<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 December 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
----------------------------------------------------
(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 February 9, 1999, 21,356,421 shares of common stock were
outstanding.
<PAGE>
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 - -
December 27, 1998 and March 31, 1998.
-- Consolidated Statements of Operations - -
for the three and nine months ended
December 27, 1998 and December 28, 1997.
-- Consolidated Statements of Cash Flows - -
for the nine months ended December 27, 1998
and December 28, 1997.
-- Notes to Condensed Consolidated Financial Statements - -
December 27, 1998.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
- ---------------------------------
Item 6. Exhibits and Reports on Form 8-K
Exhibit 10.25 - Second Amendment to the Credit and
Guarantee Agreement dated January 8, 1999
Exhibit 10.26 - Separation agreement with Arthur M. Hawkins/
CynArt L.L.C. effective October 15, 1998
Exhibit 10.27 - Separation agreement with Douglas N. Pearson
effective October 15, 1998
Exhibit 10.28 - Separation agreement with Alan E. Gauthier
effective July 31, 1998
Exhibit 10.29 - Employment agreement with James Diasio
dated September 18, 1998
Exhibit 27 - Financial Data Schedule
SIGNATURE
- ---------
1
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EXIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per-share data)
<TABLE>
<CAPTION>
December 27, March 31,
1998 1998
(Unaudited)
-------------- -----------
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 29,082 $ 35,613
Receivables, net of allowance for doubtful
accounts of $57,618 and $37,488 498,611 434,679
Inventories 581,922 572,188
Prepaid expenses and other 27,409 32,455
Deferred income taxes 14,915 14,896
-------------- -----------
Total current assets 1,151,939 1,089,831
-------------- -----------
PROPERTY, PLANT AND EQUIPMENT 945,207 824,296
Less - Accumulated depreciation (375,521) (289,183)
-------------- -----------
Total property, plant and equipment, net 569,686 535,113
-------------- -----------
OTHER ASSETS:
Goodwill, net 616,604 570,251
Investments in affiliates 24,914 24,620
Deferred financing costs, net 18,208 20,050
Deferred income taxes 63,010 61,461
Other 40,837 47,290
-------------- -----------
763,573 723,672
-------------- -----------
Total assets $ 2,485,198 $ 2,348,616
============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 24,124 $ 17,953
Current maturities of long-term debt 36,223 35,112
Accounts payable, trade 286,696 255,952
Accrued expenses 262,133 241,898
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Total current liabilities 609,176 550,915
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LONG-TERM DEBT 1,269,913 1,195,918
-------------- -----------
OTHER NONCURRENT LIABILITIES 306,819 287,531
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COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 20,757 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; 21,354,855 and 21,328,439
shares issued and outstanding 213 213
Additional paid-in capital 490,108 489,851
Accumulated deficit (84,353) (33,084)
Notes receivable - stock award plan (983) (1,609)
Unearned compensation (178) (322)
Minimum pension liability adjustment (2,767) (2,767)
Cumulative translation adjustment (123,507) (157,334)
-------------- -----------
Total stockholders' equity 278,533 294,948
-------------- -----------
Total liabilities and stockholders'
equity $ 2,485,198 $ 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 Nine Months Ended
-------------------------------- ----------------------------------
December 27, December 28, December 27, December 28,
1998 1997 1998 1997
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
NET SALES $ 678,530 $ 691,715 $ 1,824,198 $ 1,734,469
COST OF SALES 514,580 502,000 1,359,060 1,272,100
--------------- -------------- -------------- ---------------
Gross profit 163,950 189,715 465,138 462,369
--------------- -------------- -------------- ---------------
OPERATING EXPENSES:
Selling, marketing and advertising 88,819 79,519 247,364 218,238
General and administrative 54,266 35,352 127,450 98,385
Goodwill amortization 6,526 3,977 15,374 12,378
--------------- -------------- -------------- ---------------
149,611 118,848 390,188 329,001
--------------- -------------- -------------- ---------------
Operating income 14,339 70,867 74,950 133,368
--------------- -------------- -------------- ---------------
INTEREST EXPENSE, net 29,747 28,918 83,202 86,016
OTHER EXPENSE, net 12,141 (1,210) 18,102 2,467
--------------- -------------- -------------- ---------------
Income (loss) before income taxes, minority
interest and extraordinary loss (27,549) 43,159 (26,354) 44,885
INCOME TAX EXPENSE 18,477 19,714 23,644 21,240
--------------- -------------- -------------- ---------------
Income (loss) before minority interest and
extraordinary loss (46,026) 23,445 (49,998) 23,645
MINORITY INTEREST (107) 395 (309) (114)
--------------- -------------- -------------- ---------------
Income (loss) before extraordinary loss (45,919) 23,050 (49,689) 23,759
EXTRAORDINARY LOSS RELATED TO EARLY
RETIREMENT OF DEBT, net of income tax benefit
of $0 for the nine months ended December 27, 1998
and $2,899 for the three months and $3,667 for the
nine months ended December 28, 1997 -- (8,336) (301) (17,094)
--------------- -------------- -------------- ---------------
Net income (loss) $ (45,919) 14,714 (49,990) $ 6,665
=============== ============== ============== ===============
BASIC EARNINGS PER SHARE:
Income (loss) before extraordinary loss $ (2.16) $ 1.12 $ (2.34) $ 1.15
Extraordinary loss -- (0.41) (0.01) (0.83)
--------------- -------------- -------------- --------------
Net income (loss) $ (2.16) $ 0.71 $ (2.35) $ 0.32
=============== ============== ============== ==============
DILUTED EARNINGS PER SHARE:
Income (loss) before extraordinary loss $ (2.16) $ 1.05 $ (2.34) $ 1.10
Extraordinary loss -- (0.38) (0.01) (0.79)
--------------- -------------- -------------- --------------
Net income (loss) $ (2.16) $ 0.67 $ (2.35) $ 0.31
============== ============== ============== ==============
WEIGHTED AVERAGE SHARES:
Basic 21,250,997 20,593,115 21,235,248 20,585,076
============== ============== ============== ==============
Diluted 21,250,997 21,891,000 21,235,248 21,606,169
============== ============== ============== ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
3
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EXIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended
--------------------------------
December 27, December 28,
1998 1997
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (49,990) $ 6,665
Adjustments to reconcile net income (loss) to net
cash provided by operating activities - 97,093 84,278
Depreciation and amortization
Extraordinary loss 301 17,094
Deferred income taxes 19,643 11,288
Original issue discount on notes 6,855 7,754
Provision for losses on accounts receivable 18,122 430
Provision for severance and patent infringement litigation 11,136 --
Provision for inventory loss 13,035 5,135
Minority interest (309) (114)
Net proceeds from sale of European receivable 42,876 158,467
Changes in assets and liabilities excluding
effects of acquisitions -
Receivables (104,361) (124,879)
Inventories 2,530 (4,224)
Prepaid expenses and other (969) (4,363)
Payables and accrued expenses (28,871) (21,382)
Other, net (2,425) (6,043)
-------------- --------------
Net cash provided by operating activities 24,666 130,106
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of certain businesses (14,825) (38,282)
Capital expenditures (60,047) (63,581)
Equipment purchases held for sale (10,435) --
Proceeds from sale of assets 22,466 54,726
Insurance proceeds from fire damage 10,767 --
-------------- --------------
Net cash used in investing activities (52,074) (47,137)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term borrowings 6,186 15,946
Borrowings under Global Credit Facilities Agreement 448,367 342,409
Repayments under Global Credit Facilities Agreement (427,488) --
Repayments under U.S. Credit Agreement -- (17,000)
Repayment of European Facilities Agreement -- (338,761)
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 (3,775) (946)
Dividends paid (1,280) (1,273)
Debt issuance costs (2,627) (16,844)
-------------- --------------
Net cash provided by (used in) financing activities 19,383 (83,079)
-------------- --------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 1,494 (1,550)
NET DECREASE IN CASH AND CASH EQUIVALENTS (6,531) (1,660)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 35,613 42,706
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 29,082 $ 41,046
============== ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for -
Interest (net of amount capitalized) $ 85,751 $ 85,973
Income taxes $ 4,114 $ 4,810
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
4
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Dcember 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 and cash flows 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 Nine Months Ended
------------------------------ -----------------------------
December 27, December 28, December 27, December 28,
1998 1997 1998 1997
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Basic EPS Shares 21,250,997 20,593,115 21,235,248 20,585,076
Effect of Dilutive Securities -- 1,297,885 -- 1,021,093
-------------- -------------- -------------- -------------
Diluted EPS Shares 21,250,997 21,891,000 21,235,248 21,606,169
============== ============== ============== =============
</TABLE>
Options to purchase 1,642,720 shares at exercise prices ranging from $16-5/8 to
$29-1/2 were outstanding during the third 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 2007.
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 does 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 Nine Months Ended
-------------------------------- --------------------------------
December 27, December 28, December 27, December 28,
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net income (loss) $ (45,919) $ 14,714 $ (49,990) $ 6,665
Change in cumulative
translation adjustment (1,380) (7,418) 33,827 (32,410)
-------------- -------------- -------------- --------------
Total comprehensive
income (loss) $ (47,299) $ 7,296 $ (16,163) $ (25,745)
============== ============== ============== ==============
</TABLE>
Accumulated other comprehensive income was $(126,274) and $(160,101) at December
27, 1998 and March 31, 1998, respectively, consisting of cumulative translation
adjustment and minimum pension liability.
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 entities recognize 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). On October 15, 1998, the Board amended the Rights Plan to
substitute, as to the State of Wisconsin Investment Board, 20% for 15% wherever
15% otherwise applies. 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
its
6
<PAGE>
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.
(2) INVENTORIES
- ----- -----------
December 27, March 31,
1998 1998
-------------- ------------
Raw materials $ 149,678 $ 143,652
Work-in-process 85,550 78,004
Finished goods 346,694 350,532
-------------- -----------
$ 581,922 $ 572,188
============== ===========
At December 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 $564,855 and $555,121 at December 27, 1998 and March
31, 1998, respectively.
(3) LONG-TERM DEBT, etc.
- --- --------------------
On May 11, 1998, the Company entered into an interest rate bond swap agreement
for $4,430 (principal amount) of its 10% Senior Notes. Under the agreement, the
Company paid LIBOR plus 1.75% to a counterparty and received from the
counterparty the fixed coupon rate payments made by the Company. At the end of
the agreement, the counterparty was 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.
7
<PAGE>
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 was recorded as other expense in the third
fiscal quarter of 1999.
In November 1998, the Company terminated the remaining $45,055 interest rate
swap agreements. In connection therewith, the Company made a cash payment of
$4,588, of which $2,352 was recorded as a bond discount.
In January 1999, the Company amended certain provisions (effective December 27,
1998) of the existing $650,000 Senior Secured Global Credit Facilities
Agreement. After consideration of the amendments, the Company was in compliance
with all covenants.
As of December 27, 1998, the net fair value of the foreign currency and interest
rate protection agreements was $(9,617). These agreements effectively converted
$175,000 debt into 788,756 French francs (U.S. $133,000) and 25,225.2 Pounds
sterling (U.S. $42,000) under the Senior Secured Global Credit Facilities
Agreement.
(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 67 federally defined Superfund or state equivalent sites. At 41
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.
8
<PAGE>
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 December 27, 1998, the
amount of such reserves on the Company's balance sheet was $26,441. Of this
amount, $17,065 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.
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
- ----------------------------------
The Company is involved in several lawsuits on behalf of battery resellers
pending in state and federal courts in Alabama, South Carolina, Tennessee and
Texas, three of which were brought as purported class actions. These actions
contain allegations that the Company sold old or used batteries as new
batteries or sold defective batteries or batteries which did not meet
specifications. These actions seek compensatory and punitive damages and, in one
case, injunctive relief. The Company disputes the material legal claims in these
matters and plans to vigorously defend itself.
9
<PAGE>
Five purported class action lawsuits have been filed against the Company and
three of its former senior officers who were also directors alleging violations
of Section 10(b) of the Securities Exchange Act and Rule 10b-5 promulgated
thereunder. The complaints allege that the market price of the Company's stock
was artificially inflated over a period from June 27, 1995 through April 3, 1998
as a result of alleged misstatements and omissions. The named plaintiffs seek
to represent a class of persons who purchased Exide stock on the open market
during the period in which the stock was allegedly artificially inflated.
Plaintiffs in each case seek compensatory damages in an unspecified amount. The
cases have been consolidated and the plaintiffs have been ordered to file a
consolidated amended complaint. The Company has not yet answered the complaints
and no discovery has occurred. The Company disputes the material legal claims
in these cases and plans to vigorously defend itself against these charges.
Under its civil investigative authority, the Florida Attorney General issued
subpoenas to the Company in 1998. The Attorney General has focused this inquiry
into allegations including the sale of defective and used batteries, mislabeling
of batteries, improper crediting of customer accounts and securities fraud. The
Attorney General has not yet filed a complaint and the Company is in discussions
with the Attorney General's office as to how this matter can be resolved.
The Company is involved in various other claims and litigation incidental to the
conduct of its business. Based on consultation with legal counsel, management
does not believe that any claims or litigation to which the Company is a party
will have a material adverse effect on the Company's financial condition or
results of operations.
In an unpublished decision rendered January 27, 1999, the U.S. Court of Appeals
for the Federal Circuit upheld a lower-court's ruling (in 1996) on a patent-
infringement suit, resulting in a $6,100 liability. This charge, which required
recognition in the Company's third-quarter results, was included in cost of
goods sold.
10
<PAGE>
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 December 27, 1998, the net fair value of open
foreign exchange contracts and the related losses on such contracts was not
material.
