<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
Quarterly Report under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
FOR THE FISCAL QUARTER ENDED SEPTEMBER 27, 1998
Commission File Number 1 - 11263
EXIDE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 23-0552730
- ------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1400 N. WOODWARD AVE., BLOOMFIELD HILLS, MICHIGAN 48304
- ------------------------------------------------- -----------------
(Address of principal executive offices) (Zip Code)
(248) 258-0080
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(Registrant's telephone number, including area code)
Indicate by a check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
-------------- --------------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
AS OF NOVEMBER 11, 1998, 21,355,737 SHARES OF COMMON STOCK WERE OUTSTANDING.
The Exhibit Index is located on page 17.
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EXIDE CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
- -------------------------------------
Item 1. Financial Statements (unaudited except for March 31, 1998
Consolidated Balance Sheet).
-- Condensed Consolidated Balance Sheets - -
September 27, 1998 and March 31, 1998.
-- Consolidated Statements of Operations - -
for the three and six months ended September 27, 1998
and September 28, 1997.
-- Consolidated Statements of Cash Flows - -
for the six months ended September 27, 1998
and September 28, 1997.
-- Notes to Condensed Consolidated Financial Statements - -
September 27, 1998.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
- ---------------------------------
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
6 (a). Exhibits.
Exhibit 3.2 - Amended and restated By-Laws
Exhibit 4.5 - Form of Rights Agreement dated as of September 18,
1998
Exhibit 10.25 - Amended and restated 1996 Non-Employee
Directors Stock Plan
Exhibit 27 - Financial Data Schedule
6 (b). Reports on Form 8-K.
The Company filed a report on Form 8-K on September 21, 1998
describing in Item 5 the adoption of a stockholders' rights plan.
SIGNATURE
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1
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<TABLE>
<CAPTION>
EXIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per-share data)
September 27, March 31,
1998 1998
(Unaudited)
--------------- -----------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 39,762 $ 35,613
Receivables, net of allowance for doubtful
accounts of $47,838 and $37,488 535,293 434,679
Inventories 594,689 572,188
Prepaid expenses and other 22,788 32,455
Deferred income taxes 14,922 14,896
--------------- -----------
Total current assets 1,207,454 1,089,831
--------------- -----------
PROPERTY, PLANT AND EQUIPMENT 938,064 824,296
Less - Accumulated depreciation (363,381) (289,183)
--------------- -----------
Total property, plant and equipment, net 574,683 535,113
--------------- -----------
OTHER ASSETS:
Goodwill, net 620,715 570,251
Investments in affiliates 25,989 24,620
Deferred financing costs, net 18,242 20,050
Deferred income taxes 61,860 61,461
Other 41,309 47,290
--------------- -----------
768,115 723,672
--------------- -----------
Total assets $ 2,550,252 $ 2,348,616
=============== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 26,800 $ 17,953
Current maturities of long-term debt 35,651 35,112
Accounts payable, trade 269,133 255,952
Accrued expenses 261,904 241,898
--------------- -----------
Total current liabilities 593,488 550,915
--------------- -----------
LONG-TERM DEBT 1,313,703 1,195,918
--------------- -----------
OTHER NONCURRENT LIABILITIES 296,336 287,531
--------------- -----------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 20,762 19,304
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STOCKHOLDERS' EQUITY
Junior participating preferred stock, Series A, $.01 par value
30,000 shares authorized - - - -
Common stock, $.01 par value 60,000,000 shares authorized;
21,352,722 and 21,328,439 shares issued and outstanding 213 213
Additional paid-in capital 490,033 489,851
Accumulated deficit (37,998) (33,084)
Notes receivable - stock award plan (1,165) (1,609)
Unearned compensation (226) (322)
Minimum pension liability adjustment (2,767) (2,767)
Cumulative translation adjustment (122,127) (157,334)
--------------- -----------
Total stockholders' equity 325,963 294,948
--------------- -----------
Total liabilities and stockholders' equity $ 2,550,252 $ 2,348,616
=============== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
2
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<TABLE>
<CAPTION>
EXIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Amounts in thousands, except share and per-share data)
For the Three Months Ended For the Six Months Ended
----------------------------- ------------------------------------------
September 27, September 28, September 27, September 28,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $ 601,136 $ 552,389 $ 1,145,668 $ 1,042,754
COST OF SALES 440,102 404,043 844,480 770,100
------------ ------------ ------------ ------------
Gross profit 161,034 148,346 301,188 272,654
------------ ------------ ------------ ------------
OPERATING EXPENSES:
Selling, marketing and advertising 80,014 69,906 158,545 138,719
General and administrative 36,203 31,876 73,184 63,033
Goodwill amortization 4,672 4,283 8,848 8,401
------------ ------------ ------------ ------------
120,889 106,065 240,577 210,153
------------ ------------ ------------ ------------
Operating income 40,145 42,281 60,611 62,501
------------ ------------ ------------ ------------
INTEREST EXPENSE, net 26,912 27,834 53,455 57,098
OTHER EXPENSE, net 3,547 1,426 5,961 3,677
------------ ------------ ------------ ------------
Income before income taxes, minority
interest and extraordinary loss 9,686 13,021 1,195 1,726
INCOME TAX EXPENSE 7,505 5,085 5,167 1,526
------------ ------------ ------------ ------------
Income (loss) before minority interest and
extraordinary loss 2,181 7,936 (3,972) 200
MINORITY INTEREST (102) (218) (202) (509)
------------ ------------ ------------ ------------
Income (loss) before extraordinary loss 2,283 8,154 (3,770) 709
EXTRAORDINARY LOSS RELATED TO EARLY
RETIREMENT OF DEBT, net of income tax benefit
of $0 for the six months ended September 27,
1998 and $768 for the three and six months ended
September 28, 1997 - - (1,445) (301) (8,758)
------------ ------------ ------------ ------------
Net income (loss) $ 2,283 $ 6,709 $ (4,071) $ (8,049)
============ ============ ============ ============
BASIC EARNINGS PER SHARE:
Income (loss) before extraordinary loss $ 0.11 $ 0.40 $ (0.18) $ 0.04
Extraordinary loss - - (0.07) (0.01) (0.43)
------------ ------------ ------------ ------------
Net income (loss) $ 0.11 $ 0.33 $ (0.19) $ (0.39)
============ ============ ============ ============
DILUTED EARNINGS PER SHARE:
Income (loss) before extraordinary loss $ 0.11 $ 0.38 $ (0.18) $ 0.03
Extraordinary loss - - (0.07) (0.01) (0.41)
------------ ------------ ------------ ------------
Net income (loss) $ 0.11 $ 0.31 $ (0.19) $ (0.38)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES:
Basic 21,238,526 20,588,905 21,195,561 20,581,057
============ ============ ============ ============
Diluted 21,259,065 21,680,806 21,360,630 21,463,753
============ ============ ============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
3
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<TABLE>
<CAPTION>
EXIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)
For the Six Months Ended
----------------------------------
September 27, September 28,
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,071) $ (8,049)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities -
Depreciation and amortization 59,307 55,359
Extraordinary loss 301 8,758
Deferred income taxes 3,100 3,253
Original issue discount on notes 4,527 5,528
Provision for losses on accounts receivable 7,068 1,685
Minority interest (202) (509)
Net proceeds from sale of European receivables 5,855 105,696
Changes in assets and liabilities excluding
effects of acquisitions -
Receivables (87,455) (61,999)
Inventories 6,349 (29,306)
Prepaid expenses and other 4,368 (662)
Payables and accrued expenses (14,768) 27,764
Other, net (8,519) 849
--------------- ---------------
Net cash provided by (used in) operating activities (24,140) 108,367
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of certain businesses (14,825) (32,920)
Capital expenditures (38,756) (42,589)
Equipment purchases held for sale (10,435) - -
Proceeds from sale of assets 21,278 2,058
Insurance proceeds from fire damage 7,160 - -
--------------- ---------------
Net cash used in investing activities (35,578) (73,451)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term borrowings 9,011 9,603
Borrowings under Global Credit Facilities Agreement 328,145 - -
Repayments under Global Credit Facilities Agreement (267,129) - -
Borrowings under U.S. Credit Agreement - - 115,875
Repayment of European Facilities Agreement - - (93,032)
Repayment of Acquired Debt - - (64,644)
Issuance of 9.125% Senior Notes - - 102,130
Retirement of 12.25% Senior Subordinated Notes - - (104,096)
Decrease in other debt (7,015) (2,429)
Dividends paid (843) (846)
Debt issuance costs (379) (6,980)
--------------- ---------------
Net cash provided by (used in) financing activities 61,790 (44,419)
--------------- ---------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 2,077 (1,325)
--------------- ---------------
NET DECREASE IN CASH AND CASH EQUIVALENTS 4,149 (10,828)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,613 42,706
--------------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 39,762 $ 31,878
=============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for -
Interest (net of amount capitalized) $ 47,573 $ 43,633
Income taxes $ 3,947 $ 1,765
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
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EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 27, 1998
(Amounts in thousands, except share and per-share data)
(Unaudited)
(1) BASIS OF PRESENTATION, ETC.
