may execute any of its duties
--------------------
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
11.3 Exculpatory Provisions. Neither any Agent nor any of their
----------------------
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the
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95
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books or records of any Loan Party.
11.4 Reliance by Agents. Each Agent shall be entitled to rely, and
------------------
shall be fully protected in relying, upon any instrument, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Loan Parties), independent accountants and other
experts selected by the Administrative Agent. The Agents may deem and treat the
payee of any Note as the owner thereof for all purposes unless a written notice
of assignment, negotiation or transfer thereof shall have been filed with the
Administrative Agent. Each Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other Loan Document
unless it shall first receive such advice or concurrence of the Required Lenders
(or a different requisite group of Lenders if so specified by this Agreement) as
it deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Each Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Lenders (or a different requisite group of Lenders if so specified by
this Agreement), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future holders of
the Loans.
11.5 Notice of Default. No Agent shall be deemed to have knowledge
-----------------
or notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender or the Company referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders (or a different requisite group of Lenders if so specified by this
Agreement); provided that unless and until the Administrative Agent shall have
--------
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
11.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
----------------------------------------
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereinafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will,
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96
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, no Agent shall have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects or
creditworthiness of any Loan Party or any affiliate of a Loan Party which may
come into the possession of such Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
11.7 Indemnification. The Lenders agree to indemnify each Agent in
---------------
its capacity as such (to the extent not reimbursed by the Company and without
limiting the obligation of the Company to do so), ratably according to their
respective Aggregate Exposure Percentages in effect on the date on which
indemnification is sought under this Section 11.7 (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with such Aggregate
Exposure Percentages immediately prior to such date), from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind whatsoever which may at any
time (including, without limitation, at any time following the payment of the
Loans) be imposed on, incurred by or asserted against such Agent in any way
relating to or arising out of, the Commitments, this Agreement, any of the other
Loan Documents or any documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby or any action taken or
omitted by such Agent under or in connection with any of the foregoing; provided
--------
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements which are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted from such Agent's
gross negligence or willful misconduct. The agreements in this Section 11.7
shall survive the payment of the Loans and all other amounts payable hereunder.
11.8 Agent in Its Individual Capacity. Each Agent and its affiliates
--------------------------------
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent was not an Agent. With
respect to its Loans made or renewed by it and with respect to any Letter of
Credit issued or participated in by it, each Agent shall have the same rights
and powers under this Agreement and the other Loan Documents as any Lender and
may exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
11.9 Successor Administrative Agent. The Administrative Agent may
------------------------------
resign as Administrative Agent upon 30 days' notice to the Lenders and the
Company. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 9(a) or Section
9(f) with respect to the Company shall have occurred and be continuing) be
subject to approval by the Company (which approval shall not be
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97
unreasonably withheld or delayed), whereupon such successor agent shall succeed
to the rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor
agent has accepted appointment as Administrative Agent by the date that is 30
days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above. The Syndication Agent may, at
any time, by notice to the Lenders and the Administrative Agent, resign as
Syndication Agent hereunder, whereupon the duties, rights, obligations and
responsibilities hereunder shall automatically be assumed by, and inure to the
benefit of, the Administrative Agent, without any further act by the Syndication
Agent, the Administrative Agent or any Lender. After any retiring Agent's
resignation as Agent, the provisions of this Section 11 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement and the other Loan Documents.
11.10 Authorization to Release Liens. The Administrative Agent is
------------------------------
hereby irrevocably authorized by each of the Lenders to release any Lien
covering any Property of the Company or any of its Subsidiaries that is the
subject of a Disposition which is permitted by this Agreement or which has been
consented to in accordance with Section 12.1.
11.11 Public Deeds for Purposes of Spanish Law. The Administrative
----------------------------------------
Agent is hereby expressly authorized and instructed by the Lenders to public
deed this Agreement in Spain before a Notary or Official Stockbroker, to accept
the public deeding of a pledge by Exide Holding Europe S.A. of all of its shares
in the Spanish company "Sociedad Espanola del Acumulador Tudor, S.A.", to
extinguish such pledge and to make such amendments, additions, supplements or
corrections to the aforesaid public deeds as the Administrative Agent shall, in
its reasonable discretion, deem to be necessary or appropriate.
11.12 The Arrangers. The Arrangers, in their respective capacities
-------------
as such, shall have no duties or responsibilities, and shall incur no liability,
under this Agreement and the other Loan Documents.
SECTION 12. MISCELLANEOUS
12.1 Amendments and Waivers. Neither this Agreement, any other Loan
----------------------
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 12.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may, or
(with the written consent of the Required Lenders) the Agents and each Loan
Party party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders, or the Agents, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any
<PAGE>
98
Default or Event of Default and its consequences; provided, however, that no
-------- -------
such waiver and no such amendment, supplement or modification shall (i) forgive
the principal amount or extend the final scheduled date of maturity of any Loan,
extend the scheduled date or reduced the amount of any scheduled amortization
payment in respect of any Term Loan, reduce the stated rate of any interest, fee
or letter of credit commission payable hereunder or extend the scheduled date of
any payment thereof, or increase the amount or extend the expiration date of any
Lender's Revolving Credit Commitment, in each case without the consent of each
Lender directly affected thereby; (ii) amend, modify or waive any provision of
this Section 12.1 or reduce any percentage specified in the definition of
Required Lenders or Required Prepayment Lenders, consent to the assignment or
transfer by the Company of any of its rights and obligations under this
Agreement and the other Loan Documents, release all or substantially all of the
Collateral or release all or substantially all of the Guarantors from their
obligations under the Collateral Agreement, in each case without the written
consent of all Lenders; (iii) reduce any percentage specified in the definition
of Required Foreign Lenders without the written consent of all Foreign Lenders;
(iv) reduce the percentage specified in the definition of Majority Facility
Lenders or Majority Revolving Credit Facility Lenders without the written
consent of all Lenders under each affected Facility; (v) amend, modify or waive
any provision of Section 11 without the written consent of the Agents; (vi)
amend, modify or waive any provision of Section 2.7 without the written consent
of the Swing Line Lenders; or (viii) amend, modify or waive any provision of
Section 4 without the written consent of the Issuing Lenders. Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the relevant Lenders and shall be binding upon the Loan Parties, the Lenders,
the Administrative Agent and all future holders of the Loans. In the case of
any waiver, the Loan Parties, the Lenders and the Administrative Agent shall be
restored to their former position and rights hereunder and under the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.
12.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed as follows in the case of the Company, the Syndication Agent
and the Administrative Agent, as set forth on Schedule 1.1B hereto, in the case
of the Borrowing Subsidiaries and as set forth in an administrative
questionnaire delivered to the Administrative Agent in the case of the Lenders,
or to such other address as may be hereafter notified by the respective parties
hereto:
The Company: Exide Corporation
645 Penn Street
Reading, Pennsylvania 19612-4205
Attention: Treasurer
Telecopy: (610) 378-0315
Telephone: (610) 378-0315
<PAGE>
99
The Syndication Agent: Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attention: Michele Swanson
Telecopy: (212) 528-0819
Telephone: (212) 526-0330
The Administrative Agent: Credit Suisse First Boston
11 Madison Avenue
New York, New York 10010
Attention: Bruce MacKenzie
Fax: (212) 325-8304
with, in the case of notices
with respect to any of the
Borrowing Subsidiaries, a
copy to: Credit Suisse First Boston
One Cabot Square
London E14 4QJ
England
Attention: Ian Piddock
Fax: 44-171-888-8398
provided that any notice, request or demand to or upon either Agent or the
- --------
Lenders shall not be effective until received.
12.3 No Waiver; Cumulative Remedies. No failure to exercise and no
------------------------------
delay in exercising, on the part of the either Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative and
not exclusive of any rights, remedies, powers and privileges provided by law.
12.4 Survival of Representations and Warranties. All representations
------------------------------------------
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
12.5 Payment of Expenses. Each of the Borrowers jointly and
-------------------
severally agrees (a) to pay or reimburse the Agents for all their reasonable
out-of-pocket costs and expenses incurred in connection with the development,
preparation and execution of, and any amendment, supplement or modification to,
this Agreement and the other Loan Documents and any other documents prepared in
connection herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, (b) to
pay or reimburse each Lender and the Agents for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights
<PAGE>
100
under this Agreement, the other Loan Documents and any such other documents,
including, without limitation, the fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel) to each Lender and of
counsel to the Agents, (c) to pay, indemnify, and hold each Lender and the
Agents harmless from, any and all recording and filing fees or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender, each Agent, each of their respective
affiliates, and each of their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an "indemnitee") harmless from
and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including, without limitation, any of the foregoing
relating to the use of proceeds of the Loans or the violation of, noncompliance
with or liability under, any Environmental Law applicable to the operations of
the Company or any of its Subsidiaries or any of the Properties (all the
foregoing in this clause (d), collectively, the "indemnified liabilities"),
provided, that none of the Borrowers shall have any obligation hereunder to any
- --------
indemnitee with respect to indemnified liabilities to the extent such
indemnified liabilities are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of such indemnitee. Without limiting the foregoing, and to
the extent permitted by applicable law, each of the Borrowers agrees not to
assert and to cause its respective Subsidiaries not to assert, and hereby waive
and agree to cause its respective Subsidiaries to so waive, all rights for
contribution or any other rights of recovery with respect to all claims,
demands, penalties, fines, liabilities, settlements, damages, costs and expenses
of whatever kind or nature, under or related to Environmental Laws, that any of
them might have by statute or otherwise against any indemnitee. The agreements
in this Section shall survive repayment of the Loans and all other amounts
payable hereunder.
12.6 Successors and Assigns; Participations and Assignments. (a)
------------------------------------------------------
This Agreement shall be binding upon and inure to the benefit of the Company,
the Lenders, the Agents, all future holders of the Loans and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Agents and each Lender.
(b) Any Lender may, without the consent of the Company, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
-----------
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Company and the Agents shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. In no event shall any Participant under
any such participation have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would
<PAGE>
101
reduce the principal of, or interest on, the Loans or any fees payable
hereunder, or postpone the date of the final maturity of the Loans, in each case
to the extent subject to such participation or would release all or
substantially all of the Collateral or release all or substantially all of the
Guarantors from their obligations under the Collateral Agreement. The Company
agrees that if amounts outstanding under this Agreement and the Loans are due or
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall, to the maximum
extent permitted by applicable law, be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Lender under this Agreement, provided that, in purchasing
--------
such participating interest, such Participant shall be deemed to have agreed to
share with the Lenders the proceeds thereof as provided in Section 12.7(a) as
fully as if it were a Lender hereunder. The Company also agrees that each
Participant shall be entitled to the benefits of Sections 3.12, 3.13 and 3.14
with respect to its participation in the Commitments and the Loans outstanding
from time to time as if it was a Lender; provided that, in the case of Section
--------
3.13, such Participant shall have complied with the requirements of said Section
and provided, further, that no Participant shall be entitled to receive any
-------- -------
greater amount pursuant to any such Section than the transferor Lender would
have been entitled to receive in respect of the amount of the participation
transferred by such transferor Lender to such Participant had no such transfer
occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable
--------
law, at any time and from time to time assign to any Lender, any affiliate
thereof or, with the consent of the Company and the Agents (which, in each case,
shall not be unreasonably withheld or delayed) (provided that the consent of the
--------
Company need not be obtained with respect to any assignment of Term Loans), to
an additional bank, financial institution or other entity (an "Assignee") all or
--------
any part of its rights and obligations under this Agreement pursuant to an
Assignment and Acceptance, substantially in the form of Exhibit K, executed by
such Assignee, such Assignor, the Administrative Agent and the Syndication Agent
(and, where the consent of the Company is required pursuant to the foregoing
provisions, by the Company) and delivered to the Administrative Agent for its
acceptance and recording in the Register; provided that no such assignment to an
--------
Assignee (other than to any Lender or any affiliate thereof) shall be in an
aggregate principal amount of less than $5,000,000 (other than in the case of an
assignment of all of a Lender's interests under this Agreement), unless
otherwise agreed by the Company, the Administrative Agent and the Syndication
Agent. Any such assignment need not be ratable as among the Facilities. Upon
such execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance (which, unless the
Administrative Agent shall otherwise agree, shall not be less than three
Business Days following the delivery to the Administrative Agent of such
Assignment and Acceptance for acceptance and recording), (x) the Assignee
thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
with a Commitment and/or Loans as set forth therein, and (y) the Assignor
thereunder shall, to the extent provided in such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of an Assignor's rights and obligations
under this Agreement, such assigning Lender shall cease to be a party hereto).
Notwithstanding any provision of this Section 12.6, the consent of the Company
shall not be required for any assignment which occurs at any time when any Event
of Default shall have occurred and be continuing.
<PAGE>
102
(d) The Administrative Agent shall maintain at its address referred
to in Section 12.2 a copy of each Assignment and Acceptance delivered to it and
a register (the "Register") for the recordation of the names and addresses of
--------
the Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time and any Notes evidencing such Loans. The entries
in the Register shall be conclusive, in the absence of manifest error, and the
Company, the Administrative Agent and the Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loan and any Note
evidencing such Loan recorded therein for all purposes of this Agreement. Any
assignment of any Loan whether or not evidenced by a Note shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and each Note shall expressly so provide). Any assignment or transfer of all
or part of a Loan evidenced by a Note shall be registered on the Register only
upon surrender for registration of assignment or transfer of the Note evidencing
such Loan, accompanied by a duly executed Assignment and Acceptance, and
thereupon one or more new Notes in the same aggregate principal amount shall be
issued to the designated Assignee and the old Notes shall be returned by the
Administrative Agent to the Company marked "cancelled". The Register shall be
available for inspection by the Company or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof or a Person under common management with
such Lender, by the Company, the Administrative Agent and the Syndication Agent)
together with payment to the Administrative Agent of a registration and
processing fee of $3,500 (except that (i) such fee shall be payable by the
Company, in the event of any assignment made at the request of the Company
pursuant to Section 3.17 and (ii) no such registration and processing fee shall
be payable in the case of an Assignee which is an affiliate of the assigning
Lender), the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register. On or prior to such effective
date, the Company, at its own expense, upon request, shall execute and deliver
to the Administrative Agent (in exchange for the Revolving Credit Note and/or
Term Notes, as the case may be, of the assigning Lender) a new Revolving Credit
Note and/or Term Notes, as the case may be, to the order of such Assignee in an
amount equal to the Revolving Credit Commitment and/or applicable Term Loans, as
the case may be, assumed or acquired by it pursuant to such Assignment and
Acceptance and, if the assigning Lender has retained a Revolving Credit
Commitment and/or Term Loans, as the case may be, upon request, a new Revolving
Credit Note and/or Term Notes, as the case may be, to the order of the assigning
Lender in an amount equal to the Revolving Credit Commitment and/or applicable
Term Loans, as the case may be, retained by it hereunder. Such new Notes shall
be dated the Closing Date and shall otherwise be in the form of the Note
replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement acknowledge
that the provisions of this Section concerning assignments of Loans and Notes
relate only to absolute assignments and that such provisions do not prohibit
assignments creating security interests, including, without limitation, any
pledge or assignment by a Lender of any Loan or Note to (i) any Federal Reserve
Bank in accordance with applicable law or (ii) the Trustee with respect to a
pool of collateralized loan obligations which includes the obligations owing to
such Lender hereunder.
<PAGE>
103
(g) Notwithstanding anything to the contrary contained herein, any
Lender (a "Granting Bank") may grant to a special purpose funding vehicle (an
-------------
"SPC") of such Granting Bank, identified as such in writing from time to time by
---
the Granting Bank to the Administrative Agent and the Company, the option to
provide to the Borrowers all or any part of any Loan that such Granting Bank
would otherwise be obligated to make to the Borrowers pursuant to Section 2.2 or
2.4; provided that (i) nothing contained shall constitute a commitment by any
--------
SPC to make any Loan and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Bank shall
be obligated to make such Loan pursuant to the terms hereof. The making of a
Loan by an SPC hereunder shall be deemed to utilize the Commitments of all
Lenders to the same extent, and as if, such Loan were made by the Granting Bank.
Each party hereto hereby agrees that no SPC shall be liable for any payment
under this Agreement for which a Lender would otherwise be liable for so long
as, and to the extent that, the related Granting Bank makes such payment. In
furtherance of the foregoing, each party hereto hereby agrees that, prior to the
date that is one year and one day after the payment in full of all outstanding
senior indebtedness of any SPC, it will not institute against, or join any other
Person in instituting against, such SPC any bankruptcy, reorganization
arrangement, insolvency or liquidation proceedings or similar proceedings under
the laws of the United States or any state thereof.
12.7 Adjustments; Set-off. (a) On the date of occurrence of any
--------------------
Event of Default specified in clause (i) or (ii) of Section 9(f), each Lender
shall be deemed to have purchased an interest in the Obligations owing to each
other Lender (and, to the extent necessary after giving effect to any actual
recoveries on such Obligations, shall actually fund such purchase) such that,
after giving effect to all such purchases or deemed purchases, each Lender is
owed directly or through such purchase or deemed purchase the portion of the
aggregate amount of Obligations then outstanding with respect to each of the
Tranche A Term Loan Commitment, the Tranche B Term Loan Commitment and the
Revolving Credit Commitment equal to such Lender's ratable share of all
Obligations then outstanding with respect to each such commitment. Each Lender
hereby acknowledges and agrees that its obligation to purchase such Obligations
in accordance with the provisions of this Section 12.7(a) shall be irrevocable
and unconditional.
(b) If any Lender (a "Benefitted Lender") in a particular Facility
-----------------
shall at any time receive any payment of all or part of its Loans or the
Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 9(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender in such Facility in respect of such other Lender's
Loans or the Reimbursement Obligations owing to such other Lender with respect
to such Facility, or interest thereon, such Benefitted Lender shall purchase for
cash from the other Lenders in such Facility a participating interest in such
portion of each such other Lender's Loans and/or of the Reimbursement
Obligations owing to each such other Lender with respect to such Facility, or
shall provide such other Lenders in such Facility with the benefits of any such
collateral, or the proceeds thereof, as shall be necessary to cause such
Benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders in such Facility; provided, however,
-------- -------
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefitted Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery, but
without interest.
<PAGE>
104
(c) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Company or
any of the other Borrowers, any such notice being expressly waived by the
Company and each other Borrower to the extent permitted by applicable law, upon
any amount becoming due and payable by the Company or any other Borrower
hereunder (whether at the stated maturity, by acceleration or otherwise) to set
off and appropriate and apply against such amount any and all deposits (general
or special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender or any branch or agency thereof to or for the
credit or the account of the Company or such other Borrower. Each Lender agrees
promptly to notify the Company, such other Borrower and the Administrative Agent
after any such setoff and application made by such Lender, provided that the
--------
failure to give such notice shall not affect the validity of such setoff and
application.
12.8 Conversion of Loans. Upon the occurrence of any of the
-------------------
following events:
(a) an Event of Default specified in clause (i) or (ii) of Section
9(f); or
(b) at the request of the Administrative Agent and the Syndication
Agent in their discretion or upon the direction of the Required Lenders, in
each case, upon the occurrence of any other Event of Default; or
(c) at the request of the Administrative Agent and the Syndication
Agent in their discretion or upon the direction of the Majority Foreign
Lenders in respect of a particular Optional Currency, in each case, upon
the occurrence of an Event of Default specified in Section 9(a) with
respect to any Loan or Reimbursement Obligation or interest or other amount
payable thereon in such Optional Currency;
then,
(i) if such event is one of the events specified in clause (a) or (b)
above (A) all outstanding Revolving Credit Loans, Reimbursement Obligations and
Swing Line Loans denominated in any Optional Currency shall promptly be
converted by each Lender thereof into Dollars at the actual exchange rate at
which such Lender is able to obtain the applicable amount of the relevant
Optional Currency and (B) all outstanding Letters of Credit denominated in any
Optional Currency with respect to which presentment for honor shall not have
occurred at the time of the occurrence of such event shall automatically be
converted by the relevant Issuing Lender thereof into Dollars in the manner
provided in clause (A) of this paragraph (i) immediately after the time, if any,
at which a draft shall have been presented under any such Letter of Credit and
shall have been paid by the relevant Issuing Lender;
(ii) if such event is an event specified in clause (c) above with
respect to any Optional Currency (A) all outstanding Revolving Credit Loans,
Reimbursement Obligations and Swing Line Loans in such Optional Currency shall
promptly be converted by each Lender thereof into Dollars at the actual exchange
rate at which such Lender is able to obtain the applicable amount of such
Optional Currency and (B) all outstanding Letters of Credit
<PAGE>
105
denominated in such Optional Currency with respect to which presentment for
honor shall not have occurred at the time of the occurrence of such event shall
be automatically converted into Dollars in the manner provided in clause (A) of
this paragraph (ii) immediately after the time, if any, at which a draft shall
have been presented under any such Letter of Credit and shall have been paid by
the relevant Issuing Lender; and
(iii) to the extent that, after giving effect to any actual recoveries
on such Obligations, the Tranche B Term Loan Lenders would, in the absence of
the conversion described in this clause (iii) below, be obligated to fund a
purchase of a participating interest in the Obligations pursuant to Section 12.7
in any Optional Currency, all outstanding Term Loans denominated in any Optional
Currency shall promptly be converted by each Lender thereof into Dollars at the
actual exchange rate at which such Lender is able to obtain the applicable
amount of the relevant Optional Currency.
Promptly following any such conversion, each such Lender shall notify
the Administrative Agent of the exchange rate utilized by it in making its
conversion (which rate shall be deemed to be correct, in the absence of manifest
error) and the amount in Dollars of its relevant converted Loans (after giving
effect to such conversion). The Administrative Agent promptly shall notify each
such Lender, the relevant Borrower and the Company of the aggregate outstanding
principal amount (in Dollars) of such converted Loan and shall provide the
relevant Borrower and the Company with the conversion data provided to the
Administrative Agent by each such Lender. From and after such conversion, (i)
all such specified Loans shall be deemed to be outstanding in Dollars as Base
Rate Loans (with such conversion constituting, for purposes of Section 3.14, a
prepayment of such Loans before the last day of the Interest Period with respect
thereto) and (ii) all amounts from time to time accruing, and all amounts from
time to time payable, on account of such converted Loans (including, without
limitation, any interest and other amounts which were accrued but unpaid on the
date of such conversion) shall be payable in Dollars as if such Loan originally
had been made in Dollars. Any such request specified clause (b) or (c) of this
Section 12.8 shall be made by delivering to the relevant Lenders, the relevant
Borrower and the Company a notice to such effect (an "Acquisition Loan
----------------
Conversion Notice"), which Acquisition Loan Conversion Notice shall, in the case
- -----------------
of the event specified in clause (a) of this Section 12.8, be deemed to have
been delivered automatically, without actual delivery thereof or any other
action by any Person, immediately prior to the occurrence of such event.
12.9 Addition of Borrowing Subsidiaries. This Agreement will be
----------------------------------
amended to add Subsidiaries of the Company as additional Borrowing Subsidiaries
and to specify the Designated Maximum with respect thereto upon (x) execution
and delivery by the Company, such additional Borrowing Subsidiary and the
Administrative Agent, of a Borrowing Subsidiary Joinder Agreement, providing for
such Subsidiaries to become Borrowing Subsidiaries (y) delivery to the Agents of
(1) satisfactory corporate resolutions, other corporate documents, certificates
and legal opinions in respect of such additional Borrowing Subsidiaries
substantially equivalent to comparable documents delivered on the Closing Date
in respect of the Borrowing Subsidiaries party to this Agreement on the Closing
Date, and (2) such other documents with respect thereto as the Agents shall
reasonably request and (z) the written approval of all the Lenders, including
the written approval of all the Lenders to the Designated Maximum with respect
to each such Borrowing Subsidiary.
<PAGE>
106
12.10 Collateral Agency and Intercreditor Agreement. Each Lender
---------------------------------------------
hereby acknowledges that it has fully reviewed each Collateral Agency and
Intercreditor Agreement and agrees to be comply with the terms thereof as if it
were a direct signatory thereto.
12.11 Counterparts. This Agreement may be executed by one or more of
------------
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Company and the
Administrative Agent.
12.12 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
12.13 Integration. This Agreement and the other Loan Documents
-----------
represent the agreement of the Borrowers, the Guarantors, the Administrative
Agent and the Lenders with respect to the subject matter hereof, and there are
no promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Loan Documents.
12.14 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
12.15 Submission To Jurisdiction; Waivers. Each of the Borrowers and
-----------------------------------
the Guarantors hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Company, at the Company's address set forth in Section 12.2 or at such
other address of which the Administrative Agent shall have been notified
pursuant thereto, and each Borrowing Subsidiary and each Guarantor hereby
irrevocably appoints the Company as its agent for service of process and
the Company hereby accepts such appointment and irrevocably agrees to act
as
<PAGE>
107
such agent and to promptly provide to each Borrowing Subsidiary and each
Guarantor copies of any documents served upon it as agent for each
Borrowing Subsidiary and each Guarantor;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section 12.15 any special, exemplary, punitive or consequential
damages.
12.16 Acknowledgements. Each of the Borrowers hereby acknowledges
----------------
that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to any of the Borrowers arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and
each of the Borrowers, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrowers and the Lenders.
12.17 WAIVERS OF JURY TRIAL. EACH OF THE BORROWERS, THE GUARANTORS,
---------------------
THE AGENTS AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
12.18 Confidentiality. Each of the Agents and each Lender agrees to
---------------
keep confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent any Agent or any Lender
--------
from disclosing any such information (a) to the Administrative Agent, any other
Lender or any affiliate of any Lender, (b) to any Participant or Assignee (each,
a "Transferee") or prospective Transferee which agrees to comply with the
----------
provisions of this Section, (c) to the employees, directors, agents, attorneys,
accountants and other professional advisors of such Lender or its affiliates,
(d) upon the request or demand of any examiner or Governmental Authority having
jurisdiction over the such Agent or such Lender, (e) in response to any order of
any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (f) if requested or required to do so in
connection with any litigation or similar proceeding, (g) which has been
publicly disclosed other than in breach of this Section 12.18, (h) to the
National Association of Insurance Commissioners or any similar organization or
any nationally recognized rating agency that requires access to information
about a Lender's investment portfolio in
<PAGE>
108
connection with ratings issued with respect to such Lender, or (i) in connection
with the exercise of any remedy hereunder or under any other Loan Document.
12.19 Enforceability; Usury. In no event shall any provision of this
---------------------
Agreement or any other instrument evidencing or securing the indebtedness of any
of the Borrowers hereunder ever obligate any of the Borrowers to pay or allow
any Lender to collect interest on the Loans or any other indebtedness of any the
Borrowers hereunder at a rate greater than the maximum non-usurious rate
permitted by applicable law (herein referred to as the "Highest Lawful Rate"),
-------------------
or obligate any of the Borrowers to pay any taxes, assessments, charges,
insurance premiums or other amounts to the extent that such payments, when added
to the interest payable on the Loans or any other indebtedness hereunder, would
be held to constitute the payment by such Borrower of interest at a rate greater
than the Highest Lawful Rate; and this provision shall control over any
provision to the contrary.
Without limiting the generality of the foregoing, in the event the
maturity of all or any part of the principal amount of the indebtedness of any
of the Borrowers hereunder shall be accelerated for any reason, then such
principal amount so accelerated shall be credited with any interest theretofore
paid thereon in advance and remaining unearned at the time of such acceleration.
If, pursuant to the terms of this Agreement, any funds are applied to the
payment of any part of the principal amount of the indebtedness of any of the
Borrowers hereunder prior to the maturity thereof, then (a) any interest which
would otherwise thereafter accrue on the principal amount so paid by such
application shall be canceled, and (b) the indebtedness of such Borrower
hereunder remaining unpaid after such application shall be credited with the
amount of all interest, if any, theretofore collected on the principal amount so
paid by such application and remaining unearned at the date of said application;
and if the funds so applied shall be sufficient to pay in full all the
indebtedness of such Borrower hereunder, then the Lenders shall refund to such
Borrower all interest theretofore paid thereon in advance and remaining unearned
at the time of such acceleration. Regardless of any other provision in this
Agreement, or in any of the written evidences of the indebtedness of any of the
Borrowers hereunder, none of the Borrowers shall be required to pay any unearned
interest on such indebtedness or any portion thereof, and shall be required to
pay interest thereon at a rate in excess of the Highest Lawful Rate construed by
courts having competent jurisdiction thereof.
12.20 Judgment. The obligations of each Borrower hereunder due to
--------
any party hereto in Dollars (including, without limitation, by virtue of any
conversion of a Loan or Reimbursement Obligation from an Optional Currency into
Dollars pursuant to the provisions of Section 12.8) shall, notwithstanding any
judgment in a currency (the "judgment currency") other than Dollars, be
-----------------
discharged only to the extent that on the Business Day following receipt by such
party of any sum adjudged to be so due in the judgment currency such party may
in accordance with normal banking procedures purchase Dollars with the judgment
currency; if the amount of Dollars so purchased is less than the sum originally
due to such party in Dollars, such Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such party against such loss,
and if the amount of Dollars so purchased exceeds the sum originally due to any
party to this Agreement, such party agrees to remit to such Borrower such
excess.
<PAGE>
109
12.21 German Limitations on Liability. Notwithstanding anything to
-------------------------------
the contrary contained herein or in any other Loan Document:
(a) the obligations hereunder with respect to each Borrower which is
a gesellschaft mit beschrankter Haftung organized under the laws of the
Federal Republic of Germany (each, a "German GmbH Borrower") shall at all
--------------------
times be limited so that its liability as a Borrower under this Agreement
and the other Loan Documents shall at no time require its payment of any
moneys which are required to maintain its registered share capital
(Stammkapital) to the extent solely that such share capital is protected by
Sections 30 and 31 of the German Limited Liabilities Companies Act (the
"GmbH-Gesetz"); and
-----------
(b) Neither the Administrative Agent nor any of the Lenders shall be
entitled to enforce the obligations of any German GmbH Guarantor under
Section 10 for so long as, and solely to the extent that, such enforcement
would cause such German GmbH Guarantor's net assets (Reinvermogen) to be
reduced below the amount of its registered share capital which is protected
by Sections 30 and 31 of the GmbH-Gesetz;
provided each guarantee provided by a Guarantor hereunder on account of the
- --------
obligations of the German GmbH Borrowers shall be unimpaired by the provisions
of this Section 12.21, such that each such Guarantor shall remain liable under
Section 10 hereof for the obligations of the German GmbH Borrowers to the same
extent as it would have been liable in the absence of this Section 12.21.
12.22 Certain Waivers. Each Lender hereby agrees that,
---------------
notwithstanding anything to the contrary contained in this Agreement, certain of
the Pledge Agreements and Mortgages may not be delivered prior to or on the
Closing Date. Each Lender hereby waives compliance with the provisions of this
Agreement to the extent and only to the extent necessary to permit the Closing
Date to occur without the delivery of such Foreign Pledge Agreements, Mortgages
and other documentation relating thereto and to permit the Borrowers to borrow
under this Agreement. The Company hereby covenants that it shall, and shall
cause its Subsidiaries to, deliver to the Administrative Agent each such Pledge
Agreements, Mortgage and related documentation within 30 days following the
Closing Date and that the failure to deliver any such Pledge Agreement, Mortgage
or related documentation within such 30 day period shall constitute an Event of
Default hereunder; provided that, with the consent of the Administrative Agent,
--------
such 30 day period may be extended by not more than an additional 30 days.
<PAGE>
110
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
EXIDE CORPORATION, as a Borrower and as a
Guarantor
By:______________________________________
Name: Catherine B. Hnatin
Title: Vice-President and Treasurer
EXIDE HOLDING EUROPE S.A.
COMPAGNIE EUROPEENNE D'ACCUMULATEURS S.A.
EURO EXIDE CORPORATION LIMITED
SOCIEDAD ESPANOLA DEL ACUMULADOR
TUDOR S.A.
TUDOR A.B.
EXIDE VERWALTUNGS GMBH
MERCOLEC TUDOR B.V.,
each as a Borrowing Subsidiary and as a
Guarantor
By:______________________________________
Name: Catherine B. Hnatin
Title: Attorney-in-Fact
ACCUMULATORENFABRIK SONNENSCHEIN GMBH
COMPAGNIA GENERALE ACCUMULATORI S.P.A.
SINAC S.R.L.
FULMEN IBERICA S.A.
<PAGE>
111
CMP BATTERIES LIMITED
CMP BATTERIJEN B.V.
SOCIETE FRANCAISE DES ACCUMULATEURS
TUDOR S.A.
CMP BATTERIER A/S
EXIDE AUTOMOTIVE BATTERIE GMBH
HAGEN BATTERIE A.G.
INDUSTRIA COMPOSIZIONI STAMPATE S.P.A.
HAGEN BATTERIJEN B.V.
ELECTRO MERCANTIL INDUSTRIAL S.A.
GAZTAMBIDE S.A.
TERRENOS Y CONSTRUCCIONES S.A.
T.S. BATTERIE S.R.L.
EXIDE BATTERIES LIMITED
B.I.G. BATTERIES LIMITED
EXIDE (DAGENHAM) LIMITED
EXIDE FRANCE S.A.
FULMEN UK LIMITED
EXIDE AUTOMOTIVE S.A.
CMP BATTERIJEN N.V.
SOCIEDAD PORTUGUESA DO ACUMULADOR TUDOR
S.A.
EXIDE DENMARK A/S
GEMALA SWEDEN AB
CENTRA S.A.
DETA AKKUMULATORENWERK GMBH
<PAGE>
112
MAREG ACCUMULATOREN GMBH
FRIWO SILBERKRAFT MBH
EXIDE SONNAK A/S
CMP BATTERIJEN S.A.
EXIDE AUTOMOTIVE S.A.
EXIDE LENDING LIMITED
each as a Guarantor, subject to the
limitations, if any, contained in
Schedule 10.1
By:_______________________________________
Name: Catherine B. Hnatin
Title: Attorney-in-Fact
GBC, INC.
as a Guarantor
By:_______________________________________
Name: Catherine B. Hnatin
Title: Assistant Secretary
GENERAL BATTERY CORPORATION
as a Guarantor
By: Exide Investments, Inc., trustee
By:_______________________________________
Name: Catherine B. Hnatin
Title: Assistant Secretary
EXIDE INTERNATIONAL, INC.
as a Guarantor
By:_______________________________________
Name: Catherine B. Hnatin
Title: Vice President
<PAGE>
113
LEHMAN BROTHERS INC., as Arranger
By:_________________________________
Name:
Title:
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By:_________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as
Arranger and as Administrative Agent
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as a
Lender
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
LEHMAN BROTHERS BANKHAUS AG
By:_________________________________
Name:
Title:
<PAGE>
114
ALPHA CREDIT BANK A.E.
By:____________________________________
Name:
Title:
BANK OF MONTREAL
By:____________________________________
Name:
Title:
BANQUE PARIBAS
By:____________________________________
Name:
Title:
BANK POLSKA KASA OPIEKI S.A. - PEKAO
S.A.
By:____________________________________
Name:
Title:
SCOTIABANK EUROPE PLC
By:____________________________________
Name:
Title:
BANKA POPOLARE DI BERGAMO-CREDITO
VARESINO S.C.A.R.L.
By:____________________________________
Name:
Title:
<PAGE>
115
BANKBOSTON, N.A.
By:_____________________________________
Name:
Title:
BANQUE ET CAISSE D'EPARGNE DE L'ETAT,
LUXEMBOURG
By:_____________________________________
Name:
Title:
BHF BANK AKTENGESELLSCHAFT
By:_____________________________________
Name:
Title:
BANQUE NATIONALE DE PARIS
By:_____________________________________
Name:
Title:
BANCO ESPIRITO SANTO E COMERCIAL DE
LISBOA S.A.
By:_____________________________________
Name:
Title:
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By:_____________________________________
Name:
Title:
<PAGE>
116
CITIBANK, N.A.
By:___________________________________
Name:
Title:
COMERICA BANK
By:___________________________________
Name:
Title:
COMMERZBANK AG
By:___________________________________
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By:___________________________________
Name:
Title:
DAI-ICHI KANGYO BANK, LTD.
By:___________________________________
Name:
Title:
DRESDNER BANK AG
By:___________________________________
Name:
Title:
NBD BANK
By:___________________________________
Name:
Title:
<PAGE>
117
FIRST UNION NATIONAL BANK
By:____________________________________
Name:
Title:
CORESTATES BANK, N.A.
By:____________________________________
Name:
Title:
INDUSTRIAL BANK OF JAPAN, LIMITED
By:____________________________________
Name:
Title:
OSTERREICHISCHE INVESTITIONSKREDIT AG
By:____________________________________
Name:
Title:
MEESPIERSON N.V.
By:____________________________________
Name:
Title:
MELLON BANK, N.A.
By:____________________________________
Name:
Title:
THE MITSUBISHI TRUST & BANKING
CORPORATION
By:____________________________________
Name:
Title:
<PAGE>
118
ISTITUTO BANCARIO SAN PAOLO DI TORINO,
S.P.A.
By:____________________________________
Name:
Title:
SOCIETE GENERALE
By:____________________________________
Name:
Title:
THE SUMITOMO BANK, LIMITED
By:____________________________________
Name:
Title:
THE SUMITOMO TRUST & BANKING CO., LTD.
By:____________________________________
Name:
Title:
TORONTO DOMINION (TEXAS), INC.
By:____________________________________
Name:
Title:
PEOPLES SECURITY LIFE INSURANCE
COMPANY
By:____________________________________
Name:
Title:
<PAGE>
119
BANKERS LIFE & CASUALTY INSURANCE
COMPANY
By:____________________________________
Name:
Title:
FRANKLIN FLOATING RATE TRUST
By:____________________________________
Name:
Title:
ING HIGH INCOME PRINCIPAL
By:____________________________________
Name:
Title:
PRESERVATION FUND HOLDINGS, LDC
By:____________________________________
Name:
Title:
ARCHIMEDES FUNDING, L.L.C.
By:____________________________________
Name:
Title:
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By:____________________________________
Name:
Title:
<PAGE>
120
METROPOLITAN LIFE INSURANCE COMPANY
By:____________________________________
Name:
Title:
OAK HILL SECURITIES FUND, L.P.
By:____________________________________
Name:
Title:
ORIX USA CORPORATION
By:____________________________________
Name:
Title:
PARIBAS CAPITAL FUNDING LLC
By:____________________________________
Name:
Title:
KZH HOLDING COMPANY III
By:____________________________________
Name:
Title:
PRIME INCOME TRUST
By:____________________________________
Name:
Title:
KZH-CRESCENT CORPORATION
By:____________________________________
Name:
Title:
<PAGE>
121
THE TRAVELERS INSURANCE COMPANY
By:____________________________________
Name:
Title:
THE BANK OF SCOTLAND
By:____________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By:____________________________________
Name:
Title:
<PAGE>
Annex A
-------
PRICING GRID FOR REVOLVING CREDIT LOANS, SWING LINE LOANS,
TRANCHE A TERM LOANS AND COMMITMENT FEES
<TABLE>
<CAPTION>
======================================================================================================================
Applicable Applicable
Margin Margin
for for
Revolving Tranche A
Credit Term Applicable
Loans Applicable Loans Applicable Margin Applicable
which are Margin for which are Margin for for Tranche Margin for
Base Rate Revolving Base Rate Tranche A B Term Tranche B
Loans or Credit Loans Loans or Term Loans Loans Term Loans
Consolidated Foreign which are Foreign which are which are which are Facility
Leverage Alternate Eurocurrency Alternate Eurocurrency Base Rate Eurocurrency Fee
Ratio Rate Loans Loans Rate Loans Loans Loans Loans Rate
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
greater than or
equal to 4.50 to 1 .50% 1.50% 1.00% 2.00% 1.25% 2.25% .50%
- ----------------------------------------------------------------------------------------------------------------------
greater than or
equal to 4.00 to 1 .25% 1.25% .75% 1.75% 1.25% 2.25% .50%
and
less than 4.50 to 1
- ----------------------------------------------------------------------------------------------------------------------
greater than or
equal to 3.50 to 1 0% 1.00% .50% 1.50% 1.00% 2.00% .50%
and
less than 4.00 to 1
- ----------------------------------------------------------------------------------------------------------------------
greater than or 0% .75% .25% 1.25% 1.00% 2.00% .50%
equal to 3.00 to 1
and
less than 3.50 to 1
- ----------------------------------------------------------------------------------------------------------------------
less than 3.00 to 1 0% .625% 0% 1.00% .75% 1.75% .375%
======================================================================================================================
</TABLE>
Changes in the Applicable Margin or in the Facility Fee Rate resulting from
changes in the Consolidated Leverage Ratio shall become effective on the date
(the "Adjustment Date") on which financial statements are delivered to the
---------------
Administrative Agent and the Lenders pursuant to Section 7.1 (but in any event
not later than the 50th day after the end of each of the first three quarterly
periods of each fiscal year or the 100th day after the end of each fiscal year,
as the case may be) and shall remain in effect until the next change to be
effected pursuant to this paragraph. If any financial statements referred to
above are not delivered within the time periods specified above, then, until
such financial statements are delivered, the Consolidated Leverage Ratio as at
the end of the fiscal period that would have been covered thereby shall for the
purposes of this definition be deemed to be greater than 4.50 to 1. In
addition, at all times while an Event of Default shall have occurred and be
continuing, the Consolidated Leverage Ratio shall for the purposes of this
definition be deemed to be greater than 4.50 to 1. Each determination of the
Consolidated Leverage Ratio pursuant to this definition shall be made with
respect to the period of four consecutive fiscal quarters of the Company ending
at the end of the period covered by the relevant financial statements.
<PAGE>
ANNEX B
-------
CALCULATION OF THE MLA COST
The MLA Cost is calculated in accordance with the following formula:
BY + L(Y-X) + S(Y-Z)% per annum = MLA Cost
--------------------
100-(B+S)
where on the day of application of the formula:
B is the percentage of the Administrative Agent's eligible liabilities
which the Bank of England requires the Administrative Agent to hold on
a non-interest-bearing deposit account in accordance with its cash
ratio requirements.;
Y is the rate at which Pounds deposits are offered by the Administrative
Agent to leading banks in the London interbank market at or about
11:00 A.M. on that day for the relevant period;
L is the percentage of eligible liabilities which the Bank of England
requires the Administrative Agent to maintain as secured money with
members of the London Discount Market Association and/or as secured
call money with certain money brokers and gilt-edged primary market
makers;
X is the rate at which secured Pounds deposits in the relevant amount
may be placed by the Administrative Agent with members of the London
Discount Market Association and/or as secured call money with certain
money brokers and gilt-edged primary market makers at or about 11:00
A.M. on that day for the relevant period;
S is the percentage of the Administrative Agent's eligible liabilities
which the Bank of England requires the Administrative Agent to place
as a special deposit; and
Z is the interest rate per annum allowed by the Bank of England on
special deposits.
For the purposes of this Annex B:
(i) "ELIGIBLE LIABILITIES" and "SPECIAL DEPOSITS" have the meanings given
to them at the time of application of the formula by the Bank of
England;
(ii) "RELEVANT PERIOD" in relation to a borrowing, means:
(A) if its Interest Period is three months or less, its Interest
Period; or
(B) if its Interest Period is more than three months, each successive
period of three months and any necessary shorter period comprised
in that Interest Period.
<PAGE>
2
In the application of the formula, B, Y, L, X, S and Z are included in the
formula as figures and not as percentages (e.g. if B = 0.5% and Y = 15%, BY
is calculated as 0.5 x 15);
(i) The formula is applied on the first day of each relevant period
comprised in the Interest Period of the relevant borrowing.
(ii) Each rate calculated in accordance with the formula is, if necessary,
rounded upward to the nearest 1/32nd of 1%.
If the Administrative Agent determines that a change in circumstances has
rendered, or will render, the formula inappropriate, the Administrative
Agent (after consultation with the Lenders) shall notify the Company of the
manner in which the MLA Cost will subsequently be calculated. The manner
of calculation so notified by the Administrative Agent shall, in the
absence of manifest error, be binding on all the parties hereto.
<PAGE>
SCHEDULE 1.1A
<TABLE>
<CAPTION>
COMMITMENTS
Revolving Credit Tranche A Term Tranche B Term
Lender Commitment Loan Commitment Loan Commitment
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Credit Suisse First Boston $10,625,000 $6,375,000 $ 0
Lehman Brothers BankHaus AG 10,625,000 6,375,000 0
Alpha Credit Bank A.E. 6,875,000 4,125,000 0
Bank of Montreal 8,125,000 4,875,000 0
Banque Paribas 8,125,000 4,875,000 0
Bank Polska Kasa Opieki S.A. - Pekao S.A. 3,125,000 1,875,000 0
The Bank of Nova Scotia 8,125,000 4,875,000 0
Banka Popolare di Bergamo-Credito Varesino S.c.a.r.l. 5,625,000 3,375,000 0
BankBoston, N.A. 6,875,000 4,125,000 0
Bank of Scotland 8,125,000 4,875,000 0
Banque et Caisse d'Epargne de l'Etat, Luxembourg 6,875,000 4,125,000 0
BHF Bank Aktengesellschaft 9,062,500 5,437,500 0
Banque Nationale de Paris 9,062,500 5,437,500 0
Banco Espirito Santo e Comercial de Lisboa S.A. 6,875,000 4,125,000 0
Compagnie Financiere de CIC et de l'Union Europeenne (NY Branch) 4,531,250 2,718,750 0
Compagnie Financiere de CIC et de l'Union Europeenne (London Branch) 4,531,250 2,718,750 0
Citibank, N.A. 8,125,000 4,875,000 0
Comerica Bank 8,125,000 4,875,000 0
Commerzbank AG 8,125,000 4,875,000 0
Credit Agricole Indosuez 6,875,000 4,125,000 10,000,000
Dai-Ichi Kangyo Bank, Ltd. 5,625,000 3,375,000 0
Dresdner Bank AG 8,125,000 4,875,000 0
NBD Bank 8,125,000 4,875,000 0
First Union National Bank 7,812,500 4,687,500 0
Corestates Bank, N.A. 4,687,500 2,812,500 0
Industrial Bank of Japan, Limited 8,125,000 4,875,000 0
Osterreichische Investitionskredit AG 4,376,000 2,625,000 0
MeesPierson N.V. 6,875,000 4,125,000 0
Mellon Bank, N.A. 6,875,000 4,125,000 0
The Mitsubishi Trust & Banking Corporation 8,125,000 4,875,000 0
Istituto Bancario San Paolo di Torino, S.p.A. 3,125,000 1,875,000 0
Societe Generale 9,062,500 5,437,500 0
The Sumitomo Bank, Limited 5,625,000 3,375,000 0
</TABLE>
<PAGE>
2
<TABLE>
<CAPTION>
Revolving Credit Tranche A Term Tranche B Term
Lender Commitment Loan Commitment Loan Commitment
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
The Sumitomo Trust & Banking Co., Ltd. 6,875,000 4,125,000 0
Toronto Dominion (Texas), Inc. 8,125,000 4,875,000 0
Lehman Commercial Paper, Inc. 0 0 120,000,000
Peoples Security Life Insurance Company 0 0 10,000,000
Bankers Life & Casualty Insurance Company 0 0 10,000,000
Franklin Floating Rate Trust 0 0 5,000,000
ING High Income Principal Preservation Fund Holdings, LDC 0 0 7,000,000
Archimedes Funding, L.L.C. 0 0 5,000,000
Merrill Lynch Senior Floating Rate Fund, Inc. 0 0 12,000,000
Metropolitan Life Insurance Company 0 0 10,000,000
Oak Hill Securities Fund, L.P. 0 0 12,000,000
ORIX USA Corporation 0 0 6,000,000
Paribas Capital Funding LLC 0 0 10,000,000
KZH Holding Company III 0 0 6,000,000
Prime Income Trust 0 0 12,000,000
KZH-Crescent Corporation 0 0 5,000,000
The Travelers Insurance Company 0 0 10,000,000
------------ ------------ ------------
$250,000,000 $150,000,000 $250,000,000
============ ============ ============
</TABLE>
<PAGE>
SCHEDULE 1.1B
ADDRESSES FOR NOTICES AND DESIGNATED MAXIMUMS
FOR BORROWING SUBSIDIARIES
<TABLE>
<CAPTION>
Company Designated Maximum
------- ------------------
<S> <C>
Exide Holding Europe S.A. $ 50,000,000
5-7 Allee des Pierres Mayettes
92636 Gennevilliers Cedex
France
CEAc S.A. $200,000,000
5-7 Allee des Pierres Mayettes
92636 Gennevilliers Cedex
France
SEA Tudor S.A. $100,000,000
Condesa de Venadito, 1
28027 Madrid, Spain
Euro Exide Corp. Ltd. $200,000,000
1, Salford Road
Over Hulton - Bolton BL5 1DD
England
Exide Verwaltungs, GmbH $200,000,000
Thiergarten
Postfach 1180
63654 Budingen, Germany
Mercolec Tudor B.V. $200,000,000
Rivierstaete
Amsteldijk 166
1079 LH Amsterdam
The Netherlands
Exide Corporation $175,000,000
645 Penn Street
Reading, Pennsylvania 19601
United States of America
</TABLE>
<PAGE>
SCHEDULE 1.1C
CURRENCY MAXIMUMS
<TABLE>
<CAPTION>
Currency Amount
-------- ------
<S> <C>
Francs $250,000,000
Marks $175,000,000
Pounds $175,000,000
Lira $ 25,000,000
Pesetas $ 15,000,000
</TABLE>
<PAGE>
SCHEDULE 1.1D
MORTGAGED PROPERTY
<PAGE>
SCHEDULE 1.1E
PERMITTED ACQUISITIONS
<PAGE>
SCHEDULE 1.1F
LETTERS OF CREDIT
<PAGE>
SCHEDULE 1.1G
WHOLLY OWNED SUBSIDIARIES
<PAGE>
SCHEDULE 5.4
CONSENTS, AUTHORIZATIONS, FILINGS AND NOTICES
<PAGE>
SCHEDULE 5.15
SUBSIDIARIES
<PAGE>
SCHEDULE 5.19(a)
UCC FILING JURISDICTIONS
<PAGE>
SCHEDULE 5.19(b)
MORTGAGE FILING JURISDICTIONS
<PAGE>
SCHEDULE 8.2(e)
EXISTING INDEBTEDNESS
<PAGE>
SCHEDULE 8.3(f)
EXISTING LIENS
<PAGE>
SCHEDULE 8.8(j)
EXISTING INVESTMENTS
<PAGE>
SCHEDULE 8.14
EXISTING RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS
<PAGE>
SCHEDULE 10.1
EXCEPTIONS TO GUARANTEES BY FOREIGN SUBSIDIARIES
German Guarantees.
- -----------------
(i) The obligations under Section 10 with respect to each Guarantor
which is a Gesellschaft mit beschrankter Haftung organized under the laws of the
Federal Republic of Germany (each, a "German GmbH Guarantor") shall at all times
---------------------
be limited so that its liability as a Guarantor under this Agreement and the
other Loan Documents shall at no time require its payment of any moneys which
are required to maintain its registered share capital (Stammkapital) to the
extent solely that such share capital is protected by Sections 30 and 31 of the
German Limited Liabilities Companies Act (the "GmbH-Gesetz").
-----------
(ii) Neither the Administrative Agent nor any of the Lenders shall be
entitled to enforce the obligations of any German GmbH Guarantor under Section
10 for so long as, and solely to the extent that, such enforcement would cause
such German GmbH Guarantor's net assets (Reinvermogen) to be reduced below the
amount of its registered share capital which is protected by Sections 30 and 31
of the GmbH-Gesetz.
French Guarantees.
- -----------------
The obligations under Section 10 with respect to Exide Holding Europe
S.A., Exide France S.A., Compagnie Europeenne d'Accumulateurs S.A. and Societe
Francaise D'Accumulateurs Tudor S.A. (collectively, the "French Guarantors")
-----------------
shall at all times be limited to the extent, and only to the extent, necessary
to ensure that the incurrence on the Closing Date of the liability of each
French Guarantor as a Guarantor under this Agreement and the other Loan
Documents shall at no time constitute a misuse of corporate assets (abus de
biens sociaux) within the meaning of Article 437.3 of the French Company Act of
24 July, 1966.
Norwegian Guarantees.
- --------------------
Exide Sonnak AS's commitments as Guarantor hereunder or under any Loan
Document are limited by the applicable regulations in the Norwegian Joint Stock
Company's Act of 1976 (as amended or replaced) (the "Act") pursuant to which
inter alia a company may only provide financial assistance, including securities
or guarantees for the commitments of their shareholders or other related
entities or persons in so far as the company, according to the latest adopted
balance sheet has (i) an unrestricted and distributable equity capital which is
at least equal to the amount provided, guaranteed or secured, and (ii) adequate
security (either by collateral or third party guarantees) has been provided.
Exide Sonnak AS's commitments hereunder as Guarantor are consequently invalid
and unenforceable unless the applicable requirements under the Act has been
complied with.
Belgian Guarantees.
- ------------------
The obligations under Section 10 with respect of CMP Batterijen S.A.
and Exide Automotive S.A. shall be enforceable only to the extent that these
obligations have been undertaken in furtherance of the corporate interest of
those companies.
<PAGE>
Jersey Guarantees.
- -----------------
Exide Lending Limited, in addition to the provisions contained in Section
10 of the Credit and Guarantee Agreement, hereby agrees to the following
additional provisions:
- ---------------------
(i) any right which at any time Exide Lending Limited has under the
existing or future laws of Jersey whether by virtue of the droit de
discussion or otherwise to require that recourse be had to the assets
of any other person before any claim is enforced against Exide
Lending Limited in respect of its obligations as Guarantor is hereby
abandoned and waived;
(ii) Exide Lending Limited undertakes that if at any time the Agent sues
Exide Lending Limited in respect of any of its obligations as
Guarantor and the person or persons whose obligations are guaranteed
is, or are, not also sued, Exide Lending Limited agrees to be bound
by its obligations as Guarantor whether or not the person whose
obligations are guaranteed is made a party to legal proceedings for
the recovery of the amount due or owing to the Agent as aforesaid by
the person whose obligations are guaranteed hereunder and whether the
formalities required by any law of Jersey whether existing or future
in regard to the rights or obligations of sureties shall or shall not
have been observed;
(iii) any right which Exide Lending Limited may have under the existing or
future laws of Jersey whether by virtue of the droit de division or
otherwise to require that any liability under its obligations as
Guarantor be divided or apportioned with any other person or reduced
in any manner whatsoever is hereby abandoned and waived.
Swedish Guarantees.
- ------------------
The shareholders stipulated that the access of Tudor AB to the Credit
and Guarantee Agreement shall be subject to the condition that the obligations
Tudor AB as Guarantor in respect of the Borrowers shall be limited to its equity
in accordance with Swedish law.
Portuguese Guarantees.
- ---------------------
The conditions upon which Sociedade Portuguesa do Acumulador Tudor
accepts to underwrite the present contract as a Guarantor are as follows:
a) that the limit of the guarantee does not exceed PTE 1,000,000,000
(one thousand million escudos);
b) that Sociedad Espanola del Acumulador Tudor, S.A. writes a letter to
Sociedade Portuguesa do Acumulador Tudor on the following terms:
Exide Corporation, an American group of companies, which presently
owns a majority share in the share capital of Sociedad Espanola del
Acumulador Tudor, S.A., shall write a letter to the board of
directors of Sociedade Portuguesa do Acumulador Tudor, S.A., in which
it is established that it is the intention that at least 10% of its
production is sold through Sociedade
<PAGE>
Portuguesa do Acumulador Tudor, S.A., for the duration of the
guarantee, as well as to indicate that it intends to develop and
increase the operations with Sociedade Portuguesa do Acumulador Tudor,
S.A., in Portugal, showing in such letter a relationship of
unequivocal interest and understanding in Sociedade Portuguesa do
Acumulador Tudor, S.A.
Italian Guarantees.
- ------------------
The guarantee obligations under Section 10 with respect to Compagnia
Generale Accumulatori S.r.l., Societa Industriale Accumulatori S.r.I. and TS
Batterie S.r.I. (collectively, the "Italian Guarantors") shall at all time be
limited to the payment and performance when due of the Foreign Obligations
relating to such portion of the Tranche A Term Loans and Tranche B Term Loans
used for the repayment of obligations outstanding under the Existing Foreign
Credit Agreement, provided (i) that such guarantee obligations shall be
enforceable only to the extent they have been undertaken in connection with a
transaction to the benefit of the Italian Guarantors and provided further (ii)
that such guarantee obligations shall at all times not exceed an amount beyond
which an Italian Court might disallow such guarantee obligations on the basis of
the ultra vires doctrine, to the extent it finds that such guaranteed amount is
----- -----
extremely high compared to the Italian Guarantor's financial conditions at the
time the guarantee obligations are undertaken.
United Kingdom Guarantees.
- -------------------------
(i) Subject to paragraph (ii) below, the obligations of each
Guarantor incorporated in England and Wales (each a "UK GUARANTOR") under
Section 10 of this Agreement (or otherwise pursuant to this Agreement) (together
"THE OBLIGATIONS") shall at all times be limited to the extent, and only to the
extent, necessary to ensure that such UK Guarantor shall not by undertaking such
Obligations breach Section 151 (Unlawful Financial Assistance) Companies Act
1985 ("THE ACT") as a consequence of it being a party to this Agreement and its
assumption of the Obligations.
(ii) Each UK Guarantor (and all shareholders of each UK Guarantor to
the extent a party to this Agreement) shall on 21 days' written notice from the
Administrative Agent, to the extent each of them is lawfully able using all
reasonable endeavours (pursuant to the provisions of Sections 155 - 158 of the
Act or otherwise) pass all necessary resolutions and procure (if appropriate)
that its directors swear the necessary statutory declarations and shall
undertake all such other acts and deeds to ensure that the provisions of
Sections 155 - 158 of the Act are complied with such that the limitation
specified in paragraph at (i) above shall no longer apply in relation to such UK
Guarantor.
Danish Guarantees.
