EXIDE TECHNOLOGIES
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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o Preliminary Proxy Statement |
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o Confidential, for Use of the Commission |
þ Definitive Proxy Statement |
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Only (as permitted by Rule 14a-(e)(2)) |
o Definitive Additional Materials |
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o Soliciting Material Pursuant to §240.14a-12 |
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EXIDE TECHNOLOGIES
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed pursuant to Exchange
Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it
was determined): |
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Proposed maximum aggregate value of transaction: |
o Fee paid previously with preliminary materials.
o Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
date of its filing.
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD AUGUST 22, 2006
To our Shareholders:
The 2006 annual meeting of shareholders of Exide Technologies
will be held at the Hilton Garden Inn Atlanta
North/Alpharetta
at 4025 Windward Plaza Drive, Alpharetta, Georgia 30005, on
Tuesday, August 22, 2006, beginning at 9:00 a.m. local
time. At the meeting, the holders of our outstanding common
stock will act on the following matters:
(1) The election of seven directors;
(2) A proposal to approve (i) a $75,000,000 rights
offering of 21,428,571 shares of common stock to our
shareholders at $3.50 per share, (ii) the sale of any
common stock not subscribed for in the rights offering to the
standby purchasers and additional standby purchaser and the sale
of another 14,285,714 shares for $50,000,000 to the standby
purchasers at the same price and (iii) the related Standby
Purchase Agreement and Registration Rights Agreement and the
other transactions contemplated thereby;
(3) A proposal to amend our Certificate of Incorporation to
increase our authorized shares of common stock to 100,000,000
and the aggregate number of shares of capital stock to
101,000,000;
(4) A proposal to approve an amendment of our 2004 Stock
Incentive Plan;
(5) A proposal to ratify the appointment of our independent
auditors for fiscal 2007; and
(6) Any other matters that properly come before the meeting.
All holders of record of shares of our common stock (NASDAQ:
XIDE) at the close of business on July 27, 2006 are
entitled to vote at the meeting and any postponements or
adjournments of the meeting.
The enclosed proxy statement describes the proposals set forth
above in more detail. We urge you to read the proxy statement
carefully before you decide how to vote.
In connection with the rights offering, we are distributing to
our shareholders a prospectus. We urge you to read the
prospectus carefully before you decide to exercise your rights.
You are cordially invited to attend the meeting. Please note
that space limitations make it necessary to limit attendance to
shareholders and one guest. Admission to the meeting will be on
a first-come, first-served basis. Registration will begin at
8:00 a.m., and seating will begin at
8:30 a.m. Each shareholder may be asked to present
valid picture identification, such as a drivers license or
passport. Shareholders holding stock in brokerage accounts
(street name holders) will need to bring a copy of a
brokerage statement reflecting stock ownership as of the record
date. Cameras (including cellular phones with photographic
capabilities), recording devices and other electronic devices
will not be permitted at the meeting.
By order of the Board of Directors,
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Gordon A. Ulsh
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Brad S. Kalter
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President and Chief
Executive Officer
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Deputy General Counsel and
Corporate Secretary
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July 28, 2006
YOUR VOTE IS IMPORTANT
If you are unable to attend the meeting in person, you may
vote on the proposals by proxy. To do so, please complete, date,
sign and return the enclosed proxy card. We have enclosed a
prepaid envelope to expedite the return of your proxy card. You
may also vote by telephone or over the Internet as noted in the
proxy card instructions. If you have voted by telephone,
Internet or mail and later decide to attend and vote at the
meeting, you may do so.
TABLE OF
CONTENTS
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Shareholder Proposals
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Nomination of Director Candidates
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Copy of Bylaw Provisions
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A-1
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B-1
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13000
DEERFIELD PARKWAY
BUILDING 200
ALPHARETTA, GEORGIA 30004
PROXY STATEMENT, DATED
JULY 28, 2006
The Board of Directors of Exide Technologies is soliciting
proxies from its shareholders to be used at the annual meeting
of shareholders to be held on Tuesday, August 22, 2006,
beginning at 9:00 a.m., at the Hilton Garden Inn Atlanta
North/Alpharetta at 4025 Windward Plaza Drive, Alpharetta,
Georgia 30005, and at any postponements or adjournments thereof.
This proxy statement contains information related to the annual
meeting. This proxy statement, a proxy card and our Annual
Report on
Form 10-K
for the fiscal year ended March 31, 2006 are being mailed
to shareholders on or about July 28, 2006.
QUESTIONS
AND ANSWERS RELATING TO THE ANNUAL MEETING
Why did I
receive these materials?
Shareholders as of the close of business on July 27, 2006,
which is referred to as the Record Date, are
entitled to vote at our annual meeting of shareholders, which
will be held on August 22, 2006. As a shareholder, you are
invited to attend the annual meeting and are requested to vote
on the items of business described in this proxy statement. We
are required by law to distribute these proxy materials to all
shareholders as of the Record Date. This proxy statement
provides notice of the annual meeting of shareholders, describes
the proposals presented for shareholder action and includes
information required to be disclosed to shareholders. The
accompanying proxy card enables shareholders to vote on the
matters without having to attend the annual meeting in person.
Who is
entitled to vote at the meeting?
Only shareholders of record at the close of business on the
Record Date are entitled to receive notice of and to participate
in the annual meeting. If you were a shareholder of record on
the Record Date, you will be entitled to vote all of the shares
that you held on that date at the meeting, or any postponements
or adjournments of the meeting.
How many
votes do I have?
You will be entitled to one vote for each outstanding share of
our common stock you own as of the Record Date. As of the Record
Date, there were 24,560,586 shares of our common stock
outstanding and eligible to vote.
Who can
attend the meeting?
Subject to space availability, all shareholders as of the Record
Date, or their duly appointed proxies, may attend the meeting,
and each may be accompanied by one guest. Since seating is
limited, admission to the meeting will be on a first-come,
first-served basis. Registration will begin at 8:00 a.m.,
and seating will begin at 8:30 a.m. If you attend,
please note that you may be asked to present valid picture
identification, such as a
1
drivers license or passport. Cameras (including cell
phones with photographic capabilities), recording devices and
other electronic devices will not be permitted at the meeting.
Please also note that if you hold your shares in street
name (that is, through a broker, bank or other nominee),
you will need to bring a copy of a brokerage statement
reflecting your stock ownership as of the Record Date and check
in at the registration desk at the meeting.
Please let us know if you plan to attend the meeting by marking
the appropriate box on the enclosed proxy card or, if you vote
by telephone or Internet, indicating your plans when prompted.
How many
shares must be present or represented to conduct business at the
annual meeting?
The presence at the meeting, in person or by proxy, of the
holders of a majority of the aggregate voting power of the
common stock outstanding on the Record Date will constitute a
quorum, permitting the conduct of business at the meeting. As of
the Record Date, 24,560,586 shares of common stock,
representing the same number of votes, were outstanding. Thus,
the presence of the holders of common stock representing at
least 12,280,294 votes will be required to establish a quorum.
Proxies received but marked as abstentions, votes withheld and
broker non-votes will be included in the calculation of the
number of votes considered to be present at the meeting.
How can I
vote my shares in person at the annual meeting?
Shares held in your name as the shareholder of record may be
voted by you in person at the annual meeting. Shares held by you
beneficially in street name through a broker, bank
or other nominee may be voted by you in person at the annual
meeting only if you obtain a legal proxy from the broker, bank
or other nominee that holds your shares giving you the right to
vote the shares.
How can I
vote my shares without attending the meeting?
Whether you hold shares directly as the shareholder of record or
beneficially in street name, you may direct how your
shares are voted without attending the annual meeting. If you
are a shareholder of record (that is, if your shares are
registered directly in your name with our transfer agent), you
must complete and properly sign and date the accompanying proxy
card and return it to us and it will be voted as you direct. A
pre-addressed envelope is included for your use. If you are a
shareholder of record and attend the meeting, you may deliver
your completed proxy card in person. If you hold shares
beneficially in street name, you may vote by
submitting voting instructions to your broker, bank or other
nominee.
Can I
vote by telephone or electronically?
If you are a shareholder of record, you may vote by telephone,
or electronically through the Internet, by following the
instructions included with your proxy card. If your shares are
held in street name, please check your proxy card or
contact your broker, bank or other nominee to determine whether
you will be able to vote by telephone or electronically. The
deadline for voting by telephone or electronically is
11:59 p.m., Eastern Daylight Time, on August 21, 2006.
Can I
change my vote after I return my proxy card?
Yes. If you are a shareholder of record, you may revoke or
change your vote at any time before the proxy is exercised by
filing with our Corporate Secretary a notice of revocation or a
duly executed proxy bearing a later date or by attending the
annual meeting and voting in person. For shares you hold
beneficially in street name, you may change your
vote by submitting new voting instructions to your broker, bank
or other nominee or, if you have obtained a legal proxy from
your broker, bank or other nominee giving you the right to vote
your shares, by attending the meeting and voting in person. In
either case, the powers of the proxy holders will be suspended
if you attend the meeting in person and so request, although
attendance at the meeting will not by itself revoke a previously
granted proxy.
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Who
counts the votes?
Votes will be counted and certified by the Inspectors of
Election, who are employees of American Stock
Transfer & Trust Company (AST), our
transfer agent. If you are a shareholder of record, your signed
proxy card is returned directly to AST for tabulation. If you
hold your shares in street name through a broker,
bank or other nominee, your broker, bank or other nominee will
return one proxy card to AST on behalf of its clients.
What are
the Board of Directors recommendations?
Unless you give other instructions on your proxy card, the
persons named as proxy holders on the proxy card will vote in
accordance with the recommendations of the Board of Directors.
The Board of Directors recommendation is set forth
together with the description of each item in this proxy
statement. In summary, the Board of Directors recommends a
vote FOR each of the proposals.
Will
shareholders be asked to vote on any other matters?
To the knowledge of Exide and its management, shareholders will
vote only on the matters described in this proxy statement.
However, if any other matters properly come before the meeting,
the persons named as proxies for shareholders will vote on those
matters in the manner they consider appropriate.
What vote
is required to approve each item?
Election of Directors. The affirmative vote of
a plurality of the votes cast at the meeting is required for the
election of directors (Proposal 1). A properly executed
proxy marked withhold authority with respect to the
election of one or more directors will not be voted with respect
to the director or directors indicated, although it will be
counted for purposes of determining whether there is a quorum.
Amendment to Certificate of Incorporation. The
affirmative vote of the holders of outstanding shares
representing at least a majority of the voting power of all of
the shares of our common stock issued and outstanding on the
Record Date is required to amend our Certificate of
Incorporation to increase the number of authorized shares of
common stock (Proposal 3).
Other Items. For each other item, including
the proposals to approve the rights offering and related matters
(Proposal 2), amend our 2004 Stock Incentive Plan
(Proposal 4) and ratify the appointment of our
independent auditors for fiscal 2007 (Proposal 5), the
affirmative vote of the holders of a majority of the votes cast
in person or represented by proxy, and entitled to vote on the
item will be required for approval.
A properly executed proxy marked abstain with
respect to any matter will not be voted, although it will be
counted for purposes of determining whether there is a quorum.
Accordingly, an abstention will have the effect of a negative
vote.
How are
votes counted?
In the election of directors, you may vote FOR all
or some of the nominees or your vote may be WITHHELD
with respect to one or more of the nominees. You may not
cumulate your votes for the election of directors.
For the other items of business, you may vote FOR,
AGAINST or ABSTAIN. If you elect to
ABSTAIN, the abstention has the same effect as a
vote AGAINST. If you provide specific instructions
with regard to certain items, your shares will be voted as you
instruct on such items.
If you hold your shares in street name through a
broker, bank or other nominee rather than directly in your own
name, then your broker, bank or other nominee is considered the
shareholder of record, and you are considered the beneficial
owner of your shares. We have supplied copies of our proxy
statement to the broker, bank or other nominee holding your
shares of record, and they have the responsibility to send it to
you. As the beneficial owner, you have the right to direct your
broker, bank or other nominee on how to vote your shares at the
annual meeting. The broker, bank or other nominee that is the
shareholder of record for your shares is
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obligated to provide you with a voting instruction card for you
to use for this purpose. If you hold your shares in a brokerage
account but you fail to return your voting instruction card to
your broker, your shares may constitute broker
non-votes. Generally, broker non-votes occur on a matter
when a broker is not permitted to vote on that matter without
instructions from the beneficial owner and instructions are not
given. In tabulating the voting result for any particular
proposal, shares that constitute broker non-votes are not
considered present and entitled to vote on that proposal. If a
quorum is present at the annual meeting, the persons receiving
the greatest number of votes will be elected to serve as
directors. As a result, broker non-votes will not affect the
outcome of the voting on the election of directors
(Proposal 1). The approval of the rights offering and
related matters (Proposal 2), the amendment to the 2004
Stock Incentive Plan (Proposal 4) and the ratification
of the appointment of our independent auditors
(Proposal 5) require the affirmative vote of a
majority of the shares of common stock present in person or
represented by proxy at the annual meeting and entitled to vote
on the proposal. A broker non-vote is treated as not being
entitled to vote on the matter and, therefore, is not counted
for purposes of determining whether the proposal has been
approved. However, broker non-votes will have the same effect as
a negative vote on the proposals to amend our Certificate of
Incorporation to increase the number of authorized shares of
common stock (Proposal 3) because this proposal is
approved by a majority of the voting power of all of the shares
of our common stock issued and outstanding on the Record Date,
regardless of whether all of such shares are present and
entitled to vote at the meeting. Shares represented by such
broker non-votes will, however, be counted in
determining whether there is a quorum.
If you are a beneficial owner and your broker, bank or other
nominee holds your shares in its name, it is permitted to vote
your shares on the election of directors (Proposal 1), the
approval of the rights offering and related matters
(Proposal 2), the amendment to our Certificate of
Incorporation (Proposal 3) and the ratification of the
appointment of our independent auditors (Proposal 5), even
if the broker, bank or other nominee does not receive voting
instructions from you. Your broker, bank or other nominee may
not vote your shares, absent instructions from you, on the
approval of the amendment of our 2004 Stock Incentive Plan
(Proposal 4). Without your voting instructions on these
items a broker non-vote will occur.
What
should I do if I receive more than one set of voting
materials?
You may receive more than one set of voting materials, including
multiple copies of this proxy statement and multiple proxy cards
or voting instruction cards. For example, if you hold your
shares in more than one brokerage account, you may receive a
separate voting instruction card for each brokerage account in
which you hold shares. If you are a shareholder of record and
your shares are registered in more than one name, you will
receive more than one proxy card. Please complete, sign, date
and return each proxy card and voting instruction card that you
receive.
If the
rights offering is approved by the shareholders, am I required
to exercise any rights I receive in the rights
offering?
No. You may exercise any number of your rights, or you may
choose not to exercise any rights.
What
happens if I elect to exercise my rights and the shareholders do
not approve the rights offering?
If the shareholders do not approve the rights offering and you
exercised your rights, the subscription agent will refund your
payment in full. You will not be credited interest on your
payment.
Where can
I find the voting results of the annual meeting?
We intend to announce the preliminary voting results at the
annual meeting and publish the final results in our quarterly
report on
Form 10-Q
for the quarter ending September 30, 2006.
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PROPOSALS SUBMITTED
FOR SHAREHOLDER VOTE
PROPOSAL 1
ELECTION OF DIRECTORS
Each of the directors below will be a nominee for election to
serve a one-year term set to expire at the annual meeting in
2007 and until their successors are duly elected and qualified.
Our Board of Directors expects that all of the nominees will be
able and willing to serve as directors. If any nominee is not
available to serve as a director at the time of the annual
meeting, the persons named on the proxy will vote for another
candidate nominated by our Board of Directors, or our Board of
Directors may reduce the number of directors. Our Board of
Directors has determined that each of the director nominees
below, except Gordon A. Ulsh, is an independent
director as defined in the listing standards of the Nasdaq
Global Market, as currently in effect. See Corporate
Governance Director Independence.
Biographical information about each director nominee, as of
July 10, 2006, appears below.
Director
Nominees Currently Serving on our Board of
Directors
Michael R. DAppolonia
Director since 2004
Mr. DAppolonia, 57, is a Principal of
Nightingale & Associates, LLC, a global management
consulting firm providing financial and operational
restructuring services to both publicly and privately held
middle-market companies. Mr. DAppolonia is currently
President and Chief Executive Officer of Kinetic Systems Inc. In
his consulting capacity, Mr. DAppolonia served as the
President of Reorganized Cone Mills Corporation and from October
2003 to May 2005 served as Chief Restructuring Officer of Cone
Mills Corporation. From September 2002 to October 2003,
Mr. DAppolonia served as President and Director of
Moll Industries, Inc. Previously he served as President and
Chief Executive Officer of McCulloch Corporation, Ametech, Inc.,
Halston Borghese, Inc. and Simmons Upholstered Furniture Inc.
Mr. DAppolonia is a member of the Board of Directors
of The Washington Group International, Inc. and Kinetic Systems
Inc. Mr. DAppolonia is Chairman of the Compensation
Committee and a member of the Finance Committee.
David S. Ferguson
Director since 2005
Mr. Ferguson, 61, is the principal of his own retail
consulting business, DS Ferguson Enterprises, LLC, based in
Atlanta, Georgia. Mr. Ferguson is the retired President and
Chief Executive Officer of Wal-Mart Europe. He served in that
capacity from September 2000 through July 2003. Prior to that,
he was President and Chief Executive Officer of Wal-Mart Canada
from February 1996 to September 2000. Mr. Ferguson was
President and Chief Operating Officer as well as a director of
Stuarts Department Stores from August 1994 through October 1995.
Mr. Ferguson is a member of the Board of Directors of
Sobeys Inc., a Canadian grocery chain. Mr. Ferguson is a member
of the Compensation and Nominating and Corporate Governance
Committees.
John P. Reilly
Director since 2004
Mr. Reilly, 62, is the retired Chairman, President
and Chief Executive Officer of Figgie International. He has more
than thirty years of experience in the automotive industry,
where he has served as President and CEO of a number of
automotive suppliers, including Stant Corporation and Tenneco
Automotive. He has also held leadership positions at the former
Chrysler Corporation and Navistar, and has served as President
of Brunswick Corporation. Mr. Reilly is currently on the
Board of Directors of Material Sciences Corporation, Marshfield
Door Systems, Inc. and Timken Company. Mr. Reilly serves as
Chairman of the Board of Directors and a member of the
Compensation Committee.
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Michael P. Ressner
Director since 2004
Mr. Ressner, 57, is a retired Nortel Networks
executive who, between 1981 and 2003, served in a number of
senior financial and operational management positions.
Mr. Ressner was an Adjunct Professor of Applied Financial
Management at North Carolina State University between 2002 and
2004. He is currently an adviser within the College of
Management at North Carolina State University. Mr. Ressner
currently serves as a member of the Board of Directors for the
following companies: Arsenal Digital Solutions USA, Inc.,
Entrust, Inc. and Magellan Health Services, Inc.
Mr. Ressner is Chairman of the Audit Committee and a member
of the Finance Committee.
Carroll R. Wetzel
Director since 2005
Mr. Wetzel, 63, is a retired investment banker. Mr.
Wetzel most recently served as Chairman of the Board of
Directors of Safety Components International, Inc., a supplier
of automotive airbag fabric and cushions and technical fabrics
from 2000 to 2005. Mr. Wetzel currently serves as a member
of the Board of Directors of Laidlaw International, Inc.
Mr. Wetzel is Chairman of the Nominating and Corporate
Governance and Finance Committees and a member of the Audit
Committee.
Gordon A. Ulsh
Director since 2005
Mr. Ulsh, 60, is the Companys President and
Chief Executive Officer. Mr. Ulsh was appointed to his current
position in April 2005. From 2001 until March 2005,
Mr. Ulsh was Chairman, President and Chief Executive
Officer of FleetPride Inc., the nations largest
independent aftermarket distributor of heavy-duty truck parts.
Prior to joining FleetPride in 2001, Mr. Ulsh worked with
Ripplewood Equity Partners, providing analysis of automotive
industry segments for investment opportunities. Earlier, he
served as President and Chief Operating Officer of Federal-Mogul
Corporation in 1999 and as head of its Worldwide Aftermarket
Division in 1998. Prior to Federal-Mogul, he held a number of
leadership positions with Cooper Industries, Inc., including
Executive Vice President of its automotive products segment.
Mr. Ulsh joined Coopers Wagner Lighting business unit
in 1984 as Vice President of Operations, following 16 years
in manufacturing and engineering management at Ford Motor
Company.
New
Director Nominee
Herbert F. Aspbury
Mr. Aspbury, 61, currently is an investor and
advisor at Private Client Resources LLC, a privately held
company founded in 2001, which provides consolidated financial
information for high wealth investment managers and their
clients. Since 2002, Mr. Aspbury has also served as an
Adjunct Professor at the Fisher Graduate School of International
Business of the Monterrey Institute of International Studies.
Mr. Aspbury retired from Chase Manhattan Bank in 2000 where
he served in a number of capacities, most recently as the
London-based Managing Director and Regional Executive for
Europe, Africa and the Middle East. Mr. Aspbury was a
member of Chase Manhattan Corporations Management
Committee. Mr. Aspbury also served in a number of
capacities with Chemical Bank until its merger with Chase
Manhattan. Mr. Aspbury serves as Vice Chairman of the Board
of Trustees of Villanova University and is the Chair of its
Finance Committee, as well as Chairman of the Royal Oak
Foundation, the U.S. arm of Britains National Trust.
The Board of Directors recommends that the shareholders
vote FOR the election of each of the director nominees
named above.
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Other
Directors
Mark C. Demetree
Director since 2005
Mr. Demetree, 49, is Chairman and CEO of British
Salt Holdings, LLC, a producer of inorganic chemicals. From 1993
to 1997, Mr. Demetree was President of North American Salt
Company, a subsidiary of Compass Minerals Group, Inc. From 1983
to 1987, Mr. Demetree was president of Demetree Brothers,
Inc., an investment group involved in real estate investment,
venture capital investments and corporate acquisitions. Mr.
Demetree is non-executive Chairman of the Board of Directors of
Texas Petrochemical, Inc. and is a director of American Italian
Pasta Company, where he is a member of the Compensation
Committee. Mr. Demetree is also a director and
non-executive Chairman of the Board of Directors of Pinnacle
Properties Holdings. Mr. Demetree is a member of the
Nominating and Corporate Governance Committee.
Phillip M. Martineau
Director since 2004
Mr. Martineau, 57, currently serves as President and
Chief Executive Officer and Chairman of the Board of Pittsburgh
Corning Corporation and Pittsburgh Corning Europe.
Mr. Martineau previously served as President and CEO of
High Voltage Engineering Corporation from December 2004 through
February 2005, during which time that company filed for
reorganization under Chapter 11 of the Bankruptcy Code.
Prior to that, Mr. Martineau was Executive Vice President
and Group President for HNI Corporation from 2000 to 2003. From
1996 through 1999, Mr. Martineau was CEO and President of
ITW-Arcsmith. Mr. Martineau was President of Ansell
Industrial from 1994 to 1996, and CFO and Vice President for
GNB Technologies from 1988 to 1994. Mr. Martineau is a
member of the board of directors of the Experimental Aviation
Association. Mr. Martineau is a member of our Audit and
Nominating and Corporate Governance Committees.
Messrs. Demetree and Martineau have informed us that they
will not be standing for re-election to our Board of Directors.
The Standby Purchase Agreement described in Proposal 2
below includes a closing condition pursuant to which we are
required to appoint two nominees of Tontine Capital Partners,
L.P. (Tontine) who are reasonably acceptable to our
Board of Directors. Tontine has not yet proposed such nominees.
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PROPOSAL 2
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A
PROPOSAL TO APPROVE (I) A $75,000,000 RIGHTS
OFFERING OF 21,428,571 SHARES OF COMMON STOCK TO OUR
SHAREHOLDERS AT
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$3.50 PER SHARE, (II) THE SALE OF ANY COMMON
STOCK NOT SUBSCRIBED FOR IN THE RIGHTS OFFERING TO THE STANDBY
PURCHASERS AND ADDITIONAL STANDBY PURCHASER AND THE SALE OF
ANOTHER 14,285,714 SHARES FOR $50,000,000 TO THE STANDBY
PURCHASERS AT $3.50 PER SHARE AND (III) THE RELATED STANDBY
PURCHASE AGREEMENT AND REGISTRATION RIGHTS AGREEMENT AND OTHER
TRANSACTIONS CONTEMPLATED THEREBY
Due in part to increased lead prices and other costs, our
liquidity has been significantly constrained. Although we have
developed an operational plan to address this, the Board of
Directors feels that it is prudent to increase our liquidity
through additional means. After considering alternatives such as
selling our Industrial Energy Europe and Rest of World division,
the Board of Directors concluded that raising additional equity
capital is the best course available. Our Board of Directors
intends to distribute rights (the Rights Offering)
to all of our stockholders of record as of the record date of
the Rights Offering permitting them to purchase
21,428,571 shares of new common stock in the aggregate on
that date for $3.50 per share (the Subscription
Price), for total proceeds before fees and expenses of
$75,000,000. Tontine and Legg Mason Investment Trust, Inc.
(Legg Mason) have agreed to act as Standby
Purchasers and Arklow Capital, LLC (Arklow)
has agreed to act as an Additional Standby Purchaser
under a Standby Purchase Agreement (the Standby
Agreement), to purchase any shares not subscribed for in
the Rights Offering and the Standby Purchasers have further
agreed to purchase another 14,285,714 shares under the
Standby Agreement for $50,000,000. The
7
matters described above as Proposal 2 are referred to
collectively as the Share Transaction in this proxy
statement and are all conditioned on approval by our
shareholders at the annual meeting. Because we do not currently
have enough shares of common stock authorized in our Certificate
of Incorporation, we cannot proceed with the Share Transaction
unless our shareholders also approve of Proposal 3 below,
the amendment of our Certificate of Incorporation.
The Board of Directors considered the potential dilution of the
ownership percentage of our current holders of common stock that
could be caused by the issuance of additional shares of common
stock pursuant to the Share Transaction. While the ownership
percentage of current shareholders will decrease, the Board of
Directors considered that the magnitude of this dilution would
be partially dependent upon the decision of each holder of
common stock whether to subscribe for additional shares in the
Rights Offering. In addition, the Board of Directors considered
that the Share Transaction would only occur if our shareholders
approved the proposed transaction. After weighing these factors
and the effect of the Share Transaction of generating
$125,000,000, before expenses, in additional capital, the Board
of Directors believes that the Share Transaction is in the best
interests of our company and our shareholders.
The
Rights Offering
We intend to distribute to the record holders of our common
stock as of the record date of the Rights Offering
non-transferable subscription rights to subscribe for and
purchase shares of our common stock, subject to approval of the
Share Transaction and amendment to our Certificate of
Incorporation. The per-share purchase price for such shares will
be $3.50, which is equal to a 20% discount to the average
closing price of our common stock for the 30 trading day
period ended July 6, 2006. The subscription rights will
entitle the holders of common stock to purchase shares of common
stock for an aggregate purchase price of $75,000,000. See below
for additional information regarding subscription by DTC
participants.
Each holder of record of our common stock will receive 0.87248
of a subscription right for each share of our common stock held
by such holder, subject to adjustment to eliminate fractional
rights. Each full subscription right will entitle the holder
thereof to purchase at the Subscription Price, on or prior to
the expiration time of the rights offering, one share of our
common stock being offered in the Rights Offering. The number of
subscription rights offered to each holder is based upon the
holders holdings of our common stock as of the record date
of the Rights Offering.
In connection with the Rights Offering, we have filed a
Registration Statement on
Form S-3
(File No. 333-135564)
with the Securities and Exchange Commission (SEC).
The Registration Statement has not yet become effective. Once
the registration statement becomes effective, we will mail the
rights offering prospectus to our shareholders.
Shareholders are being asked at the annual meeting to approve
the Rights Offering as part of the Share Transaction and the
issuance of shares of our common stock necessary to accomplish
the Rights Offering. A vote in favor of the Share Transaction
will not obligate any shareholder to purchase shares in the
Rights Offering.
Standby
Agreement
In connection with the Rights Offering, we entered into the
Standby Agreement with the Standby Purchasers and the Additional
Standby Purchaser. A copy of the Standby Agreement is set forth
in full in Appendix A to this proxy statement, and the
following description of the Standby Agreement is qualified in
its entirety by reference to Appendix A. The Standby
Agreement obligates us to sell, and requires each of the Standby
Purchasers and the Additional Standby Purchaser to subscribe for
and purchase from us, a proportionate number of shares of common
stock equal to the Shortfall (as defined below)
divided by the Subscription Price (the Standby
Commitments). Tontine, Legg Mason and Arklow will
purchase, respectively 54%, 36% and 10% of the Shortfall (as
defined below). The Shortfall is the amount by which
$75,000,000 exceeds the aggregate subscription price to be paid
by our shareholders who subscribe for and purchase shares in the
Rights Offering. The Standby Purchasers and the Additional
Standby Purchaser may elect to assign some or all of their
rights to purchase shares of the Companys common stock
under the
8
Standby Agreement to their designated affiliates. The price per
share paid by the Standby Purchasers and the Additional Standby
Purchaser for such common stock will be equal to the
Subscription Price.
The obligation of any of the Standby Purchasers and the
Additional Standby Purchaser to fulfill the Standby Commitments
and of the Standby Purchasers to purchase additional shares
under the Standby Agreement for $50,000,000 will be subject to
(a) customary closing conditions, including: (i) that
our representations and warranties in the Standby Agreement are
true and correct in all material respects, (ii) that we
deliver a duly executed copy of the Registration Rights
Agreement, (iii) that subsequent to the execution of the
Standby Agreement and prior to the closing of the Share
Transaction, there has not been a material adverse effect on our
financial condition, earnings, financial position, operations,
assets, results of operation business or prospects or any event
or circumstance which is reasonably likely to result in a
material adverse effect on our financial condition, earnings,
financial position, operations, assets, results of operation
business or prospects, and (iv) that no market adverse
effect (including (A) suspension by the SEC or the Nasdaq
Global Market of trading in our common stock or suspension,
limitation or establishment of minimum prices in the trading in
securities generally on the New York Stock Exchange or the
Nasdaq Global Market, (B) the declaration of a banking
moratorium by United States federal or New York State
authorities or (C) any material outbreak or material
escalation of hostilities or any declaration by the United
States of a national emergency or war or other calamity or
crisis which has a material adverse effect on the
U.S. financial markets each a (Market Adverse
Effect)) has occurred and is continuing and
(b) obtaining the approval by our shareholders of
(i) the transactions contemplated by the Standby Agreement
and (ii) the authorization of a sufficient number of
additional shares of common stock for issuance (X) in the
Rights Offering, and (Y) pursuant to the Standby Agreement.
The Standby Agreement contains limits on the number of shares
that the Standby Purchasers and the Additional Standby Purchaser
may acquire pursuant to the Rights Offering and that a Standby
Purchaser may acquire pursuant to the Standby Agreement. Under
the Standby Agreement, each Standby Purchaser and the Additional
Standby Purchaser agree that it will not purchase shares of
common stock which would result in it or any group
(within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934) of which it is a member owning
(i) 30% or more of the issued and outstanding shares of our
common stock on a fully diluted basis without the prior written
consent of our lenders under our senior credit facility or
(ii) greater than 50% of the issued and outstanding shares
of our common stock. The Standby Agreement contains a limitation
on our company and its affiliates which restricts our ability,
subject to the fiduciary duties of our Board of Directors, to
directly or indirectly, discuss, negotiate, enter into or
otherwise contemplate or participate in any alternative
transaction to the Share Transaction, including, without
limitation, the sale of our industrial Europe and rest of the
world business.
