<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended October 3, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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
645 Penn Street, Reading, Pennsylvania 19601
- ---------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
(610) 378-0500
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by a check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
As of November 12, 1999, 21,373,557 shares of common stock were
outstanding.
<PAGE>
EXIDE CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
- ------------------------------
Item 1. Financial Statements (unaudited)
-- Condensed Consolidated Balance Sheets --
October 3, 1999 and March 31, 1999.
-- Consolidated Statements of Operations -- for the three
and six month periods ended October 3, 1999 and
September 27, 1998.
-- Consolidated Statements of Cash Flows --
for the six months ended October 3, 1999 and
September 27, 1998.
-- Notes to Condensed Consolidated Financial Statements --
October 3, 1999.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 10.28 - Exide 1999 Stock Incentive Plan, as amended
Exhibit 10.29 - Third Amendment, dated September 24, 1999 to
the Credit and Guarantee Agreement.*
(b) Reports on Form 8-K. None
SIGNATURE
- ---------
* The Company agrees to furnish supplementally to the Commission a copy of any
omitted schedule or exhibit to such agreement upon request by the Commission.
2
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PART I. FINANCIAL INFORMATION
EXIDE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands, except share and per-share data)
<TABLE>
<CAPTION>
October 3, March 31,
1999 1999
-------------------- -------------------
ASSETS
- ------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 28,081 $ 20,596
Receivables, net of allowance for doubtful
accounts of $56,842 and $54,111, respectively 455,677 388,665
Inventories 511,936 522,471
Prepaid expenses and other 18,268 20,541
Deferred income taxes 12,525 13,303
----------- ----------
Total current assets 1,026,487 965,576
----------- ----------
PROPERTY, PLANT AND EQUIPMENT 867,478 809,461
Less -- Accumulated depreciation (350,476) (310,801)
----------- ----------
Total property, plant and equipment, net 517,002 498,660
----------- ----------
OTHER ASSETS:
Goodwill, net 554,644 566,173
Investments in affiliates 23,943 23,072
Deferred financing costs, net 15,983 16,967
Deferred income taxes 68,539 61,019
Other 34,749 36,374
----------- ----------
697,858 703,605
----------- ----------
Total assets $ 2,241,347 $2,167,841
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Short-term borrowings $ 36,124 $ 20,881
Current maturities of long-term debt 28,526 30,439
Accounts payable 232,944 250,625
Accrued expenses 286,835 224,859
----------- ----------
Total current liabilities 584,429 526,804
----------- ----------
LONG-TERM DEBT 1,244,165 1,154,486
----------- ----------
OTHER NONCURRENT LIABILITIES 253,991 317,703
----------- ----------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 18,152 17,646
----------- ----------
STOCKHOLDERS' EQUITY
Common stock, $.01 par value 60,000,000 shares authorized;
21,466,601 and 21,359,495 shares issued and outstanding 213 213
Additional paid-in capital 490,311 490,147
Accumulated deficit (170,641) (164,712)
Notes receivable -- stock award plan (769) (786)
Unearned compensation (33) (129)
Accumulated other comprehensive loss (178,471) (173,531)
----------- ----------
Total stockholders' equity 140,610 151,202
----------- ----------
Total liabilities and stockholders' equity $ 2,241,347 $2,167,841
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
3
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EXIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except share and per-share data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
---------------------------- ----------------------------
October 3, September 27, October 3, September 27,
1999 1998 1999 1998
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
NET SALES $ 556,434 $ 601,136 $1,075,149 $1,145,668
COST OF SALES 406,670 440,102 796,216 844,480
----------- ----------- ----------- ------------
Gross profit 149,764 161,034 278,933 301,188
----------- ----------- ----------- ------------
OPERATING EXPENSES:
Selling, marketing and advertising 76,627 80,014 154,729 158,545
General and administrative 33,367 36,203 64,884 73,184
Goodwill amortization 4,268 4,672 8,525 8,848
----------- ----------- ----------- ------------
114,262 120,889 228,138 240,577
----------- ----------- ----------- ------------
Operating income 35,502 40,145 50,795 60,611
----------- ----------- ----------- ------------
INTEREST EXPENSE, net 25,279 26,912 51,978 53,455
OTHER EXPENSE, net 1,439 3,547 2,749 5,961
----------- ----------- ----------- ------------
Income (loss) before income taxes, minority
interest and extraordinary loss 8,784 9,686 (3,932) 1,195
INCOME TAX EXPENSE 4,207 7,505 543 5,167
----------- ----------- ----------- ------------
Income (loss) before minority interest and
extraordinary loss 4,577 2,181 (4,475) (3,972)
MINORITY INTEREST 351 (102) 601 (202)
----------- ----------- ----------- ------------
Income (loss) before extraordinary loss 4,226 2,283 (5,076) (3,770)
EXTRAORDINARY LOSS RELATED TO EARLY
RETIREMENT OF DEBT, net of income
tax benefit of $0 -- -- -- (301)
----------- ----------- ----------- ------------
Net income (loss) $ 4,226 $ 2,283 $ (5,076) $ (4,071)
========== ========== ========== ===========
BASIC EARNINGS PER SHARE:
Income (loss) before extraordinary loss $ 0.20 $ 0.11 $ (0.24) $ (0.18)
Extraordinary loss -- -- -- (0.01)
----------- ----------- ----------- ------------
Net income (loss) $ 0.20 $ 0.11 $ (0.24) $ (0.19)
========== ========== ========== ===========
DILUTED EARNINGS PER SHARE:
Income (loss) before extraordinary loss $ 0.20 $ 0.11 $ (0.24) $ (0.18)
Extraordinary loss -- -- -- (0.01)
----------- ----------- ----------- ------------
Net income (loss) $ 0.20 $ 0.11 $ (0.24) $ (0.19)
========== ========== ========== ===========
WEIGHTED AVERAGE SHARES:
Basic 21,064,473 21,238,526 21,065,981 21,195,561
========== ========== ========== ===========
Diluted 21,359,481 21,259,065 21,065,981 21,195,561
========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
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EXIDE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
----------------------------
October 3, September 27,
1999 1998
----------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,076) $ (4,071)
Adjustments to reconcile net loss to net
cash used in operating activities -
Depreciation and amortization 52,178 59,307
Extraordinary loss -- 301
Deferred income taxes (5,501) 3,100
Original issue discount on notes 5,000 4,527
Provision for losses on accounts receivable 3,579 7,068
Minority interest 601 (202)
Net proceeds from sale of receivables (18,850) 4,499
Changes in assets and liabilities excluding
effects of acquisitions -
Receivables (52,589) (86,099)
Inventories 10,066 6,349
Prepaid expenses and other 1,803 4,368
Payables and accrued expenses (51,086) (14,768)
Other, net (12,228) (8,519)
---------- -----------
Net cash used in operating activities (72,103) (24,140)
========== ===========
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of certain businesses -- (14,825)
Capital expenditures (29,385) (38,756)
Equipment purchases held for sale -- (10,435)
Proceeds from sale of assets 11,883 21,278
Insurance proceeds from fire damage 807 7,160
---------- -----------
Net cash used in investing activities (16,695) (35,578)
========== ===========
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in short-term borrowings 15,145 9,011
Borrowings under Global Credit Facilities Agreement 365,662 328,145
Repayments under Global Credit Facilities Agreement (278,487) (267,129)
Decrease in other debt (4,618) (7,015)
Debt issuance costs (679) (379)
Dividends paid (854) (843)
---------- -----------
Net cash provided by financing activities 96,169 61,790
---------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 114 2,077
---------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 7,485 4,149
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 20,596 35,613
---------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 28,081 $ 39,762
========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for -
Interest (net of amount capitalized) $ 46,579 $ 47,573
Income taxes $ 3,056 $ 3,947
</TABLE>
The accompanying notes are an integral part of these statements.
5
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EXIDE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
October 3, 1999
(In thousands, except share and per-share data)
(Unaudited)
(1) BASIS OF PRESENTATION
- -------------------------
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, 1999 for further information.
The financial information has been prepared in accordance with the Company's
customary accounting practices and has not been audited. In the opinion of
management, the accompanying condensed consolidated financial information
reflects all adjustments necessary to present fairly the results of operations
and financial position for the periods presented.
There is no difference between the weighted average basic and diluted shares in
the current and prior year to date earnings per share calculations because the
effects of outstanding stock options, grants and convertible securities are
antidilutive.
Options to purchase 3,435,500 and 2,286,720 shares at prices ranging from $11.00
to $29.50 and $16.625 to $29.50 were outstanding during the second quarters of
fiscal 2000 and fiscal 1999, respectively, but were not included in the
computation of diluted EPS because the option's exercise price was greater than
the average market price of the common shares. These options expire in the
years 2000 to 2009 and 2000 to 2007, respectively. The current year options
include those granted under the 1999 Stock Incentive Plan. See Note 7.
The diluted earnings per share calculation for the second quarters of fiscal
2000 and 1999 included the impact of 295,008 and 20,539 dilutive securities such
as options, respectively.
Total comprehensive income (loss) and its components are as follows:
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
-------------------------------------------- ---------------------------------------------
October 3, September 27, October 3, September 27,
1999 1998 1999 1998
------------------ --------------------- ----------------- ----------------------
<S> <C> <C> <C> <C>
Net income (loss) $ 4,226 $ 2,283 $ (5,076) $(4,071)
Change in cumulative
translation adjustment 18,296 37,157 (4,940) 35,207
------------------ --------------------- ----------------- ----------------------
Total comprehensive
income (loss) $22,522 $39,440 $(10,016) $31,136
================== ===================== ================= ======================
</TABLE>
Certain prior period amounts have been reclassified to conform with current
period presentation.
6
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(2) INVENTORIES
- ----------------
Inventories are comprised of:
October 3, March 31,
1999 1999
---------- ---------
Raw materials $127,253 $132,697
Work-in-process 81,851 74,549
Finished goods 302,832 315,225
---------- ---------
$511,936 $522,471
========== =========
At October 3, 1999 and March 31, 1999, inventories valued by the LIFO method
were approximately 27% and 30% of consolidated inventories, respectively. If
all inventories had been determined using the first-in, first-out method, such
inventories would have been $494,869 and $505,404 at October 3, 1999 and March
31, 1999, respectively.
(3) LONG-TERM DEBT
- -------------------
In September 1999, the Company amended its Credit and Guarantee Agreement
("Global Credit Facility"). The amendment allows the Company to sell certain
assets, to make potential acquisitions, to outsource certain manufacturing
functions and to provide additional time to reduce indebtedness.
As of October 3, 1999, the net fair value of the foreign currency and interest
rate protection agreements was $4,290. These agreements effectively convert
$175,000 debt into 788,756 French francs (U.S. $133,000) and 25,225.2 Pounds
sterling (U.S. $42,000) under the Global Credit Facility.
(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, releasing, 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. The Company devotes significant resources to attaining and
maintaining compliance with environmental and occupational health and safety
laws and regulations and does not currently believe that environmental, health
or safety compliance issues will have a material adverse effect on the Company's
business or financial condition. Except as disclosed herein, the Company
believes that it is in substantial compliance with all material environmental,
health and safety requirements.
North America
The Company has been advised by the U.S. Environmental Protection Agency ("EPA")
or state agencies that it is a "Potentially Responsible Party" ("PRP") under the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")
or similar state laws at 75 federally defined Superfund or state equivalent
sites. At 42 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
7
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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 be imposed on a joint
and several basis, the Company's liability may not necessarily be based on
volumetric allocations and could be greater than the Company's estimates.
Management believes, however, that its PRP status at these Superfund sites will
not have a material adverse effect on the Company's business or financial
condition because, based on the Company's experience, it is reasonable to expect
that the liability will be roughly proportionate to its volumetric contribution
of waste to the sites.
Europe
The Company is subject to numerous environmental, health and safety requirements
and is exposed to differing degrees of liabilities, compliance costs, and
cleanup requirements arising from its past and current 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. The Company believes, based upon reports from its foreign
subsidiaries and/or independent qualified opinions, that it is in substantial
compliance with all material environmental, health and safety requirements in
each country.
The Company 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.
While the ultimate outcome of the foregoing environmental matters is uncertain,
after consultation with legal counsel, management does not believe the
resolution of these matters, individually or in the aggregate, will have a
material adverse effect on the Company's long-term business, cash flows,
financial condition or results of operations. The Company's policy is to accrue
for environmental costs when it is probable that a liability has been incurred
and the amount of such liability is reasonably estimable. While the Company
believes its current estimates of future remediation costs are reasonable,
future findings or changes in estimates could have a material effect on the
recorded reserves.
The Company has established reserves for on-site and off-site environmental
remediation costs and believes that such reserves are adequate. As of October
3, 1999, the amount of such reserves on the Company's consolidated balance sheet
was $39,788. Of this amount, $28,647 was included in other noncurrent
liabilities. Because environmental liabilities are not accrued until a liability
is determined to be probable and reasonably estimable, not all potential future
environmental liabilities have been included in the Company's environmental
reserves and, therefore, additional earnings charges are possible.
(5) COMMITMENTS AND CONTINGENCIES
- ----------------------------------
There have been no significant changes from the March 31, 1999 audited
consolidated financial statements.