- -----------------
The obligations of CMP Batterier A/S and Exide Danmark A/S under the
Credit and Guarantee Agreement shall at all times be limited so that the
liability of CMP Batterier A/S and Exide Danmark A/S respectively as a Guarantor
shall at no time require the payment of any monies which (i) results in it then
being unable to honour its other financial obligations to its other creditors at
such time as they are due for payment, the position of such creditors to be
determined by Danish law, (ii) constitutes a violation of Danish bankruptcy law
and other relevant Danish statutory provisions, (iii) is an amount in excess of
- - for CMP Batterier - A/S - DKK 3,400,000 and - for Exide Danmark A/S - DKK
8,500,000.
<PAGE>
Spanish Guarantees.
- ------------------
The obligations under Section 10 with respect to Sociedad Espanola del
Accumulador Tudor, S.A., Fulmen Iberica, S.A., Electro Mercantil Industrial,
S.A., Gaztambide, S.A. and Terrenos y Construcctiones, S.A. shall be enforceable
only to the extent that these obligations have been undertaken in furtherance of
the corporate interest of those companies.
Polish Guarantees.
- -----------------
The execution of the present agreement by Centra S.A. is subject to
the condition precedent that Centra S.A. is granted by the President of the
National Bank of Poland the exchange permit necessary in connection herewith, in
particular with regard to Centra's commitments as Guarantor under Section 10,
pursuant to Article 9.1.4. of the Polish Foreign Exchange Act dated December 2,
1994, as amended.
<PAGE>
FIRST AMENDMENT
FIRST AMENDMENT, dated as of May 27, 1998 (this "Amendment"), to (i) the
---------
Credit and Guarantee Agreement, dated as of December 19, 1997, (as amended,
supplemented or otherwise modified from time to time, the "Credit and Guarantee
--------------------
Agreement"), among Exide Corporation, a Delaware corporation (the "Company"),
- --------- -------
the Borrowing Subsidiaries signatory thereto, the Guarantors signatory thereto,
the several lenders from time to time parties thereto (the "Lenders"), Lehman
-------
Commercial Paper Inc., as Syndication Agent for the Lenders (in such capacity,
the "Syndication Agent") and Credit Suisse First Boston, as Administrative Agent
-----------------
for the Lenders (in such capacity, the "Administrative Agent") and (ii) the
--------------------
Collateral Agreement, dated December 19, 1997, (the "Collateral Agreement"),
--------------------
made by the Company and certain of its Subsidiaries parties thereto in favor of
the Syndication Agent and the Administrative Agent for the Lenders.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Credit and Guarantee Agreement, the Lenders have
agreed to make, and have made, certain loans and other extensions of credit to
the Company and the Borrowing Subsidiaries; and
WHEREAS, the Company and the Borrowing Subsidiaries have requested, and,
upon this Amendment becoming effective, the Lenders have agreed, that certain
provisions of the Credit and Guarantee Agreement and Collateral Agreement be
amended in the manner provided for in this Amendment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. (a) General. Terms defined in the Credit and
------------- -------
Guarantee Agreement and used herein shall, unless otherwise indicated, have the
meanings given to them in the Credit and Guarantee Agreement. Terms defined and
used in this Amendment shall have the meanings given to them in this Amendment.
(b) Replacement of Definitions. Subsection 1.1 of the Credit and
--------------------------
Guarantee Agreement is hereby amended by deleting therefrom the definitions of
the following definitions in their entirety and substituting in lieu thereof the
following definitions in the appropriate alphabetical order:
"'Domestic Receivables Facility': the collective reference to (i) the
-----------------------------
Receivables Purchase Agreement, dated as of March 31, 1997, among Exide
U.S. Funding Corporation, as seller, Three Rivers Funding Corporation, as
buyer, and the Company, as servicer, (ii) the Sale Agreement, dated as of
March 31, 1997, between the Company, as seller, and Exide U.S. Funding
Corporation, as buyer, (iii) the agreements and instruments executed in
connection therewith as each of items (i), (ii) and (iii) is in effect on
the
<PAGE>
2
Closing Date, but giving effect to (x) extensions of the termination or
expiration date thereunder, (y) increases in the Domestic Receivables
Maximum Commitment Amount to an amount exceeding $125,000,000, but only if
such increases are approved in writing by the Required Lenders and (z)
other changes thereto approved by the Agents and (iv) any additional or
substitute or replacement receivables facility so long as such facility and
all documentation therefor, and the maximum amount thereof, are approved in
writing by the Required Lenders.
`Domestic Receivables Maximum Commitment Amount': $125,000,000.
----------------------------------------------
`L/C Commitment': at any date, the amount equal to (a)
--------------
$50,000,000 plus (b) so long as any Letter of Credit described in
Schedule 1.1F (or any replacement thereof) remains outstanding, the
amount set forth on Schedule 1.1F with respect thereto; provided that
--------
$10,000,000 of such $50,000,000 amount shall be reserved solely for
the issuance of Letters of Credit used to support Indebtedness of
Subsidiaries of the Company incorporated in Italy."
`Optional Currencies': Marks, Pounds, Francs and, with respect
-------------------
to Swing Line Loans and Letters of Credit only, Lira and Pesetas, and,
with respect to Letters of Credit only, any other foreign currency
which is acceptable to the Issuing Lender in its sole discretion."
(c) Amendment of Definitions. (i) The definition of the term "Asset
------------------------
Sale" in subsection 1.1 of the Credit and Guarantee Agreement is hereby
amended by deleting the reference to clause (f) in the second line thereof
and substituting in lieu thereof a reference to clause (g).
(ii) The definition of "Domestic Obligations" in subsection 1.1 of
the Credit and Guarantee Agreement is hereby amended by (x) inserting
immediately after the words "Interest Rate Protection Agreements" in the
eighth and ninth lines thereof the phrase "or any foreign currency hedge
agreements or swaps" and (y) inserting immediately after the words
"Interest Rate Protection Agreement" in the twelfth line thereof the phrase
"or any foreign currency hedge agreement or swap".
(iii) The definition of "Foreign Obligations" in subsection 1.1 of
the Credit and Guarantee Agreement is hereby amended by (x) inserting
immediately after the words "Interest Rate Protection Agreements" in the
ninth and tenth lines thereof the phrase "or any foreign currency hedge
agreements or swaps" and (y) inserting immediately after the words
"Interest Rate Protection Agreement" in the thirteenth line thereof the
phrase "or any foreign currency hedge agreement or swap".
<PAGE>
3
(iv) The definition of the term Revolving Credit Commitment is hereby
amended by deleting the amount "$100,000,000" in the penultimate line and
substituting in lieu thereof the amount "$125,000,000".
(c) Addition of Definitions. The following defined terms are hereby
-----------------------
added to subsection 1.1 of the Credit and Guarantee Agreement in
appropriate alphabetical order:
"'First Amendment': the First Amendment, dated as of May 27,
---------------
1998, to this Agreement.
'First Amendment Effective Date': the date each of the
------------------------------
conditions to effectiveness of each of the amendments, waivers and
agreements contained in the First Amendment described in paragraphs 23
and 24 thereof shall have been satisfied.
'GNB Acquisition': the acquisition by the Company of the
---------------
automotive battery manufacturing and metals divisions of GNB
Technologies.
'Interim Credit Facility': the collective reference to the
-----------------------
Senior Subordinated Credit Facility to be entered into by the Company
in lieu of the Senior Subordinated Note Indenture in the event the
Senior Subordinated Notes are not issued on the First Amendment
Effective Date, and all documents executed in connection therewith.
'Senior Subordinated Note Indenture': the Indenture to be
----------------------------------
entered into by the Borrower in connection with the issuance of the
Senior Subordinated Notes, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with Section 8.9.
'Senior Subordinated Notes': the Senior Subordinated Notes of
-------------------------
the Borrower to be issued pursuant to the Senior Subordinated Note
Indenture, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with Section 8.9.
'Specified Change of Control': a "Change of Control" as defined
---------------------------
in the Senior Subordinated Note Indenture or the Interim Credit
Facility."
2. Agreement with Respect to Additional Term Loans. Subject to the
-----------------------------------------------
conditions set forth herein, the Lenders party hereto hereby agree that the
Company shall be permitted to incur Indebtedness in respect of an additional
tranche of term loans under the Credit and Guarantee Agreement in an aggregate
principal amount not to exceed $100,000,000 (the "Additional Term Loans") with
---------------------
terms (including as to maturity, pricing, prepayments and collateral) equivalent
to the terms under the Loan Documents applicable to
<PAGE>
4
the Tranche B Term Loans (after giving effect to this Amendment) and otherwise
on terms and conditions satisfactory to the Required Lenders; provided, that no
--------
Lender shall be obligated to provide any of the Additional Term Loans.
3. Amendment to Subsection 2.7(a). Subsection 2.7(a) of the Credit
------------------------------
and Guarantee Agreement is hereby amended by inserting at the end of the first
sentence thereof but prior to the period the following: "provided, that the
--------
presentation by any third party of any check or draft drawn on the account of
the Company or any other borrowing by way of overdraft being deemed to
constitute a notice of borrowing of Swing Line Loans by the Company in the
amount of such check, draft or other borrowing, to the extent that insufficient
funds are then available for the payment thereof in the account of the Company
with the relevant Swing Line Lender and so long as the amount and currency with
respect to such deemed notice of borrowing are in compliance with the terms of
this Agreement".
4. Amendment to Subsection 2.7(b). Subsection 2.7(b) of the Credit
------------------------------
and Guarantee Agreement is hereby amended by inserting at the end of the first
sentence thereof but prior to the period the following: "provided, that the
--------
presentation by any third party of any check or draft drawn on the account of a
Borrowing Subsidiary or any other borrowing by way of overdraft being deemed to
constitute a notice of borrowing of Swing Line Loans by such Borrowing
Subsidiary in the amount of such check, draft or other borrowing, to the extent
that insufficient funds are then available for the payment thereof in the
account of such Borrowing Subsidiary with the relevant Swing Line Lender and so
long as the amount and currency with respect to such deemed notice of borrowing
are in compliance with the terms of this Agreement".
5. Amendment to Section 3.8(f). Subsection 3.8(f) of the Credit and
---------------------------
Guarantee Agreement is hereby amended by deleting such subsection in its
entirety and substituting in lieu thereof the following:
"(f) For the purposes of Articles L313-1 to L313-6 of the French
Code de la Consommation, the parties hereto acknowledge that it is not
possible to calculate precisely the taux effectif global as the interest
rate may vary during the course of the Loans. However, by way of example,
the taux effectif global applicable on December 19, 1997 taking into
account the fees, commissions and expenses which are payable by the
Borrowers and:
(i) in the case of a Eurocurrency Loan, assuming a base interest rate
of 3.664% per annum (being the Eurocurrency Rate (as at December
19, 1997) for French Francs or, in the case of the Tranche B Term
Loans, Dollars with an Interest Period of three months), (A) in
respect of the Tranche A Term Loans would be 5.922% per annum and
the taux de periode would be 5.664% for a period of three months,
(B) in respect of the Tranche B Term Loans would be 6.174% per
annum and the taux de periode would be 5.914% for a period of
three months and (C) in
<PAGE>
5
respect of the Revolving Credit Loans made to the Borrowing
Subsidiaries (assuming that Revolving Credit Facilities were
fully drawn for the entire duration of the Revolving Credit
Commitment Period) would be 5.418% per annum and the taux de
periode would be 5.164% for a period of three months;
(ii) in the case of a Base Rate Loan, assuming a base interest rate
of 8.5% per annum (being the Base Rate (as at December 19,
1997) for French Francs or, in the case of the Tranche B Term
Loans, for a period of three months), (A) in respect of the
Tranche A Term Loans would be 9.48% per annum and the taux de
periode would be 9.25% for a period of three months, (B) in
respect of the Tranche B Term Loans would be 9.731% per annum
and the taux de periode would be 9.5% for a period of three
months and (C) in respect of the Revolving Credit Loans made to
the Borrowing Subsidiaries (assuming that Revolving Credit
Facilities were fully drawn for the entire duration of the
Revolving Credit Commitment Period) would be 9.228% per annum
and the taux de periode would be 9.0% for a period of three
months; and
(iii) in the case of a Foreign Alternate Rate Loan, assuming a base
interest rate of 3.664% per annum (being the Foreign Alternate
Rate for Credit Suisse First Boston (as at December 19, 1997)
for French Francs or, in the case of the Tranche B Term Loans,
for a period of three months), (A) in respect of the Tranche A
Term Loans would be 4.915% per annum and the taux de periode
would be 4.664% for a period of three months, (B) in respect of
the Tranche B Term Loans would be 5.167% per annum and the taux
de periode would be 4.914% for a period of three months and (C)
in respect of the Revolving Credit Loans made to the Borrowing
Subsidiaries (assuming that Revolving Credit Facilities were
fully drawn for the entire duration of the Revolving Credit
Commitment Period) would be 4.411% per annum and the taux de
periode would be 4.164% for a period of three months."
6. Amendment to Subsection 5.21. Subsection 5.21 of the Credit
----------------------------
and Guarantee Agreement is hereby amended by adding at the end thereof the
following the following:
"The Obligations constitute, or in the event the Senior Subordinated Notes
are not issued on the First Amendment Effective Date, will constitute
"Senior Indebtedness" of the Company and the Borrowing Subsidiaries under
and as defined in the Senior Subordinated Note Indenture and the Interim
Credit Facility. The obligations of each Subsidiary Guarantor under the
Credit and Guarantee Agreement constitute, or in the event the Senior
Subordinated Notes are not issued on the First Amendment Effective Date,
will constitute "Guarantor Senior Indebtedness" (or such concept similar
<PAGE>
6
thereto) of such Subsidiary Guarantor under and as defined in the Senior
Subordinated Note Indenture and the Interim Credit Facility."
7. Amendment to Subsection 7.2. Subsection 7.2 of the Credit and
---------------------------
Guarantee Agreement is hereby amended by (a) deleting the word "and" at the end
of paragraph (f) thereof, (b) relettering current paragraph (g) as paragraph (h)
and (c) inserting immediately after paragraph (f) the following new paragraph
(g):
"(g) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior
Subordinated Note Indenture, the Senior Subordinated Notes or the Interim
Credit Facility; and"
8. Amendment to Subsection 8.1(a). Subsection 8.1(a) of the Credit
------------------------------
and Guarantee Agreement is hereby amended by deleting the table contained
therein and substituting in lieu thereof the following table:
<TABLE>
<CAPTION>
Consolidated
Period Leverage Ratio
------ --------------
<S> <C>
March 31, 1998 5.50 to 1.0
April 1, 1998 through June 30, 1998 5.75 to 1.0
July 1, 1998 through September 30, 1998 5.50 to 1.0, or in the event the
GNB Acquisition is consummated, 6.00 to 1.0
October 1, 1998 through December 31, 1998 5.25 to 1.0, or in the event the
GNB Acquisition is consummated, 5.60 to 1.0
January 1, 1999 through March 31, 1999 4.70 to 1.0, or in the event the
GNB Acquisition iS consummated, 5.00 to 1.0
April 1, 1999 through June 30, 1999 4.70 to 1.0
July 1, 1999 through December 31, 1999 4.95 to 1.0
January 1, 2000 through June 30, 2000 3.75 to 1.0
July 1, 2000 through December 31, 2000 4.00 to 1.0
January 1, 2001 through June 30, 2001 3.25 to 1.0
July 1, 2001 through December 31, 2001 3.50 to 1.0
January 1, 2002 through June 30, 2002 2.75 to 1.0
July 1, 2002 through December 31, 2002 3.00 to 1.0
January 1, 2003 through June 30, 2003 2.75 to 1.0
July 1, 2003 through December 31, 2003 3.00 to 1.0
January 1, 2004 through June 30, 2004 2.75 to 1.0
July 1, 2004 through December 31, 2004 3.00 to 1.0
</TABLE>
<PAGE>
7
9. Amendment to Subsection 8.1(b). Subsection 8.1(b) of the Credit
------------------------------
and Guarantee Agreement is hereby amended by deleting the table contained
therein and substituting in lieu thereof the following table:
<TABLE>
<CAPTION>
Period Charge Coverage Ratio
------ ---------------------
<S> <C>
March 31, 1998 through June 30, 1998 0.95 to 1.0
July 1, 1998 through September 30, 1998 0.95 to 1.0, or in the event
the GNB Acquisition is consummated, 0.75 to 1.0
October 1, 1998 through December 31, 1998 1.10 to 1.0, or in the event
the GNB Acquisition is consummated, 0.90 to 1.0
January 1, 1999 through September 30, 1999 1.30 to 1.0, or in the event
the GNB Acquisition is consummated, 1.05 to 1.0
October 1, 1999 through December 31, 1999 1.30 to 1.0
January 1, 2000 through December 31, 2000 1.35 to 1.0
January 1, 2001 and thereafter 1.75 to 1.0
</TABLE>
10. Amendment to Subsection 8.1(c). Subsection 8.1(c) of the Credit
------------------------------
and Guarantee Agreement is hereby amended by deleting the amount "$235,000,000"
and substituting in lieu thereof the following: "$230,000,000, or in the event
the GNB Acquisition is consummated $235,000,000".
11. Amendment to Subsection 8.2. Subsection 8.2 of the Credit and
---------------------------
Guarantee Agreement is hereby amended by (a) deleting the amount "$15,000,000"
from paragraph (m) and substituting in lieu thereof the amount "$20,000,000, (b)
deleting the word "and" at the end of the paragraph (m) thereof, (c) relettering
current paragraph (n) as paragraph (p), (d) adding thereto the following new
paragraph (n):
"(n) Guarantee Obligations of Subsidiaries of the Company
incorporated in Germany provided to German banking institutions in
connection with the financing of supplies purchased by any of such
Subsidiaries from German suppliers; provided that (i) no such Guarantee
--------
Obligation shall have a term exceeding 90 days, (ii) such Guarantee
Obligations shall be unsecured and (iii) the aggregate principal amount of
Guarantee Obligations which may be incurred in reliance on this paragraph
(p) shall not exceed $15,000,000 at any one time outstanding;"
and (e) adding thereto the following new paragraph (o):
"(o) Indebtedness of the Borrower in respect of the Senior
Subordinated Notes or, in the event the Senior Subordinated Notes are not
issued on the First Amendment
<PAGE>
8
Effective Date, Indebtedness under the Interim Credit Facility, in an
aggregate principal amount in each such case not to exceed $150,000,000
(plus, in the case of the Interim Credit Facility, increases in the
principal amount thereof in connection with the accretion of the interest
thereon in accordance with its terms), in each case, on terms and
conditions satisfactory to the Required Lenders;".
12. Amendment to Subsection 8.5. Subsection 8.5 of the Credit and
---------------------------
Guarantee Agreement is hereby amended by (a) relettering current paragraphs (g)
and (h) as paragraphs (h) and (i) and (b) adding thereto the following new
paragraph (g):
"(g) the sale by the Company of its ownership interest in Yuasa
Inc.;"
13. Amendment to Subsection 8.7. Subsection 8.7 of the Credit and
---------------------------
Guarantee Agreement is hereby amended by deleting the amount "$100,000,000" in
the fourth line and substituting in lieu thereof the amount "$125,000,000".
14. Amendment to Subsection 8.8(h). Subsection 8.8(h) of the Credit
------------------------------
and Guarantee Agreement is hereby amended by adding after the word "thereof" but
prior to the semi-colon in the last line thereof the following:
"provided, further, that the foregoing shall not prohibit the consummation
-------- -------
of the GNB Acquisition for an aggregate purchase price not to exceed
$300,000,000 and aggregate fees and expenses in connection therewith not to
exceed $10,000,000, pursuant to documentation in form and substance
satisfactory to the Required Lenders".
15. Amendment to Subsection 8.9. Subsection 8.9 of the Credit and
---------------------------
Guarantee Agreement is hereby amended by (a) deleting such subsection in its
entirety and substituting in lieu thereof the following:
"8.9 Limitation on Optional Payments and Modifications of Debt
---------------------------------------------------------
Instruments, etc. (a) Make or offer to make any payment, prepayment,
-----------------
repurchase or redemption of or otherwise defease or segregate funds with
respect to the Convertible Notes, the DM Notes, the Senior 10% Notes or the
Senior Subordinated Notes (other than scheduled interest payments required
to be made in cash); provided, so long as no Default or Event of Default
--------
shall have occurred and is continuing, the Company or any of its
Subsidiaries may at any time prepay, repurchase or redeem Eligible
Prepayment Debt in an aggregate principal amount not to exceed the
Available Prepayment Amount at such time, (b) amend, modify, waive or
otherwise change, or consent or agree to any amendment, modification,
waiver or other change to, any of the terms of the Convertible Notes, the
DM Notes, the Senior 10% Notes or the Senior Subordinated Notes (other than
any such amendment, modification, waiver or other change which (i) would
extend the maturity or reduce the amount of any payment of principal
thereof or which would reduce the rate or extend the date for payment of
interest thereon and (ii) does not involve the payment of a consent fee),
(c) designate
<PAGE>
9
any Indebtedness as "Designated Senior Indebtedness" for the purposes of
the Convertible Indenture or the Senior Subordinated Indenture or (d) amend
its certificate of incorporation in any manner determined by the
Administrative Agent to be adverse to the Lenders without the prior written
consent of the Required Lenders.".
16. Amendment to Section 8.13. Section 8.13 of the Credit and
-------------------------
Guarantee Agreement is hereby amended by (a) deleting the word "and" the second
time it appears in the sixth line and substituting in lieu thereof a comma and
(b) adding thereto at the end thereof and prior to the period the following:
"and (d) an agreement by DETA Portuguesa Baterias, Lda. ("DETA Portuguesa") in
---------------
favor of the Portuguese government which prohibits DETA Portuguesa from placing
a lien on approximately $5,200,000 of the assets in connection with certain
capital expenditures made by DETA Portuguesa during the fiscal years 1993
through 1997".
17. Amendment to Section 9. Section 9 of the Credit and Guarantee
----------------------
Agreement is hereby amended by (a) adding the word "or" at the end of paragraph
(l) thereof and (b) adding to the list of events therein the following:
"(m) (i) the Senior Subordinated Notes or, in the event the Senior
Subordinated Notes are not issued on the First Amendment Effective Date,
the obligations under the Interim Credit Facility, or, in each case, the
guarantees thereof, shall cease, for any reason, to be validly subordinated
to the Obligations, as provided in the Senior Subordinated Note Indenture
or the Interim Credit Facility, as the case may be, or the obligations of
the Subsidiary Guarantors under the Credit and Guarantee Agreement or (ii)
any Loan Party, any Affiliate of any Loan Party, the trustee in respect of
the Senior Subordinated Note Indenture (in the case of the Senior
Subordinated Notes) or the holders of at least 25% in aggregate principal
amount of the Senior Subordinated Note Indenture or the Interim Credit
Facility, as the case may be, shall so assert;".
18. Amendment to Subsection 12.1. Subsection 12.1 of the Credit and
----------------------------
Guarantee Agreement is hereby amended by (a) deleting the word "or" immediately
prior to the numeral "(viii)", (b) renumbering the current item "(viii)" as item
"(vii)" and (c) adding thereto a new item (viii) as follows:
"; or (viii) amend or modify subsection 3.5(d) to change the
application of prepayments thereunder without the written consent of
the Majority Facility Lenders in respect of any Facility adversely
affected thereby"
19. Amendment to Subsection 12.7(c). Subsection 12.7(c) of the
-------------------------------
Credit and Guarantee Agreement is hereby amended by deleting such subsection in
its entirety and substituting in lieu thereof the following:
"(c) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the
Company, any of the
<PAGE>
10
other Borrowers or any of the Foreign Subsidiary Guarantors, any such
notice being expressly waived by the Company, each other Borrower, and each
Foreign Subsidiary Guarantor, to the extent permitted by applicable law,
upon any amount becoming due and payable by the Company, any other
Borrower, or any of the Foreign Subsidiary Guarantors hereunder (whether at
the stated maturity, by acceleration or otherwise) to set off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any
other credits, indebtedness or claims, in any currency, in each case
whether direct or indirect, absolute or contingent, matured or unmatured,
at any time held or owing by such Lender or any branch or agency thereof to
or for the credit or the account of the Company, such other Borrower or
such Foreign Subsidiary Guarantor. Each Lender agrees promptly to notify
the Company, such other Borrower, such Foreign Subsidiary Guarantor and the
Administrative Agent after any such setoff and application made by such
Lender, provided that the failure to give such notice shall not affect the
--------
validity of such setoff and application."
20. Amendment to Subsection 12.9. Subsection 12.9 of the Credit and
----------------------------
Guarantee Agreement is hereby amended by deleting the words "all the Lenders" in
both places in which they appear in the penultimate line thereof and
substituting in lieu thereof the words "the Majority Revolving Credit Facility
Lenders".
21. Replacement of Annex A. Annex A to the Credit and Guarantee
----------------------
Agreement is hereby amended by deleting such Annex A in its entirety and
substituting in lieu thereof the new Annex A attached hereto.
22. Amendment to Collateral Agreement. (a) Subsection 1.1 of the
---------------------------------
Collateral Agreement is hereby amended by adding thereto in the appropriate
alphabetical order the following defined term:
"'Domestic Receivables Collateral': each item of Collateral in
-------------------------------
which an interest has been conveyed pursuant to or as contemplated by
the Domestic Receivables Facility, including, without limitation, all
receivables, accounts, general intangibles, 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 thereto and all
proceeds and products of any of the foregoing."
(b) Section 2 of the Collateral Agreement is hereby amended by adding
thereto at the end thereof the following:
"Notwithstanding the foregoing, the Administrative Agent on behalf of
all the Lenders and the Company on behalf of itself, the Borrowing
Subsidiaries and
<PAGE>
11
the Subsidiary Guarantors hereby expressly acknowledge that the
Collateral shall not include any of the Domestic Receivables
Collateral."
23. Conditions to Effectiveness of All Amendments. This Amendment
---------------------------------------------
shall become effective on and as of the date that the Administrative Agent shall
have received counterparts of this Amendment, duly executed by the Company, the
Borrowing Subsidiaries, the Guarantors, the Required Lenders and the Swing Line
Lenders.
24. Additional Conditions to Effectiveness of Certain Amendments. In
------------------------------------------------------------
addition to the conditions set forth in paragraph 23, the agreements and
amendments set forth in paragraphs 2, 6, 7, 11(e), 13, 14, 15 and 17 and the
amendment to the definition of "Domestic Receivables Maximum Commitment Amount"
shall be subject to the satisfaction of the following additional conditions:
(a) The Administrative Agent shall have received a copy of the
resolutions, in form and substance satisfactory to the and the
Administrative Agent, of the Company authorizing (i) the execution,
delivery and performance of this Amendment, (ii) the borrowings
contemplated hereunder, certified by the Secretary of the Company as of the
date hereof, which certificate shall be in form and substance satisfactory
to the Administrative Agent and shall state that the resolutions thereby
certified have not been amended, modified, revoked or rescinded.
(b) The Administrative Agent shall have received a certificate of the
Secretary of the Company, dated the date hereof, as to the incumbency and
signature of the officers of the Company executing this Amendment
satisfactory in form and substance to the Administrative Agent.
(c) All governmental and third party approvals (including landlords'
and other consents) necessary or advisable in connection with this
Amendment, the making of the Additional Term Loans and the GNB Acquisition
shall have been obtained and be in full force and effect, and all
applicable waiting periods shall have expired without any action being
taken or threatened by any competent authority which would restrain,
prevent or otherwise impose materially adverse conditions on the Credit and
Guarantee Agreement as amended by this Amendment, the making of the
Additional Term Loans or the GNB Acquisition.
(d) The GNB Acquisition shall have been consummated for an aggregate
purchase price not to exceed $300,000,000 pursuant to documentation in form
and substance satisfactory to the Required Lenders. The fees and expenses
in connection with the GNB Acquisition shall not exceed $10,000,000.
(e) An additional amendment to the Credit and Guarantee Agreement
shall have been executed and delivered by the Company, the Borrowing
Subsidiaries, the
<PAGE>
12
Guarantors, the Required Lenders and the Swing Line Lenders, which shall
set forth the exact terms of, and the lenders providing, the Additional
Term Loans.
(f) The Administrative Agent shall have received the executed legal
opinion of Kirkland & Ellis, counsel to the Borrower dated the date hereof
and in form and substance satisfactory to the Administrative Agent.
(g) The Administrative Agent shall have received evidence in form and
substance satisfactory to it that all filings, recordings, registrations
and other actions necessary or, in the opinion of the Administrative Agent,
desirable to perfect the liens and security interests created by the
Security Documents in the property acquired in connection with the GNB
Acquisition, shall have been completed.
(h) The Administrative Agent shall have received the results of a
recent search of the Uniform Commercial Code, judgement and tax lien
filings which may have been filed with respect to property acquired in
connection with the GNB Acquisition in each of the jurisdictions and
offices where any such property is located, and such search shall reveal no
liens on any of such property except for liens permitted by the Loan
Documents.
(i) The Lenders shall have received a satisfactory solvency analysis
from the chief financial officer of the Company which shall document the
solvency of the Company and its subsidiaries after giving effect to the
Acquisition and the other transactions contemplated hereby.
25. Representations and Warranties. The Company as of the date
------------------------------
hereof and after giving effect to the amendment contained herein, hereby
confirms, reaffirms and restates that representations and warranties made by it
in Section 5 of the Credit and Guarantee Agreement; provided, that each
--------
reference to the Credit and Guarantee Agreement therein shall be deemed to be a
reference to the Credit and Guarantee Agreement after giving effect to this
Amendment.
26. Payment of Expenses. The Company agrees to pay or
-------------------
reimburse the Syndication Agent and the Administrative Agent for all of their
out-of-pocket costs and reasonable expenses incurred in connection with the
Amendment, any other documents prepared in connection herewith and the
transactions contemplated hereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Syndication Agent and the
Administrative Agent.
27. Reference to and Effect on the Loan Documents; Limited Effect.
--------------------------------------------------------------
On and after the date hereof and the satisfaction of the conditions contained in
Section 10 of this Amendment, each reference in the Credit and Guarantee
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit and Guarantee Agreement, and each reference in the other
Loan Documents to "the Credit and Guarantee
<PAGE>
13
Agreement", "thereunder", "thereof" or words of like import referring to the
Credit and Guarantee Agreement, shall mean and be a reference to the Credit and
Guarantee Agreement as amended hereby. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any Lender or any Agent
under any of the Loan Documents, nor constitute a waiver of any provisions of
any of the Loan Documents. Except as expressly amended herein, all of the
provisions and covenants of the Credit and Guarantee Agreement and the other
Loan Documents are and shall continue to remain in full force and effect in
accordance with the terms thereof and are hereby in all respects ratified and
confirmed.
28. Counterparts. This Amendment may be executed by one or more of
------------
the parties hereto in any number of separate counterparts (which may include
counterparts delivered by facsimile transmission) and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. Any
executed counterpart delivered by facsimile transmission shall be effective as
for all purposes hereof.
29. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
-------------
OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
14
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
EXIDE CORPORATION, as a Borrower and as a
Guarantor
By:__________________________________________
Name:
Title:
EXIDE HOLDING EUROPE S.A.
COMPAGNIE EUROPEENNE
D'ACCUMULATEURS S.A.
EURO EXIDE CORPORATION LIMITED
SOCIEDAD ESPANOLA DEL ACUMULADOR
TUDOR S.A.
TUDOR A.B.
EXIDE VERWALTUNGS GMBH
MERCOLEC TUDOR B.V.,
each as a Borrowing Subsidiary and as a
Guarantor
By:_________________________________________
Name:
Title:
<PAGE>
15
ACCUMULATORENFABRIK SONNENSCHEIN
GMBH
COMPAGNIA GENERALE ACCUMULATORI
S.P.A.
SINAC S.R.L.
FULMEN IBERICA S.A.
CMP BATTERIES LIMITED
CMP BATTERIJEN B.V.
SOCIETE FRANCAISE DES
ACCUMULATEURS TUDOR S.A.
CMP BATTERIER A/S
EXIDE AUTOMOTIVE BATTERIE GMBH
HAGEN BATTERIE A.G.
INDUSTRIA COMPOSIZIONI STAMPATE
S.P.A.
HAGEN BATTERIJEN B.V.
ELECTRO MERCANTIL INDUSTRIAL S.A.
GAZTAMBIDE S.A.
TERRENOS Y CONSTRUCCIONES S.A.
T.S. BATTERIE S.R.L.
EXIDE BATTERIES LIMITED
B.I.G. BATTERIES LIMITED
EXIDE (DAGENHAM) LIMITED
EXIDE FRANCE S.A.
FULMEN UK LIMITED
EXIDE AUTOMOTIVE S.A.
CMP BATTERIJEN N.V.
SOCIEDAD PORTUGUESA DO
ACUMULADOR TUDOR S.A.
EXIDE DENMARK A/S
GEMALA SWEDEN AB
CENTRA S.A.
DETA AKKUMULATORENWERK GMBH
MAREG ACCUMULATOREN GMBH
FRIWO SILBERKRAFT MBH
EXIDE SONNAK A/S
CMP BATTERIJEN S.A.
EXIDE AUTOMOTIVE S.A.
EXIDE LENDING LIMITED
each as a Guarantor, subject to the limitations, if
any, contained in Schedule 10.1
By:_________________________________________________
Name:
Title:
<PAGE>
16
GBC, INC.
as a Guarantor
By:_________________________________________________
Name:
Title:
GENERAL BATTERY CORPORATION
as a Guarantor
By: Exide Investments, Inc., trustee
By:_________________________________________________
Name:
Title:
EXIDE INTERNATIONAL, INC.
as a Guarantor
By:_________________________________________________
Name:
Title:
<PAGE>
17
LEHMAN BROTHERS INC., as Arranger
By:___________________________
Name:
Title:
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By:___________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as
Arranger and as Administrative Agent
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as a
Lender
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
LEHMAN BROTHERS BANKHAUS AG
By:___________________________
Name:
Title:
<PAGE>
18
ALPHA CREDIT BANK A.E.
By:___________________________
Name:
Title:
BANK OF MONTREAL
By:___________________________
Name:
Title:
BANQUE PARIBAS
By:___________________________
Name:
Title:
BANK POLSKA KASA OPIEKI S.A. - PEKAO
S.A.
By:___________________________
Name:
Title:
SCOTIABANK EUROPE PLC
By:___________________________
Name:
Title:
BANCA POPOLARE DI BERGAMO-CREDITO
VARESINO S.C.A.R.L.
By:___________________________
Name:
Title:
<PAGE>
19
BANKBOSTON, N.A.
By:___________________________
Name:
Title:
BANQUE ET CAISSE D'EPARGNE DE
L'ETAT, LUXEMBOURG
By:___________________________
Name:
Title:
BHF BANK AKTENGESELLSCHAFT
By:___________________________
Name:
Title:
BANQUE NATIONALE DE PARIS
By:___________________________
Name:
Title:
BANCO ESPIRITO SANTO E COMERCIAL DE
LISBOA S.A.
By:___________________________
Name:
Title:
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE NEW YORK
BRANCH
By:___________________________
Name:
Title:
<PAGE>
20
COMERICA BANK
By:___________________________
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By:___________________________
Name:
Title:
DAI-ICHI KANGYO BANK, LTD.
By:___________________________
Name:
Title:
DRESDNER BANK AG NEW YORK & GRAND
CAYMAN BRANCHES
By:___________________________
Name:
Title:
NBD BANK
By:___________________________
Name:
Title:
FIRST UNION NATIONAL BANK
By:___________________________
Name:
Title:
<PAGE>
21
CORESTATES BANK, N.A.
By:___________________________
Name:
Title:
INDUSTRIAL BANK OF JAPAN, LIMITED
NEW YORK BRANCH
By:___________________________
Name:
Title:
OSTERREICHISCHE INVESTITIONSKREDIT
AG
By:___________________________
Name:
Title:
MEESPIERSON N.V.
By:___________________________
Name:
Title:
MELLON BANK, N.A.
By:___________________________
Name:
Title:
THE MITSUBISHI TRUST & BANKING CORPORATION
By:___________________________
Name:
Title:
<PAGE>
22
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, S.P.A.
By:___________________________
Name:
Title:
SOCIETE GENERALE
By:___________________________
Name:
Title:
THE SUMITOMO BANK, LIMITED
By:___________________________
Name:
Title:
THE SUMITOMO TRUST & BANKING CO., LTD.
By:___________________________
Name:
Title:
TORONTO DOMINION (TEXAS), INC.
By:___________________________
Name:
Title:
PEOPLES SECURITY LIFE INSURANCE
COMPANY
By:___________________________
Name:
Title:
<PAGE>
23
FRANKLIN FLOATING RATE TRUST
By:___________________________
Name:
Title:
ING HIGH INCOME PRINCIPAL
PRESERVATION FUND HOLDINGS, LDC
By: ING CAPITAL ADVISORS, INC., as
Investment Advisor
By:___________________________
Name:
Title:
ARCHIMEDES FUNDING, L.L.C.
By: ING CAPITAL ADVISORS, INC., as
Collateral Advisor
By:___________________________
Name:
Title:
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By:___________________________
Name:
Title:
METROPOLITAN LIFE INSURANCE
COMPANY
By:___________________________
Name:
Title:
<PAGE>
24
ORIX USA CORPORATION
By:___________________________
Name:
Title:
PARIBAS CAPITAL FUNDING LLC
By:___________________________
Name:
Title:
KZH HOLDING COMPANY III
By:___________________________
Name:
Title:
THE BANK OF SCOTLAND
By:___________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By:___________________________
Name:
Title:
NATEXIS BANQUE
By:___________________________
Name:
Title:
<PAGE>
25
ALLIANCE CAPITAL MANAGEMENT L.P., as
Manager on behalf of Alliance Capital Funding,
L.L.C.
By: Alliance Capital Management Corporation,
General Partner of Alliance Capital
Management L.P.
By:_________________________________________
Name:
Title:
ALLIANCE CAPITAL MANAGEMENT L.P., as
Manager on behalf of Alliance Investments
Limited
By: Alliance Capital Management Corporation,
General Partner of Alliance Capital
Management L.P.
By:_________________________________________
Name:
Title:
BALANCED HIGH YIELD FUND I LTD.,
By: BHF-Bank Aktiengesellschaft, acting
through its New York Branch, as
attorney-in-fact
By:_________________________________________
Name:
Title:
CHASE SECURITIES INC, as Agent for The
Chase Manhattan Bank
By:_________________________________________
Name:
Title:
<PAGE>
26
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.
As: Attorney-in-Fact and on behalf of First
Allmerica Financial Life Insurance
Company as Portfolio Manager
By:_________________________________________
Name:
Title:
DELANO COMPANY
By: Pacific Investment Management Company,
as its Investment Advisor
By:_________________________________________
Name:
Title:
INDOSUEZ CAPITAL FUNDING IV, L.P.
By: Indosuez Capital Luxembourg, as
Collateral Manager
By:_________________________________________
Name:
Title:
KZH-CNC CORPORATION
By:_________________________________________
Name:
Title:
LEHMAN SYNDICATED LOANS INC.
By:_________________________________________
Name:
Title:
<PAGE>
27
DEBT STRATEGIES FUND II, INC.
By:_________________________________________
Name:
Title:
MERRILL LYNCH GLOBAL INVESTMENT SERIES:
INCOME STRATEGIES PORTFOLIO
By: Merrill Lynch Asset Management, as
Investment Advisor
By:_________________________________________
Name:
Title:
MERRILL LYNCH, PIERCE, FENNER AND SMITH
INCORPORATED
By:_________________________________________
Name:
Title:
OSPREY INVESTMENTS MANAGEMENT COMPANY
By: Citibank, N.A., as Manager
By:_________________________________________
Name:
Title:
ROYALTON COMPANY
By: Pacific Investments Management
Company, as Investment Advisor
By:_________________________________________
Name:
Title:
<PAGE>
28
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By:_________________________________________
Name:
Title:
WADDELL & REED FINANCIAL INC.
By:_________________________________________
Name:
Title:
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPEENNE NEW YORK BRANCH
By:_________________________________________
Name:
Title:
<PAGE>
Annex A
-------
PRICING GRID FOR REVOLVING CREDIT LOANS, SWING LINE LOANS,
TRANCHE A TERM LOANS AND COMMITMENT FEES
<TABLE>
<CAPTION>
====================================================================================================================
Applicable Applicable
Margin Margin
for for
Revolving Tranche A
Credit Term Applicable
Loans Applicable Loans Applicable Margin Applicable
which are Margin for which are Margin for for Tranche Margin for
Base Rate Revolving Base Rate Tranche A B Term Tranche B
Loans or Credit Loans Loans or Term Loans Loans Term Loans
Consolidated Foreign which are Foreign which are which are which are Facility
Leverage Alternate Eurocurrency Alternate Eurocurrency Base Rate Eurocurrency Fee
Ratio Rate Loans Loans Rate Loans Loans Loans Loans Rate
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Greater than .75% 1.75% 1.25% 2.25% 1.50% 2.50% .50%
or equal to
5.25 to 1
- --------------------------------------------------------------------------------------------------------------------
Greater than .50% 1.50% 1.00% 2.00% 1.25% 2.25% .50%
or equal to
4.50 to 1
and
Less than
5.25 to 1
- --------------------------------------------------------------------------------------------------------------------
Greater than .25% 1.25% .75% 1.75% 1.25% 2.25% .50%
or equal to
4.00 to 1
and
Less than
4.50 to 1
- --------------------------------------------------------------------------------------------------------------------
Greater than 0% 1.00% .50% 1.50% 1.00% 2.00% .50%
or equal to
3.50 to 1
and
Less than
4.00 to 1
- --------------------------------------------------------------------------------------------------------------------
Greater than 0% .75% .25% 1.25% 1.00% 2.00% .50%
or equal to
3.00 to 1
and
Less than
3.50 to 1
-------------------------------------------------------------------------------------------------------------------
Less than 0% .625% 0% 1.00% .75% 1.75% .375%
3.00 to 1
====================================================================================================================
</TABLE>
Changes in the Applicable Margin or in the Facility Fee Rate resulting from
changes in the Consolidated Leverage Ratio shall become effective on the date
(the "Adjustment Date") on which financial statements are delivered to the
---------------
Administrative Agent and the Lenders pursuant to Section 7.1 (but in any event
not later than the 50th day after the end of each of the first three quarterly
periods of each fiscal year or the 100th day after the end of each fiscal year,
as the case may be) and shall remain in effect until the next change to be
effected pursuant to this paragraph. If any financial statements referred to
above are not delivered within the time periods specified above, then, until
such financial statements are delivered, the Consolidated Leverage Ratio as at
the end of the fiscal period that would have been covered thereby shall for the
purposes of this definition be deemed to be greater than 5.25 to 1. In
addition, at all times while an Event of Default shall have occurred and be
continuing, the Consolidated Leverage Ratio shall for the purposes of this
definition be deemed to be greater than 5.25 to 1. Each determination of the
Consolidated Leverage Ratio pursuant to this definition shall be made with
respect to the period of four consecutive fiscal quarters of the Company ending
at the end of the period covered by the relevant financial statements.
<PAGE>
BORROWING SUBSIDIARY APPROVAL
BORROWING SUBSIDIARY APPROVAL, dated as of May 27, 1998 (this
"Approval"), in connection with the Credit and Guarantee Agreement, dated as of
- ---------
December 19, 1997, (as amended by the First Amendment, dated as of May 27, 1998
and as further amended, supplemented or otherwise modified from time to time,
the "Credit and Guarantee Agreement"), among Exide Corporation, a Delaware
------------------------------
corporation (the "Company"), the Borrowing Subsidiaries signatory thereto, the
-------
Guarantors signatory thereto, the several lenders from time to time parties
thereto (the "Lenders"), Lehman Commercial Paper Inc., as Syndication Agent for
-------
the Lenders (in such capacity, the "Syndication Agent") and Credit Suisse First
-----------------
Boston, as Administrative Agent for the Lenders (in such capacity, the
"Administrative Agent").
- ---------------------
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Credit and Guarantee Agreement, the Lenders
have agreed to make, and have made, certain loans and other extensions of credit
to the Company and the Borrowing Subsidiaries; and
WHEREAS, the Credit and Guarantee Agreement permits Subsidiaries of
the Company to be added as additional Borrowing Subsidiaries upon satisfaction
of certain conditions set forth in the Credit and Guarantee Agreement, including
the approval of the Majority Revolving Credit Facility Lenders; and
WHEREAS, the Company has requested that the Lenders agree to add
certain Subsidiaries of the Company as Borrowing Subsidiaries under the Credit
and Guarantee Agreement and the Lenders are willing to agree to such addition
upon the terms and conditions set forth in this Approval and the Credit and
Guarantee Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Terms defined in the Credit and Guarantee
-------------
Agreement and used herein shall, unless otherwise indicated, have the meanings
given to them in the Credit and Guarantee Agreement.
2. Approval of Addition of Subsidiaries as Borrowing Subsidiaries.
--------------------------------------------------------------
Subject to the terms and conditions of this Approval, the Credit and Guarantee
Agreement and the Joinder Agreement of even date herewith made by Exide Italia
S.p.A., (the "New Borrowing Subsidiary") in favor of the Administrative Agent
------------------------
for the benefit of the Lenders, substantially in the form attached as Exhibit A
hereto (the "Joinder Agreement"), the Lenders hereby approve the addition of the
-----------------
New Borrowing Subsidiary as a Borrowing Subsidiary under the Credit and
Guarantee Agreement.
3. Conditions to Effectiveness. This Approval shall become
---------------------------
effective upon the satisfaction of the following conditions precedent:
<PAGE>
2
(a) The Administrative Agent shall have received counterparts of
this Approval, duly executed by the Company, the Borrowing
Subsidiaries, the Guarantors and the Majority Revolving Credit
Facility Lenders.
(b) The Administrative Agent shall have received counterparts of
the Joinder Agreement, duly executed and delivered by the Company and
the New Borrowing Subsidiary, and by its signature hereto each of the
Lenders is deemed to have accepted the contents of the Joinder
Agreement, including, without limitation, the Designated Maximum
specified therein.
(c) The Administrative Agent shall have received and be
reasonably satisfied with corporate resolutions, other corporate
documents, certificates and legal opinions in respect of the New
Borrowing Subsidiary substantially equivalent to comparable documents
delivered on the Closing Date in respect of the Borrowing Subsidiaries
party to the Credit and Guarantee Agreement on the Closing Date.
(d) The Administrative Agent shall have received counterparts of
the Foreign Obligations Guarantor Joinder Agreement, substantially in
the form of Exhibit B to this Approval, duly executed and delivered by
Exide Italia S.p.A.
(e) The Administrative Agent shall have received an additional
Pledge Agreement granting to the Administrative Agent, for the benefit
of the Foreign Lenders, a perfected first priority security interest
in the Capital Stock of Exide Italia S.p.A., and all such legal
opinions and any other documentation deemed necessary by the
Administrative Agent in connection with such pledge shall be in form
and substance, and, in the case of opinions, from counsel, reasonably
satisfactory to the Administrative Agent.
(f) The Administrative Agent shall have received such other
documents with respect to any of the foregoing matters as it shall
reasonably request.
4. Representations and Warranties. The Company as of the date
------------------------------
hereof and after giving effect to the amendment contained herein, hereby
confirms, reaffirms and restates that representations and warranties made by it
in Section 5 of the Credit and Guarantee Agreement; provided, that each
--------
reference to the Credit and Guarantee Agreement therein shall be deemed to be a
reference to the Credit and Guarantee Agreement after giving effect to this
Approval.
5. Payment of Expenses. The Company agrees to pay or reimburse the
-------------------
Syndication Agent and the Administrative Agent for all of their out-of-pocket
costs and reasonable expenses incurred in connection with the Approval, any
other documents prepared in connection herewith and the transactions
contemplated hereby, including, without
<PAGE>
3
limitation, the reasonable fees and disbursements of counsel to the Syndication
Agent and the Administrative Agent.
6. Reference to and Effect on the Loan Documents; Limited Effect.
-------------------------------------------------------------
On and after the date hereof and the satisfaction of the conditions contained in
Section 3 of this Approval, each reference in the Credit and Guarantee Agreement
to "this Agreement", "hereunder", "hereof" or words of like import referring to
the Credit and Guarantee Agreement, and each reference in the other Loan
Documents to "the Credit and Guarantee Agreement", "thereunder", "thereof" or
words of like import referring to the Credit and Guarantee Agreement, shall mean
and be a reference to the Credit and Guarantee Agreement as amended hereby. The
execution, delivery and effectiveness of this Approval shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Lender or any Agent under any of the Loan Documents, nor constitute a waiver
of any provisions of any of the Loan Documents. Except as expressly amended
herein, all of the provisions and covenants of the Credit and Guarantee
Agreement and the other Loan Documents are and shall continue to remain in full
force and effect in accordance with the terms thereof and are hereby in all
respects ratified and confirmed.
7. Counterparts. This Approval may be executed by one or more of
------------
the parties hereto in any number of separate counterparts (which may include
counterparts delivered by facsimile transmission) and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. Any
executed counterpart delivered by facsimile transmission shall be effective as
for all purposes hereof.
8. GOVERNING LAW. THIS APPROVAL AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
4
IN WITNESS WHEREOF, the parties hereto have caused this Approval to be
duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
EXIDE CORPORATION, as a Borrower and as a
Guarantor
By:_________________________________________
Name:
Title:
EXIDE HOLDING EUROPE S.A.
COMPAGNIE EUROPEENNE
D'ACCUMULATEURS S.A.
EURO EXIDE CORPORATION LIMITED
SOCIEDAD ESPANOLA DEL ACUMULADOR
TUDOR S.A
TUDOR A.B.
EXIDE VERWALTUNGS GMBH
MERCOLEC TUDOR B.V.,
each as a Borrowing Subsidiary and as a
Guarantor
By:_________________________________________
Name:
Title:
<PAGE>
5
ACCUMULATORENFABRIK SONNENSCHEIN GMBH
COMPAGNIA GENERALE ACCUMULATORI S.P.A.
SINAC S.R.L.
FULMEN IBERICA S.A.
CMP BATTERIES LIMITED
CMP BATTERIJEN B.V.
SOCIETE FRANCAISE DES ACCUMULATEURS TUDOR S.A.
CMP BATTERIER A/S
EXIDE AUTOMOTIVE BATTERIE GMBH
HAGEN BATTERIE A.G.
INDUSTRIA COMPOSIZIONI STAMPATE S.P.A.
HAGEN BATTERIJEN B.V.
ELECTRO MERCANTIL INDUSTRIAL S.A.
GAZTAMBIDE S.A.
TERRENOS Y CONSTRUCCIONES S.A.
T.S. BATTERIE S.R.L.
EXIDE BATTERIES LIMITED
B.I.G. BATTERIES LIMITED
EXIDE (DAGENHAM) LIMITED
EXIDE FRANCE S.A.
FULMEN UK LIMITED
EXIDE AUTOMOTIVE S.A.
CMP BATTERIJEN N.V.
SOCIEDAD PORTUGUESA DO ACUMULADOR TUDOR S.A.
EXIDE DENMARK A/S
GEMALA SWEDEN AB
CENTRA S.A.
DETA AKKUMULATORENWERK GMBH
MAREG ACCUMULATOREN GMBH
FRIWO SILBERKRAFT MBH
EXIDE SONNAK A/S
CMP BATTERIJEN S.A.
EXIDE AUTOMOTIVE S.A.
EXIDE LENDING LIMITED
each as a Guarantor, subject to the limitations,
if any, contained in Schedule 10.1
By:_____________________________________________
Name:
Title:
<PAGE>
6
GBC, INC.
as a Guarantor
By:_____________________________________________
Name:
Title:
GENERAL BATTERY CORPORATION
as a Guarantor
By: Exide Investments, Inc., trustee
By:_____________________________________________
Name:
Title:
EXIDE INTERNATIONAL, INC.
as a Guarantor
By:_____________________________________________
Name:
Title:
<PAGE>
7
LEHMAN BROTHERS INC., as Arranger
By:_________________________________________
Name:
Title:
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By:_________________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as
Arranger and as Administrative Agent
By:_________________________________________
Name:
Title:
By:_________________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as a
Lender
By:_________________________________________
Name:
Title:
By:_________________________________________
Name:
Title:
LEHMAN BROTHERS BANKHAUS AG
By:_________________________________________
Name:
Title:
<PAGE>
8
ALPHA CREDIT BANK A.E.
By:_________________________________________
Name:
Title:
BANK OF MONTREAL
By:_________________________________________
Name:
Title:
BANQUE PARIBAS
By:_________________________________________
Name:
Title:
BANK POLSKA KASA OPIEKI S.A. - PEKAO S.A.
By:_________________________________________
Name:
Title:
SCOTIABANK EUROPE PLC
By:_________________________________________
Name:
Title:
BANCA POPOLARE DI BERGAMO-CREDITO
VARESINO S.C.A.R.L.
By:_________________________________________
Name:
Title:
<PAGE>
9
BANKBOSTON, N.A.
By:_________________________________________
Name:
Title:
BANQUE ET CAISSE D'EPARGNE DE L'ETAT,
LUXEMBOURG
By:_________________________________________
Name:
Title:
BHF BANK AKTENGESELLSCHAFT
By:_________________________________________
Name:
Title:
BANQUE NATIONALE DE PARIS
By:_________________________________________
Name:
Title:
BANCO ESPIRITO SANTO E COMERCIAL DE
LISBOA S.A.
By:_________________________________________
Name:
Title:
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE NEW YORK BRANCH
By:_________________________________________
Name:
Title:
<PAGE>
10
COMERICA BANK
By:_________________________________________
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By:_________________________________________
Name:
Title:
DAI-ICHI KANGYO BANK, LTD.
By:_________________________________________
Name:
Title:
DRESDNER BANK AG NEW YORK & GRAND
CAYMAN BRANCHES
By:_________________________________________
Name:
Title:
NBD BANK
By:_________________________________________
Name:
Title:
FIRST UNION NATIONAL BANK
By:_________________________________________
Name:
Title:
<PAGE>
11
CORESTATES BANK, N.A.
By:_________________________________________
Name:
Title:
INDUSTRIAL BANK OF JAPAN, LIMITED
NEW YORK BRANCH
By:_________________________________________
Name:
Title:
OSTERREICHISCHE INVESTITIONSKREDIT AG
By:_________________________________________
Name:
Title:
MEESPIERSON N.V.
By:_________________________________________
Name:
Title:
MELLON BANK, N.A.
By:_________________________________________
Name:
Title:
THE MITSUBISHI TRUST & BANKING CORPORATION
By:_________________________________________
Name:
Title:
<PAGE>
12
ISTITUTO BANCARIO SAN PAOLO DI
TORINO, S.P.A.
By:_________________________________________
Name:
Title:
SOCIETE GENERALE
By:_________________________________________
Name:
Title:
THE SUMITOMO BANK, LIMITED
By:_________________________________________
Name:
Title:
THE SUMITOMO TRUST & BANKING CO., LTD.
By:_________________________________________
Name:
Title:
TORONTO DOMINION (TEXAS), INC.
By:_________________________________________
Name:
Title:
PEOPLES SECURITY LIFE INSURANCE COMPANY
By:_________________________________________
Name:
Title:
<PAGE>
13
FRANKLIN FLOATING RATE TRUST
By:_________________________________________
Name:
Title:
ING HIGH INCOME PRINCIPAL PRESERVATION
FUND HOLDINGS, LDC
By: ING CAPITAL ADVISORS, INC.,
as Investment Advisor
By:_________________________________________
Name:
Title:
ARCHIMEDES FUNDING, L.L.C.
By: ING CAPITAL ADVISORS, INC.,
as Collateral Advisor
By:_________________________________________
Name:
Title:
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.
By:_________________________________________
Name:
Title:
METROPOLITAN LIFE INSURANCE COMPANY
By:_________________________________________
Name:
Title:
<PAGE>
14
ORIX USA CORPORATION
By:_________________________________________
Name:
Title:
PARIBAS CAPITAL FUNDING LLC
By:_________________________________________
Name:
Title:
KZH HOLDING COMPANY III
By:_________________________________________
Name:
Title:
THE BANK OF SCOTLAND
By:_________________________________________
Name:
Title:
THE BANK OF NOVA SCOTIA
By:_________________________________________
Name:
Title:
NATEXIS BANQUE
By:_________________________________________
Name:
Title:
<PAGE>
15
ALLIANCE CAPITAL MANAGEMENT L.P., as
Manager on behalf of Alliance Capital
Funding, L.L.C.
By: Alliance Capital Management Corporation,
General Partner of Alliance Capital
Management L.P.
By:_________________________________________
Name:
Title:
ALLIANCE CAPITAL MANAGEMENT L.P., as
Manager on behalf of Alliance Investments
Limited
By: Alliance Capital Management Corporation,
General Partner of Alliance Capital
Management L.P.
By:_________________________________________
Name:
Title:
BALANCED HIGH YIELD FUND I LTD.,
By: BHF-Bank Aktiengesellschaft, acting
through its New York Branch, as
attorney-in-fact
By:_________________________________________
Name:
Title:
CHASE SECURITIES INC, as Agent for The
Chase Manhattan Bank
By:_________________________________________
Name:
Title:
<PAGE>
16
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.
As: Attorney-in-Fact and on behalf of First
Allmerica Financial Life Insurance
Company as Portfolio Manager
By:_________________________________________
Name:
Title:
DELANO COMPANY
By: Pacific Investment Management Company,
as its Investment Advisor
By:_________________________________________
Name:
Title:
INDOSUEZ CAPITAL FUNDING IV, L.P.
By: Indosuez Capital Luxembourg, as
Collateral Manager
By:_________________________________________
Name:
Title:
KZH-CNC CORPORATION
By:_________________________________________
Name:
Title:
LEHMAN SYNDICATED LOANS INC.
By:_________________________________________
Name:
Title:
<PAGE>
17
DEBT STRATEGIES FUND II, INC.
By:_________________________________________
Name:
Title:
MERRILL LYNCH GLOBAL INVESTMENT
SERIES: INCOME STRATEGIES PORTFOLIO
By: Merrill Lynch Asset Management, as
Investment Advisor
By:_________________________________________
Name:
Title:
MERRILL LYNCH, PIERCE, FENNER AND
SMITH INCORPORATED
By:_________________________________________
Name:
Title:
OSPREY INVESTMENTS MANAGEMENT
COMPANY
By: Citibank, N.A., as Manager
By:_________________________________________
Name:
Title:
ROYALTON COMPANY
By: Pacific Investments Management
Company, as Investment Advisor
By:_________________________________________
Name:
Title:
<PAGE>
18
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By:_________________________________________
Name:
Title:
WADDELL & REED FINANCIAL INC.