If the Share Transaction has not occurred on or prior to
September 30, 2006, for any reason whatsoever, other than a
material breach of the Standby Agreement by the Standby
Purchasers or as a result of a Market Adverse Effect, or if we
terminate the Standby Agreement prior to September 30, 2006
other than as a result of a material breach by the Standby
Purchasers or if the Standby Purchasers terminate the Standby
Agreement prior to September 30, 2006 in accordance with
the terms of the Standby Agreement, other than as a result of a
Market Adverse Effect, Standby Purchasers shall have the option
to purchase an additional 14,285,714 shares in the
aggregate of our common stock for $50,000,000 at the
subscription price (the Additional Subscription
Shares) for a period of 10 business days following the
date the Standby Agreement was terminated (the Option
Period) upon delivery of written notice to us. If our
shareholders approve the Rights Offering and the sale of the
Additional Subscription Shares to the Standby Purchasers, the
Standby Purchasers may elect to purchase any or all of the such
shares (the Complete Option), at the Subscription
Price. If our shareholders do not approve the Rights Offering
and the sale of the Additional Subscription Shares to the
Standby Purchasers, the Standby Purchasers may elect to purchase
a portion of the Additional Subscription Shares equal to up to
19.9% of our issued and outstanding common stock (the
Partial Option), at a purchase price of
$4.50 per share. With respect to the Partial Option,
Tontine shall have the option to purchase 50% of the Additional
Subscription Shares and Legg Mason shall have the option
purchase 50% of the Additional Subscription Shares and with
respect to the Complete Option, Tontine shall have the option to
purchase 60% of the Additional Subscription Shares and Legg
Mason shall have the option purchase 40% of the Additional
9
Subscription Shares, provided that Tontine and Legg Mason may
jointly agree to reallocate the percentage of the Additional
Subscription Shares purchased by either party.
Registration
Rights Agreement
In connection with the Standby Agreement, we agreed that upon
the closing of the Share Transaction, we will enter into the
Registration Rights Agreement with the Standby Purchasers and
the Additional Standby Purchaser. A copy of the form of
Registration Rights Agreement is attached as part of
Appendix A to this proxy statement, and the following
description of the Registration Rights Agreement is qualified in
its entirety by reference to Appendix A. Pursuant to the
Registration Rights Agreement, we will register the resale of
(a) the common stock that each Standby Purchaser and the
Additional Standby Purchaser is acquiring in the Rights Offering
in its capacity as a shareholder of the Company to the extent
such shares are not freely tradeable, (b) the common stock
that is purchased by the Standby Purchasers pursuant to the
terms of the Standby Agreement, and (c) any other common
stock owned by the Standby Purchasers and the Additional Standby
Purchaser. As a result, once a registration statement with
respect to such shares is declared effective by the SEC, such
shares would be eligible for resale in the public market without
restriction to the extent not already so eligible for resale.
Relationships
with the Standby Purchasers and the Additional
Purchaser
The following table sets forth information with respect to the
Standby Purchasers and the Additional Standby Purchaser and the
shares of common stock beneficially owned by each Standby
Purchaser and the Additional Standby Purchaser as of the Record
Date.
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Shares of
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Standby Purchaser
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Common Stock
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Tontine
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2,425,387
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Legg Mason
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0
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Arklow
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1,588,892
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We are not aware of any current plans or proposals by the
Standby Purchasers or the Additional Standby Purchaser with
respect to any extraordinary corporate transactions involving us
or any sale of our assets or change in our management,
capitalization, dividend policy, charter or Bylaws, or any other
change in our business or corporate structure or with respect to
the delisting or deregistration of any of our securities.
However, any determination by a Standby Purchaser or the
Additional Standby Purchaser to retain its interest in our
company will likely be subject to the continuing evaluation of
pertinent factors related to such Standby Purchasers or
Additional Standby Purchasers investment in us. We are not
aware of any current plans by the Standby Purchasers or the
Additional Standby Purchaser to resell any shares of common
stock, including any shares acquired in the Share Transaction.
Depending upon the continuing assessment of these factors from
time to time, any or all of the Standby Purchasers and the
Additional Standby Purchaser may change their present intentions
and may determine to acquire additional shares of common stock
(by means of open market or privately negotiated purchases or
otherwise) or to dispose of some or all of the shares of common
stock held by such Standby Purchasers or the Additional Standby
Purchaser.
Each Standby Purchaser and the Additional Standby Purchaser has
represented to us that such Standby Purchaser is not an
affiliate of any other Standby Purchaser, is not acting in
concert with any other Standby Purchaser or the Additional
Standby Purchaser and is not a member of a group
(within the meaning of Section 13(d)(3) of the Securities
and Exchange Act of 1934) that includes another Standby
Purchaser or the Additional Standby Purchaser as a member and
has no current intention to act in the future in a manner that
would make it a member of such a group.
Certain
Effects of the Share Transaction
To the extent that holders of our common stock do not exercise
their subscription rights and shares of our common stock are
purchased by the Standby Purchasers and the Additional Standby
Purchaser pursuant to the Rights Offering, such non-exercising
holders proportionate equity and voting interest in our
company will be
10
reduced. In addition, the equity and voting interests of the
holders of the common stock will be further reduced by the sale
of the additional shares of common stock for $50,000,000 to the
Standby Purchasers under the Standby Agreement.
In addition, the Share Transaction will result in further
dilution of the ownership percentage of the existing holders of
our common stock because the Share Transaction will trigger the
anti-dilution provisions under our Warrant Agreement and under
our convertible notes, which will result in the exercise and
conversion prices of the warrants and convertible notes being
reduced and a greater number of shares being issuable on
exercise or conversion thereof.
The Share Transaction may also result in a decrease in the
market value of our common stock. This decrease in market value
may continue after the completion of the Share Transaction.
Even if some shareholders other than the Standby Purchasers
exercise their subscription rights, the Standby Purchasers and
the Additional Standby Purchaser will have a substantial
ownership interest in our company after the Share Transaction.
As a result, the Standby Purchasers and the Additional Standby
Purchaser will have the voting power to significantly influence
the election of our Board of Directors and the approval of other
matters presented for consideration by the shareholders, which
could include mergers, acquisitions, amendments to our charter
and various corporate governance actions.
Under our senior credit facility, a change of
control is deemed to have occurred when any person or
group of persons acquires beneficial ownership of 30% or more on
a fully-diluted basis of the voting
and/or
economic interest in our common stock. Upon the occurrence of a
change of control, pursuant to the senior credit facility, the
holders of a majority of the commitments thereunder may
(a) terminate all commitments; (b) declare the
principle of and any accrued interest in respect to all loans
due and payable; (c) enforce any and all liens and security
interests created under the senior credit facility;
(d) terminate any letter of credit; or (e) exercise
any rights and remedies provided to the agent under the senior
credit facility documents or at law or equity.
The indentures for our senior secured notes and convertible
notes define a change in control to include, among
other things, the acquisition by any person or group of persons
of direct or indirect beneficial ownership of shares
representing more than 50% of the aggregate voting power of our
common stock. If a change in control were to occur, the holders
of the notes would have the right to require us to repurchase
all or any part of their notes at a purchase price equal to 101%
of the principal amount thereof for the senior notes and the
principal amount for the convertible notes, plus accrued and
unpaid interest, if any, to the date of purchase and any unpaid
liquidated damages on the convertible notes.
Although the Standby Agreement contain prohibitions on the
Standby Purchasers and the Additional Standby Purchaser
purchasing shares in the Share Transaction which would cause a
change of control under the senior credit facility or a change
in control under the senior notes and convertible notes, there
can be no assurance that the Standby Purchasers or the
Additional Standby Purchaser will not purchase additional
securities or form groups in the future which would cause a
change of control to occur and, if a change of control were to
occur, it would have a material adverse effect on our financial
condition.
We have 61,500,000 shares of common stock authorized for
issuance and, in order to enable us to proceed with the Share
Transaction, are seeking shareholder approval for the issuance
of an additional 38,500,000 shares of common stock. The use
of these authorized shares for the Share Transaction will reduce
the number of shares available for other issuances.
Reasons
for Soliciting Shareholder Approval
Our common stock trades on the Nasdaq Global Market. Under
Nasdaq Marketplace Rules, we are required to obtain shareholder
approval of the Standby Agreement and the transactions
contemplated by such agreement, including the issuance of common
stock pursuant to the Standby Agreement. Nasdaq requires
shareholder approval in a transaction (other than a public
offering) involving the issuance or potential issuance of common
stock (or securities convertible into common stock) equal to 20%
or more of the common stock outstanding before the issuance for
less than the greater of book or market value and when our
issuance of
11
common stock would result in a change of control. The
Subscription Price is less than the book value of the common
stock and depending on the number of shares purchased by
existing holders in the Rights Offering, we could issue a number
of shares of common stock pursuant to the Share Transaction that
is greater than 20% of the currently outstanding shares of
common stock. The Share Transaction could also result in a
change of control of our company as defined under Nasdaqs
rules. Accordingly, we are seeking shareholder approval of the
Share Transaction.
Consequences
if the Share Transaction is Not Approved by the
Shareholders
If the Share Transaction is not approved by the requisite vote
of our shareholders, the Standby Purchasers will have the right
to terminate the Standby Agreement. If the Standby Purchasers
terminate the Standby Agreement under such circumstances, we
would be obligated to provide to the Standby Purchasers the
option to purchase the Additional Subscription Shares equal to
up to the Partial Option, at a purchase price of $4.50 per
share. In such event, we would be required to seek alternative
sources of liquidity to satisfy our ongoing operations,
restructuring plans and capital expenditures and we may not be
able to obtain such alternative source of liquidity on
commercially reasonable terms, if at all. If we were unable to
generate such additional liquidity it would have a material
adverse impact on our financial condition and would adversely
affect the price of our common stock.
Required
Vote
The affirmative vote of a majority of the votes cast by the
holders of the shares of common stock present in person or
represented by proxy at the annual meeting and entitled to vote
on this proposal, voting together as a single class, is required
to approve this proposal.
The Board of Directors recommends a vote FOR the
proposal to approve the Share Transaction.
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PROPOSAL 3
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A
PROPOSAL TO AMEND OUR CERTIFICATE OF INCORPORATION TO
INCREASE OUR AUTHORIZED SHARES OF COMMON STOCK TO
100,000,000 AND THE AGGREGATE NUMBER OF SHARES OF
CAPITAL STOCK TO 101,000,000
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The Board of Directors has approved, subject to shareholder
approval (a) an amendment to our Certificate of
Incorporation that would increase the number of shares of common
stock which we would have authority to issue from
61,500,000 shares to 100,000,000 shares and to make a
corresponding change in the aggregate number of shares of all
classes of stock which we have authority to issue to
101,000,000. If approved by our shareholders, the increase in
authorized common stock (and the corresponding increases in the
aggregate number of shares of all classes of stock) would become
effective as soon as reasonably practicable after the annual
meeting by filing a certificate of amendment to our Certificate
of Incorporation with the Delaware Secretary of State.
Our current authorized common stock is 61,500,000 shares.
As of the Record Date, there were 24,560,586 shares of
common stock issued and outstanding, 6,250,000 warrants issued
and issuable pursuant to our 2004 plan of reorganization
covering 6,250,000 shares of common stock, 3,125,000
(proposed to be increased as described in
Proposal 4) shares of common stock reserved for
issuance under our 2004 Stock Incentive Plan for directors,
employees and consultants and 3,454,231 shares of common
stock reserved for issuance upon the conversion of the
convertible notes. Based on the number of outstanding and
reserved shares of common stock described above, we currently
have approximately 24,110,183 shares of common stock
remaining available for issuance. In addition, we are required
to issue shares of common stock under our 2004 plan of
reorganization to holders of disputed prepetition unsecured
claims as such claims are resolved and may be required to issue
additional shares to holders of prepetition secured claims if
our reserve for unsecured claims is exceeded.
The Share Transaction, if approved and completed, will require
us to issue 35,714,285 additional shares of common stock
and will trigger anti-dilution adjustments to the convertible
notes and the outstanding warrants which will increase the
number of shares of common stock issuable upon exercise and
conversion of
12
such warrants and convertible notes. Accordingly, without an
increase in the authorized common stock, we will not have
sufficient shares of common stock for the issuance pursuant to
the Share Transaction.
The additional shares of common stock authorized would also be
available for other issuances for any proper corporate purpose
from time to time as determined by our Board of Directors. For
example, in addition to the Share Transaction, we may issue
shares of common stock in public or private offerings for cash,
or for use in our operations and for use as consideration in
acquiring other companies or assets with stock.
The proposed increase in authorized shares of common stock is
necessary to enable us to complete the Share Transaction. Our
Board of Directors also believes the amendment to our
Certificate of Incorporation will enhance our flexibility in
managing our capitalization, raising capital and structuring
appropriate equity compensation. Our Board of Directors
determines whether, when and on what terms to issue shares of
common stock and preferred stock, including the additional
shares proposed to be authorized.
While we do not have any current plans to issue additional
equity securities (other than in connection with the Share
Transaction, in connection with grants under our present and
future equity compensation plans
and/or the
potential issuance of shares of common stock upon conversion or
redemption of the convertible notes or warrants issued pursuant
to our 2004 plan of reorganization), and have not entered into
any agreement to sell our equity securities at this time (other
than as contemplated for the Share Transaction) or to make an
acquisition utilizing common stock, our Board of Directors is
seeking approval for additional authorized common stock at this
time because opportunities requiring prompt action may arise in
the future and our Board of Directors believes the delay and
expense in seeking shareholder approval for additional
authorized common stock could deprive us and our shareholders of
the ability to benefit effectively from opportunities
and/or cause
the loss of attractive acquisitions or financing arrangements.
The additional shares of common stock to be authorized will have
rights identical to the currently outstanding common stock. The
proposed amendment will not affect the par value of the common
stock, which will remain at $0.01 per share. Under our
Certificate of Incorporation, our shareholders do not have
preemptive rights to subscribe to additional securities which
may be issued by us. This means that current shareholders do not
have a prior right to purchase any new issue of our capital
stock in order to maintain their proportionate ownership of
common stock.
If we issue additional shares of common stock or other
securities convertible into common stock in the future, it could
dilute the voting rights of existing holders of common stock and
could also dilute earnings per share and book value per share.
In addition, such issuances could trigger the anti-dilution
provisions under our convertible notes or existing warrants.
Consequences
if the Amendment to the Certificate of Incorporation to Increase
the Authorized Shares of Common Stock is Not Approved by the
Stockholders
If Proposal 3 is not approved by the requisite vote of the
shareholders, we would not be able to proceed with the Rights
Offering as it is currently structured. In such event, we would
be required to seek alternative sources of liquidity, and the
failure to obtain such liquidity may result in certain adverse
effects as described in Proposal 2 above.
In addition, as discussed in Proposal 2 above, the Standby
Purchasers would also have the right to terminate the Standby
Agreement. If the Standby Purchasers terminate the Standby
Agreement under such circumstances, we would be obligated to
provide to the Standby Purchasers the option to purchase a
number of Additional Subscription Shares up to the Partial
Option, at a purchase price of $4.50 per share.
Required
Vote
The affirmative vote of the holders of outstanding shares
representing at least a majority of the voting power of all of
the shares of our common stock issued and outstanding on the
Record Date will be required to approve Proposal 3.
13
The Board of Directors recommends a vote FOR the
proposal to amend our Certificate of Incorporation.
PROPOSAL 4
A PROPOSAL TO AMEND THE 2004 STOCK INCENTIVE
PLAN
The Board of Directors recommends that shareholders approve the
amendment of our 2004 Stock Incentive Plan (the 2004
Plan) to (i) if the Share Transaction is consummated,
increase the number of shares of common stock which may be
issued thereunder from 3,125,000 to 7,125,000, the limit within
the Plan for restricted stock and performance awards from
850,000 to 1,900,000 shares and the limit on total option
shares over the life of the Plan for any one participant from
600,000 to 1,500,000 or (ii) if the Share Transaction is
not consummated, revise such numbers of shares of common stock
from 3,125,000 to 5,125,000, restricted stock awards from
850,000 to 1,275,000 and limit on total options over the life of
the Plan from 600,000 to 1,050,000.
The 2004 Plan provides for grants of stock options, restricted
shares and performance awards to select key management
employees, directors and consultants of our company. The 2004
Plan assists us in attracting and retaining valuable executive
leadership while providing long-term value to our shareholders.
Although all of our employees, directors, consultants and
individuals to whom offers of employment are extended are
eligible to receive awards under the 2004 Plan, awards are
generally limited to approximately 100 executive and management
employees and our directors. Since the 2004 Plan was adopted, we
have made grants of 1,495,149 options at an average
exercise price of $9.42, 527,198 restricted shares at an average
price of $6.91 and $4,646,513 in cash performance awards.
The following is a summary of the material terms of the 2004
Plan, but it does not include all of the provisions of the plan.
The full text of the 2004 Plan as proposed to be amended is
attached as Appendix B to this proxy statement, and the
following summary is qualified in its entirety by reference to
such Appendix.
Plan
Administration
The 2004 Plan is administered by the Compensation Committee of
the Board of Directors. The Board of Directors also has the
authority to administer the 2004 Plan and to take all actions
that the Committee is otherwise authorized to take under the
2004 Plan. The Committee has the authority to determine eligible
individuals to whom awards may be granted, the number of shares
or options awarded and the fair market value of the shares. The
Committee is also responsible for determining the terms and
conditions of awards and for approving the form of award
agreements. The Committee has the authority to interpret the
2004 Plan, to prescribe, amend and rescind rules and procedures
relating to the 2004 Plan and to make all other determinations
necessary or advisable for the administration of the 2004 Plan.
The Committee may delegate authority to administer the 2004 Plan
to reporting persons, officers or employees of our company or
its affiliates, subject to the applicable law and the
restrictions set forth in the 2004 Plan.
The Board of Directors retains the right to add additional
members or replace members of the Committee with or without
cause at any time.
Limits on
Plan Awards
If the amendment to the 2004 Plan is approved and the Share
Transaction is consummated, a maximum of 7,125,000 shares
of our common stock will be available for grants of all equity
awards under the 2004 Plan, all of which may be granted as
incentive stock options. This represents approximately 11.8% of
our diluted common shares after the Share Transaction. If the
amendment to the 2004 Plan is approved, but the Share
Transaction is not consummated, the maximum would instead be
5,125,000, or approximately 8.5% of our current diluted common
shares. In either case, the Board of Directors believes that the
increased number represents a reasonable amount of potential
equity dilution. The maximum number is subject to adjustment in
the event of a stock split, reverse stock split, stock dividend,
combination, recapitalization or reclassification or other
increase or decrease in the number of issued shares of common
stock without receipt of consideration by our company. In the
event of any of these occurrences, the Committee may make such
adjustments that it
14
determines to be necessary to prevent dilution or enlargement of
benefits intended to be made available under the 2004 Plan.
If the amendment is approved and the Share Transaction is
consummated, we will be able to issue up to
1,900,000 shares of common stock pursuant to awards in the
form of restricted shares and performance awards and during the
term of the 2004 Plan, no participant may receive options for
more than 1,500,000 shares (increased from 600,000 by the
amendment) and no participant may receive performance awards in
a performance period that together exceed 600,000 shares
and $2,000,000 in cash. If the amendment is approved, but the
Share Transaction is not consummated, the 1,900,000 limit would
only be increased to 1,275,000 and the 1,500,000 limit would
only be increased to 1,050,000.
Shares delivered under the 2004 Plan may be authorized but
unissued shares or shares that we have reacquired or otherwise
hold in treasury. To the extent that any award payable in shares
of common stock expires, is forfeited, is cancelled, becomes
unexercisable or for any other reason is not paid or delivered
under the 2004 Plan, the shares subject to that award may be
used for subsequent awards to the extent not prohibited by
applicable law. Any shares withheld from a participant as full
or partial payment to our company of the exercise price or the
tax withholding upon grant, exercise, vesting or distribution of
an award may also be used for future awards under the 2004 Plan.
Eligibility
and Participation
Employees of our company and its affiliates, directors of our
company and its affiliates, consultants and non-employees to
whom an offer of employment has been extended are eligible to
receive grants under the 2004 Plan. However, only employees
(including officers who are employees) may receive grants of
incentive stock options. The Committee determines who will
receive awards, the number of shares of common stock subject to
each award, the price (if any) to be paid for the award and all
other terms of the award.
As described under Governance of the Company
Board Compensation, each non-employee director of our
company is currently awarded stock options valued at $20,000 and
restricted shares valued at $20,000, on an annual basis.
Types of
Awards Available under the 2004 Plan
The type of awards available under the 2004 Plan include stock
options, restricted shares and performance awards.
Stock
Options
Stock options granted under the 2004 Plan may be either
non-qualified stock options or incentive stock options
qualifying under Section 422 of the Internal Revenue Code
of 1986, as amended. Incentive stock options may be granted only
to employees of our company and its affiliates. Stock options
granted under the 2004 Plan will vest on the schedule determined
by the Committee. The Committee may accelerate the vesting of
stock options under certain circumstances. Most of the awards
which have been granted under the 2004 Plan to date have a
three-year vesting schedule, all of which are subject to
shareholder approval. To the extent that the aggregate fair
market value of shares of common stock underlying incentive
stock options exceeds $100,000 when those options first become
exercisable by a participant in any calendar year, the options
in excess of $100,000 will be treated as non-qualified stock
options.
The exercise price of any stock option granted under the 2004
Plan may not be less than the fair market value of our common
stock on the date the option is granted. However, with respect
to incentive stock options granted to employees who own stock
representing more than 10% of the combined voting power of all
classes of stock of our company or any affiliate, the exercise
price may not be less than 110% of the fair market value of our
common stock on the date the option is granted. The Committee
may allow the exercise price to be paid in cash or check, with
other shares of our common stock or through a cashless exercise
program using a broker-dealer.
15
The Committee will determine the term of each stock option
granted under the 2004 Plan. The Committee has discretion to
provide for a term of up to ten years. However, for incentive
stock options granted to employees who own stock representing
more than 10% of the combined voting power of all classes of
stock of our company or any affiliate, the term of the option
may not exceed five years.
To the extent the award agreement governing a grant does not
specify the terms and conditions upon which a stock option will
terminate in the event of the termination of a participant:
(1) if a termination results from disability
within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, as amended, the participant may exercise
the option at any time within one year following the
termination, to the extent the participant was entitled to
exercise the option at the date of termination; (2) if a
termination results from the participants death, or if
death of the participant occurs within thirty days following the
termination, the participants estate or person with rights
to exercise the option may exercise the option at any time
within one year following the date of the participants
death, to the extent the option had vested at the date of the
participants death or termination, as applicable;
(3) if the participant is terminated for cause, the right
to exercise the option is immediately forfeited and considered
null and void; and (4) if a termination occurs for any
other reason, the participant may exercise the option at any
time within 90 days following the termination, to the
extent the participant was entitled to exercise the option at
the date of termination.
No stock option granted under the 2004 Plan may be re-priced or
surrendered in exchange for a replacement option having a lower
exercise price except in connection with a stock split, stock
dividend or similar event in order to prevent dilution or
enlargement of benefits intended to be made available under the
2004 Plan.
Restricted
Shares
Restricted shares represent shares of our common stock. The
Committee determines the terms and conditions under which
restricted shares vest. Prior to the lapse of any restrictions
with respect to restricted shares, we issue stock certificates
evidencing the shares that bear a legend referencing the
applicable restrictions. These restricted shares and any
dividends that accrue on the shares are held by our company or a
third party designated by our company until the restricted
shares vest. Upon the vesting of restricted shares and the
participants satisfaction of any applicable tax
withholding requirements, we release to the participant, free of
any restrictions, one share of our common stock for each
restricted share, but will pay cash in lieu of fractional
shares. Subject to the Committees discretion, following
the vesting of restricted shares, the participant may be
eligible to receive cash dividends, simple interest and any
stock dividends with respect to the vested shares which were
declared and paid between the grant date and the vesting date.
Performance
Awards
Performance awards may be granted in the discretion of the
Committee and such awards may be designated by the Committee as
performance compensation awards which constitute
qualified performance-based compensation under
Section 162(m) of the Internal Revenue Code of 1986, as
amended. With respect to each performance compensation award,
the Committee establishes: (1) a performance period (of not
less than one fiscal year) over which the attainment of the
selected performance measure is measured; (2) a performance
measure to gauge the performance of our company or a business
unit, which, whether in absolute or relative terms including,
without limitation, terms relative to a peer group or index, may
be based on basic, diluted, or adjusted earnings per share;
sales or revenue; earnings before interest, taxes, and other
adjustments (in total or on a per share basis); basic or
adjusted net income; returns on equity, assets, capital, revenue
or similar measure; economic value added; working capital; total
shareholder return; and product development, product market
share, research, licensing, litigation, human resources,
information services, mergers, acquisitions, sales of assets of
affiliates or business units. Each such measure shall be to the
extent applicable, determined in accordance with generally
accepted accounting principles as consistently applied by our
company (or such other standard applied by the Committee) and,
if so determined by the Committee, and in the case of a
performance compensation award, to the extent permitted under
Internal Revenue Code Section 162(m), adjusted to omit the
effects of extraordinary items, gain or loss on the disposal of
a business segment, unusual or infrequently occurring events and
transactions and cumulative effects of changes in
16
accounting principles. Performance measures may vary from
performance period to performance period and from participant to
participant, and may be established on a stand-alone basis, in
tandem or in the alternative; or (3) a performance formula
for purposes of determining whether an award has been earned
based on the level of performance attached with respect to a
performance measure. The participant will be eligible to receive
payment on a performance compensation award to the extent the
performance measures are achieved and the performance formula as
applied against the performance measures determine that the
award has been earned for the relevant performance period.
Effect of
Change in Control
In the event of a change in control (as such term is
defined in the 2004 Plan), the Committee has the discretion,
without the need for further approval, to make arrangements for
the successor corporation to assume or provide a substantially
similar substitution for awards that have been granted, to
accelerate the vesting for awards, to arrange for payment in
exchange for cancellation of awards or make other modifications
to the awards that the Committee deems necessary. If the awards
are assumed or substituted by the successor corporation and the
participant is involuntarily terminated within twelve months
following the change in control, all of the participants
awards will become fully vested and, with respect to options,
fully exercisable.
Limited
Transferability
Awards granted under the 2004 Plan, including awards of
restricted shares with restrictions that have not lapsed,
generally may not be sold, pledged or otherwise transferred
other than by will or by the laws of descent and distribution.
However, the Committee may provide that an award (other than an
incentive stock option) may be transferred to a member of the
participants immediate family, to an inter
vivos or testamentary trust for the benefit of designated
beneficiaries or by gift to charitable institutions.
Term,
Amendment and Termination of the 2004 Plan
The 2004 Plan continues in effect for a term of ten years from
the September 7, 2004 effective date, unless earlier
terminated by the Board of Directors. The Board of Directors may
from time to time amend, discontinue or terminate the 2004 Plan,
subject to applicable law requiring shareholder approval. No
amendment, suspension or termination of the 2004 Plan will
materially and adversely affect any outstanding award without
the consent of the participant, unless such amendment,
suspension or termination relates to an adjustment necessary in
connection with a change in control, dissolution, liquidation or
change in capitalization.
New Plan
Benefits
Because future awards under the 2004 Plan are granted in the
discretion of the Committee, the type, number, recipients and
other terms of such awards cannot be determined at this time.
For fiscal 2006 (net of forfeitures) 603,038 options were
granted and 246,654 restricted shares granted to our
executive officers as a group; 28,252 options were granted
and 39,711 restricted shares were granted to our
non-executive directors as a group; and 280,791 options
were granted and 103,925 restricted shares were granted to
all of our non-executive employees as a group. Awards of options
under the 2004 Plan which were granted to our named executive
officers during fiscal 2006 are summarized under Executive
Compensation Summary Compensation Table. All
of the foregoing awards of restricted shares were approved by
the Compensation Committee.
Certain
Federal Income Tax Consequences of the 2004 Plan
The following is a brief summary of the United States federal
income tax rules relevant to options issued under the 2004 Plan,
based upon the Internal Revenue Code as currently in effect.
These rules are highly technical and subject to change in the
future. Because federal income tax consequences will vary as a
result of individual circumstances, grantees should consult
their personal tax advisors with respect to the tax consequences
associated with stock options. Moreover, the following summary
relates only to grantees
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United States federal income tax treatment, and applicable
state, local and foreign tax consequences may be substantially
different.
Non-Qualified Stock Options. Upon the grant of
a non-qualified stock option, a grantee will not recognize any
taxable income, and we will not be entitled to a deduction. Upon
the exercise of a non-qualified option, the grantee will
recognize ordinary income, subject to wage and employment tax
withholding, equal to the excess of the fair market value of the
common stock acquired on the date of exercise over the exercise
price. We will be entitled to a deduction equal to the
compensation taxable to the grantee.
If a grantee sells common stock acquired upon the exercise of a
non-qualified option, the grantee will recognize capital gain or
loss equal to the difference between the selling price of the
stock and its fair market value on the date of exercise. The
capital gain or loss will be long- or short-term, depending on
whether the grantee has held the stock for more than one year.
In any event, we will not be entitled to a deduction with
respect to any capital gain recognized by the grantee.
Short-term capital gains are generally subject to the same
federal income tax rate as ordinary income. The current maximum
rate for ordinary income is 35%. Long-term capital gains are
generally subject to a maximum rate of 15% for shares held for
more than one year. Capital losses on the sale of stock acquired
upon an options exercise may be used to offset capital
gains. If capital losses exceed capital gains, then up to $3,000
of the excess losses may be deducted from ordinary income.
Remaining capital losses may be carried forward to future tax
years.
Incentive Stock Options. A grantee will not
recognize taxable income on the grant or exercise of an
incentive stock option. However, the excess of the common
stocks fair market value on the option exercise date over
the exercise price will be included in the grantees
alternative minimum taxable income. The grantee may thereby
become subject to an alternative minimum tax, which may be
payable even though the grantee does not receive any cash upon
the options exercise with which to pay the tax.
Upon the sale of common stock acquired upon exercise of an
incentive stock option, the grantee will recognize long-term
capital gain or loss, measured by the difference between the
stocks selling price and the option exercise price, so
long as he or she has held the stock more than one year after
the date of exercise and more than two years after the date of
grant. We will not be entitled to any deduction because of the
grant or exercise of an incentive stock option, or because of
the sale of stock received upon exercise of an incentive stock
option after the required holding periods have been satisfied.
However, if a grantee disposes of common stock acquired upon
exercise of an incentive stock option before the required
holding periods have expired, including through the delivery of
any shares of the stock in payment of all or part of the
exercise price of an incentive stock option, the grantee will
recognize taxable ordinary income in an amount equal to the
difference between the options exercise price and the
lesser of (i) the common stocks fair market value on
the date of exercise and (ii) the selling price. We will be
allowed a corresponding deduction equal to the amount of
compensation taxable to the grantee. If the selling price of the
stock exceeds the fair market value on the exercise date, the
excess will be taxable to the grantee as long- or short-term
capital gain, depending on whether the grantee held the stock
for more than one year. We will not be allowed a deduction with
respect to any capital gain of this nature recognized by the
grantee.
Restricted Stock Awards. A participant will
not recognize taxable income at the time of the grant of a
restricted stock award, and we will not be entitled to a tax
deduction at such time, unless the participant makes an election
to be taxed at the time such restricted stock award is granted.
If such election is not made, the participant will recognize
taxable income at the time the restrictions lapse in an amount
equal to the excess of the fair market value of the shares at
such time over the amount, if any, paid for such shares. The
amount of ordinary income recognized by a participant by making
the above-described election or upon the lapse of the
restrictions is deductible by us, as compensation expense,
except to the extent the limit of Section 162(m) applies.
In addition, a participant receiving dividends with respect to
shares subject to a restricted stock award for which the
above-described election has not been made and prior to the time
the restrictions lapse will recognize taxable compensation
(subject to income tax withholding for our employees), rather
than dividend
18
income, in an amount equal to the dividends paid and we will be
entitled to a corresponding deduction, except to the extent the
limit of Section 162(m) applies.
Effect of
Rule 16b-3(d)(3)
under the Exchange Act. The tax consequences of
either non-qualified stock options or incentive stock options
may vary for those directors and executive officers who are
subject to the short-swing trading restrictions of
Section 16(b) of the Securities Exchange Act of 1934, if
those persons are exempted from these restrictions solely in
reliance upon the six-month holding provision of
Rule 16b-3(d)(3).
In general, a participant that falls into this category will
recognize income, or begin applicable holding periods, on the
later of (i) the date of exercise and (ii) the date
six months after the option grant date, unless the participant
files an election with the Internal Revenue Service under
Section 83(b) of the Internal Revenue Code within
30 days of the date of exercise. Under the election, a
grantee elects to recognize income on the exercise date, based
on the common stocks fair market value on that date, and
the grantees holding period begins on such date.