- --- ---------------------------
The condensed consolidated financial statements include the accounts of Exide
Corporation (the "Company") and all of its majority-owned subsidiaries. The
accompanying financial statements are presented in accordance with the
requirements of Form 10-Q and consequently do not include all of the disclosures
normally required by generally accepted accounting principles or those normally
made in the Company's annual Form 10-K filing. Accordingly, the reader of this
Form 10-Q may wish to refer to the Company's Form 10-K for the year ended March
31, 1998 for further information.
The financial information has been prepared in accordance with the Company's
customary accounting practices and has not been audited (except for Balance
Sheet information presented at March 31, 1998). In the opinion of management,
the accompanying condensed consolidated financial information reflects all
adjustments necessary to present fairly the results of operations and financial
position for the periods presented.
The Company adopted Statement of Financial Accounting Standards No. 128
"Earnings per Share" in the third quarter of fiscal 1998 and earlier periods
presented were restated. Included below is a reconciliation of shares for the
basic and diluted earnings per share ("EPS") computations.
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
-------------------------- --------------------------
September 27, September 28, September 27, September 28,
1998 1997 1998 1997
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Basic EPS Shares 21,238,526 20,588,905 21,195,561 20,581,057
Effect of Dilutive Securities 20,539 1,091,901 165,069 882,696
------------ ----------- ------------ ------------
Diluted EPS Shares 21,259,065 21,680,806 21,360,630 21,463,753
============ =========== ============ ============
</TABLE>
Options to purchase 2,286,720 shares at exercise prices ranging from $16-5/8 to
$29-1/2 were outstanding during the second quarter of fiscal 1999 but were not
included in the computation of diluted EPS because such exercise prices were
greater than the average market price of the common shares. These options
expire in the years 2000 to 2006.
5
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In the first quarter of fiscal 1999, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No.
130"). Under SFAS No. 130, comprehensive income is defined as the total of net
income and all other non-owner changes in equity. The adoption of SFAS No. 130
involves new disclosure requirements only and did not impact the reported
financial position or results of operations.
Total comprehensive income (loss) and its components are as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
-------------------------- --------------------------
September 27, September 28, September 27, September 28,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net income (loss) $ 2,283 $ 6,709 $ (4,071) $ (8,049)
Change in cumulative
translation adjustment 37,157 (625) 35,207 (24,992)
------------- ----------- ------------ ------------
Total comprehensive
income (loss) $ 39,440 $ 6,084 $ 31,136 $ (33,041)
============ ============ ============ ============
</TABLE>
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
"Accounting for Derivative Instruments and Hedging Activities", which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities. It requires that all entities recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. The Company is evaluating the impact of the
statement and will be required to adopt it in the second quarter of fiscal 2000.
On September 21, 1998, the Company's Board of Directors announced that it
adopted a Preferred Share Purchase Rights Plan and declared a dividend
distribution to be made to stockholders of record on September 29, 1998, of one
Preferred Share Purchase Right (a "Right") on each outstanding share of Common
Stock (the "Common Shares"). Each Right entitles the registered holder to
purchase from the Company one one-thousandth of a share of Junior Participating
Preferred Stock, Series A, par value $.01 per share, of the Company (the
"Preferred Shares") at an exercise price of $60 per one one-thousandth of a
Preferred Share, subject to adjustment. The Rights are not exercisable, or
transferable apart from the Common Shares, until the earlier to occur of (i) ten
days following a public announcement that a person or group other than certain
exempt persons (an "Acquiring Person"), together with persons affiliated or
associated with such Acquiring Person (other than those that are exempt persons)
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding Common Shares or (ii) ten business days following the
commencement or public disclosure of an intention to commence a tender offer or
exchange offer (other than a permitted offer, as defined) by a person other than
an exempt person if, upon consummation of the offer, such person would acquire
beneficial ownership of 15% or more of the outstanding Common Shares (subject to
certain exceptions). Thereafter, if the Company is not the surviving
corporation in a merger or other business combination or if Common Shares are
changed or exchanged or in a transaction or transactions wherein 50% or more of
6
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its consolidated assets or earning power are sold, each Right would entitle the
holder (other than the Acquiring Person and certain related persons or
transferees) upon exercise to receive, in lieu of Preferred Shares, a number of
shares of common stock of the acquiring company or the Company, as the case may
be, having a value of two times the exercise price of the Right. The Rights are
redeemable at the Company's option at any time before public disclosure that an
Acquiring Person has become such, for $.01 per Right, and expire on September
18, 2008. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment equal to the greater of $25 per share and 1,000 times
the dividend declared per Common Share. The Preferred Shares have liquidation
preference, as defined. In addition, each Preferred Share will have 1,000 votes
per share, voting together with the Common Shares.
Certain prior period amounts have been reclassified to conform to current
presentation.
<TABLE>
<CAPTION>
(2) INVENTORIES
- ------------------
September 27, March 31,
1998 1998
--------------- ------------
<S> <C> <C>
Raw materials $ 151,743 $ 143,652
Work-in-process 99,978 78,004
Finished goods 342,968 350,532
--------------- -----------
$ 594,689 $ 572,188
=============== ===========
</TABLE>
At September 27, 1998 and March 31, 1998, inventories valued by the LIFO method
were approximately 26% and 30% of consolidated inventories, respectively. If
all inventories had been determined using the first-in, first-out method, such
inventories would have been $577,622 and $555,121 at September 27, 1998 and
March 31, 1998, respectively.
(3) LONG-TERM DEBT, etc
- -------------------
On May 11, 1998, the Company entered into another interest rate bond swap
agreement for $4,430 (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 $233. 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 $301. No income tax
benefit on the extraordinary loss was recognized.
As of September 27, 1998, the net fair value of the foreign currency and
interest rate protection agreements was $(7,900). Such loss is offset by the
decrease in the fair value of the related debt.
In October 1998, the Company paid an amendment fee of $6,000 to the counterparty
to its interest rate swap agreements related to $45,055 of the Company's 10%
Senior Notes due 2005. This fee will be recorded as other expense in the third
fiscal quarter.
7
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(4) 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 in Note 12 of Notes to Consolidated Financial
Statements included in the Company's March 31, 1998 Form 10-K or herein, the
Company believes that it is in substantial compliance with all material
environmental, health and safety requirements.
North America
- -------------
The Company has been advised by the U.S. Environmental Protection Agency ("EPA")
that it is a "Potentially Responsible Party" ("PRP") under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") or similar
state laws at 64 federally defined Superfund or state equivalent sites. At 37
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 affect 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.
While the ultimate outcome of the various 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 reserves for on-site and off-site environmental remediation
costs and believes that such reserves are adequate. As of September 27, 1998,
the amount of such reserves on the Company's balance sheet was $26,149. Of this
amount, $16,715 was included in other noncurrent liabilities. Because
environmental liabilities are not recorded until the 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
future adjustments to the reserves are possible.
8
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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.
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.
(5) COMMITMENTS AND CONTINGENCIES
- ----------------------------------
There have been no significant changes from the March 31, 1998 audited financial
statements.
(6) SUBSEQUENT EVENT
- ---------------------
On July 30, 1998, the Company and Schumacher Electric Corporation, Inc.