By:_________________________________________
Name:
Title:
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE NEW YORK BRANCH
By:_________________________________________
Name:
Title:
<PAGE>
EXHIBIT A
---------
BORROWING SUBSIDIARY JOINDER AGREEMENT
BORROWING SUBSIDIARY JOINDER AGREEMENT, dated as of May 27, 1998, made
by Exide Italia S.p.A., an Italian corporation (the "Borrowing Subsidiary")
--------------------
pursuant to the Credit and Guarantee Agreement, dated as of December 19, 1997
(as amended by the First Amendment, dated as of May 27, 1998 and as may be
further amended, supplemented or otherwise modified from time to time, the
"Credit and Guarantee Agreement"), among Exide Corporation (the "Company"), the
- ------------------------------- -------
Borrowing Subsidiaries from time to time parties thereto (the "Borrowing
---------
Subsidiaries"; collectively with the Company, the "Borrowers"), the Subsidiary
- ------------ ---------
Guarantors from time to time parties thereto, the several Lenders from time to
time parties thereto, Credit Suisse First Boston, as administrative agent (in
such capacity, the "Administrative Agent") and Lehman Commercial Paper Inc., as
--------------------
syndication agent (in such capacity, the "Syndication Agent"). Unless otherwise
-----------------
defined herein, terms defined in the Credit and Guarantee Agreement and used
herein shall have the meanings given to them in the Credit and Guarantee
Agreement.
For good and valid consideration, the sufficiency of which hereby is
acknowledged, the Borrowing Subsidiary hereby agrees as follows:
(a) It shall be a Borrowing Subsidiary for all purposes under the Credit
and Guarantee Agreement and the documents executed in connection
therewith.
(b) The Designated Maximum with respect to the Borrowing Subsidiary is
$40,000,000.
(c) It shall (i) be bound by all covenants, agreements, acknowledgements
and other terms and provisions applicable to it, as a Borrowing
Subsidiary pursuant to the Credit and Guarantee Agreement and the
documents executed in connection therewith to the same extent, and in
the same manner, as if it (in its capacity as a Borrowing Subsidiary)
were a direct party thereto and (ii) perform all obligations required
of it pursuant to the Credit and Guarantee Agreement and such other
documents.
The Borrowing Subsidiary hereby acknowledges that it has received and
reviewed a copy (in execution form) of the Credit and Guarantee Agreement
(including, without limitation, all amendments, supplements and other
modifications thereto) and each of the documents referred to therein (including,
without limitation, all amendments, supplements and other modifications
thereto).
The Borrowing Subsidiary hereby represents and warrants that (a) all
representations and warranties contained in the Credit and Guarantee Agreement
and such other documents which are applicable to it (after giving effect to this
Borrowing Subsidiary Joinder Agreement) are true and correct in all material
respects and (b) immediately prior to and immediately after the effectiveness of
this Borrowing Subsidiary Joinder Agreement, no Default or Event of Default
shall have occurred and be continuing.
<PAGE>
2
The Company hereby agrees that its guarantees contained in Section 10
of the Credit and Guarantee Agreement shall remain in full force and effect
after giving effect to this Borrowing Subsidiary Joinder Agreement.
The address and jurisdiction of incorporation of the Borrowing
Subsidiary is set forth in Annex I to this Borrowing Subsidiary Joinder
Agreement.
THIS BORROWING SUBSIDIARY JOINDER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
3
IN WITNESS WHEREOF, the undersigned has caused this Borrowing
Subsidiary Joinder Agreement to be duly executed and delivered by its proper and
duly authorized officer as of the date first written above.
EXIDE ITALIA S.P.A.
By: ______________________________________
Title:
EXIDE CORPORATION
By: ______________________________________
Title:
ACKNOWLEDGED AND AGREED TO;
- --------------------------
CREDIT SUISSE FIRST BOSTON, as Administrative Agent
By: ___________________________________
Title:
<PAGE>
Annex I
-------
Administrative Information for Borrowing Subsidiary
<PAGE>
Exhibit B
---------
FOREIGN OBLIGATIONS GUARANTOR
JOINDER AGREEMENT
FOREIGN OBLIGATIONS GUARANTOR JOINDER AGREEMENT, dated as of May 27,
1998, made by Exide Italia S.p.A., an Italian corporation (the "Subsidiary
----------
Guarantor") pursuant to the Credit and Guarantee Agreement, dated as of December
- ---------
19, 1997 (as amended by the First Amendment, dated as of May 27, 1998 and as may
be further amended, supplemented or otherwise modified from time to time, the
"Credit and Guarantee Agreement"), among Exide Corporation (the "Company"), the
- ------------------------------- -------
Borrowing Subsidiaries parties thereto (the "Borrowing Subsidiaries";
----------------------
collectively with the Company, the "Borrowers"), the Subsidiary Guarantors from
---------
time to time parties thereto, the several Lenders from time to time parties
thereto, Credit Suisse First Boston, as administrative agent (in such capacity,
the "Administrative Agent") and Lehman Commercial Paper Inc., as syndication
--------------------
agent (in such capacity, the "Syndication Agent"). Unless otherwise defined
-----------------
herein, terms defined in the Credit and Guarantee Agreement and used herein
shall have the meanings given to them in the Credit and Guarantee Agreement.
For good and valid consideration, the sufficiency of which hereby is
acknowledged, the Subsidiary Guarantor hereby agrees as follows:
(a) It shall be a Foreign Subsidiary Guarantor for all purposes under the
Credit and Guarantee Agreement and the documents executed in
connection therewith, and, as such, shall guarantee, to the extent set
forth in the Credit and Guarantee Agreement, the Foreign Obligations.
(b) It shall (i) be bound by all covenants, agreements, acknowledgements
and other terms and provisions applicable to it, as a Foreign
Subsidiary Guarantor pursuant to the Credit and Guarantee Agreement
and the documents executed in connection therewith to the same extent,
and in the same manner, as if it (in its capacity as a Foreign
Subsidiary Guarantor) were a direct party thereto and (ii) perform all
obligations required of it pursuant to the Credit and Guarantee
Agreement and such other documents in such capacity.
<PAGE>
2
The Subsidiary Guarantor hereby acknowledges that it has received and
reviewed a copy (in execution form) of the Credit and Guarantee Agreement
(including, without limitation, all amendments, supplements and other
modifications thereto) and each of the documents referred to therein (including,
without limitation, all amendments, supplements and other modifications
thereto).
The Subsidiary Guarantor hereby represents and warrants that (a) all
representations and warranties contained in the Credit and Guarantee Agreement
and such other documents which are applicable to it (after giving effect to this
Foreign Obligations Guarantor Joinder Agreement) are true and correct in all
material respects and (b) immediately prior to and immediately after the
effectiveness of this Foreign Obligations Guarantor Joinder Agreement, no
Default or Event of Default shall have occurred and be continuing.
The address and jurisdiction of incorporation of the Subsidiary
Guarantor is set forth in Annex I to this Foreign Obligations Guarantor Joinder
Agreement.
THIS FOREIGN OBLIGATIONS GUARANTOR JOINDER AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
<PAGE>
3
IN WITNESS WHEREOF, the undersigned has caused this Foreign
Obligations Guarantor Joinder Agreement to be duly executed and delivered by its
proper and duly authorized officer as of the date first written above.
EXIDE ITALIA S.P.A.
By: ______________________________________
Title:
ACKNOWLEDGED AND AGREED TO;
- --------------------------
CREDIT SUISSE FIRST BOSTON, as Administrative Agent
By: ______________________________
Title:
<PAGE>
Annex I
-------
Administrative Information for Subsidiary Guarantor
<PAGE>
EXHIBIT 10.23
-------------
CONFORMED COPY
RECEIVABLES SALE AGREEMENT
dated 3 June 1997
CMP BATTERIES LIMITED
EXIDE (DAGENHAM) LIMITED
FULMEN (U.K). LIMITED
and
B.I.G. BATTERIES LIMITED
collectively, as Seller
EXIDE EUROPE FUNDING LTD
as Buyer
CITIBANK, N.A.
as Operating Agent
Clifford Chance
London
<PAGE>
CLAUSES PAGE NOS.
1. DEFINITIONS AND CONSTRUCTION................................... 1
2. FACILITY....................................................... 22
3. CONDITIONS PRECEDENT........................................... 22
4. PURCHASES...................................................... 24
5. COLLECTIONS AND SETTLEMENT..................................... 25
6. FEES, COSTS AND STAMP DUTY..................................... 28
7. PAYMENTS AND COMPUTATIONS, ETC................................. 31
8. REPRESENTATIONS AND WARRANTIES OF THE SELLER................... 32
9. AFFIRMATIVE COVENANTS OF THE SELLER............................ 36
10. NEGATIVE COVENANTS OF THE SELLER............................... 38
11. REPORTING REQUIREMENTS OF THE SELLER........................... 40
12. COLLECTION AGENT, COLLECTIONS AND BUYER ACCOUNT................ 42
13. PROTECTION OF THE BUYER'S RIGHTS............................... 45
14. RESPONSIBILITIES OF THE SELLER................................. 46
15. AGENCY AND INDEMNITIES......................................... 49
16. AMENDMENTS, ETC................................................ 52
17. NOTICES........................................................ 52
18. NO WAIVER: REMEDIES............................................ 53
19. BINDING EFFECT: ASSIGNABILITY.................................. 53
<PAGE>
20. TERMINATION.................................................... 55
21. NO PROCEEDINGS................................................. 55
22. EXECUTION IN COUNTERPARTS: SEVERABILITY........................ 56
23. CONFIDENTIALITY................................................ 56
24. GOVERNING LAW AND JURISDICTION................................. 56
SCHEDULE 1......................................................... 58
Offices of the Seller.......................................... 58
SCHEDULE 2......................................................... 59
Form of Admission of Additional Seller......................... 59
SCHEDULE 3......................................................... 62
Form of Settlement Statement................................... 62
SCHEDULE 4......................................................... 63
Form of Summary Report......................................... 63
SCHEDULE 5......................................................... 64
Initial Conditions Precedent................................... 64
SCHEDULE 6......................................................... 66
Form of Notice of Sale......................................... 66
SCHEDULE 7......................................................... 67
Form of Contract............................................... 67
SCHEDULE 8 - Part 1................................................ 68
Information to be Provided to Exide Europe..................... 68
SCHEDULE 8 - Part 2................................................ 69
Form of Monthly Summary........................................ 69
<PAGE>
THIS RECEIVABLES SALE AGREEMENT, dated 3 June 1997, is made among:
(1) CMP BATTERIES LIMITED, a company with its registered office at P.O. Box 1;
Salford Road, Over Hulton, Bolton BL5 1DD ("CMP");
(2) FULMEN (U.K.) LIMITED, a company with its registered office at Fulmen House,
Eastern Road, Aldershot GUl2 4TD ("Fulmen");
(3) EXIDE (DAGENHAM) LIMITED, a company with its registered office at Chequers
Lane, Dagenham, Essex RM9 6PX ("Exide Dagenham");
(4) B.I.G. BATTERIES LIMITED, a company with its registered office at Caldicot
Way, Cwymbran, Gwent NP44 lUF ("BIG");
(all of the above parties are collectively referred to as the "Seller", or
where the context requires, are also individually referred to as a
"Seller");
(5) EXIDE EUROPE FUNDING LTD, a company with its registered office at 22
Grenville Street, St. Helier, Jersey JE4 8PX, Channel Islands (the "Buyer");
and
(6) CITIBANK, N.A., a United States national banking association acting through
its London branch at 336 Strand, London WC2R 1HB (the "Operating Agent").
Preliminary Statements
A. The Seller desires to sell, from time to time, all of its rights and title
to and interest in certain of its Receivables, and the Buyer desires to
purchase, from time to time, such Receivables from the Seller on or after
the Effective Date; and
B. The Operating Agent has been requested and is willing to act as Operating
Agent as set out in this Agreement and, in particular, in Clause 15(A),
subject to the ability of the Operating Agent to delegate its obligations
pursuant to the terms of this Agreement, in particular, Clause 4(G).
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
In this Agreement (including the Preliminary Statements):
-1-
<PAGE>
(A) Accounting Terms: All accounting terms not specifically defined in this
Agreement shall be construed in accordance with generally accepted
accounting principles as in effect on the date hereof in England and Wales.
(B) Defined Terms: The following terms shall have the meanings indicated:
"Account Debtor" means a Person obliged to make payment(s) pursuant to a
Contract.
"Accounts Receivable Listing" means a list, by invoice number, of all of the
Contracts which are shown on the Seller's general ledger as outstanding at the
time the list is compiled together with such other information concerning each
Contract, and in such format, as the Operating Agent may specify.
"Accounts Receivable Trial Balance" means the Seller's accounts receivable trial
balance computer printout, containing a list of Account Debtors together with
the aged Outstanding Balance of the Receivables.
"Accruals" means, as of any time, the aggregate amount by which the face value
of Purchased Receivables have been reduced by virtue of any prompt payment
discounts, accruals for volume rebates, warranty claims by the applicable
Account Debtor(s), and other credit notes (including, without limitation, credit
notes issued to Account Debtors as a result of disputes, claims and invoicing
errors by the Seller).
"Advance Payment" means, at any time, the aggregate amount of any withdrawals
from the Buyer Account made by the Seller under Clause 12(C) to the extent they
are outstanding and not repaid.
"Adverse Claim" means any claim of ownership, lien, security interest, mortgage,
charge, or encumbrance, or other right or claim of any Person.
"Admission of Additional Seller" means an agreement substantially in the form
set out in Schedule 2.
"Affiliate" when used with respect to a Person means any other Person
controlling, controlled by or under common control with that Person and includes
a Subsidiary (as defined below) or a Holding Company (as defined in Section 736
of the Companies Act 1985) of that Person and any other Subsidiary of that
Holding Company; provided however, that except in respect of paragraph (2) of
the definition of "Eligible Receivable" and Clause 6(A), Persons which are not
part of the Exide Group shall not be considered to be Affiliates of any Person
which is part of the Exide Group.
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"Approved Jurisdiction" means each of (i) England, Wales, Scotland or Northern
Ireland or (ii) France, Italy, Germany, Spain, The Netherlands or Belgium, or
(iii) another jurisdiction in respect of which the Seller has obtained as
security from the applicable Account Debtor a clear and unconditional demand
letter of credit (governed by the Uniform Customs and Practice for Documentary
Credits) from a bank whose short-term debt is rated at least A-1 and P-1 by the
Rating Agencies, the term of which is in form and substance satisfactory to the
Operating Agent (acting reasonably) and the conditions of which are in form and
substance satisfactory to the Operating Agent (acting reasonably), and which
letter of credit has been fully assigned to the Operating Agent (which
assignment shall include full notice to the applicable bank issuing the letter
of credit), requiring payment to be made directly to the Operating Agent.
"Available Collections" means, at any time, an amount equal to all Collections
credited to the Buyer Account in respect of Purchased Receivables less all
accrued Yield and Programme Costs (whether or not incurred or paid by the Buyer)
together with any other amounts owing to the Buyer or the Operating Agent under
this Agreement.
"Bank Facility Rate" means either: (a) in the event that either Eureka shall not
at any time, fund its purchase under the RPA with the issuance of commercial
paper, or purchases are being made under the PPA, due solely to an Early
Amortisation Event, a per annum rate equal to Dollar LIBOR plus 1.75% and
applicable reserve asset costs for a five year facility (as certified by the
Operating Agent), or (b) in the event that Eureka shall not at any time fund its
purchase under the RPA with the issuance of commercial paper or purchases are
being made under the PPA, for any reason other than due to an Early Amortisation
Event, a per annum rate equal to Dollar LIBOR plus 0.125% and applicable reserve
asset costs for a five year facility (as certified by the Operating Agent).
"Base Rate" means a fluctuating interest rate per annum in effect from time to
time, which rate per annum shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New York, New York,
from time to time, as Citibank's base rate:
(b) the sum (adjusted to the nearest 1/16 of 1% or, if there is no nearest 1/16
of 1%, to the next higher 1/16 of 1 %) of (i) 1/2 of 1% per annum, plus (ii)
the rate obtained by dividing (A) the latest three-week moving average of
secondary market morning offering rates in the United States for three-month
certificates of deposit of major United States money market banks, such
three-week moving average (adjusted to the basis of a year of 360 days)
being determined weekly on each Monday (or, if such day is not a Programme
Business Day, on the next succeeding Programme Business Day) for the three-
week period ending on the previous Friday by Citibank on the basis of such
rates reported by certificate of deposit
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dealers to and published by the Federal Reserve Bank of New York or, if such
publication shall be suspended or terminated, on the basis of quotations for
such rates received by Citibank from three New York certificate of deposit
dealers of recognised standing selected by Citibank, by (B) a percentage
equal to 100% minus the average of the daily percentages specified during
such three-week period by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve requirement
(including, but not limited to, any emergency, supplemental or other
marginal reserve requirement) for Citibank with respect to liabilities
consisting of or including (among other liabilities) three-month Dollar non-
personal time deposits in the United States, plus (iii) the average during
such three-week period of the annual assessment rates estimated by Citibank
for determining the then current annual assessment payable by Citibank to
the Federal Deposit Insurance Corporation (or any successor) for insuring
Dollar deposits of Citibank in the United States; and
(c) 1/2 of one per cent per annum above the Federal Funds Rate.
"Buyer Account" means the account in the name of the Buyer with the Collection
Account Bank designated as such by the Buyer, or such other account at such bank
as the Buyer may utilise for the purposes of this Agreement and designate as the
Buyer Account.
"Buyer Entitlement" means, at any time, in respect of the total amount standing
to the credit of the Collection Account, the portion thereof attributable to or
representing Collections together with interest credited by the Collection
Account Bank to such portion.
"Capital" equals, at any time, the Sterling Equivalent of the Seller's
Proportionate Share of Programme Capital.
"Citibank" means Citibank, N.A., a national banking association under the laws
of the United States of America.
"Collection Account" means in respect of each party comprising the Seller, the
trust account set opposite the relevant Seller's name in Schedule 1, under the
heading "Collection Account", in each case in the name of the appropriate
Seller, established with the Collection Account Bank pursuant to the Trust
Account Bank Mandate or such other account or accounts with the Collection
Account Bank as may, with the prior written consent of the Operating Agent, be
utilised for the purposes of this Agreement and designated as a Collection
Account.
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"Collection Account Bank" means in respect of each party comprising the Seller,
such bank and branch at which the Collection Account is, with the prior written
consent of the Operating Agent, maintained from time to time.
"Collection Account Event" shall be deemed to have occurred if Exide Europe
fails to maintain a Debt Service Cover Ratio of greater than 1.10 : 1.00.
"Collection Agent" means at any time the Person then authorised pursuant to this
Agreement to service, administer and collect Purchased Receivables.
"Collections" means, with respect to any Purchased Receivable, all cash
collections received and other cash proceeds of that Purchased Receivable
(excluding any cash proceeds arising under any transaction as referred to in
Clause 19(C)) and of any Related Security with respect to that Purchased
Receivable received.
"Commitment" means the commitment of the Buyer under Clause 2 hereof.
"Concentration Amount" means as of any date, with respect to each Account
Debtor, the product of (a) the Concentration Limit applicable to such Account
Debtor and (b) the Dollar Equivalent of the Outstanding Balance of Purchased
Receivables aggregated among all Origination Agreements.
"Concentration Limit" means, in relation to the aggregate Receivables for each
Account Debtor: (a) for any single Account Debtor rated at least A-1 or P-1 or
its equivalent by the Rating Agencies, 17%; (b) for any single Account Debtor
rated A-2 or P-2 or its equivalent by the Rating Agencies, 8.5%; (c) for any
single Account Debtor rated A-3 or P-3 or its equivalent by the Rating Agencies,
5.66%; (d) for any single Account Debtor rated below A-3 or P-3 or not rated on
its short term debt, 3.4% (to the extent an Account Debtor does not have a short
term rating but has an actual or implied senior long-term debt rating, the
applicable percentage will be determined based on equivalent senior long-term
debt ratings (as determined by the Operating Agent) for the short term ratings
specified above).
"Contract" means a written agreement between the Seller and an Account Debtor
pursuant to which the Account Debtor is obliged to pay for goods or services
sold or provided by the Seller (including any value added tax in respect
thereof) from time to time.
"Country Limit" means the Sterling Equivalent of $32,000,000.
"Credit and Collection Policy" means the Seller's policies, practices and
procedures relating to Contracts and Receivables in form and content
satisfactory to the Operating Agent in accordance with paragraph (i) of Schedule
5 as modified from time to time with the consent of the Operating Agent.
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"Currency Exchange Agreement" means, as of any time, the Currency Exchange
Agreement (as that term is defined in the RPA or the PPA, as applicable) that
may be entered into by the Buyer from time to time in accordance with the
provisions of the RPA or PPA, as applicable.
"Custody Documents" means this Agreement or any Notice of Sale hereunder.
"Debt" means any indebtedness, present or future, actual or contingent in
respect of moneys borrowed or raised or any financial accommodation whatever
and, without limitation, shall include:
(1) indebtedness under or in respect of a negotiable or other financial
instrument, Guarantee, interest, gold or currency exchange, hedge or
arrangement of any kind, redeemable share, share the subject of a Guarantee,
discounting arrangement, finance lease or hire purchase agreement;
(2) the deferred purchase price (for more than 90 days) of an asset or service;
and
(3) any obligation to deliver goods or other property or provide services paid
for in advance by a financier or in relation to another financing
transaction.
"Debt Service Cover Ratio" means the Debt Service Cover Ratio as that term is
defined and calculated pursuant to the Syndicated Facility; provided however, if
the Syndicated Facility is terminated for any reason, the definition and
calculation of Debt Service Cover Ratio for the purposes of this Agreement will
survive such termination.
"Default Ratio" as of any date, is equal to the ratio (expressed as a
percentage) for the most recent month for which such ratio is available of (i)
aggregate Purchased Receivables that were 91-120 days past due at the end of
each such month plus Purchased Receivables that were charged off (or, without
duplication, which should have been charged off) as uncollectible during each
such month which, if they had not been charged off (or, without duplication,
which should have been charged off) would have been less than 90 days past due
during such month to (ii) aggregate sales giving rise to Receivables that were
generated during the calendar month immediately preceding the commencement of
the Loss Horizon preceding such date.
"Defaulted Receivable" means a Receivable:
(1) which, after the original due date, remains unpaid in whole or in part for
more than 90 days;
(2) in respect of which the Account Debtor has taken any action, or suffered any
event to occur, of the type described in Clause 11(D)(2); or
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(3) which has been, or should be, written off or provided for in the Seller's
books as uncollectible in accordance with the Credit and Collection Policy.
"Designated Account Debtor" means, at any time, all Account Debtors unless the
Operating Agent has advised the Seller that an Account Debtor shall not be
considered a Designated Account Debtor.
"Determination Date" means initially, the Effective Date and thereafter, each
following Tuesday; provided however, if such day is not a Programme Business
Day, the applicable Determination Date shall be the next succeeding Programme
Business Day.
"Diluted Receivable" means that portion of any Purchased Receivable which is
either (a) reduced or cancelled as a result of (i) any defective or rejected
goods or services, or any failure by the Seller to deliver any goods or services
or otherwise to perform under the underlying Contract or invoice, or (ii) any
change in the terms of or cancellation of any Contract or invoice or any other
adjustment by the Seller which reduces the amount payable by the Account Debtor
on the related Purchased Receivable or (iii) any set-off in respect of any claim
by the Account Debtor on the related Purchased Receivable or (b) subject to any
specific dispute, offset, counterclaim or defence whatsoever (except the
discharge in bankruptcy of the Account Debtor thereof).
"Dilution Horizon" means, at any time, the estimated weighted average period in
days between the issuance of invoices and the related credit note, if any, by
the Programme Sellers, as such period is calculated by the Operating Agent from
time to time.
"Dilution Horizon Ratio" equals the higher of (a) the Dollar Equivalent of total
sales giving rise to Programme Receivables for the Programme Sellers for the
past Dilution Horizon divided by the Dollar Equivalent of the outstanding
balance of Eligible Receivables (whether or not they are Purchased Receivables)
aggregated among all Origination Agreements as of the end of the most recent
month and (b) 0.5.
"Dilution Ratio" as of any date, is equal to the ratio (expressed as a
percentage) for the most recently ended month of (i) the aggregate amount of
Receivables that become Diluted Receivables during each such month to (ii) the
aggregate sales giving rise to Receivables that were originated during the
preceding month.
"Dilution Volatility Factor" means as of any date, a percentage equal to the
product of (i) the amount by which (A) the highest two month average Programme
Dilution Ratio during the most recently ended twelve month period exceeds (B)
the average of the Programme Dilution Ratios during such twelve month period and
(ii) (A) the highest two month average Programme Dilution Ratio.
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during such twelve month period divided by (B) the average of the Programme
Dilution Ratios during such twelve month period.
"Discount" means with respect to a Group of Receivables on the relevant Purchase
Date the sum of applicable Yield, applicable Programme Costs, applicable
Accruals, applicable Reserves and the Stamp Duty Reserve.
"Dollar Equivalent" of any sum in any currency at any time means the amount of
Dollars that would be purchased under the Currency Exchange Agreement at the
Spot Rate determined for such sum at the most recent Settlement Date.
"Dollars" and the sign "$" each mean the lawful currency of the United States of
America.
"Early Amortisation Event" means the first to occur of:
(1) any Originator defaults in the payment on the due date of any payment due
and payable by it under or relating to this Agreement or any of the other
Relevant Documents and such default continues unremedied for a period of
five (5) Local Business Days after the earlier of the Originator becoming
aware of such default and the receipt by the Originator of written notice
by the Operating Agent requiring the same to be remedied;
(2) subject to Clause 12(D), any Originator defaults in the performance or
observance of any of its other covenants and obligations, or breaches any
representation or warranty (other than a breach of the representation and
warranty in Clause 8(T)), under this Agreement or any of the other Relevant
Documents, which in the reasonable opinion of the Operating Agent is
materially prejudicial to the interests of the Buyer and/or Eureka and/or
the Liquidity Banks and/or the Operating Agent, and such default is not
remedied to the satisfaction of the Operating Agent within five Local
Business Days of the earlier of the Originator becoming aware of such
default and receipt by the Originator of written notice by the Operating
Agent requiring the same to be remedied (for the avoidance of doubt, for
the purposes of this paragraph (2) if the Originator satisfies its
obligations pursuant to Clause 5(D) within such five Local Business Day
period, such default or breach shall not be considered to be an Early
Amortisation Event);
(3) an effective resolution is passed for the winding up of any Originator;
(4) any Originator ceases or threatens to cease to carry on its business or
ceases to carry on the whole or a substantial part of its business, or
stops payment or threatens to stop payment of its debts, (which cessation
or threat thereof would, in the opinion of the Operating Agent be
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likely to materially and adversely affect the Originator's ability to
perform its obligations under the Relevant Documents, or any of them) or
the Originator becomes unable to pay its debts, or is deemed unable to pay
its debts within the meaning of section 123 of the Insolvency Act 1986
other than section 123(1)(a) thereof (as that section may be amended,
varied or re-enacted), or becomes unable to pay its debts as they fall due,
or the value of its assets falls to less than the amount of its liabilities
(taking into account for both these purposes its contingent and prospective
liabilities) or otherwise becomes insolvent;
(5) Exide Europe ceases at any time to own, directly or indirectly, a minimum
of 80% of each class of the outstanding capital stock of any Seller;
(6) Exide Europe breaches the 1:1 Debt Service Cover Ratio;
(7) any Debt of a member of the Exide Group in excess (in the aggregate) of the
Sterling Equivalent of $5,000,000 becoming prematurely due and payable or
is placed on demand as a result of an event of default (howsoever
described) under the document relating to that Debt;
(8) any sale of Eligible Receivables under this Agreement ceases to create a
valid and perfected first priority interest or security interest in such
Eligible Receivables;
(9) proceedings are initiated against the Originator in respect of its
liquidation, winding-up, administration, insolvency, composition,
reorganisation (other than a reorganisation the terms of which have been
approved by the Operating Agent and where the Originator is solvent) under
any applicable liquidation, administration, insolvency, composition,
reorganisation or other similar laws save where such proceedings are being
contested in good faith by the Originator, or an administrative or other
receiver, servicer or other similar official is appointed in relation to
the Originator or in relation to the whole or any substantial part of the
undertaking or assets of the Originator or an encumbrancer shall take
possession of the whole or any substantial part of the undertaking or
assets of the Originator, or a distress or execution or other process shall
be levied or enforced upon or sued out against the whole or any substantial
part of the undertaking or assets of the Originator and in any of the
foregoing cases it shall not be discharged within 15 days;
(10) if the Originator shall initiate or consent to judicial proceedings
relating to itself under any applicable liquidation, administration,
insolvency, composition, reorganisation or other similar laws or shall make
a conveyance or assignment for the benefit of its creditors generally;
(11) for any three month period, the average Default Ratio exceeds 4%;
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(12) for any three month period, the average Dilution Ratio exceeds 7%;
(13) for any three month period, the average Loss to Liquidation Ratio exceeds
0.5%;
(14) the Buyer is unable to obtain appropriate funds from its currency swap
counterparty under the Currency Exchange Agreement; or
(15) an Early Amortisation Event as that term is defined under the RPA or the
PPA, or a Programme Amortisation Event under any other Origination
Agreement.
"Effective Date" means the date upon which the initial conditions precedent set
forth in Schedule 5 have been satisfied and which has been designated as such by
the Operating Agent, which day shall be a Thursday which is a Programme Business
Day.
"Eligible Receivable" means a Receivable:
(1) the Account Debtor of which is a corporate body/entity which is (according
to the address specified in the related invoice) resident of an Approved
Jurisdiction;
(2) the Account Debtor of which is a Designated Account Debtor and is not an
Affiliate of any party to this Agreement;
(3) the Account Debtor of which is not the Account Debtor of any Defaulted
Receivables the aggregate Outstanding Balance of which equals or exceeds
10% of the aggregate Outstanding Balance of all Receivables of such Account
Debtor;
(4) in respect of the Account Debtor of which no delivery or shipment has been
cancelled or suspended for credit reasons and no credit line or
accommodation has been cancelled or suspended for credit reasons, in either
case at any time in the 2 years preceding the date that the invoice
relating thereto is despatched;
(5) which is not a Defaulted Receivable at the date of Purchase;
(6) which, according to the Contract related thereto, is required to be paid in
full on a date which falls (i) not earlier than the Purchase Date and (ii)
within 90 days in respect of CMP or 120 days in respect of Fulmen, BIG and
Exide Dagenham, after the earlier of the original billing date and the date
that the invoice relating thereto is despatched;
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(7) the Dollar Equivalent of the Outstanding Balance of which, when added to
the Dollar Equivalent of the Outstanding Balance (as that term is defined
under each Origination Agreement) of all other Purchased Receivables owing
by the same Account Debtor or any of its Affiliates under all Origination
Agreements, does not exceed the Concentration Amount;
(8) which is denominated and payable only in Sterling;
(9) which (A) arises, under a form of Contract set out in Schedule 7 (or which
otherwise has been duly authorised by the Operating Agent), which is stated
to be, and is, governed (for the purposes of the conflict of laws
principles of the Approved Jurisdiction in question) by English law and
which, together with such Receivable, is in full force and effect and
constitutes the legal, valid, binding and enforceable obligation of the
Account Debtor, (B) is freely assignable (or if not assignable without the
consent of the Account Debtor, such consent has been obtained to the
satisfaction of the Operating Agent) and (C) is not subject to any Adverse
Claim or dispute, set off, counterclaim or defence whatsoever;
(10) which, together with the Contract related thereto, does not contravene in
any material respect any applicable laws, rules or regulations and with
respect to which the Seller is not in violation of any such law, rule or
regulation in any material respect;
(11) which (A) satisfies all applicable requirements of the Credit and
Collection Policy and (B) complies with such other criteria and
requirements (other than those relating to the collectability of such
Receivable) as the Operating Agent may from time to time specify to the
Seller and which are based on a criterion or requirement of any one or more
of the Rating Agencies;
(12) which is not subject to withholding taxes on payments from the Account
Debtors in respect thereof;
(13) which represents all or part of the sales price in respect of the supply of
goods or services in the Approved Jurisdiction in question;
(14) the Account Debtor of which is not a government agency or local authority
unless, the Account Debtor of which is considered a separate corporate
entity under applicable law that is owned, directly or indirectly by a
government agency or local authority;
(15) which has not been prepaid in whole or in part; and
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(16) for which all goods and services to which it relates have been delivered
and performed, and all requirements of such Contract concerning the nature,
amount, quality, condition or delivery of the goods or services, or upon
which payment of such Receivable may be dependent, have been fulfilled in
all material respects.
"Eureka" means Eureka Securitisation, Plc, a company incorporated under the laws
of England and Wales.
"Exide Europe" means Exide Holding Europe, a French societe anonyme.
"Exide Group" means Exide Europe and all of its Subsidiaries.
"Facility Fee" means the Seller's Proportionate Share of 0.30% per annum of the
Facility Limit calculated monthly in arrears and applied on each Settlement
Date.
"Facility Limit" means $175,000,000.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Programme Business Day, for the next preceding Programme Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Programme Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
Federal funds brokers of recognised standing selected by it.
"Fees Letter" means the Fees Agreement dated as of the date hereof, between,
inter alia, the Originator, Exide Funding, Exide Europe and the Operating Agent
in respect of the calculation and payment of certain fees.
"Final Payment Date" means the date on which payment is made by the Operating
Agent to the Seller pursuant to Clause 5(C).
"Foreign Currency Reserve" as of any Settlement Date will equal 5.5% of the Loss
and Dilution Reserve for such Settlement Date, or such other amount as
determined by the Operating Agent (and notified in writing to the Seller),
acting reasonably (upon the written request of the Seller after any
redetermination of the level of the Foreign Currency Reserve, the Operating
Agent agrees to provide the Seller with information relating to the basis of
such redetermination).
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"Group of Receivables" means, at any time, all Receivables purchased or to be
purchased by the Buyer on a Purchase Date or, as appropriate, the Group of
Receivables specified in a Notice of Sale.
"Guarantee" means any guarantee, indemnity, letter of credit or any other
obligation or irrevocable offer (whatever called and of whatever nature):
(1) to pay or to purchase;
(2) to provide funds (whether by the advance of money, the purchase of or
subscription for shares or other securities, the purchase of assets, rights
or services, or otherwise) for the payment or discharge of;
(3) to indemnify against the consequences of default in the payment of; or
(4) to be responsible otherwise for,
an obligation or indebtedness of another person, a dividend, distribution,
capital or premium on shares, stock or other interests, or the insolvency or
financial condition of another person.
"Initial Purchase" means the first Purchase completed under this Agreement.
"Interest Period" means initially, the period commencing on the Effective Date
and ending on the following Settlement Date, and thereafter, each period
beginning on the day following the last day of the immediately preceding
Interest Period and ending on the following Settlement Date; provided however,
if such day is not a Programme Business Day, the applicable Interest Period
shall end on the next succeeding Programme Business Day.
"Letter of Undertaking" means the Letter of Undertaking given by Exide Europe
substantially in the form set out in Schedule 2 to the RPA.
"LIBOR" means the rate per month determined by the Operating Agent to be equal
to the arithmetic mean (rounded upwards, if not already such a multiple, to the
nearest whole multiple of one-sixteenth of one per cent) of the offered
quotations for Dollars which appear on page 3750 of the Telerate screen or, if
such page or service shall cease to be available, such other page or such other
service (as the case may be) as the Operating Agent may select. If less than two
quotations for the relevant rate and the relevant period are displayed and the
Operating Agent has not selected an alternative service on which two or more
such quotations are displayed "LIBOR" shall mean the Base Rate.
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"Liquidity Bank" means any financial institution which may from time to time
become a party to the PPA as a Liquidity Bank thereunder.
"Local Business Day" means any day (other than a Saturday or Sunday) on which
banks and foreign exchange markets are open for business in London. Where an
obligation is expressed in this Agreement to be performed on a Local Business
Day and such Local Business Day is not also a Programme Business Day, the
applicable Local Business Day shall be the immediately preceding Local Business
Day which is also a Programme Business Day.
"Loss and Dilution Reserve" as of any Settlement Date will equal:
[C + YR] x [max(DYN,FLOOR)/1-(max(DYN,FLOOR))]
where:
DYN = [(SF2 x ED) + DVF] x DHR + (SF1 x LR x LHR)
FLOOR = CF + (ED x DHR), with a minimum amount of $12,000,000
where:
C = Programme Capital
YR = Seller's Proportionate Share of Yield Reserve
SF1 = Stress Factor One = 2.25
SF2 = Stress Factor Two = 2.25
ED = Average Programme Dilution Ratio during the preceding 12 months
DVF = Dilution Volatility Factor
DHR = Dilution Horizon Ratio
LHR = Loss Horizon Ratio
CF = Concentration Floor = 17%
LR = Loss Ratio
"Loss Horizon" equals the sum of 90 days plus the Weighted Average Term
calculated among all Origination Agreements as of the Settlement Date.
"Loss Horizon Ratio" equals the total sales giving rise to Programme Receivables
for the Programme Sellers for the Loss Horizon divided by the outstanding
balance of Programme Receivables as of the end of the most recent month.
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"Loss Ratio" as of any date equals the highest 3 month average Default Ratio
aggregated among all Origination Agreements which has occurred in the 12 months
immediately preceding such date.
"Loss to Liquidation Ratio" as of any date, is equal to the ratio (expressed as
a percentage) of (i) the Dollar Equivalent of the aggregate outstanding balance
of all Receivables that were written off by the Seller during the twelve month
period most recently ended prior to such date to (ii) the aggregate amount of
such total sales giving rise to Receivables less the Dollar Equivalent of the
total Diluted Receivables during such twelve month period.
"Net Receivable Balance" means at any time the excess of (i) the Dollar
Equivalent of the aggregate Outstanding Balance of Eligible Receivables (whether
or not they are Purchased Receivables) over (ii) the sum of the
Overconcentration Amount at such time, plus the aggregate Unapplied Cash at such
time.
"Notice of Sale" has the meaning assigned to that term in Clause 4(A).
"Onward Sale Fee" means 0.01% per annum on the average outstanding Capital
calculated monthly in arrears and applied on each Settlement Date.
"Origination Agreement" means as of any time each agreement whereby a member of
the Exide Group sells trade receivables originated in the ordinary course of
business of such member company and which has been designated from time to time
as such by the Operating Agent. Until and unless a designation has been made by
the Operating Agent to the contrary, the Origination Agreements shall consist of
(i) for the United Kingdom, this Agreement, (ii) for France, the Receivables
Subrogation Agreement dated as of the date hereof between CEAC, Compagnie
Europeenne d'Accumulateurs S.A. and Batterie Hagen as Originators, Exide Funding
as Receivables Purchaser and Citibank as Operating Agent, (iii) for Spain, the
Receivables Sale Agreement dated as of the date hereof between Sociedad Espanola
del Acumulador Tudor, S.A. as Seller, Exide Funding as Buyer, Tudor Collections
Ltd as Agent and Citibank as Operating Agent, (iv) for Italy, (a) the
Receivables Purchase Agreement dated as of the date hereof between Societa
Industriale Accumulatori s.r.l. and Compagnia Generale Accumulatori S.p.A. as
Seller, Archimede Securitisation s.r.l. as Buyer, Citibank (London branch) as
Operating Agent and Citibank (Milan branch) as Allocation Agent, and (b) the
Onward Sale Agreement dated as of the date hereof between Archimede
Securitisation s.r.l. as onward seller, Exide Funding as onward buyer and
Citibank as Operating Agent, and (v) for Germany, the German Receivables Sale
Agreement dated as of the date hereof between Accumulatorenfabrik Sonnenschein
GmbH, Exide Automotive Batterie GmbH and Hagen Batterie AG as Sellers, Exide
Funding as Buyer and Citibank as Operating Agent.
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"Originator" means each of CMP, Fulmen, Exide Dagenham and BIG, in its capacity
as Seller or Collection Agent, as the context may require.
"Outstanding Balance" of any Receivable at any time means the then unpaid face
amount thereof (including VAT) (except for purposes of determining the Default
Ratio, where the unpaid face amount of any Purchased Receivable which has been,
or would be, written off or provided for in the Seller's books as uncollectible
in accordance with the Credit and Collection Policy shall be deemed to be zero).
"Overconcentration Amount" means at any time the Dollar Equivalent of the sum of
the amounts, if any, by which the Outstanding Balance of Receivables owing by
each Account Debtor on such date exceeds the Concentration Amount applicable to
such Account Debtor.
"Person" means an individual, partnership, company, body corporate, corporation,
trust, unincorporated association, joint venture, government, or governmental
body or agency or other entity.
"PPA" means the Parallel Purchase Agreement dated as of the date hereof between
the Buyer, the Liquidity Banks (as defined therein) and the Operating Agent.
"Programme" means the revolving sale of trade receivables originated by Exide
Holdings Europe S.A. and certain of its subsidiaries and the funding of such
revolving sale pursuant to the funding arrangements established in relation to
each Origination Agreement.
"Programme Amortisation Event" means an Early Amortisation Event of the type
described in paragraphs (1), (2), (3), (4), (6), (7), (9), (10) or (15) of the
definition of "Early Amortisation Event".
"Programme Business Day" means any day (other than a Saturday or Sunday) on
which banks and foreign exchange markets are open for business in London, Paris
and New York. Where an obligation is expressed in this Agreement to be performed
on a Programme Business Day and such Programme Business Day is not also a Local
Business Day, such obligation shall be performed on the immediately preceding
Local Business Day which is also a Programme Business Day.
"Programme Capital" equals, at any time, total Capital as defined and calculated
pursuant to the RPA or the PPA, as applicable.
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"Programme Costs" comprise (a) the Onward Sale Fee and (b) the Seller's
Proportionate Share of (i) the Facility Fee, (ii) the Investor Fee as defined in
the Fees Letter and (iii) the Programme Fee as defined in the Fees Letter.
"Programme Dilution Ratio" as of any date, is equal to the aggregate of the
Dilution Ratios calculated among all Origination Agreements.
"Programme Receivables" means the aggregate Dollar Equivalent of Receivables (as
that term is defined in each Origination Agreement), aggregated among all
Origination Agreements.
"Programme Sellers" means, collectively, all of the Affiliates of Exide Europe
designated as Sellers or Originators pursuant to all of the Origination
Agreements.
"Proportionate Share" equals, at any time, in respect of the Seller or any party
comprising the Seller, the result of the formula: the Dollar Equivalent of all
Purchased Receivables from the Seller (or such party, as applicable), divided by
the Dollar Equivalent of all Purchased Receivables and Subrogated Receivables
(as these terms are used in each applicable Origination Agreement), aggregated
among all Origination Agreements.
"Purchase" means a purchase or purported purchase by the Buyer of a Group of
Receivables from the Seller pursuant to this Agreement.
"Purchase Date" means the Effective Date and each Settlement Date after the
Effective Date occurring before the Termination Date on which there is a
Purchase of Receivables by the Buyer as contemplated by this Agreement.
"Purchase Price" means, in respect of a Group of Receivables, an amount in
Sterling equal to the Outstanding Balance of the Group of Receivables as at the
proposed Purchase Date less the Discount, as calculated by the Operating Agent.
"Purchased Receivable" means a Receivable (whether or not an Eligible
Receivable) purchased or purported to be purchased by the Buyer under this
Agreement.
"Rating Agencies" means Standard & Poor's Ratings Group, a division of the
McGraw-Hill Companies Inc. and Moody's Investors Service, Inc.
"Receivable" means the indebtedness of any Account Debtor under a Contract
arising from a sale or contract of sale of merchandise or provision or contract
of provision of services by the Seller and representing part or all of the sale
price of such merchandise or services and includes the right to
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payment of any interest or finance charges and other obligations of such Account
Debtor with respect thereto.
"Related Security" means with respect to any Receivable all of the Seller's
interest in any goods and work in progress (including returned or repossessed
goods and work in progress) relating to the sale creating such Receivable, and
all insurance policies, security, deposits, guarantees, indemnities, letters of
credit, bills of exchange, cheques, other negotiable instruments, warranties,
retention of title and other agreements and arrangements not created or made by
the Buyer supporting or securing payment of such Receivable.
"Relevant Date" means the earlier of:
(1) the date on which all Capital of all Groups of Receivables is reduced to
zero; and
(2) the date on which the Outstanding Balance of all Purchased Receivables is
reduced to zero.
"Relevant Documents" means this Agreement, the Trust Account Bank Mandate and
the Fees Letter.
"Reserves" means as of any date the Seller's Proportionate Share of the sum of
the Loss and Dilution Reserve, the Yield Reserve and the Foreign Currency
Reserve.
"RPA" means the Receivables Purchase Agreement dated as of the date hereof
between the Buyer, Eureka and the Operating Agent.
"Security Interest" means any mortgage, pledge, lien, charge, assignment,
hypothecation or security interest or any other agreement or arrangement having
the effect of conferring security.
"Seller" means, collectively, CMP, Fulmen, Exide Dagenham and BIG and any
Additional Seller made party to this Agreement in accordance with Clause 19(D),
provided that, for the avoidance of doubt, all covenants, indemnities,
representations and warranties given or made by any party comprising the Seller
pursuant to this Agreement (whether in its capacity as Seller or as Collection
Agent) shall be deemed to be given or made jointly and severally by it and the
other parties comprising the Seller, and vice versa. Where the context requires,
each such party individually shall also be considered to be a "Seller".
"Seller Entitlement" means, at any time, in respect of the total amount standing
to the credit of the Collection Account together with interest thereon, the
portion thereof which is not attributable to or representing Collections.
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"Seller Non-Transaction Account" means in respect of each party comprising the
Seller, the account set opposite the relevant Seller's name in Schedule 1, under
the heading "Seller Non-Transaction Account", in each case in the name of the
appropriate Seller, established with the Collection Account Bank, or such other
account at such branch of such bank as the Seller may from time to time specify
by written notice to the Collection Account Bank with a copy to the Operating
Agent.
"Settlement Date" means initially, the Effective Date and thereafter, each
following Thursday; provided however, if such day is not a Programme Business
Day which is also a Local Business Day under the Origination Agreement for
Italy, the Settlement Date for such week shall be the next succeeding Programme
Business Day which is also a Local Business Day under the Origination Agreement
for Italy.
"Settlement Period" means any period beginning on (and including) a Settlement
Date and ending on (but excluding) the next following Settlement Date.
"Settlement Statement" means a statement, as of any Settlement Date, prepared by
the Operating Agent substantially in the form of Schedule 3 showing (amongst
other things) the amount of Receivables purchased by the Buyer during the last
Settlement Period.
"Spot Rate" means, as of any Settlement Date, the spot rate utilised for the
Currency Exchange Agreement as determined for such Settlement Date.
"Stamp Duty" means any stamp duty, stamp duty reserve tax, registration or other
transaction or documentary tax (including without limitation, any penalty or
interest payable in connection with any failure to pay or any delay in paying
any of the same).
"Stamp Duty Account" means the account kept pursuant to Clause 6(D).
"Stamp Duty Reserve" as of any time means 1% of the value of the Outstanding
Balance of Purchased Receivables (or such greater or lesser amount that may be
required under then-applicable United Kingdom stamp duty legislation).
"Sterling" and the sign "POUND" each mean the lawful currency of the United
Kingdom.
"Sterling Equivalent" of any sum and at any time means the amount of Sterling
that would be purchased under the Currency Exchange Agreement at the Spot Rate
for such sum at such time.
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"Subsidiary" means:
(a) a subsidiary within the meaning of Section 736 of the Companies Act 1985, as
amended by Section 144 of the Companies Act 1989; and
(b) unless the context otherwise requires, a subsidiary undertaking within the
meaning of Section 21 of the Companies Act 1989.
"Summary Report" means a report as of each Determination Date or more frequently
if requested by the Operating Agent, substantially in the form of Schedule 4,
furnished by the Seller to the Operating Agent pursuant to Clause 11(F).
"Summary Report Date" means each Determination Date or such other dates as the
Operating Agent may request.
"Syndicated Facility" means the FF 2,569,000,000 Facilities Agreement dated 30th
November 1995 between Compagnie Europeenne d'Accumulateurs S.A., Euro Exide
Corporation Limited, Exide Holding Europe and Sociedad Espanola del Acumulador
Tudor S.A. as the Lead Borrowers, Bankers Trust International Plc. as Lead
Arranger, Bankers Trust Company, Bank of America National Trust and Savings
Association, Bank of Montreal and Citibank International Plc. as Underwriters,
Bank of America International Limited, Bank of Montreal and Citibank
International Plc. as Co-Arrangers, Bankers Trust Company as Agent and Security
Agent and the Lenders described therein, as that agreement may be amended or
restated from time to time.
"Temporary Adjustment Account" means the sub-account held by the Buyer with
Citibank, N.A., London branch, denominated in Sterling and utilised for the
purposes set out in Clause 12(D), under the account number 60918971.
"Termination Date" means the earliest to occur of (1) the Programme Business Day
designated by the Seller as the Termination Date following 2 Programme Business
Days' notice to the Operating Agent, (2) the Termination Date under the RPA or
the PPA, (3) an Early Amortisation Event, and (4) 3 June 2002.
"Trust Account Bank Mandate" means an agreement in respect of each Collection
Account in form and substance satisfactory to the Operating Agent (as evidenced
by its execution thereof), as described in Clause 8(Q).
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"Turnover Rate" means, as of any Purchase Date, the average of each of the three
most recently ended months outstanding Net Receivable Balance under the RPA or
the PPA, as applicable, as of the last day of each such month, over the Dollar
Equivalent of the aggregate outstanding balance of Receivables sold by the
Sellers and Originators under all Origination Agreements during each such month.
"Unapplied Cash" means as of any date with respect to any Receivable, the
aggregate Collections which have not yet been reflected on the books and
records of the Originator as a reduction to the Dollar Equivalent of the
Outstanding Balance of such Receivable.
"Weighted Average Term" means the weighted average term of all Purchased
Receivables, calculated on the basis of the formula: E(original stated payment
term of each invoice x amount of such invoice) / Einvoice amount.
"Yield" will be calculated on the first Purchase Date and on each Settlement
Date thereafter on the basis of the outstanding Capital as at such dates times
the Yield Rate divided by 360 times the number of days elapsed in the relevant
Interest Period.
"Yield Rate" will be the cost of commercial paper notes issued by Eureka to fund
its purchase of Receivables, plus related dealer commissions and administration
costs (such administration costs not to exceed 0.03% of Capital per annum), plus
the cost of swapping Dollar proceeds of commercial paper into the currency of
the Purchased Receivables, determined by the Operating Agent and expressed as a
percentage of Capital. In the event Eureka shall not at any time, fund its
purchases under the RPA with the issuance of commercial paper, or if purchases
are being made under the PPA, the Yield Rate shall be the Bank Facility Rate.
"Yield Reserve" means as of any Settlement Date, the product of (1) two times
the Turnover Rate for such date and (2) the sum of (a) fifty-two times the Yield
for such date, divided by 12 (Yield calculated for this purpose using the higher
of the Yield Rate and the rate shown in paragraph (a) of the definition of "Bank
Facility Rate"); (b) the facility fee of 0.30% per annum of the Facility Limit
calculated monthly in arrears and applied on each Settlement Date; (c) the
Programme Fee as defined in the Fees Letter; and (d) the product of (i) the
Dollar Equivalent of the most recently ended month's outstanding Net Receivable
Balance aggregated among all Origination Agreements less the Dollar Equivalent
of Defaulted Receivables aggregated among all Origination Agreements and (ii)
0.75% (substitute collection agent reserve) the resulting figure divided by 12.
(C) This Agreement: Any reference to "this Agreement" or any other agreement or
document shall, unless the context otherwise requires, include this
Agreement or, as the case may be, that other agreement or document as from
time to time amended, supplemented or novated,
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and any document which amends, supplements or novates this Agreement or, as
the case may be, that other agreement or document. Any reference to Clauses
or paragraphs in this Agreement is, subject to any contrary indication, a
reference to a Clause or paragraph in this Agreement.
(D) Origination Agreements: All references in this Agreement to terms defined
in the Origination Agreements or to amounts which are aggregated among all
Origination Agreements, shall, unless the contrary is indicated, be deemed
to refer to the equivalent concepts in the Origination Agreements where the
same defined term is not used.
(E) Headings: Headings shall be ignored in construing this Agreement.
(F) Time: Save where the contrary is indicated, any reference in this Agreement
to a time of day (including opening and closing of business hours) shall be
construed as a reference to London time.
(G) Time of Essence: Time shall be of the essence in this Agreement and all
documents delivered pursuant to the terms of this Agreement, subject to the
prior waiver of such timing by the affected party.
2. FACILITY
In consideration of the covenants contained in this Agreement, the receipt and
sufficiency of which is hereby acknowledged, the Buyer hereby offers to commit
to purchase from the Seller on each Purchase Date falling on or after the
Effective Date, full equitable and beneficial title and ownership in and to
certain Receivables on the terms and conditions set out in this Agreement.
3. CONDITIONS PRECEDENT
(A) To Initial Purchase: The Initial Purchase is subject to the condition
precedent that the Operating Agent receive on or before the date of such
Initial Purchase the documents and information specified in Schedule 5,
each in form and substance satisfactory to the Operating Agent.
(B) To All Purchases: Each Purchase (including the Initial Purchase) is subject
to the further following conditions precedent:
(1) On each Purchase Date the following statements must be true and correct
(and the Seller will be deemed to have so certified on such date that):
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(a) the representations and warranties of the Seller contained in this
Agreement are true and correct on and as of such day as though
made on such day and by reference to the then existing
circumstances;
(b) the Seller has delivered such directors' certificate as may be
required by the Operating Agent as to the Seller's solvency;
(c) after the proposed Purchase the Outstanding Balance of Purchased
Receivables would be at least equal to the sum of (i) aggregate
outstanding Capital, (ii) applicable Accruals, and (iii) Reserves
in relation to outstanding Capital;
(d) there has been no Early Amortisation Event which has not been
waived by the Operating Agent in writing;
(e) there has been no sale by the Seller of any of its Receivables out
of the ordinary course of its business without the prior written
consent of the Operating Agent;
(f) in respect of the Purchase of Receivables whose Account Debtors
are resident in France, Italy, Germany, Spain, The Netherlands or
Belgium, after the proposed Purchase, Capital in respect of such
Purchased Receivables does not exceed 15% of the Capital in
respect of all Purchased Receivables; and
(g) after the proposed Purchase, Capital would not exceed the Country
Limit, and Programme Capital would not exceed the Facility Limit.
(2) On or prior to each Purchase Date the Seller shall have delivered to
the Operating Agent an Accounts Receivable Listing.
(3) On or prior to each Purchase Date the Seller shall have complied with
all of its reporting and other obligations under this Agreement, unless
any such failure to comply has been waived by the Operating Agent in
respect of such Purchase Date.
(4) The Commitment shall not have been cancelled.
(5) The Operating Agent has received such other approvals, legal opinions
or documents as the Operating Agent may reasonably request.
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(C) The Operating Agent shall, as soon as reasonably practicable after
submission to it of a form of Contract other than the form set out in
Schedule 7, notify the Seller as to whether it approves of the form for the
purposes of paragraph (9) of the definition of "Eligible Receivable", such
approval not to be unreasonably withheld. In considering whether to approve
such other form of Contract, the Operating Agent may, as a condition of
considering whether to give its approval" take such legal advice as it
deems appropriate including, without limitation, advice from English,
Scottish or Northern Irish solicitors, and all related costs, charges, and
expenses (including without limitation reasonable legal fees, disbursements
and VAT thereon) shall be for the account of the Seller.
(D) The Commitment shall be cancelled:
(1) on the Termination Date; or
(2) if it becomes unlawful in any jurisdiction for the Buyer to give
effect to any of its obligations as contemplated by this Agreement to
fund or maintain the funding of any Purchase,
whichever shall first occur.
4. PURCHASES
(A) Making Purchases: The Seller shall, by 10:00 a.m., London time, on the
Determination Date immediately prior to each proposed Purchase Date,
deliver to the Buyer a Notice of Sale by facsimile (and shall send the
original Notice of Sale to the Operating Agent by ordinary post on the day
it is delivered by facsimile) substantially in the form of Schedule 6
("Notice of Sale") identifying (inter alia) the Purchase Date, the then
Outstanding Balance of Receivables (if any) and the Purchase Price for such
Receivables computed by the Operating Agent. The computation of the
Purchase Price by the Operating Agent shall, in the absence of manifest
error, be deemed to be conclusive.
(B) Sale: The delivery of the Notice of Sale by facsimile will constitute
notification to the Buyer of the Receivables and the Related Security,
designated pursuant to Clause 4(D), which the Buyer is to purchase for the
Purchase Price as set out in the Notice of Sale. The Buyer shall, subject
to the terms and conditions of this Agreement (including, for the avoidance
of doubt, Clause 3) pay in full the Purchase Price, which payment will
effect the transfer to the Buyer of full equitable and beneficial title and
ownership in and to those Receivables and the Related Security with respect
to those Receivables.
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(C) Purchase Price: The Buyer shall pay in full the Purchase Price on the
Purchase Date in the currency and funds specified in Clause 7(B) to the
Seller's account specified in Clause 7(C). If, however, pursuant to Clause
12(C), there is any Advance Payment outstanding then the Buyer will remit
to the Seller only that portion of the Purchase Price that exceeds the
amount of such Advance Payment and, if the amount of the Advance Payment is
equal to or greater than the Purchase Price, the Buyer shall not be
required to remit any portion of the Purchase Price to the Seller.
(D) Determination of Purchased Receivables: On or prior to each Purchase Date
in respect of which a Notice of Sale is to be delivered, the Seller will
identify the Group of Receivables to be offered for purchase by the Buyer
on such date in such format as the Operating Agent may specify.
(E) Records: On or prior to each Purchase Date in respect of which a Notice of
Sale is to be delivered, the Seller will at the Seller's expense deliver to
the Operating Agent (or as the Operating Agent may direct) the Accounts
Receivable Trial Balance generated on or in relation to such Purchase Date,
identifying the Receivables designated pursuant to Clause 4(D).