During the third quarter and first nine months of fiscal 1999, $(1.4) million
and $33.8 million, respectively, of the change in stockholders' equity was due
to foreign currency translation adjustments associated with the weakening in the
quarter and strengthening in the first nine months of most European currencies
relative to the U.S. dollar.
RESULTS OF OPERATIONS
- ---------------------
Three months ended December 27, 1998 compared with the three months ended
- -------------------------------------------------------------------------
December 28, 1997.
- ------------------
Net sales for the third quarter decreased $13.2 million, or 1.9%, to $678.5
million, as compared to $691.7 million for the same period last year. This
decrease resulted primarily from lower SLI (starting, lighting and ignition)
pricing in Europe, caused by reduced lead costs driving battery prices downward,
product mix, and reduced SLI volume in Europe and North America ($19.6 million)
and a combination of pricing pressure and lower volume in European industrial
sales ($8.6 million), offset partially by the favorable impact of foreign
exchange rates ($14.0 million).
Gross profit for the third quarter of fiscal 1999 decreased $25.8 million, or
13.6%, to $164.0 million. In addition to the unfavorable effect on gross profit
of items mentioned above ($8.4 million), third quarter fiscal 1999 profitability
was principally depressed by:
. a $6.1 million charge for an adverse appellate court ruling in a
patent infringement lawsuit;
. a $4.8 million charge relating to management's decision to close a
lead smelter and discontinue plans for a centralized refurbishment
center (a former battery manufacturing plant);
11
<PAGE>
. a $3.7 million charge for the write off of inventory and equipment
related to an abandoned new product;
. a $2.1 million charge for the write off of unsaleable inventory
specified for the Russian market; and,
. a $1.1 million charge for the early retirement of certain machinery
and equipment.
Reduced manufacturing costs attained through the continuing consolidation and
rationalization of European operations and reduced material costs of $7.2
million offset some of the above unfavorable effects on gross profit in the
third quarter of fiscal 1999 as compared to the third quarter of fiscal 1998.
Selling, general and administrative expenses increased $28.2, or 24.6%, to
$143.1 million in the third quarter of fiscal 1999 from $114.9 million in the
third quarter of fiscal 1998. Contributing to this increase was:
. a $4.8 million charge for uncollectible receivables from sales in
Russia;
. a $3.7 million charge for increased bad debt reserves primarily
related to North American customers who have filed for bankruptcy
protection;
. a $6.5 million charge related to the separation packages of 24
executives;
. increased legal costs of $1.3 million in the U.S.; and,
. higher operating expenses in Europe of $12.1 million (primarily
selling expenses and the $2.5 million unfavorable impact of foreign
exchange rates).
Goodwill amortization increased $2.5 million, or 64%, to $6.5 million in the
third quarter of fiscal 1999 from $4.0 million in the third quarter of fiscal
1998. Of this amount, $1.3 million relates to the write off of goodwill
necessitated by the closure of the smelter discussed above and $0.8 million
relates to the write off of impaired goodwill from certain branch acquisitions.
Interest expense increased $0.8 million, or 2.9%, to $29.7 million in the third
quarter of fiscal 1999 from $28.9 million in the third quarter of fiscal 1998
due to lower rates achieved through the debt restructuring completed in the
third and fourth quarters of fiscal year 1998, offset by the unfavorable impact
of foreign exchange rates and increased borrowing levels.
Other expense, net was $12.1 million expense in the third quarter of fiscal 1999
versus $1.2 million income in the third quarter of fiscal 1998. In the third
quarter of fiscal 1999, a $6.0 million charge was recorded for an amendment fee
related to the interest-rate swap agreements. In addition, $2.9 million
currency transaction losses were recorded in the third quarter of fiscal 1999
versus $1.1 million currency transaction gains recorded in the third quarter of
fiscal 1998. Additionally the third quarter of fiscal 1998 included $2.4 million
related to gains on the sale of fixed assets.
Net income decreased primarily as a result of the matters discussed above along
with the adverse impact associated with the Company's inability to tax benefit
its U.S. losses.
12
<PAGE>
Nine months ended December 27, 1998 compared with the nine months ended December
- --------------------------------------------------------------------------------
28, 1997.
- --------
Net sales for the first nine months of fiscal 1999 increased $89.7 million, or
5.2%, to $1,824.2 million from $1,734.5 million for the same period last year.
This increase is attributed to:
. the inclusion of DETA (a German industrial and automotive battery
manufacturer) acquired September 1, 1997 for nine months of fiscal
1999 versus four months of fiscal 1998 ($63.9 million); and,
. higher SLI volume in North America and higher industrial volume in
Europe ( $28.1).
Gross profit for the first nine months of fiscal 1999 increased $2.8 million, or
0.6%, to $465.1 million from $462.4 million for the same period last year. The
increase in gross profit associated with the factors described above along with
reduced manufacturing costs attained through the continuing consolidation and
rationalization of European operations and reduced material costs ($40.4
million) were principally offset by the following unfavorable items:
. a $6.1 million charge for an adverse appellate court ruling in a
patent infringement claim;
. higher depreciation costs of $8.4;
. a $4.8 million charge relating to management's decision to close a
lead smelter and discontinue plans for a centralized refurbishment
center;
. a $3.7 million charge for the write off of inventory and equipment
related to an abandoned new product;
. a $2.1 million charge for the write off of unsaleable inventory
specified for the Russian market; and,
. a $1.1 million charge for the early retirement of certain machinery
and equipment.
Selling, general and administrative expenses increased $58.2 million, or 18.4%,
in the first nine months of fiscal 1999 to $374.8 million from $316.6 million
for the same period last year. The adverse impact of including DETA for the
first nine months of fiscal 1999 versus only four months starting September of
fiscal 1998 resulted in approximately $19.3 million of the increase. Also
contributing to this increase were:
. a $4.8 million charge for uncollectible receivables from sales in
Russia;
. a $6.7 million charge for increased bad debt reserves primarily
related to North American customers who have filed for bankruptcy
protection;
. a $7.1 million charge related to the separation packages of 25
executives;
. increased legal costs of $2.6 million in the U.S.; and,
. higher operating expenses in Europe of $2.9 million (primarily selling
expenses).
13
<PAGE>
Goodwill amortization increased $3.0 million, or 24.2%, to $15.4 million in the
first nine months of fiscal 1999 from $12.4 million in the first nine months of
fiscal 1998. Of this amount, $1.3 million relates to the write off of goodwill
necessitated by the closure of the smelter discussed above and $0.8 million
relates to the write off of impaired goodwill from certain branch acquisitions.
Interest expense decreased $2.8 million, or 3.3%, to $83.2 million in the first
nine months of fiscal 1999 from $86.0 million in the first nine months of fiscal
1998 due to lower rates achieved through the debt restructuring completed in the
third and fourth quarters of fiscal year 1998.
Other expense, net was $18.1 million expense in the first nine months of fiscal
1999 versus $2.5 million expense in the first nine months of fiscal 1998. In
the first nine months of fiscal 1999, a $6.0 million charge was recorded as a
amendment fee related to interest-rate swap agreements. In addition $4.8 million
currency transaction losses were recorded in the first nine months of fiscal
1999 versus $1.1 million currency transaction gains recorded in the first nine
months of fiscal 1998. Additionally, fiscal 1998 included $3.0 million related
gains on the sale of fixed assets as compared to $0.6 million in the comparable
nine month period in fiscal 1999.
Net income decreased primarily as result of the matters discussed above along
with the adverse impact of the inability to tax benefit the U.S. losses.
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 and with borrowed funds and the proceeds of sales
of accounts receivable and sales leaseback transactions . 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 expects to meet
its liquidity requirements in the same manner.
Cash flows from operating activities were $24.7 million and $130.1 million
(including $158.5 million of proceeds from the sale of European receivables) in
the nine months ended December 27, 1998 and December 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 evaluate the cost and benefit of closing additional plants
which would necessitate cash payments for severance and other closure costs.
While the Company believes that a large portion of its cash requirements for its
consolidation activities will be generated from operations, it believes that it
has adequate liquidity and capital resources through its Senior Secured Global
Credit Facilities Agreement, as discussed below. Additionally, the Company is
reviewing all aspects of its operations and will likely divest some non-core
operations, as well as some underutilized assets, to generate cash.
The Company's capital expenditures were $60.0 million and $63.6 million in the
nine months ended December 27, 1998 and December 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
14
<PAGE>
it has sufficient resources for its capital expenditure programs from operating
cash flows and borrowing availability under its existing credit agreements.
As of December 27, 1998, the Company had $547.7 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
(Paris Interbank Offered Rate) 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 pounds sterling (U.S. $42 million).
The Company receives LIBOR (London Interbank Offered Rate) and pays PIBOR and
pounds 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 had the right to
terminate the $45.1 million bond swap agreements on a quarterly basis 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. In November 1998, the Company
terminated the $45.1 million interest rate swap agreements. In connection
therewith, the Company made a cash payment of $4.6 million.
As of December 27, 1998, the Company had $100.3 million available under its
Senior Secured Global Credit Facilities Agreement after consideration of $22.5
million of outstanding letters of credit.
As of December 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.
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,
distribution, financial accounting, and others. Initial assessments of these
systems were conducted. The Company determined that many of these systems
were not Year 2000 compliant. The Company believes that the systems must be
made compliant to ensure no material business interruption and to date, the
majority of the IT systems have been made compliant. Additionally, the
Company's Year 2000 plans are 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.
15
<PAGE>
The Company has identified the systems/equipment that need remediation, 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.
The Company has made significant progress in it's Y2K remediation efforts. The
North American Battery division will achieve Year 2000 compliance for both IT
and non-IT systems by the end of the second calendar quarter, 1999. The non
battery division is expected to be compliant by the end of third calendar
quarter, 1999. Costs for North American Year 2000 remediation are estimated at
$2 million.
The European remediation plans to achieve Year 2000 compliance for both IT and
non-IT systems and equipment is expected to be complete by end of third calendar
quarter, 1999. The preliminary estimate for the European Year 2000 remediation
effort is approximately $1.2 million for IT related issues, and $2.3 million to
address the non-IT issues associated with the embedded technology 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 do not
achieve timely and successful Year 2000 compliance with their systems/equipment.
As such, the Company has been and will continue to contact its key business
partners to inquire on their Year 2000 readiness. The Company's vertically
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, and suppliers for the purpose of developing
contingency planning effort is scheduled for the second calendar quarter 1999.
CONVERSION TO THE EURO CURRENCY
- -------------------------------
On January 1, 1999, certain member countries of the European Union established
fixed conversion rates between their existing currencies and the European
Union's common currency (Euro). The Company conducts business in member
countries. The transition period for the introduction of the Euro is between
January 1, 1999 and June 30, 2002. The Company is addressing the issues involved
with the introduction of the Euro. The more important issues facing the Company
include: converting information technology systems; reassessing currency risk;
negotiating and amending licensing agreements and contracts; and processing tax
and accounting records. Based upon progress to date, the Company believes that
use of the Euro has not and will not have a significant impact on the manner in
which it conducts its business affairs and processes its business and accounting
records. Accordingly, conversion to the Euro has not and is not expected to have
a material effect on the Company's financial condition or results of operations.
CAUTIONARY STATEMENT FOR PURPOSES OF THE
SAFE HARBOR PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information, this report may be deemed to contain
"forward-looking" statements. The Company desires to avail itself of the Safe
Harbor provisions of the Private Securities Litigation Reform Act of 1995 (the
"Act") and is including this cautionary statement for the express purpose of
availing itself of the protection afforded by the Act.
Examples of forward-looking statements include, but are not limited to (a)
projections of revenues, cost of raw materials, income or loss, earnings or loss
per share, capital expenditures, growth prospects, dividends, the effect of
currency translations, capital structure and other financial items, (b)
statements of plans of and objectives of the Company or its management or Board
of Directors, including the introduction of new products, or estimates or
predictions of actions by customers, suppliers, competitors or regulating
authorities, (c) statements of future economic performance and (d) statements of
assumptions, such as the prevailing weather conditions in the Company's market
areas, underlying other statements and statements about the Company or its
business.
The Company's core business, the design, manufacture and sale of lead acid
batteries, and the Company's structure involves risk and uncertainty. Important
factors that could affect the Company's results include, but are not limited to
(i) unseasonable weather (warm winters and cool summers) which adversely affects
demand for automotive and some industrial batteries, (ii) the Company's
substantial debt and debt service requirements which restrict the Company's
operational and financial flexibility as well as imposing significant interest
and financing costs, (iii) the Company's assets include the tax benefits of net
operating loss carry forwards, realization of which are dependent upon future
taxable income, (iv) lead, which experience significant fluctuations in market
price and which, as a hazardous material, may give rise to costly environmental
and safety claims, can affect the Company's results because it is a major
constituent in most of the Company's products, (v) the battery markets in North
America and Europe are very competitive and, as a result, it is often difficult
to maintain margins, (vi) the Company's consolidation and rationalization of
recently acquired European entities requires substantial management time and
financial and other resources and is not without risk, and (vii) foreign
operations involve risks such as disruption of markets, changes in import and
export laws, currency restrictions and currency exchange rate fluctuations.
Therefore, the Company cautions each reader of this report to carefully consider
those factors hereinabove set forth, because such factors have, in some
instances, affected and in the future could affect, the ability of the Company
to achieve its projected results and may cause actual results to differ
materially from those expressed herein.
16
<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: February 10, 1999 By: /s/ James M. Diasio
------------------------ --------------------
James M. Diasio
Chief Financial Officer
(Authorized Signatory)
17
<PAGE>
EXHIBIT INDEX
Exhibit Page
- ------- ----
No. Description No.