("Schumacher Electric"), a company headquartered in Mount Prospect, Illinois,
signed an agreement to form a joint venture to be named Schumacher Corporation.
Schumacher Electric planned to contribute its battery charger and related
products business and Exide planned to contribute its battery charger business
and its Speed Clip division to the new company. Prior to the formal closing,
this transaction was terminated by mutual consent of the parties.
9
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
GENERAL
- -------
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 September 27, 1998, the net fair value
of open foreign exchange contracts and the related losses on such contracts
aggregated $(3.0)million.
During the second quarter and first six months of fiscal 1999, $37.2 million and
$35.2 million, respectively, of the increase in stockholders' equity was due to
foreign currency translation adjustments associated with the strengthening of
most European currencies relative to the U.S. dollar.
RESULTS OF OPERATIONS
- ---------------------
Three months ended September 27, 1998 compared with the three months ended
- --------------------------------------------------------------------------
September 28, 1997.
- -------------------
Net sales for the second quarter increased $48.7 million, or 8.8% to $601.1
million, as compared to $552.4 million for the same period last year. This
increase is largely due to:
* The inclusion of DETA (a German industrial and automotive battery
manufacturer) which was acquired effective September 1, 1997 ($31 million);
* Higher automotive sales in North America ($12 million); and,
* Higher industrial and automotive sales in Europe ($6 million), after
eliminating the impact of foreign exchange rates.
Gross profit for the second quarter of FY '99 increased $12.7 million or 8.6%,
to $161.0 million from $148.3 million for the same period last year,
representing the net effect of these primary factors:
* Higher automotive and industrial volume in North America and Europe (including
DETA) of $15.4 million; and,
* Manufacturing cost reductions related to the European rationalization /
consolidation process.
10
<PAGE>
These factors were partially offset by:
* Unfavorable product mix and less profitable customer mix in North America
($4.1 million). The announced 3.95% price increase effective November 1st
should help to offset this issue in the future;
* Higher production costs in certain U.S. manufacturing facilities ($2.4
million), principally at the Bristol facility which experienced a fire in
December, 1997; and,
* Higher depreciation in Europe ($2.5 million) including the effect of the DETA
acquisition.
Profit before tax ("PBT") for the second quarter of FY '99 decreased $3.3
million to $9.7 million from $13.0 million for the same period last year, as a
result of the factors discussed above, as well as the following:
* Adverse impact of including DETA for the entire fiscal quarter (versus only
September in fiscal 1998) of $1.0 million (July and August are typically loss
months given low sales volume);
* Higher provisions for uncollectible receivables in North America ($2.8
million) related primarily to several large battery retailers which filed
Chapter 11 in fiscal 1998;
* Higher branch operating costs ($2.3 million); and,
* Foreign exchange losses of $2.1 million in the second quarter of fiscal 1999
as compared to net foreign exchange gains of $1.0 million in the second
quarter of fiscal 1998.
Net income for the second quarter of fiscal 1999 was $2.3 million as compared to
$6.7 million for the same period last year. This decrease is largely
attributable to the factors discussed above coupled with the high effective tax
rate of 77.5%. This tax rate results from an inability to record an income tax
benefit ($2.6 million) due to a realization issue related to the second quarter
fiscal 1999 U.S. taxable loss.
Six months ended September 27, 1998 compared with the six months ended September
- --------------------------------------------------------------------------------
28, 1997.
- ---------
Net sales for the first six months of FY '99 increased $102.9 million, or 9.9%,
to $1,146 million, as compared to $1,043 million for the same period last year.
This increase is largely due to:
* The inclusion of DETA (a German industrial and automotive battery
manufacturer) which was acquired effective September 1, 1997 ($81 million);
* Higher automotive sales in North America ($14 million); and,
* Higher industrial and automotive sales in Europe ($22 million), after
eliminating the impact of foreign exchange rates.
11
<PAGE>
Gross Profit for the first six months of FY '99 increased $28.5 million or
10.5%, to $301.2 million from $272.7 million for the same period last year ,
representing the net effect of these primary factors:
* Higher automotive and industrial volume in North America and Europe (including
DETA) of $31 million; and,
* Manufacturing cost reductions related to the European rationalization /
consolidation process.
These factors were partially offset by:
* Unfavorable product mix and less profitable customer mix in North America
($7.0 million). The 3.95% price increase effective November 1st should help
to offset this issue in the future
* Higher production costs in certain U.S. manufacturing facilities ($3.0
million), principally at the Bristol facility which experienced a fire in
December, 1997; and,
* Higher depreciation in Europe ($7.4 million) including the effect of the DETA
acquisition.
Profit before tax for the first six months of FY '99 decreased $0.5 million to
$1.2 million from $1.7 million for the same period last year, as a result of the
factors discussed above, as well as the following:
* Adverse impact of including DETA for the entire six months of FY '99 (versus
only September in fiscal 1998) of $2.2 million (July and August are typically
loss months given low sales volume);
* Higher provisions for uncollectible receivables in North America ($2.8
million); and,
* Foreign exchange losses of $1.9 million in the first six months of fiscal 1999
as compared to net foreign exchange losses of $0 in the first six months of
fiscal 1998.
Net loss for the first six months of fiscal 1999 was $4.1 million as compared to
a loss of $8.0 million for the same period last year. The fiscal 1999 net loss
was largely attributable to the PBT shortfall discussed above coupled with the
high effective tax rate previously discussed. Net loss for the six months of
fiscal 1998 included the recognition of an $8.8 million extraordinary loss
related to early retirement of debt.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's liquidity requirements arise primarily from the funding of
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. The Company's greatest cash demands from
operations occur during the months of June through October. During fiscal 1999
and beyond, the Company also
12
<PAGE>
expects to meet its liquidity requirements in the same manner.
Cash flows from operating activities were $(24.1) million and $108.4 million in
the six months ended September 27, 1998 and September 28, 1997, respectively.
Because of the seasonality of the Company's business, more funds are typically
generated in its third and fourth fiscal quarters. 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 $38.8 million and $42.6 million in the
six months ended September 27, 1998 and September 28, 1997, respectively. The
Senior Secured Global Credit Facilities Agreement restricts the amount of
capital expenditures which may be made by the Company and its subsidiaries. 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.
As of September 27, 1998, the Company had $590.0 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 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
convert $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 swap agreements which effectively converted $45.1
million (principal amount) of the 10% Senior Notes on a quarterly basis into a
variable LIBOR interest rate through April 15, 2000. The Company and the
counterparty has the right to terminate the $45.1 million bond swap agreements
at any time before maturity. In October 1998, the Company paid an amendment fee
of $6.0 million to the counterparty to its interest rate swap agreements related
to $45.1 million of the Company's 10% Senior Notes due 2005. This fee will be
recorded as other expense in the third fiscal quarter.
As of September 27, 1998, the Company had $60.6 million available under its
Senior Secured Global Credit Facilities Agreement after consideration of $23.4
million of outstanding letters of credit.
As of September 27, 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.
13
<PAGE>
YEAR 2000 ISSUE
- ---------------
The Company relies on information technology ("IT") systems (hardware, operating
systems, software applications) to support many key operations of its business,
including sales order processing, production scheduling, purchasing,
manufacturing, distribution, financial accounting, and others. Initial
assessments of these systems have been conducted, and the Company has determined
that many of these systems are not Year 2000 compliant. Exide believes that
these systems must be made compliant to ensure no material business
interruption. Additionally, the Company's Year 2000 plans are being designed to
include the assessment and related remediation of any non-IT systems that may
incorporate embedded computer chip technology. Certain of the Company's
manufacturing equipment contains such technology. Much of the Year 2000
planning and remediation activities have occurred in the North America versus
Europe and the Company is currently increasing its efforts in Europe.
Additional resources are being devoted to the European assessment effort and the
related remediation plans for both IT and non-IT systems and equipment.
Project plans have been developed to identify the systems/equipment that need
remediaton, as well as the actions, resources needed, and time frames to perform
the remediation. Compliance assessments are ongoing modifications to individual
project plans are made as needed, and the Company's overall remediation status
is being monitored on a regular basis, including periodic reporting to the
Company's Audit Committee of the Board of Directors.