(F) Perfection: Subject to Clause 13, each of the Seller and the Buyer will
take all such steps and comply with all such formalities as may be required
to perfect or more fully to evidence or secure title to the Receivables
assigned (or purported to be assigned) pursuant to Clause 4.
(G) Delegation of Powers of Operating Agent: The Operating Agent hereby
delegates to the Seller all of its obligations under this Clause 4, which
delegation the Seller irrevocably accepts. The Seller shall notify the
Operating Agent of all calculations made by it under this Clause 4. The
Operating Agent may revoke this delegation in writing at any time.
5. COLLECTIONS AND SETTLEMENT
(A) Collection of Receivables: (1) On each day the Collection Agent shall as
described in Clause 12(B) set aside and hold in trust for the Buyer all
Collections of Purchased Receivables on such day, and (2) the Operating
Agent shall issue a Settlement Statement to the Seller within two Programme
Business Days after each Settlement Date in relation to the Settlement
Period which ended on that Settlement Date.
(B) Settlement Procedures prior to Termination Date: Prior to the Termination
Date the procedures described in this Clause 5(B) will be applicable:
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(1) On each Purchase Date the Buyer, unless otherwise instructed by the
Operating Agent, will set off, against its obligation to pay the
Purchase Price of the Group of Receivables to be purchased by the Buyer
on such Purchase Date, the amount (if any) of any Advance Payment
withdrawn by the Seller from the Buyer Account pursuant to Clause 12(C)
and which has not been refunded as of close of business on the
Programme Business Day immediately preceding such Purchase Date.
(2) On each Determination Date the Operating Agent shall calculate:
(a) Capital as at the forthcoming Settlement Date; and
(b) Yield and Programme Costs in respect of the Capital as at the
forthcoming Settlement Date.
(3) On each Settlement Date the Operating Agent shall cause to be paid from
the Buyer Account (without prejudice to, and subject always to, the
provisions of Clause 12(C) regarding Advance Payments):
(a) to the Buyer, Yield and Programme Costs in respect of the Interest
Period ending on that Settlement Date;
(b) to the Seller, the Purchase Price (if any) in respect of Purchased
Receivables to the extent the Purchase Price is not satisfied by
way of set-off pursuant to Clauses 5(B)(1) and 12(C);
(c) to the Seller, the Proportionate Share of all sums received by the
Buyer pursuant to Clause 5(B)(3)(c) of the RPA or the PPA, as
applicable, by way of deferred purchase price for the Purchased
Receivables; and
(d) to the Buyer, all amounts standing to the credit of the Buyer
Account after payment of the amounts set forth in (a) and (b)
above.
(C) Settlement Procedures after Termination Date: On the Termination Date and
each day thereafter, the procedures described in this Clause 5(C) will be
applicable for all Purchased Receivables:
(1) On each Programme Business Day, the Operating Agent shall cause to be
paid from the Buyer Account to the Buyer all amounts standing to the
credit of the Buyer Account.
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(2) If and to the extent that the Buyer receives funds pursuant to Clause
5(C)(2) of the RPA or the PPA, as applicable, the Operating Agent shall
cause to be paid from the Buyer Account to the Seller, the Seller's
Proportionate Share of such funds, by way of deferred purchase price
for all of the Purchased Receivables.
(D) Adjustments and Allowances:
(1) If on any day the Outstanding Balance of any Purchased Receivable is
either (a) reduced or adjusted as a result of any defective, rejected,
repossessed or returned goods or services or any cash discount (whether
commercial, financial or otherwise), rebate or other adjustment made by
the Seller or any other Person, or (b) reduced or cancelled as a result
of a set off or by agreement in respect of any claim by the Account
Debtor thereof against the Seller or any other Person (whether such
claim arises out of the same or another transaction) (including without
limitation any change in the due date for payment of any Purchased
Receivable otherwise than with the prior consent of the Operating
Agent), the Seller will be deemed to have received on such day a
Collection of such Purchased Receivable in the amount of such
reduction, adjustment or cancellation and shall credit such amount to
the Buyer Account by way of indemnity.
(2) If on any day any of the representations or warranties in Clause 8 is
no longer true with respect to a Purchased Receivable, the Seller will
be deemed to have received on such day a Collection of such Purchased
Receivable equal to its original Outstanding Balance less any
Collections previously received with respect thereto and shall credit
to the Buyer Account an amount equal to such deemed Collection by way
of indemnity.
(3) If any Purchased Receivable was not an Eligible Receivable at the time
of Purchase, on the date such fact becomes known to the Seller, the
Seller will be deemed to have received a Collection of such Purchased
Receivable equal to its original Outstanding Balance less any
Collections previously received with respect thereto and shall credit
to the Buyer Account an amount equal to such deemed collection by way
of indemnity.
(4) If the Seller is not acting as the Collection Agent, it will promptly
pay to the Collection Agent the amount of any deemed Collection
pursuant to Clause 5(D)(1), (2) or (3) above by way of indemnity.
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(5) If, following any payment in respect of a deemed Collection of a
Purchased Receivable pursuant to Clause 5(D)(1), (2), (3) or (4) above,
the Buyer shall receive any further Collections in respect of such
Purchased Receivable, the Buyer shall (provided no Early Amortisation
Event has occurred) pay to the Seller an amount or amounts equal to
such further Collections by way of repayment of indemnity.
(E) Application of Collections: Any payment by an Account Debtor in respect of
any indebtedness owed by it to the Seller and any credits, defective,
rejected, repossessed or returned goods or other non cash items of an
Account Debtor will, except as otherwise specified in writing by such
Account Debtor or otherwise required by contract or law and unless otherwise
instructed by the Operating Agent, be applied as a Collection of Purchased
Receivables of such Account Debtor, in the order of the age of such
Purchased Receivables, starting with the oldest such Purchased Receivables,
to the extent of any amounts then due and payable thereunder before being
applied to or in respect of any other indebtedness of such Account Debtor.
6. FEES, COSTS AND STAMP DUTY
(A) Collection Agent Fees: Until the later of the Termination Date and the
Relevant Date, for any period during which the Seller or an Affiliate of the
Seller is not the Collection Agent, the Seller will pay the Buyer, upon its
demand, a collection fee as determined by the Operating Agent, not exceeding
110% of the fees, costs and expenses, plus value added tax (if applicable),
of the substitute Collection Agent incurred in performing such function.
(B) Costs and Expenses: The Seller agrees to pay on demand of the Operating
Agent all reasonable costs and expenses incurred by the Operating Agent in
connection with the preparation, execution and delivery of this Agreement
and the other documents to be delivered pursuant to this Agreement or in
connection therewith, such costs and expenses to include, without
limitation, the reasonable fees and out-of-pocket expenses of legal advisers
(plus VAT thereon) to the Buyer and the Operating Agent with respect thereto
and with respect to advising the Buyer and the Operating Agent as to their
respective rights and remedies under this Agreement, and all costs and
expenses, if any (including legal fees and expenses plus VAT thereon), in
connection with the enforcement of this Agreement, the other documents to be
delivered pursuant to this Agreement or in connection therewith and the
Purchased Receivables. The Buyer and the Operating Agent agree to take
reasonable steps, consistent with the protection of their respective
interests under this Agreement, to mitigate their costs and expenses in
connection with the enforcement of this Agreement, the other documents to be
delivered pursuant to this Agreement and the Purchased Receivables.
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(C) Duties and Taxes: In addition, the Seller will pay on demand of the
Operating Agent any sales, excise, registration and other taxes, duties and
fees payable in connection with the execution, delivery, filing or recording
of this Agreement or the purchase, assignment or reassignment of Receivables
under or pursuant to this Agreement, or the other documents to be delivered
under this Agreement or in any way connected with any transaction
contemplated by this Agreement. The Seller agrees to indemnify the Operating
Agent and the Buyer on demand of the Operating Agent against any liabilities
with respect to or resulting from any delay in paying or omission to pay any
such taxes, duties or fees.
(D) Stamp Duty Reserve: As of each Settlement Date, the Buyer shall ensure that
an amount equal to the Stamp Duty Reserve is on deposit in the sub-account
with Citibank, N.A., London branch, denominated in Sterling and utilised for
such purpose under the account number 60918971 (the "Stamp Duty Account").
The Buyer covenants that it shall hold the Stamp Duty Account upon trust for
itself and the Operating Agent as beneficiaries absolutely, and that funds
standing to the credit of the Stamp Duty Account may only be used to pay
applicable stamp duty in the United Kingdom in the circumstances described
in Clauses 6(E) and (F) or to adjust the amount standing to the credit of
the Stamp Duty Account to reflect the required level of the Stamp Duty
Reserve as of each Settlement Date.
(E) Liability for Stamp Duty: The Seller agrees with the Buyer and the Operating
Agent that if the Seller (or any Affiliate) causes executed originals or
counterparts of any of the Custody Documents to be brought into the United
Kingdom, or executed originals or counterparts of any of the Custody
Documents are brought into the United Kingdom in any of the circumstances
contemplated in Clause 6(F), the Seller will pay and hold itself responsible
for and will seek no indemnity from the Buyer or the Operating Agent in
respect of Stamp Duty, provided always that the Seller shall not pay or be
responsible for any penalty or interest on late presentation arising from
any failure on the part of the Buyer or the Operating Agent to present any
executed original or counterpart of any Custody Document for stamping within
30 days after it has first been brought into the United Kingdom. Each of the
parties to this Agreement agrees that, except to the extent that the Seller
is liable to pay Stamp Duty in accordance with the foregoing, the liability
to pay Stamp Duty in respect of a Custody Document shall be borne by the
party which brings, or causes the bringing of, the executed original or
counterpart of the relevant Custody Document into the United Kingdom.
(F) Documents not to be brought into United Kingdom: Each of the Buyer and the
Operating Agent undertakes that it shall not at any time cause or permit
executed originals or counterparts of any of the Custody Documents to be
brought into the United Kingdom, except in accordance with the provisions of
this Clause 6(F). Nothing in this Agreement shall in any way inhibit or
restrict the right of the Seller to bring any executed original or
counterpart of
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any Custody Document into the United Kingdom at any time. Notwithstanding
any other provision of this Agreement, the Buyer and the Operating Agent
shall be entitled at any time to cause or permit an executed original or
counterpart of any of the Custody Documents to be brought into the United
Kingdom:
(1) if it is required to do so for the purposes of any judicial,
arbitration, regulatory or administrative proceedings in the United
Kingdom involving marters which are the subject of the relevant Custody
Document, or if, in its reasonable opinion, it is necessary to produce
the same as evidence in any of such proceedings and either:
(a) the judge, arbitrator or other person responsible for the
determination of such proceedings has ruled that an executed
original or counterpart of any of the Custody Documents must be
brought into the United Kingdom (provided that if an appeal
against the ruling is permissible and the Seller so requests, and
on the condition that the Seller indemnifies either the Buyer or
the Operating Agent, as the case may be, to its respective
satisfaction on an after-tax basis for all costs involved in such
an appeal, the Buyer or the Operating Agent, as the case may be,
will pursue such an appeal pending which neither the Buyer nor the
Operating Agent, as the case may be, will cause an executed
original or counterpart of any of the Custody Documents to be
brought into the United Kingdom); or
(b) the rules governing the conduct of such proceedings provide that a
certified unstamped copy of the relevant Custody Document, or any
other form of evidence of the matters which are subject of such
proceedings cannot be produced as adequate evidence of the
purposes of such proceedings; or
(2) if it is required to do so for the purpose of the determination by any
tax authority or court or tribunal or its liability to taxation (other
than Stamp Duty); or
(3) if as a result of a change in applicable law or the interpretation of
such law by any court or tribunal or a change in the published practice
of any governmental authority, or in any published extra-statutory
concession, an executed original or counterpart of any of the Custody
Documents is required to be brought in to the United Kingdom or a
liability to Stamp Duty in respect thereof shall otherwise arise; or
(4) if it is at any time required by any law or the published practice of
any governmental authority, central bank, regulatory authority,
taxation authority or comparable authority; or
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(5) on the occurrence of an Early Amortisation Event,
provided however that on the occurrence of any of the events set out in
paragraphs 6(F)(1), (2) or (3) above, any relevant party, as the case may
be, shall notify the Seller and the other parties hereto forthwith giving
reasonable details of the relevant event, and shall to the extent that such
action does not materially prejudice its business or tax affairs or the
business or tax affairs of the Operating Agent and/or Eureka and/or the
Liquidity Banks, use reasonable endeavours to resist the relevant
requirement, failing which and after having used such reasonable endeavours
it shall not cause or permit such counterpart or executed original to be
brought into the United Kingdom until the expiry of five Local Business Days
after such notification to the Seller and the other parties hereto, unless
required to do so within such time. The Seller shall provide an indemnity,
on an after-tax basis, for reasonable costs or expenses incurred by either
the Buyer or the Operating Agent in resisting or determining whether it can
resist any of the events set out in paragraphs 6(F)(1), (2) and (3) above.
(G) Default Interest: The Seller shall pay to the Operating Agent or, as the
case may be, the Buyer interest (as well after as before judgment) on all
amounts not paid or repaid when due under this Agreement at 2% per annum
above the Base Rate payable on demand of the Operating Agent.
(H) Computations: All computations of interest and fees shall be made on the
basis of a year of 360 days for any currency other than Sterling and 365
days in the case of Sterling for the actual number of days (including the
first but excluding the last day) elapsed.
(I) Computation of Time Periods: Unless otherwise stated in this Agreement, in
the computation of a period of time from a specified date to a later
specified date, the word "from" means "from and including" and the words
"to" and "until" each means "to but excluding".
7. PAYMENTS AND COMPUTATIONS, ETC.
(A) Mechanics: All amounts to be paid to or deposited with the Operating Agent
for its own account or for the account of the Buyer by the Seller and/or the
Collection Agent under this Agreement shall be paid or deposited no later
than 12:00 noon (local time in the place of payment) on the day when due in
immediately available same day funds to the relevant account specified
below.
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(B) Currency: All amounts payable by the Seller under this Agreement to the
Operating Agent for its own account or for the account of the Buyer shall be
paid in Sterling. The Purchase Price amounts payable by the Buyer under this
Agreement shall be paid in Sterling.
(C) Accounts: Any amounts payable under this Agreement shall be remitted to the
following accounts:
(1) if to the Seller, the appropriate Seller Non-Transaction Account;
(2) if to the Buyer (otherwise than to the Buyer Account), Account No.
8319774 (Sort Code 18-50-08) with Citibank, 336 Strand, London WC2R
1HB; and
(3) if to the Operating Agent for its own account, Account No. 83267 (Sort
Code 18-50-08) with Citibank, 336 Strand, London WC2R 1HB.
(D) Grossing Up: To the fullest extent permitted by law, the Seller will make
all payments under this Agreement regardless of any defence or counterclaim.
Further, if the Seller, in its individual capacity or as Collection Agent,
is compelled by law to make any deductions or withholdings from any payments
pursuant to this Agreement, including, without limitation, payments in
respect of Receivables or Collections, the Seller will pay such additional
amounts as may be necessary in order that the net amount received by the
Operating Agent or the Buyer after such deductions or withholdings
(including any required deduction or withholding on such additional amounts)
will equal the amount that the Operating Agent or the Buyer (as appropriate)
would have received had no such deductions or withholdings been made. The
Seller will provide the Operating Agent with evidence satisfactory to the
Operating Agent that it has paid such deductions or withholdings.
(E) Appropriation of Payments: Regardless of any appropriation by the Seller or
the Collection Agent, the Operating Agent shall determine the appropriation
of any payment to it for the account of the Buyer to any amount to be paid
to or deposited with it for the account of the Buyer by the Seller and/or
the Collection Agent under this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF THE SELLER
Each Seller represents and warrants, as of the Effective Date, as follows:
(A) Incorporation: Each Seller and Exide Europe is a company duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation or organisation.
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(B) Seller Power and Authority: Each Seller has full power and authority to
effect, and has taken all necessary action to authorise, the execution,
delivery and performance by it of this Agreement and all other
instruments and documents to be delivered under this Agreement, and the
transactions contemplated by this Agreement.
(C) Exide Europe Power and Authority: Exide Europe has full power and
authority to effect, and has taken all necessary action to authorise,
the execution, delivery and performance by it of the Letter of
Undertaking and all other instruments or documents to be delivered
under the Letter of Undertaking, and the transactions contemplated by
the Letter of Undertaking.
(D) Non-Violation: The execution, delivery and performance by each Seller
of this Agreement and all other instruments and documents to be
delivered pursuant to this Agreement and all transactions contemplated
by this Agreement, and the execution, delivery and performance by Exide
Europe of the Letter of Undertaking and all transactions contemplated
thereby:
(1) do not contravene (a) any Seller's or Exide Europe's memorandum or
articles of association (or analogous constitutive documents), (b)
any law, rule or regulation applicable to any Seller or Exide
Europe, (c) any material contractual restriction contained in any
agreement or instrument binding on or affecting any party
comprising the Seller or its assets or Exide Europe or Exide
Europe's assets, or (d) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller, or any of
the Seller's assets or Exide Europe or Exide Europe's assets;
(2) do not result in or require the creation of any lien, security
interest or other charge or encumbrance upon or with respect to
any of the Seller's or Exide Europe's assets or undertaking; and
(3) will not constitute a breach of, nor give rise to any actual or
potential event of default under, any Debt of any member of the
Exide Group, or under any document relating to such Debt.
(E) Consents: No consent, authorisation, approval, notice or filing is
required (or, if required, which has not been obtained on a timely
basis) for the due execution, delivery or performance by each Seller of
this Agreement or any other document to be delivered in connection with
this Agreement or for the transactions contemplated by this Agreement
or for the due execution, delivery or performance by Exide
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Europe of the Letter of Undertaking or any other document to be
delivered in connection with the Letter of Undertaking or for the
transactions contemplated by the Letter of Undertaking.
(F) Obligations Binding: (1) This Agreement constitutes the legal, valid,
binding and enforceable obligation of each Seller; and (2) the Letter
of Undertaking constitutes the legal, valid, binding and enforceable
obligation of Exide Europe.
(G) Accounts: The most recent audited annual accounts of each Seller and
Exide Europe, copies of which have been furnished to the Operating
Agent, present a true and fair view of the financial condition of the
Seller and its consolidated Subsidiaries (if any) or Exide Europe, as
applicable, as at that date and the results of the operations of the
Seller and those subsidiaries, or Exide Europe, as applicable, for the
period ended on that date, all in accordance with generally accepted
accounting principles consistently applied.
(H) No Material Adverse Change to Seller: Since (i) 31 March 1996 in the
case of BIG, CMP and Exide Dagenham, and (ii) 31 December 1994 in the
case of Fulmen, being the date of the Seller's most recent audited
annual accounts, there has been no change in the business or financial
condition of the Seller which may materially adversely affect the
ability of the Seller to perform its obligations under this Agreement.
(I) No Material Adverse Change to Exide Group: Since 31 March 1996, being
the date of the Exide Group's most recent audited consolidated annual
accounts, there has been no change in the business or financial
condition of the Group which is reasonably likely to materially
adversely affect the ability of Exide Europe to perform its obligations
under the Letter of Undertaking.
(J) No Litigation: There are no actions, suits or proceedings current or
pending, or to the knowledge of the Seller threatened, against or
affecting any Seller or their Subsidiaries (if any) or any of their
respective assets, or Exide Europe or Exide Europe's assets, in any
court, or before any arbitrator of any kind, or before or by any
governmental body, which may materially adversely affect the financial
condition of any Seller and their Subsidiaries taken as a whole or
Exide Europe, or materially adversely affect the ability of the Seller
to perform its obligations under this Agreement or the ability of Exide
Europe to perform its obligations under the Letter of Undertaking.
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(K) No Default: No Seller nor any of their Affiliates, nor Exide Europe,
are in default with respect to any order of any court, arbitrator or
governmental body, excluding defaults with respect to orders of
governmental agencies which are not material to the business or
operations of any Seller or any of their Affiliates, or Exide Europe,
and would not materially adversely affect the ability of the Seller to
perform its obligations under this Agreement or the ability of Exide
Europe to perform its obligations under the Letter of Undertaking.
(L) No Adverse Claim: Each Receivable will, together with the Contract
related thereto, at all times be owned by the Seller free and clear of
any Adverse Claim except as provided in this Agreement (for the purpose
of this representation and warranty in respect of BIG, the Seller is
relying upon the consent letter referred to in paragraph (n) of
Schedule 5), and upon each Purchase the Buyer will acquire full
equitable and beneficial title and ownership to and of each Purchased
Receivable, the Collections and the Related Security then existing or
thereafter arising free and clear of any Adverse Claim except as
provided in this Agreement.
(M) Performance of Contracts: All goods and services to which each
Purchased Receivable relates have been delivered and performed, and all
requirements of such Contract concerning the nature, amount, quality,
condition or delivery of the goods or services, or upon which payment
of the Purchased Receivable may be dependent, have been fulfilled in
all material respects.
(N) Information: None of the information and reports (including but not
limited to each portfolio profile and each Summary Report) furnished or
to be furnished (whether by way of computerised data or otherwise) by
the Seller (in its individual capacity or as Collection Agent) or Exide
Europe, to the Operating Agent or Exide Europe, as applicable, is
inaccurate in any material respect (except as otherwise disclosed to
the Operating Agent at the time of delivery) as of the date so
furnished, or contains any material misstatement of fact or omits to
state a material fact or any fact necessary to make the statements
contained therein not materially misleading.
(O) Place of Business: The principal place of business and registered
office of the Seller is as set forth in Schedule 1 or at such other
location(s) approved by the Operating Agent (such approval not to be
unreasonably withheld or delayed).
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(P) Location of Books: The offices where the Seller keeps all its books,
records and documents evidencing Receivables or the related Contracts
are at the locations set forth in Schedule 1 or at such other
location(s) approved by the Operating Agent (such approval not to be
unreasonably withheld or delayed).
(Q) Location of Bank Accounts: The bank accounts to which the Seller has
directed the Account Debtors to remit payments for the Receivables are
the Collection Accounts (or such other account(s) at such location(s)
as may have been previously approved by the Operating Agent and in
relation to each of which a Trust Account Bank Mandate has been (or
will be as of the Effective Date) duly executed by the Seller (in its
individual capacity and/or as Collection Agent) and delivered to the
Operating Agent) and in respect of which the relevant hank has
acknowledged the Trust Commencement (as that term is defined in the
Trust Account Bank Mandate) and has agreed, in relation to the Buyer
Entitlement, not to exercise any right of set-off, net-off, combination
or consolidation of accounts or counterclaim whatsoever.
(R) No Winding-Up: No step has been taken or is intended by any Seller or,
so far as it is aware, by any other Person for any Seller's winding-up,
liquidation, dissolution, administration, merger or consolidation or
for the appointment of a receiver or administrator of the Seller or all
or any of its assets.
(S) No Breach: There has been no breach by any Seller of any of its
obligations under the Relevant Documents or by Exide Europe of any of
its obligations under the Letter of Undertaking.
(T) Eligibility: Each Receivable the subject of a Notice of Sale is an
Eligible Receivable as at the time of Purchase.
Each Seller further represents and warrants that the representations and
warranties in this Clause 8 shall be true and correct on and as of each
Purchase Date as though made on each such date and by reference to the then-
existing circumstances.
9. AFFIRMATIVE COVENANTS OF THE SELLER
Until the later of the Termination Date and the Relevant Date, the Seller
will, unless the Operating Agent otherwise consents:
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(A) Compliance with Law: Comply in all material respects with all
applicable laws, rules, regulations and orders binding on it, its
business and assets and all Receivables and related Contracts, except
where non-compliance would not have, and would not be reasonably likely
to have, a material adverse effect on its ability to perform its
obligations hereunder.
(B) Maintain Existence: Preserve and maintain its corporate existence.
(C) Access: Upon reasonable prior notice, permit the Operating Agent, or
its agents or representatives, to visit the offices of the Seller
during normal office hours and examine and make and take away copies of
all books, records and documents relating to the Receivables and to
discuss matters relating to the Receivables or the Seller's performance
hereunder with any of the officers or employees of the Seller having
knowledge of such matters and co-operate in the reconstruction of the
Accounts Receivable Trial Balance pursuant to Clause 13(C).
(D) Maintain Records: Maintain and implement administrative and operating
procedures (including, without limitation, an ability to recreate
records in the event of their destruction), and keep and maintain, all
documents, books, records and other information reasonably necessary or
advisable for the collection of all Receivables (including, without
limitation, records adequate to permit the identification on each
Purchase Date of each new Purchased Receivable and the daily
identification of all Collections of and adjustments to each existing
Purchased Receivable).
(E) Perform Contracts: Timely and fully perform and comply with all
material provisions, covenants and other promises required to be
observed by it under the Contracts relating to the Purchased
Receivables.
(F) Priority: Ensure that at all times the claims against it under this
Agreement rank at least pari passu with the claims of all its other
unsecured creditors save those whose claims are preferred by any
bankruptcy, insolvency or other similar laws of general application.
(G) Credit and Collection Policy: Comply in all material respects with its
Credit and Collection Policy with respect to each Receivable purchased
or to be offered for purchase pursuant to this Agreement and the
related Contract.
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(H) Value Added Tax: Make all relevant value added tax or other applicable
tax payments in respect of supplies of goods or services pursuant to a
Contract or which otherwise relate to Purchased Receivables, and pay
all value added tax (if any) payable in respect of any value added tax
supply made, or input value added tax suffered, by the Buyer, the
Operating Agent or any of the Operating Agent's Affiliates with respect
to supplies of goods or services by the Seller pursuant to a Contract
or which otherwise relates to Purchased Receivables.
(I) Collections: If the Seller is not acting as Collection Agent, (1) give
all reasonable assistance (including the provision of information) to
any third party replacing the Seller as Collection Agent in accordance
with the provisions of this Agreement, and (2) remit any Collections on
Purchased Receivables to the Collection Agent within one Local Business
Day after the receipt or deemed receipt thereof.
(J) Bank Accounts: Pay or cause to be paid all Collections of Receivables
directly into the bank account or accounts referred to in Clause 8(Q)
or such other account(s) approved by the Operating Agent.
(K) Audit Costs: The Seller shall pay the reasonable fees and expenses for
one audit by the Operating Agent in each financial year of the Seller,
plus the costs of one additional audit to be conducted within 4 months
after the execution of this Agreement. Except for such additional
audit, any further additional audit(s) that may be required by the
Operating Agent during any such financial year shall be for the
Operating Agent's own account.
(L) Provision of Information to Exide Europe: The Seller shall promptly
provide Exide Europe with computerised information regarding the
Purchased Receivables on the dates shown, and containing the
information set forth in Schedule 8, and all such different or other
information as the Operating Agent may reasonably determine from time
to time to properly allow Exide Europe and/or the Operating Agent to
identify all required information in respect of Account Debtors and
Receivables.
10. NEGATIVE COVENANTS OF THE SELLER
Until the later of the Termination Date and the Relevant Date, no Seller
will, without the consent of the Operating Agent:
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(A) No Disposal of Receivables: Except as otherwise provided herein, sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create
or suffer to exist any Adverse Claim upon or with respect to, any Receivable
purchased or to be-offered for purchase under this Agreement or the related
Contract, or assign any right to receive income in respect thereof.
(B) No Transfer of Business: No Seller shall transfer all or substantially all
of its assets and undertaking to any person without the prior written
consent of the Operating Agent, such consent not to be unreasonably
withheld, unless such transfer would have no adverse effect on the ability
of the Seller to collect and sell Receivables as contemplated by this
Agreement.
(C) No Security Interest over Receivables: (a) The Seller shall not create or
permit to subsist any Security Interest on any of its Receivables, and (b)
If the Seller creates or permits to subsist any Security Interest on any of
its Receivables contrary to (a) above, all the obligations of the Seller
under this Agreement shall automatically and immediately be secured upon the
same assets, ranking at least pari passu with the other obligations secured
on those assets.
(D) No Amendment to Receivables: Extend, amend or otherwise modify the terms of
any Purchased Receivable, or amend, modify or waive any term or condition of
any Contract related thereto, or commence or settle any legal action to
enforce collection of any Purchased Receivable.
(E) No Change to Credit and Collection Policy: Make any change in the character
of its business or in the Credit and Collection Policy, which change would
or might, in either case, materially impair the collectability of any
Receivable purchased or to be offered for purchase under this Agreement or
the enforcement of any related Contract against the Account Debtor or the
operation of this Agreement without the prior written consent of the
Operating Agent.
(F) Cross Indemnity: The Seller shall not amend or otherwise change the Deed of
Cross-Indemnity dated as of the date hereof between Exide Europe and the
Programme Sellers, except in respect of amendments or changes of a purely
technical or immaterial nature which do not affect either: (i) the title of
the Buyer to the Receivables assigned (or purported to be assigned) pursuant
to Clause 4 or (ii) the effectiveness of the assignment (or purported
assignment) pursuant to Clause 4.
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11. REPORTING REQUIREMENTS OF THE SELLER
Until the later of the Termination Date and the Relevant Date, the Seller
will, unless the Operating Agent otherwise consents, furnish to the
Operating Agent:
(A) Annual Accounts of Seller: As soon as available and in any event within
180 days after the end of each of the Seller's financial years, a copy
of the Seller's annual accounts and (if they are prepared) consolidated
accounts in conformity with generally accepted accounting principles,
applied on a basis consistent with that of the preceding financial
year.
(B) Annual Accounts of Exide Europe: As soon as available and in any event
within 180 days after the end of each of Exide Europe's financial
years, a copy of Exide Europe's annual accounts, prepared (as
appropriate) on a consolidated basis in conformity with generally
accepted accounting principles, applied on a basis consistent with that
of the preceding financial year, together with the report of an
internationally recognised firm of independent auditors.
(C) Other Financial Information: Upon request of the Operating Agent, such
financial information, accounts and records with respect to such Seller
or Exide Europe which are relevant to the Programme, as the Operating
Agent may from time to time reasonably request.
(D) Defaults and other Events: Forthwith on becoming aware of any of the
events described in (1), (2), (3) or (4) below or any event which, with
the giving of notice on lapse of time or both, would constitute one of
such events, the statement of the chief financial officer or chief
accounting officer of the Seller setting out details of that event and
the action which the Seller proposes to take with respect to that
event:
(1) the Seller fails to pay any principal of or premium or interest on
any Debt in excess (in the aggregate) of the Sterling Equivalent of
$5,000,000, when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable
grace period, if any, specified in the agreement on instrument
relating to such Debt, or any other default under any agreement or
instrument relating to any Debt, or any other event, shall occur
and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such
default or event is to accelerate or to permit the acceleration of
the maturity of such Debt, or any such Debt shall
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be declared to be due and payable or required to be prepaid (other than
by a regularly scheduled required prepayment) prior to the stated
maturity thereof, or any present or future mortgage, charge or other
security interest on or over any assets of the Seller becomes
enforceable;
(2) a resolution is passed or a petition is presented or an order made for
the winding up, liquidation, dissolution, merger or consolidation of
the Seller (except for the purposes of a bona fide reconstruction or
amalgamation with the consent of the Operating Agent), or a petition is
presented or an order made for the appointment of an administrator in
relation to the Seller on a receiver, administrative receiver or
manager is appointed over any part of the assets or undertaking of the
Seller or any event analogous, to any of the foregoing occurs (except,
in the case where a petition is presented (i) the proceeding is
frivolous or vexatious and (ii) the Originator is solvent and is
contesting the proceeding in good faith);
(3) a Collection Account Event occurs; or
(4) an Early Amortisation Event occurs.
(E) Debt Service Cover Ratio: Within 45 days after the end of every Accounting
Quarter (as that term is defined under the Syndicated Facility), a report
showing the current Debt Service Cover Ratio of Exide Europe.
(F) Summary Report: Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the condition or
operations, financial or otherwise, of the Seller or any of its Affiliates,
as the Operating Agent may from time to time reasonably request in order to
protect the interests of the Buyer or the Operating Agent, including, prior
to 10:00 am, London time, on each Summary Report Date, a Summary Report
(with, among other things, the information necessary to determine the
Default Ratio).
(G) Account Debtors: Within two calendar weeks after the end of each calendar
quarter (or such more frequent time as the Operating Agent may request in
writing), the Seller shall deliver to the Operating Agent a current list of
all Account Debtors in respect of Purchased Receivables and the addresses of
such Account Debtors.
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The obligations of the Seller to deliver reports or similar information to
the Buyer pursuant to this Agreement may be delegated by the Seller to Exide
Europe, and the performance by Exide Europe of such obligations hereunder
shall be deemed to be the performance by the Seller of such obligations;
provided however, that the Seller shall remain liable for any non-
performance of such obligations.
12. COLLECTION AGENT, COLLECTIONS AND BUYER ACCOUNT
(A) Designation of Collection Agent: The servicing, administering and collection
of the Receivables shall be conducted by such Person (the "Collection
Agent") so designated from time to time pursuant to this Clause 12(A). Until
the Operating Agent gives notice to the Seller of a designation of a new
Collection Agent, each applicable Seller in respect of such Seller's
Receivables, is designated as, and agrees to perform the duties and
obligations of, the Collection Agent pursuant to the terms of this
Agreement. The Operating Agent may at any time after the occurrence of an
Early Amortisation Event or a Collection Account Event designate as
Collection Agent any Person (including itself) to succeed the Seller or any
successor Collection Agent, on the condition in each case that any such
Person agrees to perform the duties and obligations of the Collection Agent
pursuant to the terms of this Agreement. The Collection Agent may, with the
prior consent of the Operating Agent, subcontract with any other Person for
servicing, administering or collecting the Receivables; provided, however,
that the Collection Agent will remain liable for the performance of the
duties and obligations of the Collection Agent under this Agreement.
(B) Duties of Collection Agent: The Collection Agent:
(1) will take or cause to be taken all such actions as may be necessary or
advisable to collect each Purchased Receivable, all in accordance with
applicable laws, rules and regulations, with reasonable care and
diligence, and in accordance with the Credit and Collection Policy and
the instructions of the Operating Agent. Each of the Seller and the
Buyer hereby appoints the Collection Agent as its agent to enforce its
respective rights and interests in and under the Purchased Receivables,
the Related Security and the Contracts;
(2) will deposit in the Collection Account for the account of the Buyer all
Collections of Purchased Receivables in accordance with this Agreement
and may, unless and until instructed otherwise by the Operating Agent
following the occurrence of an Early Amortisation Event or a Collection
Account Event, deposit in the Collection Account monies other than
Collections. Following the occurrence of a Collection Account Event, or
an Early Amortisation Event, the Collection Agent shall segregate all
cash,
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cheques and other instruments received by it from time to time constituting
Collections of Purchased Receivables as the Operating Agent may direct and
deposit in a bank account designated by the Operating Agent all such cash,
cheques and other instruments (together with the Buyer's Entitlement to the
Collection Account) as soon as practicable and in any event on the first
Local Business Day following receipt by the Collection Agent of such
Collections and will give such payment instructions and take such other
steps (whether or not contemplated by the Trust Account Bank Mandate) as the
Operating Agent may require;
(3) confirms that, in accordance with Trust Account Bank Mandate, the Collection
Account Bank has been instructed to make available to the Collection Agent
information showing amounts received on each Local Business Day and standing
to the credit of the Collection Account as at the close of business on that
day;
(4) upon receipt of the information referred to in (3) above the Collection
Agent shall, on behalf of the Buyer and the Seller, make all such
determinations and calculations as are necessary in order to determine, in
respect of amounts standing to the credit of the Collection Account on each
Local Business Day, the Buyer Entitlement and the Seller Entitlement
respectively, and shall direct the Collection Account Bank, prior to 12:00
noon on each Local Business Day, to transfer to the Buyer Account the Buyer
Entitlement;
(5) other than the transfers referred to in paragraph (4) above the Collection
Agent shall not, without the prior written consent of the Operating Agent,
withdraw funds from the Collection Account or direct the Collection Account
Bank to make any transfers from the Collection Account, except for
withdrawals on transfers of cleared funds standing to the credit of the
Collection Account which represent the Seller Entitlement and provided that
any such withdrawal or transfer would not cause the Collection Account to
become overdrawn;
(6) may not extend, amend, modify or waive the terms of any Purchased Receivable
or amend, modify or waive any term or condition of any Contract related
thereto where such extension, amendment, modification or waiver would
prejudicially affect such Purchased Receivable, unless the Operating Agent
shall have otherwise consented in writing. The Seller shall deliver to the
Collection Agent (if other than the Seller) all documents, instruments and
records which evidence or relate to the Purchased Receivables which the
Operating Agent may reasonably request;
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(7) if other than the Seller, will provide to the Seller all such
information as the Seller may require for purposes of the Summary
Report and will as soon as practicable following receipt pay to or to
the order of the Seller the Collections--of any Receivable which is not
a Purchased Receivable;
(8) if other than the Seller, will as soon as practicable upon demand make
available or (if so demanded) deliver to the Seller all documents,
instruments and records in its possession which evidence or relate to
Receivables of the Seller other than Purchased Receivables, and copies
of documents, instruments and records in its possession which evidence
or relate to Purchased Receivables which the Operating Agent may
reasonably request; and
(9) if the Operating Agent or its designee, and notwithstanding anything to
the contrary contained in this Agreement, shall have no obligation to
collect, enforce or take any other action described in this Agreement
with respect to any Receivable that is not a Purchased Receivable other
than to turn over, make available or deliver to the Seller the
Collections and documents with respect to any such Receivable as
described in (4) and (5) above.
(C) Advance Payments: The Seller may, from time to time on any Local Business
Day prior to the Termination Date unless and until the Operating Agent
directs otherwise in the event that there is an Early Amortisation Event or
a Collection Account Event, withdraw, by way of advance payment on account
of such Purchase Price as will or may be payable to the Seller on the next
following Purchase Date, any amount or amounts standing to the credit of the
Buyer Account. Any amount so withdrawn (an "Advance Payment") shall be set
off pro tanto in accordance with Clause 4(C) against the Buyer's obligation
to pay any Purchase Price payable on the next following Purchase Date and,
to the extent the amount of the Advance Payment exceeds the amount of the
Purchase Price, be refunded by the Seller in full by the transfer of cleared
funds to the Buyer Account not later than 12:00 noon on the next following
Settlement Date; provided always that any Advance Payment shall be refunded
by the Seller by the transfer of cleared funds to the Buyer Account
immediately upon the demand of the Operating Agent in the event that there
is an Early Amortisation Event or a Collection Account Event. The Seller
shall not be obliged to pay interest on any Advance Payment unless and to
the extent that it is not refunded as required under this Clause. Any
overdue amounts shall bear default interest in accordance with Clause 6(G).
(D) Failure to Report: If there is a failure at any time by the Collection Agent
to report and quantify the amount of Collections received or the amounts of
any Advance Payments and/or the funds standing to the credit of the Buyer
Account in respect of any Settlement Period such
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that the amounts due by the Seller and the Buyer pursuant to Clauses 4(B)
and (C) cannot be accurately determined (in the Operating Agent's reasonable
opinion), there will fall due from the Seller to the Buyer on the Settlement
Date at the end of such Settlement Period (on account of repayment of
Advance Payments) an amount equal to the anticipated Collections in respect
of such Settlement Period as determined by the Operating Agent, acting
reasonably. For the purposes of this Clause 12(D), it shall be considered
reasonable for the Operating Agent to anticipate that all Collections due
during such Settlement Period were received by the Collection Agent during
such Settlement Period. The Buyer shall deposit such amount into the
Temporary Adjustment Account. Upon the Operating Agent becoming satisfied
that a proper assessment of the amounts due by way of repayment of Advance
Payments has been made, there shall be an adjustment in accordance with such
assessment, by way of repayment from the Buyer or (provided no Early
Amortisation Event has occurred) by way of further payment by the Seller, as
required, and such adjusted sum shall be treated for all purposes under this
Agreement as the Collections received during such Settlement Period.
Provided that such failure by the Collection Agent does not last longer than
two consecutive Settlement Periods and the provisions of this Clause 12(D)
are complied with, such failure shall not by itself constitute an Early
Amortisation Event.
13. PROTECTION OF THE BUYER'S RIGHTS
(A) Notice of Sale: At any time after the occurrence of an Early Amortisation
Event, the Operating Agent may (and the Seller following the Operating
Agent's request shall) notify the Account Debtors, or any of them, of
Purchased Receivables of the Buyer's ownership of the Purchased Receivables
and the Collections of the Purchased Receivables and direct (or cause the
Seller to direct) all the Account Debtors of Purchased Receivables, or any
of them, that payment of all amounts payable under any such Purchased
Receivable be made directly to the Operating Agent or its designee.
(B) Legal Assignment: The Seller shall, if requested by the Operating Agent
after the occurrence of an Early Amortisation Event, forthwith execute a
legal assignment to the Buyer or the Operating Agent or as the Operating
Agent may direct (as determined by the Operating Agent) in such form as the
Operating Agent requires of all or any of the Purchased Receivables and the
Related Security and the full benefit thereof and will, if so required, give
notice thereof to the relevant Account Debtor.
(C) Reconstruction of Accounts Receivable Trial Balance: If at any time the
Seller does not (i) generate an Accounts Receivable Trial Balance in
relation to any Purchase Date (whether or not it is obliged to do so) or
(ii) provide the information to Exide Europe enumerated in Clause 9(L), the
Operating Agent will have the right to reconstruct that Accounts Receivable
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Trial Balance or such information so that a determination of the Purchased
Receivables can be made, and such reconstruction will be conclusive (in the
absence of manifest error) for the purposes of determining Purchased
Receivables.
(D) Operating Agent's Right to Perform: If the Originator fails to perform any
of its agreements or obligations under this Agreement, the Operating Agent
may (but shall not be required to) itself perform, or cause performance of,
such agreement or obligation.
(E) Power of Attorney: Without prejudice to the provisions of Clauses 13(A) to
(D), each Originator irrevocably constitutes and appoints the Operating
Agent, with full power of substitution, as its true and lawful attorney and
agent, with full power and authority in its name or otherwise, and in its
place and stead, and for its use and benefit at any time after the
occurrence of an Early Amortisation Event to take such action as the
Operating Agent may deem necessary or desirable in order to protect the
interests of the Buyer, Eureka and/or the Liquidity Banks and/or the
Operating Agent and/or to perfect title to any of the Purchased Receivables,
or Related Security, including the redirection of mail and the endorsement
of drafts, cheques and other payment media, to perform any agreement or
obligation of the Originator under or in connection with this Agreement
and/or under the Trust Account Bank Mandate(s), and to exercise all other
remedies of the Originator under this Agreement or existing at law. In
furtherance of the power herein granted, the Originator will assist and co-
operate with the Operating Agent and provide such facilities as the
Operating Agent may request. The power of attorney hereby granted is given
by way of security, is coupled with an interest, and is irrevocable and will
extend to and be binding upon the successors and assigns of the Originator.
14. RESPONSIBILITIES OF THE SELLER
Anything herein to the contrary notwithstanding:
(A) Perform Contracts: The Seller will perform all its obligations under
the Contracts related to the Purchased Receivables to the same extent
as if such Purchased Receivables had not been sold pursuant to this
Agreement and the exercise by either the Operating Agent or the Buyer
of its rights hereunder will not relieve the Seller from such
obligations.
(B) Exoneration of Buyer and Operating Agent: None of the Buyer, Eureka nor
the Operating Agent will have any obligation or liability with respect
to any Purchased Receivables or related Contracts, nor will the Buyer,
Eureka or the Operating Agent be obliged to perform any of the
obligations of the Seller thereunder.
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(C) Trust: Until the Operating Agent requests otherwise, the Seller will hold in
trust for the sole benefit of the Buyer the Contracts and other documentary
items relating to the uncollected Purchased Receivables at its address
specified in this Agreement. To the extent that the Contracts or other
documentary items also relate to Receivables that are not Purchased
Receivables, the Seller will hold them in trust for both the Buyer and the
Seller to the extent of the respective rights of the Buyer and the Seller
therein unless possession thereof is required by the Buyer to enforce its
ownership rights. The Seller will deliver such Purchased Receivables,
Contracts and documents to the Operating Agent (or as it may direct), if so
directed by the Operating Agent following an Early Amortisation Event, and
the Operating Agent will make them available to the Seller to the extent
that they contain material or information that does not relate to Purchased
Receivables and to the extent that the Buyer's interests are not thereby
compromised.
(D) Marking: The Seller will mark clearly and unambiguously its ordinary
business records, including without limitation its master data processing
records, relating to the Purchased Receivables with a legend acceptable to
the Operating Agent indicating that such Purchased Receivables are owned by
the Buyer. The Seller agrees that from time to time it will promptly execute
and deliver all instruments and documents, and take all further action that
the Operating Agent may reasonably request in order to perfect (except in so
far as perfection may entail notifying the Account Debtors of the Buyer's
ownership of the Purchased Receivables and the Collections of the Purchased
Receivables, which shall only be undertaken in accordance with Clause 13(A)
after an Early Amortisation Event), protect or more fully evidence the
Buyer's ownership interest in the Purchased Receivables, the Collections and
the Related Security and pending such time will keep an up to date record of
all Purchased Receivables.
(E) Third Party Collection Agent: At any time following the designation of a
Collection Agent other than the Seller:
(1) The Seller will, at the Operating Agent's request, (a) assemble all the
documents, instruments and other records (including, without
limitation, computer tapes and disks) which evidence the Purchased
Receivables, and the related Contracts and Related Security, or which
are otherwise necessary or desirable to collect such Purchased
Receivables, and will make the same available to the Operating Agent at
a place selected by the Operating Agent or its designee or (if so
requested) deliver the same to the Operating Agent (or as it may
direct), and (b) segregate all cash, cheques and other instruments
received by it from time to time constituting Collections of
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Purchased Receivables in a manner acceptable to the Operating
Agent and will, promptly upon receipt, remit all such cash,
cheques and instruments, duly endorsed or with duly executed
instruments of transfer, to the Operating Agent or its
designee.
(2) The Seller authorises the Operating Agent to take any and all
steps in the Seller's name and on behalf of the Seller
necessary or desirable, in the determination of the Operating
Agent, to collect all amounts due under any and all Purchased
Receivables, including, without limitation, endorsing the
Seller's name on cheques and other instruments representing
Collections and enforcing such Purchased Receivables and the
related Contracts.
(F) Value Added Tax: For the purpose of ensuring recoupment of any value
added tax forming part of a Purchased Receivable:
(1) all or part of which remains unpaid after the statutory period
for purposes of claiming bad debt relief has elapsed; or
(2) (without prejudice to Clause 5(D)) which or the Outstanding
Balance of which is, or would be, reduced, adjusted or
cancelled by the Seller and/or any other Person whether as a
result of the matters in Clause 5(D) or for any other reason;
the Seller will use its reasonable endeavours to recover such value
added tax (or the appropriate part thereof) from the appropriate tax
authorities, as agent and trustee of the Buyer, and promptly remit it
to the Buyer and, until so remitted, will hold in trust for the Buyer
any dividend received or value added tax recovered by the Seller in
respect thereof (and any such dividend or recovery will be and be
treated as a Collection). The Seller will make such accounting write-
offs and transfers and raise such credit notes as may be necessary or
desirable for this purpose, and take all such other steps as may be
reasonably requested by the Operating Agent. In particular, the Seller
will, at the request of the Operating Agent, accept a re-assignment of
any such Purchased Receivable (for a nil consideration) solely for the
purpose of facilitating recoupment of such value added tax.
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15. AGENCY AND INDEMNITIES
(A) Agency: In acting under this Agreement the Operating Agent shall have
only such duties, obligations and responsibilities as are expressly
set out in this Agreement (and such other duties, obligations and
responsibilities as are reasonably incidental) and acts solely as agent
of Eureka. However, without prejudice to the generality of the
foregoing, only the Operating Agent shall be entitled to receive and
retain fees and other amounts (including indemnification under this
Clause 15) payable to the Operating Agent for its own account.
(B) Indemnities by Seller: The Seller agrees to indemnify the Buyer, the
Operating Agent and their respective Affiliates and the Collection
Agent from and against any and all damages, losses, claims, liabilities
and related reasonable costs and expenses, including attorneys' fees
and disbursements together with VAT thereon (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or relating to this Agreement or
the ownership of Purchased Receivables, excluding, however, (a) such
amounts resulting from gross negligence or wilful misconduct on the
part of the Person who would otherwise be entitled to claim such
indemnification or (b) recourse (except as otherwise specifically
provided in this Agreement) for uncollectible Purchased Receivables or
for losses arising out of late Collections. Without limiting the
foregoing, Indemnified Amounts include amounts relating to or resulting
from:
(1) reliance on any representation or warranty made or deemed made
by the Seller under or in connection with this Agreement, or
any other information or report delivered by the Seller or the
Collection Agent pursuant to this Agreement, which shall have
been false or incorrect in any material respect when made or
deemed made or delivered (to the extent that such amounts have
not already been recovered by the applicable indemnified party
pursuant to Clause 5(D));
(2) the failure by the Seller to comply with any term, provision or
covenant contained in this Agreement or with any applicable
law, rule or regulation with respect to any Receivable, the
related Contract or the Related Security, or the nonconformity
of any Receivable or the related Contract or the Related
Security with any such applicable law, rule or regulation;
(3) the failure to vest and maintain vested in the Buyer ownership
of each Purchased Receivable, free and clear of any Adverse
Claim whether existing at the time of the Purchase of such
Receivable or at any time thereafter, excluding any such
Adverse Claim created by the Buyer;
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(4) any dispute, claim, offset or defence (other than discharge in
bankruptcy or winding up by reason of insolvency or analogous
event of the Account Debtor) of the Account Debtor to the
payment of any Receivable which is, or is purported to be, a
Purchased Receivable (including, without limitation, a defence
based on such Receivable or the related Contract not being a
legal, valid, binding and enforceable obligation of such
Account Debtor), or any other claim resulting from the sale of
the goods or services related to such Receivable or the
furnishing or failure to furnish such goods or services;
(5) any failure of the Seller, as Collection Agent or otherwise, to
perform its duties or obligations in accordance with the
provisions of this Agreement;
(6) the Buyer, at the request or with the approval of the Seller,
contracting for or arranging foreign exchange transactions
and/or funding in connection with any anticipated Purchase and
such Purchase does not in fact take place as a result of the
Seller not delivering a Notice of Sale, the operation of Clause
3(B) or any other provision of this Agreement, or a sale of
Receivables not being effected in relation to a Notice of Sale
by reason of any event described in Clause 11(D)(l), (2), (3)
and (4) or any breach by the Seller (in whatever capacity) of
any of its obligations under or in connection with this
Agreement;
(7) any products liability claim, or personal injury or property
damage claim, or other similar or related claim or action of
whatever sort arising out of or in connection with goods,
merchandise or services which are the subject of any Receivable
or Contract; and
(8) the transfer of an ownership interest in any Receivable other
than an Eligible Receivable (to the extent that such amounts
have not already been recovered by the applicable indemnified
party pursuant to Clause 5(D)).
The Operating Agent will provide the Seller with a certificate or
certificates showing in reasonable detail the basis for the calculation
of Indemnified Amounts claimed under this Clause 15(B) provided, for
the avoidance of doubt, that the provision of such certificate or
certificates shall not be a condition for the making of any claim under
this Clause 15(B).
(C) Increased Costs: If the Operating Agent determines that compliance with
any law or regulation or any guideline or request from any central bank
or other governmental authority (whether or not having the force of
law) coming into force after the Effective Date affects or would affect
the amount of capital required or expected to be maintained by the
Buyer, the
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Operating Agent, Citibank or any Person controlling the Buyer, the
Operating Agent or Citibank, and the Operating Agent determines that
the amount of such capital is increased by or based upon the existence
of the Buyer's agreement, in its discretion, to make or maintain
purchases under or pursuant to this Agreement and other similar
agreements or facilities (or any agreement entered into in accordance
with Clause 19(C)), or if the Operating Agent reasonably determines
that any amount is to be paid for liquidity agreements by the Buyer on
account of capital required or expected to be maintained by the
provider thereof, then, upon written demand by the Operating Agent, the
Seller shall immediately pay to the Operating Agent for the account of
the Buyer or Citibank or, as the case may be, for its own account from
to time, additional amounts as specified by the Operating Agent,
sufficient to compensate, in light of such circumstances, to the extent
that the Operating Agent reasonably determines such increase in capital
or, as the case may be, such amount to be allocable to the existence
of the Buyer's agreement as referred to above. A certificate as to such
amount submitted to the Seller by the Operating Agent shall, in the
absence of manifest error, be conclusive and binding for all purposes.
(D) Increased Costs in Respect of Taxation: If the Operating Agent
determines that as a result of any change in or in the interpretation
of or of the introduction of any law, regulation or regulatory
requirement relating to taxation coming into force after the Effective
Date, or as a result of any act or omission of the Seller, any of the
Buyer, the Operating Agent, Citibank or any Person controlling the
Buyer, Citibank or the Operating Agent, incurs or will incur an
increased cost in respect of purchase or agreements to purchase made
under or pursuant to this Agreement (or any agreement entered into
pursuant to Clause 19(C)) other than an increased cost arising solely
as a result of a change in the rate of taxation on the overall net
income of the relevant indemnified party, the Seller shall immediately
pay to the Operating Agent for the account of the Buyer or Citibank or,
as the case may be, for its own account from time to time, additional
amounts as specified by the Operating Agent, equal to such cost. A
certificate as to such amount submitted to the Seller by the Operating
Agent shall, in the absence of manifest error, be conclusive and
binding for all purposes.
(E) Judgment Currency: Each reference in this Agreement to a specific
currency is of the essence. The obligation of the Seller (individually,
or as the Collection Agent) in respect of any sum due from it to the
Operating Agent or the Buyer under this Agreement will, notwithstanding
any judgment in any other currency, or any bankruptcy or winding up by
reason of insolvency or analogous event of the Seller, be discharged
only to the extent that on the Local Business Day following receipt by
the Operating Agent or the Buyer of any sum adjudged or determined to
be so due in such other currency, the Operating Agent could in
accordance with normal banking procedures purchase the currency
specified in this Agreement with such other currency. If the amount of
currency so purchased is less than the amount of
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the specified currency originally due to the Operating Agent or the
Buyer, the Seller agrees, as a separate obligation and notwithstanding
any such judgment, bankruptcy, winding up or analogous event, to
indemnify the Operating Agent and the Buyer against such loss.
(F) Payment: Any amounts subject to the indemnification provisions of
Clause 15(B), (C), (D) or (E) shall be paid by the Seller to the
Operating Agent within two Programme Business Days following the
Operating Agent's demand therefor.
(G) After Tax Amount: In the event that any taxing authority seeks to
charge to tax any sum paid to the Buyer or the Operating Agent or any
of their respective Affiliates as a result of the indemnities or other
obligations contained herein, then the amount so payable shall be
grossed up by such amount as will ensure that after payment of the tax
so charged there shall be left a sum equal to the amount that would
otherwise be payable under such indemnity or obligation.
16. AMENDMENTS, ETC.
(A) Amendments and Waivers: No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Seller therefrom shall in
any event be effective unless the same shall be in writing and signed
by (1) the Seller, the Buyer and the Operating Agent with respect to an
amendment, or (2) the Seller, the Buyer or the Operating Agent, as the
case may be, with respect to a waiver or consent by it, and then such
waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.
(B) Entire Agreement: This Agreement contains a final and complete
integration of all prior expressions by the parties with respect to the
subject matter of this Agreement and constitutes the entire agreement
among the parties with respect to the subject matter of this Agreement,
superseding all prior oral or written understandings.
17. NOTICES
All notices and other communications provided for under this Agreement
shall, unless otherwise stated in this Agreement, be in writing in the
English language (including telex and fax communication) and mailed
(first class, postage paid) or delivered to each party at its address
set out under its name on the execution pages of this Agreement or at
such other telex or fax number or address as may be designated by such
party in a written notice to the other parties. All such notices and
communications will be effective, (i) in the case of written notice,
five days after being deposited in the post, or (ii) in the case of
notice by telex, when telexed against receipt of answer back, or (iii)
in the case of notice by fax, at the time of
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transmission unless served on a day which is not a Local Business Day
or after 500 pm at the place in which the recipient is located, in
which case it will be effective at 9:00 am at the place in which the
recipient is located on the following Local Business Day. In each case
notice must be addressed as aforesaid.
18. NO WAIVER: REMEDIES
(A) No Waiver: No failure on the part of the Buyer, the Seller or the
Operating Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy preclude any other or further
exercise thereof or the exercise of any other right or remedy. The
remedies in this Agreement are cumulative and not exclusive of any
remedies provided by law.
(B) Set Off: Without limiting the provisions of Clause 18(A) the Buyer and
the Operating Agent are hereby authorised by the Seller at any time
after the Seller is in default of its obligations under this Agreement
or an Early Amortisation Event has occurred, and to set off and apply,
and/or to instruct Citibank or any of Citibank's Affiliates to set off
and apply, any and all deposits at any time held and other indebtedness
at any time owing (whether general or special, time or demand,
provisional or final and in whatever currency) by the Buyer, the
Operating Agent, Citibank or, as the case may be, any such Affiliate to
or for the credit or the account of the Seller against any and all of
the obligations of the Seller (as such, as Collection Agent, or
otherwise), now or hereafter existing under this Agreement, to the
Buyer or the Operating Agent or their respective successors and assigns
or, as the case may be, now or hereafter due or owing on any account to
Citibank or any of Citibank's Affiliates (and for this purpose to
convert one currency into another).
19. BINDING EFFECT: ASSIGNABILITY
(A) Successors and Assigns: This Agreement is binding upon and enures to
the benefit of (1) the Seller and its successors and permitted
assignees in accordance with Clause 19(B); (2) the Buyer and also in
relation to the benefit, but not the burden of this Agreement, each
Person to whom the Buyer has for the time being in accordance with
Clause 19(C) (2) or (3) granted or assigned (or agreed to grant or
assign) all or part of any Purchased Receivable (or any participation
or interest, whether proprietary or contractual, in or in respect of
all or part of any Purchased Receivable) and/or all or any of its
rights, benefits and interest in or under this Agreement and their
respective successors and assignees; and (3) Citibank and its
successors as Operating Agent (and the terms "Seller", "Buyer" and
"Operating Agent" shall be construed accordingly).