Transfer of Option to Family Members. Under
the 2004 Plan, the Committee may permit transfers of
non-qualified stock options through gifts to grantees
family members, although incentive stock options are not allowed
to be transferable to family members other than by will or the
laws of descent and distribution. A grantee will not recognize
taxable income on the transfer of a non-qualified stock option
to a member of the grantees family. However, when the
transferee of the option exercises the option, the grantee will
recognize ordinary income, subject to wage and employment tax
withholding, equal to the excess of the fair market value of the
common stock acquired by the transferee of the option on the
date of exercise over the exercise price. We will be entitled to
a deduction equal to the grantees ordinary income. The
transferee of the option will have a capital gain or loss upon a
subsequent sale of the stock in an amount equal to the sale
price less the fair market value of the stock on the date the
option was exercised. Any capital gain recognized by the
transferee will be long-term capital gain if the transferee has
held the stock for more than one year after the exercise date.
For gift tax purposes, the transfer of an option constitutes a
completed gift on the date the grantee transfer the option if
the option is exercisable and the stock that would be received
on exercise would not be subject to restrictions. Otherwise, the
transfer of an option will not constitute a completed gift until
the first date that both of these conditions are satisfied. For
estate tax purposes, a transferred option is not included in the
grantees estate unless, on the date of the grantees
death, the transferred option is not exercisable or the stock
that would be received on exercise would be subject to
restrictions.
The Board of Directors recommends a vote FOR the
proposal to amend our 2004 Stock Incentive Plan.
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PROPOSAL 5
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A
PROPOSAL TO RATIFY THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANYS INDEPENDENT
AUDITORS FOR FISCAL 2007
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The Audit Committee selects our independent auditors. This
proposal is put before the shareholders because, though the
shareholder vote is not binding on the Audit Committee, the
Board of Directors believes that it is good corporate practice
to seek shareholder ratification of the Audit Committees
appointment of the independent auditors. If the appointment of
PricewaterhouseCoopers LLP is not ratified, the Audit Committee
will evaluate the basis for the shareholders vote when
determining whether to continue the firms engagement, but
may ultimately determine to continue the engagement of the firm
or another audit firm without re-submitting the matter to
shareholders. Even if the appointment of PricewaterhouseCoopers
LLP is ratified, the Audit Committee may in its sole discretion
terminate the engagement of the firm and direct the appointment
of another independent auditor at any time during the year.
Representatives of PricewaterhouseCoopers LLP are expected to
attend the 2006 annual meeting and to respond to appropriate
questions from shareholders present at the meeting and will have
an opportunity to make a statement if they desire to do so.
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Fees of
Independent Public Accountants for Fiscal 2006 and
2005
The following table presents fees for professional services
rendered by PricewaterhouseCoopers LLP for the audit of our
annual financial statements and internal control over financial
reporting for fiscal 2006 and fiscal 2005, together with fees
for audit-related services and tax services rendered by
PricewaterhouseCoopers LLP for fiscal 2006 and fiscal 2005.
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Fiscal 2006
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Fiscal 2005
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(1) Audit Fees(a)
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$
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7,946,183
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$
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7,418,229
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(2) Audit-related fees(b)
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362,128
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436,404
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(3) Tax fees(c)
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11,163
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(4) All other fees(d)
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19,083
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(a) |
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Fees for professional services performed by
PricewaterhouseCoopers LLP for the audit of our annual financial
statements and review of financial statements included in our
Form 10-Q
filings, and services that are normally provided in connection
with statutory regulatory filings or engagements. Fees for
fiscal 2006 also included $2,964,459 for the audit of our
internal control over financial reporting. Fees for fiscal 2005
also included $2,999,851 and $547,882 for the audit of our
internal control over financial reporting and Fresh Start
accounting, respectively. |
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(b) |
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Fees for assurance and related services performed by
PricewaterhouseCoopers LLP that are reasonably related to the
performance of the audit or review of our financial statements,
including employee benefit plan audits. |
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(c) |
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Fees for professional services performed by
PricewaterhouseCoopers LLP with respect to compliance and tax
consulting. |
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(d) |
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For fiscal 2005, fees related to pension advice, as well as
advice regarding subsidiary management matters. |
All audit, audit-related and tax services were pre-approved by
the Audit Committee, which concluded that the provision of such
services by PricewaterhouseCoopers LLP was compatible with the
maintenance of that firms independence in the conduct of
its auditing functions. The Audit Committees charter
provides that individual engagements must be separately
approved. The policy also requires specific approval by the
Audit Committee if total fees for audit-related and tax services
would exceed total fees for audit services in any fiscal year.
The policy authorizes the Audit Committee to delegate to one or
more of its members pre-approval authority with respect to
permitted services.
Pursuant to the Audit Committee charter, the Audit Committee
must approve all audit engagement fees and other significant
compensation to be paid to the independent auditor and the terms
of such engagement. Additionally, the Audit Committee must
pre-approve any non-audit services to be provided to our company
by the independent auditor. Based on the fees disclosed above,
approximately 37% of PricewaterhouseCoopers fees approved
by the Audit Committee related to audit of our internal control
over financial reporting for the fiscal year ended
March 31, 2006.
The Board of Directors recommends a vote FOR the
ratification of the appointment of PricewaterhouseCoopers LLP as
our companys independent auditors for fiscal 2007.
OTHER
MATTERS
As of the date of this proxy statement, we know of no business
that will be presented for consideration at the 2006 annual
meeting other than the items referred to above. If any other
matter is properly brought before the meeting for action by
shareholders, proxies in the enclosed form returned to us will
be voted in accordance with the recommendation of the Board of
Directors or, in the absence of such a recommendation, in
accordance with the best judgment of the proxy holders.
GOVERNANCE
OF THE COMPANY
Our company is committed to maintaining the highest standards of
business conduct and corporate governance, which we believe is
essential to running its business efficiently, serving our
shareholders well and
20
maintaining our integrity in the marketplace. We have adopted a
Code of Ethics and Business Conduct for directors,
officers (including the principal executive officer, principal
financial officer, principal accounting officer or controller or
persons performing similar functions) and all of our employees.
We have also adopted Corporate Governance Guidelines,
which, in conjunction with our companys Certificate of
Incorporation, Bylaws and committee charters form the framework
for our companys governance. Our Corporate Governance
Guidelines and Code of Ethics and Business Conduct
are available on the Investor Relations page of our website
http://www.exide.com. Shareholders may request free
printed copies of the Code of Ethics and Business Conduct
from:
Exide Technologies
13000 Deerfield Parkway
Building 200
Alpharetta, Georgia 30004
Attn: Corporate Secretary
Board of
Directors Committees and Meetings
The members of the Board of Directors on the date of this proxy
statement, and the committees of the Board of Directors on which
they currently serve, are identified below.
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Nominating
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and Corporate
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Compensation
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Audit
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Governance
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Finance
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Director
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Committee
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Committee
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Committee
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Committee
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Michael R. DAppolonia
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Chair
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Member
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Mark C. Demetree
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Member
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David S. Ferguson
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Member
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Member
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Phillip M. Martineau
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Member
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Member
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John P. Reilly, Chairman
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Member
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Michael P. Ressner
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Chair
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Member
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Gordon A. Ulsh
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Carroll R. Wetzel
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Member
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Chair
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Chair
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The Board of Directors met 33 times during fiscal 2006. Each
director attended at least 75% of all meetings of the Board of
Directors and committees on which he served. Under our
Corporate Governance Guidelines, each director is
expected to attend Board of Directors meetings on a regular
basis. Directors are also encouraged to attend the annual
meeting of stockholders. All but one of our directors (and all
of our current directors) attended the 2005 annual meeting.
The Board of Directors has Audit, Nominating and Corporate
Governance, Compensation and Finance Committees. Each of the
committees operates under a written charter adopted by the Board
of Directors. All of the committee charters are available on the
Investor Relations page of our website at
http://www.exide.com. A free printed copy of each
of these charters are available to any shareholder who requests
it from the address listed under the heading Governance of
the Company.
Audit
Committee
The Audit Committee met 21 times during fiscal 2006. The purpose
of the Audit Committee is to assist the Board of Directors in
overseeing the accounting and financial reporting processes and
the audits of our financial statements. The Audit
Committees primary duties and responsibilities are to:
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monitor the integrity of our financial reporting process and
systems of internal controls regarding finance, accounting and
legal compliance;
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appoint, approve and monitor the independence, services,
performance and compensation of our independent auditors and
internal audit services;
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provide an avenue of communication among the independent
auditors, our disclosure committee, management, employees, the
internal audit function and the Board of Directors;
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review and approve, as appropriate, related party transactions
for potential conflict of interest situations;
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prepare the audit committee report that the rules of the SEC
require to be included in our annual proxy statement; and
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monitor and approve the scope of our internal audit plan and
work program and coordinate our internal and external audits.
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In September 2005, the Board of Directors determined that all of
the members of the Audit Committee are independent within the
meaning of SEC regulations, the listing standards of the Nasdaq
Global Market and our Corporate Governance Guidelines.
The Board of Directors has determined that Mr. Ressner, the
chair of the Audit Committee, is qualified as an audit committee
financial expert within the meaning of Commission rules, and
that he has financial sophistication within the meaning of the
listing standards of the Nasdaq Global Market.
The report of the Audit Committee is included herein under the
heading Report of the Audit Committee. The charter
of the Audit Committee is available on our website listed above.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee met six times
during fiscal 2006. The purpose of the Nominating and Corporate
Governance Committee is to assist the Board of Directors in
identifying qualified individuals to serve as executive officers
and directors on the Board of Directors. The primary duties and
responsibilities of the Nominating and Corporate Governance
Committee are to:
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establish criteria for selecting new directors, identify
individuals qualified to become members of the Board of
Directors members based on these criteria and recommend to the
Board of Directors for its consideration such individuals as
nominees to the Board of Directors;
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coordinate with management major changes in staffing throughout
the organization and strategies to achieve employee diversity;
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oversee evaluations of the Board of Directors, individual
members of the Board of Directors and the committees of the
Board of Directors; and
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develop, evaluate and make recommendations to the Board of
Directors with respect to our corporate governance policies and
procedures and Code of Ethics and Business Conduct.
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The policy of the Nominating and Corporate Governance Committee
is to consider individuals recommended by stockholders for
nomination as a director in accordance with the procedures
described under Stockholder Proposals and Director
Nominations for the 2007 Annual Meeting. The Nominating
and Corporate Governance Committee will consider all nominees
for election as directors, including all nominees recommended by
stockholders, in accordance with the mandate contained in its
charter. In evaluating candidates, the committee considers the
persons judgment, skills, experience, age, independence,
understanding of Exides business or other related
industries as well as the needs of the Board of Directors, and
will review all candidates in the same manner, regardless of the
source of the recommendation. The Nominating and Corporate
Governance Committee will select qualified candidates and review
its recommendations with the Board of Directors.
In July 2005, the Board of Directors determined that all of the
members of the Nominating and Corporate Governance Committee are
independent within the meaning of Commission rules, the listing
standards of the Nasdaq Global Market and our Corporate
Governance Guidelines.
22
Compensation
Committee
The Compensation Committee met 15 times during fiscal 2006. The
purpose of the Compensation Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities with
respect to compensation. The Compensation Committees
primary duties and responsibilities are to:
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oversee the administration of our compensation plans, in
particular our incentive compensation and equity-based plans;
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develop and recommend to the Board of Directors total
compensation for our Chief Executive Officer and determine
compensation for all other executive officers, including
oversight of the administration of our executive benefit
plans; and
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prepare the Compensation Committee report to be included in the
annual proxy statement as required by the rules of the SEC.
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In July 2005, the Board of Directors determined that all of the
members of the Compensation Committee are independent within the
meaning of Commission regulations, the listing standards of The
Nasdaq Global Market and our Corporate Governance
Guidelines.
Finance
Committee
The Finance Committee met four times during fiscal 2006. The
purpose of the Finance Committee is to assist the Board in
reviewing and making recommendations to the Board regarding our
senior debt financing facility and alternatives thereto, and
regarding any other appropriate matters at the request of the
Board on an ad-hoc basis.
Compensation
Committee Interlocks and Insider Participation
None of the members of the Compensation Committee during fiscal
2006 or as of the date of this proxy statement is or has been an
officer or employee of our company or any of its subsidiaries.
No interlocking relationship exists between the members of our
companys Board of Directors or Compensation Committee and
the Board of Directors or compensation committee of any other
company.
Board of
Directors Compensation
Each non-employee director receives an annual retainer of
$40,000 payable prospectively in quarterly cash installments.
Additionally, the Chairman of the Board of Directors receives an
annual retainer of $50,000 payable prospectively in quarterly
installments. The Chairman of the Audit Committee receives an
additional annual retainer of $15,000, the Chairmen of the
Compensation Committee and the Finance Committee each receive
annual retainers of $10,000 and the Chairman of the Nominating
and Corporate Governance Committee receives an annual retainer
of $3,000, each paid prospectively in quarterly installments.
Each member of our Board of Directors also receives $2,000 for
each board or committee meeting attended in person and $1,000
for each board or committee meeting attended telephonically.
Each non-employee director receives an annual grant of options
and restricted shares each equal to $20,000, based on the
average of the high and low trading prices of our stock averaged
over the ten trading days prior to the date of grant. These
options and restricted shares have a one-year vesting period. On
October 14, 2005 each of the directors was awarded options
to purchase 5,673 shares of common stock at $4.955 per
share and 4,036 restricted shares.
Directors who are also employees of our company receive no
additional compensation for service as a director. Additionally,
we do not provide retirement benefits to non-employee directors
under any current program.
REPORT OF
THE AUDIT COMMITTEE
The following Report of the Audit Committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other filing under the
Securities Act of 1933 or the Securities
23
Exchange Act of 1934, notwithstanding any general statement
contained in any such filing incorporating this proxy statement
by reference, except to the extent we specifically incorporate
this Report by reference therein.
Purpose
The purpose and authority of the Audit Committee are specified
in its charter, which is described above.
Independent
Auditor Communications
The Committee discussed with the independent auditors matters
required to be discussed pursuant to Statement on Auditing
Standards No. 61 (Communication with Audit Committees),
including management judgments and accounting estimates, as well
as whether the there were any significant audit adjustments, any
disagreements with management or any difficulties encountered in
performing the audit. The Committee also discussed with
PricewaterhouseCoopers LLP matters relating to its independence,
which discussion included a review of the firms audit and
non-audit fees, as may be modified or supplemented. In
connection with such discussions, the Committee received the
written disclosures and letter from PricewaterhouseCoopers LLP
required by Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees).
Internal
Controls
During fiscal 2006, the Committee discussed with management the
scope and progress of managements evaluation of our
internal controls over financial reporting under
Section 404 of the Sarbanes-Oxley Act. The Committee also
discussed with the independent auditors the status of its
testing of internal controls over financial reporting and
whether any deficiencies existed.
Review of
Periodic Reports
The Committee reviewed with management and the independent
auditors each of our quarterly and annual reports for fiscal
2006, including our audited financial statements, which review
included a discussion regarding accounting principles, practices
and judgments. The Committee also reviewed and discussed with
management the earnings press releases accompanying such
quarterly and annual reports.
Audited
Financial Statements
As a result of its review of the audited financial statements,
as well as its discussions with management and the independent
auditors, the Committee recommended to the Board of Directors
that our audited consolidated financial statements be included
in our Annual Report on
Form 10-K
for fiscal 2006 for filing with the SEC.
Members of the Audit Committee
Michael P. Ressner, Chairman
Philip M. Martineau
Carroll R. Wetzel
REPORT OF
THE COMPENSATION COMMITTEE
The following Report of the Compensation Committee does not
constitute soliciting material and should not be deemed filed or
incorporated by reference into any other filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
notwithstanding any general statement contained in any such
filing incorporating this proxy statement by reference, except
to the extent we specifically incorporate this Report by
reference therein.
The Compensation Committee of the Board of Directors has
furnished the following report on executive compensation for
fiscal 2006.
24
Philosophy
and Components of Executive Compensation
The Committees primary objective is to have an executive
compensation program that attracts, motivates and retains a
strong leadership team that is rewarded based on our financial
objectives and increasing shareholder value. The program targets
a base compensation that is between the 50th and
75th percentiles of market while also providing executives
with the opportunity to earn total cash compensation which is
also higher than the market average based upon their individual
contribution to us attaining our growth and profit objectives. A
core strategy of the executive compensation program is to link
compensation to our overall performance, the performance of our
various business units and the performance of individual
executives. The Committee also strives to ensure that the amount
of each executives incentive compensation increases
directly with the level of that executives responsibility.
Each year, internal and external consultants review the
executive compensation philosophy and components to ensure
competitiveness in the marketplace and current company climate.
Although a yearly review is conducted on the values and metrics,
the core components of compensation for our executive officers
include a base salary, a short-term incentive plan (or annual
cash bonus) and a long-term incentive plan (for equity
compensation), each of which are described below.
Base
Salary
Each year, the Committee, upon managements recommendation,
reviews the base salaries for our executive officers and makes
recommendations to the Board of Directors regarding the salary
of the Chief Executive Officer. The Committee recommends base
salary modifications for the executive officers based on several
factors including individual performance, current market
conditions, years of experience, industry-specific experience,
national and local salaries of comparable positions (internally
and externally), and level of responsibility. Consistent high
performance will enable the individual to obtain a salary above
the prevailing market rate. If the market rate is higher than
current company salaries and if both company conditions and
individual performance are favorable, most executives will
receive an increase approximately April 1 of each year. Due
to adverse company conditions, most senior executive officers
did not receive an increase during fiscal 2006.
Short
Term Incentive
In May 2002, the Board of Directors adopted an annual cash
incentive plan, the Corporate Incentive Plan (CIP),
which applies to the Chief Executive Officer, direct reports of
the Chief Executive Officer, other senior managers and certain
professionals located throughout the world. The CIPs
objective is to provide a competitive financial opportunity that
will motivate key contributors to achieve or exceed the
Companys business plan. The CIP is a goal-driven plan
based on the following components: 1) annual financial
performance which includes our earnings before interest, taxes,
depreciation and amortization (EBITDA) and
improvements in working capital and operating cash flow; and
2) the accomplishment of strategic and personal goals,
which are evaluated annually under our performance management
process.
For senior executive officers, the Committee establishes target
bonuses ranging between 30% and 50% of base salary. For the
Chief Executive Officer, we established a target bonus at 100%
of base salary. The targets are reviewed on a yearly basis as a
part of the total cash compensation review. As market conditions
remained consistent coupled with fiscal 2006 company
performance, bonus targets were not adjusted for fiscal 2006
except that Messrs. Bregman and Reverchons bonus
targets were raised commensurate with other senior executives at
the division level.
The Board of Directors may approve discretionary payments under
the CIP. Due to overall company performance no payments were
made under the CIP to any executive officers listed in the
Summary Compensation Table during fiscal 2006, but Mr. Ulsh
was awarded a $375,000 bonus, as required pursuant to his
employment contract with us dated April 1, 2005.
Long Term
Incentives (Equity Compensation)
On August 30, 2005, the shareholders approved the 2004
Stock Incentive Plan (the 2004 Plan) to provide
incentives and awards to certain employees, including the Chief
Executive Officer and other senior
25
executive officers, directors and certain consultants. The types
of awards available under the 2004 Plan include options,
restricted shares and performance awards.
The 2004 Plan was created to align the interests of management
with the long-term interests of our shareholders and consistent
with the business strategy. For fiscal 2006, the Committee,
after review with an independent compensation consultant,
determined that an allocation of 25% options, 15% restricted
shares and 60% cash performance unit awards would provide the
appropriate balance of maximizing long-term shareholder value
with the goals of compensating executive officers, as well as
preserving shares in the 2004 Plan for future grants.
The amount of equity awards granted to each recipient is
determined after consultation with the Committees
independent consultant and is based on company performance,
company standing in the market place, and competitive market
data. The value of awards granted under the 2004 Plan ranges
from 40% and 200% of the base compensation, depending on the
participants position.
Options
Pursuant to the 2004 Plan, 603,038 options (net of forfeitures)
were granted to executive officers in fiscal 2006, representing
68.2% of all options awarded. The options have a three-year
vesting period, with one-third of the options vesting on
November 29, 2006, one-third vesting on November 29,
2007 and the remaining one-third vesting on November 29,
2008. The option awards are valued using the Black-Scholes model
based on outside consultant review and determination of peer
companies and their volatility rates and the exercise price was
set at the
10-day
trailing average closing price of common stock immediately prior
to the grant date.
Restricted
Shares
Pursuant to the 2004 Plan, 246,654 restricted shares (net of
forfeitures) were approved for granting to executive officers in
fiscal 2006, representing 70.4% of all shares awarded. These
restricted shares have a five-year vesting period, with 20%
vesting on November 29 of each year from 2006 through 2010. The
number of restricted shares was based on a
10-day
trailing average closing price of the common stock immediately
prior to the grant date of the awards by the Board of Directors
upon recommendations from the Committee.
Performance
Awards
The 2004 Plan provides the Committee with the discretion to
grant performance awards to participants in the 2004 Plan.
Performance awards provide executives with the opportunity to
receive payments for meeting certain objective goals established
by the Committee during a specified performance period. For
fiscal 2006, the Board of Directors established targets based on
Consolidated EBITDA and Return on Net Assets payable upon
achievement of targets as of March 31, 2008.
Compensation
of the Chief Executive Officer
Gordon A. Ulsh, our President and Chief Executive Officer during
fiscal 2006, received annual base compensation of $800,000 and a
target bonus of 100% of base salary, which may be greater if
justified by performance against goals established by the
Committee. For fiscal 2006, Mr. Ulsh was guaranteed a
minimum bonus of no less than $375,000, regardless of whether
any performance goals were satisfied. Mr. Ulsh also
received a bonus of $300,000 payable on his first day of
employment with our company.
Mr. Ulsh received incentive compensation of 150,000 stock
options at a per share exercise price of $13.22 and 30,000
restricted shares, which are subject to the terms and vesting
schedules under the 2004 Plan. Mr. Ulsh also received
replacement equity compensation of 80,000 stock options at a per
share exercise price of $13.22 and 100,000 restricted shares,
both of which vest over a three-year period, for equity awards
forfeited from his prior employment. Mr. Ulsh was also
reimbursed for reasonable expenses incurred in connection with
relocating himself and his family to Atlanta, Georgia, which
amounted to $197,765. Mr. Ulsh was entitled to a
gross-up
payment if any payment is subject to an excise tax under
Section 4999 of the
26
Internal Revenue Code of 1986, as amended, such that our company
shall pay an additional amount to Mr. Ulsh equal to the
amount of any exercise tax and any other taxes related thereto.
Increases in annual compensation to Mr. Ulsh are recommended by
the Compensation Committee to the Board of Directors. In
determining whether to grant any salary increase, the same
performance criteria that are applied to executive officers
generally are applied to Mr. Ulsh.
Internal
Revenue Code Section 162(m) Consideration
Section 162(m) of the Internal Revenue Code generally
disallows a tax deduction to public corporations for
compensation over $1,000,000 paid for any fiscal year to the
corporations chief executive officer and four other most
highly compensated executive officers as of the end of any
fiscal year. However, the statute exempts qualifying
performance-based compensation from the deduction limit if
certain requirements are met.
The Committee designs certain components of executive
compensation to ensure full deductibility. The Committee
believes, however, that shareholder interests are best served by
not restricting the Committees discretion and flexibility
in crafting compensation programs, even though such programs may
result in certain non-deductible compensation expenses.
Accordingly, the Committee has from time to time approved
elements of compensation for certain officers that are not fully
deductible, and reserves the right to do so in the future in
appropriate circumstances.
Members of the Compensation Committee
Michael R. DAppolonia (Chair)
Mark C. Demetree
David S. Ferguson
John P. Reilly
27
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table sets forth information concerning total
compensation earned by or paid to our Chief Executive Officer
and four other most highly compensated executive officers of our
company who served in such capacities as of March 31, 2006
(the named executive officers) for services rendered
to us during each of the past three fiscal years.
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Long Term
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Compensation
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Annual Compensation
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Restricted
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Securities
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Other Annual
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Stock
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Underlying
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All Other
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Name
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Year
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Salary
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Bonus(1)
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Compensation(2)
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Awards(3)
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Options
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Compensation(4)
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Gordon A. Ulsh
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2006
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$
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800,000
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$
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675,000
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$
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292,350
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$
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2,056,937
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428,925
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$
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29,508
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President and CEO
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2005
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$
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$
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2004
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$
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$
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$
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$
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Mitchell S. Bregman
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2006
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$
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288,000
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$
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$
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47,827
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30,118
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$
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17,684
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President, Industrial
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2005
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$
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288,000
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$
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$
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31,500
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$
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47,100
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20,000
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$
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69,230
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Americas
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2004
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$
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278,668
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$
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69,418
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$
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11,500
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$
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23,874
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Neil S. Bright
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2006
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$
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338,707
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$
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$
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$
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58,006
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36,529
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$
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41,083
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President, Industrial Europe
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2005
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$
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352,810
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$
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47,100
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12,500
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$
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97,642
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2004
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$
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352,810
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$
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4,016
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$
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$
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112,608
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Phillip A. Damaska
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2006
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$
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245,000
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$
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5,737
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$
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100,920
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$
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25,406
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16,000
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$
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20,003
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Senior Vice President
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2005
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$
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39,169
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$
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25,000
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$
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17,250
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$
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38,400
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12,000
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$
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1,958
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Corporate Controller
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2004
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E.J. OLeary
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2006
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$
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267,292
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$
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100,000
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$
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45,887
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$
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120,506
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31,785
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$
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20,415
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President, Transportation
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2005
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$
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$
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$
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$
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North America
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2004
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$
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$
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$
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$
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J. Timothy Gargaro
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2006
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$
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262,499
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$
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97,458
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$
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295,709
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Former Executive
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2005
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$
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165,802
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$
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50,000
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$
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107,102
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$
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157,000
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50,000
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$
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11,188
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Vice President and
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2004
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Chief Financial Officer
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Stuart H. Kupinsky
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2006
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$
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298,003
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$
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$
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58,120
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36,602
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$
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11,019
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Former Executive
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2005
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$
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283,250
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$
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145,593
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109,900
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30,000
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$
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36,407
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Vice President,
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2004
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$
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264,583
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$
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11,500
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$
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25,601
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General Counsel and Secretary
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(1) |
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Includes annual bonuses under the CIP Plan. Mr. Ulsh received a
retention payment of $300,000 upon commencement of his
employment and a fiscal 2006 bonus of $375,000 pursuant to his
employment agreement. Mr. Damaska received a retention
payment of $25,000 upon commencement of his employment,
Mr. OLeary received a retention payment of $100,000
upon commencement of his employment, and Mr. Gargaro
received a retention payment of $50,000 upon commencement of his
employment. |
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(2) |
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Payments to Mr. Ulsh in fiscal 2006 included a W-2 tax gross-up
of $78,887, relocation expenses of $131,098 and a moving
allowance of $66,667. Payments to Mr. Bregman in fiscal 2005
included a lump sum payment of $20,000 in lieu of any salary
action. Payment to Mr. Damaska in fiscal 2006 included
relocation costs of $60,115, and in fiscal 2005 included a W-2
tax gross up of $15,750. Payments to Mr. OLeary in
fiscal 2006 included reimbursed relocation expenses of $20,836
and a W-2 tax gross-up of $13,027. Payments to Mr. Gargaro in
fiscal 2006 included a W-2 tax gross up of $26,476 and
relocation expenses of $41,651 and in fiscal 2005 included a
moving allowance of $44,090 and a W-2 tax gross up of $56,123.
Payments to Mr. Kupinsky in fiscal 2005 included a W-2 tax
gross up of $45,816 and relocation expenses of $14,948. |
|
|
|
(3) |
|
The number and value of aggregate restricted share awards as of
March 31, 2006, based upon the closing price of our common stock
on March 31, 2006 of $2.86, are as follows: Mr. Ulsh
$659,130; |
28
|
|
|
|
|
Mr. Bregman $43,209; Mr. Bright
$50,579; Mr. Damaska $26,976; Mr.
OLeary $72,970; Mr. Gargaro
$28,600; and Mr. Kupinsky $62,102. Although
dividends are otherwise payable on restricted shares under the
2004 Plan, no dividends were declared in fiscal 2005 or 2006.
Restricted shares under the 2004 Plan have a vesting schedule,
pursuant to which 20% of the restricted shares vest on each
anniversary of the grant date over the five-year period
following the grant. |
|
|
|
(4) |
|
Includes life and accidental death and dismemberment
(AD&D) insurance premium payments, matches to
the Companys 401(k) Plan, Cash Balance Plan payments and
awards under our companys Milestone Restructuring Plan.