Significant progress has been made in remediation efforts of the legacy computer
systems, principally those in the US. The Company expects to achieve Year 2000
compliance for the IT systems before December 31, 1999. Certain European IT
systems may need to be replaced and the Company will be considering this where
appropriate. The Company recognizes that additional resources and increased
attention must be given to equipment that has date sensitive, embedded
technology -particularly within its manufacturing plants and distribution
centers.
Currently, remediation costs are estimated at approximately $2.5 million;
however, this is a preliminary estimate which does not include estimates from
certain European locations and the full assessment of non-IT systems.
Therefore, total remediation costs are expected to increase and such increases
could be significant. The major increases to these current estimates are likely
to result from the non-IT systems, primarily related to addressing the embedded
technology issues in certain manufacturing equipment.
In addition to its own Year 2000 compliance, the Company believes that its
business could potentially be adversely impacted if its key suppliers and
customers do not achieve timely and successful Year 2000 compliance with their
systems/equipment. As such, the Company has begun contacting its key business
partners to inquire on their Year 2000 readiness. The Company's vertical
integrated structure (particularly in North America and to a lesser extent in
Europe) might mitigate the adverse impact of third parties' Year 2000 issues on
the Company.
Review of readiness, and expected ability to achieve readiness of key IT and
non-IT systems, equipment, suppliers and customers for the purpose of developing
contingency planning effects is scheduled for the end of fiscal 1999.
14
<PAGE>
PART II. OTHER INFORMATION
- ---------------------------------
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders held on August 12, 1998, the
stockholders elected six directors and ratified the appointment of Arthur
Andersen LLP as independent auditors for fiscal 1999.
The results of the voting were as follows:
<TABLE>
<CAPTION>
For Director Granted Withheld
----------------------------- ---------- --------
<S> <C> <C>
Arthur M. Hawkins 18,905,658 168,663
Douglas N. Pearson 18,906,658 167,663
Robert H. Irwin 18,874,375 199,946
Thomas J. Reilly, Jr. 18,906,976 167,345
Arthur R. Taylor 18,874,675 199,646
James T. Watson 18,876,065 198,252
No
Other proposals For Against Abstain Vote
- --------------------- ---------- ------- ------- -----
<S> <C> <C> <C> <C>
Ratification of 18,973,559 60,773 39,989 - -
appointment of
Arthur Andersen
LLP as independent
auditors
</TABLE>
Item 5. Other Information
The Registrant's By-Laws have been amended in a number of respects. Such
amendments include the following:
1. The last date for submission by stockholders under the Registrant's
advance notice By-Laws of nominations for directors and other matters
for consideration at the annual meeting has been changed to 45 days
prior to the date in the meeting year which coincides with the date of
mailing the annual proxy material in the preceding year. For the next
annual meeting, this date will be June 1, 1999.
2. Executive and nominating committees of the board have been
established.
3. The provisions regarding indemnification of directors and officers
have been amended to, among other things, clarify such persons'
entitlement to advancement of defense costs.
The Registrant's Amended and Restated By-Laws are filed herewith as Exhibit
3.2.
15
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EXIDE CORPORATION
Date: November 12, 1998 By: /s/ James M. Diasio
-------------------------------- --------------------------
James M. Diasio
Chief Financial Officer
(Authorized Signatory)
16
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Description Page No.
- ------- ----------- --------
No.
- ---
<S> <C> <C>
3.2 Amended and Restated By-laws 18
4.5 Form of Rights Agreement dated as of September 18, 1998 *
between Exide Corporation and American Stock Transfer
and Trust Company, including the form of Certificate of
Designation, Preferences and Rights of Junior
Participating Preferred Shares, Series A attached
thereto as Exhibit A, the form of Rights Certificate
attached thereto as Exhibit B and the Summary of Rights
attached thereto as Exhibit C.
10.25 Amended and Restated 1996 Non-Employee Directors Stock
Plan 34
27 Financial Data Schedule 38
</TABLE>
*Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K,
dated September 21, 1998
17
<PAGE>
Exhibit 3.2
ADOPTED OCTOBER 15, 1998
------------------------
RESTATED BY-LAWS
OF
EXIDE CORPORATION
ARTICLE I
Offices
Section 1. Registered Office. The registered office of the corporation in
--------- -----------------
the State of Delaware shall be at 1209 Orange Street, Wilmington, New Castle
County, Delaware 19801. The name of the corporation's registered agent at such
address shall be The Corporation Trust Company. The registered office and/or
registered agent of the corporation may be changed from time to time by action
of the Board of Directors.
Section 2. Other Offices. The corporation may also have offices at such
--------- -------------
other places, both within and without the State of Delaware, as the Board of
Directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
Meetings of Stockholders
Section 1. Date and Time of Annual Meetings. The annual meeting of the
--------- --------------------------------
stockholders shall be held each year within one hundred eighty days after the
close of the immediately preceding fiscal year of the corporation for the
purpose of electing directors and conducting such other proper business as may
come before the meeting.
Section 2. Special Meetings. Special meetings of stockholders may be
--------- ----------------
called for any purpose and may be held at such time and place, within or without
the State of Delaware, as shall be stated in a notice of meeting or in a duly
executed waiver of notice thereof. Special meetings may be called at any time
by the secretary at the request of a majority of the Board of Directors. Such
request shall state the purpose or purposes of the proposed meeting.
Section 3. Place of Meetings. The Board of Directors may designate any
--------- -----------------
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the Board of
Directors. If no designation is made, or if a special meeting is otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
Section 4. Notice. Whenever stockholders are required or permitted to
--------- ------
take action at a meeting, written or printed notice stating the place, date,
time, and, in the case of special
1
<PAGE>
meetings, the purpose or purposes, of such meeting, shall be given to each
stockholder entitled to vote at such meeting and to each director not less than
30 nor more than 60 days before the date of the meeting. All such notices shall
be delivered, either personally or by mail, by or at the direction of the Board
of Directors, the chairman, chief executive officer, president or the secretary,
and if mailed, such notice shall be deemed to be delivered when deposited in the
United States mail, postage prepaid, addressed to the stockholder at his, her or
its address as the same appears on the records of the corporation. Attendance of
a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened.
Section 5. Stockholders List. The officer having charge of the stock
--------- -----------------
ledger of the Corporation shall make, at least 10 days before every meeting of
the stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. The holders of a majority of the outstanding shares of
--------- ------
capital stock, present in person or represented by proxy, shall constitute a
quorum at all meetings of the stockholders, except as otherwise provided by
statute or by the Certificate of Incorporation. If a quorum is not present, the
holders of a majority of the shares present in person or represented by proxy at
the meeting, and entitled to vote at the meeting, may adjourn the meeting to
another time and/or place. When a quorum is once present to commence a meeting
of stockholders, it is not broken by the subsequent withdrawal of any
stockholders or their proxies.
Section 7. Adjourned Meetings. When a meeting is adjourned to another
--------- ------------------
time and place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote
--------- -------------
of the majority of shares present in person or represented by proxy at the
meeting and entitled to vote on the subject matter shall be the act of the
stockholders, unless the question is one upon which by express provisions of an
applicable law or of the Certificate of Incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
2
<PAGE>
Section 9. Voting Rights. Except as otherwise provided by the General
--------- -------------
Corporation Law of the State of Delaware or by the Certificate of Incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
---------- -------
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no such proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 11. Proposed Business. Except as may otherwise be required by
---------- -----------------
applicable law or regulation or be expressly authorized by the Board of
Directors, a stockholder may make a nomination or nominations for director of
the corporation at an annual meeting of stockholders or at a special meeting of
stockholders called for the purpose of electing directors or may bring up any
other matter for consideration and action by the stockholders at a meeting of
stockholders only if the provisions of subsections (a), (b), (c), and (d) hereto
shall have been satisfied. If such provisions shall not have been satisfied,
any nomination sought to be made or other business sought to be presented by a
stockholder for consideration and action by the stockholders at the meeting
shall be deemed not properly brought before the meeting, is and shall be ruled
by the chairman of the meeting to be out of order, and shall not be presented or
acted upon at the meeting.