--- ----------- ---
10.25 Second Amendment to the Credit and Guarantee 19
Agreement dated January 8, 1999
10.26 Separation agreement with Arthur M. Hawkins/ 40
CynArt L.L.C. effective October 15, 1998
10.27 Separation agreement with Douglas N. Pearson 47
effective October 15, 1998
10.28 Separation agreement with Alan E. Gauthier 55
effective July 31, 1998
10.29 Employment agreement with James Diasio 61
dated September 18, 1998
27 Financial Data Schedule 65
18
<PAGE>
Exhibit 10.25
CONFORMED COPY
--------------
SECOND AMENDMENT
SECOND AMENDMENT, dated as of January 8, 1999 (this "Amendment"), to
---------
the Credit and Guarantee Agreement, dated as of December 19, 1997, (as amended
by the First Amendment, dated as of May 27, 1998 and as may be further amended,
supplemented or otherwise modified from time to time, the "Credit and Guarantee
--------------------
Agreement"), among Exide Corporation, a Delaware corporation (the "Company"),
- --------- -------
the Borrowing Subsidiaries signatory thereto, the Guarantors signatory thereto,
the several lenders from time to time parties thereto (the "Lenders"), Lehman
-------
Commercial Paper Inc., as Syndication Agent for the Lenders (in such capacity,
the "Syndication Agent") and Credit Suisse First Boston, as Administrative Agent
-----------------
for the Lenders (in such capacity, the "Administrative Agent").
--------------------
W I T N E S S E T H:
-------------------
WHEREAS, pursuant to the Credit and Guarantee Agreement, the Lenders
have agreed to make, and have made, certain loans and other extensions of credit
to the Company and the Borrowing Subsidiaries; and
WHEREAS, the Company and the Borrowing Subsidiaries have requested,
and, upon this Amendment becoming effective, the Lenders have agreed, that
certain provisions of the Credit and Guarantee Agreement and Collateral
Agreement be amended in the manner provided for in this Amendment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. (a) General. Terms defined in the Credit and
------------- -------
Guarantee Agreement and used herein shall, unless otherwise indicated, have the
meanings given to them in the Credit and Guarantee Agreement. Terms defined and
used in this Amendment shall have the meanings given to them in this Amendment.
(b) Replacement of Definitions. Subsection 1.1 of the Credit and
--------------------------
Guarantee Agreement is hereby amended by deleting therefrom the definition of
"Consolidated EBITDA" in its entirety and substituting in lieu thereof the
following definition in the appropriate alphabetical order:
"'Consolidated EBITDA': for any period, Consolidated Net Income for
--------------------
such period plus, without duplication and (other than with respect to
----
clause (g) below) to the extent reflected as a charge in the statement of
such Consolidated Net Income for such period, the sum of (a) income tax
expense, (b) interest expense, amortization or writeoff of debt discount
and debt issuance costs and commissions, discounts and other fees and
charges associated with Indebtedness (including the Loans), (c)
depreciation and
19
<PAGE>
2
amortization expense, (d) amortization of intangibles (including, but not
limited to, goodwill) and organization costs, (e) any other non-cash
charges, (f) any foreign currency translation losses required to be
recognized in accordance with GAAP with respect to intercompany obligations
and (g) for any period of determination which includes any fiscal quarter
in which the Company or any of its Subsidiaries receives any casualty or
condemnation proceeds related to any casualty event which has occurred
prior to the Second Amendment Effective Date with respect to the Cwmbran,
Wales, Bristol, Tennessee or Budingen, Germany facilities (the "Casualty
--------
Proceeds") and to the extent the Company or any of its Subsidiaries has
--------
previously expended and recognized on its financial statements amounts to
rebuild such facilities other than with the proceeds of the Casualty
Proceeds, the amount of the Casualty Proceeds received during any of such
quarters which are included in such period of determination, and minus, to
-----
the extent included in the statement of such Consolidated Net Income for
such period, the sum of (a) interest income, (b) any extraordinary, unusual
or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net
Income for such period, gains on the sales of assets outside of the
ordinary course of business), (c) any other non-cash income, all as
determined on a consolidated basis and (d) any foreign currency translation
gains required to be recognized in accordance with GAAP with respect to
intercompany obligations."
(c) Addition of Definitions. Subsection 1.1 of the Credit and
-----------------------
Guarantee Agreement is hereby amended by adding thereto the following new
definition in appropriate alphabetical order:
"'Second Amendment': the Second Amendment, dated as of January 8,
----------------
1999, to this Agreement."
"'Second Amendment Effective Date': the date of effectiveness of the
-------------------------------
Second Amendment."
2. Amendment to Subsection 7.11. Subsection 7.11 of the Credit and
----------------------------
Guarantee Agreement is hereby amended by adding thereto immediately at the end
thereof and prior to the period the following: "(other than the 1999 calendar
year)".
3. Amendment to Subsection 8.1(a). Subsection 8.1(a) of the Credit
------------------------------
and Guarantee Agreement is hereby amended by deleting the table contained
therein and substituting in lieu thereof the following table:
Consolidated
Period Leverage Ratio
------ --------------
March 31, 1998 5.50 to 1.0
April 1, 1998 through June 30, 1998 5.75 to 1.0
20
<PAGE>
3
July 1, 1998 through December 31, 1998 5.50 to 1.0
January 1, 1999 through June 30, 1999 5.25 to 1.0
July 1, 1999 through December 31, 1999 4.95 to 1.0
January 1, 2000 through June 30, 2000 3.75 to 1.0
July 1, 2000 through December 31, 2000 4.00 to 1.0
January 1, 2001 through June 30, 2001 3.25 to 1.0
July 1, 2001 through December 31, 2001 3.50 to 1.0
January 1, 2002 through June 30, 2002 2.75 to 1.0
July 1, 2002 through December 31, 2002 3.00 to 1.0
January 1, 2003 through June 30, 2003 2.75 to 1.0
July 1, 2003 through December 31, 2003 3.00 to 1.0
January 1, 2004 through June 30, 2004 2.75 to 1.0
July 1, 2004 through December 31, 2004 3.00 to 1.0
4. Amendment to Subsection 8.1(b). Subsection 8.1(b) of the Credit
-----------------------------
and Guarantee Agreement is hereby amended by deleting the table contained
therein and substituting in lieu thereof the following table:
Consolidated Fixed
Period Charge Coverage Ratio
------ ---------------------
March 31, 1998 through December 31, 1998 0.95 to 1.0
January 1, 1999 through June 30, 1999 1.10 to 1.0
July 1, 1999 through December 31, 1999 1.30 to 1.0
January 1, 2000 through December 31, 2000 1.35 to 1.0
January 1, 2001 and thereafter 1.75 to 1.0
5. Amendment to Subsection 8.1(c). Subsection 8.1(c) of the Credit
-----------------------------
and Guarantee Agreement is hereby amended by deleting the table contained
therein and substituting in lieu thereof the following table:
Consolidated
Peroid EBITDA
------ ------------
March 31, 1998 through June 30, 1999 $230,000,000
July 1, 1999 through December 31, 1999 $260,000,000
January 1, 2000 through December 31, 2000 $280,000,000
January 1, 2001 through December 31, 2001 $300,000,000
January 1, 2002 and thereafter $320,000,000
6. Amendment to Subsection 8.5. Subsection 8.5 of the Credit and
---------------------------
Guarantee Agreement is hereby amended by adding thereto the following new
paragraph (j):
21
<PAGE>
4
"(j) the sale by the Company or any of its Subsidiaries of the assets
described on Exhibit A to the Second Amendment."
7. Conditions to Effectiveness. This Amendment shall become
---------------------------
effective on and as of the date that the Administrative Agent shall have
received counterparts of this Amendment, duly executed by the Company, the
Borrowing Subsidiaries, the Guarantors and the Required Lenders and upon such
receipt shall be deemed to be effective as of December 27, 1998.
8. Representations and Warranties. The Company as of the date hereof
------------------------------
and after giving effect to the amendments contained herein, hereby confirms,
reaffirms and restates those representations and warranties made by it in
Section 5 of the Credit and Guarantee Agreement; provided, that each reference
--------
to the Credit and Guarantee Agreement therein shall be deemed to be a reference
to the Credit and Guarantee Agreement after giving effect to this Amendment.
9. Payment of Expenses. The Company agrees to pay or reimburse the
-------------------
Syndication Agent and the Administrative Agent for all of their out-of-pocket
costs and reasonable expenses incurred in connection with the Amendment, any
other documents prepared in connection herewith and the transactions
contemplated hereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Syndication Agent and the Administrative Agent.
10. Fees. In consideration of the agreement of the Lenders to
----
consent to the amendments contained herein, the Borrower agrees to pay to each
Lender which so consents on or prior to January 8, 1999, an amendment fee in an
amount equal to 0.20% of the amount of such Lender=s Commitment, payable on the
date hereof in immediately available funds.
11. Reference to and Effect on the Loan Documents; Limited Effect.
-------------------------------------------------------------
On and after the date hereof and the satisfaction of the conditions contained in
Section 7 of this Amendment, each reference in the Credit and Guarantee
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit and Guarantee Agreement, and each reference in the other
Loan Documents to "the Credit and Guarantee Agreement", "thereunder", "thereof"
or words of like import referring to the Credit and Guarantee Agreement, shall
mean and be a reference to the Credit and Guarantee Agreement as amended hereby.
The execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Lender or any Agent under any of the Loan Documents, nor constitute a waiver
of any provisions of any of the Loan Documents. Except as expressly amended
herein, all of the provisions and covenants of the Credit and Guarantee
Agreement and the other Loan Documents are and shall continue to remain in full
force and effect in accordance with the terms thereof and are hereby in all
respects ratified and confirmed.
22
<PAGE>
5
12. Counterparts. This Amendment may be executed by one or more of
------------
the parties hereto in any number of separate counterparts (which may include
counterparts delivered by facsimile transmission) and all of said counterparts
taken together shall be deemed to constitute one and the same instrument. Any
executed counterpart delivered by facsimile transmission shall be effective as
for all purposes hereof.
13. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
23
<PAGE>
6
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
EXIDE CORPORATION, as a Borrower and as a
Guarantor
By: /s/ David H. Kelly
-----------------------------------
Name: David H. Kelly
Title: Vice President and Treasurer
EXIDE HOLDING EUROPE S.A.
COMPAGNIE EUROPEENNE
D'ACCUMULATEURS S.A.
EURO EXIDE CORPORATION LIMITED
SOCIEDAD ESPANOLA DEL ACUMULADOR TUDOR S.A.
TUDOR A.B.
EXIDE VERWALTUNGS GMBH
MERCOLEC TUDOR B.V.,
each as a Borrowing Subsidiary and as a Guarantor
By: /s/ Bernard F. Stewart
----------------------------------------
Name: Bernard F. Stewart
Title: Attorney-in-Fact
24
<PAGE>
7
ACCUMULATORENFABRIK SONNENSCHEIN
GMBH
COMPAGNIA GENERALE ACCUMULATORI
S.P.A.
SINAC S.R.L.
FULMEN IBERICA S.A.
CMP BATTERIES LIMITED
CMP BATTERIJEN B.V.
SOCIETE FRANCAISE DES
ACCUMULATEURS TUDOR S.A.
CMP BATTERIER A/S
EXIDE AUTOMOTIVE BATTERIE GMBH
HAGEN BATTERIE A.G.
INDUSTRIA COMPOSIZIONI STAMPATE
S.P.A.
HAGEN BATTERIJEN B.V.
ELECTRO MERCANTIL INDUSTRIAL S.A.
GAZTAMBIDE S.A.
TERRENOS Y CONSTRUCCIONES S.A.
T.S. BATTERIE S.R.L.
EXIDE BATTERIES LIMITED
B.I.G. BATTERIES LIMITED
EXIDE (DAGENHAM) LIMITED
EXIDE FRANCE S.A.
FULMEN UK LIMITED
EXIDE AUTOMOTIVE S.A.
CMP BATTERIJEN N.V.
SOCIEDAD PORTUGUESA DO
ACUMULADOR TUDOR S.A.
EXIDE DENMARK A/S
GEMALA SWEDEN AB
CENTRA S.A.
DETA AKKUMULATORENWERK GMBH
MAREG ACCUMULATOREN GMBH
FRIWO SILBERKRAFT MBH
EXIDE SONNAK A/S
CMP BATTERIJEN S.A.
25
<PAGE>
8
EXIDE AUTOMOTIVE S.A.
EXIDE LENDING LIMITED
each as a Guarantor, subject to the limitations, if
any, contained in Schedule 10.1
By: /s/ Bernard F. Stewart
-----------------------
Name: Bernard F. Stewart
Title: Attorney-in-Fact
GBC, INC.
as a Guarantor
By: /s/ Bernard F Stewart
----------------------
Name: Bernard F. Stewart
Title: Secretary
GENERAL BATTERY CORPORATION
as a Guarantor
By: Exide Investments, Inc., trustee
By: /s/ Bernard F. Stewart
-----------------------
Name: Bernard F. Stewart
Title: Secretary
EXIDE INTERNATIONAL, INC.
as a Guarantor
By: /s/ Bernard F. Stewart
-----------------------
Name: Bernard F. Stewart
Title: Secretary
26
<PAGE>
9
LEHMAN BROTHERS INC., as Arranger
By: /s/ William J. Gallagher
-------------------------
Name: William J. Gallagher
Title: Authorized Signatory
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By: /s/ Michael E. O'Brien
-----------------------
Name: Michael E. O'Brien
Title: Authorized Signatory
CREDIT SUISSE FIRST BOSTON, as
Arranger and as Administrative Agent
By: /s/ Thomas G. Muoio
--------------------
Name: Thomas G. Muoio
Title: Vice President
By: /s/ Gregory R. Perry
---------------------
Name: Gregory R. Perry
Title: Vice President
CREDIT SUISSE FIRST BOSTON, as a
Lender
By: /s/ Thomas G. Muoio
--------------------
Name: Thomas G. Muoio
Title: Vice President
By: /s/ Robert N. Finney
---------------------
Name: Robert N. Finney
Title: Managing Director
27
<PAGE>
10
LEHMAN BROTHERS BANKHAUS AG
By: /s/ Julian Entwslg
--------------------
Name: Julian Entwislg
Title: Authorized Signatory
ALPHA CREDIT BANK A.E.