8
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(6) SEGMENT REPORTING
- ----------------------
The Company operates on a geographic basis and has two main geographic-based
reportable segments, namely, the manufacture, distribution and sale of lead acid
batteries in North America and in Europe. Sales of lead acid batteries are made
both to the aftermarket and original equipment manufacturers. Intersegment
sales are not material. Selected financial information concerning the Company's
reportable segments are as follows:
<TABLE>
<CAPTION>
North Intercompany
America Europe Other (a) Eliminations Consolidated
--------------- --------------- -------------- ------------------- -----------------
<S> <C> <C> <C> <C> <C>
For the three months
ended October 3, 1999
- ----------------------------
Net sales to third parties $205,740 $337,499 $13,557 $ (362) $ 556,434
Net income/(loss) 4,965 965 (2,412) 708 4,226
For the three months
ended September 27, 1998:
- ----------------------------
Net sales to third parties $226,418 $359,242 $15,602 $ (126) $ 601,136
Net income/(loss) (1,614) 6,994 (3,830) 733 2,283
For the six months
ended October 3, 1999:
- ----------------------------
Net sales to third parties $398,619 $652,028 $25,586 $(1,084) $1,075,149
Net income/(loss) 4,901 (6,990) (4,402) 1,415 (5,076)
For the six months
ended September 27, 1998:
- ----------------------------
Net sales to third parties $416,522 $701,085 $28,268 $ (207) $1,145,668
Net income/(loss) (6,446) 7,537 (6,617) 1,455 (4,071)
</TABLE>
(a) Other includes primarily the operations of the Company's starter and
alternator, charger and accessories businesses.
(7) OTHER
- ----------
On September 27, 1999, the Company entered into an agreement to acquire a
controlling interest in Lion Compact Energy (LCE), a privately held company
conducting research in dual-graphite battery technology. The acquisition of LCE
is subject to certain conditions, including due diligence and the execution of
agreements with certain third parties. The transaction is expected to close in
the third quarter of fiscal 2000.
In November 1999, the Company reached an agreement to sell its battery separator
operations for approximately $50 million, consisting of approximately half in
expected cash proceeds and approximately half in expected sublease arrangements.
Cash proceeds from the sale will be used to reduce debt. The transaction is
expected to close in the third quarter of fiscal 2000.
The Board of Directors adopted the 1999 Stock Incentive Plan (the "Plan")
effective August 11, 1999 under which certain employees of the Company are
eligible to be granted a total of 2,300,000 awards in the form of incentive
stock options, nonqualified stock options or restricted
9
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shares of common stock. Substantially all of the 2,300,000 stock options were
granted in the second quarter of fiscal 2000 at the fair market value on the
date of grant. Certain of these options will vest ratably over four years while
the remainder will vest over nine years or immediately upon the Company reaching
certain performance measures.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Factors Which Affect Our Financial Performance:
Lead. Lead is the principal raw material used in the manufacture of batteries,
representing approximately one-third of our cost of goods sold. The market
price of lead fluctuates significantly. Generally, when lead prices decrease,
many of our customers seek disproportionate price reductions from us, and when
lead prices increase, customers tend to be more accepting of price increases.
Competition. The automotive battery market in North America and the automotive
and industrial battery markets in Europe are highly competitive. In recent
years, competition has increased and we have come under increasing pressure for
price reductions. Price competition in Europe has been particularly intense.
This price competition has been exacerbated by an environment of low-priced
Asian imports, excess capacity and declining lead prices.
Exchange Rates. We are exposed to foreign currency risk in most European
countries, principally Germany, France, United Kingdom, Spain, and Italy.
Movements of exchange rates against the U.S. dollar can result in variations in
the U.S. dollar value of our non-US sales. In some instances gains in one
currency may be offset by losses in another.
Weather. Unusually cold winters or hot summers accelerate battery failure and
increase demand for automotive replacement batteries.
RESULTS OF OPERATIONS
- ---------------------
Three months ended October 3, 1999 compared with the three months ended
- -----------------------------------------------------------------------
September 27, 1998.
- -------------------
Net sales decreased 7.4% ($44.7 million) to $556.4 million in the second quarter
of fiscal 2000 from $601.1 million in the second quarter of fiscal 1999.
Approximately 3% of the 7.4% decrease resulted from the strengthening of the
U.S. dollar versus European currencies. Also contributing was pricing pressure
in Europe, fewer sales into Russia and the timing of demand for European
military and special application batteries. In addition, the fiscal year 1999
second quarter included significant low margin sales to Sears. Industrial
battery sales (included in net sales) for the second quarter of fiscal 2000 were
$165.9 million versus $175.5 million in the second quarter of fiscal 1999.
Gross profit decreased 7.0% ($11.3 million) in the second quarter of fiscal 2000
compared to the same period in the prior year. Weakening European currencies
versus the U.S. dollar accounted for approximately 4% of this 7.0% decrease.
Significant improvement in North America occurred due to the elimination of
certain low margin business (primarily Sears) and higher margins associated with
better product and customer mix. The gross profit margin was 26.8% in the second
quarter of fiscal 1999 compared to 26.9% in the second quarter of fiscal 2000.
The gross profit margin was unfavorably impacted by weaker European automotive
pricing, the timing of demand for higher margin military and special application
batteries, lower sales into Russia and a shift towards a more demand driven
manufacturing/production schedule which adversely impacted overhead absorption.
10
<PAGE>
Operating expenses decreased 5.5% ($6.6 million) from $120.9 million in the
second quarter of fiscal 1999 to $114.3 million in the second quarter of fiscal
2000. Weaker European currencies accounted for approximately 3% of this 5.5%
decrease. The remainder of the decrease was due to general operating
efficiencies achieved in the current year along with the impact of certain one-
time charges in the prior year.
Operating income decreased $4.6 million as a result of the matters discussed
above.
Interest expense decreased $1.6 million from $26.9 million to $25.3 million as a
result of a lower level of borrowings in the second quarter of fiscal 2000 along
with weaker European currencies and overall lower borrowing rates.
Other expense, net was $1.4 million in the second quarter of fiscal 2000 versus
$3.5 million in the second quarter of fiscal 1999. The decrease of $2.1 million
related to net currency transaction gains, insurance proceeds from a prior
period fire and a lower loss from the sales of accounts receivable.
The effective tax rate was 47.9% in the second quarter of fiscal 2000 compared
to 77.5% in the second quarter of fiscal 1999. The difference between the
federal statutory rate and the effective rate is primarily due to certain
nondeductible goodwill, differences in rates on foreign subsidiaries and losses
in certain tax jurisdictions not benefited.
Net income increased primarily as a result of the items discussed above.
Six months ended October 3, 1999 compared with the six months ended September
- -----------------------------------------------------------------------------
27, 1998.
- ---------
Net sales decreased 6.2% ($70.6 million) to $1,075.1 million for the first six
months of fiscal 2000 from $1,145.7 for the same period last year.
Approximately 3% of the 6.2% decrease resulted from the strengthening of the
U.S. dollar versus European currencies. Also contributing was pricing pressure
in Europe, fewer sales into Russia and the timing of demand for European
military and special application batteries. In addition, the first half of
fiscal year 1999 included significant low margin sales to Sears. Industrial
battery sales (included in net sales) for the first six months of fiscal 2000
were $337.4 million versus $357.0 million in the first six months of fiscal
1999.
Gross profit decreased 7.4% ($22.3 million) for the first six months of fiscal
2000 compared to the same period in the prior year. Weakening European
currencies versus the U.S. dollar accounted for approximately 3% of this 7.4%
decrease. The gross profit margin decreased from 26.3% for the first half of
fiscal 1999 to 25.9% for the same period for fiscal 2000. The decrease in gross
profit related to weaker European automotive pricing, the timing of demand for
higher margin military and special application batteries, lower sales into
Russia and a shift towards a more demand driven manufacturing/production
schedule which adversely impacted overhead absorption. Offsetting the above was
significant improvement in North America due to the elimination of certain low
margin business (primarily Sears) and higher margins associated with better
product and customer mix.
Operating expenses decreased 5.2% ($12.4 million) from $240.6 million for the
first six months of fiscal 1999 to $228.2 million for the first six months of
fiscal 2000. Weaker European currencies accounted for approximately 3% of this
5.2% decrease. The remainder of the decrease was due to general operating
efficiencies achieved in the current year along with the impact of certain one-
time charges in the prior year.
Operating income decreased $9.8 million as a result of the matters discussed
above.
Interest expense decreased $1.5 million from $53.5 million to $52.0 million as a
result of a
11
<PAGE>
lower level of borrowings for the first half of fiscal 2000 along with weaker
European currencies and overall lower borrowing rates.
Other expense, net was $2.7 million for the first two quarters of fiscal 2000
versus $6.0 million in the first two quarters of fiscal 1999. The decrease of
$3.3 million related to net currency transaction gains, insurance proceeds from
a prior period fire and a lower loss from the sale of accounts receivable.
The Company recorded income tax expense of $543 on a loss before income taxes
and minority interest of $(3,932) for the first six months of fiscal 2000
compared to income tax expense of $5,167 on income before income taxes, minority
interest and extraordinary loss of $1,195 for the first six months of fiscal
1999. The difference between the federal statutory rate and the effective rate
is primarily due to certain nondeductible goodwill, differences in rates on
foreign subsidiaries and losses in certain tax jurisdictions not benefited.
The net loss increased primarily as a result of the items discussed above.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's liquidity requirements arise primarily from the funding of
seasonal working capital needs, obligations on its indebtedness and capital
expenditures. Historically, the Company has met these liquidity requirements
through operating cash flows, with borrowed funds and with the proceeds of sales
of accounts receivable. The Company is party to a U.S. receivables purchase
agreement and a European receivables purchase agreement under which the other
parties have committed (subject to certain exceptions) to purchase selected
accounts receivable of the Company, up to a maximum commitment of $75.0 million
and $175.0 million, respectively. The Company's greatest cash demands from
operations occur during the months of June through October. During the rest of
fiscal 2000 and beyond, the Company also expects to meet its liquidity
requirements in the same manner.
Cash used in operating activities was $72.1 million and $24.1 million in the six
months ended October 3, 1999 and September 27, 1998, respectively. The increase
in cash used relates primarily to cash payments made in the first half of fiscal
2000 related to one-time charges recorded in fiscal 1999, lower receivables
sales and the timing of certain vendor payments. Because of the seasonality of
the Company's business, more funds are typically generated in its third and
fourth fiscal quarters.
The Company's capital expenditures were $29.4 million and $38.8 million in the
six months ended October 3, 1999 and September 27, 1998, respectively. The
Global Credit Facility restricts the amount of capital expenditures which may be
made by the Company and its subsidiaries. However, the Company believes that it
has sufficient resources for its capital expenditure programs from operating
cash flows and borrowing availability under its existing Global Credit Facility.
As of October 3, 1999, the Company had $531.3 million outstanding on its Global
Credit Facility, including letters of credit. Obligations under the Global
Credit Facility 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 Global Credit Facility is 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 based 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 Global Credit Facility into 778.8 million French francs
(U.S. $133 million) and 25.2 million British pound sterling (U.S. $42 million).
The Company receives LIBOR and pays PIBOR and pound sterling LIBOR.
12
<PAGE>
In September 1999, the Company amended its Global Credit Facility. The
amendment allows the Company to sell certain assets, to make potential
acquisitions, to outsource certain manufacturing functions and to provide
additional time to reduce indebtedness.
In November 1999, the Company reached an agreement to sell its battery separator
operations for approximately $50 million, consisting of approximately half in
expected cash proceeds and approximately half in expected sublease arrangements.
Cash proceeds from the sale will be used to reduce debt. The transaction is
expected to close in the third quarter of fiscal 2000. As of October 3, 1999,
the Company had $52.3 million available under its Global Credit Facility after
consideration of $17.9 million of outstanding letters of credit.
As of October 3, 1999, the Company has significant net operating loss
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
- ---------------
We rely on information technology systems (hardware, operating systems, software
applications) to support many key operations of our business, including sales
order processing, production scheduling, purchasing, distribution, financial
accounting, and others. We conducted assessments of all systems and determined
that many were not Year 2000 compliant. The majority of our information
technology systems have been made compliant. Additionally, our Year 2000 plans
included the remediation of any non-information technology systems that may
incorporate embedded computer chip technology. Some of our manufacturing
equipment contains such technology.
We have made significant progress in our Year 2000 remediation efforts. We
expect to achieve Year 2000 compliance by November 30, 1999. Costs for Year
2000 remediations are estimated at approximately $4.3 million, of which $4.2
million have been expended. These costs have been expensed as incurred with the
exception of capitalizable replacement hardware.
In addition to our own Year 2000 compliance, we believe that our business could
potentially be adversely impacted if our key suppliers do not achieve timely and
successful Year 2000 compliance. We have been in contact with our key business
partners regarding their Year 2000 readiness. Our 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.
We have implemented our Year 2000 program in the following seven phases, most of
which have been completed:
Inventory. This phase involved the identification and validation of an
inventory of all systems that could be affected by the Year 2000 issue. The
inventory phase was previously completed.