(a) The stockholder must be a stockholder of record on the record date for
such meeting entitled to vote thereat and must continue to be a
stockholder of record at the time of such meeting.
(b) The stockholder must, not later than the Notice Date (as defined below)
as to any annual meeting, or within five days after the corporation has
mailed to stockholders a notice of (or publicly announced, whichever
occurs first) a special meeting of stockholders, deliver or cause to be
delivered a written notice to the secretary of the corporation. The
Notice Date as to any annual meeting shall be the 45th day before the
date in the year of such meeting which corresponds with the date on
which the corporation first mailed its proxy materials for the prior
year's annual meeting. The notice shall specify (i) the name and
address of the stockholder as they appear on the books of the
corporation; (ii) the class and number of shares of the corporation
which are beneficially owned by the stockholder; (iii) any material
interest of the stockholder in the proposed business described in the
notice; (iv) if such business is a nomination for director, each
nomination sought to be made, together with the reasons for each
nomination, a description of the qualifications and business or
professional experience of each proposed nominee and a statement signed
by each nominee indicating his or her willingness to serve if elected,
and disclosing the information about him or her that is required by the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the
rules and regulations promulgated thereunder to be disclosed in the
proxy materials for the meeting involved if he or she were a nominee of
the corporation
3
<PAGE>
for election as one of its directors; (v) if such business is other
than a nomination for director, the nature of the business, the reasons
why it is sought to be raised and submitted for a vote of the
stockholders and if and why it is deemed by the stockholder to be
beneficial to the corporation; and (vi) if so requested by the
corporation, all other information that would be required to be filed
with the Securities and Exchange Commission if, with respect to the
business proposed to be brought before the meeting, the person
proposing such business was a participant in a solicitation subject to
Section 14 of the 1934 Act.
(c) Notwithstanding satisfaction of the provisions of subsection (a) and
(b), the proposed business described in the notice may be deemed not to
be properly brought before the meeting if, pursuant to state law or to
any rule or regulation of the Securities and Exchange Commission, it
was offered as a stockholder proposal and was omitted, or had it been
so offered, it could have been omitted, from the notice of, and proxy
material for, the meeting (or any supplement thereto) authorized by the
Board of Directors.
(d) In the event such notice is timely given pursuant to subsection (b) and
the business described therein is not disqualified pursuant to
subsection (c), such business (i) may nevertheless not be presented or
acted upon at a special meeting of stockholders unless in all other
respects it is properly before such meeting; and (ii) may not be
presented except by the stockholder who shall have given the notice
required by subsection (a) or a representative of such stockholder who
is qualified under the law of the State of Delaware to present the
proposal on the stockholder's behalf at the meeting.
Section 12. Action by Unanimous Written Consent. Unless otherwise
-----------------------------------
restricted by the Certificate of Incorporation, any action required or permitted
to be taken at any meeting of the stockholders may be taken without a meeting if
the holders of all of the outstanding stock entitled to vote on such action
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the stockholders of the corporation.
ARTICLE III
Directors
Section 1. General Powers. The business and affairs of the corporation
--------- --------------
shall be managed by or under the direction of the Board of Directors.
Section 2. Number, Election and Term of Office. The number of directors
--------- -----------------------------------
which shall constitute the first Board of Directors shall be eight. Thereafter,
the number of directors shall be established from time to time by resolution of
the Board of Directors. The directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the meeting and
entitled to vote in the election of directors. The directors shall be elected
in this manner at the annual meeting of the stockholders. Each director elected
shall hold office until a successor is duly elected and qualified or until his
or her earlier death, resignation or removal as hereinafter provided.
4
<PAGE>
Section 3. Removal and Resignation. Any director or the entire Board of
--------- -----------------------
Directors may be removed at any time with or without cause by the holders of a
majority of the shares then entitled to vote at an election of directors. Any
director may resign at any time upon written notice to the corporation.
Section 4. Vacancies. Vacancies and newly created directorships resulting
--------- ---------
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director. Each director so chosen shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
Section 5. Annual Meetings. Unless otherwise determined by resolution of
--------- ---------------
the Board of Directors, the annual meeting of each newly elected Board of
Directors shall be held without other notice than this by-law immediately after,
and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
--------- -------------------------
annual meeting, of the Board of Directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the Board of Directors. Special meetings of the Board of Directors may be
called by or at the request of the chairman, chief executive officer, president
or a majority of the directors on at least 24 hours notice to each director,
either personally, by telephone, by mail, by telecopy or by telegraph.
Section 7. Quorum, Required Vote and Adjournment. A majority of the total
--------- -------------------------------------
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. If a quorum shall not be
present at any meeting of the Board of Directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The Board of Directors may, by resolution passed
--------- ----------
by a majority of the whole Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the corporation,
which to the extent provided in such resolution or these By-laws shall have and
may exercise the powers of the Board of Directors in the management and affairs
of the corporation except as otherwise limited by law. The Board of Directors
may designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the Board of Directors. Each
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors when required.
Section 9. Committee Rules. Each committee of the Board of Directors may
--------- ---------------
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the Board of
Directors designating such committee. Unless
5
<PAGE>
otherwise provided in such a resolution, the presence of at least a majority of
the members of the committee shall be necessary to constitute a quorum. In the
event that a member and that member's alternate, if alternates are designated by
the Board of Directors as provided in Section 8 of this Article III, of such
committee is or are absent or disqualified, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in place of any such absent or
disqualified member.
Section 10. Compensation Committee. The compensation committee shall
---------- ----------------------
consist of not fewer than two members of the Board of Directors as shall from
time to time be appointed by resolution of the Board of Directors. No member of
the Board of Directors who is an officer or an employee of the corporation or
any subsidiary of the corporation shall be eligible to serve on the compensation
committee. Action by the compensation committee shall require unanimous
approval of the members of the compensation committee. The compensation
committee shall review and, as it deems appropriate, make recommendations to the
Board of Directors regarding salaries, compensation and benefits of executive
officers and other key employees of the corporation and the establishment and
administration of employee benefit plans. The compensation committee shall have
and exercise all authority under any employee stock option and incentive plans
(and, to the extent delegated by the Board of Directors, shall have the
exclusive authority for adopting and administering certain of such plans) of the
corporation as the committee therein (unless the board of directors by
resolution appoints any other committee to exercise such authority), and shall
otherwise advise and consult with the officers of the corporation as may be
requested regarding managerial personnel policies.
Section 11. Audit Committee. The audit committee shall consist of not
---------- ---------------
fewer than two members of the Board of Directors as shall from time to time be
appointed by resolution of the Board of Directors. No member of the Board of
Directors who is an officer or an employee of the corporation or any subsidiary
of the corporation shall be eligible to serve on the audit committee. The audit
committee shall review and, as it shall deem appropriate, recommend to the Board
of Directors internal accounting and financial controls for the corporation and
accounting principles and auditing practices and procedures to be employed in
the preparation and review of financial statements of the corporation. The
audit committee shall make recommendations to the Board of Directors concerning
the engagement of independent public accountants to audit the annual financial
statements of the corporation and the scope of the audit to be undertaken by
such accountants.
Section 12. Executive Committee. The executive committee shall consist of
---------- -------------------
the chairman of the Board of Directors and not fewer than two other members of
the Board of Directors who are not officers or employees of the corporation or
any of its subsidiaries as shall from time to time be appointed by resolution of
the Board of Directors. The executive committee shall have the power to take any
action which could be taken by the Board of Directors whenever in the reasonable
judgement of a majority of the members of the executive committee it would be
inconvenient for the Board of Directors to take such action, such judgement to
be conclusively evidenced by any action taken by the executive committee. In
addition, approval of the executive committee or the Board of Directors shall be
required for the entering into by the corporation or any of its subsidiaries
into any acquisition or joint venture under which one or more of them (a)
6
<PAGE>
would pay more than $1,000,000 million or its equivalent in other currencies
(except for purchases of inventory, raw materials or supplies or sales of
products), (b) would employ any person as an employee at an annual rate of
compensation in excess of $150,000 or its equivalent in other currencies or (c)
would engage any person or firm as a consultant for more than $100,000 or its
equivalent in other currencies.