By: /s/ A. Polychroniadis & M.J. Bamber
-----------------------------------
Name: A. Polychroniadis & M.J. Barber
Title: Deputy Gen. Manager & OPS Manager
BANK OF MONTREAL
By: /s/ Thomas E. McGraw
-----------------------
Name: Thomas E. McGraw
Title: Director
BANQUE PARIBAS
By: /s/ Authorized Signatory
------------------------
Name:
Title:
BANK POLSKA KASA OPIEKI S.A. - PEKAO S.A.
By: /s/ B.W. Henry
----------------
Name: B.W. Henry
Title: Vice President
SCOTIABANK EUROPE PLC
By:__________________________________
Name:
Title:
28
<PAGE>
11
BANCA POPOLARE DI BERGAMO-CREDITO
VARESINO S.C.A.R.L.
By: /s/ G. Gattaneo & S. Lupini
----------------------------
Name: G. Gattaneo & S. Lupini
Title: Co-General Manager & Deputy General Manager
BANKBOSTON, N.A.
By:__________________________
Name:
Title:
BANQUE ET CAISSE D'EPARGNE DE L'ETAT,
LUXEMBOURG
By:/s/Jean-Pierre Thein & John Dhur
-----------------------------------
Name: Jean-Pierre Thein & John Dhur
Title: Director
BHF BANK AKTENGESELLSCHAFT
By: /s/ K. Johannsmann/M. Redding
---------------------------------
Name: K. Johnannsmann/M. Redding
Title: Vice President/Assistant Treasurer
BANQUE NATIONALE DE PARIS
By: /s/ Bruno Tassart
------------------
Name: Bruno Tassart
Title: Head of Acquisition Finance
29
<PAGE>
12
BANCO ESPIRITO SANTO E COMERCIAL DE
LISBOA S.A.
By: /s/ G.N. Harris & M. Wright
---------------------------
Name: G.N. Harris & M. Wright
Title: Manager and Deputy Manager
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE NEW YORK BRANCH
By: /s/ Anthony Rock & Sean Mounier
--------------------------------
Name: Anthony Rock & Sean Mounier
Title: Vice President & First Vice President
COMERICA BANK
By: /s/ Steven J. McCormack
-----------------------
Name: Steven J. McCormack
Title: Account Officer
CREDIT AGRICOLE INDOSUEZ
By: /s/ David Bouhl & W. Leroy Startz
---------------------------------
Name: David Bouhl & W. Leroy Startz
Title: First Vice President
DAI-ICHI KANGYO BANK, LTD.
By: /s/ Christopher Fahey
--------------------
Name: Christopher Fahey
Title: Vice President
30
<PAGE>
13
DRESDNER BANK AG NEW YORK & GRAND
CAYMAN BRANCHES
By: /s/ Brigitte Sacin & John W. Sweeney
------------------------------------
Name: Brigitte Sacin & John W. Sweeney
Title: Assistant Treasurer & Assistant Vice President
NBD BANK
By: /s/ William J. Maxbauer
--------------------------
Name: William J. Maxbauer
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ Thomas M. Harper
---------------------
Name: Thomas M. Harper
Title: Vice President
CORESTATES BANK, N.A.
By: /s/ Thomas M. Harper
---------------------
Name: Thomas M. Harper
Title: Vice President
INDUSTRIAL BANK OF JAPAN, LIMITED
NEW YORK BRANCH
By: /s/ John Dippo
---------------
Name: John Dippo
Title: Senior Vice President
31
<PAGE>
14
OSTERREICHISCHE INVESTITIONSKREDIT
AG
By: Anscheringer & J. Wandsam
-------------------------
Name: Anscheringer & J. Wandsam
Title: Assistant General Manager & Manager
MEESPIERSON N.V.
By:___________________________________
Name:
Title:
MELLON BANK, N.A.
By: /s/ Mark F. Johnston
--------------------
Name: Mark F. Johnston
Title: Assistant Vice President
THE MITSUBISHI TRUST & BANKING
CORPORATION
By: /s/ Toshihiro Hayashi
---------------------
Name: Toshihiro Hayashi
Title: Senior Vice President
SOCIETE GENERALE
By: /s/ Joseph A. Philbin
---------------------
Name: Joseph A. Philbin
Title: Director
THE SUMITOMO BANK, LIMITED
By: /s/ O. Yamashita
----------------
Name: O. Yamashita
Title: General Manager
32
<PAGE>
15
THE SUMITOMO TRUST & BANKING CO.,
LTD.
By: /s/ J.M. Barker
---------------
Name: J.M. Barker
Title: Manager
TORONTO DOMINION (TEXAS), INC.
By: /s/ Jimmy Simien
------------------
Name: Jimmy Simien
Title: Vice President
MONUMENTAL LIFE INSURANCE
COMPANY, successor by merger to Peoples
Security Life Insurance Company
By: /s/ Gregory W. Theobald
------------------------
Name: Gregory W. Theobald
Title: Vice President & Assistant Secretary
FRANKLIN FLOATING RATE TRUST
By: /s/ Chauncey Lufkin
---------------------
Name: Chauncey Lufkin
Title: Vice President
ING HIGH INCOME PRINCIPAL
PRESERVATION FUND HOLDINGS, LDC
By: ING CAPITAL ADVISORS, INC., as
Investment Advisor
By: /s/ Jane Musser Nelson
----------------------
Name: Jane Musser Nelson
Title: Senior Vice President
33
<PAGE>
16
ARCHIMEDES FUNDING, L.L.C.
By: ING CAPITAL ADVISORS, INC., as
Collateral Advisor
By: /s/ Jane Musser Nelson
----------------------
Name: Jane Musser Nelson
Title: Senior Vice President
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
By: /s/ Paul Travers
----------------
Name: Paul Travers
Title: Authorized Signatory
ORIX USA CORPORATION
By: /s/ Hiroyuki Miyauchi
---------------------
Name: Hiroyuki Miyauchi
Title: Executive Vice President
PARIBAS CAPITAL FUNDING LLC
By: /s/ Jeffrey J. Youle
------------------------
Name: Jeffrey J. Youle
Title: Director
KZH CNC LLC
By: /s/ Virginia Conway
-----------------------
Name: Virginia Conway
Title: Authorized Agent
KZH CYPRESSTREE-1 LLC
By: /s/ Virginia Conway
--------------------
Name: Virginia Conway
Title: Authorized Agent
34
<PAGE>
17
KZH LANGDALE LLC
By: /s/ Virginia Conway
--------------------
Name: Virginia Conway
Title: Authorized Agent
KZH PONDVIEW LLC
By: /s/ Virginia Conway
---------------------
Name: Virginia Conway
Title: Authorized Agent
THE BANK OF SCOTLAND
By: /s/ William Paterson
----------------------
Name: William Paterson
Title: Director, European Corporate Finance
THE BANK OF NOVA SCOTIA
By: /s/ J. Alan Edwards
--------------------
Name: J. Alan Edwards
Title: Authorized Signatory
NATEXIS BANQUE
By: /s/ Jean Y. Richard & Jordan Sadler
--------------------------------------
Name: Jean Y. Richard & Jordan Sadler
Title: Executive Vice President & Associate
35
<PAGE>
18
ALLIANCE CAPITAL MANAGEMENT L.P., as
Manager on behalf of Alliance Capital Funding,
L.L.C.
By: Alliance Capital Management Corporation,
General Partner of Alliance Capital
Management L.P.
By: /s/ L.I. Savitri Alex
---------------------------
Name: L.I. Savitri Alex
Title: Vice President
ALLIANCE CAPITAL MANAGEMENT L.P., as
Manager on behalf of Alliance Investments Limited
By: Alliance Capital Management Corporation,
General Partner of Alliance Capital
Management L.P.
By: /s/ Sheryl Rothman
--------------------
Name: Sheryl Rothman
Title: Vice President
BALANCED HIGH YIELD FUND I LTD.,
By: BHF-Bank Aktiengesellschaft, acting
through its New York Branch, as attorney-
in-fact
By: /s/ John Sykes & Thomas Scifo
------------------------------
Name: John Sykes & Thomas Scifo
Title: Vice President & Assistant Vice
President
CYPRESSTREE INVESTMENT PARTNERS II,
LTD.
As: CypressTree Investment Management
Company, Inc., as Portfolio Manager
By:/s/Philip C. Robbins
-----------------------------
Name: Philip C. Robbins
Title: Principal
36
<PAGE>
19
DELANO COMPANY
By: Pacific Investment Management Company,
as its Investment Advisor
By: /s/ Raymond Kennedy
--------------------
Name: Raymond Kennedy
Title: Senior Vice President
INDOSUEZ CAPITAL FUNDING IV, L.P.
By: Indosuez Capital Luxembourg, as Collateral
Manager
By:/s/Francoise Berthlelot
-----------------------
Name: Francoise Berthelot
Title: Authorized Signatory
SYNDICATED LOAN FUNDING INC.
By: Lehman Commercial Paper Inc. not in its
individual capacity but solely as Asset
Manager
By: /s/ Michael E. O'Brien
-----------------------
Name: Michael E. O'Brien
Title: Authorized Signatory
DEBT STRATEGIES FUND II, INC.
By: /s/ Paul Travers
-----------------
Name: Paul Travers
Title: Authorized Signatory
37
<PAGE>
20
MERRILL LYNCH GLOBAL INVESTMENT
SERIES: INCOME STRATEGIES PORTFOLIO
By: Merrill Lynch Asset Management,
as Investment Advisor
By: /s/ Paul Travers
------------------
Name: Paul Travers
Title: Authorized Signatory
OSPREY INVESTMENTS PORTFOLIO
By: Citibank, N.A., as Manager
By: /s/ Hans L. Christensen
----------------------------
Name: Hans L. Christensen
Title: Vice President
ROYALTON COMPANY
By: Pacific Investments Management Company,
as Investment Advisor
By: /s/ Raymond Kennedy
--------------------
Name: Raymond Kennedy
Title: Senior Vice President
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By: /s/ Payson F. Swaffield
------------------------------
Name: Payson F. Swaffield
Title: Vice President
WADDELL & REED FINANCIAL INC.
By: /s/ Henry J. Herrmann
----------------------
Name: Henry J. Herrmann
Title: President & CEO
38
<PAGE>
21
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE NEW YORK BRANCH
By: /s/ A. de Gromard
-------------------
Name: A. de Gromard
Title: Senior Manager
EATON VANCE SENIOR INCOME TRUST
By: Eaton Vance Management as Investment
Advisor
By: /s/ Payson F. Swaffield
-------------------------
Name: Payson F. Swaffield
Title: Vice President
39
<PAGE>
EXHIBIT 10.26
EXHIBIT 10.26
-------------
SEPARATION AGREEMENT
--------------------
This Separation Agreement is made between Exide Corporation, a
Delaware Corporation ("Exide"), and Arthur M. Hawkins/CynArt, L.L.C.,
established by Mr. Hawkins.
Whereas, Mr. Hawkins has voluntarily resigned his positions as an
employee and officer of Exide, effective October 15, 1998; and
Whereas, Mr. Hawkins has voluntarily resigned his position as a
director of Exide, effective October 15, 1998; and
Whereas, Mr. Hawkins and Exide wish to provide for an orderly
transition that serves their mutual and individual interests.
Now therefore, in consideration of the above premises and mutual terms
stated below, and other valuable consideration, the parties agree as follows:
1. TRANSITION AND RESPONSIBILITIES. Effective October 15, 1998, Mr,
-------------------------------
Hawkins has relinquished all his responsibilities and functions as an employee
and officer of Exide. Effective October 15, 1998, Mr. Hawkins has relinquished
all his responsibilities and functions as a director of Exide. For a period from
October 15, 1998 through March 31, 2002, Mr. Hawkins shall through CynArt,
L.L.C. render reasonable advisory and consulting services to Exide with regard
to matters that may be requested by Exide's Board of Directors or its designee
from time to time. As a consultant pursuant to this Separation Agreement, Mr.
Hawkins shall through CynArt, L.L.C. perform only those tasks on behalf of
Exide, communicate only with those Exide employees or representatives, and avail
himself only to those Exide facilities or resources as specifically authorized
by Exide's Board of Directors or its designee. Such consulting services shall
not preclude Mr. Hawkins from conducting his then-current business affairs
consistent with his obligations under this agreement.
2. SEPARATION BENEFITS. Subject to Mr. Hawkins complying with all his
-------------------
obligations in Paragraphs 1, 6, 8, 9, 10, 11, 13, and 14 of this Agreement,
Exide will provide him with the, following:
A. A one time consulting fee totaling $900,000.00 payable in a single lump
sum on or about November 30, 1998, as per subparagraph 5(b) of Mr. Hawkins
Employment Agreement.
B. Forgiveness of a certain promissory note provided by Mr. Hawkins to
Exide in the amount of $450,000.00 during 1998.
C. In compromise of any claims Mr. Hawkins may have, payment at an annual
rate of $650,000.00 through March 31, 2002 at which time Mr. Hawkins will have
reached the age of 59 1/2. These payments will be paid to CynArt, L.L.C. Such
payments will be made in monthly installments according to Exide's normal
payroll
40
<PAGE>
practices commencing on the first payroll date following October 15, 1998, and
deducted from these payments, in equal amounts over the term of the payments,
$152,000 representing the call for capital paid by Exide to Morgan Stanley in
October 1998, plus interest as provided in the note evidencing such obligation.