Assessment. This phase involved the initial testing and code scanning to
determine whether remediation is needed and to develop a remediation plan, if
applicable. The assessment of business information systems as well as the
assessment of infrastructure items and embedded systems for both North America
and Europe was previously completed.
Remediation. This phase involved the design and execution of a remediation
plan. We have completed the remediation of our critical systems.
13
<PAGE>
System Test. This phase involved the testing of remediation items to ensure that
they function normally after being returned to their original operating
environment. It is closely related to the remediation phase and followed
essentially the same schedule.
Implementation. This phase involved the return of items to normal operation
after satisfactory performance in system testing. It followed essentially the
same schedule as remediation and system testing.
Readiness Testing. This phase involved the planning and testing of integrated
systems in a Year 2000-ready environment, including ongoing auditing and follow-
up.
Contingency Planning. This phase involved the development and execution of
plans that narrow the focus on specific areas of significant concern and
concentrate resources to address them. We currently believe that the most
reasonably likely worst case scenario is that there will be some localized
disruptions of systems that will affect individual business processes,
facilities or suppliers for a short time rather than systemic or long-term
problems affecting our business operation as a whole. Our contingency planning
will continue to review systems and other aspects of our business throughout the
remainder of the year. Because there is uncertainty as to which activities may
be affected and the exact nature of the problems that may arise, our contingency
planning will focus on minimizing the scope and duration of any disruptions by
having sufficient personnel and other resources in place to permit a flexible,
real-time response to specific problems as they may arise at individual
locations around the world. Specific contingency plans and resources for
permitting the necessary flexibility of response have been identified and are
being put into place.
We do not currently anticipate that we will experience a significant disruption
of our business as a result of the Year 2000 issue. However, there is still
uncertainty about the broader scope of the Year 2000 issue as it may affect
Exide and third parties, including our customers, that are critical to our
operations. For example, lack of readiness by electrical and water utilities,
financial institutions, governmental agencies or other providers of general
infrastructure could, in some geographic areas, pose significant impediments to
our ability to carry on our normal operations in the area or areas so affected.
In the event that we are unable to execute adequate contingency plans in the
event that problems are encountered, there could be a material adverse effect on
our business.
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 a common currency,
the Euro. We conduct significant business in these member countries. The
transition period for the introduction of the Euro is between January 1, 1999
and June 30, 2002. We are addressing the issues involved with the introduction
of the Euro. The more important issues facing us include:
. Converting information technology systems,
. Reassessing currency risk,
. Negotiating and amending contracts, and
. Processing tax and accounting records.
Based upon progress to date, we believe that use of the Euro has not and will
not have a significant impact on the manner in which we conduct our business
affairs and process our
14
<PAGE>
business and accounting records. Accordingly, conversion to the Euro has not
and is not expected to have a material effect on our financial condition or
results of operations.
15
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE
SAFE HARBOR PROVISION OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Except for historical information, this report may be deemed to contain
"forward-looking" statements. The Company desires to avail itself of the Safe
Harbor provisions of the Private Securities Litigation Reform Act of 1995 (the
"Act") and is including this cautionary statement for the express purpose of
availing itself of the protection afforded by the Act.
Examples of forward-looking statements include, but are not limited to (a)
projections of revenues, cost of raw materials, income or loss, earnings or loss
per share, capital expenditures, growth prospects, dividends, the effect of
currency translations, capital structure and other financial items, (b)
statements of plans of and objectives of the Company or its management or Board
of Directors, including the introduction of new products, or estimates or
predictions of actions by customers, suppliers, competitors or regulating
authorities, (c) statements of future economic performance and (d) statements of
assumptions, such as the prevailing weather conditions in the Company's market
areas, underlying other statements and statements about the Company or its
business.
The Company's core business, the design, manufacture and sale of lead acid
batteries, and the Company's structure involves risk and uncertainty. Important
factors that could affect the Company's results include, but are not limited to
(i) unseasonable weather (warm winters and cool summers) which adversely affects
demand for automotive and some industrial batteries, (ii) the Company's
substantial debt and debt service requirements which restrict the Company's
operational and financial flexibility, as well as imposing significant interest
and financing costs, (iii) the Company is subject to a number of litigation
proceedings, the results of which could have a material adverse effect on the
Company and its business, (iv) the Company's assets include the tax benefits of
net operating loss carry forwards, realization of which are dependent upon
future taxable income and implementation of certain tax planning strategies, (v)
lead, which experiences significant fluctuations in market price and which, as a
hazardous material, may give rise to costly environmental and safety claims, can
affect the Company's results because it is a major constituent in most of the
Company's products, (vi) the battery markets in North America and Europe are
very competitive and, as a result, it is often difficult to maintain margins,
(vii) the Company's consolidation and rationalization of acquired European
entities requires substantial management time and financial and other resources
and is not without risk, and (viii) 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 here-in-above 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>
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings.
In December 1997, the Attorney General of the State of Florida initiated an
investigation into certain alleged business practices of Exide, including
falsifying bids to the State of Florida, selling defective batteries, selling
used batteries as new, mislabeling batteries with regard to warranty coverage,
cold cranking amps, intended use and point of manufacture; and also considered
related allegations concerning improperly transferring credits among customer
accounts, procuring falsified test data, making payments to employees of certain
customers to obtain business, securities fraud, and anti-trust violations. This
investigation was resolved by a settlement agreement with the Attorney General
dated May 24, 1999, which released Exide from all liabilities and claims which
have been or could be asserted against Exide in any civil or administrative
action arising out of, related to or connected with, directly or indirectly, the
following investigated matters: falsifying bids to the State of Florida; selling
defective batteries; selling used batteries as new; mislabeling batteries with
regard to warranty coverage, cold cranking amps, intended use and point of
manufacture; and improperly transferring credits among customer accounts.
When our current management learned of the Florida Attorney General's
investigation, we elected to fully cooperate with the Attorney General. That
cooperation led to the settlement agreement. It was expressly understood and
agreed that the settlement agreement was not to be construed as an admission of
liability or any acknowledgment of the claims asserted against Exide.
Under the settlement agreement, we agreed to pay the State of Florida $2.75
million in installments, with $1.25 million to be directed to a Florida
University of the Attorney General's choosing. In addition, we have agreed to
make restitution at an estimated cost of $500,000 and to take certain further
actions, including ceasing the alleged practices, instituting certain battery
labeling practices and instituting a corporate ethics program. The settlement
applies to all batteries sold up to and including June 23, 1999.
While we believe the settlement marks the end of the Florida investigation, the
settlement does not preclude the Florida Attorney General from bringing further
claims with respect to the matters not covered by the settlement. We are
currently working towards full compliance with the terms of the settlement. We
have also brought certain issues raised by the Florida Attorney General's
inquiry to the attention of the Securities and Exchange Commission and are
voluntarily responding to the Commission's follow-up inquiries. We cannot
assure you that federal or state agencies or private claimants will not
investigate or bring charges with respect to these or other matters or that, if
they do, such claims would not have a material adverse effect on the Company.
Exide is now or recently has been involved in several lawsuits pending in state
and federal courts in Alabama, North Carolina, Pennsylvania, South Carolina,
Tennessee and Texas, some of which were brought as purported class actions.
These actions allege that Exide sold old or used batteries as new batteries,
sold defective and mislabeled batteries and improperly credited customer
accounts and seek compensatory and punitive damages and, in one case, injunctive
relief. The following lawsuits of this type are currently pending: Exide
v. East Alabama Auto Parts Anniston, Inc., Circuit Court for Calhoun County,
Alabama, Dynamic Enterprises v. Exide, United States District Court for the
Eastern District of Texas, Dynamic Enterprises v. Exide, United States District
Court for the Eastern District of Texas, Martin v. Exide, United States District
Court for the District of South Carolina, Mathis Battery Company, et al. v.
Exide, Chancercy
17
<PAGE>
Court for Weakley County, Tennessee and Gamma Group, et al. v. Exide, United
States District Court for the Eastern District of Pennsylvania. On limited
occasions before 1996, certain managers at the Company permitted batteries which
had been installed to be returned and resold as new. Some of the other acts
complained of in these cases may also have occurred. The Company's defense of
these cases (and of similar cases which it has defended in the past) therefore
rests primarily on the low incidence of any such occurrence, the Company's
warranty program addressing any problem caused by any such occurrence, and the
consequent lack of damage to any plaintiff. The Dynamic, Martin and Mathis cases
are purported class actions, none of which has yet been certified by the courts.
Class certification hearings in these cases are scheduled to begin in early
2000. We cannot assure you that we will be successful in the defense of these
claims or that additional claims will not be brought.
On May 3, 1999, we went to trial in the case of Exide v. East
Alabama Auto Parts Anniston, Inc., Circuit Court of Calhoun County, Alabama.
The case involved our breach of contract claim against East Alabama to collect
an outstanding receivable of $13,000 and their breach of contract and fraud
counterclaims, alleging that Exide sold them defective batteries. The jury
returned a verdict for Exide on its breach of contract claim, for Exide on the
East Alabama's breach of contract counterclaim and for East Alabama on its fraud
counterclaim. The jury awarded zero compensatory damages and $1.5 million
punitive damages. The judge declared a mistrial due to the inconsistency between
the compensatory damages verdict and the punitive damages awarded. In early
November 1999, the Attorney General of Alabama was permitted, over the Company's
objection, to intervene in this case with a new complaint alleging that the
Company has caused used batteries to be sold as new to consumers in Alabama from
1993 until the present. The new complaint seeks injunctive relief and damages.
The Company plans to appeal the decision to permit this intervention. Prior to
the intervention, the Company had submitted to the Alabama Attorney General an
offer to settle its concerns in exchange for providing extended warranties to
certain Alabama consumers who purchased Exide batteries. The Attorney General
has not responded to this offer. While it is not possible to predict the outcome
of the case with certainty, in light of its experience in dealing with the
Florida Attorney General investigation, the Company believes that this
development will not have a material adverse effect on its financial position.
On June 14, 1999, we went to trial in the case of The Battery Shop, et al. v.
Exide, Circuit Court of Jefferson County, Alabama. The case involved
allegations that Exide sold old, used or defective batteries as new batteries.
The jury returned a verdict rejecting the plaintiffs' claims against Exide and
the time for appeal has expired.
At a hearing in September 1999, the settlement of a securities law class action
reported in the Company's most recent prior Form 10-Q received final approval.
Our current senior management and Board of Directors have retained outside
counsel to investigate and will continue to investigate the allegations involved
in the foregoing matters. The Company has no tolerance for the practices alleged
and senior management has taken and will take action to prevent such practices
in the future.
On September 17, 1999, Exide sued Sears, Roebuck and Co. in the Circuit Court of
Cook County, Illinois seeking damages for breach of contract in an amount not
less than $15 million. On November 12, 1999, Sears filed a counterclaim against
Exide and a claim against a former Sears purchasing employee alleging inducement
to breach his fiduciary duty to Sears, common law fraud, aiding and abetting and
conspiracy.
We are currently involved in litigation with certain former members of senior
management over their separation agreements. This case, Arthur M. Hawkins v.
Exide, U.S. District Court for the Eastern District of Michigan, involves claims
by Mr. Hawkins to enforce his separation agreement with Exide and a counterclaim
by Exide seeking a declaration that the separation agreement is void and a
return of all consideration paid thereunder. Exide has also joined Messrs.
Pearson and Gauthier as additional counterclaim defendants and is seeking
similar relief against such parties. Messrs. Gauthier and Pearson are disputing
Michigan jurisdiction and have filed actions, Gauthier v. Exide and Pearson v.
Exide, respectively, the U.S. District Court for the Eastern District of
Pennsylvania alleging breach of contract.
18
<PAGE>
Exide is now involved in several lawsuits pending in state and federal courts in
South Carolina, Indiana and Pennsylvania. These actions allege that Exide and
its predecessors allowed hazardous materials used in the battery manufacturing
process to be released from certain of its facilities, allegedly resulting in
personal injury and/or property damage. The following lawsuits of this type are
currently pending in the United States District Courts indicated: Byars v.
Exide, District of South Carolina; Heaton v. Exide, Southern District of Indiana
and Wann v. Exide, Southern District of Indiana. In addition, the following
lawsuits of this type are currently pending in the Circuit Court for Greenville
County, South Carolina: Joshua Lollis v. Exide; Buchanan v. Exide; Agnew v.
Exide; Patrick Miller v. Exide; Kelly v. Exide; Amanda Thompson v. Exide;
Jonathan Talley v. Exide; Smith v. Exide; Lakeisha Talley v. Exide; Brandon Dodd
v. Exide; Prince v. Exide; Andriae Dodd v. Exide; Dominic Thompson v. Exide;
Snoddy v. Exide; Antoine Dodd v. Exide; Roshanda Talley v. Exide; Fielder v.
Exide; Rice v. Exide; Logan Lollis v. Exide; Dallis Miller v. Exide. Finally,
the following lawsuits of this type are currently pending in the Court of Common
Pleas for Berks County, Pennsylvania: Grillo v. Exide; Blume v. Exide; Esterly
v. Exide and Saylor v. Exide. The Company believes that most, if not all of
these claims are without merit, and intends to defend itself vigorously.
Nevertheless, we cannot assure you that we will be successful in the defense of
these claims, or that additional claims will not be brought.