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(B) The Seller: No Seller may assign any of its rights, benefits or
interest in or under this Agreement except with the prior consent of
the Operating Agent.
(C) The Buyer: The Buyer may grant or assign all or part of any Purchased
Receivable (or any participation or interest, whether proprietary or
contractual, in or in respect of all of any part of any Purchased
Receivable) and/or all or any of its rights, benefits and interest in
or under this Agreement (1) as provided in this Agreement, (2) to
Eureka or any Affiliate of Eureka or any vehicle managed by Eureka or
an Affiliate of Eureka (3) to Citibank or any Affiliate of Citibank or
any vehicle managed by Citibank or an Affiliate of Citibank, or (4)
(after first offering to make such grant or assignment on substantially
similar terms to the Seller, and the Seller not accepting such offer
within 10 Programme Business Days of the date of the offer) to any
other Person which engages in the business of purchasing or accepting
grants or assignments of, or making loans in respect of, accounts
receivable or other debts or intangibles or participations or
interests, whether proprietary or contractual, therein or in respect
thereof, and has entered into an agreement with the Buyer. Any such
grant or assignment as referred to in (2), (3) and (4) above shall be
upon such terms and conditions as the parties thereto may mutually
agree. Upon the assignment of all or part of any Purchased Receivable,
rights, benefits and/or interests from an assignor as described above,
the respective assignee receiving such assignment shall have all the
rights of such assignor hereunder with respect to such Purchased
Receivable (or part thereof), rights, benefits and/or interests. An
assignor of any Purchased Receivable (or part thereof), rights,
benefits and/or interests under this Agreement will provide notice to
the Seller of any such assignment, unless notice is waived by the
Seller.
(D) Additional Sellers: The Operating Agent may, in its sole and absolute
discretion, at the request of Exide Europe, admit either or both of
DETA UK Limited and/or FRIWO Batteries Limited as a Seller under this
Agreement (for the purposes of this Clause 19(D), such party or parties
shall be referred to as the "Additional Seller"). In addition to the
discretion of the Operating Agent, the admission the Additional Seller
shall also be subject to the following conditions precedent:
(1) the Operating Agent receives the documents and information
specified in Schedule 5 in respect of the Additional Seller,
each in form and substance satisfactory to the Operating
Agent;
(2) the Additional Seller, the Seller and the Buyer have delivered
to the Operating Agent a duly completed and executed Admission
of Additional Seller in the form attached as Schedule 2
(together with confirmation of due execution and delivery, in
form and
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substance satisfactory to the Operating Agent) and the
Operating Agent has indicated its consent by execution of the
Admission of Additional Seller; and
(3) Exide Europe shall have confirmed in writing to the Operating
Agent that the Letter of Undertaking shall apply, on the terms
stated therein, to all of the obligations of the Additional
Seller under the Programme;
upon which time the Additional Seller shall be deemed to be a party to
this Agreement from and after the next Settlement Date subsequent to
the execution of the Admission of Additional Seller by the Operating
Agent, and the Additional Seller shall be under the same obligations
towards each of the other parties to this Agreement as if it had been
an original party hereto as a "Seller".
20. TERMINATION
This Agreement will create and constitute the continuing obligations of
the parties in accordance with its terms, and will remain in full force
and effect until such time, after the Termination Date, as all Capital
of all Groups of Receivables has been reduced to zero and all Yield,
Programme Costs and other fees due under this Agreement or the Fees
Letter have been paid; provided, however, that the rights and remedies
with respect to any breach of any representation and warranty made by
the Seller in or pursuant to this Agreement, the provisions of Clause
21 and the indemnification and payment provisions of this Agreement
will be continuing and will survive any termination of this Agreement.
The Operating Agent will notify the Rating Agencies promptly upon the
occurrence of:
(A) the Termination Date; and/or
(B) any material amendment to this Agreement.
21. NO PROCEEDINGS
(A) Buyer: The Seller and the Operating Agent each hereby agree that they
will not institute against the Buyer any bankruptcy, insolvency or
similar proceeding so long as any commercial paper issued by Eureka or
any of its Affiliates is outstanding or one year plus one day has not
elapsed since the last day on which any such commercial paper was
outstanding.
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<PAGE>
(B) Eureka: The Seller, the Buyer and the Operating Agent each hereby agree
that they will not institute against Eureka or any of its Affiliates
any bankruptcy, insolvency or similar proceeding so long as any
commercial paper issued by Eureka or any of its Affiliates is
outstanding or one year plus one day has not elapsed since the last day
on which any such commercial paper was outstanding.
22. EXECUTION IN COUNTERPARTS: SEVERABILITY
(A) 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 when taken together shall constitute one and the same
agreement.
(B) Severability: If any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations under this Agreement, or of such provision or obligation in
any other jurisdiction, shall not be affected or impaired thereby.
23. CONFIDENTIALITY
Unless otherwise required by applicable law or regulation, or as
requested by any regulator or tribunal with competent jurisdiction
over, or over any business of, the relevant party, each of the parties
agrees to maintain the confidentiality of this Agreement in its
communications with third parties and otherwise.
24. GOVERNING LAW AND JURISDICTION
(A) Governing Law: This Agreement is governed by, and shall be construed in
accordance with, the laws of England.
(B) Consent to Jurisdiction: The parties hereto hereby irrevocably and for
the benefit of each other submit to the jurisdiction of the courts of
England in any action or proceeding arising out of or relating to this
Agreement, and hereby irrevocably agree that all claims in respect of
such action or proceeding may be heard and determined in such courts.
The parties hereto hereby irrevocably waive, to the fullest extent they
may effectively do so, the defence of an inconvenient forum to the
maintenance of such action or proceeding. As an alternative method of
service, the Seller and the Buyer also irrevocably consent to the
service of any and all process in any such action or proceeding by the
delivery of copies of such process to the Seller or the Buyer, as
applicable, at the address designated for notices under this Agreement.
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<PAGE>
The Seller and the Buyer agree that a final judgment in any action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law. Nothing shall affect the right to serve process in any other
manner permitted by law. Each of the parties hereto which is not
incorporated in England irrevocably appoints the person specified
against its signature to accept any service of any process on its
behalf and further undertakes to the other parties hereto that it will
at all times during the continuance of this Agreement maintain the
appointment of some person in England as its agent for the service of
process and irrevocably agrees that the service of any writ, notice or
other document for the purposes of any suit, action or proceeding in
the courts of England shall be duly served upon it if delivered or sent
to the address of such appointee (or to such other address in England
as that party may notify to the other parties hereto).
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered as a
Deed.
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<PAGE>
RECEIVABLES SALE AGREEMENT
dated 10 June, 1997
~
SOCIEDAD ESPANOLA DEL
ACUMULADOR TUDOR, S.A.
as Seller
EXIDE EUROPE FUNDING Ltd.
as Buyer
TUDOR COLLECTIONS LTD
as Agent
CITIBANK, NA.
as Operating Agent
Clifford Chance
Madrid
<PAGE>
<TABLE>
<CAPTION>
CLAUSES PAGE NOS.
<S> <C>
1. DEFINITIONS AND CONSTRUCTION.......................................................... 1
2. FACILITY.............................................................................. 17
3. CONDITIONS PRECEDENT.................................................................. 18
4. PURCHASES............................................................................. 19
5. COLLECTIONS AND SETTLEMENT............................................................ 20
6. FEES, COSTS AND STAMP DUTY............................................................ 22
7. PAYMENTS AND COMPUTATIONS, ETC........................................................ 23
8. REPRESENTATIONS AND WARRANTIES OF THE SELLER.......................................... 24
9. AFFIRMATIVE COVENANTS OF THE SELLER................................................... 27
10. NEGATIVE COVENANTS OF THE SELLER...................................................... 29
11. REPORTING REQUIREMENTS OF THE SELLER.................................................. 30
12. COLLECTION AGENT, COLLECTION AND AGENT ACCOUNT........................................ 32
13. PROTECTION OF THE BUYER'S RIGHTS...................................................... 34
14. RESPONSIBILITIES OF THE SELLER........................................................ 35
15. AGENCY AND INDEMNITIES................................................................ 37
16. AMENDMENTS, ETC. ..................................................................... 40
17. NOTICES............................................................................... 40
18. NO WAIVER: REMEDIES................................................................... 40
19. BINDING EFFECT: ASSIGNABILITY......................................................... 41
20. TERMINATION........................................................................... 42
21. NO PROCEEDINGS........................................................................ 42
22. EXECUTION IN COUNTERPARTS: SEVERABILITY............................................... 43
23. CONFIDENTIALITY....................................................................... 43
</TABLE>
<PAGE>
<TABLE>
<S> <C>
24. GOVERNING LAW AND JURISDICTION........................................................ 43
SCHEDULE I..................................................................................... 45
Offices of the Seller................................................................. 45
SCHEDULE 2..................................................................................... 46
Form of Admission of Additional Seller................................................ 46
SCHEDULE 3..................................................................................... 48
Settlement Statement.................................................................. 48
SCHEDULE 4..................................................................................... 51
Form of Summary Report................................................................ 51
SCHEDULE 5..................................................................................... 54
Initial Conditions Precedent.......................................................... 54
SCHEDULE 6..................................................................................... 56
Form of Notice of Sale................................................................ 56
SCHEDULE 7..................................................................................... 57
Form of Contract...................................................................... 57
SCHEDULE 8 - Part 1............................................................................ 59
Information to be Provided to Exide Europe............................................ 59
SCHEDULE 8 - Part 2............................................................................ 60
Form of Monthly Summary............................................................... 60
SCHEDULE 9..................................................................................... 61
Form of Power of Attorney............................................................. 61
EXECUTION PAGES................................................................................ 62
</TABLE>
<PAGE>
THIS RECEIVABLES SALE AGREEMENT, dated 10 June, 1997, is made among:
(1) SOCIEDAD ESPANOLA DEL ACUMULADOR TUDOR, S.A. ("Tudor") (the "Seller")
(2) EXIDE EUROPE FUNDING LTD. (the "Buyer"); and
(3) CITIBANK, N.A., a United States national banking association acting
through its London branch at 336 Strand, London WC2R 1HB (the
"Operating Agent").
(4) TUDOR COLLECTIONS LTD. (the "Agent")
Preliminary Statements
A. The Seller desires to sell, from time to time, all of its rights and
title to and interest in certain of its Receivables, and the Buyer
desires to purchase, from time to time, such rights, title to and
interest in such Receivables from the Seller on or after the Effective
Date; and
B. The Buyer will inter alia, under the RPA, on sell such Receivables to
Eureka Securitisation Plc. which will designate the Agent to collect in
its own name but on behalf of Eureka the amounts payable by Account
Debtors pursuant to a Contract, which has been the object of a sale and
purchase in accordance with Preliminary Statement A above, and
C. The Agent will carry out certain duties in respect of the Agent Account
as described in this Agreement.
D. The Operating Agent has been requested and is willing to act as
Operating Agent as set out in this Agreement and, in particular, in
Clause 15(A), subject to the ability of the Operating Agent to delegate
its obligations pursuant to the terms of this Agreement, in particular,
Clause 4(G).
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
In this Agreement (including the Preliminary Statements):
(A) Accounting Terms: All accounting terms not specifically defined in this
Agreement shall be construed in accordance with generally accepted
accounting principles as in effect on the date hereof in Spain.
(B) Defined Terms: The following terms shall have the meanings indicated:
"Account Bank Mandate" means an agreement in respect of the Agent Account in
form and substance satisfactory to the Operating Agent (as evidenced by its
execution thereof), as described in Clause 8 (Q).
"Account Debtor" means a Person obliged to make payment(s) pursuant to a
Contract.
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<PAGE>
"Accounts Receivable Listing" means a list, by invoice number, of all of the
Contracts which are shown on the Seller's general ledger in which payment
obligations or other are outstanding at the time the list is compiled together
with such other information concerning each Contract, and in such format, as the
Operating Agent may specify.
"Accounts Receivable Trial Balance" means the Seller"s accounts receivable trial
balance computer printout, containing a list of Account Debtors together with
the aged Outstanding Balance of the Receivables.
"Accruals" means, as of any time, the aggregate amount by which the face value
of Purchased Receivables have been reduced by virtue of any prompt payment
discounts, accruals for volume rebates, warranty claims by the applicable
Account Debtor(s), and other credit notes (including, without limitation, credit
notes issued to Account Debtors as a result of disputes, claims and invoicing
errors by the Seller).
"Advance Payment" means, at any time, the aggregate amount of any withdrawals
from the Agent Account made by the Seller under Clause 12(C) to the extent they
are outstanding and not repaid.
"Admission of Additional Seller" means an agreement substantially in the form
set out in Schedule 2.
"Adverse Claim" means any claim of ownership, lien, security interest,
mortgage, charge, or encumbrance, or other right or claim of any Person.
"Affiliate" when used with respect to a Person means any other Person
controlling, controlled by or under common control with that Person and includes
a Subsidiary (as defined below in its governing law) or a Holding Company of
that Person and any other Subsidiary of that Holding Company; provided however
that, except in respect of paragraph (2) of the definition of "Eligible
Receivable" and Clause 6(A), Persons which are not part of the Exide Group
shall not be considered to be Affiliates of any Person which is part of the
Exide Group.
"Agent Account" means the account opened by Tudor Collections Ltd. with the
Agent Account Bank in the name of Tudor Collections Ltd. but in the interest and
on behalf of Eureka and the Liquidity Banks.
"Agent Account Bank" means Banesto acting through its branch at or such other
branch or bank at which the Agent Account is, with the prior written consent of
the Operating Agent, maintained from time to time.
"Agent Account Event" shall be deemed to have occurred if Exide Europe fails to
maintain a Debt Service Cover Ratio of greater than 1.10:1.00.
"Agent Fee" means a fee payable on a year basis to the Agent in respect of
maintaining and, to the extent required, operating the Agent Account.
"Approved Jurisdiction" means (i) Spain or (ii) United Kingdom, France, Italy,
Germany, The Netherlands or Belgium, or (iii) another jurisdiction in respect of
which the Seller has obtained as security from the applicable Account Debtor a
clear and unconditional demand letter of credit
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<PAGE>
(governed by the Uniform Customs and Practice for Documentary Credits) from a
bank whose short-term debt is rated at least A-1 and P-1 by the Rating Agencies,
the term of which is in form and substance satisfactory to the Operating Agent
(acting reasonably) and the conditions of which are in form and substance
satisfactory to the Operating Agent (acting reasonably), and which letter of
credit has been fully assigned to the Operating Agent (which assignment shall
include full notice to the applicable bank issuing the letter of credit),
requiring payment to be made directly to the Operating Agent.
"Available Collections" means, at any time, an amount equal to all Collections
credited to the Agent Account in respect of Purchased Receivables less all
accrued Yield and Programme Costs (whether or not incurred or paid by the Buyer)
together with any other amounts owing to the Buyer, the Operating Agent or the
Agent under this Agreement.
"Banesto" means Banco Espanol de Credito, S.A., a credit entity incorporated and
organised under the laws of Spain acting for the purposes of this Agreement
through its branch at Paseo de la Castellana 103, 28046 Madrid.
"Bank Facility Rate" means either: (a) in the event that either Eureka shall not
at any time, fund its purchase under the RPA with the issuance of commercial
paper, or purchases are being made under the PPA, due solely to an Early
Amortisation Event, a per annum rate equal to Dollar LIBOR plus 1.75% and
applicable reserve asset costs for a five year facility (as certified by the
Operating Agent), or (b) in the event that Eureka shall not at any time fund its
purchase under the RPA with the issuance of commercial paper or purchases are
being made under the PPA, for any reason other than due to an Early Amortisation
Event, a per annum rate equal to Dollar LIBOR plus 0.125% and applicable reserve
asset costs for a five year facility (as certified by the Operating Agent).
"Base Rate" means a fluctuating interest rate per annum in effect from time to
time, which rate per annum shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New York, New
York, from time to time, as Citibank's base rate;
(b) the sum (adjusted to the nearest 1/16 of 1% or, if there is no nearest
1/16 of 1%, to the next higher 1/16 of 1%) of (i) 1/2 of 1% per annum,
plus (ii) the rate obtained by dividing (A) the latest three-week moving
average of secondary market morning offering rates in the United States
for three-month certificates of deposit of major United States money
market banks, such three-week moving average (adjusted to the basis of a
year of 360 days) being determined weekly on each Monday (or, if such
day is not a Programme Business Day, on the next succeeding Programme
Business Day) for the three-week period ending on the previous Friday by
Citibank on the basis of such rates reported by certificate of deposit
dealers to and published by the Federal Reserve Bank of New York or, if
such publication shall be suspended or terminated, on the basis of
quotations for such rates received by Citibank from three New York
certificate of deposit dealers of recognised standing selected by
Citibank, by (B) a percentage equal to 100% minus the average of the
daily percentages specified during such three-week period by the Board
of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, but not limited
to, any emergency, supplemental or other marginal reserve requirement)
for Citibank with respect to liabilities consisting of or including
(among other liabilities) three
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<PAGE>
month Dollar non-personal time deposits in the United States, plus
(iii) the average during such three-week period of the annual
assessment rates estimated by Citibank for determining the then current
annual assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring Dollar deposits of Citibank
in the United States; and
(c) 1/2 of one per cent per annum above the Federal Funds Rate.
"Buyer Entitlement" means, at any time, in respect of the total amount standing
to the credit of the Agent Account, the portion thereof attributable to or
representing Collections together with interest credited by on the Agent Account
to such portion by the Agent Account Bank.
"Capital" equals, at any time, the Peseta Equivalent of the Seller'
Proportionate Share of Programme Capital as defined and calculated pursuant to
the RPA.
"Citibank" means Citibank, N.A., a national banking association under the laws
of the United States of America.
"Collection Agent" means at any time the Person then authorised pursuant to this
Agreement to service, administer and collect Purchased Receivables.
"Collections" means, with respect to any Purchased Receivable, all cash
collections received and other cash proceeds of that Purchased Receivable
(excluding any cash proceeds arising under any transaction as referred to in
Clause 19(C)) and of any Related Security with respect to that Purchased
Receivable received.
"Commitment" means the commitment of the Buyer under Clause 2 hereof.
"Concentration Amount" means as of any date, with respect to each Account
Debtor, the product of (a) the Concentration Limit applicable to such Account
Debtor and (b) the Dollar Equivalent of the Outstanding Balance of Purchased
Receivables aggregated among all Origination Agreements.
"Concentration Limit" means, in relation to the aggregate Receivables for each
Account Debtor: (a) for any single Account Debtor rated at least A-l or P-1 or
its equivalent by the Rating Agencies, 17%; (b) for any single Account Debtor
rated A-2 or P-2 or its equivalent by the Rating Agencies, 8.5%; (c) for any
single Account Debtor rated A-3 or P-3 or its equivalent by the Rating Agencies,
5.66%; (d) for any single Account Debtor rated below A-3 or P-3 or not rated on
its short term debt, 3.4% (to the extent an Account Debtor does not have a short
term rating but has an actual or implied senior long-term debt rating, the
applicable percentage will be determined based on equivalent senior long-term
debt ratings (as determined by the Operating Agent) for the short term ratings
specified above).
"Contract" means a written agreement between the Seller and an Account Debtor
pursuant to which the Account Debtor is obliged to pay for goods or services
sold or provided by the Seller (including any value added tax in respect
thereof) from time to time.
"Country Limit" means the Peseta Equivalent of $66,000,000.
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<PAGE>
"Credit and Collection Policy" means the Seller's policies, practices and
procedures relating to Contracts and Receivables, in form and context
satisfactory to the Operating Agent in accordance with paragraph (i) of Schedule
5 as modified from time to time with the consent of the Operating Agent.
"Currency Exchange Agreement" means, as of any time, the Currency Exchange
Agreement (as that term is defined in the RPA or the PPA, as applicable) that
may be entered into by the Buyer from time to time in accordance with the
provisions of the RPA or PPA, as applicable.
"Debt" means any indebtedness, present or future, actual or contingent in
respect of moneys borrowed or raised or any financial accommodation whatever
and, without limitation, shall include:
(1) indebtedness under or in respect of a negotiable or other financial
instrument, Guarantee, interest, gold or currency exchange, hedge or
arrangement of any kind, redeemable share, share the subject of a
Guarantee, discounting arrangement, finance lease or hire purchase
agreement;
(2) the deferred purchase price (for more than 90 days) of an asset or
service; and
(3) any obligation to deliver goods or other property or provide services
paid for in advance by a financier or in relation to another financing
transaction.
"Default Ratio" as of any date, is equal to the ratio (expressed as a
percentage) for the most recent month for which such ratio is available of (i)
aggregate Purchased Receivables that were 91-120 days past due at the end of
each such month plus Purchased Receivables that were charged off (or, without
duplication, which should have been charged off) as uncollectible during each
such month which, if they had not been charged off (or, without duplication,
which should have been charged off) would have been less than 121 days past due
during such month to (ii) aggregate sales giving rise to Receivables that were
generated during the calendar month immediately preceding the commencement of
the Loss Horizon preceding such date.
"Debt Service Cover Ratio" means the Debt Service Cover Ratio as that term is
defined and calculated pursuant to the Syndicated Facility; provided however, if
the Syndicated Facility is terminated for any reason, the definition and
calculation of Debt Service Cover Ratio for the purposes of this Agreement will
survive such termination.
"Defaulted Receivable" means a Receivable:
(1) which, after the original due date, remains unpaid in whole or in part
for more than 90 days;
(2) in respect of which the Account Debtor has taken any action, or
suffered any event to occur, of the type described in Clause l1(D)(2);
or
(3) which has been, or should be, written off or provided for in the
Seller's books as uncollectible in accordance with the Credit and
Collection Policy.
"Designated Account Debtor" means, at any time, all Account Debtors unless the
Operating Agent has advised the Seller that an Account Debtor shall not be
considered a Designated Account Debtor.
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<PAGE>
"Determination Date" means initially, the Effective Date and thereafter, each
following Tuesday; provided however, if such day is not a Programme Business
Day, the applicable Determination Date shall be the next succeeding Programme
Business Day.
"Diluted Receivable" means that portion of any Purchased Receivable which is
either (a) reduced or cancelled as a result of (i) any defective or rejected
goods or services, or any failure by the Seller to deliver any goods or services
or otherwise to perform under the underlying Contract or invoice, or (ii) any
change in the terms of or cancellation of any Contract or invoice or any other
adjustment by the Seller which reduces the amount payable by the Account Debtor
on the related Purchased Receivable or (iii) any set-off in respect of any claim
by the Account Debtor on the related Purchased Receivable or (b) subject to any
specific dispute, offset, counterclaim or defence whatsoever (except the
discharge in bankruptcy of the Account Debtor thereof).
"Dilution Horizon" means, at any time, the estimated weighted average period in
days between the issuance of invoices and the related credit note, if any, by
the Programme Seller, as such period is calculated by the Operating Agent from
time to time.
"Dilution Horizon Ratio" equals the higher of (a) the Dollar Equivalent of
total sales giving rise to Programme Receivables for the Programme Seller for
the past Dilution Horizon divided by the Dollar Equivalent of the outstanding
balance of Eligible Receivables aggregated among all Origination Agreements
(whether or not they are Purchased Receivables) as of the end of the most recent
month and (b) 0.5.
"Dilution Ratio" as of any date, is equal to the ratio (expressed as a
percentage) for the most recently ended month of (i) the aggregate amount of
Receivables that become Diluted Receivables during each such month to (ii) the
aggregate sales giving rise to Receivables that were originated during the
preceding month.
"Dilution Volatility Factor" means as of any date, a percentage equal to the
product of (i) the amount by which (A) the highest two month average Programme
Dilution Ratio during the most recently ended twelve month period exceeds (B)
the average of the Programme Dilution Ratios during such twelve month period and
(ii) (A) the highest two month average Programme Dilution Ratio during such
twelve month period divided by (B) the average of the Dilution Ratios during
such twelve month period.
"Discount" means with respect to a Group of Receivables on the relevant
Purchase Date the sum of applicable Yield and applicable Programme Costs,
applicable Accruals, applicable Reserves and the Stamp Duty Reserve.
""Dollar Equivalent" of any sum in any currency at any time means the amount of
Dollars that would be purchased under the Currency Exchange Agreement at the
Spot Rate determined for such sum at the most recent Settlement Date.
"Dollars" and the sign "$" each mean the lawful currency of the United States of
America.
"Early Amoritsation Event" means the first to occur of:
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(1) any Originator defaults in the payment on the due date of any payment
due and payable by it under or relating to this Agreement or any of the
other Relevant Documents and such default continues unremedied for a
period of five (5) Local Business Days after the earlier of the
Originator becoming aware of such default and the receipt by the
Originator of written notice by the Operating Agent requiring the same
to be remedied;
(2) subject to Clause 12 (D), any Originator defaults in the performance or
observance of any of its other covenants and obligations, or breaches
any representation or warranty (other than a breach of the
representation and warranty in Clause 8(T)), under this Agreement or
any of the other Relevant Documents, which in the reasonable opinion of
the Operating Agent is materially prejudicial to the interests of the
Buyer and/or Eureka and/or the Liquidity Banks and/or the Operating
Agent, and such default is not remedied to the satisfaction of the
Operating Agent within five Local Business Days of the earlier of the
Originator becoming aware of such default and receipt by the Originator
of written notice by the Operating Agent requiring the same to be
remedied (for the avoidance of doubt, for the purposes of this
paragraph (2), if the Originator satisfies its obligations pursuant to
Clause 5 (D) within such five-Local Business Day period, such default
or breach shall not be considered to be an Early Amortisation Event);
(3) an effective resolution is passed for the winding up of any Originator;
(4) any Originator ceases or threatens to cease to carry on its business or
ceases to carry on the whole or a substantial part of its business, or
stops payment or threatens to stop payment of its debts, (which
cessation or threat thereof would, in the opinion of the Operating
Agent be likely to materially and adversely affect the Originator's
ability to perform its obligations under the Relevant Documents, or any
of them) or the Originator becomes unable to pay its debts, or is
deemed unable to pay its debts, or becomes unable to pay its debts as
they fall due, or the value of its assets falls to less than the amount
of its liabilities (taking into account for both these purposes its
contingent and prospective liabilities) or otherwise becomes insolvent;
(5) Exide Europe ceases at any time to own, directly or indirectly, a
minimum of 80% of the capital stock of the Seller;
(6) Exide Europe breaches the 1:1 Debt Service Cover Ratio ;
(7) any Debt of a member of the Exide Group in excess (in the aggregate) of
the Peseta Equivalent of $5,000,000 becoming prematurely due and
payable or is placed on demand as a result of an event of default
(howsoever described) under the document relating to that Debt;
(8) any sale of Eligible Receivables under this Agreement ceases to be
considered a true sale of such Eligible Receivables;
(9) proceedings are initiated against the Originator in respect of its
liquidation, winding-up, administration, insolvency, composition,
reorganisation (other than a reorganisation the terms of which have
been approved by the Operating Agent and where the Originator is
solvent) under any applicable liquidation, administration, insolvency,
composition, reorganisation or
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<PAGE>
other similar laws save where such proceedings are being contested in
good faith by the Originator, or an administrative or other receiver,
servicer or other similar official is appointed in relation to the
Originator or in relation to the whole or any substantial part of the
undertaking or assets of the Originator or an encumbrancer shall take
possession of the whole or any substantial part of the undertaking or
assets of the Originator, or a distress or execution or other process
shall be levied or enforced upon or sued out against the whole or any
substantial part of the undertaking or assets of the Originator and in
any of the foregoing cases it shall not be discharged within 15 days;
(10) if the Originator shall initiate or consent to judicial proceedings
relating to itself under any applicable liquidation, administration,
insolvency, composition, reorganisation or other similar laws or shall
make a conveyance or assignment for the benefit of its creditors
generally;
(11) for any three month period, the average Default Ratio exceeds 5 %;
(12) for any three month period, the average Dilution Ratio exceeds 23 %;
(13) for any three month period, the average Loss to Liquidation Ratio
exceeds 0,5 %;
(14) the Buyer is unable to obtain appropriate funds from its currency swap
counterparty under the Currency Exchange Agreement; or
(15) an Early Amortisation Event as that term is defined under the RPA or
the PPA, or a Programme Amortisation Event under any other Origination
Agreement.
"Effective Date" means the date upon which the initial conditions precedent
set forth in Schedule 5 have been satisfied and which has been designated as
such by the Operating Agent, which day shall be a Thursday which is a Programme
Business Day.
"Eligible Receivable" means a Receivable:
(1) the Account Debtor of which is a corporate body/entity which is
(according to the address specified in the related invoice) resident of
an Approved Jurisdiction;
(2) the Account Debtor of which is a Designated Account Debtor and is not
an Affiliate of any party to this Agreement;
(3) the Account Debtor of which is not the Account Debtor of any Defaulted
Receivables the aggregate Outstanding Balance of which equals or
exceeds 10% of the aggregate Outstanding Balance of all Receivables of
such Account Debtor;
(4) in respect of the Account Debtor of which no delivery or shipment has
been cancelled or suspended for credit reasons and no credit line or
accommodation has been cancelled or suspended for credit reasons, in
either case at any time in the 2 years preceding the date that the
invoice relating thereto is despatched;
(5) which is not a Defaulted Receivable at the date of Purchase;
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(6) which, according to the Contract related thereto, is required to be
paid in full on a date which falls (i) not earlier than the Purchase
Date and (ii) within 180 days after the earlier of the original billing
date and the date that the invoice relating thereto is despatched;
(7) the Dollar Equivalent of the Outstanding Balance of which, when added
to the Dollar Equivalent of the Outstanding Balance (as that term is
defined under each Origination Agreement) of all other Purchased
Receivables under all Origination Agreements owing by the same Account
Debtor or any of its Affiliates under all Origination Agreements, does
not exceed the Concentration Amount;
(8) which is denominated and payable only in pesetas;
(9) which (A) arises under a form of Contract set out in Schedule 7 (or
which otherwise has been duly authorised by the Operating Agent), which
is stated to be, and is, governed by Spanish law and which, together
with such Receivable, is in full force and effect and constitutes the
legal, valid, binding and enforceable obligation of the Account Debtor,
(B) is freely assignable (or if not assignable without the consent of
the Account Debtor, such consent has been obtained to the satisfaction
of the Operating Agent) and (C) is not subject to any Adverse Claim or
dispute, set off, counterclaim or defence whatsoever;
(10) which, together with the Contract related thereto, does not contravene
in any material respect any applicable laws, rules or regulations and
with respect to which the Seller is not in violation of any such law,
rule or regulation in any material respect;
(11) which (A) satisfies all applicable requirements of the Credit and
Collection Policy and (B) complies with such other criteria and
requirements (other than those relating to the collectability of such
Receivable) as the Operating Agent may from time to time specify to the
Seller and which are based on a criterion or requirement of any one or
more of the Rating Agencies;
(12) which is not subject to withholding taxes on payments from the Account
Debtors in respect thereof;
(13) which represents all or part of the sales price in respect of the
supply of goods or services in the Approved Jurisdiction in question;
(14) the Account Debtor of which is not a government agency or local
authority unless the Account Debtor of which is considered a separate
corporate entity under applicable law that is owned, directly or
indirectly by a government agency or local authority;
(15) which has not been prepaid in whole or in part; and
(16) for which all goods and services to which it relates have been
delivered and performed, and all requirements of such Contract
concerning the nature, amount, quality, condition or delivery of the
goods or services, or upon which payment of such Receivable may be
dependent, have been fulfilled in all material respects.
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"Eureka" means Eureka Securitisation, Plc, a company incorporated under the laws
of England and Wales.
"Exide Europe" means Exide Holding Europe, a French societe anonyme.
"Exide Group" means Exide Europe and all of its Subsidiaries.
"Facility Fee" means the Seller's Proportionate Share of 0.30% per annum of the
Facility Limit calculated monthly in arrears and applied on each Settlement
Date.
"Facility Limit" means $175,000,000.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Programme Business Day, for the next preceding Programme Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Programme Business Day, the average of the
quotations for such day on such transactions received by the Agent from three
Federal funds brokers of recognised standing selected by it.
"Fees Letter" means the Fees Agreement dated as of the date hereof, between,
inter alia, the Originator, Exide Funding, Exide Europe and the Operating Agent
in respect of the calculation and payment of certain fees.
"Final Payment Date" means the date on which payment is made by the Operating
Agent to the Seller pursuant to Clause 5(C).
"Foreign Currency Reserve" as of any Settlement Date will equal 5.5% of the Loss
and Dilution Reserve for such Settlement Date, or such other amount as
determined by the Operating Agent (and notified in writing to the Seller),
acting reasonably (upon the written request of the Seller after any
redetermination of the level of the Foreign Currency Reserve, the Operating
Agent agrees to provide the Seller with information relating to the basis of
such redetermination).
"Group of Receivables" means, at any time, all Receivables purchased or to be
purchased by the Buyer on a Purchase Date or, as appropriate, the Group of
Receivables specified in a Notice of Sale.
"Guarantee" means any guarantee, indemnity, letter of credit or any other
obligation or irrevocable offer (whatever called and of whatever nature):
(1) to pay or to purchase;
(2) to provide funds (whether by the advance of money, the purchase of or
subscription for shares or other securities, the purchase of assets,
rights or services, or otherwise) for the payment or discharge of;
(3) to indemnify against the consequences of default in the payment of; or
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(4) to be responsible otherwise for,
an obligation or indebtedness of another person, a dividend, distribution,
capital or premium or shares, stock or other interests, or the insolvency or
financial condition of another person.
"Initial Purchase" means the first Purchase completed under this Agreement.
"Interest Period" means initially, the period commencing on the Effective Date
and ending on the following Settlement Date, and thereafter, each period
beginning on the day following the last day of the immediately preceding
Interest Period and ending on the following Settlement Date; provided however,
if such day is not a Programme Business Date, the applicable Interest Period
shall end on the next succeeding Programme Business Day.
"Letter of Undertaking" means the Letter of Undertaking given by Exide Europe
substantially in the form set out in Schedule 2 to the RPA.
"LIBOR" means the rate per month determined by the Operating Agent to be equal
to the arithmetic mean (rounded upwards, if not already such a multiple, to the
nearest whole multiple of one-sixteenth of one per cent) of the offered
quotations for Dollars which appear on page 3750 of the Telerate screen or, if
such page or service shall cease to be available, such other page or such other
service (as the case may be) as the Operating Agent may select. If less than two
quotations for the relevant rate and the relevant period are displayed and the
Operating Agent has not selected an alternative service on which two or more
such quotations are displayed "LIBOR" shall mean the Base Rate.
"Liquidity Bank" means any financial institution which may from time to time
become a party to the PPA as a Liquidity Bank thereunder.
"Local Business Day" means any day (other than a Saturday or Sunday) on which
banks and foreign exchange markets are open for business in Madrid. Where an
obligation is expressed in this Agreement to be performed on a Local Business
Day and such Local Business Day is not also a Programme Business Day, the
applicable Local Business Day shall be the immediately preceding Local Business
Day which is also a Programme Business Day.
"Loss and Dilution Reserve" as of any Settlement Date will equal:
[C + YR] x [max(DYN,FLOOR)/l -(max(DYN,FLOOR))]
where:
DYN = [(SF2 x ED) + DVF] x DHR + (SF1 x LR x LHR)]
FLOOR = CF + (ED x DHR), with a minimum amount of $12,000,000
where:
C = Programme Capital
YR = Seller's Proportionate Share of Yield Reserve
SF1 = Stress Factor One = 2.25
SF2 = Stress Factor Two = 2.25
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ED = Average Programme Dilution Ratio during the preceding 12 months
DVF = Dilution Volatility Factor
DHR = Dilution Horizon Ratio
LHR = Loss Horizon Ratio
CF = Concentration Floor = 17%
LR = Loss Ratio
"Loss Horizon" equals the sum of 90 days plus the Weighted Average Term
calculated among all Origination Agreements as of the Settlement Date.
"Loss Horizon Ratio" equals the total sales giving rise to Programme Receivables
for the Programme Seller for the Loss Horizon divided by the outstanding balance
of Programme Receivables as of the end of the most recent month.
"Loss Ratio" as of any date equals the highest 3 month average Default Ratio
aggregated among all Origination Agreements which has occurred in the 12 months
immediately preceding such date.
"Loss to Liquidation Ratio" as of any date, is equal to the ratio (expressed as
a percentage) of (i) the Dollar Equivalent of the aggregate outstanding balance
of all Receivables that were written off by the Seller during the twelve month
period most recently ended prior to such date to (ii) the aggregate amount of
such total sales giving rise to Receivables less the Dollar Equivalent of the
total Diluted Receivables during such twelve month period.
"Net Receivable Balance" means at any time the excess of (i) the Dollar
Equivalent of the aggregate Outstanding Balance of Eligible Receivables (whether
or not they are Purchased Receivables) over (ii) the sum of the
Overconcentration Amount at such time, plus the aggregate Unapplied Cash at such
time.
"Notice of Sale" has the meaning assigned to that term in Clause 4(A).
"Onward Sale Fee" means 0.01 % per annum on the average outstanding Capital
calculated monthly in arrears and applied on each Settlement Date.
"Origination Agreement" means as of any time each agreement whereby a member of
the Exide Group sells trade receivables originated in the ordinary course of
business of such member company and which has been designated from time to time
as such by the Operating Agent. Until and unless a designation has been made by
the Operating Agent to the contrary, the Origination Agreements shall consist
of(i) for Spain, this Agreement, (ii) for France, the Receivables Subrogation
Agreement dated as of the date hereof between CEAC Compagnie Europeenne
d'Accumulateurs S.A. and Batterie Hagen as Originators, Exide Funding as
Receivables Purchaser and Citibank as Operating Agent, (iii) for United Kingdom,
the Receivables Sale Agreement dated as of the date hereof between CMP Batteries
Limited, Exide (Dagenham) Limited, Fulmen (U.K.) Limited and B.I.G. Batteries
Limited as Seller, Exide Funding as Buyer and Citibank as Operating Agent, (iv)
for Italy, the Receivables Purchase Agreement dated as of the date hereof
between Societa Industriale Accumulatori s.r.l. and Compagnia Generale
Accumulatori S.p.A. as Seller, Archimede Securitisation s.r.l. as Buyer,
Citibank (London branch) as Operating Agent and Citibank (Milan branch) as
Allocation Agent and (b) the Onward Sale Agreement dated as of the date hereof
between Archimede Securitisation s.r.l. as onward seller, Exide Funding as
onward buyer and Citibank as Operating Agent, and (v) for
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Germany, the German Receivables Sale Agreement dated as of the date hereof
between Accumulatorenfabrik Sonnenschein GmbH, Exide Automotive Batterie GmbH
and Hagen Batterie A.G. as Sellers, Exide Funding as Buyer and Citibank as
Operating Agent.
"Originator" means Tudor, in its capacity as Seller or Collection Agent, as the
context may require.
"Outstanding Balance" of any Receivable at any time means the then unpaid face
amount thereof (including VAT) (except for purposes of determining the Default
Ratio, where the unpaid face amount of any Purchased Receivable which has been,
or would be, written off or provided for in the Seller's books as uncollectible
in accordance with the Credit and Collection Policy shall be deemed to be zero).
"Overconcentration Amount" means at any time the Dollar Equivalent of the sum of
the amounts, if any, by which the Outstanding Balance of Receivables owing by
each Account Debtor on such date exceeds the Concentration Amount applicable to
such Account Debtor.
"Person" means an individual, partnership, company, body corporate, corporation,
trust, unincorporated association, joint venture, government, or governmental
body or agency or other entity.
"Peseta" means the lawful currency of Spain.
"Peseta Equivalent" of any sum and at any time means the amount of Peseta that
would be purchased under the Currency Exchange Agreement at the Spot Rate for
such sum at such time.
"PPA" means the Parallel Purchase Agreement dated 3 June 1997 between the Buyer,
the Liquidity Banks (as defined therein) and the Operating Agent.
"Programme" means the revolving sale of trade receivables originated by Exide
Holdings Europe S.A. and certain of its subsidiaries and the funding of such
revolving sale pursuant to the funding arrangements established in relation to
each Origination Agreement.
"Programme Amortisation Event" means an Early Amortisation Event of the type
described in paragraphs (1), (2), (3), (4), (6), (7), (9), (10) or (16) of the
definition of "Early Amortisation Event".
"Programme Business Day" means any day (other than a Saturday or Sunday) on
which banks and foreign exchange markets are open for business in London, Paris
and New York. Where an obligation is expressed in this Agreement to be performed
on a Programme Business Day and such Programme Business Day is not also a Local
Business Day, such obligation shall be performed on the immediately preceding
Local Business Day which is also a Programme Business Day.
"Programme Capital" equals, at any time, total Capital as defined and calculated
pursuant to the RPA or the PPA, as applicable.
"Programme Costs" comprise (a) the Onward Sale Fee, the Agent Fee and (b) the
Seller's Proportionate Share of (i) the Facility Fee, (ii) the Investor Fee as
defined in the Fees Letter and the Programme Fee as defined in the Fees Letter.
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"Programme Dilution Ratio" as of any date, is equal to the aggregate Dilution
Ratios calculated among all Origination Agreements.
"Programme Receivables" means the aggregate Dollar Equivalent of Receivables (as
that term is defined in each Origination Agreement), aggregated among all
Origination Agreements.
"Programme Sellers" means, collectively, all of the Affiliates of Exide Europe
designated as Sellers or Originators pursuant to all of the Origination
Agreements.
"Proportionate Share" equals, at any time, in respect of the Seller or any party
comprising the Seller, the result of the formula: the Dollar Equivalent of all
Purchased Receivables from the Seller (or such party, as applicable), divided by
the Dollar Equivalent of all Purchased Receivables and Subrogated Receivables
(as these terms are used in each applicable Origination Agreement), aggregated
among all Origination Agreements.
"Purchase" means a purchase or purported purchase by the Buyer of a Group of
Receivables from the Seller pursuant to this Agreement.
"Purchase Date" means the Effective Date and each Settlement Date after the
Effective Date occurring before the Termination Date on which there is a
Purchase of Receivables by the Buyer as contemplated by this Agreement.
"Purchase Price" means, in respect of a Group of Receivables, an amount in
pesetas equal to the Outstanding Balance of the Group of Receivables as at the
proposed Purchase Date less the Discount, as calculated by the Operating Agent.
"Purchased Receivable" means a Receivable (whether or not an Eligible
Receivable) purchased or purported to be purchased by the Buyer under this
Agreement.
"Rating Agencies"' means Standard & Poor's Ratings Group, a division of the
McGraw Hill Companies Inc., and Moody's Investors Service, Inc.
"Receivable" means the indebtedness of any Account Debtor under a Contract
arising from a sale or contract of sale of merchandise or provision or contract
of provision of services by the Seller and representing part or all of the sale
price of such merchandise or services and includes the right to payment of any
interest or finance charges and other obligations of such Account Debtor with
respect thereto.
"Related Security" means with respect to any Receivable all of the Seller's
interest in any goods and work in progress (including returned or repossessed
goods and work in progress) relating to the sale creating such Receivable, and
all insurance policies, security, deposits, guarantees, indemnities, letters of
credit, bills of exchange, cheques, other negotiable instruments, warranties,
retention of title and other agreements and arrangements not created or made by
the Buyer supporting or securing payment of such Receivable.
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"Relevant Date" means the earlier of:
(1) the date on which all Capital of all Groups of Receivables is reduced
to zero; and
(2) the date on which the Outstanding Balance of all Purchased Receivables
is reduced to zero.
"Relevant Documents" means this Agreement, the Account Bank Mandate and the Fees
Letter.
"Reserves" means as of any date the Seller's Proportionate Share of the sum of
the Loss and Dilution Reserve, the Yield Reserve and the Foreign Currency
Reserve.
"RPA" means the Receivables Purchase Agreement dated as of the date hereof
between the Buyer Eureka and the Operating Agent.
"Security Interest" means any mortgage, pledge, lien, charge, assignment,
hypothecation or security interest or any other agreement or arrangement having
the effect of conferring security.
"Seller" means Sociedad Espanola del Acumulador Tudor, S.A. and any additional
Seller made party to this Agreement in accordance with Clause 19 (D).
"Seller Entitlement" means, at any time, in respect of the total amount
standing to the credit of the Agent Account together with interest thereon, the
portion thereof which is not attributable to or representing Collections.
"Seller Non-Transaction Account" means (i) in respect of Tudor, the account
numbered 0030-1518-02-000233271, established with Banco Espanol de Credito,
Banca Corporativa or such other account at such branch of the Agent Account Bank
as the Seller may from time to time specify by written notice to the Agent
Account Bank with a copy to the Operating Agent.
"Settlement Date" means initially, the Effective Date and thereafter, each
following Thursday; provided however, if such day is not a Programme Business
Day which is also a Local Business Day under the Origination Agreement for
Italy, the Settlement Date for such week shall be the next succeeding Programme
Business Day which is also a Local Business Day under the Origination Agreement
for Italy.
"Settlement Period" means any period beginning on (and including) a Settlement
Date and ending on (but excluding) the next following Settlement Date.
"Settlement Statement" means a statement, as of any Settlement Date, prepared
by the Operating Agent substantially in the form of Schedule 3 showing, in
Pesetas, (amongst other things) the amount of Receivables purchased by the Buyer
during the last Settlement Period.
"Spot Rate" means, as of any Settlement Date, the spot rate utilised for the
Currency Exchange Agreement as determined for such Settlement Date.
"Subsidiary" means, under Spanish law, any entity (a) which is directly or
indirectly controlled by another company, (b) in which one half or more of its
corporate share capital is owned by another company, (c) which is a subsidiary
of another company which in turn is a subsidiary (in accordance
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with what is referred in letters (a) and (b) of this definition) of another
company. For this purpose, a company is deemed to be controlled by another if
such other company has the power to manage and administer its affairs or to
control the composition of its management body.
"Summary Report" means a report as of each Determination Date or more frequently
if requested by the Operating Agent, substantially in the form of Schedule 4,
furnished by the Seller to the Operating Agent pursuant to Clause 11(F).
"Summary Report Date" means each Determination Date or such other dates as the
Operating Agent may request.
"Syndicated Facility" means the FF 2,569,000,000 Facilities Agreement dated 30th
November 1995 between Compagnie Europeenne d'Accumulateurs S.A., Euro Exide
Corporation Limited, Exide Holding Europe and Sociedad Espanola del Acumulador
Tudor S.A. as the Lead Borrowers, Bankers Trust International Plc. as Lead
Arranger, Bankers Trust Company, Bank of America National Trust and Savings
Association, Bank of Montreal and Citibank International Plc. as Underwriters,
Bank of America International Limited, Bank of Montreal and Citibank
International Plc. as Co-Arrangers, Bankers Trust Company as Agent and Security
Agent and the Lenders described therein, as that agreement may be amended or
restated from time to time.
"Temporary Adjustment Account" means the sub-account held by the Buyer with
Citibank, N.A., London branch, denominated in Sterling and utilised for the
purposes set out in Clause 12 (D), under the account number 60918971.
"Termination Date" means the earliest to occur of (1) the Programme Business Day
designated by the Seller as the Termination Date following 2 Programme Business
Days' notice to the Operating Agent, (2) the Termination Date under the RPA or
the PPA, (3) an Early Amortisation Event, and (4) 10 June, 2002.
"Turnover Rate" means, as of any Purchase Date under the RPA or the PPA,
applicable, the average of each of the three most recently ended months
outstanding Net Receivable Balance as of the last day of each such month, over
the Dollar Equivalent of the aggregate outstanding balance of Receivables sold
by the Seller and Originators under all Origination Agreements during each such
month.
"Unapplied Cash" means as of any date with respect to any Receivable, the
aggregate Collections which have not yet been reflected on the books and records
of the Originator as a reduction to the Dollar Equivalent of the Outstanding
Balance of such Receivable.
"Weighted Average Term" means the weighted average term of all Purchased
Receivables, calculated on the basis of the formula: E(original stated payment
term of each invoice x amount of such invoice) / Einvoice amount.
"Yield" will be calculated on the first Purchase Date and on each Settlement
Date thereafter on the basis of the outstanding Capital as at such dates times
the Yield Rate divided by 360 times the number of days elapsed in the relevant
Interest Period.
"Yield Rate" will be the cost of commercial paper notes issued by Eureka to fund
its purchase or Receivables, plus related dealer commissions, and administration
costs (such administration costs not
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to exceed 0.30% of Capital per annum), plus the cost of swapping Dollar proceeds
of commercial paper into the currency of the Purchased Receivables, determined
by the Operating Agent and expressed as a percentage of Capital. In the event
Eureka shall not at any time, fund its purchases under the RPA with the issuance
of commercial paper, or if purchases are being made under the PPA, the Yield
Rate shall be the Bank Facility Rate.
"Yield Reserve" means as of any Settlement Date, the product of (1) two times
the Turnover Rate for such date and (2) the sum of (a) fifty-two times the Yield
for such date, divided by 12 (Yield calculated for this purpose using the higher
of the Yield Rate and the rate shown in paragraph (a) of the definition of "Bank
Facility Rate"); (b) the facility fee of 0.30% per annum of the Facility Limit
calculated monthly in arrears and applied on each Settlement Date a; (c) the
Programme Fee as defined in the Fees Letter; and (d) the product of (i) the
Dollar Equivalent of the most recently ended month's outstanding Net Receivable
Balance aggregated among all Origination Agreements less the Dollar Equivalent
of Defaulted Receivables aggregated among all Origination Agreements and (ii)
0.75% (substitute collection agent reserve) the resulting figure divided by 12.
(C) This Agreement: Any reference to "this Agreement" or any other
agreement or document shall, unless the context otherwise requires,
include this Agreement or, as the case may be, that other agreement or
document as from time to time amended, supplemented or novated, and any
document which amends, supplements or novates this Agreement or, as the
case may be, that other agreement or document. Any reference to Clauses
or paragraphs in this Agreement is, subject to any contrary indication,
a reference to a Clause or paragraph in this Agreement.
(D) Origination Agreements: All references in this Agreement to terms
defined in the Origination Agreements or to amounts which are
aggregated among all Origination Agreements, shall, unless the contrary
is indicated, be deemed to refer to the equivalent concepts in the
Origination Agreements where the same defined term is not used.
(E) Headings: Headings shall be ignored in construing this Agreement.
(F) Time: Save where the contrary is indicated, any reference in this
Agreement to a time of day (including opening and closing of business
hours) shall be construed as a reference to Madrid time.
(G) Time of Essence: Time shall be of the essence in this Agreement and all
documents delivered pursuant to the terms of this Agreement, subject to
the prior waiver of such timing by the affected party.
2. FACILITY
The Buyer hereby offers to commit to purchase at a discount from the Seller on
each Purchase Date falling on or after the Effective Date, full title and
ownership in and to certain Receivables on the terms and conditions set out in
this Agreement and in consideration of the covenants contained in this
Agreement.
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3. CONDITIONS PRECEDENT
(A) To Initial Purchase: The Initial Purchase is subject to the condition
precedent that the Operating Agent receives on or before the date of
such Initial Purchase the documents and information specified in
Schedule 5, each in form and substance satisfactory to the Operating
Agent.
(B) To All Purchases: Each Purchase (including the Initial Purchase) is
subject to the further following conditions precedent:
(1) On each Purchase Date the following statements must be true and
correct (and the Seller will be deemed to have so certified on
such date that):
(a) the representations and warranties of the Seller
contained in this Agreement are true and correct on and
as of such day as though made on such day and by
reference to the then existing circumstances;
(b) the Seller has delivered such directors' certificate as
may be required by the Operating Agent as to the
Seller's solvency;
(c) after the proposed Purchase the Outstanding Balance of
Purchased Receivables would be at least equal to the
sum of (i) aggregate outstanding Capital, (ii)
applicable Accruals and (iii) Reserves in relation to
outstanding Capital;
(d) there has been no Early Amortisation Event which has
not been waived by the Operating Agent in writing;
(e) there has been no sale by the Seller of any of its
Receivables out of the ordinary course of its business
without the prior written consent of the Operating
Agent;
(f) in respect of the Purchase of Receivables whose Account
Debtors are resident in United Kingdom, France, Italy,
Germany, The Netherlands or Belgium after the proposed
Purchase, Capital in respect of such Purchased
Receivables does not exceed 15% of the Capital in
respect of all Purchased Receivables; and
(g) after the proposed Purchase, Capital would not exceed
the Country Limit, and Programme Capital would not
exceed the Facility Limit.
(2) On or prior to each Purchase Date the Seller shall have
delivered to the Operating Agent an Accounts Receivable
Listing.
(3) On or prior to each Purchase Date the Seller shall have
complied with all of its reporting and other obligations under
this Agreement; unless any such failure to comply has been
waived by the Operating Agent in respect of such Purchase Date.
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(4) The Commitment shall not have been cancelled.
(5) The Operating Agent has received such other approvals, legal
opinions or documents as the Operating Agent may reasonably
request.
(C) The Operating Agent shall, as soon as reasonably practicable after
submission to it of a form of Contract other than the form set out in
Schedule 7, notify the Seller as to whether it approves of the form for
the purposes of paragraph (9) of the definition of "Eligible
Receivable", such approval not to be unreasonably withheld. In
considering whether to approve such other form of Contract, the
Operating Agent may, as a condition of considering whether to give its
approval, take such legal advice as it deems appropriate and all
related costs, charges, and expenses (including without limitation
reasonable legal fees, disbursements and VAT thereon) shall be for the
account of the Seller.
(D) The Commitment shall be cancelled:
(1) on the Termination Date; or
(2) if it becomes unlawful in any jurisdiction for the Buyer to
give effect to any of its obligations as contemplated by this
Agreement to fund or maintain the funding of any Purchase,
whichever shall first occur.
4. PURCHASES
(A) Making Purchases: The Seller shall, by 10:00 a.m., London time, on the
Determination Date prior to each proposed Purchase Date, deliver to the
Buyer a Notice of Sale by facsimile (and shall send the original Notice
of Sale to the Operating Agent by ordinary post on the day it is
delivered by facsimile) substantially in the form of Schedule 7
("Notice of Sale") identifying (inter alia) the Purchase Date, the then
Outstanding Balance of Receivables (if any) and the Purchase Price for
such Receivables computed by the Operating Agent. The computation of
the Purchase Price by the Operating Agent shall, in the absence of
manifest error, be deemed to be conclusive.
(B) Sale: The delivery of the Notice of Sale by facsimile will constitute
notification to the Buyer of the Receivables and the Related Security,
designated pursuant to Clause 4(D), which the Buyer is to purchase for
the Purchase Price as set out in the Notice of Sale. The Buyer shall,
subject to the terms and conditions of this Agreement (including, for
the avoidance of doubt, Clause 3) pay in full the Purchase Price (in
the manner described in Clause 4(C)), which payment will effect the
transfer to the Buyer of full title and ownership in and to those
Receivables and the Related Security with respect to those Receivables.
(C) Purchase Price: The Buyer shall pay in full the Purchase Price on the
Purchase Date in the currency and funds specified in Clause 7(B) to the
Seller Non-Transaction Account. If, however, pursuant to Clause 12(C),
there is any Advance Payment outstanding then the Buyer will remit to
the Seller only that portion of the Purchase Price that exceeds the
amount of such Advance Payment.
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(D) Determination of Purchased Receivables: On or prior to each Purchase
Date in respect of which a Notice of Sale is to be delivered, the
Seller will identify the Group of Receivables to be offered for
purchase by the Buyer on such date in such format as the Operating
Agent may specify.
(E) Records: On or prior to each Purchase Date in respect of which a Notice
of Sale is to be delivered, the Seller will at the Seller's expense
deliver to the Operating Agent (or as the Operating Agent may direct)
the Accounts Receivable Trial Balance generated on or in relation to
such Purchase Date, identifying the Receivables designated pursuant to
this Clause 4(D).
(F) Perfection: Subject to Clause 13, each of the Seller and the Buyer will
take all such steps and comply with all such formalities as may be
required to perfect or more fully to evidence or secure title to the
Receivables assigned (or purported to be assigned) pursuant to Clause
4.
(G) Delegation of Powers of Operating Agent: The Operating Agent hereby
delegates to the Seller all of its obligations under this Clause 4,
which delegation the Seller irrevocably accepts. The Seller shall
notify the Operating Agent of all calculations made by it under this
Clause 4. The Operating Agent may revoke this delegation in writing at
any time.
5. COLLECTIONS AND SETTLEMENT
(A) Collection of Receivables: (1) On each day the Collection Agent shall
as described in Clause 12(B) set aside and hold for the Buyer all
Collections of Purchased Receivables on such day, and (2) the Operating
Agent shall issue a Settlement Statement to the Seller and to the Agent
Account Bank within two Programme Business Days after each Settlement
Date in relation to the Settlement Period which ended on that
Settlement Date.
Such Collections will be credited to the Agent Account maintained by
the Agent Account Bank in accordance with the terms of the Agent
Account Bank Mandate.
(B) Settlement Procedures prior to Termination Date: Prior to the
Termination Date the procedures described in this Clause 5(B) will be
applicable:
(1) On each Purchase Date the Buyer, unless otherwise instructed by
the Operating Agent, will set off, against its obligation to
pay the Purchase Price of the Group of Receivables to be
purchased by the Buyer on such Purchase Date, the amount (if
any) of any Advance Payment withdrawn by the Seller from the
Agent Account pursuant to Clause 12(C) and which has not been
refunded as of close of business on the Programme Business Day
immediately preceding such Purchase Date.
(2) On each Determination Date the Operating Agent shall calculate:
(a) Capital as at the forthcoming Settlement Date; and
(b) Yield and Programme Costs in respect of the Capital as
at the forthcoming Settlement Date.