Payments to Mr. Ulsh include the following: a 401(k) match
of $7,000 in fiscal 2006; Cash Balance Plan payments of $20,500
in fiscal 2006; and life and AD&D insurance premiums of
$2,008 in fiscal 2006. Payments to Mr. Bregman include the
following: a 401(k) match of $6,300 in fiscal 2006 and $2,160 in
fiscal 2005; life and AD&D insurance premiums of $884 in
fiscal 2006, $1,084 in fiscal 2005 and $1,033 in fiscal 2004;
Cash Balance Plan payments of $10,500 in fiscal 2006, $10,250 in
fiscal 2005 and $9,157 in fiscal 2004; and awards under the
Milestone Restructuring Plan of $55,733 in fiscal 2005 and
$13,684 in fiscal 2004. Payments to Mr. Bright include the
following: employer pension payments of $39,468 in fiscal 2006,
$42,337 in fiscal 2005 and $50,139 in fiscal 2004; private
medical insurance premiums of $1,615 in fiscal 2006, $1,733 in
fiscal 2005 and $1,468 in fiscal 2004; and awards under the
Milestone Restructuring Plan of $52,154 in fiscal 2005 and
$61,001 in fiscal 2004. Payments to Mr. Damaska include the
following: a 401(k) match of $7,522 in fiscal 2006; Cash Balance
Plan payments of $11,729 in fiscal 2006 and $1,958 in fiscal
2005; and life and AD&D insurance premiums of $752 in
fiscal 2006 . Payments to Mr. Gargaro include the
following: Cash Balance Plan payments of $7,135 in fiscal 2006
and $10,790 in fiscal 2005; life and AD&D insurance premiums
of $1,075 in fiscal 2006 and $398 in fiscal 2005; and severance
payments of $287,500 in fiscal 2006. Payments to
Mr. Kupinsky include the following: a 401(k) match of
$6,300 in fiscal 2006; Cash Balance Plan payments of $10,500 in
fiscal 2006, $10,353 in fiscal 2005 and $9,756 in fiscal 2004;
life and AD&D insurance premiums of $901 in fiscal 2006,
$1,054 in fiscal 2005 and $1,054 in fiscal 2004; and awards
under the Milestone Restructuring Incentive Plan of $25,000 in
fiscal 2005 and $14,792 in fiscal 2004. |
29
Option
Grants during Fiscal 2006
The following table sets forth information with respect to
options to purchase common stock granted to the named executive
officers under the 2004 Plan during fiscal 2006. The table sets
forth:
|
|
|
|
|
the number of shares of common stock underlying options granted
during fiscal 2006;
|
|
|
|
the percentage that such options represent of all options
granted to employees during fiscal 2006;
|
|
|
|
the exercise price (which in each case was equal to the closing
price of the stock for the ten trading days preceding the date
of grant);
|
|
|
|
the expiration date; and
|
|
|
|
the hypothetical present value, as of the grant date, of the
options under the option pricing model discussed below.
|
The hypothetical present value of the options as of their date
of grant has been calculated using the Black-Scholes option
pricing model, as permitted by SEC rules, based upon a set of
assumptions set forth in footnote (2) to the table. It
should be noted that this model is only one method of valuing
options, and the Companys use of the model should not be
interpreted as an endorsement of its accuracy. The actual value
of the options may be significantly different, and the value
actually realized, if any, will depend upon the excess of the
market value of the common stock over the option exercise price
at the time of exercise.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% of Total
|
|
|
|
|
|
|
|
|
|
|
Options
|
|
|
|
|
|
|
|
|
Number of
|
|
Granted to
|
|
Exercise
|
|
|
|
Hypothetical
|
|
|
Options
|
|
Employees in
|
|
Price
|
|
Expiration
|
|
Value at
|
Name
|
|
Granted(1)
|
|
Fiscal Year
|
|
($/Share)
|
|
Date
|
|
Grant Date(2)
|
|
Gordon A. Ulsh
|
|
|
150,000
|
|
|
|
16.0
|
%
|
|
$
|
13.22
|
|
|
|
8/29/15
|
|
|
$
|
1,176,000
|
|
|
|
|
198,925
|
|
|
|
21.2
|
%
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
$
|
592,747
|
|
Mitchell S. Bregman
|
|
|
30,118
|
|
|
|
3.2
|
%
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
$
|
89,752
|
|
Neil S. Bright
|
|
|
36,529
|
|
|
|
3.9
|
%
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
$
|
108,856
|
|
Phillip A. Damaska
|
|
|
16,000
|
|
|
|
1.7
|
%
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
$
|
47,680
|
|
E.J. OLeary
|
|
|
30,000
|
|
|
|
3.2
|
%
|
|
$
|
4.88
|
|
|
|
8/29/15
|
|
|
$
|
86,700
|
|
|
|
|
1,785
|
|
|
|
0.2
|
%
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
$
|
5,319
|
|
J. Timothy Gargaro
|
|
|
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
|
|
NA
|
|
Stuart H. Kupinsky
|
|
|
36,602
|
|
|
|
3.9
|
%
|
|
$
|
4.46
|
|
|
|
11/28/15
|
|
|
$
|
109,074
|
|
|
|
|
(1) |
|
The Compensation Committee, which administers the 2004 Plan, has
general authority to accelerate, extend or otherwise modify
benefits under option grants in certain circumstances within
overall plan limits. |
|
(2) |
|
The hypothetical present value at grant date of options granted
during fiscal 2006 has been calculated using the Black-Scholes
option pricing model, based upon the following assumptions:
Risk-Free Interest Rate of 4.5%, Option Term of 10 years
and volatility of 0.4050. The approach used in developing the
assumptions upon which the Black-Scholes valuations were
calculated is consistent with the requirements of Statement of
Financial Accounting Standards No. 123, Accounting
for Stock-Based Compensation. The options
vest in four equal annual installments beginning on the first
anniversary of the date of grant, subject to acceleration in
certain circumstances. |
30
Option
Exercises and Year End Values
No stock options were exercised by our named executive officers
in fiscal 2006. The following table sets forth information
regarding unexercised stock options held by named executive
officers as of March 31, 2006. As of March 31, 2006,
there were no
in-the-money
stock options because the exercise price of all outstanding
stock options exceeded the market value of our common stock on
March 31, 2006 of $2.86 per share.
|
|
|
|
|
|
|
|
|
|
|
Number of Unexercised
|
|
|
Options at
|
|
|
March 31, 2006
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Gordon A. Ulsh
|
|
|
0
|
|
|
|
428,925
|
|
Mitchell S. Bregman
|
|
|
6,667
|
|
|
|
43,451
|
|
Neil S. Bright
|
|
|
4,167
|
|
|
|
44,862
|
|
Phillip A. Damaska
|
|
|
4,000
|
|
|
|
24,000
|
|
E.J. OLeary
|
|
|
0
|
|
|
|
31,785
|
|
J. Timothy Gargaro
|
|
|
16,667
|
|
|
|
33,333
|
|
Stuart H. Kupinsky
|
|
|
10,000
|
|
|
|
56,602
|
|
Long-Term
Incentive Plan Awards
LONG-TERM
INCENTIVE PLANS AWARDS IN LAST FISCAL
YEAR(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Performance or
|
|
|
|
|
|
|
Name
|
|
Shares/Units(2)
|
|
Other Period
|
|
Threshold
|
|
Target
|
|
Maximum(3)
|
|
Gordon A. Ulsh
|
|
|
N/A
|
|
|
|
03/31/08
|
|
|
$
|
480,000
|
|
|
$
|
1,200,000
|
|
|
$
|
2,000,000
|
|
Mitchell S. Bregman
|
|
|
N/A
|
|
|
|
03/31/08
|
|
|
$
|
86,400
|
|
|
$
|
216,000
|
|
|
$
|
432,000
|
|
Neil S. Bright
|
|
|
N/A
|
|
|
|
03/31/08
|
|
|
$
|
104,791
|
|
|
$
|
261,977
|
|
|
$
|
523,954
|
|
Phillip A. Damaska
|
|
|
N/A
|
|
|
|
03/31/08
|
|
|
$
|
45,900
|
|
|
$
|
114,750
|
|
|
$
|
229,500
|
|
E.J. OLeary
|
|
|
N/A
|
|
|
|
03/31/08
|
|
|
$
|
99,100
|
|
|
$
|
247,750
|
|
|
$
|
495,500
|
|
J. Timothy Gargaro
|
|
|
N/A
|
|
|
|
03/31/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stuart H. Kupinsky
|
|
|
N/A
|
|
|
|
03/31/08
|
|
|
$
|
105,000
|
|
|
$
|
262,500
|
|
|
$
|
525,000
|
|
|
|
|
(1) |
|
Performance unit awards will be payable in cash based on targets
established by the Compensation Committee: 50% for achievement
of an Adjusted EBITDA target and 50% for achievement of a return
on net assets target. The performance period has been
established by the Compensation Committee as December 1,
2005 through March 31, 2008. Payment will only be made
after conclusion of the performance period and will paid as
follows: 40% of the performance unit award upon achievement of
85% of the targets, 100% of the performance unit award upon
achievement of 100% of the targets and up to 200% of the
performance unit award upon achievement of 130% of the targets. |
|
|
|
(2) |
|
No units or shares were issued to eligible participants. |
|
|
|
(3) |
|
Pursuant to the terms of the 2004 Plan, Mr. Ulshs
maximum Performance Award is capped at $2,000,000, which is less
than 200% of the target performance unit award.
Mr. Kupinsky resigned in March 2006 and has forfeited his
award. |
Employment
Contracts, Termination of Employment and
Change-in-Control
Agreements
Gordon
A. Ulsh (President and Chief Executive Officer)
Mr. Ulsh serves as our President and Chief Executive
Officer pursuant to an employment agreement dated March 2,
2005. The agreement provides for Mr. Ulshs employment
through February 2007 (subject to earlier termination under
certain circumstances as described below). At the end of the
two-year period and each
31
anniversary thereafter, the agreement provides that the term
will be automatically extended for one additional year unless
either party provides advance written notice of non-renewal.
Pursuant to the terms of the agreement, Mr. Ulsh will
receive annual base compensation of not less than $800,000 and a
target bonus of 100% of base salary, which may be greater if
justified by performance against goals established by the
Compensation Committee of the Board of Directors. For fiscal
2006, Mr. Ulsh is guaranteed a minimum bonus of no less
than $375,000, regardless of whether any performance goals are
satisfied. Mr. Ulsh also received a bonus of $300,000 on
the first day of his employment with the Company.
Mr. Ulsh received incentive compensation of 150,000 stock
options at a per share exercise price equal to the fair market
value of one share of common stock on the date of grant and
30,000 restricted shares, both of which are subject to the terms
and vesting schedules under the 2004 Plan.
Mr. Ulsh received inducement equity compensation of 80,000
stock options at a per share exercise price equal to the fair
market value of one share of common stock on the date of grant
and 100,000 restricted shares, both of which will vest over a
three-year period. Mr. Ulsh received, in accordance with
our relocation policy, reimbursement for all reasonable expenses
incurred in relocating himself and his family to Atlanta,
Georgia.
Severance payments for a termination of Mr. Ulshs
employment without cause or by Mr. Ulsh for good reason
include earned but yet unpaid base salary through the date of
termination, earned but unpaid bonus for the year prior to the
year in which the date of termination occurs and any earned but
unpaid vacation pay. Mr. Ulsh would also receive a pro-rata
share of the bonus that would have been paid had he remained
employed through the end of the fiscal year in which such
termination occurs, and a lump sum payment equal to 200% of the
sum of his annual base salary and target bonus.
Mr. Ulsh was entitled to a
gross-up
payment if any payment is subject to an excise tax under
Section 4999 of the Internal Revenue Code of 1996, as
amended.
Mr. Ulshs agreement contains provisions relating to
non-competition during the term of employment, protection of our
confidential information and intellectual property, and
non-solicitation of our Companys employees following
termination of employment.
Francis
M. Corby, Jr. (Chief Financial Officer)
Mr. Corby serves as our Chief Financial Officer and
Executive Vice President pursuant to an employment agreement
dated February 16, 2006. The agreement provides for
Mr. Corbys employment through March 2008 (subject to
earlier termination under certain circumstances as described
below). At the end of his employment period the agreement shall
terminate unless our company provides Mr. Corby with at
least 60 days prior written notice that we intend to renew
or extend the agreement.
Pursuant to the terms of the agreement, Mr. Corby will
receive annual base compensation of not less than $400,000 in
the first year of the employment period, not less than $450,000
in the second year of the employment period and a target bonus
of 50% of base salary for fiscal year 2007 and 100% of base
salary for fiscal year 2008, which bonuses may be greater if
justified by performance against goals established by the
Compensation Committee of the Board of Directors. For fiscal
2007, Mr. Corby is guaranteed a minimum bonus of no less
than $75,000, regardless of whether any performance goals are
satisfied. Mr. Corby also received a performance bonus of
$16,666.67 for fiscal 2006 and a signing bonus of $150,000,
which must be repaid in full if Mr. Corbys employment
is terminated without good reason within six months of
commencement, in connection with the commencement of his
employment with our company. Mr. Corby will be eligible for
a $150,000 bonus at the end of his employment period, provided
that his employment with our company was not terminated for any
reason other than good cause prior to the end of his employment
period.
Mr. Corby received incentive compensation of stock options
to acquire shares of our companys common stock worth
$200,000 at a per share exercise price equal to the fair market
value of one share of our common stock on the date of grant
which options vest at 100% on the secondary anniversary of the
grant date, and $150,000 worth restricted shares of our stock,
both of which are subject to the terms and vesting schedules
32
under the 2004 Plan. Mr. Corby received, in accordance
with our relocation policy, reimbursement for all reasonable
expenses incurred in relocating to Atlanta, Georgia.
Severance payments for a termination of Mr. Corbys
employment without cause or by Mr. Corby for good reason
include earned but yet unpaid base salary through the date of
termination, earned but unpaid bonus for the year prior to the
year in which the date of termination occurs and any earned but
unpaid vacation pay. Mr. Corby would also receive 100% of
the target bonus that would have been paid had he remained
employed through the end of the fiscal year in which such
termination occurs, and a lump sum payment equal to
Mr. Corbys base salary through the end of the
employment period.
Mr. Corbys agreement contains provisions relating to
non-competition during the term of employment, protection of our
confidential information and intellectual property, and
non-solicitation of our companys employees following
termination of employment.
Income
Protection Plan
Our company has an Income Protection Plan which is intended to
provide participants (including executive officers) with
severance benefits in the event of termination of employment
without cause or resignation under certain adverse
circumstances. Under the plan, executive officers will receive
twelve months of severance regardless of whether the executive
officer obtains new employment within the twelve-month period.
The plan previously provided 24 months of severance which
would terminate or be reduced to the extent the executive
officer obtained compensation from new employment during such
24-month
period.
Executive
and Management Incentive Compensation
Annual
Incentives
In May 2002, the Board of Directors adopted an annual cash
incentive plan, the Corporate Incentive Plan (CIP),
which applies to the Chief Executive Officer, his direct reports
and other senior managers and certain other managers and
professionals located throughout the world. The CIPs
objective is to provide a competitive financial opportunity that
will motivate key contributors to achieve or exceed our
companys business plan. The CIP is a goal-driven plan
based on annual financial performance that includes EBITDA,
improvements in working capital and strategic and personal
goals. The incentive compensation of the Chief Executive Officer
under the CIP is based on global improvements in EBITDA, working
capital, strategic goals and personal goals. Target incentive
levels are established based on market competitive data and the
functional responsibilities for the other participants in the
CIP. The Board of Directors may approve discretionary payments
under the CIP. No payments were made to the Chief Executive
Officer or his direct reports for fiscal year 2006.
Long-Term
Incentives
On August 30, 2005, the shareholders approved the 2004 Plan
to provide incentives and awards to employees and directors of
our company, as well as certain of our companys
consultants.
Retirement
Plans
Cash
Balance Plan
All employees earn benefits with every dollar they earn in
eligible compensation. Contribution credits in the amount of 5%
of eligible compensation are allocated to each employees
account each month. These contribution credits earn interest,
compounded daily, from the time they are allocated to the
account. The interest credit for a given year is a fixed rate
based on the yield rate of
30-year
Treasury Bonds, as published in the month of November of the
previous year. Effective May 15, 2006, we suspended future
contributions to the Cash Balance Plan.
In addition to the prior mentioned plan, Mr. Bregman has
been grandfathered into the salaried component of the Exide
Technologies Retirement Plan. There is an accrued benefit of
$3,605.11 per month. The benefit is payable as a Single
Life Annuity beginning the first of the month following the day
he attains age 65. This
33
benefit was frozen as of December 30, 2000 and no further
benefits for Mr. Bregman or any of our other salaried
employees have accrued under this component since that time.
Equity
Compensation Plan Information
The following table summarizes information, as of March 31,
2006, relating to equity compensation plans of our company
pursuant to which grants of options, restricted shares or other
rights to acquire shares may be granted from time to time.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
Remaining Available for
|
|
|
Number of Securities to be
|
|
Weighted-Average
|
|
Future Issuance Under
|
|
|
Issued Upon Exercise of
|
|
Exercise Price of
|
|
Equity Compensation Plans
|
|
|
Outstanding Options,
|
|
Outstanding Options,
|
|
(Excluding Securities
|
|
|
Warrants and Rights
|
|
Warrants, and Rights
|
|
Reflected in Column (a))
|
Plan Category
|
|
(a)
|
|
(b)
|
|
(c)
|
|
Equity compensation plans approved
by security holders(1)
|
|
|
1,230,257
|
|
|
$
|
8.31
|
|
|
|
1,440,242
|
|
Equity compensation plans not
approved by security holders(2)
|
|
|
80,000
|
|
|
$
|
13.22
|
|
|
|
|
|
Total
|
|
|
1,310,257
|
|
|
$
|
9.98
|
|
|
|
1,440,242
|
|
|
|
|
(1) |
|
Consists of our 2004 Stock Incentive Plan. |
|
|
|
(2) |
|
Consists of an inducement grant of options to our Chief
Executive Officer |
34
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of July 17,
2006, concerning:
|
|
|
|
|
each person whom we know beneficially owns more than five
percent of our common stock;
|
|
|
|
each of our directors and nominees for the Board of Directors;
|
|
|
|
each of our named executive officers; and
|
|
|
|
all of our directors and executive officers as a group.
|
Unless otherwise noted below, the address of each beneficial
owner is c/o Exide Technologies, 13000 Deerfield Parkway,
Building 200, Alpharetta, GA 30004.
We determined beneficial ownership in accordance with the rules
of the SEC. Except as indicated by the footnotes below, we
believe, based on information furnished to our company, that the
persons and entities named in the table below have sole voting
and investment power with respect to all shares of common stock
that they beneficially own, subject to applicable community
property laws.
Applicable percentage ownership is based on
24,551,008 shares of common stock outstanding at
July 17, 2006. In computing the number of shares of common
stock beneficially owned by a person and the percentage
ownership of that person, we deemed outstanding shares of common
stock subject to options or warrants held by that person that
are currently exercisable or exercisable within 60 days of
July 17, 2006. We did not deem these shares outstanding,
however, for purposes of computing the percentage ownership of
any other person.
The information provided in the table below is based on our
records, information filed with the SEC and information provided
to us, except where otherwise noted.
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Percent
|
Name of Beneficial Owner
|
|
Beneficially Owned
|
|
of Class
|
|
5% Shareholders
|
|
|
|
|
|
|
|
|
Sterling Capital Management LLC(1)
|
|
|
3,459,939
|
|
|
|
14.1
|
%
|
4064 Colony Road,
Suite 300
Charlotte, NC 28211
|
|
|
|
|
|
|
|
|
Wells Fargo & Company(2)
|
|
|
2,571,500
|
|
|
|
10.5
|
%
|
420 Montgomery Street
San Francisco, CA 94104
|
|
|
|
|
|
|
|
|
Jeffrey L. Gendell(3)
|
|
|
2,425,387
|
|
|
|
9.9
|
%
|
C/o Tontine Capital Management,
L.L.C.
55 Railroad Avenue, 3rd Floor
Greenwich, CT 06830
|
|
|
|
|
|
|
|
|
Donald Smith & Co.,
Inc.(4)
|
|
|
2,365,597
|
|
|
|
9.6
|
%
|
152 West
57th Street
New York, NY 10019
|
|
|
|
|
|
|
|
|
Stanfield Capital Partners LLC(5)
|
|
|
1,926,062
|
|
|
|
7.6
|
%
|
430 Park Avenue
New York, NY 10022
|
|
|
|
|
|
|
|
|
David J. Greene and Company, LLC(6)
|
|
|
1,816,760
|
|
|
|
7.4
|
%
|
599 Lexington Avenue
New York, NY 10022
|
|
|
|
|
|
|
|
|
Arklow Capital, LLC(7)
|
|
|
1,588,892
|
|
|
|
6.5
|
%
|
237 Park Avenue, Suite 900
New York, NY 10017
|
|
|
|
|
|
|
|
|
35
|
|
|
|
|
|
|
|
|
|
|
Number of Shares
|
|
Percent
|
Name of Beneficial Owner
|
|
Beneficially Owned
|
|
of Class
|
|
Directors and Executive
Officers
|
|
|
|
|
|
|
|
|
Michael R. DAppolonia
|
|
|
9,049
|
|
|
|
*
|
|
Mark C. Demetree
|
|
|
9,263
|
|
|
|
*
|
|
David S. Ferguson
|
|
|
5,673
|
|
|
|
*
|
|
Phillip M. Martineau
|
|
|
14,049
|
|
|
|
*
|
|
John P. Reilly
|
|
|
9,049
|
|
|
|
*
|
|
Michael P. Ressner
|
|
|
9,049
|
|
|
|
*
|
|
Gordon A. Ulsh
|
|
|
331,132
|
|
|
|
*
|
|
Carroll R. Wetzel
|
|
|
5,673
|
|
|
|
*
|
|
Mitchell Bregman
|
|
|
21,775
|
|
|
|
*
|
|
Neil Bright
|
|
|
21,852
|
|
|
|
*
|
|
E.J. OLeary
|
|
|
35,514
|
|
|
|
*
|
|
Phillip A. Damaska
|
|
|
13,432
|
|
|
|
*
|
|
All Directors and executive
officers as a group (15 persons)
|
|
|
485,510
|
|
|
|
2.0
|
%
|
|
|
|
* |
|
Represents less than 1% of the outstanding common stock. |
|
(1) |
|
The information reflects the Schedule 13G filed by Sterling
Capital Management LLC on February 14, 2006. As of
February 14, 2006, 3,459,939 shares of our common
stock were beneficially owned by Sterling Capital Management LLC. |
|
(2) |
|
The information reflects the Schedule 13G filed jointly by
Wells Fargo & Company and Wells Capital Management
Incorporated on April 24, 2006. As of April 24, 2006,
2,571,500 shares of our common stock were reported
beneficially owned by Wells Fargo & Company and
5,524,700 shares of our common stock were reported
beneficially owned by Wells Capital Management Incorporated. |
|
(3) |
|
The information reflects the Schedule 13D filed jointly by
Tontine Capital Management, L.L.C., Tontine Partners, L.P.,
Tontine Capital Partners, L.P., Tontine Management, L.L.C.,
Tontine Overseas Associates, L.L.C., and Jeffrey L. Gendell on
June 29, 2006. Jeffrey L. Gendell (Mr. Gendell)
is the managing member of Tontine Capital Management, L.L.C.
(TCM), a Delaware limited liability company, the
general partner of Tontine Capital Partners, L.P., a Delaware
limited partnership (TCP). Mr. Gendell is the
managing member of Tontine Management, L.L.C. (TM),
a Delaware limited liability company, the general partner of
Tontine Partners, L.P., a Delaware limited partnership
(TP). Mr. Gendell is also the managing member of
Tontine Overseas Associates, L.L.C., a Delaware limited
liability company (TOA), the investment adviser to
Tontine Overseas Fund, Ltd., a Cayman Islands corporation
(TOF) and certain separately managed accounts.
Mr. Gendell indirectly owns 2,425,387 shares of Common
Stock of which is made up of the following: TCP directly owns
632,200 shares of Common Stock; TP directly owns
564,576 shares of Common Stock; TOF beneficially owns
1,178,611 shares of Common Stock; and certain separately managed
accounts own 50,000. |
|
(4) |
|
The information reflects the Schedule 13G filed by Donald
Smith & Co., Inc. on February 14, 2006. As of
February 14, 2006, 2,365,597 shares of our common
stock were beneficially owned by Donald
Smith & Co., Inc. |
|
(5) |
|
The information reflects the Schedule 13G/A filed by
Stanfield Capital Partners LLC on February 14, 2006. As of
February 14, 2006, 1,926,062 shares of our common
stock were beneficially owned by Stanfield Capital Partners LLC. |
|
(6) |
|
The information reflects the Schedule 13G filed by David J.
Greene and Company, LLC on February 10, 2006. As of
February 10, 2006, 1,816,760 shares of our common
stock were beneficially owned by David J. Greene and
Company, LLC. |
|
(7) |
|
The information reflects the Schedule 13G/A filed by Arklow
Capital, LLC on July 7, 2006. As of February 13, 2006,
1,588,892 shares of our common stock were beneficially
owned by Arklow Capital, LLC. including warrants exercisable
into 639,600 shares of common stock held by Arklow Capital,
LLC. |
36
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our directors, executive officers and holders
of more than 10% of our companys common stock to file with
the Commission reports regarding their ownership and changes in
ownership of our securities. Based upon a review of filings with
the SEC and written representations that no other reports were
required, we believes that all of our directors, executive
officers and 10% shareholders complied during fiscal 2005 with
the reporting requirements of Section 16(a), with the
exception of: Gordon A. Ulsh and Francis M. Corby,
Jr.: Mr. Ulsh filed a Form 4 indicating a
purchase of Exide stock by a family member beginning
June 10, 2005, for which Mr. Ulsh specifically denies
beneficial ownership. The Form 4 was not filed until
July 12, 2005, 30 days late.
Mr. Corby filed a Form 4 indicating a purchase of our stock
by a family member on March 6, 2006, for which
Mr. Corby specifically denies beneficial ownership. The
Form 4 was not filed until April 27, 2006,
50 days late.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We have entered into the Standby Agreement with Tontine, a
holder of approximately 9.9% of our outstanding common stock,
and Arklow, a holder of approximately 6.5% of our outstanding
common stock (which includes warrants exercisable into shares of
our common stock). The terms of the Standby Agreement are
described above in the discussion of Proposal 2.
37
PERFORMANCE
GRAPH
The following graph compares the performance of our
companys common stock with the performance of the
Standard & Poors Small Cap 600 Index and a peer
group index following our emergence from Chapter 11
bankruptcy protection. The graph assumes that $100 was invested
on May 5, 2004 in our common stock, the S&P Small Cap
600 Index and the peer group index, the S&P Small Cap Auto
Parts and Equipment Index, and that all dividends, if any, were
reinvested.
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5-May-04
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30-Jun-04
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30-Sep-04
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31-Dec-04
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31-Mar-05
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30-Jun-05
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30-Sep-05
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31-Dec-05
|
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31-Mar-06
|
Exide Technologies
|
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$
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100
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$
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93
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$
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72
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$
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63
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$
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59
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$
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22
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$
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23
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$
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17
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$
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13
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S&P Small Cap 600 Index
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$
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100
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$
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105
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$
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104
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$
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118
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$
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115
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$
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120
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$
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126
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$
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127
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$
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143
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S&P Small Cap Auto Parts and
Equipment Index
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$
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100
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$
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93
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$
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72
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$
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77
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$
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72
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$
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70
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$
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59
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$
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59
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$
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61
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SHAREHOLDER
PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 2007 ANNUAL
MEETING
You may submit proposals, including director nominations, for
consideration at future shareholder meetings.
Shareholder Proposals. For a shareholder
proposal to be considered for inclusion in our proxy statement
for the annual meeting next year, our Corporate Secretary must
receive the written proposal at our principal executive offices
no later than March 30, 2007. Such proposals must also
comply with SEC regulations under
Rule 14a-8
of the Securities Exchange Act of 1934 regarding the inclusion
of shareholder proposals in company-sponsored proxy materials.
Proposals should be addressed to:
Exide Technologies
13000 Deerfield Parkway
Building 200
Alpharetta, Georgia 30004
Attn: Corporate Secretary
Fax:
(678) 566-9229
38
For a shareholder proposal that is not intended to be included
in our proxy statement under
Rule 14a-8
of the Securities Exchange Act of 1934, the shareholder must
(1) deliver a proxy statement and form of proxy to holders
of a sufficient number of shares of our common stock to approve
the proposal, (2) provide the information required by our
Bylaws and (3) give timely notice to our Corporate
Secretary in accordance with our Bylaws, which, in general,
require that the notice be received by our Corporate Secretary:
|
|
|
|
|
not earlier than the close of business on the one hundred
twentieth day prior to the first anniversary of the 2006 annual
meeting of shareholders, or April 23, 2007; and
|
|
|
|
not later than the close of business on the ninetieth day prior
to the first anniversary of the 2006 annual meeting of
shareholders, or May 23, 2007.
|
However, if the 2007 annual meeting of shareholders is moved
more than 30 days before or more than 70 days after
August 22, 2007, then notice must be delivered by the
shareholder not earlier than the close of business on the one
hundred twentieth day prior to such annual meeting and not later
than the close of business on the later of the ninetieth day
prior to such annual meeting or the tenth day following the day
on which public announcement of the date of such meeting is
first made by our company.
Nomination of Director Candidates. You may
propose director candidates for consideration by the Board of
Directors Nominating and Corporate Governance Committee.
Any such recommendation should include the nominees name
and qualification for Board of Directors membership and should
be directed to our Corporate Secretary at the address of our
companys principal executive offices set forth above. For
additional information regarding shareholder recommendations of
director candidates, see Governance of the
Company Nomination of Directors
Shareholder Recommendations and Nominees.
In addition, our bylaws permit shareholders to nominate
directors for election at an annual meeting of shareholders. To
nominate a director, the shareholder must provide the
information required by our Bylaws. In addition, the shareholder
must give timely notice to our Corporate Secretary in accordance
with our Bylaws, which, in general, require that the notice be
received by our Corporate Secretary within the time period
described above under Shareholder Proposals for
shareholder proposals that are not intended to be included in
our proxy statement.
Copy of Bylaw Provisions. You may contact our
Corporate Secretary at its principal executive offices for
a copy of the relevant provisions of the Companys Bylaws
regarding the requirements for making shareholder proposals and
nominating director candidates.
The Board of Directors does not provide a process for
stockholders to send other communications to the Board because
it believes that the process available under applicable federal
securities laws for stockholders to submit proposals for
consideration at the annual meeting is adequate.
AVAILABILITY
OF ANNUAL REPORT
You may obtain, without charge, a copy of our Annual Report on
Form 10-K for the fiscal year ended March 31, 2006, including
the financial statements and the financial statement schedules
required to be filed with the SEC pursuant to rule 13a-1 of the
Exchange Act. You may also obtain copies of exhibits to the
Form 10-K, but we will charge a reasonable fee to
stockholders requesting such exhibits. You should direct your
request in writing to us at our address set forth on the first
page of this Proxy Statement, attention: Brad S. Kalter,
Corporate Secretary.
ADDITIONAL
INFORMATION
Householding of Proxy
Materials. The SEC has adopted rules that permit
companies and intermediaries such as brokers to satisfy delivery
requirements for proxy statements with respect to two or more
shareholders sharing the same address by delivering a single
proxy statement addressed to those shareholders. This process,
which is commonly referred to as householding,
potentially provides extra convenience for shareholders and cost
savings for companies. Our company and some brokers household
proxy materials,
39
delivering a single proxy statement to multiple shareholders
sharing an address unless contrary instructions have been
received from the affected shareholders. Once you have received
notice from your broker or our company that they or our company
will be householding materials to your address, householding
will continue until you are notified otherwise or until you
revoke your consent. If, at any time, you no longer wish to
participate in householding and would prefer to receive a
separate proxy statement, or if you are receiving multiple
copies of the proxy statement and wish to receive only one,
please notify your broker if your shares are held in a brokerage
account or us if you hold registered shares. You can notify us
by sending a written request to Exide Technologies, 13000
Deerfield Parkway, Building 200, Alpharetta, Georgia 30004 or by
calling Investor Relations at
(678) 566-9000.
Proxy Solicitation Costs. Our company is
making this solicitation and will pay the entire cost of
preparing, assembling, printing, mailing and distributing these
proxy materials and soliciting votes. If you choose to access
the proxy materials
and/or vote
over the Internet, you are responsible for Internet access
charges you may incur. If you choose to vote by telephone, you
are responsible for telephone charges you may incur. We have
retained Georgeson Shareholder Communications Inc., 17 State
Street, New York, New York 10004, to aid in the solicitation.
For these services, we will pay Georgeson a fee of $8,500 and
reimburse it for certain
out-of-pocket
disbursements and expenses. Our officers and regular employees
of the Company may, but without compensation other than their
regular compensation, solicit proxies by further mailing or
personal conversations, or by telephone, telex, facsimile or
electronic means. We will, upon request, reimburse brokerage
firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of stock.
40
APPENDIX A
STANDBY
PURCHASE AGREEMENT
STANDBY PURCHASE AGREEMENT (this Agreement)
dated as of June 28, 2006, by and among Exide Technologies,
a Delaware corporation (the Company), Tontine
Capital Partners, L.P., a Delaware limited partnership
(Tontine), Legg Mason Investment Trust, Inc.,
a Maryland corporation (Legg Mason and
together with Tontine, the Standby
Purchasers), and Arklow Capital, LLC, a Delaware
limited liability company (the Additional Standby
Purchaser).
W I T N E S
S E T H:
WHEREAS, the Company proposes, as soon as practicable after the
Rights Offering Registration Statement, as defined herein,
becomes effective, and the Proxy Statement, as defined herein,
has been mailed, to distribute to holders of its common stock
(the Common Stock) of record as of the close
of business on the record date of the Rights Offering (the
Record Date), non-transferable rights (the
Rights) to subscribe for and purchase
additional shares of Common Stock (the New
Shares) at a subscription price (the
Subscription Price) in accordance with the
term sheet attached hereto as Annex A (such term sheet, the
Term Sheet and such offering, the
Rights Offering); and
WHEREAS, pursuant to the Rights Offering, stockholders of record
will receive one Right for each share of Common Stock held by
them as of the Record Date, and each Right will entitle the
holder to purchase the number of New Shares of Common Stock as
determined pursuant to the Term Sheet at the Subscription Price
(the Basic Subscription Privilege); and
WHEREAS, the Company has requested the Standby Purchasers and
the Additional Standby Purchaser to agree to purchase from the
Company upon expiration of the Rights Offering, and the Standby
Purchasers and the Additional Standby Purchaser are willing to
so purchase, New Shares, at the Subscription Price, to the
extent such New Shares are not purchased by stockholders
pursuant to the exercise of Rights; and
WHEREAS, the Standby Purchasers shall purchase, or if the Rights
Offering is not consummated, shall have the right to purchase
and the Company shall sell to the Standby Purchasers additional
shares; and
WHEREAS, in order to further induce the Standby Purchasers and
the Additional Standby Purchaser to enter into this Agreement,
the Company has agreed to grant the Standby Purchasers and the
Additional Standby Purchaser (including any of their permitted
assignees) registration rights with respect to the Securities
(as defined below) purchased by them pursuant to this Agreement
pursuant to a registration rights agreement substantially in the
form attached hereto as Annex B (the Registration
Rights Agreement);
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, the parties hereto hereby agree as
follows:
Section 1. Certain
Other Definitions. The following terms used
herein shall have the meanings set forth below:
Additional Standby Purchaser shall have the
meaning set forth in the preamble hereof.