We are also involved in various other claims and litigation incidental to the
conduct of our business. For a discussion of environmental issues relating to
our business, see Note 4 to our Condensed Consolidated Financial Statements.
Item 2. Changes in Securities and Use of Proceeds. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to Vote of Security Holders.
At the Company's annual meeting of stockholders held August 11, 1999, the
stockholders elected five directors, adopted the Company's 1999 Stock Incentive
Plan and ratified the appointment of Arthur Andersen LLP as the independent
certified public accountants for the 2000 fiscal year.
The results of the voting were as follows:
Proposal I: Election of five directors.
Director For Against Withheld
---------------------- ----------- -------- ----------
Robert A. Lutz 18,004,958 0 2,203,557
Francois J. Castaing 18,006,508 0 2,202,008
John A. James 18,006,558 0 2,201,958
Heinz C. Prechter 18,006,558 0 2,201,958
John E. Robson 18,005,478 0 2,203,038
Proposal II: Adoption of the 1999 Stock Incentive Plan.
For Against Abstain
----------------------- ------------ -----------
8,337,774 7,459,820 47,796
Proposal III: Ratification of the appointment of Arthur Andersen LLP as the
Company's independent certified public accountants for the 2000 fiscal year.
For Against Abstain
----------------------- ------------ -----------
20,044,719 126,937 36,862
Item 5. Other Information. None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit 10.28 - Exide 1999 Stock Incentive Plan, as amended
Exhibit 10.29 - Third Amendment,dated September 24, 1999 to the
Credit and Guarantee Agreement.
(b) Reports on Form 8-K. None.
19
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EXIDE CORPORATION
Date: November 16, 1999 By: /s/ James M. Diasio
----------------------- ---------------------------
James M. Diasio
Executive Vice President
and Chief Financial Officer
20
<PAGE>
EXIDE CORPORATION
1999 STOCK INCENTIVE PLAN*
1. PURPOSE OF THE PLAN.
The purpose of the Exide Corporation 1999 Stock Incentive Plan (the "Plan")
is to promote the interests of Exide Corporation (together with its
subsidiaries, the "Company") and its stockholders by (i) attracting and
retaining employees, officers, directors, consultants and advisors of
outstanding ability, (ii) motivating such persons, by means of performance-
related incentives, to achieve longer-range performance goals, and (iii)
enabling such persons to participate in the long-term growth and financial
success of the Company. The effective date of the Plan is August 11, 1999.
2. ADMINISTRATION.
(a) Subject to the following paragraphs, the Plan shall be administered by
the Board of Directors of the Company (the "Board") or by a Compensation
Committee of the Board (the "Compensation Committee"). If the Board delegates to
the Compensation Committee the authority to administer the Plan, the
Compensation Committee shall be empowered to take all actions reserved to the
Board under the Plan. The Board is authorized to interpret the Plan, to
prescribe, amend and rescind rules and regulations to further the purposes of
the Plan, and to make all other determinations necessary for the administration
of the Plan. All such actions by the Board shall be conclusive, final and
binding on all participants.
(b) Should the Board delegate to the Compensation Committee the authority
to administer the Plan, then such Compensation Committee shall consist solely of
members of the Board who qualify as (i) "Non-Employee Directors" as defined
under Rule 16b-3 under the Exchange Act and (ii) "outside directors" as defined
under Section 162(m) or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code") and applicable Treasury regulations thereunder, if
and to the extent such qualification is necessary so that the grant or the
exercise of awards made under the Plan will qualify for any tax or other
material benefit to participants or the Company under applicable law.
(c) Notwithstanding the foregoing, the Board may, subject to any
limitations or restrictions the Board may impose from time to time, delegate to
the Chief Executive Officer the authority to administer the Plan, including the
authority to make grants of Options (as hereinafter defined) to employees of the
Company and its subsidiaries who are not subject to the requirements of Section
16 of the Exchange Act and who are not expected to be subject to the limitations
of Section 162(m) of the Code.
* As amended August 11, 1999
<PAGE>
3. AWARDS.
Awards under the Plan may be in the form of options which qualify as
"incentive stock options" within the meaning of Section 422 or any successor
provision of the Code ("Incentive Stock Options"), options which do not so
qualify ("Nonqualified Options" and, collectively with Incentive Stock Options,
"Options"), and stock which is subject to certain forfeiture risks and
restrictions on transferability ("Restricted Stock"). Incentive Stock Options
may be granted only to employees of the Company. Each award of an Option shall
be designated in the applicable Option grant certificate as an Incentive Stock
Option or a Nonqualified Option, as appropriate. If, notwithstanding its
designation as an Incentive Stock Option, all or a portion of any Option does
not qualify under the Code as an Incentive Stock Option, the portion which does
not so qualify shall be treated for all purposes hereunder as a Nonqualified
Option.
4. SHARES SUBJECT TO THE PLAN.
Subject to adjustment as provided in Section 9, the maximum aggregate
number of shares of common stock, par value $.01 per share ("Common Stock"),
that may be awarded under the Plan is 2,300,000 shares. Grants of restricted
stock as provided in Section 8 shall be limited to 200,000 shares. The Common
Stock to be offered under the Plan shall be authorized and unissued Common
Stock, or issued Common Stock which shall have been reacquired by the Company
and held in its treasury. The Common Stock covered by any unexercised portion of
terminated stock options granted under the Plan, or by any award of Restricted
Stock which is forfeited, may again be subject to new awards under the Plan. In
the event the purchase price of an Option is paid in whole or in part through
the delivery of Common Stock, only the net number of shares of Common Stock
issuable in connection with the exercise of the Option shall be counted against
the number of shares remaining available for the grant of awards under the Plan.
No participant shall be granted awards in respect of more than 500,000 shares of
Common Stock in any calendar year (subject to adjustment as provided in Section
9).
5. PARTICIPANTS.
The Board shall determine and designate from time to time those employees,
directors, consultants and advisors of the Company or its subsidiaries who shall
be awarded Options or Restricted Stock under the Plan and the number of shares
of Common Stock to be covered by each such Option or Restricted Stock award,
provided that any such consultants or advisors render bona fide services which
are not in connection with the offer or sale of securities in a capital-raising
transaction. In making its determinations, the Board shall take into account the
present and potential contributions of the respective individuals to the success
of the Company, and such other factors as the Board shall deem relevant in
connection with accomplishing the purposes of the Plan. Each award shall be
evidenced by a written Option or Restricted Stock agreement or grant form
("Grant Instrument") as the Board shall approve from time to time.
<PAGE>
6. FAIR MARKET VALUE.
For all purposes under the Plan, the term "Fair Market Value" shall mean,
as of any applicable date, (i) if the principal securities market on which the
Common Stock is traded is a national securities exchange or The NASDAQ National
Market ("NNM"), the closing price of the Common Stock on such exchange or NNM,
as the case may be, or if no sale of the Common Stock shall have occurred on
such date, on the next preceding date on which there was a reported sale; (ii)
if the principal securities market on which the Common Stock is traded is not a
national securities exchange, or NNM, the average of the bid and asked prices
reported by the National Quotation Bureau, Inc.; or (iii) if the price of the
Common Stock is not so reported, the Fair Market Value of the Common Stock as
determined in good faith by the Board.
7. GRANTS OF OPTIONS.
(a) Exercise Price of Options. Incentive Stock Options shall be granted at
an exercise price of not less than 100% of the Fair Market Value on the date of
grant; provided, however, that Incentive Stock Options granted to a participant
who at the time of such grant owns (within the meaning of Section 424(d) of the
Code) more than ten percent of the voting power of all classes of stock of the
Company (a "10% Holder") shall be granted at an exercise price of not less than
110% of the Fair Market Value on the date of grant. Nonqualified Options shall
be granted at an exercise price of not less than 100% of the Fair Market value
on the date of grant.
(b) Term and Termination of Options.
(1) The Board shall determine the term within which each Option may be
exercised, in whole or in part, provided that (i) such term shall not exceed ten
years from the date of grant; (ii) the term of an Incentive Stock Option granted
to a 10% Holder shall not exceed five years from the date of grant; and (iii)
the aggregate Fair Market Value (determined on the date of grant) of Common
Stock with respect to which Incentive Stock Options granted to a participant
under the Plan or any other plan of the Company and its subsidiaries become
exercisable for the first time in any calendar year shall not exceed $100,000.
(2) Unless otherwise determined by the Board, all rights to exercise
Options shall terminate on the first to occur of (i) the scheduled expiration
date as set forth in the applicable Grant Instrument, (ii) ninety days following
the date of termination of employment or provision of services for any reason
other than the death or permanent disability (as defined in the benefit programs
of Exide Corporation) of the participant, (iii) the scheduled expiration date by
reason of the participant's death or permanent disability, or retirement (iv)
immediately, if employee ceases employment and provides services or support for
any other firm or competitor, as determined by the Board (v) as may be otherwise
provided in the event of a Change of Control as defined in Section 10; provided,
however, that in the event that an employee ceases to be employed by the Company
due to a termination for "cause" (as defined in Section 7(b)(3)), all
<PAGE>
rights to exercise Options held by such employee shall terminate immediately as
of the date such employee ceases to be employed by the Company.
(3) As used in this Plan, the term "cause" shall mean a written finding by
the Board that the employee has engaged in conduct that is fraudulent, disloyal,
criminal or injurious to the Company, including, without limitation,
embezzlement, theft, commission of a felony or dishonesty in the course of his
or her employment or service, or the disclosure of trade secrets or confidential
information of the Company to persons not entitled to receive such information.
(c) Payment for Shares. Full payment for shares purchased upon exercise of
Options granted under the Plan shall be made at the time the award is exercised
in whole or in part. Payment of the purchase price shall be made in cash or in
such other form as the Board may approve, including, without limitation, (i) by
the delivery to the Company by the participant of a promissory note containing
such terms as the Board may determine, (ii) by the delivery to the Company by
the participant of shares of Common Stock that have been held by the participant
for at least six months prior to exercise of the award, valued at the Fair
Market Value of such shares on the date of exercise, or (iii) if the Common
Stock is publicly traded, pursuant to a cashless exercise arrangement with a
broker on such terms as the Board may determine. No shares of Common Stock
shall be issued to the participant until such payment has been made, and a
participant shall have none of the rights of a stockholder with respect to
Options held by such participant.
(d) Other Terms and Conditions. The Board shall have the discretion to
determine terms and conditions, consistent with the Plan, that will be
applicable to Options, including, without limitation, performance-based criteria
for acceleration or determination of the date on which certain Options shall
become exercisable. Options granted to the same or different participants, or at
the same or different times, need not contain similar provisions.
(e) Substitution of Options. Options may be granted under the Plan from
time to time in substitution for stock options of other entities ("Acquired
Companies") in connection with the merger or consolidation of the Acquired
Company with the Company, the acquisition by the Company of all or a portion of
the assets of the Acquired Company, or the acquisition of stock of the Acquired
Company such that the Acquired Company becomes a subsidiary of the Company.
(f) Delivery of Common Stock. The Board shall generally deliver shares of
Common Stock immediately upon a valid exercise of a Stock Option under the Plan
or as soon as administratively feasible. The Board shall also have the
discretion to accept written election, in a form it determines, from a
participant to defer or alter delivery of Common Stock after exercise. The
Board may impose limitations on such deferral.
(g) No Repricing. In no event shall any issued and outstanding Option be
repriced to a lower option exercise price than the original exercise price
(except pursuant to Section 9) at any time during the term of such Option
without the prior affirmative vote of a majority of the shares
<PAGE>
of Common Stock of the Company present at a stockholders meeting in person or by
proxy and entitled to vote.
8. GRANTS OF RESTRICTED STOCK.
The Board may issue or transfer shares of Common Stock to employees,
directors, consultants or advisors under a grant of Restricted Stock, upon such
terms as the Board deems applicable, including the provisions set forth below:
(a) General Requirements. Shares of Common Stock issued or transferred
pursuant to Restricted Stock grants may be issued or transferred for
consideration or for no consideration, and subject to restrictions or no
restrictions, as determined by the Board. The Board may establish conditions
under which restrictions on shares of Restricted Stock shall lapse over a period
of time or according to such other criteria (including performance-based
criteria) as the Board deems appropriate. The period of time during which the
Restricted Stock will remain subject to restrictions will be designated in the
Grant Instrument as the "Restriction Period."
(b) Number of Shares. The Board shall determine the number of shares of
Common Stock to be issued or transferred pursuant to a Restricted Stock grant
and the restrictions applicable to such shares.
(c) Requirement of Employment or Service. If the recipient of a Restricted
Stock grant ("Grantee") ceases to be employed by, or to provide service to, the
Company during the Restriction Period, or if other specified conditions are not
met, the Restricted Stock grant shall terminate as to all shares covered by the
grant as to which the restrictions have not lapsed, and those shares of Common
Stock must be immediately returned to the Company in exchange for the purchase
price, if any, paid by the Grantee for such shares. The Board may, however,
provide for complete or partial exceptions to this requirement as it deems
appropriate.