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(3) On each Settlement Date the Operating Agent shall cause to be
paid from the Agent Account (without prejudice to, and subject
always to, the provisions of Clause 12(C) regarding Advance
Payments) and in the following order:
(a) to the Buyer, Yield and Programme Costs in respect of
the Interest Period ending on that Settlement Date;
(b) to the Seller, the Purchase Price (if any) in respect
of Purchased Receivables, to the extent the Purchase
Price is not satisfied by way of set-off pursuant to
Clauses 5(B)(1) and 12(C);
(c) to the Seller, the Proportionate Share of all sums
received by the Buyer pursuant to Clause 5(B)(3)(c) of
the RPA or the PPA, as applicable, by way of deferred
purchase price for the Purchased Receivables; and
(d) to the Buyer, the amounts credited to the Agent Account
in respect of Purchased Receivables after payment of
the amounts set forth in (a) and (b) above;
(e) to the Seller, the amounts credited to the Agent
Account other than in respect of the Purchased
Receivables; and
(f) to the Buyer all amounts standing to the credit of the
Agent Account after payment of items (a) to (e) above.
(C) Settlement Procedures after Termination Date: On the Termination Date
and each day thereafter, the procedures described in this Clause 5(C)
will be applicable for all Purchased Receivables:
(1) On each Programme Business Day, the Operating Agent shall cause
to be paid from the Buyer Account to the Buyer all amounts
standing to the credit of the Buyer Account.
(2) If and to the extent that the Buyer receives funds pursuant to
Clause 5(C)(2) of the RPA or the PPA, as applicable, the
Operating Agent shall cause to be paid from the Buyer Account
to the Seller, the Seller's Proportionate Share of such funds,
by way of deferred purchase price for all of the Purchased
Receivables.
(D) Adjustments and Allowances:
(1) If on any day the Outstanding Balance of any Purchased
Receivable is either (a) reduced or adjusted as a result of any
defective, rejected, repossessed or returned goods or services
or any cash discount (whether commercial, financial or
otherwise), rebate or other adjustment made by the Seller or
any other Person, or (b) reduced or cancelled as a result of a
set off or by agreement in respect of any claim by the Account
Debtor thereof against the Seller or any other Person (whether
such claim arises out of the same or another transaction)
(including without limitation any change in the due date for
payment of any Purchased Receivable otherwise than with the
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prior consent of the Operating Agent), the Seller will be
deemed to have received on such day a Collection of such
Purchased Receivable in the amount of such reduction,
adjustment or cancellation and shall credit such amount to the
Agent Account by way of indemnity.
(2) If on any day any of the representations or warranties in
Clause 8 is no longer true with respect to a Purchased
Receivable, the Seller will be deemed to have received on such
day a Collection of such Purchased Receivable equal to its
original Outstanding Balance less any Collections previously
received with respect thereto and shall credit to the Agent
Account an amount equal to such deemed Collection by way of
indemnity.
(3) If any Purchased Receivable was not an Eligible Receivable at
the time of Purchase, on the date such fact becomes known to
the Seller, the Seller will be deemed to have received a
Collection of such Purchased Receivable equal to its original
Outstanding Balance less any Collections previously received
with respect thereto and shall credit to the Agent Account an
amount equal to such deemed collection by way of indemnity.
(4) If the Seller is not acting as the Collection Agent, it will
promptly pay to the Collection Agent the amount of any deemed
Collection pursuant to Clause 5(D)(1) (2) or (3) above by way
of indemnity.
(5) If, following any payment in respect of a deemed Collection of
a Purchased Receivable pursuant to Clause 5(D)(1), (2), (3) or
(4) above, the Buyer shall receive any further Collections in
respect of such Purchased Receivable, the Buyer shall (provided
no Early Amortisation Event has occurred) pay to the Seller an
amount or amounts equal to such further Collections by way of
repayment of indemnity.
(E) Application of Collections: Any payment by an Account Debtor in respect
of any indebtedness owed by it to the Seller and any credits,
defective, rejected, repossessed or returned goods or other non cash
items of an Account Debtor will, except as otherwise specified in
writing by such Account Debtor or otherwise required by contract or law
and unless otherwise instructed by the Operating Agent, be applied as a
Collection of Purchased Receivables of such Account Debtor, in the
order of the age of such Purchased Receivables, starting with the
oldest such Purchased Receivables, to the extent of any amounts then
due and payable thereunder before being applied to or in respect of any
other indebtedness of such Account Debtor.
6. FEES, COSTS AND STAMP DUTY
(A) Collection Agent Fees: Until the later of the Termination Date and the
Relevant Date, for any period during which the Seller or an Affiliate
of the Seller is not the Collection Agent, the Seller will pay the
Buyer, upon its demand, a collection fee as determined by the Operating
Agent, not exceeding 110% of the fees, costs and expenses, plus value
added tax (if applicable), of the substitute Collection Agent incurred
in performing such function
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(B) Costs and Expenses: The Seller agrees to pay on demand of the Operating
Agent all reasonable costs and expenses incurred by the Operating Agent
in connection with the preparation, execution and delivery of this
Agreement and the other documents to be delivered pursuant to this
Agreement or in connection therewith, such costs and expenses to
include, without limitation, the reasonable fees and out-of-pocket
expenses of legal advisers (plus VAT thereon) to the Buyer, the Agent,
and the Operating Agent with respect thereto and with respect to
advising the Buyer and the Operating Agent as to their respective
rights and remedies under this Agreement, and all costs and expenses,
if any (including legal fees and expenses plus VAT thereon), in
connection with the enforcement of this Agreement, the other documents
to be delivered pursuant to this Agreement or in connection therewith
and the Purchased Receivables. The Buyer, the Agent, and the Operating
Agent agree to take reasonable steps, consistent with the protection of
their respective interests under this Agreement, to mitigate their
costs and expenses in connection with the enforcement of this
Agreement, the other documents to be delivered pursuant to this
Agreement and the Purchased Receivables.
(C) Duties and Taxes: In addition, the Seller will pay on demand of the
Operating Agent any sales, excise, registration and other taxes, duties
and fees payable in connection with the execution, delivery, filing or
recording of this Agreement or the purchase, assignment or reassignment
of Receivables under or pursuant to this Agreement, or the other
documents to be delivered under this Agreement or in any way connected
with any transaction contemplated by this Agreement. The Seller agrees
to indemnify the Operating Agent and the Buyer on demand of the
Operating Agent against any liabilities with respect to or resulting
from any delay in paying or omission to pay any such taxes, duties or
fees.
(D) Default Interest: The Seller shall pay to the Operating Agent or, as
the case may be, the Buyer interest (as well after as before judgment)
on all amounts not paid or repaid when due under this Agreement at 2%
per annum above the Base Rate payable on demand of the Operating Agent.
(E) Computations: All computations of interest and fees 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.
(F) Computation of Time Periods: Unless otherwise stated in this Agreement,
in the computation of a period of time from a specified date to a later
specified date, the word "from" means "from and including" and the
words "to" and "until" each means "to but excluding".
7. PAYMENTS AND COMPUTATIONS, ETC.
(A) Mechanics: All amount to be paid to or deposited with the Operating
Agent for it own account or for the account of the Agent or the Buyer
by the Seller or by the Collection Agent under this Agreement shall be
paid or deposited no later than 12:00 noon (local time in the place of
payment) on the day when due in immediately available same day funds to
the relevant account specified below.
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(B) Currency: All amounts payable by the Seller under this Agreement to the
Operating Agent for its own account or for the account of the Buyer
shall be paid in pesetas. The Purchase Price amounts payable by the
Buyer under this Agreement shall be paid in pesetas.
(C) Accounts: Any amount payable under this Agreement shall be remitted to
the following accounts:
(1) if to the Seller, to the Seller Non-Transaction Account;
(2) if to the Buyer, to the Agent Account;
(3) if to the Operating Agent for its own account, Account No.
1842358 (Sort Code 18-50-08) with Citibank 336 Strand London
WC2K 1HB.
(D) Grossing Up: To the fullest extent permitted by law, the Seller will
make all payments under this Agreement regardless of any defence or
counterclaim. Further, if the Seller, in its individual capacity, is
compelled by law to make any deductions or withholdings from any
payments pursuant to this Agreement including, without limitation,
payments in respect of Receivables or Collections, the Seller will pay
such additional amounts as may be necessary in order that the net
amount received by the Operating Agent or the Agent, or to the Buyer
after such deductions or withholdings (including any required deduction
or withholding on such additional amounts) will equal the amount that
the Operating Agent, the Agent, or the Buyer (as appropriate) would
have received had no such deductions or withholdings been made. The
Seller will provide the Operating Agent with evidence satisfactory to
the Operating Agent that it has paid such deductions or withholdings.
(E) Appropriation of Payments: Regardless of any appropriation by the
Seller or the Collection Agent, the Operating Agent shall determine the
appropriation of any payment to it for the account of the Agent to any
amount to be paid to or deposited with it for the account of the Agent
by the Seller and/or the Collection Agent under this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represent and warrants, as of the Effective Date, as
follows:
(A) Incorporation: The Seller and Exide Europe is a company duly
incorporated and validly existing under the laws of its
jurisdiction of incorporation or organisation.
(B) Seller Power and Authority: The Seller has full power and
authority to effect, and has taken all necessary action to
authorise, the execution, delivery and performance by it of
this Agreement and all other instruments and documents to be
delivered under this Agreement, and the transactions
contemplated by this Agreement.
(C) Exide Europe Power and Authority: Exide Europe has full power
and authority to effect, and has taken all necessary action to
authorise, the execution, delivery and performance by it of the
Letter of Undertaking and all other instruments or documents to
be delivered under the Letter of Undertaking, and the
transactions contemplated by the Letter of Undertaking.
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(D) Non-Violation: The execution, delivery and performance by the
Seller of this Agreement and all other instruments and
documents to be delivered pursuant to this Agreement and all
transactions contemplated by this Agreement, and the execution,
delivery and performance by Exide Europe of the Letter of
Undertaking and all transactions contemplated thereby:
(1) do not contravene (a) any Seller's or Exide Europe's
memorandum or articles of association (or analogous
constitutive documents), (b) any law, rule or
regulation applicable to the Seller or Exide Europe,
(c) any material contractual restriction contained in
any agreement or instrument binding on or affecting any
party comprising the Seller or its assets, Exide Europe
or Exide Europe's assets, or (d) any order, writ,
judgment, award, injunction or decree binding on or
affecting the Seller, Exide Europe or any of the
Seller's or Exide Europe's assets;
(2) do not result in or require the creation of any lien,
security interest or other charge or encumbrance upon
or with respect to any of the Seller's or, to the best
of its knowledge, Exide Europe's assets or undertaking;
and
(3) will not constitute a breach of, nor give rise to any
actual or potential event of default under, any Debt of
any member of the Exide Group, or under any document
relating to such Debt.
(E) Consents: No consent, authorisation, approval, notice or filing
is required (or, if required, which has not been obtained on a
timely basis) for the due execution, delivery or performance by
the Seller of this Agreement or any other document to be
delivered in connection with this Agreement or for the
transactions contemplated by this Agreement or for the due
execution, delivery or performance by Exide Europe of the
Letter of Undertaking or any other document to be delivered in
connection with the Letter of Undertaking or for the
transactions contemplated by the Letter of Undertaking.
(F) Obligations Binding: (1) This Agreement constitutes the legal,
valid, binding and enforceable obligation of the Seller; and
(2) the Letter of Undertaking constitutes the legal, valid,
binding and enforceable obligation of Exide Europe.
(G) Accounts: The most recent audited annual accounts of the Seller
and Exide Europe, copies of which have been furnished to the
Operating Agent, present a true and fair view of the financial
condition of the Seller and its consolidated Subsidiaries (if
any) or Exide Europe, as applicable, as at that date and the
results of the operations of the Seller and those subsidiaries,
or Exide Europe, as applicable, for the period ended on that
date, all in accordance with generally accepted accounting
principles consistently applied.
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<PAGE>
(H) No Material Adverse Change to Seller: Since 11 April 1996,
being the date of the Seller's most recent audited annual
account, there has been no change in the business or financial
condition of the Seller which may materially adversely affect
the ability of the Seller to perform its obligations under this
Agreement.
(I) No Material Adverse Change to Exide Group: Since 31 March 1996,
being the date of the Exide Group's most recent audited
consolidated annual accounts, there has been no change in the
business or financial condition of the Group which is
reasonably likely to materially adversely affect the ability of
Exide Europe to perform its obligations under the Letter of
Undertaking.
(J) No Litigation: There are no actions, suits or proceedings
current or pending, or to the knowledge of the Seller
threatened, against or affecting the Seller or its Subsidiaries
(if any) or any of their respective assets, or Exide Europe or
Exide Europe's assets in any court, or before any arbitrator of
any kind, or before or by any governmental body, which may
materially adversely affect the financial condition of the
Seller and its Subsidiaries taken as a whole or Exide Europe,
or materially adversely affect the ability of the Seller to
perform its obligations under this Agreement or the ability of
Exide Europe to perform its obligations under the Letter of
Undertaking.
(K) No Default: No Seller nor any of its Affiliates, nor Exide
Europe, are in default with respect to any order of any court,
arbitrator or governmental body, excluding defaults with
respect to orders of governmental agencies which are not
material to the business or operations of the Seller or any of
its Affiliates, or Exide Europe, and would not materially
adversely affect the ability of the Seller to perform its
obligations under this Agreement or the ability of Exide Europe
to perform its obligations under the Letter of Undertaking.
(L) No Adverse Claim: Each Receivable will, together with the
Contract related thereto, at all times be owned by the Seller
free and clear of any Adverse Claim except as provided in this
Agreement, and upon each Purchase the Buyer will acquire full
equitable and beneficial title and ownership to and of each
Purchased Receivable, the Collections and the Related Security
then existing or thereafter arising free and clear of any
Adverse Claim except as provided in this Agreement.
(M) Performance of Contracts: All goods and services to which each
Purchased Receivable relates have been delivered and performed,
and all requirements of such Contract concerning the nature,
amount, quality, condition or delivery of the goods or
services, or upon which payment of the Purchased Receivable may
be dependent, have been fulfilled in all material respects.
(N) Information: None of the information and reports (including but
not limited to each portfolio profile and each Summary Report)
furnished or to be furnished (whether by way of computerised
data or otherwise) by the Seller (in its individual capacity or
as Collection Agent) or Exide Europe, to the Operating Agent or
Exide Europe, as applicable, is inaccurate in any material
respect (except as otherwise disclosed to the Operating Agent
at the time of delivery) as of the date so furnished, or
contains any
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<PAGE>
material misstatement of fact or omits to state a material fact
or any fact necessary to make the statements contained therein
not materially misleading.
(O) Place of Business: The principal place of business and
registered office of the Seller is as set forth in Schedule 1
or at such other location(s) approved by the Operating Agent
(such approval not to be unreasonably withheld or delayed).
(P) Location of Books: The offices where the Seller keeps all it
books, records and document evidencing Receivables or the
related Contracts are at the locations set forth in Schedule 1
or at such other location(s) approved by the Operating Agent
(such approval not to be unreasonably withheld or delayed).
(Q) Location of Bank Accounts: The bank accounts to which the
Seller has directed the Account Debtors to remit payments for
the Receivables is the Agent Account (or such other account(s)
at such location(s) as may have been previously approved by the
Operating Agent and in relation to which an Account Bank
Mandate has been duly executed inter alia by the Seller (in its
individual capacity and/or as Collection Agent) the Buyer and
the Agent Account Bank and delivered to the Operating Agent and
in respect of which the relevant bank has agreed, in relation
to the Buyer Entitlement, not to exercise any right of set-off,
net-off, combination or consolidation of accounts or
counterclaim whatsoever.
(R) No Winding-Up: No step has been taken or is intended by the
Seller or, so far as it is aware, by any other Person for the
Seller's winding-up, liquidation, dissolution, administration,
merger or consolidation or for the appointment of a receiver or
administrator or equivalent or analogous action of the Seller
or all or any of its assets.
(S) No Breach: There has been no breach by the Seller of any of its
obligations under the Relevant Documents or by Exide Europe of
any of its obligations under the Letter of Undertaking.
(T) Eligibility: Each Receivable the subject of a Notice of Sale is
an Eligible Receivable as at the time of Purchase.
The Seller further represents and warrants that the representations and
warranties in this Clause 8 shall be true and correct on and as of each
Purchase Date as though made on each such date and by reference to the
then-existing circumstances.
9. AFFIRMATIVE COVENANTS OF THE SELLER
Until the later of the Termination Date and the Relevant Date, the
Seller will, unless the Operating Agent otherwise consents:
(A) Compliance with Law: Comply in all material respects with all
applicable laws, rules, regulations and orders binding on it,
its business and assets and all Receivables and related
Contracts, except where non-compliance would not have, and
would not
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reasonably likely to have, a material adverse effect on its
ability to perform its obligations hereunder.
(B) Maintain Existence: Preserve and maintain its corporate
existence.
(C) Access: Upon reasonable prior notice, permit the Operating Agent,
or its agents or representatives, to visit the offices of the
Seller during normal office hours and examine and make and take
away copies of all books, records and documents relating to the
Receivables and to discuss matters relating to the Receivables or
the Seller's performance hereunder with any of the officers or
employees of the Seller having knowledge of such matters and co-
operate in the reconstruction of the Accounts Receivable Trial
Balance pursuant to Clause 13(B).
(D) Maintain Records: Maintain and implement administrative and
operating procedures (including, without limitation, an ability
to recreate records in the event of their destruction), and keep
and maintain, all documents, books, records and other information
reasonably necessary or advisable for the collection of all
Receivables (including, without limitation, records adequate to
permit the identification on each Purchase Date of each new
Purchased Receivable and the daily identification of all
Collections of and adjustments to each existing Purchased
Receivable).
(E) Perform Contracts: Timely and fully perform and comply with all
material provisions, covenants and other promises required to be
observed by it under the Contracts relating to the Purchased
Receivables.
(F) Priority: Ensure that at all times the claims against it under
this Agreement rank at least pari passu with the claims of all
its other unsecured creditors save those whose claims are
preferred by any bankruptcy, insolvency or other similar laws of
general application or which have been documented in an escritura
publica or in a poliza intervenida.
(G) Credit and Collection Policy: Comply in all material respects
with its Credit and Collection Policy with respect to each
Receivable purchased or to be offered for purchase pursuant to
this Agreement and the related Contract.
(H) Value Added Tax: Make all relevant value added tax or other
applicable tax payments in respect of supplies of goods or
services pursuant to a Contract or which otherwise relate to
Purchased Receivables, and pay all value added tax (if any)
payable in respect of any value added tax supply made, or input
value added tax suffered, by the Buyer, the Operating Agent or
any of the Operating Agent's Affiliates with respect to supplies
of goods or services by the Seller pursuant to a Contract or
which otherwise relates to Purchased Receivables.
(I) Collections: If the Seller is not acting as Collection Agent, (1)
give all reasonable assistance (including the provision of
information) to any third party replacing the Seller as
Collection Agent in accordance with the provisions of this
Agreement, and (2) remit any Collections on Purchased Receivables
to the Collection Agent within one Business Day after the receipt
or deemed receipt thereof.
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<PAGE>
(J) Bank Accounts: Pay or cause to be paid all Collections of
Receivables directly into the bank account or accounts referred
to in Clause 8(Q) or such other account(s) approved by the
Operating Agent and the Buyer.
(K) Audit Costs: The Seller shall pay the reasonable fees and
expenses for one audit by the Operating Agent in each financial
year of the Seller plus the costs of one additional audit to be
conducted within 4 months after the execution of this Agreement.
Except for such additional audit, any further additional audit(s)
that may be required by the Operating Agent during any such
financial year shall be for the Operating Agent's own account.
(L) Provision of Information to Exide Europe: The Seller shall
promptly provide Exide Europe with computerised information
regarding the Purchased Receivables on the dates shown, and
containing the information set forth in Schedule 10, and all such
different or other information as the Operating Agent may
reasonably determine from time to time to properly allow Exide
Europe and/or the Operating Agent to identify all required
information in respect of Account Debtors and Receivables.
10. NEGATIVE COVENANTS OF THE SELLER
Until the later of the Termination Date and the Relevant Date, the
Seller will not, without the consent of the Operating Agent:
(A) No Disposal of Receivables: Except as otherwise provided herein,
sell, assign (by operation of law or otherwise) or otherwise
dispose of, or create or suffer to exist any Adverse Claim upon
or with respect to, any Receivable purchased or to be offered for
purchase under this Agreement or the related Contract, or assign
any right to receive income in respect thereof.
(B) No Transfer of Business: The Seller shall not transfer all or
substantially all of its assets and undertaking to any person
without the prior written consent of the Operating Agent, such
consent not to be unreasonably withheld, unless such transfer
would have no adverse effect on the ability of the Seller to
collect and sell Receivables as contemplated by this Agreement.
(C) No Security Interest over Receivables: (a) The Seller shall not
create or permit to subsist any Security Interest on any of its
Receivables, and (b) If the Seller creates or permits to subsist
any Security Interest on any of its Receivables contrary to (a)
above, all the obligations of the Seller under this Agreement
shall automatically and immediately be secured upon the same
assets, ranking at least pari passu with the other obligations
secured on those assets.
(D) No Amendment to Receivables: Extend, amend or otherwise modify
the terms of any Purchased Receivable, or amend, modify or waive
any term or condition of any Contract related thereto, or
commence or settle any legal action to enforce collection of any
Purchased Receivable.
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<PAGE>
(E) No Change to Credit and Collection Policy: Make any change in the
character of its business or in the Credit and Collection Policy,
which change would or might, in either case, materially impair
the collectability of any Receivable purchased or to be offered
for purchase under this Agreement or the enforcement of any
related Contract against the Account Debtor or the operation of
this Agreement without the prior written consent of the Operating
Agent.
(F) Cross Indemnity: The Seller shall not amend or otherwise change
the Deed of Cross-Indemnity dated as of the date hereof between
Exide Europe and the Programme Sellers, except in respect of
amendments or changes of a purely technical or immaterial nature
which do not affect either: (i) the title of the Buyer to the
Receivables assigned (or purported to be assigned) pursuant to
Clause 4 or (ii) the effectiveness of the assignment (or
purported assignment) pursuant to Clause 4.
11. REPORTING REQUIREMENTS OF THE SELLER
Until the later of the Termination Date and the Relevant Date, the
Seller will, unless the Operating Agent otherwise consents, furnish to
the Operating Agent:
(A) Annual Accounts of Seller: As soon as available and in any event
within 180 days after the end of the Seller's financial year, a
copy of the Seller's annual accounts and (if they are prepared)
consolidated accounts in conformity with generally accepted
accounting principles, applied on a basis consistent with that of
the preceding financial year.
(B) Annual Accounts of Exide Europe: As soon as available and in any
event within 180 days after the end of each of Exide Europe's
financial years, a copy of Exide Europe's annual accounts,
prepared (as appropriate) on a consolidated basis in conformity
with generally accepted accounting principles, applied on a
basis consistent with that of the preceding financial year,
together with the report of an internationally recognised firm of
independent auditors.
(C) Other Financial Information: Upon request of the Operating Agent,
such financial information, accounts and records with respect to
the Seller or Exide Europe which are relevant to the Programme as
the Operating Agent may from time to time reasonably request.
(D) Defaults and other Events: Forthwith on becoming aware of any of
the events described in (1), (2), (3) or (4) below or any event
which, with the giving of notice or lapse of time or both, would
constitute one of such events, the statement of the chief
financial officer or chief accounting officer of the Seller
setting out details of that event and the action which the Seller
proposes to take with respect to that event:
(1) the Seller fails to pay any principal of or premium or
interest on any Debt in excess (in the agregate) of the
Peseta equivalent of $5,000,000, when the same becomes due
and payable (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) and such
failure shall continue after the applicable grace period, if
any, specified in the agreement
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<PAGE>
or instrument relating to such Debt, or any other default
under any agreement or instrument relating to any Debt, or
any other event, shall occur and shall continue after the
applicable grace period, if any, specified in such agreement
or instrument, if the effect of such default or event is to
accelerate or to permit the acceleration of the maturity of
such Debt, or any such Debt shall be declared to be due and
payable or required to be prepaid (other than by a regularly
scheduled required prepayment) prior to the stated maturity'
thereof, or any present or future mortgage, charge or other
security interest on or over any assets of the Seller becomes
enforceable;
(2) a resolution is passed or a petition is presented or an order
made for the winding up, liquidation, dissolution, merger or
consolidation of the Seller (except for the purposes of a
bona fide reconstruction or amalgamation with the consent of
the Operating Agent), or a petition is presented or an order
made for the appointment of an administrator in relation to
the Seller or a receiver, administrative receiver or manager
is appointed over any part of the assets or undertaking of
the Seller or any event analogous, to any of the foregoing
occurs (except, in the case where a petition is presented (i)
the proceeding is frivolous or vexatious and (ii) the
Originator is solvent and is contesting the proceeding in
good faith);
(3) an Agent Account Event occurs; or
(4) an Early Amortisation Event occurs.
(E) Debt Service Cover Ratio: Within 45 days after the end of every
Accounting Quarter (as that term is defined under the Syndicated
Facility), a report showing the current Debt Service Cover Ratio
of Exide Europe for such calendar month.
(F) Summary Report: Promptly, from time to time, such other
information, documents, records or reports respecting the
Receivables or the condition or operations, financial or
otherwise, of the Seller [or any of its Affiliates], as the
Operating Agent may from time to time reasonably request in
order to protect the interests of the Buyer or the Operating
Agent, including, prior to 10:00 a.m., London time, on each
Summary Report Date, a Summary Report (with, among other things,
the information necessary to determine the Default Ratio).
(G) Account Debtors: Within two calendar weeks after the end of each
calendar quarter (or such more frequent time as the Operating
Agent may request in writing), the Seller shall deliver to the
Operating Agent a current list of all Account Debtors in respect
of Purchased Receivables and the addresses of such Account
Debtors.
The obligations of the Seller to deliver reports or similar information to the
Buyer pursuant to this Agreement may be delegated by the Seller to Exide Europe,
and the performance by Exide Europe of such obligations hereunder shall be
deemed to be the performance by the Seller of such obligations: provided
however, that the Seller shall remain liable for any non-performance of such
obligations.
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12. COLLECTION AGENT, COLLECTION AND AGENT ACCOUNT
(A) Designation of Collection Agent: The servicing, administering and
collection of the Receivables shall be conducted by such Person (the
"Collection Agent") so designated from time to time pursuant to this
Clause 12(A). Until the Operating Agent gives notice to the Seller of a
designation of a new Collection Agent, the Seller's Receivables is
designated as, and agrees to perform the duties and obligations of, the
Collection Agent pursuant to the terms of this Agreement. The Operating
Agent may at any time after the occurrence of an Early Amortisation
Event or an Agent Account Event designate as Collection Agent any
Person (including itself) to succeed the Seller or any successor
Collection Agent, on the condition in each case that any such Person
agrees to perform the duties and obligations of the Collection Agent
pursuant to the terms of this Agreement. The Collection Agent may, with
the prior consent of the Operating Agent, subcontract with any other
Person for servicing, administering or collecting the Receivables;
provided, however, that the Collection Agent will remain liable for the
performance of the duties and obligations of the Collection Agent under
this Agreement.
(B) Duties of Collection Agent: The Collection Agent:
(1) will take or cause to be taken all such actions as may be
necessary or advisable to collect each Purchased Receivable,
all in accordance with applicable laws, rules and regulations,
with reasonable care and diligence, and in accordance with the
Credit and Collection Policy and the instructions of the
Operating Agent. The Seller and the Buyer hereby appoint the
Collection Agent as its agent to enforce its respective rights
and interests in and under the Purchased Receivables, the
Related Security and the Contracts;
(2) will deposit in the Agent Account for the account of the Buyer
all Collections of Purchased Receivables in accordance with
this Agreement and the Agent Account Bank Mandate and may,
unless and until instructed otherwise by the Operating Agent
following the occurrence of an Early Amortisation Event or a
Agent Account Event, deposit in the Agent Account monies other
than Collections.
(3) confirm that the Agent Account Bank will make available to the
Collection Agent information showing amounts received on each
Local Business Day and standing to the credit of the Agent
Account as at the close of business on that day;
(4) upon receipt of the information referred to in (3) above the
Collection Agent shall, on behalf of the Buyer and the Seller,
make all such determinations and calculations as are necessary
in order to determine, in respect of amounts standing to the
credit of the Agent Account on each Local Business Day, the
Buyer Entitlement and the Seller Entitlement respectively, and
shall direct the Agent Account Bank, prior to 12:00 noon on
each Local Business Day, to transfer to the Seller
Non-Transaction Account the Seller Entitlement;
(5) other than the transfers referred to in paragraph (4) above the
Collection Agent shall not, without the prior written consent
of the Operating Agent, withdraw funds from the Agent Account
or direct the Agent Account Bank to make any transfers from the
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Agent Account, except for withdrawals or transfers of cleared
funds standing to the credit of the Agent Account which
represent the Seller Entitlement and provided that any such
withdrawal or transfer would not cause the Agent Account to
become overdrawn;
(6) may not extend, amend, modify or waive the terms of any
Purchased Receivable or amend, modify or waive any term or
condition of any Contract related thereto, where such
extension, amendment, modification or waiver would
prejudicially affect such Purchased Receivable, unless the
Operating Agent shall have otherwise consented in writing. The
Seller shall deliver to the Collection Agent (if other than the
Seller) all documents, instruments and records which evidence
or relate to the Purchased Receivables which the Operating
Agent may reasonably request;
(7) if other than the Seller, will provide to the Seller all such
information as the Seller may require for purposes of the
Summary Report and will as soon as practicable following
receipt pay to or to the order of the Seller the Collections of
any Receivable which is not a Purchased Receivable;
(8) if other than the Seller, will as soon as practicable upon
demand make available or (if so demanded) deliver to the Seller
all documents, instruments and records in its possession which
evidence or relate to Receivables of the Seller other than
Purchased Receivables, and copies of documents, instruments and
records in its possession which evidence or relate to Purchased
Receivables which the Operating Agent may reasonably request;
and
(9) if the Operating Agent or its designee, and notwithstanding
anything to the contrary contained in this Agreement, shall
have no obligation to collect, enforce or take any other action
described in this Agreement with respect to any Receivable that
is not a Purchased Receivable other than to turn over, make
available or deliver to the Seller the Collections and
documents with respect to any such Receivable as described in
(4) and (5) above.
(C) Advance Payments: The Seller may, from time to time on any Local
Business Day prior to the Termination Date, unless and until the
Operating Agent directs otherwise in the event that there is an Early
Amortisation Event or an Agent Account Event, withdraw, by way of
advance payment on account of such Purchase Price as will or may be
payable to the Seller on the next following Purchase Date, any amount
or amounts standing to the credit of the Agent Account. Any amount so
withdrawn (an "Advance Payment") shall be set off pro tanto in
accordance with Clause 4(C) against the Buyer's obligation to pay any
Purchase Price payable on the next following Purchase Date and, to the
extent the amount of the Advance Payment exceeds the amount of the
Purchase Price, be refunded by the Seller in full by the transfer of
cleared funds to the Agent Account not later than 12:00 noon on the
next following Settlement Date; provided always that any Advance
Payment shall be refunded by the Seller by the transfer of cleared
funds to the Agent Account immediately upon the demand of the Operating
Agent in the event that there is an Early Amortisation Event or a Agent
Account Event. The Seller shall not be obliged to pay interest on any
Advance Payment unless and to the extent that it is not refunded as
required under this Clause. Any overdue amounts shall bear default
interest in accordance with Clause 6(D).
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(D) Failure to Report: If there is a failure at any time by the Collection
Agent to report and quantify the amount of Collections received or the
amounts of any Advance Payments and/or the funds standing to the credit
of the Agent Account in respect of any Settlement Period such that the
amounts due by the Seller and the Buyer pursuant to Clauses 4(B) and
(C) cannot be accurately determined (in the Operating Agent's
reasonable opinion), there will fall due from the Seller to the Buyer
on the Settlement Date at the end of such Settlement Period (on account
of repayment of Advance Payments) an amount equal to the anticipated
Collections in respect of such Settlement Period as determined by the
Operating Agent, acting reasonably. For the purposes of this Clause
12(D), it shall be considered reasonable for the Operating Agent to
anticipate that all Collections due during such Settlement Period were
received by the Collection Agent during such Settlement Period. The
Buyer shall deposit such amount into the Temporary Adjustment Account.
Upon the Operating Agent becoming satisfied that a proper assessment of
the amounts due by way of repayment of Advance Payments has been made,
there shall be an adjustment in accordance with such assessment, by way
of repayment from the Buyer or (provided no Early Amortisation Event
has occurred) by way of further payment by the Seller, as required, and
such adjusted sum shall be treated for all purposes under this
Agreement as the Collections received during such Settlement Period.
Provided that such failure by the Collection Agent does not last longer
than two consecutive Settlement Periods and the provisions of this
Clause 12(D) are complied with, such failure shall not by itself
constitute an Early Amortisation Event.
(E) In consideration of the Agent acting as such under this Agreement, the
Seller shall pay to the Agent until the Termination Date the Agent Fee
of Pesetas 45.000 plus VAT (if any), such fee to be payable quarterly
in advance on the first Settlement Date and three monthly thereafter.
13. PROTECTION OF THE BUYER'S RIGHTS
(A) Notice of Sale: At any time after the occurrence of an Early
Amortisation Event, the Operating Agent may (and the Seller following
the Operating Agent's request shall) notify the Account Debtors, or any
of them, of Purchased Receivables of the Buyer's ownership of the
Purchased Receivables and the Collections of the Purchased Receivables
and direct (or cause the Seller to direct) all the Account Debtors of
Purchased Receivables, or any of them, that payment of all amounts
payable under any such Purchased Receivable be made directly to the
Operating Agent or its designee.
(B) Reconstruction of Accounts Receivable Trial Balance: If at any time the
Seller does not generate an Accounts Receivable Trial Balance in
relation to any Purchase Date (whether or not it is obliged to do so)
or (ii) provide the information to Exide Europe enumerated in Clause
9(L),,the Operating Agent will have the right to reconstruct that
Accounts Receivable Trial Balance or such information so that a
determination of the Purchased Receivables can be made, and such
reconstruction will be conclusive (in the absence of manifest error)
for the purposes of determining Purchased Receivables.
(C) Operating Agent's Right to Perform: If the Originator fails to perform
any of its agreements or obligations under this Agreement, the
Operating Agent may (but shall not be required to) itself perform, or
cause performance of, such agreement or obligation.
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(D) Power of Attorney (Poderes Notariales): Without prejudice to the
provisions of Clauses 13(A) to (D), the Originator irrevocably
constitutes and appoints the Operating Agent, with full power of
substitution, as its true and lawful attorney and agent, with full
power and authority in its name or otherwise, and in its place and
stead, and for its use and benefit at any time after the occurrence of
an Early Amortisation Event to take such action as the Operating Agent
may deem necessary or desirable in order to protect the interests of
the Buyer, Eureka and/or the Operating Agent and/or the Liquidity Banks
and/or to perfect title to any of the Purchased Receivables, or Related
Security, including the redirection of mail and endorse drafts, cheques
and other payment media, to perform any agreement or obligation of the
Originator under or in connection with this Agreement and/or under the
Account Bank Mandate(s), and to exercise all other remedies of the
Originator under this Agreement or existing at law. In furtherance of
the power herein granted, the Originator will assist and co-operate
with the Operating Agent and provide such facilities as the Operating
Agent may request. The power of attorney hereby granted is given by way
of security, is coupled with an interest, and is irrevocable and will
extend to and be binding upon the successors and assigns of the
Originator and is in substance on the terms expressed in Schedule 9 to
this Agreement.
14. RESPONSIBILITIES OF THE SELLER
Anything herein to the contrary notwithstanding:
(A) Perform Contracts: The Seller will perform all its obligations
under the Contracts related to the Purchased Receivables to the
same extent as if such Purchased Receivables had not been sold
pursuant to this Agreement and the exercise by either the
Operating Agent or the Buyer of its rights hereunder will not
relieve the Seller from such obligations.
(B) Exoneration of Buyer, Agent and Operating Agent: None of the
Buyer, Agent, Eureka nor the Operating Agent will have any
obligation or liability with respect to any Purchased
Receivables or related Contracts, nor will the Buyer, Agent,
Eureka or the Operating Agent be obliged to perform any of the
obligations of the Seller thereunder.
(C) Until the Operating Agent requests otherwise, the Seller will
hold in the interest of and for the sole benefit of the Buyer
the Contracts and other documentary items relating to the
uncollected Purchased Receivables at its address specified in
this Agreement. To the extent that the Contracts or other
documentary items also relate to Receivables that are not
Purchased Receivables, the Seller will hold them in such
interests for both the Buyer and the Seller to the extent of
the respective rights of the Buyer and the Seller therein
unless possession thereof is required by the Buyer to enforce
its ownership rights. The Seller will deliver such Purchased
Receivables, Contracts and documents to the Operating Agent (or
as it may direct), if so directed by the Operating Agent
following an Early Amortisation Event, and the Operating Agent
will make them available to the Seller to the extent that they
contain material or information that does not relate to
Purchased Receivables and to the extent that the Buyer's
interests are not thereby compromised.
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(D) Marking: The Seller will mark clearly and unambiguously its ordinary
business records, including without limitation its master data
processing records, relating to the Purchased Receivables with a legend
acceptable to the Operating Agent indicating that such Purchased
Receivables are owned by the Buyer. The Seller agrees that from time to
time it will promptly execute and deliver all instruments and
documents, and take all further action that the Operating Agent may
reasonably request in order to perfect (except in so far as perfection
may entail notifying the Account Debtors of the Buyer's ownership of
the Purchased Receivables and the Collections of the Purchased
Receivables, which shall only be undertaken in accordance with Clause
13(A) after an Early Amortisation Event), protect or more fully
evidence the Buyer's ownership interest in the Purchased Receivables,
the Collections and the Related Security and pending such time will
keep an up to date record of all Purchased Receivables.
(E) Third Party Collection Agent: At any time following the designation of
a Collection Agent other than the Seller:
(1) The Seller will, at the Operating Agent's request, (a) assemble
all the documents, instruments and other records (including,
without limitation, computer tapes and disks) which evidence
the Purchased Receivables, and the related Contracts and
Related Security, or which are otherwise necessary or desirable
to collect such Purchased Receivables, and will make the same
available to the Operating Agent at a place selected by the
Operating Agent or its designee or (if so requested) deliver
the same to the Operating Agent (or as it may direct), and (b)
segregate all cash, cheques and other instruments received by
it from time to time constituting Collections of Purchased
Receivables in a manner acceptable to the Operating Agent and
will, promptly upon receipt, remit all such cash, cheques and
instruments, duly endorsed or with duly executed instruments of
transfer, to the Operating Agent or its designee.
(2) The Seller authorises the Operating Agent to take any and all
steps in the Seller's name and on behalf of the Seller
necessary or desirable, in the determination of the Operating
Agent, to collect all amounts due under any and all Purchased
Receivables, including, without limitation, endorsing the
Seller's name on cheques and other instruments representing
Collections and enforcing such Purchased Receivables and the
related Contracts.
(F) Value Added Tax: For the purpose of ensuring recoupment of any value
added tax forming part of a Purchased Receivable:
(1) all or part of which remains unpaid after the statutory period
for purposes of claiming bad debt relief has elapsed; or
(2) (without prejudice to Clause 5(D)) which or the Outstanding
Balance of which is, or would be, reduced, adjusted or
cancelled by the Seller and/or any other Person whether as a
result of the matters in Clause 5(D) or for any other reason;
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the Seller will use its reasonable endeavours to recover such
value added tax (or the appropriate part thereof) from the
appropriate tax authorities, as agent of the Buyer, and
promptly remit it to the Buyer and, until so remitted, will
hold for the Buyer any dividend received or value added tax
recovered by the Seller in respect thereof (and any such
dividend or recovery will be and be treated as a Collection).
The Seller will make such accounting write-offs and transfers
and raise such credit notes as may be necessary or desirable
for this purpose, and take all such other steps as may be
reasonably requested by the Operating Agent. In particular, the
Seller will, at the request of the Operating Agent, accept a
re-assignment of any such Purchased Receivable (for a nil
consideration) solely for the purpose of facilitating
recoupment of such value added tax.
15. AGENCY AND INDEMNITIES
(A) Agency: In acting under this Agreement the Operating Agent shall have
only such duties, obligations and responsibilities as are expressly set
out in this Agreement (and such other duties, obligations and
responsibilities as are reasonably incidental) and acts solely as agent
of Eureka. However, without prejudice to the generality of the
foregoing, only the Operating Agent shall be entitled to receive and
retain fees and other amounts (including indemnification under this
Clause 15) payable to the Operating Agent for its own account.
(B) Indemnities by Seller: The Seller agrees to indemnify the Buyer, the
Agent, the Operating Agent and their respective Affiliates and the
Collection Agent from and against any and all damages, losses, claims,
liabilities and related reasonable costs and expenses, including
attorneys' fees and disbursements together with VAT thereon (all of the
foregoing being collectively referred to as "Indemnified Amounts")
awarded against or incurred by any of them arising out of or relating
to this Agreement or the ownership of Purchased Receivables, excluding,
however, (a) such amounts resulting from gross negligence or wilful
misconduct on the part of the Person who would otherwise be entitled to
claim such indemnification or (b) in the case of the Agent, the
Operating Agent and their respective Affiliates and the Collection
Agent recourse (except as otherwise specifically provided in this
Agreement) for uncollectible Purchased Receivables or for losses
arising out of late Collections. Without limiting the foregoing,
Indemnified Amounts include amounts relating to or resulting from:
(1) reliance on any representation or warranty made or deemed made
by the Seller under or in connection with this Agreement, or
any other information or report delivered by the Seller or the
Collection Agent pursuant to this Agreement, which shall have
been false or incorrect in any material respect when made or
deemed made or delivered (to the extent that such amounts have
not already been recovered by the applicable indemnified party
pursuant to Clause 5(D));
(2) the failure by the Seller to comply with any term, provision or
covenant contained in this Agreement or with any applicable
law, rule or regulation with respect to any Receivable, the
related Contract or the Related Security, or the nonconformity
of any Receivable or the related Contract or the Related
Security with any such applicable law, rule or regulation;
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(3) the failure to vest and maintain vested in the Buyer ownership
of each Purchased Receivable, free and clear of any Adverse
Claim whether existing at the time of the Purchase of such
Receivable or at any time thereafter, excluding any such
Adverse Claim created by the Buyer;
(4) any dispute, claim, offset or defence (other than discharge in
bankruptcy or winding up by reason of insolvency or analogous
event of the Account Debtor) of the Account Debtor to the
payment of any Receivable which is, or is purported to be, a
Purchase Receivable (including, without limitation, a defence
based on such Receivable or the related Contract not being a
legal, valid, binding and enforceable obligation of such
Account Debtor), or any other claim resulting from the sale of
the goods or services related to such Receivable or the
furnishing or failure to furnish such goods or services;
(5) any failure of the Seller, as Collection Agent or otherwise, to
perform its duties or obligations in accordance with the
provisions of this Agreement;
(6) the Buyer, at the request or with the approval of the Seller,
contracting for or arranging foreign exchange transactions
and/or funding in connection with any anticipated Purchase and
such Purchase does not in fact take place as a result of the
Seller. not delivering a Notice of Sale, the operation of
Clause 3(B) or any other provision of this Agreement, or a sale
of Receivables not being effected in relation to a Notice of
Sale by reason of any event described in Clause 11(D)(1), (2),
(3) and (4) or any breach by the Seller (in whatever capacity)
of any of its obligations under or in connection with this
Agreement;
(7) any products liability claim, or personal injury or property
damage claim, or other similar or related claim or action of
whatever sort arising out of or in connection with goods,
merchandise or services which are the subject of any Receivable
or Contract, and
(8) the transfer of an ownership interest in any Receivable other
than an Eligible Receivable (to the extent that such amounts
have not already been recovered by the applicable indemnified
party pursuant to Clause 5(D).
The Operating Agent will provide the Seller with a certificate or
certificates showing in reasonable detail the basis for the calculation
of Indemnified Amounts claimed under this Clause 15(B) provided, for
the avoidance of doubt, that the provision of such certificate or
certificates shall not be a condition for the making of any claim under
this Clause 15(B).
(C) Increased Costs: If the Operating Agent determines that compliance with
any law or regulation or any guideline or request from any central bank
or other governmental authority (whether or not having the force of
law) coming into force after the Effective Date affects or would affect
the amount of capital required or expected to be maintained by the
Buyer, the Agent, the Operating Agent, Citibank or any Person
controlling the Buyer, the Agent, the Operating Agent or Citibank, and
the Operating Agent determines that the amount of such capital is
increased by or based upon the existence of the Buyer's agreement, in
its disconnection, to make or maintain purchases under or pursuant to
this Agreement and other similar
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agreements or facilities (or any agreement entered into in accordance
with Clause 19(C)), or if the Operating Agent reasonably determines
that any amount is to be paid for liquidity agreements by the Buyer on
account of capital required or expected to be maintained by the
provider thereof, then, upon written demand by the Operating Agent, the
Seller shall immediately pay to the Operating Agent for the account of
the Buyer or Citibank or the Agent or, as the case may be, for its own
account from to time, additional amounts as specified by the Operating
Agent, sufficient to compensate, in light of such circumstances, to the
extent that the Operating Agent reasonably determines such increase in
capital or, as the case may be, such amount to be allocable to the
existence of the Buyer's agreement as referred to above. A certificate
as to such amount submitted to the Seller by the Operating Agent shall,
in the absence of manifest error, be conclusive and binding for all
purposes.
(D) Increased Costs in Respect of Taxation: If the Operating Agent
determines that as a result of any change in or in the interpretation
of or of the introduction of any law, regulation or regulatory
requirement relating to taxation coming into force after the Effective
Date, or as a result of any act or omission of the Seller, any of the
Buyer, the Agent, the Operating Agent, Citibank or any Person
controlling the Buyer, the Agent, Citibank or the Operating Agent,
incurs or will incur an increased cost in respect of purchase or
agreements to purchase made under or pursuant to this Agreement (or any
agreement entered into pursuant to Clause 19(C)) other than an
increased cost arising solely as a result of a change in the nate of
taxation on the overall net income of the relevant indemnified party,
the Seller shall immediately pay to the Operating Agent for the account
of the Buyer, the Agent or Citibank or, as the case may be, for its own
account from time to time, additional amounts as specified by the
Operating Agent, equal to such cost. A certificate as to such amount
submitted to the Seller by the Operating Agent shall, in the absence of
manifest error, be conclusive and binding for all purposes.
(E) Judgment Currency: Each reference in this Agreement to a specific
currency is of the essence. The obligation of the Seller (individually,
or as the Collection Agent) in respect of any sum due from it to the
Operating Agent or the Buyer under this Agreement will, notwithstanding
any judgment in any other currency, or any bankruptcy or winding up by
reason of insolvency or analogous event of the Seller, be discharged
only to the extent that on the Local Business Day following receipt by
the Operating Agent or the Buyer of any sum adjudged or determined to
be so due in such other currency, the Operating Agent could in
accordance with normal banking procedures purchase the currency
specified in this Agreement with such other currency. If the amount of
currency so purchased is less than the amount of the specified currency
originally due to the Operating Agent or the Buyer, the Seller agrees,
as a separate obligation and notwithstanding any such judgment,
bankruptcy, winding up or analogous event, to indemnify the Operating
Agent and the Buyer against such loss.
(F) Payment: Any amounts subject to the indemnification provisions of
Clause 15(B), (C), (D) or (E) shall be paid by the Seller to the
Operating Agent within two Programme Business Days following the
Operating Agent's demand therefor.
(G) After Tax Amount: In the event that any taxing authority seeks to
charge to tax any sum paid to the Buyer or the Operating Agent or any
of their respective Affiliates as a result of the indemnities or other
obligations contained herein, then the amount so payable shall be
grossed up by such amount as will ensure that after payment of the tax
so charged there shall
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be left a sum equal to the amount that would otherwise be payable under
such indemnity or obligation.
16. AMENDMENTS, ETC.
(A) Amendments and Waivers: No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Seller therefrom shall in
any event be effective unless the same shall be in writing and signed
by (1) the Seller, the Agent, the Buyer and the Operating Agent with
respect to an amendment, or (2) the Seller, the Agent the Buyer or the
Operating Agent, as the case may be, with respect to a waiver or
consent by it, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
(B) Entire Agreement: This Agreement contains a final and complete
integration of all prior expressions by the parties with respect to the
subject matter of this Agreement and constitutes the entire agreement
among the parties with respect to the subject matter of this Agreement,
superseding all prior oral or written understandings.
17. NOTICES
All notices and other communications provided for under this Agreement
shall, unless otherwise stated in this Agreement, be in writing in the
English language (including telex and fax communication) and mailed
(first class, postage paid) or delivered to each party at its address
set out under its name on the execution pages of this Agreement or at
such other telex or fax number or address as may be designated by such
party in a written notice to the other parties. All such notices and
communications will be effective, (i) in the case of written notice,
five days after being deposited in the post, or (ii) in the case of
notice by telex, when telexed against receipt of answer back, or (iii)
in the case of notice by fax, at the time of transmission unless served
on a day which is not a Local Business Day or after 5:00pm at the place
in which the recipient is located, in which case it will be effective
at 9:00am at the place in which the recipient is located on the
following Local Business Day. In each case notice must be addressed as
aforesaid:
18. NO WAIVER: REMEDIES
(A) No Waiver: No failure on the part of the Agent, the Buyer, the Seller
or the Operating Agent to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any night or remedy preclude any other or
further exercise thereof or the exercise of any other right or remedy.
The remedies in this Agreement are cumulative and not exclusive of any
remedies provided by law.
(B) Set Off: Without limiting the provisions of Clause 18(A) the Buyer, the
Agent, and the Operating Agent are hereby authorised by the Seller at
any time after the Seller is in default of its obligations under this
Agreement or an Early Amortisation Event has occurred and to set off
and apply, and/or to instruct Citibank or any of Citibank's Affiliates
to set off and apply, any and all deposits at any time held and other
indebtedness at any time owing (whether general or special, time or
demand, provisional or final and in whatever currency) by the Buyer,
the Agent, the Operating Agent or, as the case may be, any such
Affiliate to
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or for the credit or the account of the Seller against any and all of
the obligations of the Seller (as such, as Collection Agent, or
otherwise), now or hereafter existing under this Agreement, to the
Buyer, the Agent, or the Operating Agent or their respective successors
and assigns on, as the case may be, now or hereafter due or owing on
any account to Citibank or any of Citibank's Affiliates (and for this
purpose to convert one currency into another).
19. BINDING EFFECT: ASSIGNABILITY
(A) Successors and Assigns: This Agreement is binding upon and enures to
the benefit of (1) the Seller and its successors and permitted
assignees in accordance with Clause 19(B); (2) the Buyer and also in
relation to the benefit, but not the burden of this Agreement, each
Person to whom the Buyer has for the time being in accordance with
Clause 19(C) (2) or (3) granted or assigned (or agreed to grant or
assign) all or part of any Purchased Receivable (or any participation
or interest, whether proprietary or contractual, in or in respect of
all or part of any Purchased Receivable) and/or all or any of its
rights, benefits and interest in or under this Agreement and their
respective successors and assignees; (3) the Agent and its successors
and (4) Citibank and its successors as Operating Agent (and the terms
"Seller", "Buyer" and "Operating Agent" shall be construed
accordingly).
(B) The Seller: No Seller may assign any of its rights, benefits or
interest in or under this Agreement except with the prior consent of
the Operating Agent.
(C) The Buyer: The Buyer may grant or assign all or part of any Purchased
Receivable (or any participation or interest, whether proprietary or
contractual, in or in respect of all of any part of any Purchased
Receivable) and/or all or any of its rights, benefits and interest in
or under this Agreement (1) as provided in this Agreement, (2) to
Eureka or any Affiliate of Eureka or any vehicle managed by Eureka or
an Affiliate of Eureka (3) to Citibank or any Affiliate of Citibank or
any vehicle managed by Citibank or an Affiliate of Citibank, or (4)
(after first offering to make such grant or assignment on
substantially similar terms to the Seller, and the Seller not
accepting such offer within 10 Programme Business Days of the date of
the offer) to any other Person which engages in the business of
purchasing or accepting grants or assignments of, or making loans in
respect of, accounts receivable or other debts or intangibles or
participations or interests, whether proprietary or contractual,
therein or in respect thereof, and has entered into an agreement with
the Buyer. Any such grant or assignment as referred to in (2), (3) and
(4) above shall be upon such terms and conditions as the parties
thereto may mutually agree. Upon the assignment of all or part of any'
Purchased Receivable, rights, benefits and/or interests from an
assignor as described above, the respective assignee receiving such
assignment shall have all the rights of such assignor hereunder
with respect to such Purchased Receivable (or part thereof), rights,
benefits and/or interests. An assignor of any Purchased Receivable (or
part thereof), rights, benefits and/or interests under this Agreement
will provide notice to the Seller of any such assignment, unless notice
is waived by the Seller.
(D) Additional Seller: The Operating Agent may, in its sole and absolute
discretion, at the request of Exide Europe, admit DETA-Iberica S.A. as
a Seller under this Agreement (for the purposes of this Clause 19(D),
such party or parties shall be referred to as the "Additional
Seller")]. In addition to the discretion of the Operating Agent, the
admission the Additional Seller shall also be subject to the following
conditions precedent:
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(1) the Operating Agent receives the documents and information
specified in Schedule 5 in respect of the Additional Seller,
each in form and substance satisfactory to the Operating Agent;
(2) the Additional Seller, the Seller and the Buyer have delivered
to the Operating Agent a duly completed and executed Admission
of Additional Seller in the form attached as Schedule 2
(together with confirmation of due execution and delivery, in
form and substance satisfactory to the Operating Agent) and the
Operating Agent has indicated its consent by execution of the
Admission of Additional Seller; and
(3) Exide Europe shall have confirmed in writing to the Operating
Agent that the Letter of Undertaking shall apply, on the terms
stated therein, to all of the obligations of the Additional
Seller under the Programme;
upon which time the Additional Seller shall be deemed to be a party to
this Agreement from and after the next Settlement Date subsequent to
the execution of the Admission of Additional Seller by the Operating
Agent, and the Additional Seller shall be under the same obligations
towards each of the other parties to this Agreement as if it had been
an original party hereto as a "Seller".
20. TERMINATION
This Agreement will create and constitute the continuing obligations of
the parties in accordance with its terms, and will remain in full force
and effect until such time, after the Termination Date, as all Capital
of all Groups of Receivables has been reduced to zero and all Yield,
Programme Costs and other fees due under this Agreement or Fees Letter
have been paid; provided, however, that the rights and remedies with
respect to any breach of any representation and warranty made by the
Seller in or pursuant to this Agreement, the provisions of Clause 21
and the indemnification and payment provisions of this Agreement will
be continuing and will survive any termination of this Agreement. The
Operating Agent will notify the Rating Agencies promptly upon the
occurrence of:
(A) the Termination Date; and/or
(B) any material amendment to this Agreement.
21. NO PROCEEDINGS
(A) Buyer: The Seller and the Operating Agent each hereby agree that they
will not institute against the Buyer any bankruptcy, insolvency or
similar proceeding so long as any commercial paper issued by Eureka or
any of its Affiliates is outstanding or one year plus one day has not
elapsed since the last day on which any such commercial paper was
outstanding.
(B) Eureka: The Seller, the Buyer and the Operating Agent each hereby agree
that they will not institute against Eureka or any of its Affiliates
any bankruptcy, insolvency or similar proceeding so long as any
commercial paper issued by Eureka or any of its Affiliates is
outstanding or one year plus one day has not elapsed since the last day
on which any such commercial paper was outstanding.
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<PAGE>
22. EXECUTION IN COUNTERPARTS: SEVERABILITY
(A) 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 when taken together shall constitute one and the same
agreement.
(B) Severability: If any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations under this Agreement, or of such provision or obligation in
any other jurisdiction, shall not be affected or impaired thereby.
23. CONFIDENTIALITY
Unless otherwise required by applicable law or regulation, or as
requested by any regulator or tribunal with competent jurisdiction
over, or over any business of, the relevant party, each of the parties
agrees to maintain the confidentiality of this Agreement in its
communications with third parties and otherwise.
24. GOVERNING LAW AND JURISDICTION
(A) Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of Spain.
(B) Consent to Jurisdiction: The parties hereto hereby irrevocably and for
the benefit of each other submit to the jurisdiction of the courts of
Madrid in any action or proceeding arising out of or relating to this
Agreement, and hereby irrevocably agree that all claims in respect of
such action or proceeding may be heard and determined in such courts.
The parties hereto hereby irrevocably waive, to the fullest extent they
may effectively do so, the defence of an inconvenient forum to the
maintenance of such action or proceeding. As an alternative method of
service, the Seller and the Buyer also irrevocably consent to the
service of any and all process in any such action or proceeding by the
delivery of copies of such process to the Seller or the Buyer, as
applicable, at the address designated for notices under this Agreement.
The Seller and the Buyer agree that a final judgment in any action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law. Nothing shall affect the right to serve process in any other
manner permitted by law.