Section 13. Nominating Committee. The nominating committee shall consist
---------- --------------------
of not fewer than two members of the Board of Directors as shall from time to
time be appointed by resolution of the Board of Directors. No member of the
Board of Directors who is an officer or an employee of the corporation or any
subsidiary of the corporation shall be eligible to serve on the nominating
committee. The nominating committee shall (a) in consultation with the chairman
of the Board, consider and make recommendations to the full Board of Directors
concerning the number and accountability of Board committees, committee
assignments and committee membership rotation practices, (b) establish
qualifications, desired backgrounds and selection criteria for nominees to the
Board of Directors, (c) recommend to the full Board of Directors nominees for
Board membership, (d) on an annual basis, conduct an evaluation of the
effectiveness of the full Board of Directors (but not of individual members) and
the effectiveness of overall governance practices and guidelines, based on input
from all Board members, and (e) perform such additional duties as from time to
time may be prescribed by the Board of Directors.
Section 14. Communications Equipment. Members of the Board of Directors
---------- ------------------------
or any committee thereof may participate in and act at any meeting of such Board
of Directors or committee through the use of a conference telephone or other
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in the meeting pursuant to this
section shall constitute presence in person at the meeting.
Section 15. Waiver of Notice and Presumption of Assent. Any member of the
---------- ------------------------------------------
Board of Directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 16. Action by Written Consent. Unless otherwise restricted by the
---------- -------------------------
Certificate of Incorporation, any action required or permitted to be taken at
any meeting of the Board of Directors, or of any committee thereof, may be taken
without a meeting if all members of the Board of Directors or such committee, as
the case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the Board of Directors or such
committee.
7
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ARTICLE IV
Officers
Section 1. Number. The officers of the corporation shall be elected by
--------- ------
the Board of Directors and shall consist of a chairman, chief executive officer,
president, chief financial officer, one or more vice-presidents, a secretary, a
treasurer, a controller and such other officers and assistant officers as may be
deemed necessary or desirable by the Board of Directors. Any number of offices
may be held by the same person. In its discretion, the Board of Directors may
choose not to fill any office for any period as it may deem advisable.
Section 2. Election and Term of Office. The officers of the corporation
--------- ---------------------------
shall be elected annually by the Board of Directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. Vacancies may be filled or new offices created and filled at any
meeting of the Board of Directors. Each officer shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the Board of
--------- -------
Directors may be removed by the Board of Directors whenever in its judgment the
best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
--------- ---------
death, resignation, removal, disqualification or otherwise, may be filled by the
Board of Directors for the unexpired portion of the term by the Board of
Directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by
--------- ------------
the Board of Directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. Chairman of the Board. The chairman of the board shall preside
--------- ---------------------
at all meetings of the stockholders and Board of Directors at which he or she is
present and shall have the powers and perform the duties incident to that
position. The chairman of the board shall have such other powers and perform
such other duties as may be prescribed by the Board of Directors or as may be
provided in these By-laws.
Section 7. The Chief Executive Officer. Subject to the control of the
--------- ---------------------------
board of directors, the chief executive officer shall have general and active
management of the business of the corporation and shall have supervisory power
and authority over all officers and agents elected or appointed by the board of
directors, and over the appointment or employment, functions, duties, removal or
discharge of all other employees and agents of the corporation. Except where by
law the signature of the president is required, the chief executive officer may
sign and execute all instruments in the name of the corporation.
Section 8. The President. The president shall be the chief operating
--------- -------------
officer of the
8
<PAGE>
corporation, and, under the direction of the chief executive officer, shall
generally be responsible for the supervision and control of the corporation's
internal affairs. The president shall, under the direction of the chief
executive officer, be responsible for the internal administration of the
corporation, including the supervision of all relations with all outside
agencies and organizations with which the corporation comes into contact on a
daily basis. The president may sign and execute all documents, agreements and
instruments in the name of the corporation. The president shall perform such
other duties and have such other powers as the board of directors may, from time
to time, determine or these By-laws may prescribe.
Section 9. Executive Vice President. It shall be the duty of the
--------- ------------------------
executive vice president (if any) to assist the chief executive officer and
president in the administration, general management and direction of the
corporation's business and affairs with respect to such matters as may be
assigned to him by the chief executive officer, the president or the Board of
Directors. Whenever the chief executive officer or the president are unable to
serve, by reason of sickness, absence or otherwise, the regular powers and
duties of their offices shall be exercised and performed by the executive vice
president (if any) designated by the Board of Directors.
Section 10. Chief Financial Officer. The chief financial officer of the
---------- -----------------------
corporation shall, under the direction of the chief executive officer, be
responsible for all financial and accounting matters and for the direction of
the offices of treasurer and controller. The chief financial officer shall have
such other powers and perform such other duties as the Board of Directors, the
chief executive officer, or these By-laws may, from time to time, prescribe.
Section 11. Vice-presidents. The vice-president, or if there shall be
---------- ---------------
more than one, the vice-presidents in the order determined by the Board of
Directors, shall, in the absence or disability of the chief executive officer or
the president, act with all of the powers and be subject to all the restrictions
of the chief executive officer or the president as the case may be. The vice-
presidents shall also perform such other duties and have such other powers as
the Board of Directors, the chief executive officer, the president or these By-
laws may from time to time prescribe.
Section 12. The Secretary and Assistant Secretaries. The secretary shall
---------- ---------------------------------------
attend all meetings of the Board of Directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the chairman
and president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these By-laws or by law; shall have such powers
and perform such duties as the Board of Directors, the chief executive officer,
president or these By-laws may from time to time prescribe; and shall have
custody of the corporate seal of the corporation. The secretary, or an
assistant secretary, shall have authority to affix the corporate seal to any
instrument requiring it and when so affixed, it may be attested by his or her
signature or by the signature of such assistant secretary. The Board of
Directors may give general authority to any other officer to affix the seal of
the corporation and to attest the affixing by his or her signature. The
assistant secretary, or if there be more than one, the assistant secretaries in
the order determined by the Board of Directors, shall, in the absence or
disability of the secretary, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as the
Board of Directors, the chief executive officer and president or
9
<PAGE>
secretary may from time to time prescribe.
Section 13. The Treasurer and Assistant Treasurer. The treasurer shall,
---------- -------------------------------------
under the direction of the chief financial officer, have the custody of the
corporate funds and securities; shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation; shall deposit
all moneys and other valuable effects in the name and to the credit of the
corporation as may be ordered by the Board of Directors; shall cause the funds
of the corporation to be disbursed when such disbursements have been duly
authorized, taking proper vouchers for such disbursements; and shall render to
the chief executive officer, the president, the chief financial officer and the
Board of Directors, at its regular meeting or when the Board of Directors so
requires, an account of the corporation; shall have such powers and perform such
duties as the Board of Directors, the chief financial officer or these By-laws
may from time to time prescribe. If required by the board of directors, the
treasurer shall give the corporation a bond (which shall be rendered every six
years) in such sums and with such surety or sureties as shall be satisfactory to
the board of directors for the faithful performance of the duties of the office
of treasurer and for the restoration to the corporation, in case of death,
resignation, retirement or removal from office, of all books, papers, vouchers,
money and other property of whatever kind in the possession or under the control
of the treasurer belonging to the corporation. The assistant treasurer, or if
there shall be more than one, the assistant treasurers in the order determined
by the board of directors, shall in the absence or disability of the treasurer,
perform the duties and exercise the powers of the treasurer. The assistant
treasurers shall perform such other duties and have such other powers as the
board of directors, the chief financial officer or treasurer may, from time to
time, prescribe.
Section 14. The Controller. The controller shall, under the direction of
---------- --------------
the chief financial officer, have general charge, control, and supervision over
the accounting and auditing affairs of the corporation. The controller or such
persons as the controller shall designate shall have responsibility for the
custody and safekeeping of all permanent records and papers of the corporation.