(d) Restrictions on Transfer and Legend on Stock Certificate. During the
Restriction Period, a Grantee may not sell, assign, transfer, donate, pledge or
otherwise dispose of the shares of Restricted Stock. Each certificate for a
share of Restricted Stock shall contain a legend giving appropriate notice of
the applicable restrictions. The Grantee shall be entitled to have the legend
removed from the stock certificate covering the shares of Restricted Stock
subject to restrictions when all restrictions on such shares have lapsed. The
Board may determine that the Company will not issue certificates for shares of
Restricted Stock until all restrictions on such shares have lapsed, or that the
Company will retain possession of certificates for shares of Restricted Stock
until all restrictions on such shares have lapsed.
(e) Right to Vote and to Receive Dividends. During the Restriction Period,
the Grantee shall have the right to vote shares of Restricted Stock and to
receive any dividends or other distributions paid on such shares, subject to any
restrictions deemed appropriate by the Board.
<PAGE>
(f) Lapse of Restrictions. All restrictions imposed on Restricted Stock
shall lapse upon the expiration of the applicable Restriction Period and the
satisfaction of all conditions agreed to, or imposed by the Board. The Board may
determine, as to any or all Restricted Stock grants, that the restrictions shall
lapse without regard to any Restriction Period. The Board may also agree in its
sole discretion, to extend the restriction period at the request of the
participant. Such request shall be made in writing and shall be in a form
acceptable to the Board. The Board may impose any limitations on the extension
of the Restricted Period.
9. ADJUSTMENTS TO REFLECT CAPITAL CHANGES.
The number and kind of shares subject to outstanding awards, the exercise
price applicable to Options previously awarded, and the number and kind of
shares available subsequently to be granted under the Plan shall be
appropriately adjusted to reflect any stock dividend, stock split, combination
or exchange of shares or other change in capitalization with a similar
substantive effect upon the Plan or the awards granted under the Plan. The Board
shall have the power and sole discretion to determine the nature and amount of
the adjustment to be made in each case. The adjustment so made shall be final
and binding on all participants.
10. DEFINITION OF CHANGE OF CONTROL.
For purposes of this Plan, a "Change of Control" shall mean the occurrence of
any of the following events:
(a) The acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) (other than the Company or an employee benefit plan of the
Company) of beneficial ownership (within the meaning of Rule l3d-3 promulgated
under the Exchange Act) of more than 50% of the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Voting Securities"); or
(b) The approval by the shareholders of the Company of a reorganization,
merger, consolidation or recapitalization of the Company (a "Business
Combination"), other than a Business Combination in which more than 50% of the
combined voting power of the outstanding voting securities of the surviving or
resulting entity immediately following the Business Combination is held by the
persons who, immediately prior to the Business Combination, were the holders of
the Voting Securities; or
(c) The approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company, or a sale of all or substantially all
of the assets of the Company; or
(d) Individuals who, as of the Restated Effective Date, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to such date whose election or nomination for
<PAGE>
election by the Company's shareholders was approved by a vote of at least a
majority of the directors when comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board.
Provided, however, that notwithstanding anything else in this Section 10 to
the contrary, no event or transaction described herein shall be deemed to be a
Change in Control under this Plan unless such event or transaction has received
all necessary regulatory or governmental (including local, state, federal and
foreign) approvals required for the lawful consummation of such event or
transaction.
11. CONSEQUENCES OF A CHANGE OF CONTROL.
(a) Upon a Change of Control, (i) each outstanding Option shall be assumed
by the Acquiring Corporation (as defined below) or parent thereof or replaced
with a comparable option or right to purchase shares of the capital stock, or
equity equivalent instrument, of the Acquiring Corporation or parent thereof, or
other comparable rights (such assumed and comparable options and rights,
together, the "Replacement Options"), and (ii) each share of Restricted Stock
shall be converted to a comparable restricted grant of capital stock, or equity
equivalent instrument, of the Acquiring Corporation or parent thereof or other
comparable restricted property (such assumed and comparable restricted grants,
together, the "Replacement Restricted Stock"), provided, however, that if the
Acquiring Corporation or parent thereof does not agree to grant Replacement
Options and Replacement Restricted Stock, then all outstanding Options which
have been granted under the Plan and which are not exercisable as of the
effective date of the Change of Control shall automatically accelerate and
become exercisable immediately prior to the effective date of the Change of
Control, and all restrictions and conditions on any Restricted Stock which has
been granted under the Plan shall lapse upon the effective date of the Change of
Control. The term "Acquiring Corporation" means the surviving, continuing,
successor or purchasing corporation, as the case may be. The Board may determine
in its discretion (but shall not be obligated to do so) that, in lieu of the
issuance of Replacement Options, all holders of outstanding Options which are
exercisable immediately prior to a Change of Control (including those that
become exercisable under this Section 11(a) and any that become exercisable
under Section 11(d) will be required to surrender them in exchange for a payment
by the Company, in cash or Common Stock as determined by the Board, of an amount
equal to the amount (if any) by which the then Fair Market Value of Common Stock
subject to unexercised Options exceeds the exercise price of those Options, with
such payment to take place as of the date of the Change of Control or such other
date as the Board may prescribe.
(b) Any Options that are not assumed or replaced by Replacement Options,
exercised or cashed out prior to or concurrent with a Change of Control will
terminate effective upon the Change of Control or at such other time as the
Board deems appropriate.
<PAGE>
(c) Notwithstanding anything in the Plan to the contrary, in the event of a
Change of Control, no action described in the Plan shall be taken (including,
without limitation, actions described in subsections (a), (b) and (c) above) if
such actions would make the Change of Control ineligible for "pooling of
interests" accounting treatment or would make the Change of Control ineligible
for desired tax treatment if, in the absence of such actions, the Change of
Control would qualify for such treatment and the Company intends to use such
treatment with respect to such Change of Control.
(d) Notwithstanding anything in Section 12 to the contrary, the Board may,
in the Grant Instrument, create any provisions for the acceleration or cessation
of vesting of Stock Options or Restricted Stock in the event of a Change-of-
Control for some or all of a specific grant.
12. TRANSFERABILITY OF OPTIONS.
Unless otherwise determined by the Board with respect to Nonqualified
Options for one or more participants, Options granted under the Plan shall not
be transferable other than by will or the laws of descent and distribution and
are exercisable during a participant's lifetime only by the participant.
13. WITHHOLDING.
The Company shall have the right to deduct any taxes required by law to be
withheld in respect of awards granted under the Plan from amounts paid to a
participant in cash as salary, bonus or other compensation. In the Board's
discretion, a participant may be permitted to elect to have withheld from the
shares otherwise issuable to the participant, or to tender to the Company, a
number of shares of Common Stock the aggregate Fair Market Value of which does
not exceed the minimum applicable withholding rate for federal (including FICA),
state and local tax liabilities. Such election must be in a form and manner
prescribed by the Board.
14. CONSTRUCTION OF THE PLAN.
The validity, construction, interpretation, administration and effect of
the Plan and of its rules and regulations, and rights relating to the Plan,
shall be determined solely by the Board. Any determination by the Board shall be
final and binding on all participants. The Plan shall be governed in accordance
with the laws of the State of Delaware, without regard to the conflict of law
provisions of such laws.
15. NO RIGHT TO AWARD; NO RIGHT TO EMPLOYMENT.
No person shall have any claim of right to be granted an Option or
Restricted Stock under the Plan. Neither the Plan nor any action taken hereunder
shall be construed as giving any employee any right to be retained in the employ
of the Company or any of its subsidiaries or as giving any consultant, advisor
or director any right to continue to serve in such capacity.
<PAGE>
16. AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES.
Income recognized by a participant pursuant to the provisions of the Plan
shall not be included in the determination of benefits under any employee
pension benefit plan (as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974) or group insurance or other benefit
plans applicable to the participant which are maintained by the Company or any
of its subsidiaries, except as may be provided under the terms of such plans or
determined by resolution of the Board.
17. NO STRICT CONSTRUCTION.
No rule of strict construction shall be implied against the Company, the
Board or any other person in the interpretation of any of the terms of the Plan,
any award granted under the Plan or any rule or procedure established by the
Board.
18. CAPTIONS.
All Section headings used in the Plan are for convenience only, do not
constitute a part of the Plan, and shall not be deemed to limit, characterize or
affect in any way any provisions of the Plan, and all provisions of the Plan
shall be construed as if no captions have been used in the Plan.
19. SEVERABILITY.
Whenever possible, each provision in the Plan and every award at any time
granted under the Plan shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of the Plan or any award at
any time granted under the Plan shall be held to be prohibited by or invalid
under applicable law, then such provision shall be deemed amended to accomplish
the objectives of the provision as originally written to the fullest extent
permitted by law, and all other provisions of the Plan and every other award at
any time granted under the Plan shall remain in full force and effect.
20. LEGENDS.
All certificates for Common Stock delivered under the Plan shall be subject
to such transfer and other restrictions as the Board may deem advisable under
the rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange or quotation system upon which the Common Stock
is then listed or quoted and any applicable federal or state securities laws,
and the Board may cause a legend or legends to be put on any such certificates
to make appropriate references to such restrictions.
21. AMENDMENT.
<PAGE>
The Board may, by resolution, amend or revise the Plan, except that such
action shall not be effective without stockholder approval if such stockholder
approval is required to maintain the compliance of the Plan and/or awards
granted to directors, executive officers or other persons under any applicable
securities tax or other legal requirement. The Board may not modify any Options
previously granted under the Plan in a manner adverse to the holders thereof
without the consent of such holders, except in accordance with the provisions of
Sections 9, 11 or 22.
22. MODIFICATION FOR GRANTS OUTSIDE THE U.S.
The Board may, without amending the Plan, modify grants of Options or
Restricted Stock to participants who are foreign nationals or employed outside
the United States in order to recognize differences in local law or regulations,
tax policies or customs.
23. EFFECTIVE DATE; TERMINATION OF PLAN.
The Plan will be effective on August 11, 1999, subject to shareholder
approval. The Plan shall terminate on August 10, 2009, unless it is earlier
terminated by the Board. Termination of the Plan shall not affect awards
previously granted under the Plan.
<PAGE>
THIRD AMENDMENT
THIRD AMENDMENT, dated as of September 24, 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, the Second Amendment, dated as
of January 8, 1999, 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) Amendment of Definitions. Section 1.1 of the Credit and Guarantee
------------------------
Agreement is hereby amended by (i) inserting after the word "Expenditures" in
the fourth line of the definition of "Consolidated Fixed Charge Coverage Ratio"
the following: "(other than Capital Expenditures of the type described in
paragraph (c) of the proviso to Section 8.7)", (ii) inserting at the end of the
definition of "Indebtedness" the following: "Notwithstanding the foregoing, the
obligation of the Company to make the installment investments in the joint
venture separately disclosed in writing to the Lenders in connection with the
Third Amendment as Project Enterprise as required by the joint venture agreement
relating to such joint venture shall not constitute Indebtedness.", (iii)
inserting after the word "Francs" in the first line of the definition of
"Optional Currencies" the following: ", euro", (iv) inserting after the
reference to
<PAGE>
2
Schedule 1.1E in the eighth line of the definition of "Permitted Acquisition"
the words "and the acquisition separately disclosed in writing to the Lenders in
connection with the Third Amendment as Project Tortoise to the extent the
Company acquires at least 85% of the Capital Stock of the Person acquired in
such acquisition", (v) replacing the definition of the term "Business Day" with
the following new definition:
"'Business Day': a day other than a Saturday, Sunday or other day on
------------
which commercial banks in New York City or London, England are authorized
or required by law to close; provided that such day also (a) is a day upon
--------
which trading is conducted by and between banks in deposits for the
currency in which such Eurocurrency Loan is to be made in the relevant
interbank eurocurrency market, with respect to notices and determinations
in connection with, and payments of principal and interest on, Eurocurrency
Loans, (b) is not a day on which commercial banks in the principal
financial center in the country in which such Borrowing Subsidiary is
organized are authorized or required by law to close, in the case of Loans
made to any Borrowing Subsidiary and (c) in the case of euro only, is not a
day on which commercial banks in the city which the Administrative Agent
nominates for purposes of its euro operations are authorized or required by
law to close; provided, further, when such term is used for the purpose of
-------- -------
determining the date on which the Eurocurrency Base Rate is determined
under this Agreement for any Loan denominated in euro for any Interest
Period therefor and for purposes of determining the first and last day of
any Interest Period, references in this Agreement to Business Days shall be
deemed to be references to Target Operating Days.",
(vi) replacing the definition of the term "Designated Equity Amounts" with the
following new definition:
"'Designated Equity Amounts': at any date, the amount equal to the
-------------------------
sum of (i) the aggregate amount of Net Cash Proceeds received by the
Company and its Subsidiaries from the issuance of Capital Stock and (ii)
the value of any shares of common stock of the Company directly issued to
the sellers as part of the consideration for any Permitted Acquisition or
Permitted Joint Venture (valued at fair market value (as determined in good
faith by the Board of Directors of the Company)), in each case, which (a)
have been designated in writing by the Company to the Administrative Agent
as "Designated Equity Amounts" and (b) are utilized by the Company and its
Subsidiaries within 45 days after such receipt to finance Permitted
Acquisitions pursuant to Section 8.8(h) or Permitted Joint Ventures
pursuant to Section 8.8(i)."
and (vii) replacing the definition of the term "Wholly Owned Subsidiary" with
the following new definition:
<PAGE>
3
"'Wholly Owned Subsidiary': as to any Person, any other Person all of
-----------------------
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries; provided, however, that each of the Foreign
-------- -------
Subsidiaries of the Company set forth in Schedule 1.1G and Schedule B to
the Third Amendment shall be deemed to be a "Wholly Owned Subsidiary" to
the extent that the Company owns beneficially at least the percentage of
such Foreign Subsidiary set forth opposite such Foreign Subsidiary's name
on Schedule 1.1G or Schedule B, as the case may be.