Additional Subscription Shares shall have the
meaning set forth in Section 2(c) hereof.
Agreement shall have the meaning set forth in
the preamble hereof.
Backstop Termination Date shall have the
meaning set forth in Section 3 hereof.
Basic Subscription Privilege shall have the
meaning set forth in the recitals hereof.
Board shall have the meaning set forth in
Section 7(a)(i) hereof.
Business Day shall mean any day that is not a
Saturday, a Sunday or a day on which banks are required or
permitted to be closed in the State of New York.
A-1
Closing shall mean the closing of the
purchases described in Section 2 hereof, which shall be
held at 10:00 a.m. on the Closing Date at the offices of
Weil, Gotshal & Manges LLP located at 767 Fifth Avenue,
New York, New York 10153, or such other time and place as may be
agreed to by the parties hereto, provided that if the
purchases described in Section 2 hereof do not occur and
the option pursuant to Section 3 is exercised, then
Closing shall mean the closing of purchases
described in Section 3 hereof.
Closing Date shall mean the date that is
three (3) Business Days after the Rights Offering
Expiration Date, or such other date as may be agreed to by the
parties hereto, provided that if the Rights Offering does
not occur and the option is exercised pursuant to Section 3
hereof, then Closing Date shall mean the date that
is three (3) Business Days after such option is exercised,
or such other date as may be agreed to by the parties hereto.
Commission shall mean the United States
Securities and Exchange Commission, or any successor agency
thereto.
Common Stock shall have the meaning set forth
in the recitals hereof.
Company shall have the meaning set forth in
the preamble hereof.
Company SEC Documents shall have the meaning
set forth in Section 4(h) hereof.
Company Stock Approval shall have the meaning
set forth in Section 3 hereof.
Complete Option shall have the meaning set
forth in Section 3 hereof.
Convertible Notes shall have the meaning set
forth in Section 3 hereof.
Credit Agreement shall mean the Credit
Agreement dated May 5, 2004, as amended, by and among the
Company and Exide Global Holding Netherlands C.V. as borrowers,
the lenders party thereto, and Deutsche Bank AG New York Branch
as the administrative agent.
Designee shall have the meaning set forth in
Section 8 hereof.
Excess Shares shall have the meaning set
forth in Section 7(f) hereof.
Exchange Act shall mean the Securities
Exchange Act of 1934, as amended, and the rules and regulations
promulgated by the Commission thereunder.
Expenses shall have the meaning set forth in
Section 7(c) hereof.
HSR Act shall mean the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
Legg Mason shall have the meaning set forth
in the preamble hereof.
Market Adverse Effect shall have the meaning
set forth in Section 9(a)(iv) hereof.
Material Adverse Effect shall mean a material
adverse effect on the financial condition, or on the earnings,
financial position, operations, assets, results of operation,
business or prospects of the Company and its subsidiaries taken
as a whole.
New Shares shall have the meaning set forth
in the recitals hereof.
Observer Rights shall have the meaning set
forth in Section 8 hereof.
Option Period shall have the meaning set
forth in Section 3 hereof.
Partial Option shall have the meaning set
forth in Section 3 hereof.
Person shall mean an individual, corporation,
partnership, association, joint stock company, limited liability
company, joint venture, trust, governmental entity,
unincorporated organization or other legal entity.
Plan shall have the meaning set forth in
Section 4(c) hereof.
Prospectus shall mean a prospectus, as
defined in Section 2(10) of the Securities Act, that meets
the requirements of Section 10 of the Securities Act and is
current with respect to the securities covered thereby.
A-2
Proxy Statement shall mean a definitive proxy
statement filed with the Commission relating to the Rights
Offering and the transactions contemplated hereunder, together
with all amendments, supplements and exhibits thereto.
Registration Rights Agreement shall have the
meaning set forth in the recitals hereof.
Record Date shall have the meaning set forth
in the recitals hereof.
Representative shall have the meaning set
forth in Section 7(b) hereof.
Rights shall have the meaning set forth in
the recitals hereof.
Rights Offering shall have the meaning set
forth in the recitals hereof.
Rights Offering Expiration Date shall mean
the date on which the subscription period under the Rights
Offering expires.
Rights Offering Prospectus shall mean the
final Prospectus included in the Rights Offering Registration
Statement for use in connection with the issuance of the Rights.
Rights Offering Registration Statement shall
mean the Companys Registration Statement on
Form S-3
under the Securities Act or such other appropriate form under
the Securities Act, pursuant to which the Rights and underlying
shares of Common Stock will be registered pursuant to the
Securities Act.
Securities shall mean those of the New
Shares, Unsubscribed Shares and Additional Subscription Shares
that are purchased by the Standby Purchasers pursuant to
Section 2 or 3 hereof, as the case may be.
Securities Act shall mean the Securities Act
of 1933, as amended, and the rules and regulations promulgated
by the Commission thereunder.
Standby Purchaser shall have the meaning set
forth in the preamble hereof.
Subscription Agent shall have the meaning set
forth in Section 7(a)(vii) hereof.
Subscription Price shall have the meaning set
forth in the recitals hereof.
Termination Date shall have the meaning set
forth in Section 3 hereof.
Term Sheet shall have the meaning set forth
in the recitals hereof.
Threshold shall have the meaning set forth in
Section 7(f) hereof.
Tontine shall have the meaning set forth in
the preamble hereof.
Transfer shall have the meaning set forth in
Section 10(a) hereof.
Unsubscribed Shares shall have the meaning
set forth in Section 2(b) hereof.
Section 2. Standby
Purchase Commitment.
(a) Each of the Standby Purchasers and the Additional
Standby Purchaser hereby agrees to purchase from the Company,
and the Company hereby agrees to sell to each of the Standby
Purchasers and the Additional Standby Purchaser, at the
Subscription Price, all of the New Shares that will be available
for purchase by each of the Standby Purchasers and the
Additional Standby Purchaser pursuant to its Basic Subscription
Privilege.
(b) The Standby Purchasers and the Additional Standby
Purchaser hereby agree to purchase from the Company, and the
Company hereby agrees to sell to the Standby Purchasers and the
Additional Standby Purchaser, at the Subscription Price, any and
all New Shares if and to the extent such shares are not
purchased by the Companys stockholders (the
Unsubscribed Shares) pursuant to the exercise
of Rights. It is understood and agreed that, if and to the
extent that the Standby Purchasers and the Additional Standby
Purchaser are required to purchase Unsubscribed Shares pursuant
to this subsection (b), Tontine shall purchase 54% of the
Unsubscribed Shares, Legg Mason shall purchase 36% of the
Unsubscribed Shares and the Additional Standby Purchaser shall
purchase 10% of the Unsubscribed Shares, provided that if
the Additional Standby Purchaser does not purchase such
Unsubscribed Shares, Tontine shall purchase 60% of the
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Unsubscribed Shares and Legg Mason shall purchase 40% of the
Unsubscribed Shares, provided, further, that
Tontine, Legg Mason and the Additional Standby Purchaser reserve
the right to agree among themselves to reallocate the percentage
of the Unsubscribed Shares that they shall each purchase so long
as they purchase 100% of the Unsubscribed Shares in the
aggregate.
(c) The Standby Purchasers hereby agree to purchase from
the Company, and the Company hereby agrees to sell to the
Standby Purchasers, at the Subscription Price, between
11,111,111 and 16,666,667 shares of Common Stock (the
Additional Subscription Shares) in accordance
with the Term Sheet. It is understood and agreed that Tontine
shall purchase 60% of the Additional Subscription Shares and
Legg Mason shall purchase 40% of the Additional Subscription
Shares, provided that Tontine and Legg Mason reserve the
right to agree between each other to reallocate the percentage
of the Additional Subscription Shares that they shall each
purchase so long as Tontine and Legg Mason purchase 100% of the
Additional Subscription Shares in the aggregate.
(d) Notwithstanding anything else contained in this
Agreement, none of Tontine, Legg Mason or the Additional Standby
Purchaser shall acquire Securities hereunder which would result
in it or any group (within the meaning of
Section 13(d)(3) of the Exchange Act) of which it is a
member owning (i) 30% or more of the issued and outstanding
shares of Common Stock on fully diluted basis without the
requisite prior written consent of the Companys lenders
under the Credit Agreement or (ii) greater than 50% of the
issued and outstanding shares of Common Stock. If either Standby
Purchaser would otherwise exceed such maximum number of shares,
such excess shall be purchased by the other Standby Purchaser.
If the Additional Standby Purchaser would otherwise exceed such
maximum number of shares, such excess shall be purchased 60% by
Tontine and 40% by Legg Mason.
(e) Payment of the Subscription Price for the Securities
shall be made, on the Closing Date, against delivery of
certificates evidencing the Securities, in United States dollars
by means of certified or cashiers checks, bank drafts,
money orders or wire transfers.
(f) If the number of Unsubscribed Shares and Additional
Subscription Shares which Legg Mason is entitled to purchase
hereunder at the Closing has an aggregate Subscription Price of
less than $25,000,000, Tontine agrees, upon request from Legg
Mason, to allocate to Legg Mason a portion of the Securities it
is entitled to purchase so that Legg Masons aggregate
Subscription Price equals $25,000,000.
Section 3. Option. (i) If
the Closing has not occurred on or prior to September 30,
2006 (the Backstop Termination Date), for any
reason whatsoever, other than a material breach hereunder by the
Standby Purchasers or failure of the closing condition specified
in Section 9(a)(iv), or (ii) if the Company terminates
this Agreement prior thereto other than as a result of a
material breach hereunder by the Standby Purchasers or
(iii) if the Standby Purchasers terminate this Agreement
prior thereto (other than pursuant to Section 11(a)(ii)
hereof) in accordance with the terms hereof (such dates in
clauses (i), (ii) and (iii) above referred to as
the Termination Date), each Standby Purchaser
shall have the option to purchase the Additional Subscription
Shares for a period of ten (10) Business Days following the
Termination Date (the Option Period) upon
delivery of written notice to the Company. If the stockholders
of the Company shall have approved the Rights Offering and the
transactions contemplated hereby, the Standby Purchasers may
elect to purchase any or all of the Additional Subscription
Shares (the Complete Option), at the
Subscription Price. If the stockholders of the Company shall not
have approved the Rights Offering and the transactions
contemplated hereby, the Standby Purchasers may elect to
purchase a portion of the Additional Subscription Shares equal
to up to 19.9% of the issued and outstanding Common Stock (the
Partial Option), at a purchase price of
$4.50 per share. It is understood and agreed that
(i) with respect to the Partial Option, Tontine shall have
the option to purchase 50% of the Additional Subscription Shares
and Legg Mason shall have the option to purchase 50% of the
Additional Subscription Shares and (ii) with respect to the
Complete Option, Tontine shall have the option to purchase 60%
of the Additional Subscription Shares and Legg Mason shall have
the option to purchase 40% of the Additional Subscription Shares
pursuant to this Section 3, provided that Tontine
and Legg Mason reserve the right to agree between each other to
reallocate the percentage of the Additional Subscription Shares
that they shall each purchase upon exercise of the Complete
Option or Partial Option, as the case may be.
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Section 4. Representations
and Warranties of the Company. The Company
represents and warrants to the Standby Purchasers and the
Additional Standby Purchaser as follows:
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be
conducted.
(b) This Agreement has been duly and validly authorized,
executed and delivered by the Company and, subject to approval
by the Companys stockholders, constitutes a binding
obligation of the Company enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar
laws affecting creditors rights and remedies generally,
and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is
sought in a proceeding at law or in equity).
(c) The authorized capital of the Company consists of
(i) 61,500,000 shares of Common Stock, of which,
(A) 24,551,008 shares were issued and outstanding, as
of June 9, 2006, (B) 3,454,231 shares are
reserved for issuance upon conversion of the Companys
Floating Rate Convertible Senior Subordinated Notes due
September 18, 2013 (the Convertible
Notes), as of the date hereof,
(C) 6,250,000 shares are reserved for issuance upon
exercise of the Companys warrants issued and issuable
under the Companys 2004 plan of reorganization, as amended
(the Plan), as of the date hereof,
(D) 1,234,042 shares are reserved for issuance upon
exercise of options and other awards granted under the
Companys stock option and incentive plans, as of
June 22, 2006 and (E) shares issuable as provided in
the Plan, of which 543,000 shares of Common Stock and
warrants to acquire 1,358,000 shares of Common Stock are
currently reserved for issuance under the Plan with respect to
disputed claims, as of the date hereof; and
(ii) 1,000,000 shares of preferred stock, par value
$0.01 per share, none of which preferred stock has been
issued, as of the date hereof. All of the outstanding shares of
Common Stock have been duly authorized, are validly issued,
fully paid and nonassessable and were offered, sold and issued
in compliance with all applicable federal and state securities
laws and without violating any contractual obligation or any
other preemptive or similar rights.
(d) At the time the Rights Offering Registration Statement
becomes effective, the Rights Offering Registration Statement
will comply in all material respects with the requirements of
the Securities Act and will not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. The Prospectus, at the time the Rights Offering
Registration Statement becomes effective and at the Closing
Date, will not include an untrue statement or a material fact or
omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading; provided, however,
that the representations and warranties in this subsection shall
not apply to statements in or omissions from the Rights Offering
Registration Statement or the Prospectus made in reliance upon
and in conformity with the information furnished to the Company
in writing by the Standby Purchasers or the Additional Standby
Purchaser for use in the Rights Offering Registration Statement
or in the Prospectus.
(e) The Proxy Statement will not, on the date it is first
mailed to stockholders of the Company, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading and will not, at the time the
stockholders of the Company vote at a meeting of the
stockholders of the Company, to approve this Agreement and the
transactions hereunder and an amendment to the Companys
Certificate of Incorporation providing for an increase in the
number of authorized shares of Common Stock (Company
Stockholder Approval), omit to state any material fact
necessary to correct any statement in any earlier communication
from the Company with respect to the solicitation of proxies for
the Company Stockholder Approval which shall have become false
or misleading in any material respect. The Proxy Statement will
comply as to form in all material respects with the applicable
requirements of the Exchange Act. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to
information furnished to the Company in writing by
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the Standby Purchasers or the Additional Standby Purchaser for
inclusion or incorporation by reference in any of the foregoing
documents.
(f) All of the Securities and New Shares will have been
duly authorized for issuance prior to the Closing (assuming
Company Stockholder Approval has been obtained) and the shares
issuable upon exercise of the Partial Option are duly authorized
for issuance, and, when issued and distributed as set forth in
the Prospectus, will be validly issued, fully paid and
non-assessable; and none of the Securities or New Shares will
have been issued in violation of the preemptive rights of any
security holders of the Company arising as a matter of law or
under or pursuant to the Companys Certificate of
Incorporation, as amended, the Companys bylaws, as
amended, or any agreement or instrument to which the Company is
a party or by which it is bound.
(g) The documents incorporated by reference into the
Prospectus pursuant to Item 12 of
Form S-3
under the Securities Act, when they become effective or at the
time they are filed with the Commission, as the case may be,
will comply in all material respects with the applicable
provisions of the Exchange Act.
(h) Since May 2004, the Company has filed with the
Commission all forms, reports, schedules, statements and other
documents required to be filed by it through the date hereof
under the Exchange Act, or the Securities Act (all such
documents, as supplemented and amended since the time of filing,
collectively, the Company SEC Documents). The
Company SEC Documents, including without limitation all
financial statements and schedules included in the Company SEC
Documents, at the time filed (and, in the case of registration
statements and proxy statements, on the dates of effectiveness
and the dates of mailing, respectively, and in the case of any
Company SEC Document amended or superseded by a filing prior to
the date of this Agreement, then on the date of such amending or
superseding filing), (i) did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading, and (ii) complied in all
material respects with the applicable requirements of the
Exchange Act and the Securities Act, as applicable, subject to
any restatement of the financial statements for the fiscal year
ended March 31, 2005 of the type referenced in the
Companys press release dated June 14, 2006. The
audited consolidated financial statements of Company included in
the Companys Annual Report on
Form 10-K
for the fiscal year ended March 31, 2006 comply as to form
in all material respects with applicable accounting requirements
and with the published rules and regulations of the Commission
with respect thereto, were prepared in accordance with United
States generally accepted accounting principles applied on a
consistent basis during the periods involved, and present fairly
in all material respects, the consolidated financial position of
the Company and its consolidated subsidiaries as at the dates
thereof and the consolidated results of their operations and
cash flows for the periods then ended.
(i) Since March 31, 2006, there have not been any
events, changes, occurrences or state of facts that,
individually or in the aggregate, have had or would reasonably
be expected to have a Material Adverse Effect, except as
disclosed in writing by the Company to the other parties hereto.
Section 5. Representations
and Warranties of the Standby Purchasers and the Additional
Standby Purchaser. Each Standby Purchaser and
the Additional Standby Purchaser, severally and not jointly,
represents and warrants to the Company, as to itself only, as
follows:
(a) Such Standby Purchaser or Additional Standby Purchaser
is a corporation, partnership or limited liability company duly
organized, validly existing and in good standing under the laws
of its state of organization.
(b) This Agreement has been duly and validly authorized,
executed and delivered by such Standby Purchaser or Additional
Standby Purchaser and constitutes a binding obligation of such
Standby Purchaser or Additional Standby Purchaser enforceable
against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors rights and
remedies generally, and subject, as to enforceability, to
general principles of equity,
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including principles of commercial reasonableness, good faith
and fair dealing (regardless of whether enforcement is sought in
a proceeding at law or in equity).
(c) Such Standby Purchaser or Additional Standby Purchaser
is an accredited investor within the meaning of
Rule 501(a) under the Securities Act and is acquiring the
Securities for investment for its own account, with no present
intention of dividing its participation with others (other than
in accordance with Sections 2(b), 2(c) and 15 hereof) or
reselling or otherwise distributing the same in violation of the
Securities Act or any applicable state securities laws.
(d) The Standby Purchasers and the Additional Standby
Purchaser are not affiliates (within the meaning of
Rule 405 of the Securities Act) of one another, are not
acting in concert and are not members of a group
(within the meaning of Section 13(d)(3) of the Exchange
Act) and have no current intention to act in the future in a
manner that would make them members of such a group.
(e) The Standby Purchasers and the Additional Standby
Purchaser understand that: (i) other than pursuant to the
Registration Rights Agreement, the resale of the Securities has
not been and is not being registered under the Securities Act or
any applicable state securities laws, and the Securities may not
be sold or otherwise transferred unless (a) the Securities
are sold or transferred pursuant to an effective registration
statement under the Securities Act, (b) at the
Companys request, the Standby Purchasers or the Additional
Standby Purchaser, as the case may be, shall have delivered to
the Company an opinion of counsel (which opinion shall be in
form, substance and scope reasonably satisfactory to the
Companys counsel) to the effect that the Securities to be
sold or transferred may be sold or transferred pursuant to an
exemption from such registration, or (c) the Securities are
sold pursuant to Rule 144 promulgated under the Securities
Act; (ii) any sale of such Securities made in reliance on
Rule 144 under the Securities Act may be made only in
accordance with the terms of such Rule; and (iii) except as
set forth in the Registration Rights Agreement, neither the
Company nor any other Person is under any obligation to register
such Securities under the Securities Act or any state securities
laws or to comply with the terms and conditions of any exemption
thereunder. The Standby Purchasers and the Additional Standby
Purchaser acknowledge that an appropriate restrictive legend
will be placed on the certificate or certificates representing
the Securities that may be issued pursuant to this Agreement.
Section 6. Deliveries
at Closing.
(a) At the Closing, the Company shall deliver to each of
the Standby Purchasers and the Additional Standby Purchaser the
following:
(i) A certificate or certificates representing the number
of shares of Common Stock issued to each of the Standby
Purchasers and the Additional Standby Purchaser pursuant to
Section 2 or 3 hereof, as the case may be; and
(ii) A certificate of an officer of the Company on its
behalf to the effect that the representations and warranties of
the Company contained in this Agreement are true and correct in
all material respects on and as of the Closing Date, with the
same effect as if made on the Closing Date.
(b) At the Closing, each of the Standby Purchasers shall
deliver to the Company the following:
(i) Payment of the Subscription Price of the Securities
purchased by such Standby Purchaser, as set forth in
Section 2(e) or 3 hereof, as the case may be; and
(ii) A certificate of such Standby Purchaser to the effect
that the representations and warranties of such Standby
Purchaser contained in this Agreement are true and correct in
all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date.
(c) At the Closing of the transactions contemplated under
Section 2, the Additional Standby Purchaser shall deliver
to the Company the following:
(i) Payment of the Subscription Price of the New Shares
purchased by the Additional Standby Purchaser, as set forth in
Section 2(e) hereof; and
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(ii) A certificate of the Additional Standby Purchaser to
the effect that the representations and warranties of the
Additional Standby Purchaser contained in this Agreement are
true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing Date.
Section 7. Covenants.
(a) Covenants. The Company agrees
as follows between the date hereof and the Closing Date:
(i) To use its reasonable best efforts to have the board of
directors of the Company (Board) recommend to
the stockholders of the Company to approve this Agreement and
the transactions contemplated hereunder;
(ii) To as soon as reasonably practicable (A) seek
Company Stockholder Approval of the Rights Offering, the
transactions contemplated hereunder and an increase in the
number of authorized shares of the Common Stock in an amount
sufficient to have enough shares of Common Stock available to
issue all of the shares of Common Stock contemplated to be
issued hereunder and (ii) file with the Commission the
Rights Offering Registration Statement and the Proxy Statement;
(iii) To use reasonable best efforts to cause the Rights
Offering Registration Statement and any amendments thereto to
become effective as promptly as possible;
(iv) To use reasonable best efforts to effectuate the
Rights Offering;
(v) As soon as reasonably practicable after the Company is
advised or obtains knowledge thereof, to advise the Standby
Purchasers and the Additional Standby Purchaser with a
confirmation in writing, of (A) the time when the Rights
Offering Registration Statement or any amendment thereto has
been filed or declared effective or the Prospectus or any
amendment or supplement thereto has been filed, (B) the
issuance by the Commission of any stop order, or of the
initiation or threatening of any proceeding, suspending the
effectiveness of the Rights Offering Registration Statement or
any amendment thereto or any order preventing or suspending the
use of any preliminary prospectus or the Prospectus or any
amendment or supplement thereto, (C) the issuance by any
state securities commission of any notice of any proceedings for
the suspension of the qualification of the New Shares for
offering or sale in any jurisdiction or of the initiation, or
the threatening, of any proceeding for that purpose,
(D) the receipt of any comments from the Commission, and
(E) any request by the Commission for any amendment to the
Rights Offering Registration Statement or any amendment or
supplement to the Prospectus or for additional information. The
Company will use its reasonable best efforts to prevent the
issuance of any such order or the imposition of any such
suspension and, if any such order is issued or suspension is
imposed, to obtain the withdrawal thereof as promptly as
possible;
(vi) To operate the Companys business in the ordinary
course of business consistent with past practice;
(vii) To notify, or to cause the subscription agent for the
Rights Offering (the Subscription Agent) to
notify, on each Friday during the exercise period of the Rights,
or more frequently if reasonably requested by any Standby
Purchaser or the Additional Standby Purchaser, the Standby
Purchasers and the Additional Standby Purchaser of the aggregate
number of Rights known by the Company or the Subscription Agent
to have been exercised pursuant to the Rights Offering as of the
close of business on the preceding Business Day or the most
recent practicable time before such request, as the case may be;
(viii) Not to issue any shares of capital stock of the
Company, or options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, securities
convertible into or exchangeable for capital stock of the
Company, or other agreements or rights to purchase or otherwise
acquire capital stock of the Company, (A) except for shares
of Common Stock issuable upon exercise of the Companys
presently outstanding warrants and stock options and other
awards or upon conversion of the Convertible Notes and
(B) except for warrants and Common Stock issuable under the
Plan and (C) except for new stock options and other awards
granted to employees of the Company hired after the date hereof
covering not more than 75,000 shares of Common Stock under
the Companys incentive plans and (D) except for
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the effects of the antidilution provisions in the Companys
warrants issued under the Plan and the indenture governing the
terms of the Convertible Notes;
(ix) Not to authorize any stock split, stock dividend,
stock combination or similar transaction affecting the number of
issued and outstanding shares of Common Stock;
(x) Not to declare or pay any dividends or repurchase any
shares of Common Stock; and
(xi) Not to incur any indebtedness or guarantees thereof,
other than borrowings in the ordinary course of business and
consistent with past practice.
(b) No Shop. Subject to the
fiduciary duties of the Board after receipt of the advice of the
Companys outside legal counsel, the Company shall not, and
shall not permit any of its affiliates, directors, officers,
employees, representatives or agents of the Company
(collectively, the Representatives) to,
directly or indirectly, other than with respect to the
disposition of non-core assets of the Company, for a price not
to exceed $30,000,000 in the aggregate, permitted under the
Credit Agreement, (i) discuss, knowingly encourage,
negotiate, undertake, initiate, authorize, recommend, propose or
enter into, any transaction involving a merger, consolidation,
business combination, purchase or disposition of any material
amount of the assets or any capital stock of the Company or any
of its subsidiaries other than the transactions contemplated by
this Agreement, (ii) facilitate, knowingly encourage,
solicit or initiate discussions, negotiations or submissions of
proposals or offers in respect of any such alternative
transaction, (iii) furnish or cause to be furnished, to any
Person, any information concerning the business, operations,
properties or assets of the Company or any of its subsidiaries
in connection with any such alternative transaction, or
(iv) otherwise cooperate in any way with, or assist or
participate in, facilitate or knowingly encourage, any effort or
attempt by any other Person to do or seek any of the foregoing.
The Company shall (and shall cause its Representatives to)
immediately cease and cause to be terminated any existing
discussions or negotiations with any Persons conducted
heretofore with respect to any such alternative transaction,
including, without limitation, the sale of the Companys
European and rest of the world industrial energy business. This
Section 7(b) shall not apply to the possible sale of
businesses identified in writing by the Company to the Standby
Purchasers on or prior to the date hereof.
(c) Expense Reimbursement. The
Company agrees to promptly reimburse each Standby Purchaser for
all of its reasonable
out-of-pocket
costs and expenses and reasonable attorneys fees
(collectively, Expenses) incurred by such
Standby Purchaser in connection with this Agreement, its due
diligence investigation of the Company and other activities
relating to the transactions contemplated hereunder upon the
Companys receipt of all reasonably requested documentation
to support the incurrence by such Standby Purchaser of such
Expenses. If any travel or travel-related expenses incurred by
principals or employees of any Standby Purchaser are required in
connection with the foregoing activities, the Companys
reimbursement of such travel-related expenses will be subject to
the terms applicable to the Companys advisors in
connection with the transactions contemplated hereunder.
(d) Registration Rights
Agreement. The Company, the Standby Purchaser
and the Additional Standby Purchaser shall execute and deliver
to each other and any of their permitted assignees on or prior
to the Closing Date the Registration Rights Agreement.
(e) Public Statements. Neither the
Company nor the Standby Purchasers and the Additional Standby
Purchaser shall issue any public announcement, statement or
other disclosure with respect to this Agreement or the
transactions contemplated hereby without the prior consent of
the other parties hereto, which consent shall not be
unreasonably withheld or delayed, except (i) if such public
announcement, statement or other disclosure is required by
applicable law or applicable stock market regulations, in which
case the disclosing party shall consult in advance with respect
to such disclosure with the other parties to the extent
reasonably practicable, or (ii) the filing of any
Schedule 13D or Schedule 13G, to which a copy of this
Agreement and the Registration Rights Agreement may be attached
as an exhibit thereto.
(f) HSR Filing. If Legg Mason
determines a filing is or may be required under the HSR Act in
connection with the transactions contemplated hereunder, the
Company and Legg Mason shall use reasonable best efforts to
promptly prepare and file all necessary documentation and to
effect all applications that are necessary or advisable under
the HSR Act with respect to the transactions contemplated
hereunder so that the
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applicable waiting period shall have expired or been terminated
as soon as practicable after the date hereof. The filing fee
required by the HSR Act for such filings shall be paid by the
Company. If all conditions to the Closing have been satisfied or
waived, other than the condition set forth in
Section 9(d)(v), the number of shares of Common Stock
purchased by Legg Mason hereunder shall be reduced so that the
Subscription Price payable by Legg Mason is below the threshold
(the Threshold) which would require a filing
under the HSR Act, provided that Tontine shall purchase
such shares of Common Stock above the Threshold up to an amount
that would not cause Tontine to own 30% or more of the issued
and outstanding Common Stock on a fully diluted basis, and if
there are any such shares of Common Stock (the Excess
Shares) which would cause Tontine to acquire 30% or
more of the issued and outstanding Common Stock on a fully
diluted basis, the number of shares of Common Stock the Standby
Purchasers are required to purchase hereunder shall be reduced
by such number of Excess Shares.
Section 8. Observer
Rights. The Company acknowledges and agrees
that for so long as Tontine
and/or its
affiliates retain over 50% of its shares of Common Stock held
immediately after the Closing under Section 2, if no
employee of Tontine is serving as a member of the Board, Tontine
shall have the right to designate one person who is either an
employee of Tontine or is otherwise reasonably acceptable to the
Board (the Designee) to act as an observer to
the Board as provided below (Observer
Rights). During such time as Tontine has Observer
Rights, the Company shall invite the Designee to attend any
meetings of the Board of Directors of the Company and any
committees thereof (at the same time directors are invited
thereto) and provide the Designee with such materials (at the
same time such materials are provided to directors) as the
Company provides to directors in connection with their service
on the Board and any committees thereof, provided that the
Designee need not be permitted to attend any portion of any such
meeting or be provided with any portion of such materials to the
extent that so doing would jeopardize any legal privilege,
including the attorney-client privilege, and to the extent the
subject of such meeting or materials is potentially adverse to
Tontine. The exercise by Tontine of Observer Rights is
conditioned upon the Companys receipt of a confidentiality
agreement executed by Tontine and the Designee reasonably
satisfactory to the Company providing for Tontines and the
Designees preservation of the confidentiality of any
materials provided or information received at any meeting of the
Board or any committee thereof. The Company will not be
responsible for any expenses of the Observers attendance
at such meetings.
Section 9. Conditions
to Closing.
(a) The obligations of each of the Standby Purchasers and
the Additional Standby Purchaser to consummate the transactions
contemplated hereunder are subject to the fulfillment, prior to
or on the Closing Date, of the following conditions:
(i) The representations and warranties of the Company in
Section 4 shall be true and correct in all material
respects as of the date hereof and at and as of the Closing Date
as if made on such date (except for representations and
warranties made as of a specified date, which shall be true and
correct in all material respects as of such specified date);
(ii) The Company shall have executed and delivered to the
Standby Purchasers a duly executed copy of the Registration
Rights Agreement;
(iii) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, there shall not have
been any Material Adverse Effect and no event shall have
occurred or circumstance shall exist which would reasonably
likely result in a Material Adverse Effect; and
(iv) As of the Closing Date, none of the following events
shall have occurred and be continuing: (A) trading in the
Common Stock shall have been suspended by the Commission or the
Nasdaq National Market or trading in securities generally on the
New York Stock Exchange or the Nasdaq National Market shall have
been suspended or limited or minimum prices shall have been
established on either such exchange or the Nasdaq National
Market, (B) a banking moratorium shall have been declared
either by U.S. federal or New York State authorities, or
(C) there shall have occurred any material outbreak or
material escalation of hostilities, declaration by the United
States of a national emergency or war or other
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calamity or crisis which has a material adverse effect on the
U.S. financial markets (collectively, a Market
Adverse Effect).
(b) The obligations of Tontine to consummate the
transactions contemplated in Section 2 hereof are subject
to the election or appointment, on or prior to the Closing Date,
of two (2) nominees of Tontine to the Board reasonably
acceptable to the Board, which Board shall consist of not more
than nine (9) members immediately after giving effect to
such additional two (2) directors; it being understood that
the Board shall be free to change the size of the Board after
the Closing Date to the extent permitted by the Companys
certificate of incorporation and bylaws and Delaware law. If
such condition is not satisfied and Tontine elects not to close,
neither Legg Mason nor the Additional Standby Purchaser shall be
obligated to close hereunder.