The controller shall have responsibility for the preparation and maintenance of
the books of account and of the accounting records and papers of the
corporation; shall supervise the preparation of all financial statements and
reports on the operation and condition of the business; shall have
responsibility for the establishment of financial statements and reports on the
operation and condition of the business; shall have responsibility for the
establishment of financial procedures, records, and forms used by the
corporation; shall have responsibility for the filing of all financial reports
and returns, required by law; shall render to the chief executive officer, the
chief financial officer or the Board of Directors, whenever they may require, an
account of the controller's transactions; and in general shall have such other
powers and perform such other duties as are incident to the office of controller
and as the Board of Directors may from time to time prescribe.
Section 15. Other Officers, Assistant Officers and Agents. Officers,
---------- ---------------------------------------------
assistant officers and agents, if any, other than those whose duties are
provided for in these By-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the Board of Directors.
Section 16. Absence or Disability of Officers. In the case of the absence
---------- ---------------------------------
or disability of
10
<PAGE>
any officer of the corporation and of any person hereby authorized to act in
such officer's place during such officer's absence or disability, the Board of
Directors may by resolution delegate the powers and duties of such officer to
any other officer or to any director, or to any other person whom it may select.
ARTICLE V
Indemnification of Directors and Officers
Section 1. Right to Indemnification. Each person who was or is made a
--------- ------------------------
party or is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or she
is or was a Director or an officer of the corporation or is or was serving at
the request of the corporation as a Director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan
(hereinafter an "indemnitee"), whether the basis of such proceeding is alleged
action in an official capacity as a Director, officer, employee or agent or in
any other capacity while serving as a Director, officer, employee or agent,
shall be indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than such law permitted the corporation to provide prior to such
amendment), against all expense, liability and loss (including attorneys' fees,
judgment, fines, ERISA excise taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such indemnitee in connection therewith;
provided, however, that, except as provided in Section 3 of this Article V with
respect to proceedings to enforce rights to indemnification, the corporation
shall indemnify any such indemnitee in connection with a proceeding (or part
thereof) initiated by such indemnitee only if such proceeding (or part thereof)
was authorized by the Board of Directors of the corporation.
Section 2. Right to Advancement of Expenses. The right to
--------- --------------------------------
indemnification conferred in Section 1 of this Article V shall include the right
to be paid by the corporation the expenses (including attorney's fees) incurred
in defending any such proceeding in advance of its final disposition
(hereinafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires, an advancement of expenses incurred
by an indemnitee in his or her capacity as a Director or officer (and not in any
other capacity in which service was or is rendered by such indemnitee,
including, without limitation, service to an employee benefit plan) shall be
made only upon delivery to the corporation of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
this Section 2 or otherwise. The rights to indemnification and to the
advancement of expenses conferred in Sections 1 and 2 of this Article V shall be
contract rights and such rights shall continue as to an indemnitee who has
ceased to be a Director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators.
11
<PAGE>
Section 3. Right of Indemnitee to Bring Suit. If a claim under Section
--------- ---------------------------------
1 or 2 of this Article V is not paid in full by the corporation within sixty
(60) days after a written claim has been received by the corporation, except in
the case of a claim for an advancement of expenses, in which case the applicable
period shall be twenty (20) days, the indemnitee may at any time thereafter
bring suit against the corporation to recover the unpaid amount of the claim.
If successful in whole or in part in any such suit, or in a suit brought by the
corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the indemnitee shall be entitled to be paid also the expense of
prosecuting or defending such suit. In (I) any suit brought by the indemnitee
to enforce a right to indemnification hereunder (but not in a suit brought by
the indemnitee to enforce a right to an advancement of expenses) it shall be a
defense that, and (ii) in any suit brought by the corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the corporation
shall be entitled to recover such expenses upon a final adjudication that, the
indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation law. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
corporation (including its Board of Directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses hereunder,
or brought by the corporation to recover an advancement of expenses pursuant to
the terms of an undertaking, the burden of proving that the indemnitee is not
entitled to be indemnified, or to such advancement of expenses, under this
Article V or otherwise shall be on the corporation.
Section 4. Non-Exclusivity of Rights. The rights to indemnification
--------- -------------------------
and to the advancement of expenses conferred in this Article V shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, the corporation's Certificate of Incorporation, By-laws,
agreement, vote of stockholders or disinterested Directors or otherwise.
Section 5. Insurance. The corporation may maintain insurance, at its
--------- ---------
expense, to protect itself and any Director, officer, employee or agent of the
corporation or another, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the corporation would
have the power to indemnify such person against such expense, liability or loss
under the Delaware General Corporation Law.
ARTICLE VI
Certificates of Stock
Section 1. Form. Every holder of stock in the corporation shall be
--------- ----
entitled to have a certificate, signed by, or in the name of the corporation by
the chief executive officer, president or a vice-president and the secretary or
an assistant secretary of the corporation, certifying the number of shares owned
by such holder in the corporation. If such a certificate is countersigned
12
<PAGE>
(1) by a transfer agent or an assistant transfer agent other than the
corporation or its employee or (2) by a registrar, other than the corporation or
its employee, the signature of any such chief executive officer and president,
vice-president, secretary, or assistant secretary may be facsimiles. In case any
officer or officers who have signed, or whose facsimile signature or signatures
have been used on, any such certificate or certificates shall cease to be such
officer or officers of the corporation whether because of death, resignation or
otherwise before such certificate or certificates have been delivered by the
corporation, such certificate or certificates may nevertheless be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature or signatures have been used thereon
had not ceased to be such officer or officers of the corporation. All
certificates for shares shall be consecutively numbered or otherwise identified.
The name of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered on the books of the
corporation. Shares of stock of the corporation shall only be transferred on the
books of the corporation by the holder of record thereof or by such holder's
attorney duly authorized in writing, upon surrender to the corporation of the
certificate or certificates for such shares endorsed by the appropriate person
or persons, with such evidence of the authenticity of such endorsement,
transfer, authorization, and other matters as the corporation may reasonably
require, and accompanied by all necessary stock transfer stamps. In that event,
it shall be the duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate or certificates, and record the
transaction on its books. The Board of Directors may appoint a bank or trust
company organized under the laws of the United States or any state thereof to
act as its transfer agent or registrar, or both, in connection with the transfer
of any class or series of securities of the corporation.
Section 2. Lost Certificates. The Board of Directors may direct a new
--------- -----------------
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that
--------- ---------------------------------------------
the corporation may determine the stockholders entitled to notice of or to vote
at any meeting of stockholders or any adjournment thereof, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the Board
of Directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be the close of business on the
next day preceding the day on which notice is given, or if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of
13
<PAGE>
Directors may fix a new record date for the adjourned meeting.
Section 4. Fixing a Record Date for Other Purposes. In order that the
--------- ---------------------------------------
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the Board of Directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
Section 5. Registered Stockholders. Prior to the surrender to the
--------- -----------------------
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications and otherwise to exercise all the rights and
powers of an owner.
ARTICLE VII
General Provisions
Section 1. Dividends. Dividends upon the capital stock of the
--------- ---------
corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of the capital stock, subject to the provisions of the Certificate of
Incorporation. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or any other purpose
and the directors may modify or abolish any such reserve in the manner in which
it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts or other orders
--------- ------------------------
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the Board of Directors or a duly
authorized committee thereof.
Section 3. Contracts. The Board of Directors may authorize any officer or
--------- ---------
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
--------- -----
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the
14
<PAGE>
judgment of the directors, such loan, guaranty or assistance may reasonably be
expected to benefit the corporation. The loan, guaranty or other assistance may
be with or without interest, and may be unsecured, or secured in such manner as
the Board of Directors shall approve, including, without limitation, a pledge of
shares of stock of the corporation. Nothing in this section contained shall be
deemed to deny, limit or restrict the powers of guaranty or warranty of the
corporation at common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
--------- -----------
by resolution of the Board of Directors.