(c) Addition of Definitions. Section 1.1 of the Credit and Guarantee
-----------------------
Agreement is hereby amended by adding thereto the following new definition in
appropriate alphabetical order:
"`Consolidated Interest Coverage Ratio': for any period, the ratio of
------------------------------------
(a) Consolidated EBITDA for such period to (b) Consolidated Interest
Expense for such period.
`EMU': Economic and Monetary Union as contemplated in the Treaty on
---
European Union.
`EMU Legislation': legislative measures of the European Union for the
---------------
introduction of, changeover to or operation of the euro in one or more
member states.
`euro': the single currency of the European Union as constituted by
----
the Treaty on European Union and as referred to in EMU Legislation.
`euro unit': the currency unit of the euro as defined in the EMU
---------
Legislation.
"FQ1", "FQ2 ", "FQ3", and "FQ4": when used with a numerical year
--- ---- --- ---
designation, means the first, second, third or fourth fiscal quarters,
respectively, of such fiscal year of the Company (e.g., FQ2 2000 means the
second fiscal quarter of the Company's 2000 fiscal year, which fiscal
quarter ends October 3, 1999).
`National Currency Unit': the unit of currency (other than a euro
----------------------
unit) of a Participating Member State.
`Participating Member State': any member state which has the euro as
--------------------------
its lawful currency.
`Subsequent Participant': any member state that adopts the euro as
----------------------
its lawful currency after January 1, 1999.
<PAGE>
4
`Target Operating Day': any day that is not (a) a Saturday or Sunday,
--------------------
(b) Christmas Day or New Year's Day or (c) any other day on which the
Trans-European Real-time Gross Settlement Operating System (or any
successor settlement system) is not operating (as determined by the
Administrative Agent).
`Third Amendment': the Third Amendment, dated as of September 24,
---------------
1999, to this Agreement.
`Treaty on European Union': the Treaty of Rome of March 25, 1957, as
------------------------
amended by the Single European Act 1986 and the Maastricht Treaty (which
was signed at Maastricht on February 7, 1992, and came into force on
November 1, 1993), as amended from time to time."
2. Amendment to Section 3.5(a). Section 3.5(a) of the Credit and
---------------------------
Guarantee Agreement is hereby amended by adding thereto immediately after the
reference to Section 8.2 in the seventh line thereof and prior to the comma the
following: "(other than paragraph (q) thereof)".
3. Amendment to Section 3.11. There shall be added to Section 3.11
-------------------------
of the Credit and Guarantee Agreement the following new paragraphs (i) through
(l):
"(i) A payment shall be deemed to have been made by the
Administrative Agent on the date on which it is required to be made under
this Agreement if the Administrative Agent has, on or before that date,
taken all relevant steps to make that payment. With respect to the payment
of any amount denominated in euro, the Administrative Agent shall not be
liable to any Borrower or any of the Lenders in any way whatsoever for any
delay, or the consequences of any delay, in the crediting to any account of
any amount required by this Agreement to be paid by the Administrative
Agent if the Administrative Agent shall have taken all relevant steps to
achieve, on the date required by this Agreement, the payment of such amount
in immediately available, freely transferable, cleared funds in the euro
unit to the account with the bank in the principal financial center in the
Participating Member State which the relevant Borrower or, as the case may
be, any Lender shall have specified for such purpose. In this paragraph
(i), "all relevant steps" means all such steps as may be prescribed from
time to time by the regulations or operating procedures of such clearing or
settlement system as the Administrative Agent may from time to time
determine for the purpose of clearing or settling payments of euro.
(j) Any amount payable by the Administrative Agent to the
Lenders under this Agreement in the currency of a Participating Member
State shall be paid in the euro unit.
<PAGE>
5
(k) If, in relation to the currency of any Subsequent
Participant, the basis of accrual of interest or fees expressed in this
Agreement with respect to such currency shall be inconsistent with any
convention or practice in the London Interbank Market or, as the case may
be, the Paris Interbank Market for the basis of accrual of interest or fees
in respect of the euro, such convention or practice shall replace such
expressed basis effective as of and from the date on which such Subsequent
Participant becomes a Participating Member State; provided, that if any
--------
Loan in the currency of such Subsequent Participant is outstanding
immediately prior to such date, such replacement shall take effect, with
respect to such Loan, at the end of the then current Interest Period.
(l) Without prejudice and in addition to any method of
conversion or rounding prescribed by any EMU legislation and (i) without
prejudice to the respective liabilities for indebtedness of the Borrowers
to the Lenders and the Lenders to the Borrowers under or pursuant to this
Agreement and (ii) without increasing the Available Revolving Credit
Commitment of any Lender:
(i) the Revolving Credit Facility and each reference in this
Agreement to a minimum amount (or an integral multiple thereof) in a
national currency denomination of a Subsequent Participant to be paid
to or by the Administrative Agent shall, immediately upon such
Subsequent Participant becoming a Participating Member State, be
replaced by a reference to such reasonably comparable and convenient
amount (or an integral multiple thereof) in the euro unit as the
Administrative Agent may from time to time specify; and
(ii) except as expressly provided in this Section 3.11, each
provision of this Agreement shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to
time specify to be necessary or appropriate to reflect the adoption of
the euro in any Participating Member State and any relevant market
conventions or practices relating to the euro."
4. Amendment to Section 3.19. Section 3.19 of the Credit and
-------------------------
Guarantee Agreement is hereby amended by deleting paragraphs (a) and (c)
thereof.
5. Addition of Section 3.21. There shall be added to the Credit and
------------------------
Guarantee Agreement the following new Section 3.21:
"3.21 Redenomination and Alternative Currencies. Each
-----------------------------------------
obligation under this Agreement of a party to this Agreement which has been
denominated in the national currency unit of a Subsequent Participant state
shall be redenominated into the euro unit in accordance with EMU
legislation immediately upon such Subsequent Participant becoming a
Participating Member State (but otherwise in accordance with EMU
Legislation)."
<PAGE>
6
6. Amendment to Section 7.9. Section 7.9 of the Credit and Guarantee
------------------------
Agreement is hereby amended by deleting such section in its entirety and
substituting in lieu thereof the following new Section 7.9:
"7.9 Interest Rate Protection. In the case of the Company,
------------------------
maintain in effect Interest Rate Protection Agreements to the extent
necessary to provide that at all times at least 25% of the aggregate then
outstanding principal amount of the Term Loans is subject to either a fixed
interest rate or interest rate protection for a period and on other terms
and conditions reasonably satisfactory to the Agents."
7. Amendment to Section 8.1(a). Section 8.1(a) of the Credit and
---------------------------
Guarantee Agreement is hereby amended by deleting the table contained therein
and substituting in lieu thereof the following table:
<TABLE>
<CAPTION>
Consolidated
Period Leverage Ratio
------ ---------------
<S> <C>
FQ2 2000 - FQ3 2000 5.75 to 1.0
FQ4 2000 - FQ1 2001 5.10 to 1.0
FQ2 2001 5.00 to 1.0
FQ3 2001 4.50 to 1.0
FQ4 2001 - FQ2 2002 4.25 to 1.0
FQ3 2002 3.75 to 1.0
FQ4 2002 - FQ2 2003 3.25 to 1.0
FQ3 2003 and thereafter 3.00 to 1.0
</TABLE>
8. Amendment to Section 8.1(b). Section 8.1(b) of the Credit and
Guarantee Agreement is hereby amended by deleting the table contained therein
and substituting in lieu thereof the following table:
<TABLE>
<CAPTION>
Consolidated Fixed
Period Charge Coverage Ratio
------ ---------------------
<S> <C>
FQ2 2000 - FQ3 2000 1.00 to 1.0
FQ4 2000 - FQ2 2001 1.10 to 1.0
FQ3 2001 and thereafter 1.20 to 1.0
</TABLE>
9. Amendment to Section 8.1(c). Section 8.1(c) of the Credit and
---------------------------
Guarantee Agreement is hereby amended by deleting such section in its entirety
and substituting in lieu thereof the following new Section 8.1(c):
<PAGE>
7
"(c) Consolidated Interest Coverage Ratio. Permit the
------------------------------------
Consolidated Interest Coverage Ratio for any period of four consecutive
fiscal quarters of the Company ending during any period set forth below to
be less than the ratio set forth below opposite such period:
<TABLE>
<CAPTION>
Consolidated Interest
Period Coverage Ratio
------ --------------
<S> <C>
FQ2 2000 - FQ4 2000 2.25 to 1.0
FQ1 2001 - FQ2 2001 2.40 to 1.0
FQ3 2001 - FQ2 2002 2.75 to 1.0
FQ3 2002 and thereafter 3.00 to 1.0
</TABLE>
10. Amendment to Section 8.2. Section 8.2 of the Credit and
------------------------
Guarantee Agreement is hereby amended by (a) deleting the word "and" at the end
of the paragraph (o) thereof, (b) deleting the period at the end of paragraph
(p) and substituting in lieu thereof the following: "; and" and (c) adding
thereto the following new paragraph (q):
"(q) unsecured Indebtedness of any Foreign Subsidiary in an aggregate
principal amount (for all Foreign Subsidiaries) not to exceed $50,000,000
at any one time outstanding; provided, that the Net Cash Proceeds thereof
--------
are applied in accordance with Section 3.5(a)."
11. Amendment to Subsection 8.3. Subsection 8.3 of the Credit and
---------------------------
Guarantee Agreement is hereby amended by (a) deleting the word "and" at the end
of the paragraph (n) thereof, (b) deleting the period at the end of paragraph
(o) thereof and substituting in lieu thereof the following: "; and" and (c)
adding thereto the following new paragraph (p):
"(p) Liens consisting of the right of the Company's joint venture
partner (the "Partner") in the joint venture separately disclosed in
-------
writing to the Lenders in connection with the Third Amendment as Project
Enterprise to require the Company to put its ownership interests in such
joint venture to the Partner in the event the Company does not make certain
of the investments required by the joint venture agreement relating to such
joint venture."
12. Amendment to Section 8.5. Section 8.5 of the Credit and
------------------------
Guarantee Agreement is hereby amended by (a) deleting the word "and" at the end
of the paragraph (i) thereof, (b) deleting the period at the end of paragraph
(j) and substituting in lieu thereof the following: "; and" and (c) adding
thereto the following new paragraph (k):
"(k) the sale by the Company or any of its Subsidiaries of the assets
described on Schedule A to the Third Amendment (or, in the case of the
particular asset specified on Schedule A (the "Contributed Asset"), the
-----------------
contribution of such asset to a joint venture and
<PAGE>
8
the sale of equity interests in such joint venture to a third party), so
long as the aggregate consideration (including debt assumed by the
purchaser thereof) received by the Company or any such Subsidiary in
connection with any such asset sale (or contribution and sale) shall be at
least equal to the minimum consideration with respect to such asset as
disclosed on such Schedule A."
13. Amendment to Section 8.8(e). Section 8.8(e) of the Credit and
---------------------------
Guarantee Agreement is hereby amended by deleting such section in its entirety
and substituting in lieu thereof the following new Section 8.8(e):
"(e) the Company or any of its Subsidiaries may make intercompany
loans to (i) any Wholly Owned Subsidiary so long as each such intercompany
loan of the Dollar Equivalent of $1,000,000 or more in principal amount is
evidenced by a promissory note (in form and substance satisfactory to the
Administrative Agent) which is pledged in favor of the Administrative Agent
pursuant to the Collateral Agreement or a Pledge Agreement and (ii) any
Subsidiary which is not a Wholly Owned Subsidiary; provided, that the
--------
aggregate principal amount of all such loans described in this clause (ii)
shall not exceed $10,000,000 at any one time outstanding;"
14. Amendment to Section 8.8(h). Section 8.8(h) of the Credit and
---------------------------
Guarantee Agreement is hereby amended by adding thereto immediately after the
reference to Schedule 1.1E in the fourth line thereof the following:
"and other than the acquisition separately disclosed in writing to the
Lenders in connection with the Third Amendment as Project Tortoise, to
the extent such separately disclosed acquisition is financed with
Designated Equity Amounts,"
15. Amendment to Section 8.8(i). Section 8.8(i) of the Credit and
---------------------------
Guarantee Agreement is hereby amended by deleting such section in its entirety
and substituting in lieu thereof the following new Section 8.8(i):
"(i) (x) the contribution to a Permitted Joint Venture of the
Contributed Asset and (y) other investments in Permitted Joint Ventures in
an aggregate amount thereof at any one time not to exceed for all
investments made pursuant to this clause (y) the sum of (A) $25,000,000 and
(B) the amount of any such investments financed with Designated Equity
Amounts to the extent such Designated Equity Amounts do not exceed
$25,000,000."