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<PAGE>
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
SOCIEDAD ESPANOLA DEL ACUMULADOR, S.A.
as Seller
By: /s/ Baldomero Sanchez Falcon
-------------------------------------
Name: BALDOMERO SANCHEZ FALCON
Title: EMPOWERED
Date: 10.06.1997
EXIDE EUROPE FUNDING Ltd.
as Buyer
By: /s/ PAUL EGERTON-VERNON
-------------------------------------
Name: PAUL EGERTON-VERNON
Title: DIRECTOR
Date: 13.06.97
TUDOR COLLECTIONS LTD.
as Agent
By: /s/ PAUL EGERTON-VERNON
-------------------------------------
Name: PAUL EGERTON-VERNON
Title: DIRECTOR
Date: 13.06.97
CITIBANK, N.A.
as Operating Agent
By: /s/ Michael Storm
-------------------------------------
Name: Michael Storm
Title: VP
Date: 17.06.97
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<PAGE>
EXECUTION COPY
GERMAN RECEIVABLES SALE AGREEMENT
dated 5 June, 1997
ACCUMULATORENFABRIK SONNENSCHEIN GmbH
EXIDE AUTOMOTIVE BATTERIE GmbH
HAGEN BATTERIE AG
collectively, as Sellers and as Collection Agents
EXIDE EUROPE FUNDING LTD.
as Buyer
CITIBANK, N.A.
as Operating Agent
Clifford Chance
Frankfurt
<PAGE>
CONTENTS
1. DEFINITIONS AND CONSTRUCTION...................................... 1
2. FACILITY.......................................................... 22
3. CONDITIONS PRECEDENT.............................................. 22
4. PURCHASES......................................................... 24
5. COLLECTIONS AND SETTLEMENT........................................ 26
6. FEES, COSTS AND STAMP DUTY........................................ 29
7. PAYMENTS AND COMPUTATIONS, ETC.................................... 30
8. REPRESENTATIONS AND WARRANTIES OF THE SELLERS..................... 31
9. AFFIRMATIVE COVENANTS OF THE SELLERS.............................. 35
10. NEGATIVE COVENANTS OF THE SELLERS................................. 37
11. REPORTING REQUIREMENTS OF THE SELLERS............................. 38
12. COLLECTION AGENTS, COLLECTIONS AND BUYER ACCOUNTS................. 40
13. PROTECTION OF THE BUYER'S RIGHTS.................................. 45
14. RESPONSIBILITIES OF THE SELLERS................................... 46
15. AGENCY AND INDEMNITIES............................................ 48
16. AMENDMENTS, ETC................................................... 51
17. NOTICES........................................................... 52
18. NO WAIVER: REMEDIES............................................... 52
<PAGE>
19. BINDING EFFECT: ASSIGNABILITY..................................... 53
20. TERMINATION....................................................... 54
21. NO PROCEEDINGS.................................................... 55
22. RESTRUCTURING..................................................... 55
23. RELEASE OF EXCESS RELATED SECURITY................................ 56
24. EXECUTION IN COUNTERPARTS: SEVERABILITY........................... 56
25. CONFIDENTIALITY................................................... 56
26. GOVERNING LAW AND JURISDICTION.................................... 56
THE SCHEDULES
Schedule 1 Part 1 - Offices of the Sellers
Part 2 - Collection Accounts
Part 3 - Seller Non-Transaction Accounts
Part 4 - Buyer Accounts
Schedule 2 Form of Admission of Additional Seller
Schedule 3 Form of Settlement Statement
Schedule 4 Form of Summary Report
Schedule 5 Initial Conditions Precedent
Schedule 6 Form of Notice of Sale
Schedule 7 Forms of Contract
Schedule 8 Part 1 - Information to be provided to Exide Europe
Part 2 - Form of Monthly Summary
Schedule 9 Part 1 - Form of ASGmbH Account Pledge Agreement
Part 2 - Form of EABGmbH Account Pledge Agreement
Part 3 - Form of HBAG Account Pledge Agreement
Part 4 - Form of Buyer Account Pledge Agreement
<PAGE>
THIS RECEIVABLES SALE AGREEMENT, dated 5 June, 1997, is made among:
(1) ACCUMULATORENFABRIK SONNENSCHEIN GmbH, a company registered under HRB
107 at Amtsgericht Budingen ("ASGmbH");
(2) EXIDE AUTOMOTIVE BATTERIE GmbH, a company registered under HRB 6408 at
Amtsgericht Kassel ("EABGmbH");
(3) HAGEN BATTERIE AG, a company registered under HRB 1087 at Amtsgericht
Soest ("HBAG" and, together with ASGmbH and EABGmbH, the "Sellers" and
"Seller" means any of them);
(4) EXIDE EUROPE FUNDING LTD., a company with its registered office at 22
Grenville Street, St. Helier, Jersey JE4 8PX, Channel Islands (the
"Buyer");
(5) CITIBANK, N.A., a United States national banking association acting
through its London branch at 336 Strand, London WC2R lHB (the
"Operating Agent");
Preliminary Statements
A. Each of the Sellers desires to sell, from time to time, all of its
rights and title to and interest in certain of its Receivables, and the
Buyer desires to purchase, from time to time, such Receivables from
such Seller on or after the Effective Date; and
B. The Operating Agent has been requested and is willing to act as
Operating Agent as set out in this Agreement and, in particular, in
Clause 15(A), subject to the ability of the Operating Agent to delegate
its obligations pursuant to the terms of this Agreement, in particular,
Clause 4(G).
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS AND CONSTRUCTION
In this Agreement (including the Preliminary Statements):
(A) Accounting Terms: All accounting terms not specifically defined in this
Agreement shall be construed in accordance with generally accepted
accounting principles as in effect on the date hereof in the Federal
Republic of Germany.
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(B) Defined Terms: The following terms shall have the meanings indicated:
"Account Debtor" means a Person obliged to make payment(s) pursuant to a
Contract.
"Account Pledge Agreements" means the account pledge agreements substantially in
the forms of Schedule 9 hereto.
"Accounts Receivable Listing" means a list, by invoice number, of all of the
Contracts which are shown on a Seller's general ledger as outstanding at the
time the list is compiled together with such other information concerning each
Contract, and in such format, as the Operating Agent may specify.
"Accounts Receivable Trial Balance" means a Seller's accounts receivable trial
balance computer printout, containing a list of Account Debtors together with
the aged Outstanding Balance of the Receivables.
"Accruals" means, as of any time, the aggregate amount by which the face value
of Purchased Receivables have been reduced by virtue of any prompt payment
discounts, accruals for volume rebates, warranty claims by the applicable
Account Debtor(s), and other credit notes (including, without limitation, credit
notes issued to Account Debtors as a result of disputes, claims and invoicing
errors by the relevant Seller).
"Admission of Additional Seller" means an agreement substantially in the form
set out in Schedule 2.
"Advance Payment" means, at any time, the aggregate amount of any withdrawals
from the Buyer Account made by the Seller under Clause 12(C) to the extent they
are outstanding and not repaid.
"Adverse Claim" means any claim of ownership, lien, security interest, mortgage,
charge, or encumbrance, or other right or claim of any Person.
"Affiliate" when used with respect to (i) any company incorporated in the
Federal Republic of Germany means any related company or corporation in
accordance with Section 15 of the German Stock Corporation Act ("Akriengesetz")
and (ii) any other Person means any other Person controlling, controlled by or
under common control with, in each case, directly or indirectly that Person and
includes a Subsidiary (as defined below) or a company or corporation of which
that Person is a Subsidiary and any other Subsidiary of such company or
corporation; provided however, that, Persons which are not part of the Exide
Group shall not be considered to be Affiliates of any Person which is part of
the Exide Group except for the purposes of paragraph (i) above, paragraph (2) of
the definition of "Eligible Receivable" and Clause 6(A).
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<PAGE>
"Approved Jurisdiction" means each of (i) the Federal Republic of Germany or
(ii) France, Italy, England, Wales, Scotland or Northern Ireland, Spain, The
Netherlands or Belgium, or (iii) another jurisdiction in respect of which the
Seller has obtained as security from the applicable Account Debtor a clear and
unconditional demand letter of credit (governed by the Uniform Customs and
Practice for Documentary Credits) from a bank whose short-term debt is rated at
least A-l and P-l by the Rating Agencies, the term of which is in form and
substance satisfactory to the Operating Agent (acting reasonably) and the
conditions of which are in form and substance satisfactory to the Operating
Agent (acting reasonably), and which letter of credit has been fully assigned to
the Operating Agent (which assignment shall include full notice to the
applicable bank issuing the letter of credit), requiring payment to be made
directly to the Operating Agent.
"Available Collections" means, at any time, an amount equal to the aggregate of
all Collections standing to the credit of the Buyer Accounts in respect of
Purchased Receivables less all accrued Yield and Programme Costs (whether or not
incurred or paid by the Buyer) together with any other amounts owing from the
Collection Agents to the Buyer or the Operating Agent under this Agreement.
"Bank Facility Rate" means either: (a) in the event Eureka shall not at any
time, fund its purchase under the RPA with the issuance of commercial paper or
purchases are being made under the PPA, due solely to an Early Amortisation
Event, a per annum rate equal to Dollar LIBOR plus 1.75%, or (b) in the event
Eureka shall not at any time fund its purchase under the RPA with the issuance
of commercial paper or purchases are being made under the PPA, for any reason
other than due to an Early Amortisation Event, a per annum rate equal to Dollar
LIBOR plus 0.125%.
"Base Rate" means a fluctuating interest rate per annum in effect from time to
time, which rate per annum shall at all times be equal to the highest of:
(a) the rate of interest announced publicly by Citibank in New York, from
time to time, as Citibank's base rate:
(b) the sum (adjusted to the nearest 1/16 of 1% or, if there is no nearest
1/16 of 1%, to the next highest 1/16 of 1%) of (i) 1/2 of 1% per
annum, plus (ii) the rate obtained by dividing (A) the latest three-
week moving average of secondary market morning offering rates in the
United States for three-month certificates of deposit of major United
States money market banks, such three-week moving average (adjusted to
the basis of a year of 360 days) being determined weekly on each Monday
(or, if such day is not a Programme Business Day, on the next
succeeding Programme Business Day) for the three-week period ending on
the previous Friday by Citibank on the basis of such rates reported by
certificate of deposit dealers to and published by the Federal Reserve
Bank of New York or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by
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Citibank from three New York certificate of deposit dealers of
recognised standing selected by Citibank, by (B) a percentage equal to
100% minus the average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal Reserve
System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency, supplemental
or other marginal reserve requirement) for Citibank with respect to
liabilities consisting of or including (among other liabilities) three-
month Dollar non-personal time deposits in the United States plus (iii)
the average during such three-week period of the annual assessment
rates estimnated by Citibank for determining the then current annual
assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring Dollar deposits of Citibank
in the United States; and
(c) 1/2 of one per cent. per annum above the Federal Funds Rate.
"Buyer Account" means each of the accounts specified in Part 4 of Schedule 1 in
the name of the Buyer with the Collection Account Banks or such other account at
such bank as the Buyer may utilise for the purposes of this Agreement and
designate as a Buyer Account.
"Buyer Entitlement" means all amounts standing to the credit of the Seller Non-
Transaction Accounts which are not Seller Entitlement.
"Capital" equals, at any time, the Deutsch Mark Equivalent of the Sellers'
Proportionate Share of Programme Capital.
"Citibank" means Citibank, N.A., a national banking association under the laws
of the United States of America.
"Collection Account" means, in respect of each Seller, each of the accounts set
opposite such Seller's name in Part 2 of Schedule 1 pursuant to the Collection
Account Bank Mandates and operated by the relevant Collection Agent or such
other account or accounts of each Seller with the Collection Account Banks as
may, with the prior written consent of the Operating Agent, be utilised for the
purposes of this Agreement and designated as a Collection Account.
"Collection Account Banks" means each of the banks listed in Part 2 of Schedule
1 with which a Collection Account is held or such other branch or bank at which
a Collection Account is, with the prior written consent of the Operating Agent,
opened or maintained from time to time.
"Collection Account Bank Mandates" means the resolutions, instructions and
signature authorities given by each Seller to the Collection Account Banks in
form and substance satisfactory to the
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<PAGE>
Operating Agent (as evidenced by its execution thereof), as they may be amended
from time to time with the prior written consent of the Operating Agent.
"Collection Account Event" shall be deemed to have occurred if Exide Europe
fails to maintain a Debt Service Cover Ratio of greater than 1.10 :1.00.
"Collection Agent" means at any time the Person then authorised pursuant to this
Agreement to service, administer and collect Purchased Receivables.
"Collections" means, with respect to any Purchased Receivable, all cash
collections and other cash proceeds of that Purchased Receivable (including
Uberweisungen, bank transfers, wire-transfers, checks, bills of exchange, direct
debits, but excluding any cash proceeds arising under any transaction as
referred to in Clause 19(C)) and of any Related Security with respect to that
Purchased Receivable.
"Commitment" means the commitment of the Buyer under Clause 2 hereof.
"Concentration Amount" means as of any date, with respect to each Account
Debtor, the product of (a) the Concentration Limit applicable to such Account
Debtor and (b) the Dollar Equivalent of the Outstanding Balance of Purchased
Receivables aggregated among all Origination Agreements.
"Concentration Limit" means, in relation to the aggregate Receivables for each
Account Debtor: (a) for any single Account Debtor rated at least A-I or P-l or
its equivalent by the Rating Agencies, 17%;
(b) for any single Account Debtor rated A-2 or P-2 or its equivalent by the
Rating Agencies, 8.5%;
(c) for any single Account Debtor rated A-3 or P-3 or its equivalent by the
Rating Agencies, 5.66%;
(d) for any single Account Debtor rated below A-3 or P-3 or not rated on its
short term debt, 3.4% (to the extent an Account Debtor does not have a short
term rating but has an actual or implied senior long-term debt rating, the
applicable percentage will be determined based on equivalent senior long-
term debt ratings (as determined by the Operating Agent) for the short term
ratings specified above).
"Contract" means a written agreement between a Seller and an Account Debtor
pursuant to which the Account Debtor is obliged to pay for goods or services
sold or provided by such Seller (including any value added tax in respect
thereof) from time to time.
"Country Limit" means the DM Equivalent of $37,000,000.
"Credit and Collection Policy" means in respect of a Seller, its policies,
practices and procedures relating to Contracts and Receivables in form and
content satisfactory to the Operating Agent in accordance with paragraph (j) of
Schedule 5, as modified from time to time with the consent of the Operating
Agent.
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<PAGE>
"Currency Exchange Agreement" means, as of any time, the Currency Exchange
Agreement (as that term is defined in the RPA or the PPA, as applicable) that
may be entered into by the Buyer from time to time in accordance with the
provisions of the RPA or the PPA, as applicable.
"Debt" means any indebtedness, present or future, actual or contingent in
respect of moneys borrowed or raised or any financial accommodation whatever
and, without limitation, shall include:
(1) indebtedness under or in respect of a negotiable or other financial
instrument, Guarantee, interest, gold or currency exchange, hedge or
arrangement of any kind, redeemable share, share the subject of a
Guarantee, discounting arrangement, finance lease or hire purchase
agreement;
(2) the deferred purchase price (for more than 90 days) of an asset or
service; and
(3) any obligation to deliver goods or other property or provide services
paid for in advance by a financier or in relation to another financing
transaction.
"Debt Service Cover Ratio" means the Debt Service Cover Ratio as that term is
defined and calculated pursuant to the Syndicated Facility; provided however, if
the Syndicated Facility is terminated for any reason, the definition and
calculation of Debt Service Cover Ratio for the purposes of this Agreement will
survive such termination.
"Default Ratio" as of any date, is equal to the ratio (expressed as a
percentage) for the most recent month for which such ratio is available of (i)
aggregate Purchased Receivables that were 91-120 days past due at the end of
each such month plus Purchased Receivables that were charged off (or, without
duplication, which should have been charged off) as uncollectible during each
such month which, if they had not been charged off (or, without duplication,
which should have been charged off) would have been less than 90 days past due
during such month to (ii) aggregate sales giving rise to Receivables that were
generated during the calendar month immediately preceding the commencement of
the Loss Horizon preceding such date.
"Defaulted Receivable" means a Receivable:
(1) which, after the original due date, remains unpaid in whole or in part
for more than 90 days;
(2) in respect of which the Account Debtor has taken any action, or
suffered any event to occur, of the type described in Clause 11(D)(2);
or
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(3) which has been, or should be, written off or provided for in a Seller's
books as uncollectible in accordance with the Credit and Collection
Policy.
"Designated Account Debtor" means, at any time, all Account Debtors unless the
Operating Agent has advised a Seller that an Account Debtor shall not be
considered a Designated Account Debtor.
"Deutsche Mark" and "DM" each mean the lawful currency of the Federal Republic
of Germany;
"Determination Date" means initially, the Effective Date and thereafter, each
following Tuesday; provided however, if such day is not a Programme Business
Day, the applicable Determination Date shall be the next succeeding Programme
Business Day.
"Diluted Receivable" means that portion of any Purchased Receivable which is
either (a) reduced or cancelled as a result of (i) any defective or rejected
goods or services, or any failure by a Seller to deliver any goods or services
or otherwise to perform under the underlying Contract or invoice, or (ii) any
change in the terms of or cancellation of any Contract or invoice or any other
adjustment by a Seller which reduces the amount payable by the Account Debtor on
the related Purchased Receivable or (iii) any set-off in respect of any claim by
the Account Debtor on the related Purchased Receivable or (b) subject to any
specific dispute, offset, counterclaim or defence whatsoever (except the
discharge in bankruptcy of the Account Debtor thereof).
"Dilution Horizon" means, at any time, the estimated weighted average period in
days between the issuance of invoices and the related credit note, if any, by
the Programme Sellers, as such period is calculated by the Operating Agent
from time to time.
"Dilution Horizon Ratio" equals the higher of (a) the Dollar Equivalent of total
sales giving rise to Programme Receivables for the Programme Sellers for the
past Dilution Horizon divided by the Dollar Equivalent of the outstanding
balance of Eligible Receivables (whether or not they are Purchased Receivables)
aggregated among all Origination Agreements as of the end of the most recent
month and (b) 0.5.
"Dilution Ratio" as of any date, is equal to the ratio (expressed as a
percentage) for the most recently ended month of (i) the aggregate amount of
Receivables that become Diluted Receivables during each such month to (ii) the
aggregate sales giving rise to Receivables that were originated during the
preceding month.
"Dilution Volatility Factor" means as of any date, a percentage equal to the
product of (i) the amount by which (A) the highest two month average Programme
Dilution Ratio during the most recently ended twelve month period exceeds (B)
the average of the Programme Dilution Ratios during
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such twelve month period and (ii) (A) the highest two month average Programme
Dilution Ratio during such twelve month period divided by (B) the average of the
Programme Dilution Ratios during such twelve month period.
"Discount" means with respect to a Group of Receivables on the relevant Purchase
Date the sum of applicable Programme Costs, applicable Accruals and applicable
Reserves.
"DM Equivalent" or "Deutsche Mark Equivalent" of any sum and at any time means
the amount of Deutsche Mark that would be purchased under the Currency Exchange
Agreement at the Spot Rate determined for such sum at such time.
"Dollar Equivalent" of any sum and at any time means the amount of Dollar that
would be purchased under the Currency Exchange Agreement at the Spot Rate
determined for such sum the most recent Settlement Date.
"Dollars" and the sign "$" each mean the lawful currency of the United States of
America.
"Early Amortisation Event" means the first to occur of:
(1) any Originator defaults in the payment on the due date of any payment
due and payable by it under or relating to this Agreement or any of
the other Relevant Documents and such default continues unremedied
for a period of five (5) Local Business Days after the earlier of
such Originator becoming aware of such default and the receipt by
such Originator of written notice by the Operating Agent requiring
the same to be remedied;
(2) subject to Clause 12(D), any Originator defaults in the performance
or observance of any of its other covenants and obligations, or
breaches any representation or warranty (other than a breach of the
representation and warranty in Clause 8(T)), under this Agreement or
any of the other Relevant Documents, which in the reasonable opinion
of the Operating Agent is materially prejudicial to the interests of
the Buyer and/or Eureka and/or the Liquidity Banks and/or the
Operating Agent, and such default is not remedied to the satisfaction
of the Operating Agent within five Local Business Days of the earlier
of such Originator becoming aware of such default and receipt by such
Originator of written notice by the Operating Agent requiring the
same to be remedied (for the avoidance of doubt, for the purposes of
this paragraph (2), if an Originator satisfies its obligations
pursuant to Clause 5(D) within such five Local Business Day period,
such default or breach shall not be considered to be an Early
Amortisation Event);
(3) an effective resolution is passed for winding up any Originator;
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(4) any Originator ceases or threatens to cease to carry on its business
or ceases to carry on the whole or a substantial part of its
business, or stops payment or threatens to stop payment of its debts,
(which cessation or threat thereof would, in the opinion of the
Operating Agent be likely to materially and adversely affect such
Originator's ability to perform its obligations under the Relevant
Documents, or any of them) or any Originator becomes unable to pay
its debts (Zahlungsunfahigkeit), or is deemed unable to pay its
debts, within the meaning of German law on insolvency, including
within the meaning of the Konkursordnung or the Vergleichsordnung or
becomes unable to pay its debts as they fall due, or the value of its
assets falls to less than the amount of its liabilities (taking into
account for both these purposes its contingent and prospective
liabilities) or otherwise becomes insolvent or over-indebted
(uberschuldet);
(5) Exide Europe ceases at any time to own, directly or indirectly, a
minimum of 80% of each class of the outstanding capital stock of any
Seller;
(6) Exide Europe breaches the 1:1 Debt Service Cover Ratio;
(7) any Debt of a member of the Exide Group in excess (in the aggregate)
of the DM Equivalent of $5,000,000 becoming prematurely due and
payable or is placed on demand as a result of an event of default
(howsoever described) under the document relating to that Debt;
(8) any sale of Eligible Receivables under this Agreement ceases to
create a valid and perfected unencumbered first priority interest or
security interest in such Eligible Receivables;
(9) proceedings are initiated against any Originator in respect of its
liquidation, winding-up, administration, insolvency, composition,
reorganisation (other than a reorganisation the terms of which have
been approved by the Operating Agent and where such Originator is
solvent) under any applicable liquidation, administration,
insolvency, composition, reorganisation or other similar laws save
where such proceedings are being contested in good faith by such
Originator, or an administrative or other receiver, servicer or other
similar official is appointed in relation to any Originator or in
relation to the whole or any substantial part of the undertaking or
assets of any Originator or an encumbrancer shall take possession of
the whole or any substantial part of the undertaking or assets of any
Originator, or a distress or execution or other process shall be
levied or enforced upon or sued out against the whole or any
substantial part of the undertaking or assets of any Originator and
in any of the foregoing cases it shall not be discharged within 15
days;
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(10) if any Originator shall initiate or consent to judicial proceedings
relating to itself under any applicable liquidation, administration,
insolvency, composition, reorganisation or other similar laws or
shall make a conveyance or assignment for the benefit of its
creditors generally,
(11) for any three month period, the average Default Ratio exceeds 5%;
(12) for any three month period, the average Dilution Ratio exceeds 7%;
(13) for any three month period, the average Loss to Liquidation Ratio
exceeds 0.5%;
(14) the Buyer is unable to obtain appropriate funds from its currency
swap counterparty under the Currency Exchange Agreement; or
(15) an Early Amortisation Event as that term is defined under the RPA or
the PPA or a Programme Amortisation Event under any other Origination
Agreement.
"Effective Date" means the date upon which the initial conditions precedent set
forth in Schedule 5 have been satisfied and which has been designated as such by
the Operating Agent, which day shall be a Thursday which is a Programme Business
Day.
"Eligible Receivable" means a Receivable:
(1) the Account Debtor of which is a company or commercial partnership or
registered cooperative or any other body corporate which is
(according to the address specified in the related invoice) organised
under the laws of and resident in an Approved Jurisdiction;
(2) the Account Debtor of which is a Designated Account Debtor and is not
an Affiliate of any party to this Agreement;
(3) the Account Debtor of which is not the Account Debtor of any
Defaulted Receivables the aggregate Outstanding Balance of which
equals or exceeds 10% of the aggregate Outstanding Balance of all
Receivables of such Account Debtor;
(4) in respect of the Account Debtor of which no delivery or shipment has
been cancelled or suspended for credit reasons and no credit line or
accommodation has been cancelled or suspended for credit reasons, in
either case at any time in the 2 years preceding the date that the
invoice relating thereto is despatched;
(5) which is not a Defaulted Receivable at the date of Purchase;
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(6) which, according to the Contract related thereto, is required to be
paid in full on a date which falls (i) not earlier than the Purchase
Date and (ii) within 120 days in respect of ASBmbH and HBAG or 180
days in respect of EABGmbH after the earlier of the original billing
date and the date that the invoice relating thereto is despatched;
(7) the Dollar Equivalent of the Outstanding Balance of which, when added
to the Dollar Equivalent Outstanding Balance (as that term is defined
under each Origination Agreement) of all other Purchased Receivables
owing by the same Account Debtor or any of its Affiliates under all
Origination Agreements, does not exceed the Concentration Amount;
(8) which is denominated and payable only in Deutsche Mark;
(9) which (A) arises under a form of Contract set out in Schedule 7 (or
which otherwise has been duly authorised by the Operating Agent),
which is stated to be, and is, governed (for the purposes of
applicable conflict of laws principles in the Federal Republic of
Germany) by the laws of the Federal Republic of Germany and which is
in existence and in full force and effect and constitutes the legal,
valid and binding obligation of the Account Debtor, (B) is an
obligation which is freely assignable in the manner contemplated in
this Agreement and, for the avoidance of doubt, is not subject to any
restriction on assignment and (C) is not subject to any Adverse Claim
or dispute, set off, counterclaim or defence whatsoever;
(10) which, together with the Contract related thereto, does not
contravene in any material respect any applicable laws, rules or
regulations and with respect to which the relevant Seller is not in
violation of any such law, rule or regulation in any material
respect;
(11) which (A) satisfies all applicable requirements of the Credit and
Collection Policy and (B) complies with such other criteria and
requirements (other than those relating to the collectability of such
Receivable) as the Operating Agent may from time to time specify to
the relevant Seller and which are based on a criterion or requirement
of any one or more of the Rating Agencies;
(12) which is not subject to withholding taxes on payments from the
Account Debtors in respect thereof;
(13) which represents all or part of the sales price in respect of the
supply of goods or services in the Approved Jurisdiction in question;
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(14) the Account Debtor of which is not a government agency or local
authority unless, the Account Debtor of which is considered a
separate corporate entity under applicable law that is owned,
directly or indirectly by a government agency or local authority;
(15) which has not been prepaid in whole or in part; and
(16) for which all goods and services to which it relates have been
delivered and performed, and all requirements of such Contract
concerning the nature, amount, quality, condition or delivery of the
goods or services, or upon which payment of such Receivable may be
dependent, have been fulfilled in all material respects.
"Eureka" means Eureka Securitisation, Plc., a company incorporated under the
laws of England and Wales.
"Exide Europe" means Exide Holdings Europe S.A., a French societe anonyme.
"Exide Group" means Exide Europe and all of its Subsidiaries.
"Facility Fee" means the Sellers' Proportionate Share of 0.30% per annum of the
Facility Limit calculated monthly in arrears and applied on each Settlement
Date.
"Facility Limit" means $ 175,000,000.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Programme Business Day, for the next preceding Programme Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Programme Business Day, the average of the
quotations for such day on such transactions received by the Operating Agent
from three Federal funds brokers of recognised standing selected by it.
"Fees Letter" means the Fees Agreement dated as of the date hereof between,
inter alia the Originators, the Buyer, Exide Europe and the Operating Agent in
respect of the calculation and payment of certain fees.
"Final Payment Date" means the date on which payment is made by the Operating
Agent to a Seller pursuant to Clause 5(C).
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"Foreign Currency Reserve" as of any Settlement Date will equal 5.5% of the Loss
and Dilution Reserve for such Settlement Date, or such other amount as
determined by the Operating Agent (and notified in writing to the Sellers),
acting reasonably (upon the written request of the Seller after any
redetermination of the level of the Foreign Currency Reserve, the Operating
Agent agrees to provide the Seller with information relating to the basis of
such redetermination).
"Funding Agreement" means any agreement whereby the Buyer acquires or may
acquire funds for the purpose of financing (in whole or in part) the purchase of
Receivables hereunder.
"Group of Receivables" means, at any time, all Receivables purchased or to be
purchased by the Buyer on a Purchase Date or, as appropriate, the Group of
Receivables specified in a Notice of Sale.
"Guarantee" means any guarantee, indemnity, letter of credit or any other
obligation or irrevocable offer (whatever called and of whatever nature):
(1) to pay or to purchase;
(2) to provide funds (whether by the advance of money, the purchase of or
subscription for shares or other securities, the purchase of assets,
rights or services, or otherwise) for the payment or discharge of;
(3) to indemnify against the consequences of default in the payment of;
or
(4) to be responsible otherwise for,
an obligation or indebtedness of another person, a dividend, distribution,
capital or premium on shares, stock or other interests, or the insolvency or
financial condition of another person.
"Initial Purchase" means the first Purchase completed under this Agreement.
"Interest Period" means initially, the period commencing on the Effective Date
and ending on the following Settlement Date and thereafter, each period
beginning on the day following the last day of the immediately preceding
Interest Period and ending on the following Settlement Date; provided however,
if such day is not a Programme Business Day, the applicable Interest Period
shall end on the next succeeding Programme Business Day.
"Letter of Undertaking" means the Letter of Undertaking given by Exide Europe
substantially in the form set out in Schedule 2 to the RPA.
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"LIBOR" means the rate per month determined by the Operating Agent to be equal
to the arithmetic mean (rounded upwards, if not already such a multiple, to the
nearest whole multiple of one-sixteenth of one per cent) of the offered
quotations for Dollars which appear on page 3750 of the Telerate screen or, if
such page or service shall cease to be available, such other page or such other
service (as the case may be) as the Operating Agent may select. If less than two
quotations for the relevant rate and the relevant period are displayed and the
Operating Agent has not selected an alternative service on which two or more
such quotations are displayed "LIBOR" shall mean the Base Rate.
"Liquidity Bank" means any financial institution which may from time to time
become a party to the PPA as a Liquidity Bank thereunder.
"Local Business Day" means any day (other than a Saturday or Sunday) on which
banks and foreign exchange markets are open for business in Frankfurt am Main.
Where an obligation is expressed in this Agreement to be performed on a Local
Business Day and such Local Business Day is not also a Programme Business Day,
the applicable Local Business Day shall be the immediately-preceding Local
Business Day which is also a Programme Business Day.
"Loss and Dilution Reserve'" as of any Settlement Date will equal:
[C + YR] x [max(DYN,FLOOR)/1 -(max(DYN,FLOOR))]
where:
DYN = [(SF2 x ED) + DVF] x DHR + (SF1 x LR x LHR)
FLOOR = CF + (ED x DHR), with a minimum amount of $12,000,000
where:
C = Programme Capital
YR = the Sellers' Proportionate Share of Yield Reserve
SF1 = Stress Factor One = 2.25
SF2 = Stress Factor Two = 2.25
ED = Average Programme Dilution Ratio during the preceding 12 months
DVF = Dilution Volatility Factor
DHR = Dilution Horizon Ratio
LHR = Loss Horizon Ratio
CF = Concentration Floor = 17%
LR = Loss Ratio
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"Loss Horizon" equals the sum of 90 days plus the Weighted Average Term
calculated among all Origination Agreements as of the Settlement Date.
"Loss Horizon Ratio" equals the total sales giving rise to Programme
Receivables for the Programme Sellers for the Loss Horizon divided by the
outstanding balance of Programme Receivables as of the end of the most recent
month.
"Loss Ratio" as of any date equals the highest 3 month average Default Ratio
aggregated among all Origination Agreements which has occurred in the 12 months
immediately preceding such date.
"Loss to Liquidation Ratio" as of any date, is equal to the ratio (expressed as
a percentage) of (i) the aggregate outstanding balance of all Receivables that
were written off by the Sellers during the twelve month period most recently
ended prior to such date to (ii) the aggregate amount of such total sales giving
rise to Receivables less the Dollar Equivalent of the total Diluted Receivables
during such twelve month period.
"Net Receivable Balance" means at any time the excess of (i) the Dollar
Equivalent of the aggregate Outstanding Balance of Eligible Receivables (whether
or not they are Purchased Receivables) over (ii) the sum of the
Overconcentration Amount at such time, plus the aggregate Unapplied Cash at such
time.
"Notice of Sale" has the meaning assigned to that term in Clause 4(A).
"Onward Sale Fee" means 0.01% per annum on the average outstanding Capital
calculated monthly in arrears and applied on each Settlement Date.
"Origination Agreement" means as of any time each agreement, whereby a member
of the Exide Group sells trade receivables originated in the ordinary course of
business of such member company and which has been designated from time to time
as such by the Operating Agent. Until and unless a designation has been made by
the Operating Agent to the contrary, the Origination Agreements shall consist of
(i) for the United Kingdom, the Receivables Sale Agreement dated as of the date
hereof between CMP Batteries Limited, Exide (Dagenham) Limited, Fulmen (U.K.)
Limited and B.I.G. Batteries Limited as Seller, Exide Funding as Buyer and
Citibank as Operating Agent, (ii) for France, the Receivables Subrogation
Agreement dated as of the date hereof between CEAC, Compagnie Europeenne
d'Accumulateurs S.A. and Batterie Hagen as Originators, Exide Funding as
Receivables Purchaser and Citibank as Operating Agent, (iii) for Spain, the
Receivables Sale Agreement dated as of the date hereof between Sociedad Espanola
del Acumulador Tudor, S.A. as Seller, Exide Funding as Buyer, Tudor Collections
Ltd as Agent and Citibank as Operating Agent, (iv) for Italy, (a) the
Receivables Purchase Agreement dated as of the date hereof between Societa
Industriale Accumulatori
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s.r.l. and Compagnia Generale Accumulatori S.p.A. as Seller, Archimede
Securitisation s.r.i as Buyer, Citibank (London branch) as Operating Agent and
Citibank (Milan branch) as Allocation Agent, and (b) the Onward Sale Agreement
dated as of the date hereof between Archimede Securitisation s.r.l. as onward
seller, Exide Funding as onward buyer and Citibank as Operating Agent and (v)
for Germany, this Agreement.
"Originator" means each of ASGmbH, EABGmbH and HBAG, in its capacity as Seller
and/or Collection Agent, as the context may require.
"Outstanding Balance" of any Receivable at any time means the then unpaid face
amount thereof (including VAT) (except for purposes of determining the Default
Ratio, where the unpaid face amount of any Purchased Receivable which has been,
or would be, written off or provided for in a Seller's books as uncollectible in
accordance with the Credit and Collection Policy shall be deemed to be zero).
"Overconcentration Amount" means at any time the Dollar Equivalent of the sum of
the amounts, if any, by which the Outstanding Balance of Receivables owing by
each Account Debtor on such date exceeds the Concentration Amount applicable to
such Account Debtor.
"Person" means an individual, partnership, company, body corporate, corporation,
trust, unincorporated association, joint venture, government, or governmental
body or agency or other entity.
"PPA" means the Parallel Purchase Agreement dated as of the date hereof
between the Buyer and Citibank and such other parties as may become a Buyer
thereunder.
"Programme" means the revolving sale of trade receivables originated by Exide
Holdings Europe S.A. and certain of its subsidiaries and the funding of such
revolving sale pursuant to the funding arrangements established in relation to
each Origination Agreement.
"Programme Amortisation Event" means an Early Amortisation Event of the type
described in paragraphs (1), (2), (3), (4), (6), (7), (9), (10) or (15) of the
definition of "Early Amortisation Event".
"Programme Business Day"' means any day (other than a Saturday or Sunday) on
which banks and foreign exchange markets are open for business in London, Paris
and New York. Where an obligation is expressed in this Agreement to be performed
on a Programme Business Day and such Programme Business Day is not also a Local
Business Day, such obligation shall be performed on the immediately preceding
Local Business Day which is also a Programme Business Day.
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"Programme Capital" equals, at any time, total Capital as defined and calculated
pursuant to the RPA or the PPA, as applicable.
"Programme Costs" comprise (a) the Onward Sale Fee and (b) the Sellers'
Proportionate Share of (i) the Facility Fee, (ii) the Investor Fee as defined in
the Fees Letter and (iii) the Programme Fee as defined in the Fees Letter.
"Programme Dilution Ratio" as of any date, is equal to the aggregate of the
Dilution Ratios calculated among all Origination Agreements.
"Programme Receivables" means the aggregate Dollar Equivalent of Receivables (as
that term is defined in each Origination Agreement), aggregated among all
Origination Agreements.
"Programme Sellers" means, collectively, all of the Affiliates of Exide Europe
designated as Sellers or Originators pursuant to any or all of the Origination
Agreements.
"Proportionate Share" equals, at any time, in respect of the Sellers or any of
them, the result of the formula: the Dollar Equivalent of all Purchased
Receivables from the Sellers (or any of them, as applicable), divided by the
Dollar Equivalent of all Purchased Receivables and Subrogated Receivables (as
these terms are used in each applicable Origination Agreement), aggregated among
all Origination Agreements.
"Purchase" means a purchase or purported purchase by the Buyer of a Group of
Receivables from a Seller pursuant to this Agreement.
"Purchase Date" means the Effective Date and each Settlement Date after the
Effective Date occurring before the Termination Date on which there is a
Purchase of Receivables by the Buyer as contemplated by this Agreement.
"Purchase Price" means, in respect of a Group of Receivables, an amount in
Deutsche Mark equal to the Outstanding Balance of the Group of Receivables as at
the proposed Purchase Date less the Discount, as calculated by the Operating
Agent.
"Purchased Receivable" means a Receivable (whether or not an Eligible
Receivable) purchased or purported to be purchased by the Buyer under this
Agreement.
"Rating Agencies" means Standard & Poor's Ratings Group, a division of the
McGraw-Hill Companies Inc. and Moody's Investors Service, Inc.
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"Receivable" means the indebtedness of any Account Debtor under a Contract
arising from a sale or contract of sale of merchandise or provision or contract
of provision of services by a Seller and representing part or all of the sale
price of such merchandise or services and includes the right to payment of any
interest or finance charges and other obligations of such Account Debtor with
respect thereto.
"Records" means, in respect of any Receivable, all Contracts, correspondence,
notes of dealings with other documents, books, books of account, registers,
records and other information (including, without limitation, computer
programmes, tapes, discs, punch cards, data processing software and related
property and rights) maintained (and recreated in the event of destruction of
the originals thereof) with respect to such Receivable and the related Account
Debtor.
"Related Security" means with respect to any Receivable all of the relevant
Seller's interest in any goods and work in progress (including returned or
repossessed goods and work in progress) relating to the sale creating such
Receivable, all insurance policies, security, deposits, guarantees, indemnities,
letters of credit, bills of exchange, cheques, other negotiable instruments,
warranties, retention of title and other agreements and arrangements not created
or made by the Buyer supporting or securing payment of such Receivable, Records
and all proceeds at any time arising out of the resale, redemption or other
disposal (net of collection costs); or dealing with, or judgments relating to,
any of the foregoing, any debts represented thereby and all rights of action
against any Person in connection therewith.
"Relevant Date" means the earlier of:
(1) the date on which all Capital of all Groups of Receivables is reduced to
zero; and
(2) the date on which the Outstanding Balance of all Purchased Receivables is
reduced to zero.
"Relevant Documents" means this Agreement, the Collection Account Bank Mandates,
the Account Pledge Agreements and the Fees Letter.
"Reserves" means, as of any date, the Sellers' Proportionate Share of the sum of
the Loss and Dilution Reserve, the Yield Reserve and the Foreign Currency
Reserve.
"RPA" means the Receivables Purchase Agreement dated as of the date hereof
between the Buyer, Eureka and the Operating Agent.
"Security Interest" means any mortgage, pledge, lien, charge, assignment,
hypothecation or security interest or any other agreement or arrangement having
the effect of conferring security.
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"Sellers" means, collectively, ASGmbH, EABGmbH and HBAG and any Additional
Seller made party to this Agreement in accordance with Clause 19(D) provided
that, for the avoidance of doubt, all covenants, indemnities, representations
and warranties given or made by any party comprising the Sellers pursuant to
this Agreement (whether in its capacity as Seller or as Collection Agent) shall
be deemed to be given or made jointly and severally by it and the other parties
comprising the Sellers, and vice versa. Where the context requires, including,
for the avoidance of doubt, for the purpose of the definitions of "Early
Amortisation Event" and "Collection Agent Event" each such party individually
shall also be considered to be a "Seller".
"Seller Entitlement" means, at any time, in respect of the total amount standing
to the credit of the Collection Accounts together with interest thereon, the
portion thereof which is not attributable to or representing Collections.
"Seller Non-Transaction Account" means in respect of each Seller, each of the
accounts set opposite such Seller's name in Part 3 of Schedule 1 or such other
account or accounts at such branch of such bank as such Seller may from time to
time specify by written notice to the Collection Account Bank with a copy to the
Operating Agent.
"Settlement Date" means initially, the Effective Date and thereafter, each
following Thursday; provided however, if such day is not a Programme Business
Day which is also a Local Business Day under the Origination Agreement for
Italy, the Settlement Date for such week shall be the next succeeding Programme
Business Day which is also a Local Business Day under the Origination Agreement
for Italy.
"Settlement Period" means any period beginning on (and including) a Settlement
Date and ending on (but excluding) the next following Settlement Date.
"Settlement Statement" means a statement, as of any Settlement Date, prepared by
the Operating Agent substantially in the form of Schedule 3 showing, (amongst
other things) the amount of Receivables purchased by the Buyer during the last
Settlement Period.
"Spot Rate" means, as of any Settlement Date, the spot rate utilised for the
Currency Exchange Agreement as determined for such Settlement Date.
"Stamp Duty" means any stamp duty, stamp duty reserve tax, registration or other
transaction or documentary tax (including without limitation, any penalty or
interest payable in connection with any failure to pay or any delay in paying
any of the same).
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"Subsidiary" means a subsidiary within the meaning of Section 15 of the Stock
Corporations Act (Aktiengesetz).
"Summary Report" means a report as of each Determination Date or more frequently
if requested by the Operating Agent, substantially in the form of Schedule 4,
furnished by a Seller to the Operating Agent pursuant to Clause 11(F).
"Summary Report Date" means each Determination Date or such other dates as the
Operating Agent may request.
"Syndicated Facility" means the FF 2,569,000,000 Facilities Agreement dated 30th
November 1995 between Compagnie Europeenne d'Accumulateurs S.A., Euro Exide
Corporation Limited, Exide Holding Europe and Sociedad Espanola del Acumulador
Tudor S.A. as the Lead Borrowers, Bankers Trust International Plc. as Lead
Arranger, Bankers Trust Company, Bank of America National Trust and Savings
Association, Bank of Montreal and Citibank International Plc. as Underwriters,
Bank of America International Limited, Bank of Montreal and Citibank
International Plc. as Co-Arrangers, Bankers Trust Company as Agent and Security
Agent and the Lenders described therein, as that agreement may be amended or
restated from time to time.
"Temporary Adjustment Account" means the sub-account held by the Buyer with
Citibank, N.A., London branch, denominated in Deutsche Mark and utilised for
such purpose under the account number 60918971.
"Termination Date" means the earliest to occur of (1) the Programme Business Day
designated by the Seller as the Termination Date following 2 Programme Business
Days' notice to the Operating Agent, (2) the Termination Date under the RPA or
the PPA, (3) an Early Amortisation Event, and (4) 5 June, 2002.
"Turnover Rate" means, as of any Purchase Date, the average of each of the three
most recently ended months outstanding Net Receivable Balance under the RPA or
the PPA, as applicable, as of the last day of each such month, over the Dollar
Equivalent of aggregate outstanding balance of Receivables sold by the Sellers
and Originators under all Origination Agreements during each such month.
"Unapplied Cash" means as of any date with respect to any Receivable, the
aggregate Collections which have not yet been reflected on the books and records
of the Originator as a reduction to the Dollar Equivalent of the Outstanding
Balance of such Receivable.
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"Weighted Average Term" means the weighted average term of all Purchased
Receivables, calculated on the basis of the formula: E(original stated payment
term of each invoice x amount of such invoice) / Einvoice amount.
"Yield" will be calculated on the first Purchase Date and on each Settlement
Date thereafter on the basis of the outstanding Capital as at such dates times
the Yield Rate divided by 360 times the actual number of days elapsed in the
relevant Interest Period.
"Yield Rate" will be the cost of commercial paper notes issued by Eureka to fund
its purchase of Receivables, plus related dealer commissions and administration
costs (such administration costs not to exceed 0.03% of Capital per annum), plus
the cost of swapping Dollar proceeds of commercial paper into the currency of
the Purchased Receivables, determined by the Operating Agent and expressed as a
percentage of Capital. In the event Eureka shall not at any time, fund its
purchases under the RPA with the issuance of commercial paper, or if purchases
are being made under the PPA, the Yield Rate shall be the Bank Facility Rate.
"Yield Reserve" means as of any Settlement Date, the product of (1) two times
the Turnover Rate for such date and (2) the sum of (a) fifty-two times the Yield
for such date, divided by 12 (Yield calculated for this purpose using the higher
of the Yield Rate and the rate shown in paragraph (a) of the definition of "Bank
Facility Rate"); (b) the facility fee of 0.30% per annum of the Facility Limit
calculated monthly in arrears and applied on each Settlement Date; (c) the
Programme Fee as defined in the Fees Letter; and (d) the product of (i) the
Dollar Equivalent of the most recently ended month's outstanding Net Receivable
Balance aggregated among all Origination Agreements less the Dollar Equivalent
of Defaulted Receivables aggregated among all Origination Agreements and (ii)
0.75% (substitute collection agent reserve) the resulting figure divided by 12.
(C) This Agreement: Any reference to "this Agreement" or any other agreement
or document shall, unless the context otherwise requires, include this
Agreement or, as the case may be, that other agreement or document as from
time to time amended, supplemented or novated, and any document which
amends, supplements or novates this Agreement or, as the case may be, that
other agreement or document. Any reference to Clauses or paragraphs in
this Agreement is, subject to any contrary indication, a reference to a
Clause or paragraph in this Agreement.
(D) Origination Agreements: All references in this Agreement to terms defined
in the Origination Agreements or to amounts which are aggregated among all
Origination Agreements, shall, unless the contrary is indicated, be deemed
to refer to the equivalent concepts in the Origination Agreements where
the same defined term is not used.
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(E) Headings: Headings shall be ignored in construing this Agreement.
(F) Time: Save where the contrary is indicated, any reference in this
Agreement to a time of day (including opening and closing of business
hours) shall be construed as a reference to Frankfurt am Main time.
(G) Time of Essence: Time shall be of the essence in this Agreement and all
documents delivered pursuant to the terms of this Agreement, subject to
the prior waiver of such timing by the affected party.
2. FACILITY
The Sellers hereby agree to sell and the Buyer hereby offers to commit to
purchase at a discount from the Sellers on each Purchase Date falling on or
after the Effective Date, full title and ownership in and to certain Receivables
on the terms and conditions set out in this Agreement.
3. CONDITIONS PRECEDENT
(A) To Initial Purchase: The Initial Purchase is subject to the condition
precedent that the Operating Agent receive on or before the date of such
Initial Purchase the documents and information specified in Schedule 5,
each in form and substance satisfactory to the Operating Agent.
(B) To All Purchases: Each Purchase (including the Initial Purchase) is
subject to the further following conditions precedent:
(1) On each Purchase Date the following statements must be true and
correct (and the relevant Seller will be deemed to have jointly and
severally with the other Sellers so certified on such date that):
(a) the representations and warranties of each Seller contained in
this Agreement are true and correct on and as of such day as
though made on such day and by reference to the then existing
circumstances;
(b) such Seller has delivered such directors' certificate as may
be required by the Operating Agent as to such Seller's
solvency;
(c) after the proposed Purchase the Outstanding Balance of
Purchased Receivables would be at least equal to the sum of
(i) aggregate outstanding
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Capital (ii) applicable Accruals, and (iii) Reserves in
relation to outstanding Capital;
(d) there has been no Early Amortisation Event which has not been
waived by the Operating Agent in writing;
(e) there has been no sale by any Seller of any of its Receivables
out of the ordinary course of its business without the prior
written consent of the Operating Agent;
(f) the aggregate Outstanding Balance of all Purchased Receivables
whose Account Debtors are resident in France, Italy, England,
Wales or Northern Ireland, Spain, The Netherlands or Belgium
does not exceed 15% of the outstanding Capital; and
(g) after the proposed Purchase, Capital would not exceed the
Country Limit and Programme Capital would not exceed the
Facility Limit.
(2) On or prior to each Purchase Date the relevant Seller shall have
delivered to the Operating Agent an Accounts Receivable Listing.
(3) On or prior to each Purchase Date each Seller shall have complied
with all of its reporting and other obligations under this Agreement
unless such failure to comply has been waived by the Operating Agent
in respect of such Purchase Date.
(4) The Commitment shall not have been cancelled.
(5) The Operating Agent has received such other approvals, legal
opinions or documents as the Operating Agent may reasonably request.
(C) The Operating Agent shall, as soon as reasonably practicable after
submission to it of a form of Contract other than the form set out in
Schedule 7, notify the relevant Seller as to whether it approves of the
form for the purposes of paragraph (9) of the definition of "Eligible
Receivable", such approval not to be unreasonably withheld. In considering
whether to approve such other form of Contract, the Operating Agent may,
as a condition of considering whether to give its approval, take such
legal advice as it deems appropriate including, without limitation, advice
from counsel in the Federal Republic of Germany, and all related costs,
charges, and expenses (including without limitation reasonable legal fees,
disbursements and VAT thereon) shall be for the joint and several account
of the Sellers.
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(D) The Commitment shall be cancelled:
(1) on the Termination Date; or
(2) if it becomes unlawful in any jurisdiction for the Buyer to give
effect to any of its obligations as contemplated by this Agreement
to fund or maintain the funding of any Purchase,
whichever shall first occur.
4. PURCHASES
(A) Making Purchases: Each Seller shall, prior to 10 a.m. London time on the
Determination Date immediately prior to each proposed Purchase Date,
deliver to the Buyer a Notice of Sale by facsimile (and shall send the
original Notice of Sale to the Operating Agent by ordinary post on the day
it is delivered by facsimile) substantially in the form of Schedule 6
("Notice of Sale") identifying (inter alia) the Purchase Date, the then
Outstanding Balance of Receivables (if any) and the Purchase Price for
such Receivables calculated by the Operating Agent on behalf of the Buyer.
The calculation of the Purchase Price by the Operating Agent shall, in the
absence of manifest error, be deemed to be conclusive and binding on the
parties hereto.
(B) Sale: The delivery of the Notice of Sale by facsimile will constitute
notification to the Buyer of the Receivables and the Related Security,
designated pursuant to Clause 4(D), which the Buyer is to purchase for the
Purchase Price as set out in the Notice of Sale. The Buyer shall, subject
to the terms and conditions of this Agreement (including, for the
avoidance of doubt, Clause 3) pay in full the Purchase Price once the sale
and assignment has been affected. Sale and assignment to the Buyer of full
title and ownership in and to those Receivables and the Related Security
with respect to those Receivables are effected by either (i) payment of
the Purchase Price as calculated by the Operating Agent (including payment
by set-off pursuant to Clause 5(B)(1) in connection with Clause 12(C)) or
(ii) verbal acceptance of the offer. To the extent that title to Related
Security cannot be transferred by mere agreement between a Seller and the
Buyer as effected in the foregoing sentence of this Clause, each of the
Sellers and the Buyer agree that:
(a) insofar as Related Security governed by German law is concerned:
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(i) any transfer of possession (Ubergabe) necessary to transfer
title in a Related Security, in particular in relation to
cheques, bills of exchange or Vorgehaltseigentum, is replaced
by as the case may be:
aa) the relevant Seller holding such instruments of debt or
other movables in custody for the Buyer free of charge
(Verwahrung); and/or
bb) assigning hereby to the Buyer all claims for return
against the relevant persons which are in actual
possession of such instrument or movable;
(ii) any notice to be given in order to effect transfer of title
shall, however subject to Clause 14(D) immediately be given by
such Seller in such form as the Operating Agent requires and
each Seller hereby agrees that if such Seller fails to give
such notice, the Operating Agent is hereby irrevocably
authorised to give such notice on behalf of such Seller; and
(iii) any other thing to be done or form or registration to be
effected shall be immediately done and effected by such Seller
at its own cost; and
(b) insofar as Related Security governed by the law of any other
jurisdiction is concerned:
(i) the relevant Seller shall do all acts and things at its own
cost which, under applicable law are necessary to be done in
order to effect transfer of title; and
(ii) insofar as applicable law does allow, sub-paragraphs (a) (i),
(ii) and (iii) shall apply mutatis mutandis to such Related
Security.
(C) Purchase Price: The Buyer shall pay in full the Purchase Price on the
Purchase Date in the currency and funds specified in Clause 7(B) to the
relevant Seller's account specified in Clause 7(C).
(D) Determination of Purchased Receivables: On or prior to each Purchase Date
in respect of which a Notice of Sale is to be delivered, the relevant
Seller will identify the Group of Receivables to be offered for purchase
by the Buyer on such date in such format as the Operating Agent may
specify.
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(E) Records: On or prior to each Purchase Date in respect of which a Notice
of Sale is to be delivered, the relevant Seller will at the Seller's
expense deliver to the Operating Agent (or as the Operating Agent may
direct) the Accounts Receivable Trial Balance generated on or in
relation to such Purchase Date, identifying the Receivables designated
pursuant to this Clause 4(E).
(F) Perfection: Subject to Clause 13, each Seller and the Buyer will take
all such steps and comply with all such formalities as may be required
to perfect or more fully to evidence or secure title to the Receivables
and the Related Security sold and assigned (or purported to be sold and
assigned) pursuant to this Clause 4.
(G) Delegation of Powers of Operating Agent: The Operating Agent hereby
delegates to the Sellers all of its obligations under this Clause 4,
which delegation the Sellers irrevocably accept. Each of the Sellers
shall notify the Operating Agent of all calculations made by it under
this Clause 4. The Operating Agent may revoke this delegation in
writing at any time.
5. COLLECTIONS AND SETTLEMENT
(A) Collection of Receivables: (1) On each day the Collection Agent shall
as described in Clause 12(B) set aside and hold in trust (Treuhand) for
the Buyer until the following Settlement Date all Collections of
Purchased Receivables on such day, and (2) the Operating Agent shall
issue a Settlement Statement to the relevant Seller within two
Programme Business Days after each Settlement Date in relation to the
Settlement Period which ended on that Settlement Date.
(B) Settlement Procedures prior to Termination Date: Prior to the
Termination Date the procedures described in this Clause 5(B) will be
applicable:
(1) On each Purchase Date the Buyer shall, unless otherwise
instructed by the Operating Agent, set off, against its
obligation to pay the Purchase Price of the Group of
Receivables to be purchased by the Buyer on such Purchase Date,
the aggregate amount (if any) of any Advance Payments withdrawn
by the relevant Collection Agent from any Buyer Account
pursuant to Clause 12(C) and which has not been refunded as of
close of business on the Programme Business Day immediately
preceding such Purchase Date.
(2) On each Determination Date the Operating Agent shall calculate:
(a) Capital as at the forthcoming Settlement Date; and
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(b) Yield and Programme Costs in respect of the Capital as at
the forthcoming Settlement Date.
(3) On each Settlement Date each Collection Agent shall pay all
Collections in respect of Purchased Receivables into the Buyer
Accounts set out in Part 4 of Schedule 1 subject to the
provisions of Clause 12(C) regarding Advance Payments.
(4) On each Settlement Date the Operating Agent shall cause to be
paid from the Buyer Accounts (without prejudice to, and subject
always to, the provisions of Clause 12(C) regarding Advance
Payments):
(a) to the Buyer, Yield and Programme Costs in respect of the
Interest Period ending on that Settlement Date;
(b) to the Seller, the Purchase Price (if any) in respect of
Purchased Receivables, to the extent the Purchase Price is
not satisfied by way of set-off pursuant to Clauses
5(B)(1) and 12(C);
(c) to each Collection Agent, the Proportionate Share of the
relevant Seller of all sums received by the Buyer pursuant
to Clause 5(B)(3)(c) of the RPA or the PPA, as applicable,
by way of a success fee in respect of the collection of
the Purchased Receivables; and
(d) to the Buyer, all amounts standing to the credit of the
Buyer Account after payment of the amounts set forth in
(a) and (b) above.
(C) Settlement Procedures after Termination Date: On the Termination Date
and each day thereafter, for all Purchased Receivables:
(1) On each Programme Business Day, the Operating Agent shall cause
to be paid from the Buyer Accounts to the Buyer all amounts
standing to the credit of the Buyer Accounts.
(2) If and to the extent that the Buyer receives funds pursuant to
Clause 5(C)(2) of the RPA or the PPA, as applicable, the
Operating Agent shall cause to be paid from the relevant Buyer
Account to each Collection Agent, the relevant Seller's
Proportionate Share of such funds, by way of a success fee in
respect of all the Purchased Receivables.
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(D) Adjustments and Allowances:
(1) If on any day the Outstanding Balance of any Purchased
Receivable is ether (a) reduced or adjusted as a result of any
defective, rejected, repossessed or returned goods or services
or any cash discount (whether commercial, financial or
otherwise), rebate or other adjustment made by the relevant
Seller or any other Person, or (b) reduced or cancelled as a
result of a set off or by agreement in respect of any claim by
the Account Debtor thereof against the relevant Seller or any
other Person (whether such claim arises out of the same or
another transaction) (including without limitation any change
in the due date for payment of any Purchased Receivable
otherwise than with the prior consent of the Operating Agent),
the relevant Seller will be deemed to have received on such day
a Collection of such Purchased Receivable in the amount of such
reduction, adjustment or cancellation and shall credit such
amount to the relevant Buyer Account by way of indemnity.
(2) If on any day any of the representations or warranties in
Clause 8 is no longer true with respect to a Purchased
Receivable, the relevant Seller will be deemed to have received
on such day a Collection of such Purchased Receivable equal to
its original Outstanding Balance less any Collections
previously received with respect thereto and shall credit to
the relevant Buyer Account an amount equal to such deemed
Collection by way of indemnity.
(3) If any Purchased Receivable was not an Eligible Receivable at
the time of Purchase, on the date such fact becomes known to a
Seller, the relevant Seller will be deemed to have received a
Collection of such Purchased Receivable equal to its original
Outstanding Balance less any Collections previously received
with respect thereto and shall pay to the Buyer an amount equal
to such deemed collection by way of indemnity.
(4) If a Seller is not acting as the Collection Agent, it will
promptly pay to the Collection Agent the amount of any deemed
Collection pursuant to Clause 5(D)(l), (2) or (3) above by way
of indemnity.
(5) If, following any payment in respect of a deemed Collection of
a Purchased Receivable pursuant to Clause 5(D)(1), (2), (3) or
(4) above, the Buyer shall receive any further Collections in
respect of such Purchased Receivable, the Buyer shall (provided
no Early Amortisation Event has occurred) pay to the relevant
Seller an amount or amounts equal to such further Collections
by way of repayment of indemnity.
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(E) Application of Collections: Any payment by an Account Debtor in respect
of any indebtedness owed by it to the relevant Seller and any credits
or cash proceeds in respect of defective, rejected, repossessed or
returned goods or other non cash items of an Account Debtor will,
except as otherwise specified in writing by such Account Debtor or
otherwise required by contract or law and unless otherwise instructed
by the Operating Agent, be applied as a Collection of Purchased
Receivables of such Account Debtor, in the order of the age of such
Purchased Receivables, starting with the oldest such Purchased
Receivables, to the extent of any amounts then due and payable
thereunder before being applied to or in respect of any other
indebtedness of such Account Debtor.