D. Continue Mr. Hawkins and his dependents in Exide's group medical and
dental plans through March 31, 2002. Exide will pay directly to the insurance
provider all premiums through March 31, 2002 for participation of Mr. Hawkins
and his dependents in Exide's group medical and dental plans. Following March
31, 2002, Mr. Hawkins and his dependents shall be notified of and eligible for
COBRA continuation coverage.
E. Provide CynArt, L.L.C. title on or about November 15, 1998 to his
current company car.
F. Provide Mr. Hawkins title on or about November 15, 1998 to the Cessna
Centurion N9612Y which Mr. Hawkins personally piloted in the performance of his
duties at Exide, at its current book value, which amount shall be deducted from
the one time consulting fee as described in paragraph 2A.
G. Retention of 500,000 options granted to Mr. Hawkins under the 1997 Stock
Option Plan, as amended in section 5 at the October 15, 1998 Board of Directors
meeting. Such options shall be vested so that Mr. Hawkins shall have the right
to exercise the 500,000 options up to and through May 1, 2007 whether or not Mr.
Hawkins is retired or employed as of such date.
H. Exide acknowledges that this Agreement is not intended to affect any
rights under Exide's Selective Executive Retirement Agreement with Mr. Hawkins
which previously have vested, and in accordance with the terms of the Selective
Executive Retirement Agreement, Mr. Hawkins shall be entitled to benefits upon
reaching the age of 59 1/2.
I. Any compensation previously and correctly deferred by Mr. Hawkins under
the terms of the Exide Deferred Compensation Plan, together with any accrued
interest and earnings thereon and all amounts attributable thereto. Upon
execution of this Agreement, Mr. Hawkins shall receive in a lump sum any such
compensation under the plan.
J. Reasonable expenses incurred in connection with performance of any
advisory and consulting services performed hereunder.
K. Nothing contained in this Separation Agreement shall serve to restrict
or enlarge any rights, if any, Mr. Hawkins may have with respect to Exide's
Stock Option Plan or Selective Executive Retirement Agreement, other than as may
be set forth herein.
Mr. Hawkins acknowledges that Exide makes no representation or
warranties of any kind to him concerning the tax consequences, if any, of any
separation benefits Mr. Hawkins
41
<PAGE>
receives under this Agreement. Mr. Hawkins agrees to pay any federal, state or
local taxes which are assessed against him with respect to any such benefits.
Mr. Hawkins' failure to perform under paragraphs 5, 6, 7, 8, 9 and 12
of this Agreement shall void Exide's obligations of payment under subparagraphs
2A and 2C but otherwise shall not affect the parties' rights or obligations
under this Agreement.
3. Mutual Release.
---------------
A. Mr. Hawkins, on behalf of himself and his agents, assignees, attorneys,
heirs, executors and administrators, releases, forever discharges and covenants
not to sue Exide (including any current, former or subsequent predecessor,
successor, assignee, parent, subsidiary or affiliate of Exide, and each of their
respective officers, directors, employees, representatives or agents) with
respect to any liability, claim, demand, action, cause of action, suit,
grievance, debt, sum of money, controversy, agreement (including, without
limitation, any Employment Agreement previously made between Mr. Hawkins and
Exide), promise, damage, demand, back pay, front pay, cost, expense, attorney's
fees or remedy of any type, known or unknown, which Mr. Hawkins has, may have or
has ever had, in law or equity, or before any federal, state or local court or
administrative agency, through the date of Mr. Hawkins' execution of this
Agreement on account of, or in relation to, any matter, cause, circumstance, act
or omission arising out of or in connection with any claims, demands or actions
under any federal, state or local statute or regulation, or the common law of
any state, regarding in any way discrimination in employment or termination of
employment, except where a claim is based upon intentional misconduct.
There is expressly reserved from the effect of this release any
claim which M. Hawkins may now or hereinafter have, or benefit which
the Exide Board of Directors in its discretion may grant, with respect
to (i) this Agreement; (ii) Exide's indemnification obligations, which
will continue in full force and effect as to Mr. Hawkins' actions
prior to the date hereof, including but not limited to Exide's
obligations under the articles of incorporation and the by-laws of
Exide, and state law; (iii) employee or director and officer liability
insurance; (iv) Mr. Hawkins' entitlement to and rights under Exide's
stock option plan, employee pension plan and Selective Executive
Retirement Agreement; and (v) defense by Exide for any acts or
omissions occurring or alleged to have occurred in connection with Mr.
Hawkins' employment with or resignation from Exide.
B. Except as agreed herein, Exide, on behalf of itself and any current,
former or subsequent predecessor, successor, assignee, parent, subsidiary or
affiliate of Exide, and each of their respective officers, directors, employees,
representatives or agents releases, forever discharges and covenants not to sue
Mr. Hawkins with respect to any liability, claim, demand, action, cause of
action, suit grievance, debt, sum of money, controversy, agreement (including,
without limitation, any Employment Agreement previously made between Mr. Hawkins
and Exide), promise, damage, demand, back pay, front pay, cost, expense,
attorney's fees or remedy of any type, known or unknown, which Exide has, may
have or has ever had, in law or equity, or before any federal, state
42
<PAGE>
or local court or administrative agency, through the date of Exide's execution
of this Agreement on account of, or in relation to, any matter, cause,
circumstance, act or omission arising out of or in connection with Mr. Hawkins'
employment with or resignation from Exide, including any claims, demands or
actions under any federal, state or local statute or regulation, or the common
law of any state, except where a claim is based on intentional misconduct.
There is expressly reserved from the effect of this release any
claim which Exide may now or hereinafter have with respect to (i) this
Agreement; (ii) Mr. Hawkins' obligations under any indemnification
agreements, which will continue in full force and effect as to Mr.
Hawkins' actions prior to the date hereof, including but not limited
to obligations under the articles of incorporation and the bylaws of
Exide, and state law; (iii) employee or director and officer liability
insurance; (iv) Mr. Hawkins' entitlement to and rights under Exide's
stock option plan, employee pension plan and supplemental executive
retirement plan; and (v) defense by Exide for any acts or omissions
occurring or alleged to have occurred in connection with Mr. Hawkins's
employment with or resignation from Exide.
4. ADEA RELEASE. Mr. Hawkins specifically agrees that:
------------
A. He is releasing any and all claims under the Age Discrimination in
Employment Act of 1967, as amended by the Older Workers Benefit Protection
Act, arising up to the date of the execution of this Separation Agreement;
B. The consideration he will receive is greater than normally provided by
Exide's policies to a person of his length of service and responsibility;
C. He consulted with an attorney of his choice before he executed this
instrument,
D. He has been given 21 days from the date of presentation of this
Separation Agreement to decide whether to sign the document, and
E. He has 7 days from the execution of the Separation Agreement to revoke
its execution. In the event of such revocation, all obligations of Exide under
this instrument shall immediately cease.
5. RETURN OF EXIDE PROPERTY. Mr. Hawkins shall immediately return to
------------------------
Exide any of its property in his possession or control including, without
limitation, all automobiles, cellular telephones, pagers, computers, credit
cards, documents (including, without limitation, written or computer-based
materials and other information contained in any tangible medium of expression
or recording, and any copies, excerpts, summaries, compilations or abridgments
thereof) and other property of any kind, except as otherwise provided herein.
Mr. Hawkins shall immediately clear any outstanding cash advances or Exide
credit card charges by filing appropriate expense reports and making any
appropriate repayments. Exide shall promptly reimburse Mr. Hawkins for all
outstanding expenses reimbursable in accord with Exide's policy upon filing of
appropriate expense reports.
43
<PAGE>
6. CONFIDENTIAL INFORMATION. Mr. Hawkins acknowledges that during
------------------------
his employment with Exide, he has had access to and was provided with certain
proprietary trade secrets and confidential business information, including,
without limitation, Exide's prior, current and future financing, financial and
funding information or strategies, the communications made to and between its
corporate directors, and Exide's accounting and litigation plans or strategies.
Mr. Hawkins further acknowledges that all the above proprietary trade secrets
and confidential business information (i) remain unknown to Exide's competitors
and to the general public, (ii) derive independent actual or potential economic
value from the fact that such secrets and information are kept confidential, and
(iii) Exide's proprietary trade secrets and confidential business information
are the subjects of Exide's efforts, which are reasonable under the
circumstances, to maintain their secrecy.
7. CONFIDENTIALITY COVENANT. Mr. Hawkins shall not disclose any
------------------------
proprietary trade secret information or any other confidential business
information belonging to Exide to anyone other than his attorneys or Exide, its
officers, directors, employees, agents, affiliates, successors and assigns, or
as directed by Exide, unless required to do so by a court or government agency
or as necessary to perform any advisory and consulting services hereunder.
8. RESTRICTIVE COVENANTS. In view of Mr. Hawkins' access to Exide's
---------------------
proprietary trade secrets and confidential business information, and in
consideration of the value of such property to Exide, for the period commencing
November 1, 1998 and ending March 31, 2001, Mr. Hawkins shall not directly or
indirectly;
A. Own, manage, operate, control, be employed by, participate in or be
connected or affiliated in any manner with the ownership, management, operation
or control of, any business which shall directly or indirectly compete with any
of the businesses conducted by Exide or any of its successors, subsidiaries,
divisions, or affiliates at the time of the execution of this Agreement.
B. Contact, solicit, or accept the trade or patronage of any of the
customers of Exide for himself or any other person or entity, with respect to
the business engaged in by Exide. The term "customers" shall include, without
limitation, the officers, directors, agents, employees, parents, subsidiaries
and affiliates of such customers, and all persons or organizations with whom
Exide has done business within the period of Mr. Hawkins' employment by Exide or
whom Mr. Hawkins, through CynArt, L.L.C., is requested by Exide to contact or
communicate with on behalf of Exide during the term of this agreement.
C. Solicit, induce or attempt to induce any other employee, officer,
director, or agent of Exide to leave Exide's employ or engagement to become
connected in any with, or employ or utilize any such employee, officer, director
or agent in, any other business which shall directly or indirectly compete with
any of the businesses conducted by Exide or any of its successors, subsidiaries,
division, or affiliates at the time of the execution of this Agreement.
9. INJUNCTIVE RELIEF. In view of Mr. Hawkins' access to Exide's
-----------------
proprietary trade secrets and confidential business information, and in
consideration of the value of such
44
<PAGE>
property to Exide, Mr. Hawkins agrees that the covenants contained in Paragraphs
7 and 8 above are necessary to protect Exide's interests in its confidential
matter, and to protect and maintain customer relationships and other legitimate,
proprietary interests of Exide, both actual and potential, which Mr. Hawkins
would not have had access to but for his employment relationship with Exide. Mr.
Hawkins acknowledges that without enforcement of the covenants set forth herein,
Exide would be irreparably harmed and the full extent of injury resulting
therefrom would be impossible to calculate and Exide therefore will not have an
adequate remedy at law. Accordingly, Mr. Hawkins agrees that temporary and
permanent injunctive relief would be appropriate remedies against such breach,
without bond or security, provided, however, that nothing herein shall be
construed as limiting any other legal or equitable remedies available to Exide.
10. POSITIVE LIGHT. Mr. Hawkins will use his best efforts to insure
--------------
that all his own written and oral communications, and any such communications
over which he has any control by other persons, will promote Exide, its current
or former officers, directors or agents, in a clearly positive and favorable
light. Exide will use its best efforts to insure that all its own written and
oral communications, and any such communications by other persons over whom it
has any control, will promote Mr. Hawkins in a clearly positive and favorable
light. The parties also will use their respective best efforts to project a
positive and favorable attitude toward each other, and to instill a similar
attitude in other people. At no time will the parties, individually or through
any other person or entity, in any manner make, disseminate or participate in
any disparaging, defamatory, negative or adverse statements concerning each
other. Nothing contained in this Paragraph shall be construed as prohibiting
Exide or its employees and Mr. Hawkins from providing truthful information.
11. LEGAL SUPPORT. Mr. Hawkins acknowledges that as the former
-------------
President and CEO of Exide, he will be called upon to cooperate in the
prosecution and/or defense of any litigation where his participation is
necessary or deemed desirable by Exide. Mr. Hawkins agrees that he will, at all
times, make himself readily available to diligently assist the Corporation in
these matters. Mr. Hawkins will be entitled to reimbursement for the normal
travel and accommodation expenses associated with these prosecutions and/or
litigations.
12. CONFIDENTIAL TERMS. Mr. Hawkins and Exide each warrant that the
------------------
terms of this Agreement will be regarded as a strictly confidential
communication between the parties, and that neither party will, by act or
omission, in any manner or means, disclose the terms or the Agreement to any
person or entity. This warranty does not apply to Mr. Hawkins' disclosures to
his spouse, financial and tax advisors, lawyers, any court or government agency,
or as necessary to enforce the terms of this Agreement, to Exide's disclosures
to its financial advisors, lawyers and persons or entities with a need to know,
or to disclosures of either party required by law.
13. NO ADMISSION. The parties to this instrument acknowledge and
------------
agree that Exide's execution of this Separation Agreement does not constitute
and shall not be construed as an admission of wrongdoing of any kind on the part
of the entities and persons hereby released, by whom wrongdoing of any kind is
expressly denied.
45
<PAGE>
14. INTEGRATION. Mr. Hawkins acknowledges that the only
-----------
consideration for this Separation Agreement is described in this instrument;
that no other promise or agreement of any kind has been made to or with him by
any person or entity whatsoever to cause him to execute this Separation
Agreement; that this instrument constitutes the entire agreement between the
parties, and the terms set forth herein are contractual and not a mere recital.
15. WAIVER. Any failure either by Exide or Mr. Hawkins to insist on
------
strict compliance with any of the terms, covenants and conditions of this
Agreement shall not be deemed a waiver or relinquishment of such terms,
covenants and conditions or of any similar right or power hereunder at any
subsequent time.