16. Replacement of Pricing Grid. Annex A to the Credit and Guarantee
---------------------------
Agreement is hereby amended by deleting such Annex A in its entirety and
substituting in lieu thereof the Pricing Grid attached as Annex A hereto.
<PAGE>
9
17. Approval of Addition of Subsidiaries as Borrowing Subsidiaries.
--------------------------------------------------------------
Subject to the terms and conditions of this Amendment, the Credit and Guarantee
Agreement and each of the Joinder Agreements of even date herewith made by
Centra S.A., CMP Batterijen B.V., Accumulatorenfabrik Sonnenshein GmbH and CMP
Batteries Limited, respectively (collectively, the "New Borrowing Subsidiaries")
--------------------------
in favor of the Administrative Agent for the benefit of the Lenders,
substantially in the form attached as Exhibit A hereto (collectively, the
"Joinder Agreements"), the Majority Revolving Credit Facility Lenders hereby
- -------------------
approve the addition of the New Borrowing Subsidiaries as Borrowing Subsidiaries
under the Credit and Guarantee Agreement.
In addition, the Designated Maximum with respect to Tudor A.B., which was named
a Borrowing Subsidiary on the Closing Date but with respect to which no
Designated Maximum was specified on the Closing Date, is $25,000,000.
18. 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, the Required Lenders and the Majority
Revolving Credit Facility Lenders and the Company shall have paid the fees
referred to in Section 21 of this Amendment. In addition, the effectiveness of
the addition of the New Borrowing Subsidiaries as Borrowing Subsidiaries under
the Credit and Guarantee Agreement is conditioned upon the following additional
conditions precedent:
(a) The Administrative Agent shall have received counterparts of
the Joinder Agreement, duly executed and delivered by the Company and
the New Borrowing Subsidiaries, and by the approval of such New
Borrowing Subsidiary as a Borrowing Subsidiary under the Credit and
Guarantee Agreement each of the Lenders is deemed to have accepted the
contents of the Joinder Agreement, including, without limitation, the
Designated Maximums specified therein.
(b) The Administrative Agent shall have received and be
reasonably satisfied with corporate resolutions, other corporate
documents, certificates and legal opinions in respect of each New
Borrowing Subsidiary substantially equivalent to comparable documents
delivered on the Closing Date in respect of the Borrowing Subsidiaries
party to the Credit and Guarantee Agreement on the Closing Date.
(c) The Administrative Agent shall have received counterparts of
the Foreign Obligations Guarantor Joinder Agreement, substantially in
the form of Exhibit B to this Amendment, duly executed and delivered
by each of the New Borrowing Subsidiaries.
(d) The Administrative Agent shall have received an additional
Pledge Agreement granting to the Administrative Agent, for the benefit
of the Foreign Lenders, a perfected first priority security interest
in the Capital Stock of each of the New Borrowing Subsidiaries, and
all such legal opinions and any other documentation deemed necessary
by the Administrative Agent in connection with
<PAGE>
10
such pledge shall be in form and substance, and, in the case of
opinions, from counsel, reasonably satisfactory to the Administrative
Agent.
(e) The Administrative Agent shall have received such other
documents with respect to any of the foregoing matters as it shall
reasonably request.
19 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.
20 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.
21 Fees. In consideration of the agreement of the Lenders to
----
consent to the amendments contained herein, the Company agrees to pay to each
Lender which so consents on or prior to September 24, 1999, an amendment fee in
an amount equal to 0.125% of the aggregate amount of such Lender's Commitment,
payable on the date hereof in immediately available funds.
22 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 18 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.
23 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.
<PAGE>
11
24 GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
12
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective proper and duly authorized
officers as of the day and year first above written.
EXIDE CORPORATION, as a Borrower and as a
Guarantor
By:_______________________________________________
Name:
Title:
EXIDE HOLDING EUROPE S.A.
COMPAGNIE EUROPEENNE
D'ACCUMULATEURS S.A.
EURO EXIDE CORPORATION LIMITED
SOCIEDAD ESPANOLA DEL ACUMULADOR
TUDOR S.A.
TUDOR A.B.
EXIDE VERWALTUNGS GMBH
MERCOLEC TUDOR B.V.,
each as a Borrowing Subsidiary and as a Guarantor
By:_______________________________________________
Name:
Title:
<PAGE>
13
ACCUMULATORENFABRIK SONNENSCHEIN
GMBH
COMPAGNIA GENERALE ACCUMULATORI
S.P.A.
SINAC S.R.L.
FULMEN IBERICA S.A.
CMP BATTERIES LIMITED
CMP BATTERIJEN B.V.
SOCIETE FRANCAISE DES ACCUMULATEURS
TUDOR S.A.
CMP BATTERIER A/S
EXIDE AUTOMOTIVE BATTERIE GMBH
HAGEN BATTERIE A.G.
INDUSTRIA COMPOSIZIONI STAMPATE S.P.A.
HAGEN BATTERIJEN B.V.
ELECTRO MERCANTIL INDUSTRIAL S.A.
GAZTAMBIDE S.A.
TERRENOS Y CONSTRUCCIONES S.A.
T.S. BATTERIE S.R.L.
EXIDE BATTERIES LIMITED
B.I.G. BATTERIES LIMITED
EXIDE (DAGENHAM) LIMITED
EXIDE FRANCE S.A.
FULMEN UK LIMITED
EXIDE AUTOMOTIVE S.A.
CMP BATTERIJEN N.V.
SOCIEDAD PORTUGUESA DO ACUMULADOR
TUDOR S.A.
EXIDE DENMARK A/S
GEMALA SWEDEN AB
CENTRA S.A.
DETA AKKUMULATORENWERK GMBH
MAREG ACCUMULATOREN GMBH
FRIWO SILBERKRAFT MBH
EXIDE SONNAK A/S
CMP BATTERIJEN S.A.
EXIDE AUTOMOTIVE B.V.
EXIDE LENDING LIMITED
each as a Guarantor, subject to the
limitations, if any, contained in
Schedule 10.1
By:__________________________________
Name:
Title:
<PAGE>
14
GBC, INC.
as a Guarantor
By:_____________________________
Name:
Title:
GENERAL BATTERY CORPORATION
as a Guarantor
By: Exide Investments, Inc., trustee
By:_____________________________
Name:
Title:
EXIDE INTERNATIONAL, INC.
as a Guarantor
By:_____________________________
Name:
Title:
<PAGE>
15
LEHMAN BROTHERS INC., as Arranger
By:_____________________________
Name:
Title:
LEHMAN COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By:_____________________________
Name:
Title:
LEHMAN SYNDICATED LOANS INC.
By:_____________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON, as
Arranger and as Administrative Agent
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
<PAGE>
16
CREDIT SUISSE FIRST BOSTON, as a
Lender
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
LEHMAN BROTHERS BANKHAUS AG
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
ALPHA CREDIT BANK A.E.
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
BANK OF MONTREAL
By:_____________________________
Name:
Title:
<PAGE>
17
BANQUE PARIBAS
By:_____________________________
Name:
Title:
BANK POLSKA KASA OPIEKI S.A. - PEKAO S.A.
By:_____________________________
Name:
Title:
SCOTIABANK EUROPE PLC
By:_____________________________
Name:
Title:
BANCA POPOLARE DI BERGAMO-CREDITO
VARESINO S.C.A.R.L.
By:_____________________________
Name:
Title:
BANKBOSTON, N.A.
By:_____________________________
Name:
Title:
<PAGE>
18
BANQUE ET CAISSE D'EPARGNE DE L'ETAT,
LUXEMBOURG
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
BHF BANK AKTENGESELLSCHAFT
By:_____________________________
Name:
Title:
BANQUE NATIONALE DE PARIS
By:_____________________________
Name:
Title:
BANCO ESPIRITO SANTO E COMERCIAL DE
LISBOA S.A.
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
<PAGE>
19
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE NEW YORK BRANCH
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
COMERICA BANK
By:_____________________________
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
DAI-ICHI KANGYO BANK, LTD.
By:_____________________________
Name:
Title:
<PAGE>
20
DRESDNER BANK AG NEW YORK & GRAND
CAYMAN BRANCHES
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
FIRST UNION NATIONAL BANK
By:_____________________________
Name:
Title:
CORESTATES BANK, N.A.
By:_____________________________
Name:
Title:
INDUSTRIAL BANK OF JAPAN, LIMITED
NEW YORK BRANCH
By:_____________________________
Name:
Title:
OSTERREICHISCHE INVESTITIONSKREDIT AG
By:_____________________________
Name:
Title:
<PAGE>
21
MEESPIERSON N.V.
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
MELLON BANK, N.A.
By:_____________________________
Name:
Title:
THE MITSUBISHI TRUST & BANKING
CORPORATION
By:_____________________________
Name:
Title:
SOCIETE GENERALE
By:_____________________________
Name:
Title:
THE SUMITOMO TRUST & BANKING CO., LTD.
By:_____________________________
Name:
Title:
<PAGE>
22
TORONTO DOMINION (TEXAS), INC.
By:_____________________________
Name:
Title:
ING HIGH INCOME PRINCIPAL
PRESERVATION FUND HOLDINGS, LDC
By: ING CAPITAL ADVISORS, INC., as
Investment Advisor
By:_____________________________
Name:
Title:
ARCHIMEDES FUNDING, L.L.C.
By: ING CAPITAL ADVISORS, INC., as
Collateral Advisor
By:_____________________________
Name:
Title:
ORIX USA CORPORATION
By:_____________________________
Name:
Title:
PARIBAS CAPITAL FUNDING LLC
By:_____________________________
Name:
Title:
<PAGE>
23
KZH CNC LLC
By:_____________________________
Name:
Title:
KZH CYPRESSTREE-1 LLC
By:_____________________________
Name:
Title:
KZH LANGDALE LLC
By:_____________________________
Name:
Title:
KZH PONDVIEW LLC
By:_____________________________
Name:
Title:
KZH WATERSIDE LLC
By:_____________________________
Name:
Title:
THE BANK OF SCOTLAND
By:_____________________________
Name:
Title:
<PAGE>
24
THE BANK OF NOVA SCOTIA
By:_____________________________
Name:
Title:
NATEXIS BANQUE BFCE
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
ALLIANCE CAPITAL MANAGEMENT L.P., as
Manager on behalf of Alliance Capital
Funding, L.L.C.
By: Alliance Capital Management Corporation,
General Partner of Alliance Capital
Management L.P.
By:_____________________________
Name:
Title:
<PAGE>
25
ALLIANCE CAPITAL MANAGEMENT L.P., as
Manager on behalf of Alliance Investments
Limited
By: Alliance Capital Management Corporation,
General Partner of Alliance Capital
Management L.P.
By:_____________________________
Name:
Title:
BALANCED HIGH YIELD FUND I LTD.,
By: BHF-Bank Aktiengesellschaft, acting
through its New York Branch, as
attorney-in-fact
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
CYPRESSTREE INVESTMENT PARTNERS II, LTD.
As: CypressTree Investment Management
Company, Inc., as Portfolio Manager
By:_____________________________
Name:
Title:
DELANO COMPANY
By: Pacific Investment Management Company,
as its Investment Advisor
By:_____________________________
Name:
Title:
<PAGE>
26
INDOSUEZ CAPITAL FUNDING IV, L.P.
By: Indosuez Capital, as Portfolio Manager
By:_____________________________
Name:
Title:
ROYALTON COMPANY
By: Pacific Investments Management Company,
as Investment Advisor
By: PIMCO Management Inc., a general partner
By:_____________________________
Name:
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By:_____________________________
Name:
Title:
WADDELL & REED FINANCIAL INC.
By:_____________________________
Name:
Title:
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE LONDON BRANCH
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
EATON VANCE SENIOR INCOME TRUST
By: Eaton Vance Management as
Investment Advisor
By:______________________________
Name:
Title:
EATON VANCE INSTITUTIONAL SENIOR
LOAN FUND
By: Eaton Vance Management as Investment
Advisor
By:______________________________
Name:
Title:
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK
By:______________________________
Name:
Title:
27
<PAGE>
BANK ONE, MICHIGAN, f/k/a NBD BANK
By:______________________________
Name:
Title:
CAPTIVA IV FINANCE, LTD., as advised by
Pacific Investment Management Company
By:______________________________
Name:
Title:
WINGED FOOT FUNDING TRUST
By:______________________________
Name:
Title:
INDOSUEZ CAPITAL FUNDING IIA, LIMITED
By: Indosuez Capital as Portfolio Advisor
By:______________________________
Name:
Title:
BLACK DIAMOND CLO, 1998-1 LTD.
By:______________________________
Name:
Title:
28
<PAGE>
MONUMENT CAPITAL LTD., as Assignee
By: Alliance Capital Management L.P.,
as Investment Manager
By: Alliance Capital Management
Corporation, as General Partner
By:______________________________
Name:
Title:
CYPRESSTREE INSTITUTIONAL FUND, LLC
By: CypressTree Investment Management
Company Inc., its Managing Member
By:______________________________
Name:
Title:
CYPRESSTREE INVESTMENT FUND, LLC
By: CypressTree Investment Management
Company Inc., its Managing Member
By:______________________________
Name:
Title:
CYPRESSTREE SENIOR FLOATING RATE FUND
By: CypressTree Investment Management
Company Inc., as Portfolio Manager
By:______________________________
Name:
Title:
29
<PAGE>
NORTH AMERICAN SENIOR FLOATING RATE FUND
By: CypressTree Investment Management
Company Inc., as Portfolio Manager
By:______________________________
Name:
Title:
SEQUILS-ING I (HBDGM), LTD.