(c) The obligations of the Company to consummate the
transactions contemplated hereunder are subject to the
fulfillment, prior to or on the Closing Date, of the following
conditions:
(i) The representations and warranties of each of the
Standby Purchasers and the Additional Standby Purchaser in
Section 5 shall be true and correct in all material
respects as of the date hereof and at and as of the Closing Date
as if made as of such date (except for representations and
warranties made as of a specified date, which shall be true and
correct in all material respects as of such specified
date); and
(ii) Each Standby Purchaser shall have executed and
delivered to the Company a duly executed copy of the
Registration Rights Agreement.
(d) The obligations of each of the Company and the Standby
Purchasers and the Additional Standby Purchaser to consummate
the transactions contemplated hereunder in connection with the
Rights Offering are subject to the fulfillment, prior to or on
the Closing Date, of the following conditions:
(i) No judgment, injunction, decree or other legal
restraint shall prohibit, or have the effect of rendering
unachievable, the consummation of the Rights Offering or the
transactions contemplated by this Agreement;
(ii) The Rights Offering Registration Statement shall have
been filed with the Commission and declared effective; no stop
order suspending the effectiveness of the Rights Offering
Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and any request of
the Commission for inclusion of additional information in the
Registration Statement or otherwise shall have been complied
with;
(iii) The holders of a majority of the outstanding Common
Stock shall have approved the Rights Offering and the
transactions contemplated hereunder;
(iv) The New Shares and the Securities shall have been
authorized for listing on the Nasdaq Stock Market; and
(v) If the purchase of Common Stock hereunder is subject to
the terms of the HSR Act, the applicable waiting period shall
have expired or been terminated thereunder with respect to such
purchase.
(e) If the Additional Standby Purchaser elects not to close
because of a failure of a Closing condition, it shall cease to
have any rights or obligations hereunder. To the extent the
Standby Purchasers elect to waive such Closing condition which
has not been satisfied, they shall purchase their proportionate
share of the New Shares that the Additional Standby Purchaser
would have purchased hereunder, all subject to, and in
accordance with, Section 2.
Section 10. Restrictions
on Transfer.
(a) The Standby Purchasers and the Additional Standby
Purchaser shall not, and shall ensure that their respective
Affiliates do not, purchase, sell, transfer, assign, convey,
gift, mortgage, pledge, encumber, hypothecate or otherwise
dispose of, directly or indirectly
(Transfer), any Securities; provided,
however, that the foregoing shall not restrict in any manner a
Transfer (i) by a Standby Purchaser or the Additional
Standby Purchaser to one or more of its Affiliates, provided
that the transferee in each case agrees in writing to be subject
to the terms of this Section 10, or (ii) to any other
person in a private transaction if the Company
A-11
first shall have been furnished with an opinion of legal
counsel, reasonably satisfactory to the Company, to the effect
that such Transfer is exempt from the registration requirements
of the Securities Act or (iii) made in accordance with
Rule 144 under the Securities Act, provided that the
Company shall have the right to receive an opinion of legal
counsel for the holder, reasonably satisfactory to the Company,
to the effect that such Transfer is exempt from the registration
requirements of the Securities Act, prior to the removal of the
legend subject to Rule 144 or (iv) made pursuant to a
registration statement declared effective by the Commission. Any
purported Transfers of Securities in violation of this
Section 10 shall be null and void and no right, title or
interest in or to such Securities shall be Transferred to the
purported transferee, buyer, donee, assignee or encumbrance
holder. The Company will not give, and will not permit the
Companys transfer agent to give, any effect to such
purported Transfer in its stock records.
(b) Restrictive Legends. The
Standby Purchasers and the Additional Standby Purchaser
understand and agree that the Securities will bear a legend
substantially similar to the legend set forth below in addition
to any other legend that may be required by applicable law or by
any agreement between the Company and any of the Standby
Purchasers and the Additional Standby Purchaser. The legend may
be removed pursuant to Section 10(a)(iii) and
Section 10(a)(iv) as provided above. The legend shall be
removed upon the effectiveness of a registration statement filed
pursuant to the Registration Rights Agreement.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
REGISTERED AND/OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED EXCEPT (A) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND REGISTRATION AND/OR QUALIFICATION UNDER APPLICABLE
STATE SECURITIES LAWS, (B) IN A TRANSACTION WHICH IS EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND REGISTRATION AND/OR QUALIFICATION UNDER APPLICABLE STATE
SECURITIES LAWS PROVIDED THAT AT THE ISSUERS REQUEST, THE
TRANSFEROR THEREOF SHALL HAVE DELIVERED TO THE ISSUER AN OPINION
OF COUNSEL (WHICH OPINION SHALL BE IN FORM, SUBSTANCE AND SCOPE
REASONABLY SATISFACTORY TO THE ISSUER) TO THE EFFECT THAT SUCH
SECURITIES MAY BE SOLD OR TRANSFERRED PURSUANT TO AN
EXEMPTION FROM SUCH REGISTRATION, OR (C) SUCH
SECURITIES MAY BE SOLD PURSUANT TO RULE 144 PROMULGATED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
Section 11. Termination.
(a) This Agreement may be terminated at any time prior to
the Closing Date, by either Standby Purchaser by written notice
to the other parties hereto if there is (i) a Material
Adverse Effect or (ii) a Market Adverse Effect that is not
cured within twenty-one (21) days after the occurrence
thereof (the Cure Period), provided
that the right to terminate this Agreement after the occurrence
of each Material Adverse Effect or a Market Adverse Effect,
which has not been cured within the Cure Period, shall expire
7 days after the expiration of such Cure Period.
(b) This Agreement may be terminated at any time prior to
the Closing Date, by the Company on one hand or either of the
Standby Purchasers on the hand by written notice to the other
parties hereto:
(i) If there is a material breach of this Agreement by the
other party that is not cured within fifteen (15) days
after receipt of written notice by such breaching party;
(ii) As to Section 2, Section 7(a) (other than
Sections 7(a)(ix) and 7(a)(x)) and Section 7(b), after
the Backstop Termination Date; or
(iii) As to any obligations hereunder other than
Section 2, after the expiration of the Option Period.
(c) The Additional Standby Purchaser may terminate its
obligations to purchase New Shares pursuant to Section 2
upon the occurrence of the any of the events set forth in this
Section 11 which give rise to a right of the Standby
Purchasers to terminate this Agreement. Upon such termination by
the Additional Standby Purchaser, the Additional Standby
Purchaser shall cease to have any rights and obligations
hereunder. To the
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extent this Agreement is not terminated by the Standby
Purchasers, they shall purchase their proportionate share of the
New Shares that the Additional Standby Purchaser would have
purchased hereunder, all subject to, and in accordance with,
Section 2.
Section 12. Indemnification
and Contribution.
(a) In the event of any registration of any Securities
under the Securities Act pursuant to this Agreement, the Company
shall indemnify and hold harmless the Standby Purchasers, the
Additional Standby Purchaser and each other Person (including
each underwriter) who participated in the offering of such
Securities and each other Person, if any, who controls such
Standby Purchaser or Additional Standby Purchaser or such
participating Person within the meaning of the Securities Act
(all such Persons being hereinafter referred to, collectively,
as the Standby Indemnified Persons), against
any losses, claims, damages or liabilities, joint or several, to
which any of the Standby Indemnified Persons may become subject
(i) as a result of any breach by the Company of any of its
representations or warranties contained herein or in any
certificate delivered hereunder or (ii) under the
Securities Act or any other statute or at common law, insofar as
such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (A) any
alleged untrue statement of any material fact contained, on the
effective date thereof, in any registration statement under
which such securities were registered under the Securities Act,
any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereto, or (B) any
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and shall reimburse each such Standby Indemnified
Person for any reasonable legal or any other expenses reasonably
incurred by such Standby Indemnified Person in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the
Company shall not be liable in any such case to any Standby
Indemnified Person to the extent that any such loss, claim,
damage or liability arises out of or is based upon any actual or
alleged untrue statement or actual or alleged omission made in
such registration statement, preliminary prospectus, prospectus
or amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by such
Standby Indemnified Person specifically for use therein or so
furnished for such purposes by any underwriter. Such indemnity
shall remain in full force and effect regardless of any
investigation made by or on behalf of such Standby Indemnified
Person, and shall survive the transfer of such Securities or New
Shares by such Standby Indemnified Person.
(b) Each Standby Purchaser and the Additional Standby
Purchaser by acceptance thereof, severally, and not jointly,
agree to indemnify and hold harmless the Company, its directors
and officers and each other Person, if any, who controls the
Company within the meaning of the Securities Act (all such
Persons being hereinafter referred to, collectively, as the
Company Indemnified Persons, and together
with the Standby Indemnified Persons, the Indemnified
Persons) against any losses, claims, damages or
liabilities, joint or several, to which any of the Company
Indemnified Persons may become subject (i) as a result of
any breach by such Standby Purchaser or Additional Standby
Purchaser of any of its representations or warranties contained
herein or in any certificate delivered hereunder or
(ii) under the Securities Act or any other statute or at
common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon information provided in writing to the Company by
such Standby Purchaser or Additional Standby Purchaser
specifically for use in any registration statement under which
Securities were registered under the Securities Act at the
request of such Standby Purchaser or Additional Standby
Purchaser, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto.
(c) Any Person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of
any claim with respect to which it seeks indemnification
(provided that the failure to give such notice shall not
limit the rights of such Person, except to the extent the
indemnifying party is actually prejudiced thereby) and
(ii) unless in such indemnified partys reasonable
judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified
party; provided, however, that any person entitled
to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the
expense of such Person unless (A) the indemnifying party
has agreed to pay such fees or expenses or (B) the
indemnifying party shall have failed to assume the defense of
such claim and
A-13
employ counsel reasonably satisfactory to such Person. If such
defense is not assumed by the indemnifying party as permitted
hereunder, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party
without its consent (but such consent will not be unreasonably
withheld or delayed). If such defense is assumed by the
indemnifying party pursuant to the provisions hereof, such
indemnifying party shall not settle or otherwise compromise the
applicable claim unless (i) such settlement or compromise
contains a full and unconditional release of the indemnified
party or (ii) the indemnified party otherwise consents in
writing, which consent shall not be unreasonably withheld or
delayed. An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obligated to
pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified
party, a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to
such claim, in which event the indemnifying party shall be
obligated to pay the reasonable fees and disbursements of such
additional counsel or counsels.
(d) (i) If the indemnification provided for in this
Section 12 is unavailable to an Indemnified Person
hereunder in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such Indemnified Person, shall contribute
to the amount paid or payable by such Indemnified Person as a
result of such losses, claims, damages, liabilities or expenses
in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and Indemnified Person in
connection with the actions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such
indemnifying party and Indemnified Persons shall be determined
by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information
supplied by, the indemnifying party or the Indemnified Persons,
and their relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be
deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
(ii) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 12(d)
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
Section 13. Survival. The
representations and warranties of the Company and each of the
Standby Purchasers and the Additional Standby Purchaser
contained in this Agreement or in any certificate delivered
hereunder shall survive the Closing hereunder.
Section 14. Notices. All
notices, communications and deliveries required or permitted by
this Agreement shall be made in writing signed by the party
making the same, shall specify the Section of this Agreement
pursuant to which it is given or being made and shall be deemed
given or made (i) on the date delivered if delivered by
telecopy or in person, (ii) on the third (3rd) Business Day
after it is mailed if mailed by registered or certified mail
(return receipt requested) (with postage and other fees prepaid)
or (iii) on the day after it is delivered, prepaid, to an
overnight express delivery service that confirms to the sender
delivery on such day, as follows:
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(a) |
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if to Tontine, at: |
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c/o Tontine Capital Management L.L.C.
55 Railroad Avenue, 3rd Floor
Greenwich, Connecticut 06830
Attention: Joseph V. Lash
Telecopy No.:
(203) 769-2010 |
A-14
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with a copy to: |
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Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Ted S. Waksman
Telecopy No.:
(212) 310-8007 |
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(b) |
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if to Legg Mason, at: |
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Legg Mason Opportunity Trust
c/o Legg Mason Capital Management
100 Light Street
Baltimore, Maryland 21202
Attention: General Counsel
Telecopy No.:
(410) 454-5372 |
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with a copy to: |
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Legg Mason Legal & Compliance
100 Light Street
Baltimore, Maryland 21202
Attention: Asset Management-Mutual Fund Practice Group
Telecopy No.:
(410) 454-4408 |
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(c) |
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if to Additional Standby Purchaser, at: |
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Arklow Capital, LLC
237 Park Avenue
New York, N.Y. 10017
Attention: Chief Executive Officer
Telecopy No.:
(212) 808-3789 |
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with a copy to: |
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Gottfried & Associates
1328 Boston Post Road
Larchmont, N.Y. 10538
Attention: Michael N. Gottfried
Telecopy No.:
(914) 833-9202 |
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(d) |
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if to the Company, at: |
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Exide Technologies
13000 Deerfield Parkway, Building 200
Alpharetta, Georgia 30004
Attention: Gordon A. Ulsh
Telecopy No.:
(678) 566-9171 |
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with a copies to: |
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Exide Technologies
13000 Deerfield Parkway, Building 200
Alpharetta, Georgia 30004
Attention: Law Department
Telecopy No.:
(678) 566-9342 |
A-15
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and |
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Kirkland & Ellis LLP
200 East Randolph Drive
Chicago, IL 60601
Attention: Carter W. Emerson, P.C.
Telecopy No.:
(312) 660-0374 |
or to such other representative or at such other address of a
party as such party hereto may furnish to the other parties in
writing in accordance with this Section 14. If notice is
given pursuant to this Section 14 of any assignment to a
permitted successor or assign of a party hereto, the notice
shall be given as set forth above to such successor or permitted
assign of such party.
Section 15. Assignment. This
Agreement will be binding upon, and will inure to the benefit of
and be enforceable by, the parties hereto and their respective
successors and assigns, including any person to whom Securities
are transferred in accordance herewith. This Agreement, or the
Standby Purchasers or the Additional Standby
Purchasers obligations hereunder, may be assigned,
delegated or transferred, in whole or in part, by either Standby
Purchaser or the Additional Standby Purchaser to any Affiliate
(as defined in
Rule 12b-2
under the Exchange Act) of such Standby Purchaser or the
Additional Standby Purchaser over which such Standby Purchaser
or the Additional Standby Purchaser or any of its Affiliates
exercises investment authority, including, without limitation,
with respect to voting and dispositive rights, provided
that any such assignee assumes the obligations of such Standby
Purchaser or the Additional Standby Purchaser hereunder and
agrees in writing to be bound by the terms of this Agreement in
the same manner as such Standby Purchaser or Additional Standby
Purchaser, as the case may be. Notwithstanding the foregoing or
any other provisions herein, no such assignment will relieve
such Standby Purchaser or Additional Standby Purchaser, as the
case may be, of its obligations hereunder if such assignee fails
to perform such obligations.
Section 16. Entire
Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto in
respect of the subject matter contained herein. There are no
restrictions, promises, warranties, or undertakings, other than
those set forth or referred to herein, with respect to the
standby purchase commitments or the registration rights granted
by the Company with respect to the Securities and the New
Shares. This Agreement supersedes all prior agreements and
understandings between the parties with respect to the subject
matter of this Agreement.
Section 17. Governing
Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
New York (other than its rules of conflict of laws to the extent
the application of the laws of another jurisdiction would be
required thereby).
Section 18. Severability. If
any provision of this Agreement or the application thereof to
any person or circumstances is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such
provision to persons or circumstances other than those as to
which it has been held invalid or unenforceable, shall remain in
full force and effect and shall in no way be affected, impaired
or invalidated thereby, so long as the economic or legal
substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such
determination, the parties shall negotiate in good faith in an
effort to agree upon a suitable and equitable substitute
provision to effect the original intent of the parties.
Section 19. Extension
or Modification of Rights Offering. Without
the prior written consent of the Standby Purchasers, the Company
may (i) waive irregularities in the manner of exercise of
the Rights, and (ii) waive conditions relating to the
method (but not the timing) of the exercise of the Rights to the
extent that such waiver does not materially adversely affect the
interests of the Standby Purchasers.
Section 20. Miscellaneous.
(a) The Company shall not after the date of this Agreement
enter into any agreement with respect to its securities which is
inconsistent with or violates the rights granted to holders of
Securities in this Agreement.
A-16
(b) The headings in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the
meaning of this Agreement.
(c) This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original,
but all of which, when taken together, shall constitute one and
the same instrument.
[Remainder
of this page intentionally left blank.]
A-17
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered as of the date first above written.
EXIDE TECHNOLOGIES
Name: Gordon A. Ulsh
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Title:
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President and Chief Executive Officer
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TONTINE CAPITAL PARTNERS, L.P.
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By:
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TONTINE CAPITAL MANAGEMENT, L.L.C.,
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its general partner
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By:
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/s/ Jeffrey L. Gendell
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Name: Jeffrey L. Gendell
LEGG MASON INVESTMENT TRUST, INC.
Name: Gregory Merz
ARKLOW CAPITAL, LLC
Name: Gregory Shrock
A-18
Annex A
To the extent that terms and conditions herein overlap with the
terms and conditions in the Standby Purchase Agreement and the
Registration Rights Agreement (the Definitive
Agreements), the terms and conditions in the Definitive
Agreements shall govern.
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Issuer
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Exide Technologies (the
Company).
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Aggregate Offering
Size
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$125.0 million, comprised of
a $75.0 million rights offering and a $50.0 million
additional subscription privilege for the Standby Purchasers.
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Authorization
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Prior approval of the
Companys board of directors (the Board)
and subject to shareholder approval.
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Rights Offering
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The Company is distributing to
holders of its common stock, at no charge, one subscription
right for every one share of the Companys common stock
that holders owned as of the Record Date.
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Subscription
Privilege
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Each subscription right entitles
Eligible Participants to purchase, for every one share of common
stock they owned as of the Record Date, between 1.02 and
0.68 shares of common stock upon payment of between $3.00
and $4.50 per share, depending on the Subscription Price
formula described below.
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Launch Date
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The offering will be launched
shortly after the mailing of the proxy statement for the
Companys annual shareholder meeting, which will be held in
August 2006. The expected launch date is July 27, 2006.
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Record Date
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The Record Date is expected to be
July 27, 2006 at 5:00 p.m., New York City time.
Only the Companys stockholders as of the Record Date (the
Eligible Participants) will receive rights to
subscribe for shares in the rights offering.
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Expiration Date
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It is expected that the rights
would expire at or shortly after the Companys annual
meeting but in no event more than 40 days after the launch
date. Rights not exercised by the Expiration Date will be null
and void. The Company has the option, with the approval of the
Standby Purchasers, to extend the expiration of the rights
offering for any reason, for a period not to exceed 15 business
days.
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Subscription Price
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Subscription Price will be payable
in cash and set at a 20% discount to the average closing price
of the Companys common stock for the 30 trading day period
ending July 6, 2006. Notwithstanding the above, at no time
shall the Subscription Price be higher than $4.50 per share
nor shall it be lower than $3.00 per share. All payments
must be cleared on or before the Expiration Date.
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Transferability of
Rights
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The subscription rights may not be
sold, transferred or assigned.
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Subscription Commitment of
Tontine
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Tontine Capital Partners, L.P.
(Tontine), who, as of June 15, 2006,
beneficially owned approximately 9.9% of the Companys
common stock, will agree to act as a standby purchaser in the
rights offering in the amount up to 54% of the unsubscribed
shares.
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A-19
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Subscription Commitment of Legg
Mason
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Legg Mason Investment Trust, Inc.
(Legg Mason), who, as of June 15, 2006,
beneficially owned 0.0% of the Companys common stock, will
agree to act as a Standby Purchaser in the rights offering in
the amount up to 36% of the unsubscribed shares.
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Subscription Commitment of
Arklow
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Arklow Capital, LLC.
(Arklow), who, as of June 15, 2006,
beneficially owned 4.2% of the Companys common stock, will
agree to act as a Standby Purchaser in the rights offering in
the amount up to 10% of the unsubscribed shares.
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Reallocation of Percentage of
Subscription
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Tontine, Legg Mason and Arklow
reserve the right to agree among themselves to reallocate the
percentage of the unsubscribed shares that they shall each
purchase (so long as Tontine, Legg Mason and Arklow purchase
100% of the unsubscribed shares in the aggregate).
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Subscription Commitment
Fee
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Additional subscription privilege
of $50.0 million to be allocated pro rata to Tontine and
Legg Mason based on subscription commitments, subject to change
of control limitations described below.
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Additional Subscription
Privilege for the Standby Purchasers
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The Company is granting Tontine
and Legg Mason the right to acquire between 11.1 million
and 16.7 million shares of the Companys common stock
at the Subscription Price after completion of the Rights
Offering. They will commit to purchase such shares.
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Reallocation of Percentage of
Additional Subscription
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Tontine and Legg Mason reserve the
right to agree between each other to reallocate the percentage
of the additional subscription shares referred to above that
they shall each purchase (so long as Tontine and Legg Mason
purchase 100% of the additional subscription shares in the
aggregate).
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Change of Control
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No purchaser, or group of which
that purchaser is a member, may acquire shares in the equity
offering that would result in a Change of Control under the
Companys Senior Credit Facility (30% fully-diluted
ownership) or Second-Lien Notes agreement (50% of outstanding
shares).
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Subscription Agent
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[TBD].
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Use of Proceeds
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Proceeds will be used to provide
additional liquidity for working capital, capital expenditures
and general corporate purposes.
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Board of Directors
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Tontine shall have the right to
nominate 2 directors on the Board reasonably acceptable to
the Board, which Board shall consist of not more than 9 members
immediately after giving effect to such additional
2 directors; it being understood that the Board shall be
free to change the size of the Board after the closing date of
the rights offering to the extent permitted by the
Companys certificate of incorporation and by-laws and
Delaware law.
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Registration Rights
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Tontine, Legg Mason and Arklow
shall have registration rights, which shall consist of an
immediate evergreen shelf registration statement, demand
registrations if the shelf registration statement is not
effective, unlimited Form
S-3
registrations so long as the Company is eligible to use such
Form and piggyback registration rights.
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Annex B
REGISTRATION
RIGHTS AGREEMENT
Registration Rights Agreement, dated as
of ,
2006, by and among Exide Technologies, a Delaware corporation
(Company), and the stockholders signatories
hereto.
W I T N E S
S E T H:
WHEREAS, this Agreement is being entered into in connection with
the Standby Purchase Agreement dated as of June [ ],
2006 (the Standby Purchase Agreement) among
the parties to this Agreement (as defined below);
NOW, THEREFORE, in consideration of the premises and the
covenants hereinafter contained, it is agreed as follows:
1. Definitions. Unless otherwise
defined herein, capitalized terms used herein and in the
recitals above shall have the following meanings:
Additional Holders shall mean
the Permitted Assignees of Registrable Securities who, from time
to time, acquire Registrable Securities from a Holder or Holders
and own Registrable Securities at the relevant time, agree to be
bound by the terms hereof and become Holders for purposes of
this Agreement.
Affiliate of a Person shall mean any
Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, such other Person. For purposes of this
definition, control shall mean the ability of one
Person to direct the management and policies of another Person.
Agreement shall mean this Registration
Rights Agreement, including all amendments, modifications and
supplements and any exhibits or schedules to any of the
foregoing, and shall refer to the Agreement as the same may be
in effect at the time such reference becomes operative.
Business Day shall mean any day that
is not a Saturday, a Sunday or a day on which banks are required
or permitted to be closed in the State of New York.
Closing Date shall have the meaning
assigned to such term in the Standby Purchase Agreement.
Commission shall mean the Securities
and Exchange Commission or any other federal agency then
administering the Securities Act and other federal securities
laws.
Common Stock shall mean the shares of
common stock, $.01 par value per share, of Company, as
adjusted to reflect any merger, consolidation, recapitalization,
reclassification, split-up, stock dividend, rights offering or
reverse stock split made, declared or effected with respect to
the Common Stock.
Company shall have the meaning
assigned to such term in the preamble.
Demand Registration shall have the
meaning assigned to such term in Section 2(b) hereof.
Exchange Act shall mean the Securities
Exchange Act of 1934, as amended, or any similar federal
statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
Holder shall mean any (i) Person
who owns Registrable Securities at the relevant time and is a
party to this Agreement or (ii) any Additional Holder.
Majority Holders shall mean Holders
holding at the time, shares of Registrable Securities
representing more than 50% of the then outstanding Registrable
Securities.
Permitted Assignee shall mean any
(a) Affiliate of any Holder who acquires Registrable
Securities from such Holder, or its Affiliates, or (b) any
other Person who acquires any Registrable Securities of any
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Holder or Holders who is designated as a Permitted Assignee by
such Holder in a written notice to Company; provided,
however, that the rights of any Person designated as a
Permitted Assignee referred to in the foregoing clause (b)
shall be limited if, and to the extent, provided in such notice.
Person shall mean any
individual, corporation, partnership, limited liability company,
joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or
political subdivision thereof or any other entity.
Registrable Securities shall
mean the Common Stock of Company owned by the Holders as of the
date hereof or at any time in the future; and, if as a result of
any reclassification, stock dividends or stock splits or in
connection with a combination of shares, recapitalization,
merger, consolidation, sale of all or substantially all of the
assets of Company or other reorganization or other transaction
or event, any capital stock, evidence of indebtedness, warrants,
options, rights or other securities (collectively
Other Securities) are issued or
transferred to a Holder in respect of Registrable Securities
held by the Holder, references herein to Registrable Securities
shall be deemed to include such Other Securities.
Securities Act shall mean the
Securities Act of 1933, as amended, or any similar federal
statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
Shelf Registration means a
registration effected pursuant to Section 2(a) hereof.
Shelf Registration Statement means a
shelf registration statement of Company relating to
a shelf offering in accordance with Rule 415 of
the Securities Act, or any similar rule that may be adopted by
the Commission, pursuant to the provisions of Section 2(a)
hereof which covers all of the Registrable Securities held by
the Holders, on an appropriate form under the Securities Act,
and all amendments and supplements to such registration
statement, including post-effective amendments, in each case
including the prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
Standby Purchase Agreement shall
have the meaning assigned to such term in the recitals.
2. Required Registration.
(a) Company shall use its reasonable best efforts to cause
a Shelf Registration Statement to be filed and declared
effective by the Commission within 90 days after the
Closing Date. Each Holder as to which any Shelf Registration is
being effected agrees to furnish to Company all information with
respect to such Holder necessary to make any information
previously furnished to Company by such Holder not misleading.
Company agrees to use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective for as long
as any Holder holds Registrable Securities. Company further
agrees, if necessary, to promptly supplement or amend the Shelf
Registration Statement, if required by the rules, regulations or
instructions applicable to the registration form used by Company
for such Shelf Registration Statement or by the Securities Act
or by any other rules and regulations thereunder for shelf
registrations, and Company agrees to furnish to the Holders of
Registrable Securities copies of any such supplement or
amendment promptly after its being used or filed with the
Commission.
(b) At any time the Shelf Registration Statement covering
all Registrable Securities is not effective and after receipt of
a written request from the Holders of Registrable Securities
requesting that Company effect a registration under the
Securities Act covering at least 10% of the Registrable
Securities outstanding as of the Closing Date (a Demand
Registration), and specifying the intended method or
methods of disposition thereof, Company shall promptly notify
all Holders in writing of the receipt of such request and each
such Holder, in lieu of exercising its rights under
Section 3 may elect (by written notice sent to Company
within 10 Business Days from the date of such Holders
receipt of the aforementioned Companys notice) to have
Registrable Securities included in such Demand Registration
thereof pursuant to this Section 2. Thereupon Company
shall, as expeditiously as is possible, use its reasonable best
efforts to effect the registration under the Securities Act of
all shares of Registrable Securities which Company has been so
requested to register by such Holders for sale, all to the
extent required to permit the disposition (in accordance with
the intended
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method or methods thereof, as aforesaid) of the Registrable
Securities so registered; provided, however, that
Company shall not be required to effect more than two
(2) registrations of any Registrable Securities pursuant to
this Section 2, unless Company shall be eligible at any
time to file a registration statement on
Form S-3
(or other comparable short form) under the Securities Act, in
which event there shall be no limit on the number of such
registrations pursuant to this Section 2.
(c) A registration will not count as a Demand Registration
until it has become effective (unless the requesting Holders
withdraw all their Registrable Securities and Company has
performed its obligations hereunder in all material respects, in
which case such demand will count as a Demand Registration
unless the requesting Holders pay all registration expense in
connection with such withdrawn registration); provided,
however, that if, after it has become effective, an
offering of Registrable Securities pursuant to a registration is
interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or
court or is withdrawn because of any development affecting
Company, such registration will be deemed not to have been
effected and will not count as a Demand Registration.
(d) If the managing underwriter of a Demand Registration
shall advise Company in writing that, in its opinion, the
distribution of the Registrable Securities requested to be
included in the Demand Registration would materially and
adversely affect the distribution of such Registrable
Securities, then all selling Holders shall reduce the amount of
Registrable Securities each intended to distribute through such
offering on a
pro-rata
basis.
3. Incidental Registration. If
Company at any time proposes to file on its behalf
and/or on
behalf of any of its security holders (the demanding
security holders) a registration statement under the
Securities Act on any form (other than a registration statement
on
Form S-4
or S-8 or
any successor form for securities to be offered in a transaction
of the type referred to in Rule 145 under the Securities
Act or to employees of Company pursuant to any employee benefit
plan, respectively) for the general registration of securities,
it will give written notice to all Holders at least 20 days
before the initial filing with the Commission of such
registration statement, which notice shall set forth the
intended method of disposition of the securities proposed to be
registered by Company. The notice shall offer to include in such
filing the aggregate number of shares of Registrable Securities
as such Holders may request.
Each Holder desiring to have Registrable Securities registered
under this Section 3 shall advise Company in writing within
10 Business Days after the date of receipt of such offer from
Company, setting forth the amount of such Registrable Securities
for which registration is requested. Company shall thereupon
include in such filing the number of shares of Registrable
Securities for which registration is so requested, subject to
the next sentence, and shall use its reasonable best efforts to
effect registration under the Securities Act of such shares. If
the managing underwriter of a proposed public offering shall
advise Company in writing that, in its opinion, the distribution
of the Registrable Securities requested to be included in the
registration concurrently with the securities being registered
by Company or such demanding security holder would materially
and adversely affect the distribution of such securities by
Company or such demanding security holder, then all selling
security holders (including the demanding security holder who
initially requested such registration) shall reduce the amount
of securities each intended to distribute through such offering
on a pro-rata basis. Except as otherwise provided
in Section 5, all expenses of such registration shall be
borne by Company.