16. SEVERABILITY. If any provision of this Agreement shall be
------------
declared by any court to be void or unenforceable, the other provisions shall
not be affected but shall remain in full force and effect. Furthermore, if any
of the restrictions against various post-employment activities is found to be
unreasonable or invalid, the court before which the matter is pending shall
enforce the restriction to the maximum extent it deems to be valid and
enforceable. Such restrictions shall be considered divisible both as to time and
as to geographical scope, with each month and geographical area being deemed
separate.
17. SUCCESSORS. This Separation Agreement shall be binding upon
----------
Exide and Mr. Hawkins, and their respective heirs, personal representatives,
successors and assigns.
18. GOVERNING LAW. This Agreement shall be construed in accord with
-------------
and governed by the laws of the State of Michigan.
19. KNOWING AND VOLUNTARY SIGNING. Mr. Hawkins acknowledges that he
-----------------------------
is represented by counsel, that counsel has explained to him all the terms of
this Separation Agreement, and that he has voluntarily signed it intending it to
legally bind him. Exide, by its designated representative, whose signature
appears below, acknowledges that it is represented by counsel, that counsel has
explained all the terms of this Separation Agreement to Exide's Board of
Directors, and that the Board of Directors has duly authorized its execution,
intending it to legally bind Exide.
EXIDE CORPORATION
/s/ Arthur M. Hawkins By: /s/Arthur R. Taylor
------------------------- ------------------------------------
Arthur M. Hawkins For the Board of Directors
November 10, 1998 By: November 11, 1998
------------------------- ------------------------------------
Dated Dated
46
<PAGE>
EXHIBIT 10.27
EXHIBIT 10.27
-------------
SEPARATION AGREEMENT
--------------------
This Separation Agreement is made between Exide Corporation, a
Delaware Corporation ("Exide"), and Douglas N. Pearson.
Whereas, Mr. Pearson has voluntarily resigned his positions as an
employee and officer of Exide, effective October 15, 1998; and
Whereas, Mr. Pearson has voluntarily resigned his position as a
director of Exide, effective October 15, 1998; and
Whereas, Mr. Pearson and Exide wish to provide for an orderly
transition that serves their mutual and individual interests.
Now therefore, in consideration of the above premises and mutual terms
stated below, and other valuable consideration, the parties agree as follows:
1. TRANSITION AND RESPONSIBILITIES. Effective October 15, 1998, Mr.
-------------------------------
Pearson has relinquished all his responsibilities and functions as an employee
and officer of Exide. Effective October 15, 1998, Mr. Pearson has relinquished
all his responsibilities and functions as a director of Exide. For a period from
October 15, 1998 through July 20, 2003, Mr. Pearson shall render reasonable
advisory and consulting services to Exide with regard to matters that may be
requested by Exide's Board of Directors or its designee from time to time. As a
consultant pursuant to this Separation Agreement, Mr. Pearson shall perform only
those tasks on behalf of Exide, communicate only with those Exide employees or
representatives, and avail himself only to those Exide facilities or resources
as specifically authorized by Exide's Board of Directors or its designee. Such
consulting services shall not preclude Mr. Pearson from conducting his then-
current business affairs consistent with his obligations under this agreement.
2. SEPARATION BENEFITS. Subject to Mr. Pearson complying with all his
-------------------
obligations in Paragraphs 1, 6, 8, 9, 10, 11, 13, and 14 of this Agreement,
Exide will provide him with the, following:
A. Forgiveness of a certain promissory note provided by Mr.
Pearson to Exide in the amount of $225,000.00 during 1998.
B. In compromise of any claims Mr. Pearson may have, payment at
an annual rate of $ 450,000.00 through July 20, 2003 at which time Mr.
Pearson will have reached age 59 1/2. Such payments will be made in
monthly installments according to Exide's normal payroll practices
commencing on the first payroll date following October 15, 1998, and
deducted from these payments in equal amounts over the term of the payments
will be $339,000 representing the call for capital paid by Exide to Morgan
Stanley in October 1998.
47
<PAGE>
C. Continue Mr. Pearson and his dependents in Exide's group
medical and dental plans through July 20, 2003. Exide will pay directly to
the insurance provider all premiums through July 20, 2003 for participation
of Mr. Pearson and his dependents in Exide's group medical and dental
plans. Following July 20, 2003, Mr. Pearson and his dependents shall be
notified of and eligible for COBRA continuation coverage.
D. Provide Mr. Pearson title on or about November 15, 1998 to his
current company car.
E. Retention of all options granted to Mr. Pearson under the 1993
Stock Option Plan and the 1997 Stock Option Plan, as amended in section 5
at the October 15, 1998 Board of Directors meeting. Such options shall be
vested so that Mr. Pearson shall have the right to exercise the options up
to and through the dates provided in those Plans, whether or not Mr.
Pearson is retired or employed as of such date.
F. Exide acknowledges that this Agreement is not intended to
affect any rights under Exide's Selective Executive Retirement Agreement
with Mr. Pearson which previously have vested, and in accordance with the
terms of the Selective Executive Retirement Agreement, Mr. Pearson shall be
entitled to benefits upon reaching the age of 59 1/2.
G. Any compensation previously and correctly deferred by Mr.
Pearson under the terms of the Exide Deferred Compensation Plan, together
with any accrued interest and earnings thereon and all amounts attributable
thereto. Upon the execution of this Agreement, Mr. Pearson shall receive
in a lump sum any such compensation under the plan.
H. Reasonable expenses incurred in connection with performance of
any advisory and consulting services performed hereunder.
I. Nothing contained in this Separation Agreement shall serve to
restrict or enlarge any rights, if any, Mr. Pearson may have with respect
to Exide's Stock Option Plan or Selective Executive Retirement Agreement,
other than as may be set forth herein.
Mr. Pearson acknowledges that Exide makes no representation or
warranties of any kind to him concerning the tax consequences, if any, of any
separation benefits Mr. Pearson receives under this Agreement. Mr. Pearson
agrees to pay any federal, state or local taxes which are assessed against him
with respect to any such benefits.
Mr. Pearson' failure to perform under paragraphs 5, 6, 7, 8, 9 and 12
of this Agreement shall void Exide's obligations of payment under subparagraphs
2A and 2C but otherwise shall not affect the parties' rights or obligations
under this Agreement.
3. Mutual Release.
---------------
A. Mr. Pearson, on behalf of himself and his agents, assignees,
attorneys, heirs, executors and administrators, releases, forever
discharges and covenants not to sue Exide (including any current, former or
subsequent predecessor, successor,
48
<PAGE>
assignee, parent, subsidiary or affiliate of Exide, and each of their
respective officers, directors, employees, representatives or agents) with
respect to any liability, claim, demand, action, cause of action, suit,
grievance, debt, sum of money, controversy, agreement (including, without
limitation, any Employment Agreement previously made between Mr. Pearson
and Exide), promise, damage, demand, back pay, front pay, cost, expense,
attorney's fees or remedy of any type, known or unknown, which Mr. Pearson
has, may have or has ever had, in law or equity, or before any federal,
state or local court or administrative agency, through the date of Mr.
Pearson' execution of this Agreement on account of, or in relation to, any
matter, cause, circumstance, act or omission arising out of or in
connection with any claims, demands or actions under any federal, state or
local statute or regulation, or the common law of any state, regarding in
any way discrimination in employment or termination of employment, except
where a claim is based upon intentional misconduct.
There is expressly reserved from the effect of this release any
claim which Mr. Pearson may now or hereinafter have, or benefit which
the Exide Board of Directors in its discretion may grant, with respect
to (i) this Agreement; (ii) Exide's indemnification obligations, which
will continue in full force and effect as to Mr. Pearson' actions
prior to the date hereof, including but not limited to Exide's
obligations under the articles of incorporation and the by-laws of
Exide, and state law; (iii) employee or director and officer liability
insurance; (iv) Mr. Pearson's entitlement to and rights under Exide's
stock option plan, employee pension plan and supplemental executive
retirement plan; and (v) defense by Exide for any acts or omissions
occurring or alleged to have occurred in connection with Mr. Pearson'
employment with or resignation from Exide.
B. Except as agreed herein, Exide, on behalf of itself and any
current, former or subsequent predecessor, successor, assignee, parent,
subsidiary or affiliate of Exide, and each of their respective officers,
directors, employees, representatives or agents releases, forever
discharges and covenants not to sue Mr. Pearson with respect to any
liability, claim, demand, action, cause of action, suit grievance, debt,
sum of money, controversy, agreement (including, without limitation, any
Employment Agreement previously made between Mr. Pearson and Exide),
promise, damage, demand, back pay, front pay, cost, expense, attorney's
fees or remedy of any type, known or unknown, which Exide has, may have or
has ever had, in law or equity, or before any federal, state or local court
or administrative agency, through the date of Exide's execution of this
Agreement on account of, or in relation to, any matter, cause,
circumstance, act or omission arising out of or in connection with Mr.
Pearson's employment with or resignation from Exide, including any claims,
demands or actions under any federal, state or local statute or regulation,
or the common law of any state, except where a claim is based on
intentional misconduct.
There is expressly reserved from the effect of this release any
claim which Exide may now or hereinafter have with respect to (i) this
Agreement; (ii) Mr. Pearson's obligations under any indemnification
agreement, which will continue in full force and effect as to Mr.
Pearson's actions prior to the date hereof, including but not limited
to obligations under the articles of incorporation and the
49
<PAGE>
bylaws of Exide, and state law; (iii) employee or director and officer
liability insurance; (iv) Mr. Pearson's entitlement to and rights
under Exide's stock option plan, employee pension plan and Selective
Executive Retirement Agreement; and (v) defense by Exide for any acts
or omissions occurring or alleged to have occurred in connection with
Mr. Pearson's employment with or resignation from Exide.
4. ADEA RELEASE. Mr. Pearson specifically agrees that:
------------
A. He is releasing any and all claims under the Age
Discrimination in Employment Act of 1967, as amended by the Older Workers
Benefit Protection Act, arising up to the date of the execution of this
Separation Agreement;
B. The consideration he will receive is greater than normally
provided by Exide's policies to a person of his length of service and
responsibility;
C. He consulted with an attorney of his choice before he executed
this instrument,
D. He has been given 21 days from the date of presentation of
this Separation Agreement to decide whether to sign the document, and
E. He has 7 days from the execution of the Separation Agreement
to revoke its execution. In the event of such revocation, all obligations
of Exide under this instrument shall immediately cease.
5. RETURN OF EXIDE PROPERTY. Mr. Pearson shall immediately return to
------------------------
Exide any of its property in his possession or control including, without
limitation, all automobiles, cellular telephones, pagers, computers, credit
cards, documents (including, without limitation, written or computer-based
materials and other information contained in any tangible medium of expression
or recording, and any copies, excerpts, summaries, compilations or abridgments
thereof) and other property of any kind, except as otherwise provided herein.
Mr. Pearson shall immediately clear any outstanding cash advances or Exide
credit card charges by filing appropriate expense reports and making any
appropriate repayments. Exide shall promptly reimburse Mr. Pearson for all
outstanding expenses reimbursable in accord with Exide's policy upon filing of
appropriate expense reports.
6. CONFIDENTIAL INFORMATION. Mr. Pearson acknowledges that during
------------------------
his employment with Exide, he has had access to and was provided with certain
proprietary trade secrets and confidential business information, including,
without limitation, Exide's prior, current and future financing, financial and
funding information or strategies, the communications made to and between its
corporate directors, and Exide's accounting and litigation plans or strategies.
Mr. Pearson further acknowledges that all the above proprietary trade secrets
and confidential business information (i) remain unknown to Exide's competitors
and to the general public, (ii) derive independent actual or potential economic
value from the fact that such secrets and information are kept confidential, and
(iii) Exide's proprietary trade secrets and confidential business information
are the subjects of Exide's efforts, which are reasonable under the
circumstances, to maintain their secrecy.
50
<PAGE>
7. CONFIDENTIALITY COVENANT. Mr. Pearson shall not disclose any
------------------------
proprietary trade secret information or any other confidential business
information belonging to Exide to anyone other than his attorneys or Exide, its
officers, directors, employees, agents, affiliates, successors and assigns, or
as directed by Exide, unless required to do so by a court or government agency
or as necessary to perform any advisory and consulting services hereunder.
8. RESTRICTIVE COVENANTS. In view of Mr. Pearson's access to Exide's
---------------------
proprietary trade secrets and confidential business information, and in
consideration of the value of such property to Exide, for the period commencing
November 1, 1998 and ending July 20, 2003, Mr. Pearson shall not directly or
indirectly;
A. Own, manage, operate, control, be employed by, participate in
or be connected or affiliated in any manner with the ownership, management,
operation or control of, any business which shall directly or indirectly
compete with any of the businesses conducted by Exide or any of its
successors, subsidiaries, divisions, or affiliates at the time of the
execution of this Agreement.
B. Contact, solicit, or accept the trade or patronage of any of
the customers of Exide for himself or any other person or entity, with
respect to the business engaged in by Exide. The term "customers" shall
include, without limitation, the officers, directors, agents, employees,
parents, subsidiaries and affiliates of such customers, and all persons or
organizations with whom Exide has done business within the period of Mr.
Pearson' employment by Exide or whom Mr. Pearson is requested by Exide to
contact or communicate with on behalf of Exide during the term of this
Agreement.
C. Solicit, induce or attempt to induce any other employee,
officer, director, or agent of Exide to leave Exide's employ or engagement
to become connected in any with, or employ or utilize any such employee,
officer, director or agent in, any other business which shall directly or
indirectly compete with any of the businesses conducted by Exide or any of
its successors, subsidiaries, division, or affiliates at the time of the
execution of this Agreement.