By: ING Capital Advisors LLC, Collateral
Manager and Authorized Signatory
By:_____________________________
Name:
Title:
30
<PAGE>
<TABLE>
<CAPTION>
Applicable Applicable
Margin Margin
for for Tranche
Revolving A Term
Credit Loans Applicable
Loans which Applicable which are Applicable Margin Applicable
are Base Margin for Base Rate Margin for for Tranche Margin for
Rate Loans Revolving Loans or Tranche A B Term Tranche B
or Foreign Credit Loans Foreign Term Loans Loans which Term Loans
Consolidated Alternate which are Alternate which are are Base which are Facility
Leverage Rate Loans Eurocurrency Rate Loans Eurocurrency Rate Loans Eurocurrency Fee Rate
Ratio Loans Loans Loans
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Greater than or
equal to 5.25 to 1 1.25% 2.25% 1.75% 2.75% 2.00% 3.00% .50%
- --------------------------------------------------------------------------------------------------------------
Greater than or
equal to 4.50 to 1 1.00% 2.00% 1.50% 2.50% 1.75% 2.75% .50%
and less than 5.25
to 1
- --------------------------------------------------------------------------------------------------------------
Greater than or
equal to 4.00 1 .50% 1.50% 1.00% 2.00% 1.50% 2.50% .50%
and less than
4.50 to 1
- --------------------------------------------------------------------------------------------------------------
Greater than or
equal to 3.50 to 1 .25% 1.25% .75% 1.75% 1.25% 2.25% .50%
and less than
4.00 to 1
- --------------------------------------------------------------------------------------------------------------
Greater than or
equal to 3.00 to 1 0% .75% .25% 1.25% 1.00% 2.00% .50%
and less than
3.50 to 1
- --------------------------------------------------------------------------------------------------------------
Less than
3.00 to 1 0% .625% 0% 1.00% .75% 1.75% .375%
==============================================================================================================
</TABLE>
Changes in the Applicable Margin or in the Facility Fee Rate resulting from
changes in the Consolidated Leverage Ratio shall become effective on the date
(the "Adjustment Date") on which financial statements are delivered to the
---------------
Administrative Agent and the Lenders pursuant to Section 7.1 (but in any event
not later than the 50th day after the end of each of the first three quarterly
periods of each fiscal year or the 100th day after the end of each fiscal year,
as the case may be) and shall remain in effect until the next change to be
effected pursuant to this paragraph. If any financial statements referred to
above are not delivered within the time periods specified above, then, until
such financial statements are delivered, the Consolidated Leverage Ratio as at
the end of the fiscal period that would have been covered thereby shall for the
purposes of this definition be deemed to be greater than 5.25 to 1. In
addition, at all times while an Event of Default shall have occurred and be
continuing, the Consolidated Leverage Ratio shall for the purposes of this
definition be deemed to be greater than 5.25 to 1. Each determination of the
Consolidated Leverage Ratio pursuant to this definition shall be made with
respect to the period of four consecutive fiscal quarters of the Company ending
at the end of the period covered by the relevant financial statements.
31
<PAGE>
EXHIBIT A
---------
BORROWING SUBSIDIARY JOINDER AGREEMENT
BORROWING SUBSIDIARY JOINDER AGREEMENT, dated as of September 21,
1999, made by Centra S.A., CMP Batterijen B.V., Accumulatorenfabrik Sonnenshein
GmbH and CMP Batteries Limited (collectively, the "Borrowing Subsidiaries")
----------------------
pursuant to the Credit and Guarantee Agreement, dated as of December 19, 1997
(as amended, supplemented or otherwise modified from time to time, the "Credit
------
and Guarantee Agreement"), among Exide Corporation (the "Company"), the
- ----------------------- -------
Borrowing Subsidiaries from time to time parties thereto (the "Borrowing
---------
Subsidiaries"; collectively with the Company, the "Borrowers"), the Subsidiary
- ------------ ---------
Guarantors from time to time parties thereto, the several Lenders from time to
time parties thereto, Credit Suisse First Boston, as administrative agent (in
such capacity, the "Administrative Agent") and Lehman Commercial Paper Inc., as
--------------------
syndication agent (in such capacity, the "Syndication Agent"). Unless otherwise
-----------------
defined herein, terms defined in the Credit and Guarantee Agreement and used
herein shall have the meanings given to them in the Credit and Guarantee
Agreement.
For good and valid consideration, the sufficiency of which hereby is
acknowledged, each of the Borrowing Subsidiaries hereby agrees as follows:
(a) It shall be a Borrowing Subsidiary for all purposes under the Credit
and Guarantee Agreement and the documents executed in connection
therewith.
(b) The Designated Maximum with respect to Centra S.A. is $25,000,000, the
Designated Maximum with respect to CMP Batterijen B.V. is $50,000,000,
the Designated Maximum with respect to Accumulatorenfabrik Sonnenshein
GmbH is $50,000,000 and the Designated Maximum with respect to CMP
Batteries Limited is $50,000,000.
(c) It shall (i) be bound by all covenants, agreements, acknowledgments
and other terms and provisions applicable to it, as a Borrowing
Subsidiary pursuant to the Credit and Guarantee Agreement and the
documents executed in connection therewith to the same extent, and in
the same manner, as if it (in its capacity as a Borrowing Subsidiary)
were a direct party thereto and (ii) perform all obligations required
of it pursuant to the Credit and Guarantee Agreement and such other
documents.
Each of the Borrowing Subsidiaries hereby acknowledges that it has
received and reviewed a copy (in execution form) of the Credit and Guarantee
Agreement (including, without limitation, all amendments, supplements and other
modifications thereto) and each of the documents referred to therein (including,
without limitation, all amendments, supplements and other modifications
thereto).
32
<PAGE>
Each of the Borrowing Subsidiaries hereby represents and warrants that
(a) all representations and warranties contained in the Credit and Guarantee
Agreement and such other documents which are applicable to it (after giving
effect to this Borrowing Subsidiary Joinder Agreement) are true and correct in
all material respects and (b) immediately prior to and immediately after the
effectiveness of this Borrowing Subsidiary Joinder Agreement, no Default or
Event of Default shall have occurred and be continuing.
The Company hereby agrees that its guarantees contained in Section 10
of the Credit and Guarantee Agreement shall remain in full force and effect
after giving effect to this Borrowing Subsidiary Joinder Agreement.
The address and jurisdiction of incorporation of each of the Borrowing
Subsidiaries is set forth in Annex I to this Borrowing Subsidiary Joinder
Agreement.
THIS BORROWING SUBSIDIARY JOINDER AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
33
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Borrowing
Subsidiary Joinder Agreement to be duly executed and delivered by its proper and
duly authorized officer as of the date first written above.
CENTRA S.A.
By:
_______________________
Title:
CMP BATTERIJEN B.V.
By:
_______________________
Title:
ACCUMULATORENFABRIK
By:
_______________________
Title
CMP BATTERIES LIMITED
By:
_______________________
Title
EXIDE CORPORATION
By:
______________________
Title:
ACKNOWLEDGED AND AGREED TO;
- --------------------------
CREDIT SUISSE FIRST BOSTON, as Administrative Agent
By:__________________________________________________
Title:
34
<PAGE>
Annex I
-------
Administrative Information for Borrowing Subsidiary
CMP Batterijen B.V.
Postus 162 Produktiestraat 25
3606 CA Maarsen, Netherlands+B32
Centra S.A.
U1 Gdynska 31/33
61-016 Poznan, Poland
Accumulatorenfabrik Sonnenshein GmbH
Thiergarten
63654 Budigen, Germany
CMP Batteries Limited
P.O. Box 1, Salford Road, Over Hulton
Bolton BL5 1DD, England
35
<PAGE>
Exhibit B
---------
FOREIGN OBLIGATIONS GUARANTOR
JOINDER AGREEMENT
FOREIGN OBLIGATIONS GUARANTOR JOINDER AGREEMENT, dated as of September
21, 1999, made by Centra S.A., CMP Batterijen B.V, Accumulatorenfabrik
Sonnenshein GmbH and CMP Batteries Limited (collectively, the "Subsidiary
----------
Guarantors") pursuant to the Credit and Guarantee Agreement, dated as of
- ----------
December 19, 1997 (as amended, supplemented or otherwise modified from time to
time, the "Credit and Guarantee Agreement"), among Exide Corporation (the
------------------------------
"Company"), the Borrowing Subsidiaries parties thereto (the "Borrowing
- -------- ---------
Subsidiaries"; collectively with the Company, the "Borrowers"), the Subsidiary
- ------------ ---------
Guarantors from time to time parties thereto, the several Lenders from time to
time parties thereto, Credit Suisse First Boston, as administrative agent (in
such capacity, the "Administrative Agent") and Lehman Commercial Paper Inc., as
--------------------
syndication agent (in such capacity, the "Syndication Agent"). Unless otherwise
-----------------
defined herein, terms defined in the Credit and Guarantee Agreement and used
herein shall have the meanings given to them in the Credit and Guarantee
Agreement.
For good and valid consideration, the sufficiency of which hereby is
acknowledged, each of the Subsidiary Guarantors hereby agrees as follows:
(a) It shall be a Foreign Subsidiary Guarantor for all purposes under the
Credit and Guarantee Agreement and the documents executed in
connection therewith, and, as such, shall guarantee, to the extent set
forth in the Credit and Guarantee Agreement, the Foreign Obligations.
(b) It shall (i) be bound by all covenants, agreements, acknowledgments
and other terms and provisions applicable to it, as a Foreign
Subsidiary Guarantor pursuant to the Credit and Guarantee Agreement
and the documents executed in connection therewith to the same extent,
and in the same manner, as if it (in its capacity as a Foreign
Subsidiary Guarantor) were a direct party thereto and (ii) perform all
obligations required of it pursuant to the Credit and Guarantee
Agreement and such other documents in such capacity.
36
<PAGE>
Each of the Subsidiary Guarantors hereby acknowledges that it has
received and reviewed a copy (in execution form) of the Credit and Guarantee
Agreement (including, without limitation, all amendments, supplements and other
modifications thereto) and each of the documents referred to therein (including,
without limitation, all amendments, supplements and other modifications
thereto).
Each of the Subsidiary Guarantors hereby represents and warrants that
(a) all representations and warranties contained in the Credit and Guarantee
Agreement and such other documents which are applicable to it (after giving
effect to this Foreign Obligations Guarantor Joinder Agreement) are true and
correct in all material respects and (b) immediately prior to and immediately
after the effectiveness of this Foreign Obligations Guarantor Joinder Agreement,
no Default or Event of Default shall have occurred and be continuing.
The address and jurisdiction of incorporation of each of the
Subsidiary Guarantors is set forth in Annex I to this Foreign Obligations
Guarantor Joinder Agreement.
THIS FOREIGN OBLIGATIONS GUARANTOR JOINDER AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
37
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Foreign
Obligations Guarantor Joinder Agreement to be duly executed and delivered by its
proper and duly authorized officer as of the date first written above.
CENTRA S.A.
By:
________________________
Title:
CMP BATTERIJEN B.V.
By:
_______________________
Title:
ACCUMULATORENFABRIK
By:
_______________________
Title
CMP BATTERIES LIMITED
By:
_______________________
Title
ACKNOWLEDGED AND AGREED TO;
- --------------------------
CREDIT SUISSE FIRST BOSTON, as Administrative Agent
By: _________________________________________________
Title:
38
<PAGE>
Annex I
-------
Administrative Information for Subsidiary Guarantors
CMP Batterijen B.V.
Postus 162 Produktiestraat 25
3606 CA Maarsen, Netherlands+B32
Centra S.A.
U1 Gdynska 31/33
61-016 Poznan, Poland
Accumulatorenfabrik Sonnenshein GmbH
Thiergarten
63654 Budigen, Germany
CMP Batteries Limited
P.O. Box1, Salford Road, Over Hulton
Bolton BL5 1DD, England
39
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> OCT-03-1999
<CASH> 28,081
<SECURITIES> 0
<RECEIVABLES> 512,519
<ALLOWANCES> 56,842
<INVENTORY> 511,936
<CURRENT-ASSETS> 1,026,487
<PP&E> 867,478
<DEPRECIATION> 350,476
<TOTAL-ASSETS> 2,241,347
<CURRENT-LIABILITIES> 584,429
<BONDS> 1,244,165
0
0
<COMMON> 213
<OTHER-SE> 140,397
<TOTAL-LIABILITY-AND-EQUITY> 2,241,347
<SALES> 1,075,149
<TOTAL-REVENUES> 1,075,149
<CGS> 796,216
<TOTAL-COSTS> 796,216
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,579
<INTEREST-EXPENSE> 51,978
<INCOME-PRETAX> (3,932)
<INCOME-TAX> 543
<INCOME-CONTINUING> (5,076)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,076)
<EPS-BASIC> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