4. Registration Procedures. If
Company is required by the provisions of Section 2 or 3 to
use its reasonable best efforts to effect the registration of
any of its securities under the Securities Act, Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a registration
statement with respect to such securities and use its reasonable
best efforts to cause such registration statement to become and
remain effective for a period of time required for the
disposition of such securities by the holders thereof, but not
to exceed 180 days (other than the Shelf Registration
Statement which shall be kept effective for such period as
provided in Section 2(a));
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration
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statement effective and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of
all securities covered by such registration statement until the
earlier of such time as all of such securities have been
disposed of in a public offering or the expiration of
180 days (other than the Shelf Registration Statement which
shall be kept effective for such period as provided in
Section 2(a));
(c) furnish to such selling security holders such number of
copies of a summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements of
the Securities Act, and such other documents, as such selling
security holders may reasonably request;
(d) use its reasonable best efforts to register or qualify
the securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions within
the United States as each holder of such securities shall
request (provided, however, that Company shall not
be obligated to qualify as a foreign corporation to do business
under the laws of any jurisdiction in which it is not then
qualified or to file any general consent to service or process),
and do such other reasonable acts and things as may be required
of it to enable such holder to consummate the disposition in
such jurisdiction of the securities covered by such registration
statement;
(e) promptly notify each Holder whose Registrable
Securities are intended to be covered by such registration
statement and each underwriter and, if requested by any such
Person, confirm such notice in writing (i) when a
prospectus or any prospectus supplement or post-effective
amendment has been filed and, with respect to a registration
statement or any post-effective amendment, when the same has
become effective, (ii) of the issuance by any state
securities or other regulatory authority of any order suspending
the qualification or exemption from qualification of any of the
Registrable Securities under state securities or blue
sky laws or the initiation of any proceedings for that
purpose, (iii) any request by the Commission for the
amending or supplementing of such registration statement or
prospectus or for additional information; and (iv) of the
happening of any event which makes any statement made in a
registration statement or related prospectus untrue or which
requires the making of any changes in such registration
statement, prospectus or documents so that they will not contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading, and, as promptly as
practicable thereafter, prepare and file with the Commission and
furnish a supplement or amendment to such prospectus so that, as
thereafter deliverable to the purchasers of such Registrable
Securities, such prospectus will not contain any untrue
statement of a material fact or omit a material fact necessary
to make the statements therein, in light of the circumstances
under which they were made, not misleading, and the time period
during which such registration statement is required to remain
effective shall be extended for the time period during which
such prospectus is so suspended;
(f) furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to
Section 2, on the date that such shares of Registrable
Securities are delivered to the underwriters for sale pursuant
to such registration or, if such Registrable Securities are not
being sold through underwriters, on the date that the
registration statement with respect to such shares of
Registrable Securities becomes effective, (1) an opinion,
dated such date, of the independent counsel representing Company
for the purposes of such registration, addressed to the
underwriters, if any, and if such Registrable Securities are not
being sold through underwriters, then to the Holders making such
request, in customary form and covering matters of the type
customarily covered in such legal opinions; and (2) a
comfort letter dated such date, from the independent certified
public accountants of Company, addressed to the underwriters, if
any, and if such Registrable Securities are not being sold
through underwriters, then to the Holder making such request
and, if such accountants refuse to deliver such letter to such
Holder, then to Company, in a customary form and covering
matters of the type customarily covered by such comfort letters
and as the underwriters or such Holder shall reasonably request.
Such opinion of counsel shall additionally cover such other
legal matters with respect to the registration in respect of
which such opinion is being given as such Holders may reasonably
request. Such letter from the independent certified public
accountants shall additionally cover such other financial
matters (including information as to the period ending not more
than five Business Days prior to the date of such letter) with
respect to the
A-24
registration in respect of which such letter is being given as
the Holders of a majority of the Registrable Securities being so
registered may reasonably request;
(g) enter into customary agreements (including an
underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or
facilitate the disposition of such Registrable
Securities; and
(h) otherwise use its reasonable best efforts to comply
with all applicable rules and regulations of the Commission, and
make available to its security holders, as soon as reasonably
practicable, but not later than 18 months after the
effective date of the registration statement, an earnings
statement covering the period of at least 12 months
beginning with the first full month after the effective date of
such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities
Act.
It shall be a condition precedent to the obligation of Company
to take any action pursuant to this Agreement in respect of the
securities which are to be registered at the request of any
Holder that such Holder shall furnish to Company such
information regarding the securities held by such Holder and the
intended method of disposition thereof as Company shall
reasonably request and as shall be required in connection with
the action taken by Company.
Each Holder agrees that, upon receipt of any notice from Company
of the happening of any event of the kind described in
Section 4(e)(iv), such Holder shall immediately discontinue
such Holders disposition of Registrable Securities
pursuant to the registration statement relating to such
Registrable Securities until such Holders receipt of the
copies of the supplemented or amended prospectus contemplated by
Section 4(e)(iv).
5. Expenses. All expenses incurred
in complying with this Agreement, including, without limitation,
all registration and filing fees (including all expenses
incident to filing with any stock exchange or the National
Association of Securities Dealers, Inc.), printing expenses,
fees and disbursements of counsel for Company, the reasonable
fees and reasonable expenses of counsel for the selling security
holders (selected by those holding a majority of the shares
being registered), expenses of any special audits incident to or
required by any such registration and expenses of complying with
the securities or blue sky laws of any jurisdiction pursuant to
Section 4(d), shall be paid by Company, except that:
(a) all such expenses in connection with any amendment or
supplement to the registration statement or prospectus filed
more than 180 days after the effective date of such
registration statement because any Holder has not effected the
disposition of the securities requested to be registered shall
be paid by such Holder; and
(b) Company shall not be liable for any fees, discounts or
commissions to any underwriter or any fees or disbursements of
counsel for any underwriter in respect of the securities sold by
such Holder.
6. Indemnification and
Contribution.
(a) In the event of any registration of any Registrable
Securities under the Securities Act pursuant to this Agreement,
Company shall indemnify and hold harmless to the fullest extent
permitted by law the Holder of such Registrable Securities, such
Holders directors and officers, and each other person
(including each underwriter) who participated in the offering of
such Registrable Securities and each other person, if any, who
controls such Holder or such participating person within the
meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which such Holder
or any such director or officer or participating person or
controlling person may become subject under the Securities Act
or any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any alleged untrue
statement of any material fact contained, on the effective date
thereof, in any registration statement under which such
securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto, or (ii) any alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, and shall reimburse such Holder or such director,
officer or participating person or controlling person for any
A-25
legal or any other expenses reasonably incurred by such Holder
or such director, officer or participating person or controlling
person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided,
however, that Company shall not be liable in any such
case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any actual or alleged
untrue statement or actual or alleged omission made in such
registration statement, preliminary prospectus, prospectus or
amendment or supplement in reliance upon and in conformity with
written information furnished to Company by such Holder
specifically for use therein or (in the case of any registration
pursuant to Section 2) so furnished for such purposes
by any underwriter. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf
of such Holder or such director, officer or participating person
or controlling person, and shall survive the transfer of such
securities by such Holder.
(b) Each Holder, by acceptance hereof, agrees to indemnify
and hold harmless to the fullest extent permitted by law
Company, its directors and officers and each other person, if
any, who controls Company within the meaning of the Securities
Act against any losses, claims, damages or liabilities, joint or
several, to which Company or any such director or officer or any
such person may become subject under the Securities Act or any
other statute or at common law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon information provided in writing to Company
by such Holder specifically for use in the following documents
and contained, on the effective date thereof, in any
registration statement under which securities were registered
under the Securities Act at the request of such Holder, any
preliminary prospectus or final prospectus contained therein, or
any amendment or supplement thereto. Notwithstanding the
provisions of this paragraph (b) or
paragraph (d) below, no Holder shall be required to
indemnify any person pursuant to this Section 6 or to
contribute pursuant to paragraph (d) below in an
amount in excess of the amount of the aggregate net proceeds
received by such Holder in connection with any such registration
under the Securities Act.
(c) Any Person entitled to indemnification hereunder will
(i) give prompt written notice to the indemnifying party of
any claim with respect to which it seeks indemnification
(provided that the failure to give such notice shall not
limit the rights of such Person, except to the extent the
indemnifying party is actually prejudiced thereby) and
(ii) unless in such indemnified partys reasonable
judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such
claim with counsel reasonably satisfactory to the indemnified
party; provided, however, that any person entitled
to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such
claim, but the fees and expenses of such counsel shall be at the
expense of such Person unless (A) the indemnifying party
has agreed to pay such fees or expenses or (B) the
indemnifying party shall have failed to assume the defense of
such claim and employ counsel reasonably satisfactory to such
Person. If such defense is not assumed by the indemnifying party
as permitted hereunder, the indemnifying party will not be
subject to any liability for any settlement made by the
indemnified party without its consent (but such consent will not
be unreasonably withheld or delayed). If such defense is assumed
by the indemnifying party pursuant to the provisions hereof,
such indemnifying party shall not settle or otherwise compromise
the applicable claim unless (i) such settlement or
compromise contains a full and unconditional release of the
indemnified party or (ii) the indemnified party otherwise
consents in writing, which consent shall not be unreasonably
withheld or delayed. An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel
for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any
indemnified party, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party
shall be obligated to pay the reasonable fees and disbursements
of such additional counsel or counsels.
(d) If the indemnification provided for in this
Section 6 from the indemnifying party is unavailable to an
indemnified party hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims,
A-26
damages, liabilities or expenses in such proportion as is
appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions
which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party
and indemnified parties shall be determined by reference to,
among other things, whether any action in question, including
any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been
made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties
relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be
deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 6(d) were
determined by pro-rata allocation or by any other
method of allocation which does not take account of the
equitable considerations referred to in the immediately
preceding paragraph. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any
Person who was not guilty of such fraudulent misrepresentation.
7. Certain Limitations on Registration
Rights. Notwithstanding the other provisions
of this Agreement:
(a) Company shall not be obligated to register the
Registrable Securities of any Holder if, in the opinion of
counsel to Company reasonably satisfactory to the Holder and its
counsel (or, if the Holder has engaged an investment banking
firm, to such investment banking firm and its counsel), the sale
or other disposition of such Holders Registrable
Securities, in the manner proposed by such Holder (or by such
investment banking firm), may be effected without registering
such Registrable Securities under the Securities Act; and
(b) Company shall not be obligated to register the
Registrable Securities of any Holder pursuant to Section 2
if Company has had a registration statement, under which such
Holder had a right to have its Registrable Securities included
pursuant to Section 2 or 3, declared effective within
six months prior to the date of the request pursuant to
Section 2; provided, however, that if any
Holder elected to have shares of its Registrable Securities
included under such registration statement but some or all of
such shares were excluded pursuant to the penultimate sentence
of Section 3, then such six-month period shall be reduced
to three months.
(c) Company shall have the right to delay the filing or
effectiveness of a registration statement required pursuant to
Section 2 hereof during one or more periods aggregating not
more than 90 days in any twelvemonth period in the event
that (i) Company would, in accordance with the advice of
its counsel, be required to disclose in the prospectus
information not otherwise then required by law to be publicly
disclosed and (ii) in the judgment of Companys board
of directors, there is a reasonable likelihood that such
disclosure, or any other action to be taken in connection with
the prospectus, would materially and adversely affect any
existing or prospective material business situation, transaction
or negotiation or otherwise materially and adversely affect
Company.
8. Selection of Managing
Underwriters. The managing underwriter or
underwriters for any offering of Registrable Securities to be
registered pursuant to Section 2 shall be selected by the
holders of a majority of the Registrable Securities being so
registered and shall be reasonably acceptable to Company.
9. Interpretive Matters. Unless
otherwise expressly provided or the context otherwise requires,
for purposes of this Agreement the following rules of
interpretation apply:
(a) When calculating the period of time before which,
within which or following which any act is to be done or step
taken pursuant to this Agreement, the date that is the reference
date in calculating such period is excluded. If the last day of
such period is a non-Business Day, the period in question ends
on the next succeeding Business Day.
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(b) Any reference in this Agreement to gender includes all
genders, and words imparting the singular number also include
the plural and vice versa.
(c) All references in this Agreement to any
Article, or Section, are to the
corresponding Article or Section of this Agreement.
(d) The words herein, hereinafter,
hereof, and hereunder refer to this
Agreement as a whole and not merely to a subdivision in which
such words appear unless the context otherwise requires.
(e) The word including or any variation thereof
means including, but not limited to, and does not
limit any general statement that it follows to the specific or
similar items or matters immediately following it.
10. Miscellaneous.
(a) No Inconsistent
Agreements. Company will not hereafter enter
into any agreement with respect to its securities which is
inconsistent with the rights granted to the Holders in this
Agreement.
(b) Remedies. Each Holder, in
addition to being entitled to exercise all rights granted by
law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Company agrees
that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of
this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be
adequate. In any action or proceeding brought to enforce any
provision of this Agreement or where any provision hereof is
validly asserted as a defense, the successful party shall be
entitled to recover reasonable attorneys fees in addition
to any other available remedy.
(c) Amendments and Waivers. Except
as otherwise provided herein, the provisions of this Agreement
may not be amended, modified or supplemented, and waivers or
consents to departure from the provisions hereof may not be
given unless Company has obtained the written consent of the
Majority Holders.
(d) Notice Generally. All notices,
demands, communications and deliveries required or permitted by
this Agreement shall be made in writing signed by the party
making the same, shall specify the Section of this Agreement
pursuant to which it is given or being made and shall be deemed
given or made (i) on the date delivered if delivered by
telecopy or in person, (ii) on the third (3rd) Business Day
after it is mailed if mailed by registered or certified mail
(return receipt requested) (with postage and other fees prepaid)
or (iii) on the day after it is delivered, prepaid, to an
overnight express delivery service that confirms to the sender
delivery on such day, as follows:
(i) If to any Holder, at its last known address appearing
on the books of Company maintained for such purpose.
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(ii) |
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If to Company, at: |
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Exide Technologies
13000 Deerfield Parkway, Building 200
Alpharetta, Georgia 30004
Attention: Gordon A. Ulsh
Telecopy No.:
(678) 566-9171 |
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With copies to: |
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Exide Technologies
13000 Deerfield Parkway, Building 200
Alpharetta, Georgia 30004
Attention: Law Department
Telecopy No.:
(678) 566-9342 |
A-28
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and |
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Kirkland & Ellis LLP
200 East Randolph Drive
Chicago, IL 60601
Attention: Carter W. Emerson, P.C.
Telecopy No.:
(312) 660-0374 |
or at such other address as may be substituted by notice given
as herein provided. The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such
notice. Every notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder shall be
deemed to have been duly given or served on the date on which
personally delivered, with receipt acknowledged, telecopied and
confirmed by telecopy answerback or three Business Days after
the same shall have been deposited in the United States mail.
(e) Rule 144. So long as
Company is subject to the reporting requirements under the
Exchange Act, it shall comply with such requirements so as to
permit sales of Registrable Securities by the holders thereof
pursuant to Rule 144 under the Securities Act.
(f) Successors and Assigns. This
Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of each of the parties hereto
including any person to whom Registrable Securities are
transferred and becomes an Additional Holder in accordance with
this Agreement.
(g) Headings. The headings in this
Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
(h) Governing Law; Jurisdiction; Jury
Waiver. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State
of New York without giving effect to the conflict of laws
provisions thereof. Each of the parties hereby submits to
personal jurisdiction and waives any objection as to venue in
the County of New York, State of New York. Service of process on
the parties in any action arising out of or relating to this
Agreement shall be effective if mailed to the parties in
accordance with Section 10(d) hereof. The parties hereto
waive all right to trial by jury in any action or proceeding to
enforce or defend any rights hereunder.
(i) Severability. Wherever
possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement shall be prohibited
by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
(j) Entire Agreement. This
Agreement represents the complete agreement and understanding of
the parties hereto in respect of the subject matter contained
herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect
to the subject matter hereof.
(k) Counterparts. This Agreement
may be executed in any number of counterparts and by the parties
hereto in separate counterparts (including by facsimile), each
of which when so executed shall be deemed to be an original and
all of which taken together shall constitute one and the same
agreement.
(l) Termination. Companys
obligations under this Agreement shall cease with respect to any
Person when such Person ceases to be a Holder. Notwithstanding
the foregoing, Companys obligations under Section 5
and Section 6 shall survive in accordance with their terms.
A-29
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
EXIDE TECHNOLOGIES
Name:
TONTINE CAPITAL PARTNERS, L.P.
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By:
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TONTINE CAPITAL MANAGEMENT, L.L.C.,
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its general partner
Name:
LEGG MASON INVESTMENT TRUST, INC.
Name:
ARKLOW CAPITAL, LLC
Name:
[PERMITTED ASSIGNEES UNDER STANDBY PURCHASE
AGREEMENT]
A-30
APPENDIX B
EXIDE
TECHNOLOGIES
2004
STOCK INCENTIVE PLAN
(as
proposed to be amended)
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1.
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Establishment,
Purpose, and Types of Awards
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Exide Technologies (the Company) hereby establishes
an incentive compensation plan to be known as the Exide
Technologies 2004 Stock Incentive Plan (hereinafter
referred to as the Plan), in order to provide
incentives and awards to select key management employees and
directors of the Company and its Affiliates, as well as certain
consultants.
The Plan permits the granting of the following types of awards
(Awards), according to the Sections of the Plan
listed here:
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Section 6
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Options
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Section 7
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Restricted Shares
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Section 8
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Performance Awards
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The Plan is not intended to affect and shall not affect any
stock options, equity-based compensation, or other benefits that
the Company or its Affiliates may have provided, or may
separately provide in the future pursuant to any agreement,
plan, or program that is independent of this Plan.
Terms in the Plan that begin with an initial capital letter have
the defined meaning set forth in Appendix A,
unless defined elsewhere in this Plan or the context of their
use clearly indicates a different meaning.
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3.
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Shares Subject
to the Plan
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Subject to the provisions of Section 11 of the Plan, the
maximum number of Shares that the Company may issue is
7,125,000 Shares for all Awards all of which may be issued
as Incentive Stock Options (ISO); but the Company
shall not issue more than 1,900,000* Shares pursuant to Awards
in the form of Restricted Shares and Performance Awards. For all
Awards, the Shares issued pursuant to the Plan may be authorized
but unissued Shares, or Shares that the Company has reacquired
or otherwise holds in treasury.
Shares that are subject to an Award that for any reason expires,
is forfeited, is cancelled, or becomes unexercisable, and Shares
that are for any other reason not paid or delivered under the
Plan shall again, except to the extent prohibited by Applicable
Law, be available for subsequent Awards under the Plan. In
addition, the Committee may make future Awards with respect to
Shares that the Company retains from otherwise delivering
pursuant to an Award either (i) as payment of the exercise
price of an Award, or (ii) in order to satisfy the
withholding or employment taxes due upon the grant, exercise,
vesting, or distribution of an Award. Notwithstanding the
foregoing, but subject to adjustments pursuant to
Section 11 below, the number of Shares that are available
for ISO Awards shall be determined, to the extent required under
applicable tax laws, by reducing the number of Shares designated
in the preceding paragraph by the number of Shares granted
pursuant to Awards (whether or not Shares are issued pursuant to
such Awards); provided that any Shares that are either purchased
under the Plan and forfeited back to the Plan, or surrendered in
payment of the Exercise Price for an Award shall be available
for issuance pursuant to ISO Awards.
* These amounts assume the
Share Transaction is consummated. If it is not, they will be
reduced to 5,125,000 and 1,275,000.
B-1
(a) General. The Committee shall
administer the Plan in accordance with its terms, provided that
the Board may act in lieu of the Committee on any matter. The
Committee shall hold meetings at such times and places as it may
determine and shall make such rules and regulations for the
conduct of its business as it deems advisable. In the absence of
a duly appointed Committee or if the Board otherwise chooses to
act in lieu of a Committee, the Board shall function as the
Committee for all purposes of the Plan.
(b) Committee Composition. The Board
shall appoint the members of the Committee. The Board or
Committee may (i) delegate to a committee of one or more
members of the Board who are not outside directors
within the meaning of Section 162(m) of the Code the
authority to grant awards to Eligible Persons who are either
(A) not then covered employees within the
meaning of Section 162(m) of the Code (Covered
Employees) and are not expected to be Covered Employees at
the time of recognition of income resulting from such Award or
(B) not persons with respect to whom the Company wishes to
comply with Section 162(m) of the Code or
(ii) delegate to a committee of one or more members of the
Board who are not non-employee directors within the
meaning of
Rule 16b-3
the authority to grant Awards to Eligible Persons who are not
subject to Section 16 of the Exchange Act. The Board may at
any time appoint additional members to the Committee, remove and
replace members of the Committee with or without Cause, and fill
vacancies on the Committee however caused.
(c) Powers of the Committee. Subject to
the provisions of the Plan, the Committee shall have the
authority, in its sole discretion:
(i) to determine Eligible Persons to whom Awards shall be
granted from time to time and the number of Shares or units to
be covered by each Award;
(ii) to determine, from time to time, the Fair Market Value
of Shares;
(iii) to determine, and to set forth in Award Agreements,
the terms and conditions of all Awards, including any applicable
exercise or purchase price, the installments and conditions
under which an Award shall become vested (which may be based on
performance), terminated, expired, cancelled, or replaced, and
the circumstances for vesting acceleration or waiver of
forfeiture restrictions, and other restrictions and limitations;
(iv) to approve the forms of Award Agreements and all other
documents, notices and certificates in connection therewith
which need not be identical either as to type of Award or among
Participants;
(v) to construe and interpret the terms of the Plan and any
Award Agreement, to determine the meaning of their terms, and to
prescribe, amend, and rescind rules and procedures relating to
the Plan and its administration; and
(vi) to determine, with respect to any calendar year,
whether Directors may elect to receive an Option in lieu of
payment of fees in cash, and the percentage of such fees that
may be declined in order to receive a grant of such an Option.
(vii) in order to fulfill the purposes of the Plan and
without amending the Plan, modify, cancel, or waive the
Companys rights with respect to any Awards, to adjust or
to modify Award Agreements for changes in Applicable Law, and to
recognize differences in foreign law, tax policies, or customs;
and
(viii) to make all other interpretations and to take all
other actions that the Committee may consider necessary or
advisable to administer the Plan or to effectuate its purposes.
Subject to Applicable Law and the restrictions set forth in the
Plan, the Committee may delegate administrative functions to
individuals who are Reporting Persons, officers, or Employees of
the Company or its Affiliates.
(d) Deference to Committee
Determinations. The Committee shall have the
discretion to interpret or construe ambiguous, unclear, or
implied (but omitted) terms in any fashion it deems to be
appropriate in its sole discretion, and to make any findings of
fact needed in the administration of the Plan or Award
B-2
Agreements. The Committees prior exercise of its
discretionary authority shall not obligate it to exercise its
authority in a like fashion thereafter. The Committees
interpretation and construction of any provision of the Plan, or
of any Award or Award Agreement, shall be final, binding, and
conclusive. The validity of any such interpretation,
construction, decision or finding of fact shall not be given de
novo review if challenged in court, by arbitration, or in any
other forum, and shall be upheld unless clearly arbitrary or
capricious.
(e) No Liability;
Indemnification. Neither the Board nor any
Committee member, nor any Person acting at the direction of the
Board or the Committee, shall be liable for any act, omission,
interpretation, construction or determination made in good faith
with respect to the Plan, any Award or any Award Agreement. The
Company and its Affiliates shall pay or reimburse any member of
the Committee, as well as any Director, Employee, or Consultant
who takes action in connection with the Plan, for all expenses
incurred with respect to the Plan, and to the full extent
allowable under Applicable Law shall indemnify each and every
one of them for any claims, liabilities, and costs (including
reasonable attorneys fees) arising out of their good faith
performance of duties under the Plan. The Company and its
Affiliates may obtain liability insurance for this purpose.
(a) General Rule. The Committee may grant
ISOs only to Employees (including officers who are Employees) of
the Company or an Affiliate that is a parent
corporation or subsidiary corporation within
the meaning of Section 424 of the Code, and may grant all
other Awards to any Eligible Person. A Participant who has been
granted an Award may be granted an additional Award or Awards if
the Committee shall so determine, if such person is otherwise an
Eligible Person and if otherwise in accordance with the terms of
the Plan.
(b) Grant of Awards. Subject to the
express provisions of the Plan, the Committee shall determine
from the class of Eligible Persons those individuals to whom
Awards under the Plan may be granted, the number of Shares
subject to each Award, the price (if any) to be paid for the
Shares or the Award and, in the case of Performance Awards, in
addition to the matters addressed in Section 8 below, the
specific objectives, goals and performance criteria that further
define the Performance Award. Each Award shall be evidenced by
an Award Agreement signed by the Company and, if required by the
Committee, by the Participant. The Award Agreement shall set
forth the material terms and conditions of the Award established
by the Committee.
(c) Limits on Awards. During the term of
the Plan, no Participant may receive Options under the Plan that
relate to more than 1,500,000* shares and no Participant may
receive Performance Awards under the Plan that, in the
aggregate, relate to more than 600,000 Shares. The
Committee may adjust these limitations pursuant to
Section 11 below.
(d) Grant of Options in Lieu of Directors
Fees. To the extent permitted by the Committee
with respect to fees to be earned in any calendar year, a
Director may elect, prior to the year with respect to which such
fees will be earned, to choose to decline to accept all or a
portion of the fees that would otherwise be paid in cash, and in
lieu thereof, to have the Committee grant an Option under the
Plan. Such Option shall cover the number of Shares at a per
Share exercise price equal to 100% of the Fair Market Value per
Share on the Grant Date that would, in the aggregate, have the
equivalent value of the fees that will not be paid (as
determined using the Black-Scholes method or such other
reasonable method of valuation used by the Committee.) The Grant
Date for the Option shall be the date that the fees would
otherwise have been paid, and will be 100% vested on the Grant
Date.
6. Option
Awards
(a) Types; Documentation. The Committee
may in its discretion grant ISOs to any Employee and Non-ISOs to
any Eligible Person, and shall evidence any such grants in an
Award Agreement that is delivered to
* This amount assumes the
Share Transaction is consummated. If it is not, it will be
reduced to 1,050,000.
B-3
the Participant. Each Option shall be designated in the Award
Agreement as an ISO or a Non-ISO, and the same Award Agreement
may grant both types of Options. Any portion of an Option that
is not designated in the Award Agreement as an ISO or that
otherwise fails or is not qualified as an ISO (even if
designated as an ISO) shall be a Non-ISO. At the sole discretion
of the Committee, any Option may be exercisable, in whole or in
part, immediately upon the grant thereof, or only after the
occurrence of a specified event, or only in installments, which
installments may vary. Options granted under the Plan may
contain such terms and provisions not inconsistent with the Plan
that the Committee shall deem advisable in its sole and absolute
discretion.
(b) ISO $100,000 Limitation. To the
extent that the aggregate Fair Market Value of Shares with
respect to which Options designated as ISOs first become
exercisable by a Participant in any calendar year (under this
Plan and any other plan of the Company or any Affiliate) exceeds
$100,000, such excess Options shall be treated as
Non-ISOs.
For purposes of determining whether the $100,000 limit is
exceeded, the Fair Market Value of the Shares subject to an ISO
shall be determined as of the Grant Date. In reducing the number
of Options treated as ISOs to meet the $100,000 limit, the most
recently granted Options shall be reduced first. In the event
that Section 422 of the Code is amended to alter the
limitation set forth therein, the limitation of this
Section 6(b) shall be automatically adjusted accordingly.
(c) Term of Options. Each Award Agreement
shall specify a term at the end of which the Option
automatically expires, subject to earlier termination provisions
contained in Section 6(h) hereof; provided, that, the term
of any Option may not exceed ten years from the Grant Date. In
the case of an ISO granted to an Employee who is a Ten Percent
Holder on the Grant Date, the term of the ISO shall not exceed
five years from the Grant Date.
(d) Exercise Price. The exercise price of
an Option shall be determined by the Committee in its discretion
and shall be set forth in the Award Agreement, subject to the
following special rules:
(i) ISOs. If an ISO is granted to
an Employee who on the Grant Date is a Ten Percent Holder, the
per Share exercise price shall not be less than 110% of the Fair
Market Value per Share on such Grant Date. If an ISO is granted
to any other Employee, the per Share exercise price shall not be
less than 100% of the Fair Market Value per Share on the Grant
Date.
(ii) Non-ISOs. The per Share
exercise price for the Shares to be issued pursuant to the
exercise of a Non-ISO shall not be less than 100% of the Fair
Market Value per Share on the Grant Date.
(e) Exercise of Option. The Committee
shall in its sole discretion determine the times, circumstances,
and conditions under which an Option shall be exercisable, and
shall set them forth in the Award Agreement. The Committee shall
have the discretion to determine whether and to what extent the
vesting of Options shall be tolled during any unpaid leave of
absence; provided, however, that in the absence of such
determination, vesting of Options shall be tolled during any
such leave approved by the Company.
(f) Minimum Exercise Requirements. An
Option may not be exercised for a fraction of a Share. The
Committee may require in an Award Agreement that an Option be
exercised as to a minimum number of Shares, provided that such
requirement shall not prevent a Participant from purchasing the
full number of Shares as to which the Option is then exercisable.
(g) Methods of Exercise. Prior to its
expiration pursuant to the terms of the applicable Award
Agreement, each Option may be exercised, in whole or in part
(provided that the Company shall not be required to issue
fractional shares), by delivery of written notice of exercise to
the secretary of the Company accompanied by the full exercise
price of the Shares being purchased. In the case of an ISO, the
Committee shall determine the acceptable methods of payment on
the Grant Date and it shall be included in the applicable Award
Agreement. The methods of payment that the Committee may in its
discretion accept or commit to accept in an Award Agreement
include:
(i) cash or check payable to the Company (in
U.S. dollars);
(ii) other Shares that (A) are owned by the
Participant who is purchasing Shares pursuant to an Option,
(B) have a Fair Market Value on the date of surrender equal
to the aggregate exercise price of the
B-4
Shares as to which the Option is being exercised, (C) were
not acquired by such Participant pursuant to the exercise of an
Option, unless such Shares have been owned by such Participant
for at least six months or such other period as the Committee
may determine, (D) are all, at the time of such surrender,
free and clear of any and all claims, pledges, liens and
encumbrances, or any restrictions which would in any manner
restrict the transfer of such shares to or by the Company (other
than such restrictions as may have existed prior to an issuance
of such Shares by the Company to such Participant), and
(E) are duly endorsed for transfer to the Company;
(iii) a cashless exercise program that the Committee may
approve, from time to time in its discretion, pursuant to which
a Participant may concurrently provide irrevocable instructions
(A) to such Participants broker or dealer to effect
the immediate sale of the purchased Shares and remit to the
Company, out of the sale proceeds available on the settlement
date, sufficient funds to cover the exercise price of the Option
plus all applicable taxes required to be withheld by the Company
by reason of such exercise, and (B) to the Company to
deliver the certificates for the purchased Shares directly to
such broker or dealer in order to complete the sale; or
(iv) any combination of the foregoing methods of payment.
The Company shall not be required to deliver Shares pursuant to
the exercise of an Option until payment of the full exercise
price therefore is received by the Company.
(h) Termination of Continuous
Service. The Committee may establish and set
forth in the applicable Award Agreement the terms and conditions
on which an Option shall remain exercisable, if at all,
following termination of a Participants Continuous
Service. The Committee may waive or modify these provisions at
any time. To the extent that a Participant is not entitled to
exercise an Option at the date of his or her termination of
Continuous Service, or if the Participant (or other person
entitled to exercise the Option) does not exercise the Option to
the extent so entitled within the time specified in the Award
Agreement or below (as applicable), the Option shall terminate
and the Shares underlying the unexercised portion of the Option
shall revert to the Plan and become available for future Awards.
In no event may any Option be exercised after the expiration of
the Option term as set forth in the Award Agreement.
The following provisions shall apply to the extent an Award
Agreement does not specify the terms and conditions upon which
an Option shall terminate when there is a termination of a
Participants Continuous Service:
(i) Termination other than Upon Disability or Death
or for Cause. In the event of termination of
a Participants Continuous Service (other than as a result
of Participants death, disability or termination for
Cause), the Participant shall have the right to exercise an
Option at any time within 90 days following such
termination to the extent the Participant was entitled to
exercise such Option at the date of such termination.
(ii) Disability. In the event of
termination of a Participants Continuous Service as a
result of his or her disability within the meaning
of Section 22(e)(3) of the Code, the Participant shall have
the right to exercise an Option at any time within one year
following such termination to the extent the Participant was
entitled to exercise such Option at the date of such termination.
(iii) Death. In the event of the
death of a Participant during the period of Continuous Service
since the Grant Date of an Option, or within thirty days
following termination of the Participants Continuous
Service, the Option may be exercised, at any time within one
year following the date of the Participants death, by the
Participants estate or by a person who acquired the right
to exercise the Option by bequest or inheritance, but only to
the extent the right to exercise the Option had vested at the
date of death or, if earlier, the date the Participants
Continuous Service terminated.
(iv) Cause. If the Committee
determines that a Participants Continuous Service
terminated due to Cause, the Participant shall immediately
forfeit the right to exercise any Option, and it shall be
considered immediately null and void.
B-5
(i) Prohibition on Repricing. No Option
granted hereunder shall be amended to reduce the exercise price
under such Option, or surrendered in exchange for a replacement
Option having a lower purchase price per share; provided that
this Section 6(i) shall not restrict or prohibit any
adjustment or other action taken pursuant to Section 11
below.
(a) Grants. The Committee may in its
discretion grant restricted shares (Restricted
Shares) to any Eligible Person and shall evidence such
grant in an Award Agreement that is delivered to the Participant
which sets forth the number of Restricted Shares, the purchase
price for such Restricted Shares (if any) and the terms upon
which the Restricted Shares may become vested. The Committee may
condition any Award of Restricted Shares to a Participant on
receiving from the Participant such further assurances and
documents as the Committee may require to enforce the
restrictions.