Section 6. Corporate Seal. The Board of Directors shall provide a
--------- --------------
corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in
--------- --------------------------------------
any other corporation held by the corporation shall be voted by the chief
executive officer, unless the Board of Directors specifically confers authority
to vote with respect thereto, which authority may be general or confined to
specific instances, upon some other person or officer. Any person authorized to
vote securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Section Headings. Section headings in these By-laws are for
--------- ----------------
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 9. Inconsistent Provisions. In the event that any provision of
--------- -----------------------
these By-laws is or becomes inconsistent with any provision of the Certificate
of Incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these By-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
15
<PAGE>
ARTICLE VIII
Amendments
These By-laws may be amended, altered or repealed and new By-laws adopted
at any meeting of the Board of Directors by a majority vote. The fact that the
power to adopt, amend, alter or repeal the By-laws has been conferred upon the
Board of Directors shall not divest the stockholders of the same powers.
16
<PAGE>
Exhibit 10.25
1996 NON-EMPLOYEE DIRECTORS STOCK PLAN
OF
EXIDE CORPORATION/1/
1. PURPOSE. The purpose of the 1996 Non-Employee Directors Stock Plan
(the "Plan") is to provide additional compensation to non-employee directors of
Exide Corporation (the "Company"), that will further link such directors'
interest with those of the Company's shareholders.
2. PARTICIPANTS. Participants in the Plan shall consist of those
directors of the Company who are not employees of the Company or any of its
subsidiaries. The term "subsidiary" means a corporation more than 50% of the
voting stock of which is owned directly or indirectly by the Company.
3. RESERVATION OF SHARES. There shall be reserved for issuance under the
Plan an aggregate of 20,000 shares of Common Stock of the Company ("Common
Stock"), subject to adjustment as set forth in Section 9 below. Common Stock
issued under the Plan may be authorized and unissued shares, shares held in
treasury or any combination thereof.
4. ADMINISTRATION. The Plan shall be administered by the Compensation
Committee of the Board of directors of the Company or such other committee of
the board as may be appointed by the board consisting of not less than three
members of the board (the "Committee"). The Committee shall have authority to
interpret the Plan and adopt, amend and rescind rules relating to the
administration of the Plan. All such interpretations and rules shall be
conclusive and binding on all persons.
5. EFFECTIVE DATE. The Plan originally became effective on August 14,
1996.
6. SHARE AWARDS. (a) For each fiscal year beginning with the fiscal year
which commenced April 1, 1996, each non-employee director of the Company who is
elected a director at the Annual Meeting of Shareholders during such fiscal year
shall receive an award of 500 shares of Common Stock effective as of the
conclusion of such Annual Meeting. No shares of Common Stock received by a
participant under this Section 6(a) may be sold, assigned, transferred, pledged
or otherwise encumbered or disposed of for a period of six months after receipt
of such shares, except in the case of the death or disability of such
participant prior to the expiration of such six-month period.
- --------------------------
/1/ As amended through August 12, 1998
1
<PAGE>
(b) Each participant shall receive, effective May 1, 1997, a grant of the
number of shares of Common Stock (the "Restricted Shares") equal to (to the
nearest whole share) $40,600 divided by the per share closing price of the
Common Stock on the New York Stock Exchange on such date. Restricted Shares may
not be disposed of by a participant until they have vested. Upon a
participant's re-election as a director of the Company at each Annual Meeting of
Shareholders commencing with the 1998 Annual Meeting, 20% of the Restricted
Shares will vest. If a participant ceases to serve as a director of the Company
before all of his Restricted Shares have vested, the unvested Restricted Shares
will thereupon be forfeited.
Upon a change in Control, all unvested Restricted Shares shall vest.
"Change in Control" means the first to occur of any one or more of the
following:
(i) the acquisition or holding by any person, entity or "group"
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act")), other than by the Company, any
subsidiary or any employee benefit plan of the Company or subsidiary, of
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange
Act) of 30% or more of the then-outstanding Common Stock or the then-
outstanding Voting Power of the Company; provided, however, that no Change
in Control shall occur solely by reason of any such acquisition by a
corporation with respect to which, after such acquisition, more than 60% of
both the then-outstanding common shares and the then-outstanding Voting
Power of such corporation are then beneficially owned, directly or
indirectly, by the persons who were the beneficial owners of the Common
Stock immediately before such acquisition, in substantially the same
proportions as their respective ownership, immediately before such
acquisition, of the then outstanding Common Stock and Voting Power of the
Company; or
(ii) individuals (the "Incumbent Board") who, as of August 13, 1998,
constitute the Board of Directors of the Company (the "Board") cease for
any reason to constitute at least a majority of the Board; provided that
any individual who becomes a director after such date whose election or
nomination for election by the Company's stockholders was approved by at
least a majority of the Incumbent Board (other than an election or
nomination of an individual whose initial assumption of the office is in
connection with an actual or threatened "election contest" relating to the
election of the directors of the Company (as such terms are used in Rule
14a-11 under the Exchange Act)) shall be deemed to be members of the
Incumbent Board; or
(iii) approval by the stockholders of the Company of (1) a merger,
reorganization or consolidation (an "Extraordinary Transaction") with
respect to which persons who were the respective beneficial owners of the
Common Stock immediately before such Extraordinary Transaction would not,
if such Extraordinary Transaction were to be consummated immediately after
such stockholder approval (but otherwise in accordance with the terms
presented in
2
<PAGE>
writing to the stockholders of the Company for their approval),
beneficially own, directly or indirectly, more than 60% of both the then-
outstanding common shares and the then-outstanding Voting Power of the
corporation resulting from such Extraordinary Transaction, insubstantially
the same proportions as their respective ownership, immediately before such
Extraordinary Transaction, of the then-outstanding Common Stock and Voting
Power of the Company, (2) a liquidation or dissolution of the Company or
(3) the sale or other disposition of all or substantially all of the assets
of the Company in one transaction or a series of related transactions.
"Voting Power" means the combined voting power of the then outstanding
securities of a corporation entitled to vote generally in the election of
directors.
(c) Beginning on May 1, 1997, 50% (or such greater percentage as any
participant may direct in writing to the Company) of any fees due a participant
for serving as a director of the Company and as a member or chairman of any
committee thereof shall be paid in the form of Common Stock valued for this
purpose at the closing price of the Common Stock on the New York Stock Exchange
on the first trading day of the fiscal quarter for which such fees are due.
7. WITHHOLDING TAXES. Whenever Common Stock is payable under the Plan,
the Company shall have the right to require the director to remit to the Company
an amount sufficient to satisfy federal, state and local withholding tax
requirements, if any, prior to the delivery of any certificate or certificates
for such Common Stock.
8. PARTICIPANT RIGHTS. Except as otherwise provided herein, each
participant shall have full beneficial ownership of, and rights and privileges
of a shareholder as to awarded shares, including the right to vote and the right
to receive dividends.
9. ADJUSTMENTS. In the event of changes in the outstanding Common Stock
of the Company by reason of stock dividends, stock splits, recapitalization,
mergers, consolidations, combinations or exchanges of shares, separations,
reorganizations or liquidations, the number and class of shares to be issued
under the Plan shall be appropriately adjusted by the Committee so that future
awards under the Plan will continue to bear the same proportionate relationship
to the Company's other equity capital.
10. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
deliver shares of Common Stock under the Plan shall be subject to (i) all
applicable laws, rules and regulations and such approvals by any governmental
agencies as may be required, including without limitation, the effectiveness of
a registration statement under the Securities act of 1933, as amended, as deemed
necessary or appropriate by counsel for the company, and (ii) the condition that
such shares shall have been duly listed on the New York Stock Exchange.
11. AMENDMENT AND TERMINATION. The Plan may be amended by the Board of
Directors in any respect, provided that, without shareholder approval, no
amendment shall (i) materially increase the maximum number of shares of Common
Stock available for issuance under
3
<PAGE>
the Plan (ii) materially increase the benefits accruing to participants under
the Plan, or (iii) materially modify the requirements as to eligibility for
participation in the Plan, and provided further, that the Plan may not be
amended more than once every six months except to comport with changes in the
Internal Revenue Code of 1986, as amended, or the rules thereunder. The Plan may
also be terminated at any time by the Board of Directors.
12. NO RIGHT TO CONTINUE AS DIRECTOR. Nothing contained in this Plan
shall be deemed to confer upon any person any right to continue as the director
of or to be associated in any way with the Company.
4
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<PERIOD-START> APR-01-1998
<PERIOD-END> SEP-27-1998
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