9. INJUNCTIVE RELIEF. In view of Mr. Pearson's access to Exide's
-----------------
proprietary trade secrets and confidential business information, and in
consideration of the value of such property to Exide, Mr. Pearson agrees that
the covenants contained in Paragraphs 7 and 8 above are necessary to protect
Exide's interests in its confidential matter, and to protect and maintain
customer relationships and other legitimate, proprietary interests of Exide,
both actual and potential, which Mr. Pearson would not have had access to but
for his employment relationship with Exide. Mr. Pearson acknowledges that
without enforcement of the covenants set forth herein, Exide would be
irreparably harmed and the full extent of injury resulting therefrom would be
impossible to calculate and Exide therefore will not have an adequate remedy at
law, Accordingly, Mr. Pearson agrees that temporary and permanent injunctive
relief would be appropriate remedies against such breach, without bond or
security; provided; however, that nothing herein shall be construed as limiting
any other legal or equitable remedies available to Exide.
51
<PAGE>
10. POSITIVE LIGHT. Mr. Pearson will use his best efforts to insure
--------------
that all his own written and oral communications, and any such communications
over which he has any control by other persons, will promote Exide, its current
or former officers, directors or agents, in a clearly positive and favorable
light. Exide will use its best efforts to insure that all its own written and
oral communications, and any such communications by other persons over whom it
has any control, will promote Mr. Pearson in a clearly positive and favorable
light. The parties also will use their respective best efforts to project a
positive and favorable attitude toward each other, and to instill a similar
attitude in other people. At no time will the parties, individually or through
any other person or entity, in any manner make, disseminate or participate in
any disparaging, defamatory, negative or adverse statements concerning each
other. Nothing contained in this Paragraph shall be construed as prohibiting
Exide or its employees and Mr. Pearson from providing truthful information.
11. LEGAL SUPPORT. Mr. Pearson acknowledges that as the former
-------------
President of North American Operations of Exide, he will be called upon to
cooperate in the prosecution and/or defense of any litigation where his
participation is necessary or deemed desirable by Exide. Mr. Pearson agrees that
he will, at all times, make himself readily available to diligently assist the
Corporation in these matters. Mr. Pearson will be entitled to reimbursement for
the normal travel and accommodation expenses associated with these prosecutions
and/or litigations.
12. CONFIDENTIAL TERMS. Mr. Pearson and Exide each warrant that the
------------------
terms of this Agreement will be regarded as a strictly confidential
communication between the parties, and that neither party will, by act or
omission, in any manner or means, disclose the terms or the Agreement to any
person or entity. This warranty does not apply to Mr. Pearson's disclosures to
his spouse, financial and tax advisors, lawyers, any court or government agency,
or as necessary to enforce the terms of this Agreement, to Exide's disclosures
to its financial advisors, lawyers and persons or entities with a need to know,
or to disclosures of either party required by law.
13. NO ADMISSION. The parties to this instrument acknowledge and
------------
agree that Exide's execution of this Separation Agreement does not constitute
and shall not be construed as an admission of wrongdoing of any kind on the part
of the entities and persons hereby released, by whom wrongdoing of any kind is
expressly denied.
14. INTEGRATION. Mr. Pearson acknowledges that the only
-----------
consideration for this Separation Agreement is described in this instrument;
that no other promise or agreement of any kind has been made to or with him by
any person or entity whatsoever to cause him to execute this Separation
Agreement; that this instrument constitutes the entire agreement between the
parties, and the terms set forth herein are contractual and not a mere recital.
15. WAIVER. Any failure either by Exide or Mr. Pearson to insist on
------
strict compliance with any of the terms, covenants and conditions of this
Agreement shall not be deemed a waiver or relinquishment of such terms,
covenants and conditions or of any similar right or power hereunder at any
subsequent time.
16. SEVERABILITY. If any provision of this Agreement shall be
------------
declared by any court to be void or unenforceable, the other provisions shall
not be affected but shall remain in
52
<PAGE>
full force and effect. Furthermore, if any of the restrictions against various
post-employment activities is found to be unreasonable or invalid, the court
before which the matter is pending shall enforce the restriction to the maximum
extent it deems to be valid and enforceable. Such restrictions shall be
considered divisible both as to time and as to geographical scope, with each
month and geographical area being deemed separate.
17. SUCCESSORS. This Separation Agreement shall be binding upon
----------
Exide and Mr. Pearson, and their respective heirs, personal representatives,
successors and assigns.
18. GOVERNING LAW. This Agreement shall be construed in accord with
-------------
and governed by the laws of the State of Michigan.
53
<PAGE>
19. KNOWING AND VOLUNTARY SIGNING. Mr. Pearson acknowledges that he
-----------------------------
is represented by counsel, that counsel has explained to him all the terms of
this Separation Agreement, and that he has voluntarily signed it intending it to
legally bind him. Exide, by its designated representative, whose signature
appears below, acknowledges that it is represented by counsel, that counsel has
explained all the terms of this Separation Agreement to Exide's Board of
Directors, and that the Board of Directors has duly authorized its execution,
intending it to legally bind Exide.
EXIDE CORPORATION
/s/Douglas N. Pearson By: /s/Arthur R. Taylor
- --------------------------- ------------------------------------
Douglas N. Pearson For the Board of Directors
November 10, 1998 By: November 10, 1998
- --------------------------- ------------------------------------
Dated Dated
54
<PAGE>
EXHIBIT 10.28
EXHIBIT 10.28
SEPARATION AGREEMENT
This Separation Agreement is made between Exide Corporation, a
Delaware corporation ("Exide"), and Alan E. Gauthier.
Whereas, Mr. Gauthier has voluntarily resigned his position as an
employee, officer and director of Exide, effective July 31, 1998; and
Whereas, Mr. Gauthier and Exide wish to provide for an orderly
transition that serves their mutual and individual interests.
Now, therefore, in consideration of the above premises, Mr. Gauthier's
past services to Exide, and the mutual terms stated below, and other valuable
consideration, the parties agree as follows:
1. Transition and Responsibilities. Effective July 31, 1988, Mr.
-------------------------------
Gauthier has relinquished all his responsibilities and functions as an employee,
officer and director of Exide. For a period of two years after July 31, 1998,
Mr. Gauthier shall render reasonable advisory and consulting services to Exide
with regard to matters that may be requested by Exide's Board of Directors or
its designee from time to time. As a consultant pursuant to this Separation
Agreement, Mr. Gauthier shall perform only those tasks on behalf of Exide,
communicate only with those Exide employees or representatives, and avail
himself only of those Exide facilities or resources as specifically authorized
by Exide's Board of Directors or its designee or by this Separation Agreement,
or as necessary to perform any requested advisory and consulting services
hereunder. Such advisory and consulting services shall be of a nature not to
preclude Mr. Gauthier from conducting his then-current business affairs.
2. Separation Benefits. Exide will provide Mr. Gauthier with the
-------------------
following:
A. Consulting fees totalling $600,000.00, payable as follows: six
(6) monthly payments of $25,000.00, commencing on August 15, 1998 and,
thereafter, payable on a quarterly basis, in equal amounts, over the
remaining period of the consulting arrangements set forth in paragraph
1 above.
B. Continue Mr. Gauthier and his dependents in Exide's health
insurance plan and Mr. Gauthier in Exide's long-term disability plan
through July 31, 2000. Exide will pay directly to the insurance
provider all premiums through July 31, 2000 for participation by Mr.
Gauthier and his dependents in Exide's health insurance plan and by
Mr. Gauthier in Exide's long-term disability plan. Following July 31,
2000, Mr. Gauthier and his dependents shall be notified of and
eligible for COBRA continuation coverage.
C. Payment of any unused vacation leave accrued by Mr. Gauthier as of
July 31, 1998.
55
<PAGE>
D. An allowance of up to $25,000.00 for outplacement services for Mr.
Gauthier, payable directly to a firm not unacceptable to Exide.
E. Mr. Gauthier acknowledges that Exide makes no representation or
warranties of any kind to him concerning the tax consequences, if any,
of any separation benefits Mr. Gauthier receives under this Agreement.
Mr. Gauthier agrees to pay any federal, state or local taxes which are
assessed against him with respect to any such benefits.
F. Any compensation previously and correctly deferred by Mr. Gauthier
under the terms of the Exide Deferred Compensation Plan, together with
any accrued interest and earnings thereon and all amounts attributable
thereto. No later than sixty (60) days following the execution of
this Agreement, Mr. Gauthier shall receive in a lump sum any such
compensation under the plan.
G. Exide acknowledges that this agreement is not intended to affect
any rights under Exide's Selective Executive Retirement Agreement with
Mr. Gauthier which previously have vested, and in accordance with the
terms of the Selective Executive Retirement Agreement, Mr. Gauthier
shall be entitled to benefits upon reaching the age of 59-1/2.
H. Reasonable expenses incurred in connection with performance of any
advisory and consulting services provided hereunder.
I. Nothing contained in this Separation Agreement shall serve to
restrict or enlarge any rights, if any, Mr. Gauthier may have with
respect to Exide's Stock Option Plan or Supplemental Executive
Retirement Plan, other than as may be set forth in Paragraphs F and H,
above.
Mr. Gauthier's failure to perform under paragraphs 1, 5, 7, 8, 10 and
12 of this Agreement shall void Exide's obligations of further payment under
subparagraph A, but otherwise shall not affect the parties' right or obligations
under this Agreement.
3. Mutual Release.
--------------
A. Except as agreed herein, Mr. Gauthier, on behalf of himself and
his agents, assignees, attorneys, heirs, executors and administrators,
releases, forever discharges and covenants not to sue Exide (including
any current, former or subsequent predecessor, successor, assignee,
parent, subsidiary or affiliate of Exide, and each of their respective
officers, directors, employees, representatives or agents) with
respect to any liability, claim, demand, action, cause of action,
suit, grievance, debt, sum of money, controversy, agreement
(including, without limitation, any Employment Agreement previously
made between Mr. Gauthier and Exide), promise, damage, demand, back
pay, front pay, cost, expense, attorney's fees or remedy of any type,
known or unknown, which Mr. Gauthier has, may have or has ever had, in
law or equity, or before any federal, state or local court or
administrative agency, through the date of Mr. Gauthier's execution of
this Separation Agreement on account of, or in relation to, any
56
<PAGE>
matter, cause, circumstance, act or omission arising out of or in
connection with Mr. Gauthier's employment with or resignation from
Exide, including any claims, demands or actions under any federal,
state or local statute or regulation, or the common law of any state,
regarding in any way discrimination in employment or termination of
employment, except where a claim is based upon intentional misconduct.
There is expressly reserved from the effect of this release any claim
which Mr. Gauthier may now or hereinafter have, or benefit which the
Exide Board of Directors in its discretion may grant, with respect to
(i) this Severance Agreement; (ii) Exide's indemnification
obligations, which will continue in full force and effect as to Mr.
Gauthier's actions prior to the date hereof, including but not limited
to Exide's obligations under the articles of incorporation and the by-
laws of Exide, and state law; (iii) employee or director and officer
liability insurance; (iv) Mr. Gauthier's entitlement to and rights
under Exide's stock option plan, employee pension plan and
supplemental executive retirement plan; and (v) defense by Exide for
any acts or omissions occurring or alleged to have occurred in
connection with Mr. Gauthier's employment with or resignation from
Exide.
B. Except as agreed herein, Exide, on behalf of itself and any
current, former or subsequent predecessor, successor, assignee,
parent, subsidiary or affiliate of Exide, and each of their respective
officers, directors, employees, representatives or agents releases,
forever discharges and covenants not to sue Mr. Gauthier with respect
to any liability, claim, demand, action, cause of action, suit,
grievance, debt, sum of money, controversy, agreement (including,
without limitation, any Employment Agreement previously made between
Mr. Gauthier and Exide), promise, damage, demand, back pay, front pay,
cost, expense, attorney's fees or remedy of any type, known or
unknown, which Exide has, may have or has ever had, in law or equity,
or before any federal, state or local court or administrative agency,
through the date of Exide's execution of this Separation Agreement on
account of, or in relation to, any matter, cause, circumstance, act or
omission arising out of or in connection with Mr. Gauthier's
employment with or resignation from Exide, including any claims,
demands or actions under any federal, state or local statute or
regulation, or the common law of any state, except where a claim is
based on intentional misconduct.
There is expressly reserved from the effect of this release any claim
which Mr. Gauthier may now or hereinafter have with respect to (i)
this Severance Agreement; (ii) Exide's indemnification obligations,
which will continue in full force and effect as to Mr. Gauthier's
actions prior to the date hereof, including but not limited to Exide's
obligations under the articles of incorporation and the by-laws of
Exide, and state law; (iii) employee or director and officer liability
insurance; (iv) Mr. Gauthier's entitlement to and rights under Exide's
stock option plan, employee pension plan and supplemental executive
retirement plan; and (v) defense by Exide for any acts or omissions
occurring or alleged to have
57
<PAGE>
occurred in connection with Mr. Gauthier's employment with or
resignation from Exide.
4. ADEA Release. Mr. Gauthier specifically agrees that:
------------
A. He is releasing any and all claims under the Age Discrimination in
Employment Act of 1967, as amended by the Older Workers Benefit Protection Act,
arising up to the date of the execution of this Separation Agreement;
B. He consulted with an attorney of his choice before he executed
this instrument.
5. Return of Exide Property. Mr. Gauthier shall promptly return to
------------------------
Exide any of its property in his possession or control, including without
limitation all cellular telephones, pagers, credit cards, documents (including,
without limitation, written or computer-based materials and other information
contained in any tangible medium of expression or recording, and any copies,
excerpts, summaries, compilations or abridgments thereof) and other property of
any kind, except for the white 1997 Cessna T-210M, Serial number T 2106207, of
which he shall have possession and sole use during the term of the consulting
agreement set forth in paragraph A, above, and the 1996 Chrysler LHS automobile,
titles to which shall be, and by this agreement is, conveyed to him free and
clear of all claims and liens. At the end of the term of the consulting
agreement set forth in paragraph 1, Mr. Gauthier shall have the option to
purchase the airplane from Exide at the then existing market value. Mr.