(b) Vesting and Forfeiture. The Committee
shall set forth in an Award Agreement granting Restricted
Shares, the terms and conditions under which the
Participants interest in the Restricted Shares will become
vested and non-forfeitable. Except as set forth in the
applicable Award Agreement or as otherwise determined by the
Committee, upon termination of a Participants Continuous
Service for any reason, the Participant shall forfeit his or her
Restricted Shares; provided that if a Participant purchases the
Restricted Shares and forfeits them for any reason, the Company
shall return the purchase price to the Participant only if and
to the extent set forth in an Award Agreement.
(c) Issuance of Restricted Shares Prior to
Vesting. The Company shall issue stock
certificates that evidence Restricted Shares pending the lapse
of applicable restrictions, and that bear a legend making
appropriate reference to such restrictions. Except as set forth
in the applicable Award Agreement or the Committee otherwise
determines, the Company or a third party that the Company
designates shall hold such Restricted Shares and any dividends
that accrue with respect to Restricted Shares pursuant to
Section 8(e) below.
(d) Issuance of Shares upon Vesting. As
soon as practicable after vesting of a Participants
Restricted Shares and the Participants satisfaction of
applicable tax withholding requirements, the Company shall
release to the Participant, free from the vesting restrictions,
one Share for each vested Restricted Share, unless an Award
Agreement provides otherwise. No fractional shares shall be
distributed, and cash shall be paid in lieu thereof.
(e) Dividends Payable on
Vesting. Whenever Shares are released to a
Participant under Section 7(d) above pursuant to the
vesting of Restricted Shares are issued to a Participant
pursuant to Section 7(d) above, such Participant may
receive, in the sole discretion of the Committee, with respect
to each Share released or issued, an amount equal to any cash
dividends (plus, in the discretion of the Committee, simple
interest at a rate as the Committee may determine) and a number
of Shares equal to any stock dividends, which were declared and
paid to the holders of Shares between the Grant Date and the
date such Share is released or issued.
(a) Performance Units. Subject to the
limitations set forth in paragraph (c) hereof, the
Committee may in its discretion grant Performance Units to any
Eligible Person and shall evidence such grant in an Award
Agreement that is delivered to the Participant which sets forth
the terms and conditions of the Award.
(b) Performance Compensation
Awards. Subject to the limitations set forth in
paragraph (c) hereof, the Committee may, at the time
of grant of a Performance Unit, designate such Award as a
Performance Compensation Award in order that such
Award constitutes qualified performance-based
compensation under Code Section 162(m), in which
event the Committee shall have the power to grant such
Performance Compensation Award upon terms and conditions that
qualify it as qualified performance-based
compensation within the meaning of Code
Section 162(m). With respect to each such Performance
Compensation Award, the
B-6
Committee shall establish, in writing within the time required
under Code Section 162(m), a Performance
Period, Performance Measure(s), and
Performance Formula(e) (each such term being
hereinafter defined).
A Participant shall be eligible to receive payment in respect of
a Performance Compensation Award only to the extent that the
Performance Measure(s) for such Award are achieved and the
Performance Formula(e) as applied against such Performance
Measure(s) determines that all or some portion of such
Participants Award has been earned for the Performance
Period. As soon as practicable after the close of each
Performance Period, the Committee shall review and certify in
writing whether, and to what extent, the Performance Measure(s)
for the Performance Period have been achieved and, if so,
determine and certify in writing the amount of the Performance
Compensation Award to be paid to the Participant and, in so
doing, may use negative discretion to decrease, but not
increase, the amount of the Award otherwise payable to the
Participant based upon such performance.
(c) Limitations on Awards. The maximum
Performance Unit Award and the maximum Performance Compensation
Award that any one Participant may receive for any one
Performance Period shall not together exceed 600,000 Shares
and $2,000,000 in cash.
(d) Definitions.
(i) Performance Formula means, for a
Performance Period, one or more objective formulas or standards
established by the Committee for purposes of determining whether
or the extent to which an Award has been earned based on the
level of performance attained or to be attained with respect to
one or more Performance Measure(s). Performance Formulae may
vary from Performance Period to Performance Period and from
Participant to Participant and may be established on a
stand-alone basis, in tandem or in the alternative.
(ii) Performance Measure means one or more of
the following selected by the Committee to measure Company,
Affiliate,
and/or
business unit performance for a Performance Period, whether in
absolute or relative terms (including, without limitation, terms
relative to a peer group or index): basic, diluted, or adjusted
earnings per share; sales or revenue; earnings before interest,
taxes, and other adjustments (in total or on a per share basis);
basic or adjusted net income; returns on equity, assets,
capital, revenue or similar measure; economic value added;
working capital; total shareholder return; and product
development, product market share, research, licensing,
litigation, human resources, information services, mergers,
acquisitions, sales of assets of Affiliates or business units.
Each such measure shall be to the extent applicable, determined
in accordance with generally accepted accounting principles as
consistently applied by the Company (or such other standard
applied by the Committee) and, if so determined by the
Committee, and in the case of a Performance Compensation Award,
to the extent permitted under Code Section 162(m), adjusted
to omit the effects of extraordinary items, gain or loss on the
disposal of a business segment, unusual or infrequently
occurring events and transactions and cumulative effects of
changes in accounting principles. Performance Measures may vary
from Performance Period to Performance Period and from
Participant to Participant, and may be established on a
stand-alone basis, in tandem or in the alternative.
(iii) Performance Period means one or more
periods of time (of not less than one calendar year or one
fiscal year of the Company), as the Committee may designate,
over which the attainment of one or more Performance Measure(s)
will be measured for the purpose of determining a
Participants rights in respect of an Award.
Notwithstanding the above, if an Award is granted to an Employee
who is hired after the beginning of a calendar or fiscal year,
such Award may designate a Performance Period of less than one
calendar year or less than one fiscal year of the Company.
(a) General. As a condition to the
issuance or distribution of Shares pursuant to the Plan, the
Participant (or in the case of the Participants death, the
person who succeeds to the Participants rights) shall make
such arrangements as the Company may require for the
satisfaction of any applicable federal, state, local or foreign
withholding tax obligations that may arise in connection with
the Award and the issuance of Shares. The
B-7
Company shall not be required to issue any Shares until such
obligations are satisfied. If the Committee allows the
withholding or surrender of Shares to satisfy a
Participants tax withholding obligations, the Committee
shall not allow Shares to be withheld in an amount that exceeds
the minimum statutory withholding rates for federal and state
tax purposes, including payroll taxes.
(b) Default Rule for Employees. In the
absence of any other arrangement, an Employee shall be deemed to
have directed the Company to withhold or collect from his or her
cash compensation an amount sufficient to satisfy such tax
obligations from the next payroll payment otherwise payable
after the date of the exercise of an Award or of the other event
giving rise to the withholding tax obligations.
(c) Special Rules. In the case of a
Participant other than an Employee (or in the case of an
Employee where the next payroll payment is not sufficient to
satisfy such tax obligations, with respect to any remaining tax
obligations), in the absence of any other arrangement and to the
extent permitted under the Applicable Law, the Participant shall
be deemed to have elected to have the Company withhold from the
Shares or cash to be issued pursuant to an Award that number of
Shares having a Fair Market Value determined as of the
applicable Tax Date (as defined below) equal to the amount
required to be withheld. For purposes of this Section 9,
the Fair Market Value of the Shares to be withheld shall be
determined on the date that the amount of tax to be withheld is
to be determined under the Applicable Law (the Tax
Date).
(d) Surrender of Shares. If permitted by
the Committee, in its discretion, a Participant may satisfy the
minimum applicable tax withholding and employment tax
obligations associated with an Award by surrendering Shares to
the Company (including Shares that would otherwise be issued
pursuant to the Award) that have a Fair Market Value determined
as of the applicable Tax Date equal to the amount required to be
withheld. In the case of Shares previously acquired from the
Company that are surrendered under this Section 9, such
Shares must have been owned by the Participant for more than six
months on the date of surrender (or such longer period of time
the Company may in its discretion require).
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10.
|
Non-Transferability
of Awards
|
(a) General. Except as set forth in this
Section 10, or as otherwise approved by the Committee for a
select group of management or highly compensated Employees,
Awards may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or
by the laws of descent or distribution. The designation of a
beneficiary by a Participant will not constitute a transfer. An
Award may be exercised, during the lifetime of the holder of an
Award, only by such holder, the duly-authorized legal
representative of a disabled Participant, or a transferee
permitted by this Section 10.
(b) Limited Transferability
Rights. Notwithstanding anything else in this
Section 10, the Committee may in its discretion provide
that an Award, other than ISOs, may be transferred, on such
terms and conditions as the Committee deems appropriate, either
(i) by instrument to the Participants Immediate
Family (as defined below), (ii) by instrument to an
inter vivos or testamentary trust (or other entity) in which the
Award is to be passed to the Participants designated
beneficiaries, or (iii) by gift to charitable institutions.
Any transferee of the Participants rights shall succeed
and be subject to all of the terms of this Award Agreement and
the Plan. Immediate Family means any child,
stepchild, grandchild, parent, stepparent, grandparent, spouse,
former spouse, sibling, niece, nephew,
mother-in-law,
father-in-law,
son-in-law,
daughter-in-law,
brother-in-law,
or
sister-in-law,
and shall include adoptive relationships.
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11.
|
Adjustments
Upon Changes in Capitalization, Merger or Certain Other
Transactions
|
(a) Changes in Capitalization. The
Committee shall equitably adjust the number of Shares covered by
each outstanding Award, the maximum Awards that can be granted
to any individual under the Plan, and the number of Shares that
have been authorized for issuance under the Plan but as to which
no Awards have yet been granted or that have been returned to
the Plan upon cancellation, forfeiture, or expiration of an
Award, as well as the price per Share covered by each such
outstanding Award, to reflect any increase or decrease in the
number of issued Shares resulting from a number of actions
including, but not limited to, a stock-split, reverse
stock-split, stock dividend, combination, recapitalization or
reclassification of the Shares, or any other increase or
decrease in the number of issued Shares effected without receipt
of consideration by the Company. The
B-8
Committee shall take the aforementioned actions if it determines
that such adjustments are necessary to prevent dilution or
enlargement of benefits intended to be made available under the
Plan. In the event of any such transaction or event, the
Committee may provide in substitution for any or all outstanding
Options under the Plan such alternative consideration (including
securities of any surviving entity) as it may in good faith
determine to be equitable under the circumstances and may
require in connection therewith the surrender of all Options so
replaced. In any case, such substitution of securities shall not
require the consent of any person who is granted Options
pursuant to the Plan. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be required to
be made with respect to, the number or price of Shares subject
to any Award. Any adjustments made to an ISO shall be made in
accordance with Section 424(a) of the Code.
(b) Dissolution or Liquidation. In the
event of the dissolution or liquidation of the Company other
than as part of a Change of Control, each Award will terminate
immediately prior to the consummation of such action, subject to
the ability of the Committee to exercise any discretion
authorized in the case of a Change in Control.
(c) Change in Control. In the event of a
Change in Control, the Committee may in its sole and absolute
discretion and authority, without obtaining the approval or
consent of the Companys shareholders or any Participant
with respect to his or her outstanding Awards, take one or more
of the following actions:
(i) arrange for or otherwise provide that each outstanding
Award shall be assumed or a substantially similar award shall be
substituted by a successor corporation or a parent or subsidiary
of such successor corporation (the Successor
Corporation);
(ii) accelerate the vesting of Awards so that Awards shall
vest (and, to the extent applicable, become exercisable) as to
the Shares that otherwise would have been unvested and provide
that repurchase rights of the Company with respect to Shares
issued upon exercise of an Award shall lapse as to the Shares
subject to such repurchase right;
(iii) arrange or otherwise provide for the payment of cash
or other consideration to Participants in exchange for the
satisfaction and cancellation of outstanding Awards; or
(iv) make such other modifications, adjustments or
amendments to outstanding Awards or this Plan as the Committee
deems necessary or appropriate, subject however to the terms of
Section 14(a) below.
Notwithstanding the above, in the event a Participant holding an
Award assumed or substituted by the Successor Corporation in a
Change in Control is Involuntarily Terminated by the Successor
Corporation in connection with, or within 12 months
following consummation of, the Change in Control, then any
assumed or substituted Award held by the terminated Participant
at the time of termination shall accelerate and become fully
vested (and exercisable in full in the case of Options), and any
repurchase right applicable to any Shares shall lapse in full,
unless an Award Agreement provides for a more restrictive
acceleration or vesting schedule or more restrictive limitations
on the lapse of repurchase rights or otherwise places additional
restrictions, limitations and conditions on an Award. The
acceleration of vesting and lapse of repurchase rights provided
for in the previous sentence shall occur immediately prior to
the effective date of the Participants termination, unless
an Award Agreement provides otherwise.
(d) Certain Distributions. In the event
of any distribution to the Companys shareholders of
securities of any other entity or other assets (other than
dividends payable in cash or stock of the Company) without
receipt of consideration by the Company, the Committee may, in
its discretion, appropriately adjust the number of Shares
and/or the
price per Share covered by each outstanding Award to reflect the
effect of such distribution.
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12.
|
Time
of Granting
Awards.
|
The date of grant (Grant Date) of an Award shall be
the date on which the Committee makes the determination granting
such Award or such other date as is determined by the Committee,
provided that in the case of an ISO, the Grant Date shall be the
later of the date on which the Committee makes the determination
granting such ISO or the date of commencement of the
Participants employment relationship with the Company.
B-9
The Plan shall continue in effect for a term of ten
(10) years from its effective date as determined under
Section 17 below, unless the Plan is sooner terminated
under Section 14 below.
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14.
|
Amendment
and Termination of the Plan; Modifications of
Awards.
|
(a) Authority to Amend or
Terminate. Subject to any applicable law,
regulation or stock exchange rule requiring shareholder
approval, the Board may from time to time amend, alter, suspend,
discontinue, or terminate the Plan in a form and manner
consistent with Applicable Laws.
(b) Effect of Amendment or
Termination. No amendment, suspension, or
termination of the Plan shall materially and adversely affect
Awards already granted unless either it relates to an adjustment
pursuant to Section 11 above, or it is otherwise mutually
agreed between the Participant and the Committee, which
agreement must be in writing and signed by the Participant and
the Company. Notwithstanding the foregoing, the Committee may
amend the Plan to eliminate provisions which are no longer
necessary as a result of changes in tax, accounting or
securities laws or regulations, or in the interpretation thereof.
(c) Modification, Extension and Renewal of
Awards. Within the limitations of the Plan, the
Committee may modify an Award, to accelerate the rate at which
an Option may be exercised (including without limitation
permitting an Option to be exercised in full without regard to
the installment or vesting provisions of the applicable Award
Agreement or whether the Option is at the time exercisable, to
the extent it has not previously been exercised), to accelerate
the vesting of any Award or to extend or renew outstanding
Awards. Notwithstanding the foregoing provision and except as
expressly provided in the Plan or in the Award Agreement, no
modification of an outstanding Award shall materially and
adversely affect such Participants rights thereunder,
unless either the Participant provides written consent or there
is an express Plan provision permitting the Committee to act
unilaterally to make the modification.
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15.
|
Conditions
Upon Issuance of
Shares.
|
Notwithstanding any other provision of the Plan or any agreement
entered into by the Company pursuant to the Plan, the Company
shall not be obligated, and shall have no liability for failure,
to issue or deliver any Shares under the Plan unless such
issuance or delivery would comply with Applicable Law, with such
compliance determined by the Company in consultation with its
legal counsel.
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16.
|
Reservation
of
Shares.
|
The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
This Plan shall become effective on the date of its approval by
the Board; provided that this Plan shall be submitted to the
Companys shareholders for approval, and if not approved by
the shareholders in accordance with Applicable Laws (as
determined by the Committee in its discretion) within one year
from the date of approval by the Board, this Plan and any Awards
shall be null, void, and of no force and effect. Awards granted
under this Plan before approval of this Plan by the shareholders
shall be granted subject to such approval, and no Shares shall
be distributed before such approval. Unless the Company
determines to submit Section 8 of the Plan and the
definition of Performance Measure(s) to the Companys
shareholders at the first shareholder meeting that occurs in the
fifth year following the year in which the Plan was last
approved by shareholders (or any earlier meeting designated by
the Board), in accordance with the requirements of
Section 162(m) of the Code, and such shareholder approval
is obtained, then no further Performance Awards shall be made to
Eligible Persons under Section 8 after the date of such
annual meeting, but the remainder of the Plan shall continue in
effect.
B-10
All disputes relating to or arising from the Plan shall be
governed by the internal substantive laws (and not the laws of
conflicts of laws) of the State of Delaware, to the extent not
preempted by United States federal law. If any provision of this
Plan is held by a court of competent jurisdiction to be invalid
and unenforceable, the remaining provisions shall continue to be
fully effective.
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19.
|
Laws
And
Regulations.
|
(a) U.S. Securities Laws. This Plan,
the grant of Awards, and the exercise of Options under this
Plan, and the obligation of the Company to sell or deliver any
of its securities (including, without limitation, Options,
Restricted Shares and Shares) under this Plan shall be subject
to all Applicable Law. In the event that the Shares are not
registered under the Securities Act of 1933, as amended (the
Act), or any applicable state securities laws prior
to the delivery of such Shares, the Company may require, as a
condition to the issuance thereof, that the persons to whom
Shares are to be issued represent and warrant in writing to the
Company that such Shares are being acquired by him or her for
investment for his or her own account and not with a view to,
for resale in connection with, or with an intent of
participating directly or indirectly in, any distribution of
such Shares within the meaning of the Act, and a legend to that
effect may be placed on the certificates representing the Shares.
(b) Other Jurisdictions. To facilitate
the making of any grant of an Award under this Plan, the
Committee may provide for such special terms for Awards to
Participants who are foreign nationals or who are employed by
the Company or any Affiliate outside of the United States of
America as the Committee may consider necessary or appropriate
to accommodate differences in local law, tax policy or custom.
The Company may adopt rules and procedures relating to the
operation and administration of this Plan to accommodate the
specific requirements of local laws and procedures of particular
countries. Without limiting the foregoing, the Company is
specifically authorized to adopt rules and procedures regarding
the conversion of local currency, taxes, withholding procedures
and handling of stock certificates which vary with the customs
and requirements of particular countries. The Company may adopt
sub-plans and establish escrow accounts and trusts as may be
appropriate or applicable to particular locations and countries.
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20.
|
No
Shareholder
Rights.
|
Neither a Participant nor any transferee of a Participant shall
have any rights as a shareholder of the Company with respect to
any Shares underlying any Award until the date of issuance of a
share certificate to a Participant or a transferee of a
Participant for such Shares in accordance with the
Companys governing instruments and Applicable Law. Prior
to the issuance of Shares pursuant to an Award, a Participant
shall not have the right to vote or to receive dividends or any
other rights as a shareholder with respect to the Shares
underlying the Award, notwithstanding its exercise in the case
of Options. No adjustment will be made for a dividend or other
right that is determined based on a record date prior to the
date the stock certificate is issued, except as otherwise
specifically provided for in this Plan.
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21.
|
No
Employment
Rights.
|
The Plan shall not confer upon any Participant any right to
continue an employment, service or consulting relationship with
the Company, nor shall it affect in any way a Participants
right or the Companys right to terminate the
Participants employment, service, or consulting
relationship at any time, with or without Cause.
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22.
|
Compliance
with Code
Section 409A.
|
The Plan is intended to satisfy the requirements of Code
Section 409A and any regulations or guidance that may be
adopted thereunder from time to time, including any transition
relief available under applicable guidance related to Code
Section 409A. The Plan may be amended or interpreted by the
Committee as it determines necessary or appropriate in
accordance with Code Section 409A and to avoid a plan
failure under Code Section 409A(a)(1).
B-11
EXIDE
TECHNOLOGIES
2004 STOCK INCENTIVE PLAN
Appendix A:
Definitions
As used in the Plan, the following definitions shall apply:
Affiliate means any entity which
together with the Company is under common control within the
meaning of Section 414 of the Code (provided that 50% shall
be substituted for 80% when applying the Section 414 common
control rules).
Applicable Law means the legal
requirements relating to the administration of options and
share-based plans under applicable U.S. federal and state
laws, the Code, any applicable stock exchange or automated
quotation system rules or regulations, and the applicable laws
of any other country or jurisdiction where Awards are granted,
as such laws, rules, regulations and requirements shall be in
place from time to time.
Award means any award made pursuant to
the Plan, including awards made in the form of an Option, a
Restricted Share and a Performance Award, or any combination
thereof, whether alternative or cumulative, authorized by and
granted under this Plan.
Award Agreement means any written
document setting forth the terms of an Award that has been
authorized by the Committee. The Committee shall determine the
form or forms of documents to be used, and may change them from
time to time for any reason.
Board means the Board of Directors of
the Company.
Cause for termination of a
Participants Continuous Service will exist if the
Participant is terminated from employment or other service with
the Company or an Affiliate for any of the following reasons:
(i) the Participants willful failure to substantially
perform his or her duties and responsibilities to the Company or
deliberate violation of a material Company policy; (ii) the
Participants commission of any material act or acts of
fraud, embezzlement, dishonesty, or other willful misconduct;
(iii) the Participants material unauthorized use or
disclosure of any proprietary information or trade secrets of
the Company or any other party to whom the Participant owes an
obligation of nondisclosure as a result of his or her
relationship with the Company; or (iv) Participants
willful and material breach of any of his or her obligations
under any written agreement or covenant with the Company.
The Committee shall in its discretion determine whether or not a
Participant is being terminated for Cause. The Committees
determination shall, unless arbitrary and capricious, be final
and binding on the Participant, the Company, and all other
affected persons. The foregoing definition does not in any way
limit the Companys ability to terminate a
Participants employment or consulting relationship at any
time, and the term Company will be interpreted
herein to include any Affiliate or successor thereto, if
appropriate.
Change in Control means any of the
following:
(I) any Person is or becomes the Beneficial Owner, directly
or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Companys then
outstanding securities, excluding any Person who becomes such a
Beneficial Owner in connection with a transaction described in
paragraph (III)(B) below;
(II) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the date hereof, constitute the Board and
any new director (other than a director whose initial assumption
of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election
by the Companys shareholders was approved or recommended
by the affirmative vote of a majority of the directors then
still in office
B-12
who either were directors on the date hereof or whose
appointment, election or nomination for election was previously
so approved or recommended (Continuing Directors);
(III) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with
any other corporation, other than a merger or consolidation in
which (A) the Companys shareholders receive or retain
voting common stock in the Company or the surviving or resulting
corporation in such transaction on the same pro rata basis as
their relative percentage ownership of Company common stock
immediately preceding such transaction and a majority of the
entire Board of the Company are or continue to be Continuing
Directors following such transaction, or (B) the
Companys shareholders receive voting common stock in the
corporation which becomes the public parent of the Company or
its successor in such transaction on the same pro rata basis as
their relative percentage ownership of Company common stock
immediately preceding such transaction and a majority of the
entire Board of such parent corporation are Continuing Directors
immediately following such transaction;
(IV) the sale of any one or more Company subsidiaries,
businesses or assets not in the ordinary course of business and
pursuant to a shareholder approved plan for the complete
liquidation or dissolution of the Company; or
(V) there is consummated any sale of assets, businesses or
subsidiaries of the Company which, at the time of the
consummation of the sale, (x) together represent 50% or
more of the total book value of the Companys assets on a
consolidated basis or (y) generated 50% or more of the
Companys pre-tax income on a consolidated basis in either
of the two fully completed fiscal years of the Company
immediately preceding the year in which the Change in Control
occurs; provided, however, that, in either case, any such sale
shall not constitute a Change in Control if such sale
constitutes a
Rule 13e-3
transaction and at least 60% of the combined voting power of the
voting securities of the purchasing entity are owned by
shareholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior
to such sale.
Notwithstanding the foregoing, a Change in Control
shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated
transactions immediately following which the record holders of
the common stock of the Company immediately prior to such
transaction or series of transactions continue to have
substantially the same proportionate ownership in an entity
which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
Code means the U.S. Internal
Revenue Code of 1986, as amended.
Committee means a committee of at
least two members of the Board appointed by the Board to
administer the Plan and to perform the functions set forth
herein and who are non-employee directors within the
meaning of
Rule 16b-3
as promulgated under Section 16 of the Exchange Act and who
are also outside directors within the meaning of
Section 162(m) of the Code.
Company means Exide Technologies, a
Delaware corporation; provided, however, that in the event the
Company reincorporates to another jurisdiction, all references
to the term Company shall refer to the Company in
such new jurisdiction.
Consultant means any person, including
an advisor, who is engaged by the Company or any Affiliate to
render services and is compensated for such services.
Continuous Service means the absence
of any interruption or termination of service as an Employee,
Director, or Consultant. Continuous Service shall not be
considered interrupted in the case of: (i) sick leave;
(ii) military leave; (iii) any other leave of absence
approved by the Committee, provided that such leave is for a
period of not more than 90 days, unless reemployment upon
the expiration of such leave is guaranteed by contract or
statute, or unless provided otherwise pursuant to Company policy
adopted from time to time; (iv) changes in status from
Director to advisory director or emeritus status; or
(iv) in the case of transfers between locations of the
Company or between the Company, its Affiliates or their
respective successors.
B-13
Changes in status between service as an Employee, Director, and
a Consultant will not constitute an interruption of Continuous
Service.
Director means a member of the Board
or a member of the Board of Directors of an Affiliate.
Eligible Person means any Consultant,
Director or Employee and includes non-Employees to whom an offer
of employment has been extended.
Employee means any person whom the
Company or any Affiliate classifies as an employee (including an
officer) for employment tax purposes. The payment by the Company
of a directors fee to a Director shall not be sufficient
to constitute employment of such Director by the
Company.
Exchange Act means the Securities
Exchange Act of 1934, as amended.
Fair Market Value means, as of any
date (the Determination Date) (i) the average
closing price of a Share for the ten consecutive trading days
immediately preceding, but not including, the Determination Date
as reported on the New York Stock Exchange or the American Stock
Exchange (collectively, the Exchange); or
(ii) if such stock is not traded on the Exchange but is
quoted on NASDAQ or a successor quotation system, the average
for ten consecutive trading days immediately preceding, but not
including, the Determination Date of (A) the last sales
price (if the stock is then listed as a National Market Issue
under The Nasdaq National Market System) or (B) the mean
between the closing representative bid and asked prices (in all
other cases) for the stock as reported by NASDAQ or such
successor quotation system; or (iii) if such stock is not
traded on the Exchange or quoted on NASDAQ but is otherwise
traded in the
over-the-counter,
the average mean between the representative bid and asked prices
for the ten consecutive trading days immediately preceding, but
not including, the Determination Date; or (iv) if
subsections (i)-(iii) do not apply, the fair market value
established in good faith by the Board.
Grant Date has the meaning set forth
in Section 12 of the Plan.
Incentive Share Option or ISO
hereinafter means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of
the Code, as designated in the applicable Award Agreement.
Involuntary Termination means
termination of a Participants Continuous Service under the
following circumstances occurring on or after a Change in
Control: (i) termination without Cause by the Company or an
Affiliate or successor thereto, as appropriate; or
(ii) voluntary termination by the Participant within
60 days following (A) a material reduction in the
Participants job responsibilities, provided that neither a
mere change in title alone nor reassignment to a substantially
similar position shall constitute a material reduction in job
responsibilities; (B) an involuntary relocation of the
Participants work site to a facility or location more than
50 miles from the Participants principal work site at
the time of the Change in Control; or (C) a material
reduction in Participants total compensation other than as
part of a reduction by the same percentage amount in the
compensation of all other similarly-situated Employees,
Directors or Consultants.
Non-ISO means an Option not intended
to qualify as an ISO, as designated in the applicable Award
Agreement.
Option means any stock option granted
pursuant to Section 6 of the Plan.
Participant means any holder of one or
more Awards, or the Shares issuable or issued upon exercise of
such Awards, under the Plan.
Performance Awards mean Performance
Units and Performance Compensation Awards granted pursuant to
Section 8.
Performance Compensation Awards mean
Awards granted pursuant to Section 8(b) of the Plan.
B-14
Performance Unit means Awards granted
pursuant to Section 8(a) of the Plan which may be paid in
cash, in Shares, or such combination of cash and Shares as the
Committee in its sole discretion shall determine.
Plan means this Exide Technologies
2004 Stock Incentive Plan.
Reporting Person means an officer,
Director, or greater than ten percent shareholder of the Company
within the meaning of
Rule 16a-2
under the Exchange Act, who is required to file reports pursuant
to
Rule 16a-3
under the Exchange Act.
Restricted Shares mean Shares subject
to restrictions imposed pursuant to Section 7 of the Plan.
Rule 16b-3
means
Rule 16b-3
promulgated under the Exchange Act, as amended from time to
time, or any successor provision.
Share means a share of common stock of
the Company, as adjusted in accordance with Section 11 of
the Plan.
Ten Percent Holder means a person who
owns stock representing more than ten percent (10%) of the
combined voting power of all classes of stock of the Company or
any Affiliate.
B-15
EXIDE TECHNOLOGIES
PROXY
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD AUGUST 22, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Barbara A. Hatcher or Brad S. Kalter, and each or any of them,
proxies of the undersigned, with full power of substitution, to vote all of the shares of Exide
Technologies, a Delaware corporation (the Company), which the undersigned may be entitled to vote
at the annual meeting of Shareholders of the Company to be held at the Hilton Garden Inn Atlanta
North/Alpharetta at 4025 Windward Plaza Drive, Alpharetta, Georgia 30005, on Tuesday, August 22,
2006, beginning at 9:00 a.m. (local time) or at any adjournment or postponement thereof, as shown
on the voting side of this card. This proxy will be voted as specified. If a choice is not
specified, this proxy will be voted FOR the director nominees and FOR proposals 2, 3, 4 and 5 and
in the discretion of the proxyholders on any other matter that properly comes before the meeting.
(Continued and to be signed on the reverse side.)
ANNUAL MEETING OF SHAREHOLDERS OF
EXIDE TECHNOLOGIES
AUGUST 22, 2006
PROXY VOTING INSTRUCTIONS
TO VOTE BY MAIL
Please date, sign and mail your proxy card in the envelope provided as soon as possible.
TO VOTE BY TELEPHONE
Please call toll-free 1-800-PROXIES and follow the instructions. Have your control number and
the proxy card available when you call.
TO VOTE BY INTERNET
Please access the web page at www.voteproxy.com and follow the on-screen instructions. Have
your control number available when you access the web page.
YOUR CONTROL NUMBER IS:
Please detach and mail in the envelope provided.
[X] Please mark votes as in this example.
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FOR all
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WITHHOLD |
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nominees
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AUTHORITY |
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(except as
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to vote for all |
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indicated)
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nominees |
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1.
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The election of the following seven persons as directors
of the Company.
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[ ]
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[ ] |
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For all nominees |
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Nominees:
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listed hereon, |
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except vote |
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withheld for the |
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Herbert F. Aspbury Michael R. DAppolonia David S. Ferguson
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following nominee(s): |
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John P. Reilly |
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Michael P. Ressner |
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Gordon A. Ulsh |
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Carroll R. Wetzel |
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FOR
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AGAINST
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ABSTAIN |
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2.
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Approve rights offering, sale of additional shares and
related matters.
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[ ]
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FOR
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AGAINST
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ABSTAIN |
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3.
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Amend the Companys Certificate of Incorporation to increase
authorized shares.
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FOR
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AGAINST
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ABSTAIN |
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4.
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Amend the Companys 2004 Stock Incentive Plan to increase
shares.
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FOR
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AGAINST
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ABSTAIN |
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5.
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Ratify the appointment of the Companys independent auditors
for fiscal 2007.
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In their discretion, the proxies are authorized to vote upon such other business as may
properly come before the annual meeting or any adjournment or postponement thereof.
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Signature
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Signature if held jointly
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Dated |
NOTE: This Proxy Card should be dated, signed by the shareholder exactly as the shareholders
name appears hereon and returned promptly in the enclosed envelope. Persons signing in a fiduciary
capacity should so indicate. Please sign exactly as name(s) appear hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.