6. FEES, COSTS AND STAMP DUTY
(A) Collection Agent Fees: Until the later of the Termination Date and the
Relevant Date, for any period during which a Seller or an Affiliate of
such Seller is not the Collection Agent, the Sellers jointly and
severally agree that they will pay the Buyer, upon its demand, a
collection fee as determined by the Operating Agent, not exceeding 110%
of the fees, costs and expenses, plus value added tax (if applicable),
of the substitute Collection Agent incurred in performing such
function.
(B) Costs and Expenses: The Sellers jointly and severally agree to pay on
demand of the Operating Agent all reasonable costs and expenses
incurred by the Operating Agent in connection with the preparation,
execution and delivery of this Agreement and the other documents to be
delivered pursuant to this Agreement or in connection therewith, such
costs and expenses to include, without limitation, the reasonable fees
and out-of-pocket expenses of legal advisers (plus VAT thereon) to the
Buyer and the Operating Agent with respect thereto and with respect to
advising the Buyer and the Operating Agent as to their respective
rights and remedies under this Agreement, and all costs and expenses,
if any (including legal fees and expenses plus VAT thereon), in
connection with the enforcement of this Agreement, the other documents
to be delivered pursuant to this Agreement or in connection therewith
and the Purchased Receivables. The Buyer and the Operating Agent agree
to take reasonable steps, consistent with the protection of their
respective interests under this Agreement, to mitigate their costs and
expenses in connection with the enforcement of this Agreement, the
other documents to be delivered pursuant to this Agreement and the
Purchased Receivables.
(C) Duties and Taxes: In addition, the Sellers hereby jointly and severally
agree that they will pay on demand of the Operating Agent any stamp
duty, sales, excise, registration and other taxes, duties and fees
payable in connection with the execution, delivery, filing or recording
of this Agreement or the purchase, assignment or reassignment of
Receivables under or pursuant to this Agreement, or the other documents
to be delivered under this Agreement or
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in any way connected with any transaction contemplated by this
Agreement. The Sellers jointly and severally agree to indemnify the
Operating Agent and the Buyer on demand of the Operating Agent against
any liabilities with respect to or resulting from any delay in paying
or omission to pay any such taxes, duties or fees.
(D) Default Interest: The Sellers hereby jointly and severally agree that
they shall pay to the Operating Agent or, as the case may be, the Buyer
interest (as well after as before judgment) on all amounts (other than
interest) not paid or repaid when due under this Agreement at 2% per
annum above the Base Rate payable on demand of the Operating Agent.
(E) Computations: All computations of interest and fees shall be made on
the basis of a year of 360 days and actual number of days (including
the first but excluding the last day) elapsed. In case any of the
Sellers has not paid interest pursuant to this sub-clause (E) or
pursuant to any other provision of applicable law when such payment of
interest is due, the Sellers jointly and severally agree to pay to the
Operating Agent or, as the case may be, the Buyer lump sum damages at
the amount of 2% per annum above the Base Rate on demand of the
Operating Agent.
(F) Computation of Time Periods: Unless otherwise stated in this Agreement,
in the computation of a period of time from a specified date to a later
specified date, the word "from" means "from and including" and the
words "to" and "until" each means "to but excluding".
7. PAYMENTS AND COMPUTATIONS, ETC.
(A) Mechanics: All amounts to be paid to or deposited with the Operating
Agent for its own account or for the account of the Buyer by any Seller
and/or the Collection Agent under this Agreement shall be paid or
deposited no later than 12:00 noon (local time in the place of payment)
on the day when due in immediately available same day funds to the
relevant account specified below.
(B) Currency: All amounts payable by the Sellers under this Agreement to
the Operating Agent for its own account or for the account of the Buyer
shall be paid in Deutsche Mark. The Purchase Price amounts payable by
the Buyer under this Agreement shall be paid in Deutsche Mark.
(C) Accounts: Any amounts payable under this Agreement shall, unless
provided otherwise by this Agreement, be remitted to the following
accounts:
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(1) if to a Seller, the appropriate Seller Non-Transaction Account;
(2) if to the Buyer (otherwise than to any Buyer Account), Account
No. 8319731 (Sort Code 18-50-08) with Citibank, 336 Strand,
London WC2R 1HB; and
(3) if to the Operating Agent for its own account, Account No.
3064506 (Sort Code 18-50-08) with Citibank, 336 Strand, London
WC2R 1HB.
(D) Grossing Up: To the fullest extent permitted by law, each Seller will
make all payments under this Agreement regardless of any defence or
counterclaim. Further, if a Seller, in its individual capacity or as
Collection Agent, is compelled by law to make any deductions or
withholdings from any payments pursuant to this Agreement including,
without limitation, payments in respect of Receivables or Collections,
such Seller will pay such additional amounts as may be necessary in
order that the net amount received by the Operating Agent or the Buyer
after such deductions or withholdings (including any required deduction
or withholding on such additional amounts) will equal the amount that
the Operating Agent or the Buyer (as appropriate) would have received
had no such deductions or withholdings been made. Each Seller will
provide the Operating Agent with evidence satisfactory to the Operating
Agent that it has paid such deductions or withholdings.
(E) Appropriation of Payments: Regardless of any appropriation by any
Seller or the Collection Agent, the Operating Agent shall determine the
appropriation of any payment to it for the account of the Buyer to any
amount to be paid to or deposited with it for the account of the Buyer
by the Seller and/or the Collection Agent under this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller jointly and severally with the other Sellers represents and
warrants, as of the Effective Date, as follows:
(A) Incorporation: Each Seller and Exide Europe is a company duly
incorporated and validly existing under the laws of its
jurisdiction of incorporation or organisation.
(B) Seller Power and Authority: Each Seller has full power and
authority to effect, and has taken all necessary action to
authorise, the execution, delivery and performance by it of
this Agreement and all other instruments and documents to be
delivered under this Agreement, and the transactions
contemplated by this Agreement.
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(C) Exide Europe Power and Authority: Exide Europe has full power
and authority to effect, and has taken all necessary action to
authorise, the execution, delivery and performance by it of the
Letter of Undertaking and all other instruments or documents to
be delivered under the Letter of Undertaking, and the
transactions contemplated by the Letter of Undertaking.
(D) Non-Violation: The execution, delivery and performance by each
Seller of this Agreement and all other instruments and
documents to be delivered pursuant to this Agreement and all
transactions contemplated by this Agreement, and the execution,
delivery and performance by Exide Europe of the Letter of
Undertaking and all transactions contemplated thereby:
(1) do not contravene (a) any Seller's or Exide Europe's
memorandum or articles of association (or analogous
constitutive documents), (b) any law, rule or
regulation applicable to any Seller or Exide Europe,
(c) any material contractual restriction contained in
any agreement or instrument binding on or affecting
any party comprising the Sellers, Exide Europe or the
Exide Europe's assets, or (d) any order, writ,
judgment, award, injunction or decree binding on or
affecting any Seller or any of such Seller's assets or
Exide Europe or Exide Europe's assets;
(2) do not result in or require the creation of any lien,
security interest or other charge or encumbrance upon
or with respect to any of the Seller's or Exide
Europe's assets or undertaking; and
(3) will not constitute a breach of, nor give rise to any
actual or potential event of default under, any Debt
of any member of the Exide Group, or under any
document relating to such Debt.
(E) Consents: No consent, authorisation, approval, notice or filing
is required (or, if required, which has not been obtained on a
timely basis) for the due execution, delivery or performance by
each Seller of this Agreement or any other document to be
delivered in connection with this Agreement or for the
transactions contemplated by this Agreement or for the due
execution, delivery or performance by Exide Europe of the
Letter of Undertaking or any other document to be delivered in
connection with the Letter of Undertaking or for the
transactions contemplated by the Letter of Undertaking.
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(F) Obligations Binding: (1) This Agreement constitutes the legal,
valid, binding and enforceable obligation of each Seller; and
(2) the Letter of Undertaking constitutes the legal, valid,
binding and enforceable obligation of Exide Europe.
(G) Accounts: The most recent audited annual accounts of each
Seller and Exide Europe, copies of which have been furnished to
the Operating Agent, present a true and fair view of the
financial condition of such Seller and its consolidated
Subsidiaries (if any) or Exide Europe, as applicable, as at
that date and the results of the operations of such Seller and
those subsidiaries, or Exide Europe, as applicable, for the
period ended on that date, all in accordance with generally
accepted accounting principles consistently applied.
(H) No Material Adverse Change to any Seller: Since 31 March 1996,
being the date of each of the Sellers' most recent audited
annual accounts, there has been no change in the business or
financial condition of any Seller which may materially
adversely affect the ability of any Seller to perform its
obligations under this Agreement.
(I) No Material Adverse Change to Exide Group: Since 31 March 1996,
being the date of the Exide Group's most recent audited
consolidated annual accounts, there has been no change in the
business or financial condition of the Group which is
reasonably likely to materially adversely affect the ability of
Exide Europe to perform its obligations under the Letter of
Undertaking.
(J) No Litigation: There are no actions, suits or proceedings
current or pending, or to the knowledge of any Seller
threatened, against or affecting any Seller or its Subsidiaries
(if any) or any of its respective assets, or Exide Europe or
Exide Europe's assets in any court, or before any arbitrator of
any kind, or before or by any governmental body, which may
materially adversely affect the financial condition of any
Seller and its Subsidiaries taken as a whole or Exide Europe,
or materially adversely affect the ability of any Seller to
perform its obligations under this Agreement or the ability of
Exide Europe to perform its obligations under the Letter of
Undertaking.
(K) No Default: No Seller nor any of its Affiliates, nor Exide
Europe, is in default with respect to any order of any court,
arbitrator or governmental body, excluding defaults with
respect to orders of governmental agencies which are not
material to the business or operations of any Seller or any of
its Affiliates, or Exide Europe, and would not materially
adversely affect the ability of such Seller to perform its
obligations under
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this Agreement or the ability of Exide Europe to perform its
obligations under the Letter of Undertaking.
(L) No Adverse Claim: Each Receivable will, together with the
Contract related thereto, at all times be owned by the relevant
Seller free and clear of any Adverse Claim except as provided
in this Agreement, and upon each Purchase the Buyer will
acquire full title to and of each Purchased Receivable, the
Collections and the Related Security then existing or
thereafter arising free and clear of any Adverse Claim except
as provided in this Agreement.
(M) Performance of Contracts: All goods and services to which each
Purchased Receivable relates have been delivered and performed,
and all requirements of such Contract concerning the nature,
amount, quality, condition or delivery of the goods or
services, or upon which payment of the Purchased Receivable may
be dependent, have been fulfilled in all material respects.
(N) Information: None of the information and reports (including but
not limited to each portfolio profile and each Summary Report)
furnished or to be furnished (whether by way of computerised
data or otherwise) by any Seller (in its individual capacity or
as Collection Agent) or Exide Europe, to the Operating Agent or
Exide Europe, as applicable, is inaccurate in any material
respect (except as otherwise disclosed to the Operating Agent
at the time of delivery) as of the date so furnished, or
contains any material misstatement of fact or omits to state a
material fact or any fact necessary to make the statements
contained therein not materially misleading.
(O) Place of Business: The principal place of business and
registered office of each Seller is as set forth in Part 1 of
Schedule 1 or at such other location(s) approved by the
Operating Agent (such approval not to be unreasonably withheld
or delayed).
(P) Location of Books: The offices where each Seller keeps all its
books, records and documents evidencing Receivables or the
related Contracts are at the locations set forth in Schedule 1
or at such other location(s) approved by the Operating Agent
(such approval not to be unreasonably withheld or delayed).
(Q) Location of Bank Accounts: The bank accounts to which each
Seller has directed the Account Debtors to remit payments for
the Receivables are the Collection Accounts (or such other
account(s) at such location(s) as may have been previously
approved by the Operating Agent and in relation to each of
which a Collection Account Bank Mandate has been (or will be as
of the Effective Date) duly executed
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by any Seller (in its individual capacity and/or as Collection
Agent) and the Operating Agent) and in respect of which the
relevant bank has agreed, in relation to at least the Buyer
Entitlement, not to exercise any right of set-off, net-off,
combination or consolidation of accounts or counterclaim
whatsoever.
(R) No Winding-Up: No step has been taken or is intended by any
Seller or, so far as it is aware, by any other Person for any
Seller's winding-up, liquidation, dissolution, administration,
merger or consolidation or for the appointment of an
administrator of any Seller or all or any of its assets.
(S) No Breach: There has been no breach by any Seller of any of its
obligations under the Relevant Documents or by Exide Europe of
any of its obligations under the Letter of Undertaking.
(T) Eligibility: Each Receivable the subject of a Notice of Sale is
an Eligible Receivable as at the time of Purchase.
Each Seller further jointly and severally with the other Sellers
represents and warrants that the representations and warranties in this
Clause 8 shall be true and correct on and as of each Purchase Date as
though made on each such date and by reference to the then-existing
circumstances.
9. AFFIRMATIVE COVENANTS OF THE SELLERS
Until the later of the Termination Date and the Relevant Date, each
Seller will jointly and severally with the other Sellers, unless the
Operating Agent otherwise consents:
(A) Compliance with Law: Comply in all material respects with all
applicable laws, rules, regulations and orders binding on it,
its business and assets and all Receivables and related
Contracts, except where non-compliance would not have, and
would not be reasonably likely to have, a material adverse
effect on its ability to perform its obligations hereunder.
(B) Maintain Existence: Preserve and maintain its corporate
existence.
(C) Access: Upon reasonable prior notice, permit the Operating
Agent, or its agents or representatives, to visit the offices
of such Seller during normal office hours and examine and make
and take away copies of all books, records and documents
relating to the Receivables and to discuss matters relating to
the Receivables or any Seller's
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performance hereunder with any of the officers or employees of
such Seller having knowledge of such matters and co-operate in
the reconstruction of the Accounts Receivable Trial Balance
pursuant to Clause 13(B).
(D) Maintain Records: Maintain and implement administrative and
operating procedures (including, without limitation, an ability
to recreate records in the event of their destruction), and
keep and maintain, all documents, books, records and other
information reasonably necessary or advisable for the
collection of all Receivables (including, without limitation,
records adequate to permit the identification on each Purchase
Date of each new Purchased Receivable and the daily
identification of all Collections of and adjustments to each
existing Purchased Receivable).
(E) Perform Contracts: Timely and fully perform and comply with all
material provisions, covenants and other promises required to
be observed by it under the Contracts relating to the Purchased
Receivables.
(F) Priority: Ensure that at all times the claims against it under
this Agreement rank at least pari passu with the claims of all
its other unsecured creditors save those whose claims are
preferred by any bankruptcy, insolvency or other similar laws
of general application.
(G) Credit and Collection Policy: Comply in all material respects
with its Credit and Collection Policy with respect to each
Receivable purchased or to be offered for purchase pursuant to
this Agreement and the related Contract.
(H) Value Added Tax: Make all relevant value added tax or other
applicable tax payments in respect of supplies of goods or
services pursuant to a Contract or which otherwise relate to
Purchased Receivables, and pay all value added tax (if any)
payable in respect of any value added tax supply made, or input
value added tax suffered, by the Buyer, the Operating Agent or
any of the Operating Agent's Affiliates with respect to
supplies of goods or services by any Seller pursuant to a
Contract or which otherwise relates to Purchased Receivables.
(I) Collections: If any Seller is not acting as Collection Agent,
(1) give all reasonable assistance (including the provision of
information) to any third party replacing such Seller as
Collection Agent in accordance with the provisions of this
Agreement, and (2) remit any Collections on Purchased
Receivables to the Collection Agent on the Business Day of the
receipt or deemed receipt thereof.
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(J) Bank Accounts: Pay or cause to be paid all Collections of
Receivables directly into the bank account or accounts referred
to in Clause 8(Q) or such other account(s) approved by the
Operating Agent.
(K) Audit Costs: Pay the reasonable fees and expenses for one audit
by the Operating Agent in each financial year of each Seller
plus the costs of one additional audit to be conducted within 4
months after the execution of this Agreement. Except for such
additional audit, any further additional audit(s) that may be
required by the Operating Agent during any such financial year
shall be for the Operating Agent's own account.
(L) Provision of Information to Exide Europe: The Sellers shall
promptly provide Exide Europe with computerised information
regarding the Purchased Receivables on the dates shown, and
containing the information set forth in Schedule 8, and all
such different or other information as the Operating Agent may
reasonably determine from time to time to properly allow Exide
Europe and/or the Operating Agent to identify all required
information in respect of Account Debtors and Receivables.
10. NEGATIVE COVENANTS OF THE SELLERS
Until the later of the Termination Date and the Relevant Date, each
Seller jointly and severally with the other Sellers hereby undertakes
that no Seller will, without the prior consent of the Operating Agent:
(A) No Disposal of Receivables: Except as otherwise provided
herein, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Adverse
Claim upon or with respect to, any Receivable purchased or to
be offered for purchase under this Agreement or the related
Contract, or assign any right to receive income in respect
thereof.
(B) No Transfer of Business: Transfer all or substantially all of
its assets and undertaking to any person including without the
prior written consent of the Operating Agent, such consent not
to be unreasonably withheld unless such transfer would have no
adverse effect on the ability of any Seller to collect and sell
Receivables as contemplated by this Agreement.
(C) No Security Interest over Receivables: (a) create or permit to
subsist any Security Interest on any of its Receivables, and
(b) any Seller creates or permits to subsist any Security
Interest on any of its Receivables contrary to (a) above, such
Seller shall procure that all the obligations of the Sellers
under this Agreement shall automatically
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and immediately be secured upon the same assets, ranking at
least pari passu with the other obligations secured on those
assets.
(D) No Amendment to Receivables: Extend, amend or otherwise modify
the terms of any Purchased Receivable, or amend, modify or
waive any term or condition of any Contract related thereto, or
commence or settle any legal action to enforce collection of
any Purchased Receivable.
(E) No Change to Credit and Collection Policy: Make any change in
the character of its business or in the Credit and Collection
Policy, which change would or might, in either case, materially
impair the collectability of any Receivable purchased or to be
offered for purchase under this Agreement or the enforcement of
any related Contract against the Account Debtor or the
operation of this Agreement without the prior written consent
of the Operating Agent.
(F) Cross Indemnity: The Seller shall not amend or otherwise change
the Deed of Cross-Indemnity dated as of the date hereof
between Exide Europe and the Programme Sellers, except in
respect of amendments or changes of a purely technical or
immaterial nature which do not affect either: (i) the title of
the Buyer to the Receivables assigned (or purported to be
assigned) pursuant to Clause 4 or (ii) the effectiveness of the
assignment (or purported assignment) pursuant to Clause 4.
11. REPORTING REQUIREMENTS OF THE SELLERS
Until the later of the Termination Date and the Relevant Date, each
Seller hereby jointly and severally with the other Sellers agrees that
it will, unless the Operating Agent otherwise consents, furnish to the
Operating Agent in the English language or translated into English
accompanied by a certificate certifying that the translation is true
and full.
(A) Annual Accounts of Sellers: As soon as available and in any
event within 180 days after the end of each of such Seller's
financial years, a copy of such Seller's annual accounts and
(if they are prepared) consolidated accounts in conformity with
generally accepted accounting principles, applied on a basis
consistent with that of the preceding financial year.
(B) Annual Accounts of Exide Europe: As soon as available and in
any event within 180 days after the end of each of Exide
Europe's financial years, a copy of Exide Europe's annual
accounts, prepared (as appropriate) on a consolidated basis in
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conformity with generally accepted accounting principles,
applied on a basis consistent with that of the preceding
financial year.
(C) Other Financial Information: Upon request of the Operating
Agent, such financial information, accounts and records with
respect to such Seller or Exide Europe which are relevant to
the Programme, as the Operating Agent may from time to time
reasonably request.
(D) Defaults and other Events: Forthwith on becoming aware of any
of the events described in (1), (2), (3) or (4) below or any
event which, with the giving of notice or lapse of time or
both, would constitute one of such events, the statement of the
chief financial officer or chief accounting officer of a Seller
setting out details of that event and the action which such
Seller proposes to take with respect to that event:
(1) any Seller fails to pay any principal of or premium or
interest on any Debt, in excess (in the aggregate) of
the DM Equivalent of $5,000,000 when the same becomes
due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise)
and such failure shall continue after the applicable
grace period, if any, specified in the agreement or
instrument relating to such Debt, or any other default
under any agreement or instrument relating to any Debt,
or any other event, shall occur and shall continue
after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such
default or event is to accelerate or to permit the
acceleration of the maturity of such Debt, or any such
Debt shall be declared to be due and payable or
required to be prepaid (other than by a regularly
scheduled required prepayment) prior to the stated
maturity thereof, or any present or future mortgage,
charge or other security interest on or over any assets
of any Seller becomes enforceable;
(2) a resolution is passed or a petition is presented or an
order made for the winding up, liquidation,
dissolution, merger or consolidation of any Seller
(except for the purposes of a bona fide reconstruction
or amalgamation with the consent of the Operating
Agent), or a petition is presented or an order made for
the appointment of an administrator in relation to any
Seller or an administrative receiver is appointed over
any part of the assets or undertaking of any Seller or
any event analogous, to any of the foregoing occurs
(except, in the case where a petition is presented (i)
the proceeding is frivolous or vexatious and (ii) any
Originator is solvent and is contesting the proceeding
in good faith); or
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(3) a Collection Account Event occurs; or
(4) an Early Amortisation Event occurs.
(E) Debt Service Cover Ratio: Within 45 days after the end of every
Accounting Quarter (as that term is defined under the
Syndicated Facility), a report showing the current Debt Service
Cover Ratio of Exide Europe.
(F) Summary Report: Promptly, from time to time, such other
information, documents, records or reports respecting the
Receivables or the condition or operations, financial or
otherwise, of any Seller or any of its Affiliates, as the
Operating Agent may from time to time reasonably request in
order to protect the interests of the Buyer or the Operating
Agent, including, prior to 10.00 a.m., London time on each
Summary Report Date, a Summary Report (with, among other
things, the information necessary to determine the Default
Ratio).
(G) Account Debtors: Within two calendar weeks after the end of
each calendar month (or such more frequent time as the
Operating Agent may request in writing), each Seller shall
deliver to the Operating Agent a current list of all Account
Debtors in respect of Purchased Receivables and the addresses
of such Account Debtors.
The obligations of the Sellers to deliver reports or similar information to the
Buyer pursuant to this Agreement may be delegated by the Sellers to Exide
Europe, and the performance by Exide Europe of such obligations hereunder shall
be deemed to be the performance by the Sellers of such obligations; provided
however, that the Sellers shall remain jointly and severally liable for any
non-performance of such obligations.
12. COLLECTION AGENTS, COLLECTIONS AND BUYER ACCOUNTS
(A) Designation of Collection Agents: The servicing, administering and
collection of the Receivables shall be conducted by such Persons (each
"Collection Agent" and together the "Collection Agents") so designated
from time to time pursuant to this Clause 12(A). Until the Operating
Agent gives notice to a Seller of a designation of a new Collection
Agent, each Seller in respect of such Seller's Receivables, is
designated as, and agrees to perform the duties and obligations of,
such Collection Agent pursuant to the terms of this Agreement in
relation to the Purchased Receivables originating from its business.
The Operating Agent may at any time after the occurrence of an Early
Amortisation Event or a Collection Account Event designate as
Collection Agent any Person (including itself) to succeed such Seller
or any successor Collection Agent, on the condition in each case that
any such Person agrees to
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perform the duties and obligations of such Collection Agent pursuant to
the terms of this Agreement. Such Collection Agent may, with the prior
consent of the Operating Agent, subcontract with any other Person for
servicing, administering or collecting the Receivables; provided,
however, that such Collection Agent will remain liable for the
performance of the duties and obligations of such Collection Agent
under this Agreement.
(B) Duties of Collection Agents: Each Collection Agent hereby agrees with
the Buyer and the Operating Agent that it:
(1) will take or cause to be taken and is, until further notice
from the Operating Agent, allowed and empowered to take all
such actions as may be necessary or advisable to collect each
Purchased Receivable, all in accordance with applicable laws,
rules and regulations, with reasonable care and diligence, and
in accordance with the Credit and Collection Policy and the
instructions of the Operating Agent. Each of the Sellers and
the Buyer hereby appoints the respective Collection Agents as
its agents to enforce its respective rights and interests in
and under the Purchased Receivables, the Related Security and
the Contracts in particular, to:
(a) endeavour at its own expense to recover amounts due
from the Account Debtor in accordance with the Credit
and Collection Policy and in particular (but without
prejudice to the generality of the foregoing) exercise
all enforcement measures concerning amounts due from
the Account Debtor. For this purpose such Collection
Agent is hereby authorised to sue the Account Debtor in
any court in the Federal Republic of Germany or in any
other competent jurisdiction in the Collection Agent's
own name and for the benefit of the Buyer
("Gewillkurte Prozessstandschaft"), the Purchaser
being obliged where necessary to assist such Collection
Agent in exercising all rights and remedies under and
in connection with the relevant Purchased Receivables
and for these purposes the Collection Agent is released
from the restrictions set forth in Section 181 of the
German Civil Code;
(b) keep Records, books of account and documents in
relation to the Purchased Receivables separate from all
other records, books of account and documents relating
to other Receivables or any receivables made or
serviced by the Collection Agent otherwise;
(c) keep records for all taxation purposes, including for
the purposes of value added tax;
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(d) hold all Records relating to the Purchased Receivables in its
possession in trust for, and to the order of, the Buyer;
(e) assist the Buyer in discharging any Related Security in
respect of any Purchased Receivables which have been repaid;
and
(f) assist the Buyer's auditors and provide information to them
upon request,
and each Collection Agent hereby accepts such appointment.
(2) will deposit in the relevant Collection Account for the order of the
Buyer all Collections of Purchased Receivables in accordance with
this Agreement and may, unless and until instructed otherwise by the
Operating Agent following the occurrence of an Early Amortisation
Event or a Collection Account Event, deposit in the Collection
Account monies other than Collections. Following the occurrence of a
Collection Account Event, or an Early Amortisation Event, such
Collection Agent shall segregate all cash, cheques and other
instruments received by it from time to time constituting
Collections of Purchased Receivables as the Operating Agent may
direct and deposit in a bank account designated by the Operating
Agent all such cash, cheques and other instruments (together with
the Buyer's Entitlement to the Collection Accounts) as soon as
practicable and in any event on the first Local Business Day
following receipt by such Collection Agent of such Collections and
will give such payment instructions and take such other steps
(whether or not contemplated by the relevant Collection Account Bank
Mandate) as the Operating Agent may require;
(3) confirms that, in accordance with the relevant Collection Account
Bank Mandate, the relevant Collection Account Bank has been
instructed to make available to such Collection Agent information
showing amounts received on each Local Business Day and standing to
the credit of such Collection Account as at the close of business on
that day;
(4) upon receipt of the information referred to in (3) above such
Collection Agent shall, on behalf of the Buyer and the relevant
Seller, make all such determinations and calculations as are
necessary in order to determine, in respect of amounts standing to
the credit of the relevant Collection Account on each Local Business
Day (including each Settlement Date), the Buyer Entitlement and the
Seller Entitlement respectively, and shall direct the relevant
Collection Account Bank, prior to 12:00 noon on each Settlement
Date, to transfer to the relevant Buyer Account the Buyer
Entitlement;
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(5) other than the transfers referred to in paragraphs (3) above and (C)
below such Collection Agent shall not, without the prior written
consent of the Operating Agent, withdraw funds from any of its
Collection Accounts or direct any Collection Account Bank to make
any transfers from any of its Collection Accounts, except for
withdrawals or transfers of cleared funds standing to the credit of
such Collection Account in accordance with the relevant Collection
Account Bank Mandates and which represent the Seller Entitlement and
provided that any such withdrawal or transfer would not cause any
such Collection Account to become overdrawn;
(6) may not extend, amend, modify or waive the terms of any Purchased
Receivable or amend, modify or waive any term or condition of any
Contract related thereto where such extension, amendment,
modification or waiver would prejudicially affect such Purchased
Receivable, unless the Operating Agent shall have otherwise
consented in writing. Each Seller shall deliver to the relevant
Collection Agent (if other than such Seller) all documents,
instruments and records which evidence or relate to the Purchased
Receivables which the Operating Agent may reasonably request;
(7) if other than a Seller, will provide to such Seller all such
information as such Seller may require for purposes of the Summary
Report and will as soon as practicable following receipt pay to or
to the order of such Seller the Collections of any Receivable which
is not a Purchased Receivable;
(8) if other than a Seller, will as soon as practicable upon demand
make available or (if so demanded) deliver to such Seller all
documents, instruments and records in its possession which evidence
or relate to Receivables of such Seller other than Purchased
Receivables, and copies of documents, instruments and records in its
possession which evidence or relate to Purchased Receivables which
the Operating Agent may reasonably request; and
(9) if the Operating Agent or its designee, and notwithstanding anything
to the contrary contained in this Agreement, shall have no
obligation to collect, enforce or take any other action described in
this Agreement with respect to any Receivable that is not a
Purchased Receivable other than to turn over, make available or
deliver to the relevant Seller the Collections and documents with
respect to any such Receivable as described in (4) and (5) above.
(C) Advance Payments: A Collection Agent may, from time to time on any Local
Business Day prior to the Termination Date unless and until the Operating
Agent directs otherwise in the event that there is an Early Amortisation
Event or a Collection Account Event, withdraw any
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amount or amounts standing to the credit of the Buyer Accounts. Any amount
so withdrawn (an "Advance Payment") which amount is required to be paid by
the respective Collection Agent to the Buyer on the Settlement Date if it
had not been so withdrawn shall be set off pro tanto in accordance with
Clauses 4(C) and 5(B)(1) against the Buyer's obligation to pay any
Purchase Price payable on the next following Purchase Date and, to the
extent the amount of the Advance Payment exceeds the amount of the
Purchase Price, be refunded by such Collection Agent in full by the
transfer of cleared funds to the Buyer's account pursuant to Clause
7(C)(2) not later than 12:00 noon on the next following Settlement Date;
provided always that any Advance Payment shall be refunded by such
Collection Agent by the transfer of cleared funds to the Buyer immediately
upon the demand of the Operating Agent in the event that there is an Early
Amortisation Event or a Collection Account Event. A Collection Agent
shall not be obliged to pay interest on any Advance Payment unless and to
the extent that it is not refunded as required under this Clause. Any
overdue amounts shall bear default interest in accordance with Clause
6(D).
(D) Failure to Report: If there is a failure at any time by the Collection
Agent to report and quantify the amount of Collections received or the
amounts of any Advance Payments and/or the funds standing to the credit of
any Buyer Account in respect of any Settlement Period such that the
amounts due by any Seller and the Buyer pursuant to Clauses 4(B) and (C)
cannot be accurately determined (in the Operating Agent's reasonable
opinion), there will fall due from the Sellers (on a joint and several
basis) to the Buyer on the Settlement Date at the end of such Settlement
Period (on account of repayment of Advance Payments) an amount equal to
the anticipated Collections in respect of such Settlement Period as
determined by the Operating Agent, acting reasonably. For the purposes of
this Clause 12(D), it shall be considered reasonable for the Operating
Agent to anticipate that all Collections due during such Settlement Period
were received by the Collection Agent during such Settlement Period. The
Buyer shall deposit such amount into the Temporary Adjustment Account.
Upon the Operating Agent becoming satisfied that a proper assessment of
the amounts due by way of repayment of Advance Payments has been made,
there shall be an adjustment in accordance with such assessment, by way of
repayment from the Buyer or by way of further payment by the Sellers, as
required, and such adjusted sum shall be treated for all purposes under
this Agreement as the Collections received during such Settlement Period.
Provided that such failure by the Collection Agent does not last longer
than two consecutive Settlement Periods and the provisions of this Clause
12(D) are complied with, such failure shall not by itself constitute an
Early Amortisation Event.
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13. PROTECTION OF THE BUYER'S RIGHTS
(A) Notice of Sale: At any time after the occurrence of an Early Amortisation
Event, the Operating Agent may (and each Seller following the Operating
Agent's request shall) notify the Account Debtors, or any of them, of
Purchased Receivables of the Buyer's ownership of the Purchased
Receivables and the Collections of the Purchased Receivables and direct
(or cause such Seller to direct) all the Account Debtors of Purchased
Receivables, or any of them, that payment of all amounts payable under any
such Purchased Receivable be made directly to the Operating Agent or its
designee.
(B) Reconstruction of Accounts Receivable Trial Balance: If at any time any
Seller does not (i) generate an Accounts Receivable Trial Balance in
relation to any Purchase Date (whether or not it is obliged to do so) or
(ii) provide the information to Exide Europe enumerated in Clause 9(L),
the Operating Agent will have the right to reconstruct that Accounts
Receivable Trial Balance or such information so that a determination of
the Purchased Receivables can be made, and such reconstruction will be
conclusive (in the absence of manifest error) for the purposes of
determining Purchased Receivables.
(C) Operating Agent's Right to Perform: If any Originator fails to perform any
of its agreements or obligations under this Agreement, the Operating Agent
may (but shall not be required to) itself perform, or cause performance
of, such agreement or obligation at the cost of the Originators.
(D) Power of Attorney: Without prejudice to the provisions of Clauses 13(A) to
(C), each Originator irrevocably constitutes and appoints the Operating
Agent, with full power of substitution, as its true and lawful attorney
and agent, with full power and authority in its name or otherwise, and in
its place and stead, and for its use and benefit at any time after the
occurrence of an Early Amortisation Event to take such action as the
Operating Agent may deem necessary or desirable in order to protect the
interests of the Buyer, Eureka and/or the Operating Agent and/or the
Liquidity Banks and/or to perfect title to any of the Purchased
Receivables, or Related Security, including the redirection of mail and
the endorsement of drafts, cheques and other payment media, to perform any
agreement or obligation of such Originator under or in connection with
this Agreement and/or under the Collection Account Bank Mandate(s), and to
exercise all other remedies of such Originator under this Agreement or
existing at law. In furtherance of the power herein granted, the
Originator will assist and co-operate with the Operating Agent and provide
such facilities as the Operating Agent may request. The power of attorney
hereby granted is given by way of security, is coupled with an interest,
and is irrevocable and will extend to and be binding upon the successors
and
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assigns of such Originator. The Operating Agent is hereby released from
the restrictions under Section 181 of the German Civil Code.
14. RESPONSIBILITIES OF THE SELLERS
Notwithstanding anything herein to the contrary, each Seller jointly and
severally with the other Sellers hereby agrees with the Buyer and the
Operating Agent that:
(A) Perform Contracts: Each Seller will perform all its obligations
under the Contracts related to the Purchased Receivables to the same
extent as if such Purchased Receivables had not been sold pursuant
to this Agreement and the exercise by either the Operating Agent or
the Buyer of its rights hereunder will not relieve such Seller from
such obligations.
(B) Exoneration of Buyer and Operating Agent: None of the Buyer, Eureka
nor the Operating Agent will have any obligation or liability with
respect to any Purchased Receivables or related Contracts, nor will
the Buyer, Eureka or the Operating Agent be obliged to perform any
of the obligations of any Seller thereunder.
(C) Trust (Treuhandschaft): Until the Operating Agent requests
otherwise, each Seller will hold in trust (als Treuhander) for the
sole benefit, and to the order of the Buyer the Contracts, Records
and other documentary items relating to the uncollected Purchased
Receivables at its address specified in this Agreement. To the
extent that the Contracts, Records or other documentary items also
relate to Receivables that are not Purchased Receivables, such
Seller will hold them in trust and to the order of both the Buyer
and such Seller to the extent of the respective rights of the Buyer
and such Seller therein unless possession thereof is required by the
Buyer to enforce its ownership rights. Each Seller will deliver such
Purchased Receivables, Contracts, Records and documents to the
Operating Agent (or as it may direct), if so directed by the
Operating Agent following an Early Amortisation Event, and the
Operating Agent will make them available to such Seller to the
extent that they contain material or information that does not
relate to Purchased Receivables and to the extent that the Buyer's
interests are not thereby compromised.
(D) Marking: Each Seller will mark clearly and unambiguously its
ordinary business records, including without limitation its master
data processing records, relating to the Purchased Receivables with
a legend acceptable to the Operating Agent indicating that such
Purchased Receivables are owned by the Buyer. Each Seller agrees
that from time to time it will promptly execute and deliver all
instruments and documents,
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and take all further action that the Operating Agent may reasonably
request in order to perfect (except in so far as perfection may
entail notifying the Account Debtors of the Buyer's ownership of the
Purchased Receivables and the Collections of the Purchased
Receivables, which shall only be undertaken in accordance with
Clause 13(A) after an Early Amortisation Event), protect or more
fully evidence the Buyer's ownership interest in the Purchased
Receivables, the Collections and the Related Security and pending
such time will keep an up to date record of all Purchased
Receivables.
(E) Third Party Collection Agent: At any time following the designation
of a Collection Agent other than a Seller:
(1) Each Seller will, at the Operating Agent's request, (a)
assemble all Contracts and Related Security relating to the
Purchased Receivables, or which are otherwise necessary or
desirable to collect such Purchased Receivables, and will make
the same available to the Operating Agent at a place selected
by the Operating Agent or its designee or (if so requested)
deliver the same to the Operating Agent (or as it may direct),
and (b) segregate all cash, cheques and other instruments
received by it from time to time constituting Collections of
Purchased Receivables in a manner acceptable to the Operating
Agent and will, promptly upon receipt, remit all such cash,
cheques and instruments, duly endorsed or with duly executed
instruments of transfer, to the Operating Agent or its
designee.
(2) Each Seller authorises the Operating Agent to take any and all
steps in such Seller's name and on behalf of such Seller
necessary or desirable, in the determination of the Operating
Agent, to collect all amounts due under any and all Purchased
Receivables, including, without limitation, endorsing such
Seller's name on cheques and other instruments representing
Collections and enforcing such Purchased Receivables and the
related Contracts.
(F) Value Added Tax: For the purpose of ensuring recoupment of any value
added tax forming part of a Purchased Receivable:
(1) all or part of which remains unpaid after the statutory period
for purposes of claiming bad debt relief has elapsed; or
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(2) (without prejudice to Clause 5(D)) which or the Outstanding
Balance of which is, or would be, reduced, adjusted or
cancelled by any Seller and/or any other Person whether as a
result of the matters in Clause 5(D) or for any other reason;
such Seller will use its reasonable endeavours to recover such value
added tax (or the appropriate part thereof) from the appropriate tax
authorities, as agent and trustee of the Buyer, and promptly remit
it to the Buyer and, until so remitted, will hold in trust for the
Buyer any dividend received or value added tax recovered by such
Seller in respect thereof (and any such dividend or recovery will be
and be treated as a Collection). Such Seller will make such
accounting write-offs and transfers and raise such credit notes as
may be necessary or desirable for this purpose, and take all such
other steps as may be reasonably requested by the Operating Agent.
In particular, each Seller will, at the request of the Operating
Agent, accept a re-assignment of any such Purchased Receivable (for
a nil consideration) solely for the purpose of facilitating
recoupment of such value added tax.
15. AGENCY AND INDEMNITIES
(A) Agency: In acting under this Agreement the Operating Agent shall
have only such duties, obligations and responsibilities as are
expressly set out in this Agreement (and such other duties,
obligations and responsibilities as are reasonably incidental) and
acts solely as agent of Eureka. However, without prejudice to the
generality of the foregoing, only the Operating Agent shall be
entitled to receive and retain fees and other amounts (including
indemnification under this Clause 15) payable to the Operating Agent
for its own account.
(B) Indemnities by the Sellers: Each Seller jointly and severally with
the other Sellers agrees to indemnify the Buyer, the Operating Agent
and their respective Affiliates and the Collection Agent from and
against any and all damages, losses, claims, liabilities and related
reasonable costs and expenses, including attorneys' fees and
disbursements together with VAT thereon (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against
or incurred by any of them arising out of or relating to this
Agreement or the ownership of Purchased Receivables, excluding,
however, (a) such amounts resulting from gross negligence or wilful
misconduct on the part of the Person who would otherwise be entitled
to claim such indemnification or (b) recourse (except as otherwise
specifically provided in this Agreement) for uncollectible Purchased
Receivables or for losses arising out of late Collections. Without
limiting the foregoing, Indemnified Amounts include amounts relating
to or resulting from:
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<PAGE>
(1) reliance on any representation or warranty made or deemed made by
any Seller under or in connection with this Agreement, or any other
information or report delivered by any Seller or the Collection
Agent pursuant to this Agreement, which shall have been false or
incorrect in any material respect when made or deemed made or
delivered (to the extent that such amounts have not already been
recovered by the applicable indemnified party pursuant to Clause
5(D));
(2) the failure by any Seller to comply with any term, provision or
covenant contained in this Agreement or with any applicable law,
rule or regulation with respect to any Receivable, the related
Contract or the Related Security, or the noncomformity of any
Receivable or the related Contract or the Related Security with any
such applicable law, rule or regulation;
(3) the failure to vest and maintain vested in the Buyer ownership of
each Purchased Receivable, free and clear of any Adverse Claim
whether existing at the time of the Purchase of such Receivable or
at any time thereafter, excluding any such Adverse Claim created by
the Buyer;
(4) any dispute, claim, offset or defence (other than discharge in
bankruptcy or winding up by reason of insolvency or analogous event
of the Account Debtor) of the Account Debtor to the payment of any
Receivable which is, or is purported to be, a Purchased Receivable
(including, without limitation, a defence based on such Receivable
or the related Contract nor being a legal, valid, binding and
enforceable obligation of such Account Debtor), or any other claim
resulting from the sale of the goods or services related to such
Receivable or the furnishing or failure to furnish such goods or
services;
(5) any failure of any Seller, as Collection Agent or otherwise, to
perform its duties or obligations in accordance with the provisions
of this Agreement;
(6) the Buyer, at the request or with the approval of any Seller,
contracting for or arranging foreign exchange transactions and/or
funding in connection with any anticipated Purchase and such
Purchase does not in fact take place as a result of any Seller not
delivering a Notice of Sale, the operation of Clause 3(B) or any
other provision of this Agreement, or a sale of Receivables not
being effected in relation to a Notice of Sale by reason of any
event described in Clause 11(D)(l), (2), (3) and (4) or any breach
by any Seller (in whatever capacity) of any of its obligations under
or in connection with this Agreement;
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<PAGE>
(7) any products liability claim, or personal injury or property damage
claim, or other similar or related claim or action of whatever sort
arising out of or in connection with goods, merchandise or services
which are the subject of any Receivable or Contract; and
(8) the transfer of an ownership interest in any Receivable other than
an Eligible Receivable (to the extent that such amounts have not
already been recovered by the applicable indemnified party pursuant
to Clause 5(D)).
The Operating Agent will provide any Seller with a certificate or
certificates showing in reasonable detail the basis for the calculation of
Indemnified Amounts claimed under this Clause 15(B) provided, for the
avoidance of doubt, that the provision of such certificate or certificates
shall not be a condition for the making of any claim under this Clause
15(B).
(C) Increased Costs: If the Operating Agent determines that compliance with
any law or regulation or any guideline or request from any central bank or
other governmental authority (whether or not having the force of law)
coming into force after the Effective Date affects or would affect the
amount of capital required or expected to be maintained by the Buyer, the
Operating Agent, Citibank or any Person controlling the Buyer, the
Operating Agent or Citibank, and the Operating Agent determines that the
amount of such capital is increased by or based upon the existence of the
Buyer's agreement, in its discretion, to make or maintain purchases under
or pursuant to this Agreement and other similar agreements or facilities
(or any agreement entered into in accordance with Clause 19(C)), or if the
Operating Agent reasonably determines that any amount is to be paid for
liquidity agreements by the Buyer on account of capital required or
expected to be maintained by the provider thereof, then, upon written
demand by the Operating Agent, each Seller shall immediately pay to the
Operating Agent for the account of the Buyer or Citibank or, as the case
may be, for its own account from to time, additional amounts as specified
by the Operating Agent, sufficient to compensate, in light of such
circumstances, to the extent that the Operating Agent reasonably
determines such increase in capital or, as the case may be, such amount to
be allocable to the existence of the Buyer's agreement as referred to
above. A certificate as to such amount submitted to any Seller by the
Operating Agent shall, in the absence of manifest error, be conclusive and
binding for all purposes.
(D) Increased Costs in Respect of Taxation: If the Operating Agent determines
that as a result of any change in or in the interpretation of or of the
introduction of any law, regulation or regulatory requirement relating to
taxation coming into force after the Effective Date, or as a result of any
act or omission of any Seller, any of the Buyer, the Operating Agent,
Citibank or any Person controlling the Buyer, Citibank or the Operating
Agent, incurs or will incur
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<PAGE>
an increased cost in respect of purchases or agreements to purchase made
under or pursuant to this Agreement (or any agreement entered into
pursuant to Clause 19(C)) other than an increased cost arising solely as a
result of a change in the rate of taxation on the overall net income of
the relevant indemnified party, each Seller shall immediately pay to the
Operating Agent for the account of the Buyer or Citibank or, as the case
may be, for its own account from rime to time, additional amounts as
specified by the Operating Agent, equal to such cost. A certificate as to
such amount submitted to any Seller by the Operating Agent shall, in the
absence of manifest error, be conclusive and binding for all purposes.
(E) Judgment Currency: Each reference in this Agreement to a specific currency
is of the essence. The obligation of each of the Sellers in respect of any
sum due from it to the Operating Agent or the Buyer and of the Collection
Agent to the Buyer under this Agreement will, notwithstanding any judgment
in any other currency, or any bankruptcy or winding up by reason of
insolvency or analogous event of such Seller, be discharged only to the
extent that on the Local Business Day following receipt by the Operating
Agent or the Buyer of any sum adjudged or determined to be so due in such
other currency, the Operating Agent could in accordance with normal
banking procedures purchase the currency specified in this Agreement with
such other currency. If the amount of currency so purchased is less than
the amount of the specified currency originally due to the Operating Agent
or the Buyer, each Seller jointly and severally with the other Seller
agrees, as a separate obligation and notwithstanding any such judgment,
bankruptcy, winding up or analogous event, to indemnify the Operating
Agent and the Buyer against such loss.
(F) Payment: Any amounts subject to the indemnification provisions of Clause
15(B), (C), (D) or (E) shall be paid by each Seller to the Operating Agent
within two Programme Business Days following the Operating Agent's demand
therefor.
(G) After Tax Amount: In the event that any taxing authority seeks to charge
to tax any sum paid to the Buyer or the Operating Agent or any of their
respective Affiliates as a result of the indemnities or other obligations
contained herein, then the amount so payable shall be grossed up by such
amount as will ensure that after payment of the tax so charged there shall
be left a sum equal to the amount that would otherwise be payable under
such indemnity or obligation. Clause 7(D) applies mutatis matandis.
16. AMENDMENTS, ETC.
(A) Amendments and Waivers: No amendment of any provision of this Agreement
including this Clause 16(A) nor consent to any departure by any Seller
therefrom shall in any event be
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<PAGE>
effective unless the same shall be in writing and signed by the Sellers,
the Buyer and the Operating Agent.
(B) Entire Agreement: This Agreement contains a final and complete integration
of all prior expressions by the parties with respect to the subject matter
of this Agreement and constitutes the entire agreement among the parties
with respect to the subject matter of this Agreement, superseding all
prior oral or written understandings.
17. NOTICES
All notices and other communications provided for under this Agreement
shall, unless otherwise stated in this Agreement, be in writing in the
English language (including telex and fax communication) and mailed (first
class, postage paid) or delivered to each party at its address set out
under its name on the execution pages of this Agreement or at such other
telex or fax number or address as may be designated by such party in a
written notice to the other parties. All such notices and communications
will be effective, (wiederlegbare Vermutung) (i) in the case of written
notice, five days after being deposited in the post, or (ii) in the case
of notice by telex, when telexed against receipt of answer back, or (iii)
in the case of notice by fax, at the time of transmission unless served on
a day which is not Local Business Day or after 5.00 pm at the place in
which the recipient is located, in which case it will be effective at 9.00
am at the place in which the recipient is located on the following Local
Business Day. In each case notice must be addressed as aforesaid.
18. NO WAIVER: REMEDIES
(A) No Waiver: No failure on the part of the Buyer, any Seller or the
Operating Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any right or remedy preclude any other or further
exercise thereof or the exercise of any other right or remedy. The
remedies in this Agreement are cumulative and not exclusive of any
remedies provided by law.
(B) Set Off: Without limiting the provisions of Clause 18(A) the Buyer and the
Operating Agent are hereby authorised by each of the Sellers at any time
after any Seller is in default of its obligations under this Agreement or
an Early Amortisation Event has occurred, and to set off and apply, and/or
to instruct Citibank or any of Citibank's Affiliates to set off and apply,
any and all deposits at any time held and other indebtedness at any time
owing (whether general or special, time or demand, provisional or final
and in whatever currency) by the Buyer, the Operating Agent, Citibank or,
as the case may be, any such Affiliate to or for the credit or the account
of such Seller against any and all of the obligations of such Seller (as
such, as
- 52 -
<PAGE>
Collection Agent, or otherwise), now or hereafter existing under this
Agreement, to the Buyer or the Operating Agent or their respective
successors and assigns or, as the case may be, now or hereafter due or
owing on any account to Citibank or any of Citibank's Affiliates (and for
this purpose to convert one currency into another).
19. BINDING EFFECT: ASSIGNABILITY
(A) Successors and Assigns: This Agreement is binding upon and enures to the
benefit of (1) each Seller and its successors and permitted assignees in
accordance with Clause 19(B); (2) the Buyer and also in relation to the
benefit, but not the burden of this Agreement, each Person to whom the
Buyer has for the time being in accordance with Clause 19(C) (2) or (3)
granted or assigned (or agreed to grant or assign) all or part of any
Purchased Receivable (or any participation or interest, whether
proprietary or contractual, in or in respect of all or part of any
Purchased Receivable) and/or all or any of its rights, benefits and
interest in or under this Agreement and their respective successors and
assignees; and (3) Citibank and its successors as Operating Agent (and the
terms "Seller", "Buyer" and "Operating Agent" shall be construed
accordingly).
(B) The Seller: No Seller may assign any of its rights, benefits or interest
in or under this Agreement except with the prior consent of the Operating
Agent.
(C) The Buyer: The Buyer may grant or assign all or part of any Purchased
Receivable (or any participation or interest, whether proprietary or
contractual, in or in respect of all of any part of any Purchased
Receivable) and/or all or any of its rights, benefits and interest in or
under this Agreement (1) as provided in this Agreement, (2) to Eureka or
any Affiliate of Eureka or any vehicle managed by Eureka or an Affiliate
of Eureka (3) to Citibank or any Affiliate of Citibank or any vehicle
managed by Citibank or an Affiliate of Citibank, or (4) (after first
offering to make such grant or assignment on substantially similar terms
to each Seller, and such Seller nor accepting such offer within 10
Programme Business Days of the date of the offer) to any other Person
which engages in the business of purchasing or accepting grants or
assignments of, or making loans in respect of, accounts receivable or
other debts or intangibles or participations or interests, whether
proprietary or contractual, therein or in respect thereof, and has entered
into an agreement with the Buyer. Any such grant or assignment as referred
to in (2), (3) and (4) above shall be upon such terms and conditions as
the parties thereto may mutually agree. Upon the assignment of all or part
of any Purchased Receivable, rights, benefits and/or interests from an
assignor as described above, the respective assignee receiving such
assignment shall have all the rights of such assignor hereunder with
respect to such Purchased Receivable (or part thereof), rights, benefits
and/or interests. An assignor of any Purchased Receivable (or part
thereof), rights, benefits and/or
- 53 -
<PAGE>
interests under this Agreement will provide notice to such Seller of any
such assignment, unless notice is waived by such Seller.
(D) Additional Sellers: The Operating Agent may, in its sole and absolute
discretion, at the request of Exide Europe, admit any or all of DETA
Akkumulatorenwerk GmbH, MAREG Accumulatoren GmbH, FRIWO SILBERKRAFT GmbH
and/or CEAG Dominit GmbH as a Seller under this Agreement (for the
purposes of this Clause 19(D), such party or parties shall be referred to
as the "Additional Seller"). In addition to the discretion of the
Operating Agent, the admission of the Additional Seller shall also be
subject to the following conditions precedent:
(1) the Operating Agent receives the documents and information specified
in Schedule 5 in respect of the Additional Seller, each in form and
substance satisfactory to the Operating Agent;
(2) the Additional Seller, the Sellers and the Buyer have delivered to
the Operating Agent a duly completed and executed Admission of
Additional Seller in the from attached as Schedule 2 (together with
confirmation of due execution and delivery, in form and substance
satisfactory to the Operating Agent) and the Operating Agent has
indicated its consent by execution of the Admission of Additional
Seller; and
(3) Exide Europe shall have confirmed in writing to the Operating Agent
that the Letter of Undertaking shall apply, on the terms stated
therein, to all of the obligations of the Additional Seller under
the Programme,
upon which time the Additional Seller shall be deemed to be a party to
this Agreement from and after the next Settlement Date subsequent to the
execution of the Admission of Additional Seller by the Operating Agent,
and the Additional Seller shall be under the same obligations towards each
of the other parties to this Agreement as if it had been an original party
hereto as a "Seller" and as "Originator".
20. TERMINATION
This Agreement will create and constitute the continuing obligations of
the parties in accordance with its terms, and will remain in full force
and effect until such time, after the Termination Date, as all Capital of
all Groups of Receivables has been reduced to zero and all Yield,
Programme Costs and other fees due under this Agreement or the Fee Letter
have been paid; provided, however, that the rights and remedies with
respect to any breach of any representation and warranty made by any
Seller in or pursuant to this Agreement, the
- 54 -
<PAGE>
provisions of Clause 21 and the indemnification and payment provisions of
this Agreement will be continuing and will survive any termination of this
Agreement. The Operating Agent will notify the Rating Agencies promptly
upon the occurrence of:
(A) the Termination Date; and/or
(B) any material amendment to this Agreement.
21. NO PROCEEDINGS
(A) Buyer: Each of the Sellers and the Operating Agent each hereby agree that
they will nor institute against the Buyer any bankruptcy, insolvency or
similar proceeding so long as any commercial paper issued by Eureka or any
of its Affiliates is outstanding or one year plus one day has not elapsed
since the last day on which any such commercial paper was outstanding.
(B) Eureka: Each of the Sellers, the Buyer and the Operating Agent each hereby
agree that it will not institute against Eureka or any of its Affiliates
any bankruptcy, insolvency or similar proceeding so long as any commercial
paper issued by Eureka or any of its Affiliates is outstanding or one year
plus one day has not elapsed since the last day on which any such
commercial paper was outstanding.
22. RESTRUCTURING
(A) The parties to this Agreement agree that if, by reason of any change
in the insolvency law in the Federal Republic of Germany as a result
of the coming into force of the new Insolvency Code
(Insolvenzordnung) or in its interpretation or administration,
Citibank or Eureka so requests, the parties will consider in good
faith a restructuring of this Agreement, the other Relevant
Documents, the RPA and/or the PPA and the transactions contemplated
herein and/or therein Provided that any such restructuring shall be
upon such terms and conditions as are acceptable to Citibank, the
Operating Agent and Eureka and Provided further that the Sellers and
the Collection Agents shall jointly and severally indemnify Citibank,
the Operating Agent and Eureka from and against all losses, costs and
expenses (including legal fees) incurred by any of them in connection
with such restructuring together with VAT thereon irrespective of
whether or not such restructuring is completed.
(B) It is hereby agreed by the parties to this Agreement that the
provisions herein expressed to be for the benefit of Citibank and/or
Eureka are intended to, and create rights in favour of Citibank
and/or Eureka as third parties, directly enforceable by
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<PAGE>
each of them in accordance with the provisions hereof or under law
(Verirag zugunsten Dritter).
23. RELEASE OF EXCESS RELATED SECURITY
The Buyer agrees on demand of the relevant grantor of Related Security or
other security (if any) to discharge such Related Security or other
security (if any) or parts thereof granted to it in relation to the
Purchased Receivables or otherwise in so far as the claim secured by such
Related Security or other security (if any) should be exceeded otherwise
than temporarily by 20% of the realisable value of such Related Security
or other security (if any). In the case of a claim for money being granted
as security, its realisation value shall be deemed to be 90% of its
nominal outstanding amount.
24. EXECUTION IN COUNTERPARTS: SEVERABILITY
(A) 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 when
taken together shall constitute one and the same agreement.
(B) Severability: If any provision in or obligation under this Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations
under this Agreement, or of such provision or obligation in any other
jurisdiction, shall not be affected or impaired thereby. The illegal,
invalid or unenforceable provision shall be replaced by the parties by a
provision coming as close as legally possible to the commercial interests
of the parties.
25. CONFIDENTIALITY
Unless otherwise required by applicable law or regulation, or as requested
by any regulator or tribunal with competent jurisdiction over, or over any
business of, the relevant party, each of the parties agrees to maintain
the confidentiality of this Agreement in its communications with third
parties save its advisers, provided such advisers are legally bound to
keep confidential the information obtained during the course of their
profession and otherwise.
26. GOVERNING LAW AND JURISDICTION
(A) Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Federal Republic of Germany.
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<PAGE>
(B) Consent to Jurisdiction: The parties hereto hereby irrevocably and for the
benefit of each other submit to the jurisdiction of the Landgericht of
Frankfurt am Main in any action or proceeding arising out of or relating
to this Agreement, and hereby irrevocably agree that all claims in respect
of such action or proceeding may be heard and determined in such courts.
The parties hereto hereby irrevocably waive, to the fullest extent they
may effectively do so, the defence of an inconvenient forum to the
maintenance of such action or proceeding. Each Seller agrees that a final
judgment in any action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing shall affect the right to serve process in
any manner permitted by law.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered on the
day first above written.
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<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. 333-39269, 333-29991, 333-11695, 333-00885,
333-00413, 33-64169, 33-62295, 33-62467.
ARTHUR ANDERSEN LLP
Philadelphia, Pennsylvania
June 29, 1998
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