Gauthier shall promptly clear any outstanding cash advances or Exide credit card
charges by filing appropriate expense reports and making any appropriate
repayments. Exide shall promptly reimburse Mr. Gauthier for all outstanding
expenses reimbursable in accord with Exide's policy upon filing of appropriate
expense reports.
6. Confidential Information. Mr. Gauthier acknowledges that during
------------------------
his employment with Exide, he has had access to and was provided with certain
proprietary trade secrets and confidential business information, including,
without limitation, Exide's prior, current and future financing, financial and
funding information or strategies, the communications made to and between its
corporate directors, and Exide's accounting and litigation plans or strategies.
Mr. Gauthier further acknowledges that all the above proprietary trade secrets
and confidential business information (i) remain unknown to Exide's competitors
and to the general public, (ii) derive independent actual or potential economic
value from the fact that such secrets and information are kept confidential, and
(iii) Exide's proprietary trade secrets and confidential business information
are the subjects of Exide's efforts, which are reasonable under the
circumstances, to maintain their secrecy.
7. Confidentiality Covenant. Mr. Gauthier shall not disclose any
------------------------
proprietary trade secret information or any other confidential business
information belonging to Exide to anyone other than his attorneys or Exide, its
officers, directors, employees, agents, affiliates, successors and assigns, or
as directed by such person, unless required to do so by a court or government
agency or as necessary to perform any advisory and consulting services
hereunder.
58
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8. Injunctive Relief. In view of Mr. Gauthier's access to Exide's
-----------------
proprietary trade secrets and confidential business information, and in
consideration of the value of such property to Exide, Mr. Gauthier agrees that
the covenant contained in paragraph 7 above is necessary to protect Exide's
interests in its Confidential matter, and to protect and maintain customer
relationships and other legitimate, proprietary interests of Exide, both actual
and potential, which Mr. Gauthier would not have had access to but for his
employment relationship with Exide. Mr. Gauthier acknowledges that enforcement
of the covenants in Paragraph 7 above would not prevent him from earning a
livelihood. Mr. Gauthier further agrees that in the event of his actual or
threatened breach of any of the covenants set forth herein, Exide would be
irreparably harmed and the full extent of injury resulting therefrom would be
difficult to calculate and Exide therefore will not have an adequate remedy at
law. Accordingly, Mr. Gauthier agrees that temporary and permanent injunctive
relief would be appropriate remedies against such breach, without bond or
security; provided, however, that nothing herein shall be construed a limiting
any other legal or equitable remedies available to Exide.
9. Positive Light. Mr. Gauthier will use his best efforts to insure
--------------
that all has own written and oral communications, and any such communications by
other persons over whom he has any control, will promote Exide, its current or
former officers, directors or agents, in a clearly positive and favorable light.
Exide will use its best efforts to insure that all its own written and oral
communications, and any such communications by other persons over whom it has
any control, will promote Mr. Gauthier in a clearly positive and favorable
light. The parties also will use their respective best efforts to project a
positive and favorable attitude toward each other, and to instill a similar
attitude in other people. At no time will the parties, individually or through
any other person or entity, in any manner make, disseminate or participate in
any disparaging, defamatory, negative or adverse statements concerning each
other. Nothing contained in this paragraph shall be construed as prohibiting
Mr. Gauthier, Exide or its employees from providing truthful information.
10. Confidential Terms. Mr. Gauthier and Exide each warrant that the
------------------
terms of this Agreement will be regarded as a strictly confidential
communication between the parties, and that neither party will, by act or
omission, in any manner or means, disclose the terms of the Agreement to any
person or entity. This warranty does not apply to Mr. Gauthier's disclosures to
his spouse, financial and tax advisors, lawyers, any court or government agency,
or as necessary to enforce the terms of this agreement, to Exide's disclosures
to its financial advisors and lawyers, or to disclosures of either party
required by law.
11. Employee Agreement. This agreement shall terminate and supersede
------------------
the Employee Agreement between Exide and Mr. Gauthier dated May 23, 1989, and
any modifications thereof.
12. No Admission. The parties to this instrument acknowledge and
------------
agree that Exide's and Mr. Gauthier's execution of this Separation Agreement
does not constitute and shall not be construed as an admission of wrongdoing of
any kind on the part of the entities and persons hereby released, by whom
wrongdoing of any kind is expressly denied.
13. Integration. Mr. Gauthier acknowledges that the only
-----------
consideration for this Separation Agreement is described in this instrument;
that no other promise or agreement of
59
<PAGE>
any kind has been made to or with him by any person or entity whatsoever to
cause him to execute this Separation Agreement, that this instrument constitutes
the entire agreement between the parties, and the terms set forth herein are
contractual and not a mere recital.
14. Waiver. Any failure either by Exide or Mr. Gauthier to insist on
------
strict compliance with any of the terms, covenants and conditions of this
Agreement shall not be deemed a waiver or relinquishment of such terms,
covenants and conditions or of any similar right or power hereunder at any
subsequent time.
15. Severability. If any provision of this Agreement shall be
------------
declared by any court to be void or unenforceable, the other provisions shall
not be affected but shall remain in full force and effect. Furthermore, if any
of the restrictions against various post-employment activities is found to be
unreasonable or invalid, the court before which the matter is pending shall
enforce the restriction to the maximum extent it deems to be valid and
enforceable. Such restrictions shall be considered divisible both as to time
and as to geographical scope, with each month and geographical area being deemed
separate.
16. Successors. This Separation Agreement shall be binding upon
----------
Exide and Mr. Gauthier, and their respective heirs, personal representatives,
successors and assigns.
17. Governing Law. This Agreement shall be construed in accord with
-------------
and governed by the laws of the State of New Jersey.
18. Knowing and Voluntary Signing. Mr. Gauthier acknowledges that he
-----------------------------
is represented by counsel, that counsel has explained to him all the terms of
this Separation Agreement, and that he has voluntarily signed it, intending it
to legally bind him. Exide, by its President, acknowledges that it is
represented by counsel, that counsel has explained to it all the terms of this
Separation Agreement, and that Exide has voluntarily signed it, intending it to
legally bind Exide.
EXIDE CORPORATION
/s/ Alan E. Gauthier By: /s/Arthur R. Taylor
- ---------------------- --------------------------------
Alan E. Gauthier For the Board of Directors
August 14, 1998 August 31, 1998
- ---------------------- --------------------------------
Dated Dated
60
<PAGE>
EXHIBIT 10.29
EMPLOYMENT AGREEMENT
--------------------
Exide Corporation ("Exide") desires to retain the services of Mr. James Diasio,
whose experience, knowledge and abilities are valuable to the company, and Mr.
Diasio desires to be employed by the company, pursuant to the terms and
conditions set forth in this Outline.
1. DUTIES - Exide will employ Mr. Diasio initially as the Executive
Vice President/CFO, with the powers and duties consistent with that
position. Mr. Diasio will, during the course of his employment with
Exide, perform any additional or different duties and accept
election or appointment to other offices or positions as may be
specified by Exide. Mr. Diasio will devote his full time and his
efforts to the performance of his duties and to the advancement of
the interests of Exide.
2. COMPENSATION - During the first twelve months of his employment with
Exide, Exide will pay Mr. Diasio a salary of not less than
$280,000.00. Mr. Diasio's salary will be paid in equal installments
on the company's regular payroll dates. Mr. Diasio will have the
opportunity to earn a bonus of up to 150% of his salary each year,
based upon the achievement of performance goals which will be
specified by the company. At the end of six months employment and
assuming Mr. Diasio's performance is satisfactory, an adjustment of
not less than $300,000.00 will be made to his base salary.
Assuming that Mr. Diasio remains employed with the company, he will
be entitled to a one-time bonus of $50,000.00 on the commencement
date of 18 months with the company.
3. EMPLOYEE BENEFITS - Mr. Diasio will be allowed to participate in and
receive any and all benefits pursuant to any benefit programs,
existing during the term of his employment with Exide, that are
generally available to other executives of the company, including,
among other things, participation in Exide's executive long-term
disability plan and Exide's executive retirement plan. Exide will
provide Mr. Diasio with a suitable automobile for business use. In
addition, Mr. Diasio will be allowed to participate in all life
insurance, hospital, surgical, medical or other group health and
accident benefit plans, the company's annual vacation plan, plan,
and all incentive, pension, bonus or retirement plans as may be in
existence during the term of Mr. Diasio's employment with Exide, and
for which Mr. Diasio meets the eligibility requirements.
61
<PAGE>
Page 2
4. STOCK OPTIONS - On the date of Mr. Diasio's commencement of
employment with Exide, he will receive 20,000 options of shares of
Exide common stock pursuant to Exide's 1993 Long Term Incentive
Plan, which shall have an exercise price equal to the fair market
value of the common stock on the date of the signature of the
Employment Agreement which shall vest over a five year period at a
rate of 20% per year from the date of the grant. These options shall
expire no later than the tenth anniversary of Mr. Diasio's
employment commencement date and shall be subject to all of the
terms and conditions of the Plan.
5. TERMINATION - Mr. Diasio's employment with Exide will terminate upon
the occurrence of any of the following events (1) Mr. Diasio's death
or permanent disability which cannot be reasonably accommodated; (2)
Mr. Diasio's discharge for "cause", (3) thirty days after Mr. Diasio
submits written notice of his resignation to the company, or (4)
thirty days after Exide provides written notice of termination to
Mr. Diasio. For the purpose of this Agreement, the term "cause"
means: the conviction of a crime involving moral turpitude; conduct
lending to bring the company into public disgrace or disrepute; or,
substantial failure to perform the duties required of him; but does
not mean Exide's disagreement with any lawful action undertaken by
Mr. Diasio in the good faith exercise of his business judgment.
"Substantial failure to perform the duties required of him" shall
not constitute "cause" unless Exide's Audit Committee shall give Mr.
Diasio a reasonable notice and period to correct the cause giving
rise to such notice prior to termination of employment. Any
termination decision shall be subject to the approval of a majority
vote of the Exide Audit Committee.
If Mr. Diasio's employment is terminated for any reason other than
reasons (1), (2), or (3) enumerated in paragraph 5 of this Outline,
or if Mr. Diasio terminates employment due to a change in his
position, duties, responsibilities or status, which is inconsistent
with the Executive Vice President/CFO position, duties,
responsibilities, or status, or in the event of a "Change in
Control", as defined in the attached Exhibit A, he shall receive:
(1) income protection of $300,000 payable in monthly increments over
a 12 month period commencing 30 days after the date of termination:
(2) continuation of health insurance coverage under Exide's plan for
Mr. Diasio and his dependents, if such dependents are eligible and
enrolled at the time of his termination, and Mr. Diasio's benefits
under the Executive Long-Term Disability Plan for a one-year period;
(3) payment of unused vacation leave accrued as of the date of
termination; (4) an allowance of up to $65,000.00 for outplacement
services for Mr. Diasio
62
<PAGE>
Page 3
Payable directly to a firm acceptable to Exide; and (5) payment of
all reasonable expenses incurred in relocating. For the purpose of
this Outline, "income protection" means protection for Mr. Diasio in
the event of unemployment. If Mr. Diasio becomes employed at any
time during the 12 month period for a salary equal or greater to his
Exide salary at the time of his departure, Exide's income protection
payments will cease. If Mr. Diasio becomes employed at any time
during the 12 month period, but for a salary of less than his Exide
salary at the time of departure, Exide will make up the salary
difference for the remainder of the 12 month period.
Unless specifically addressed above, in the event of Mr. Diasio's
resignation, the Audit Committee may, at its discretion, grant him
any one or all of the items 1-5 listed above.
Exide Corporation and Mr. James Diasio agree to the terms set forth
in this Outline.
6. LAW APPLICABLE - This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania.
EXIDE CORPORATION
By: ___________________________
Arthur R. Taylor
9/18/98
By: ___________________________
James M. Diasio
9/19/98
63
<PAGE>
EXHIBIT A
CHANGE OF CONTROL - For purposes of this Agreement, "Change of Control" means
any of the following events:
(a) The acquisition by a person or group of persons acting in concert, of a
beneficial ownership interest in the Corporation, resulting in the total
beneficial ownership of such persons or group of persons equaling or
exceeding 50% of the outstanding common stock of the Corporation; provided,
however, that no such person or group of persons shall be deemed to
beneficially own any common stock held by the Corporation or any of its
subsidiaries or any employee benefit plan for any related trust) of the
Corporation or its subsidiaries. The Change of Control shall be deemed to
occur on the date of the beneficial ownership of the acquiring person or
group of persons first equals or exceeds 50% of the outstanding common
stock of the Corporation.
(b) A change, within any period of twenty-four (24) months or less, in the
composition of the Board of Directors of the Corporation such that at the
end of such period a majority of the directors who are then serving were
not serving at the beginning of such period, unless at the end of such
period the majority of the directors in office were nominated upon the
recommendation of a majority of the board of Directors of the Corporation
at the beginning of such period. The Change of Control shall be deemed to
occur on the date the last director necessary to result in a Change of
Control take office or resigns from office, as applicable.
(c) Approval by the stockholders of the Corporation of a merger, consolidation
or other reorganization having substantially the same effect, or the sale
of all or substantially all the consolidated assets of the Corporation in
each case, with respect to which the persons or group of persons who were
the respective beneficial owners of the common stock immediately prior to
such event do not, following such event, beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding voting
securities of the Corporation resulting from such event, or the corporation
purchasing or receiving assets pursuant to such event. The Change of
Control shall be deemed on the date on which the transaction is approved by
the Corporation's stockholders.
64
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