Exhibit 10.2

 

€25,000,000 Credit Facility Agreement

 

THIS AGREEMENT is dated 15 June, 2005

 

BETWEEN:

 

(1) ENERSYS HOLDINGS (LUXEMBOURG) S.à r.l., a société à responsibilité limitée
incorporated under the laws of the Grand Duchy of Luxembourg, having a share
capital of euro 4,036,050.00, being registered with the Luxembourg trade and
companies register under number B86195, and having its registered office at 6
Avenue Pasteur, L-2310 Luxembourg (the Company);

 

(2) ENERSYS CAPITAL INC. (the Parent);

 

(3) BANCA INTESA S.P.A. a company incorporated under the laws of Italy, with
registered office in Milan, Piazza Paolo Ferrari no. 10, Fiscal Code and
registration number with the Companies’ Register of Milan: 00799960158,
corporate capital Euro 3,561,062,849,24 fully paid up and subscribed,
registration number with the Albo of the banks: 5361 and leading company of the
Intesa group; AND SANPAOLO IMI S.P.A. a company incorporated under the laws of
Italy, with registered office in Turin, Piazza San Carlo no. 156, Fiscal Code
and registration number with the Companies’ Register of Turin: 06210280019,
corporate capital Euro 5,217,679,140.80 fully paid up and subscribed,
registration number with the Albo of the banks: 5084.9.0 and leading company of
the Sanpaolo IMI group, as mandated lead arrangers (in this capacity the
Mandated Lead Arrangers);

 

(4) THE FINANCIAL INSTITUTIONS listed in Schedule 1 (Original Parties) as
original lenders (the Original Lenders); and

 

(5) SANPAOLO IMI S.p.A. as facility agent (in this capacity the Facility Agent).

 

WHEREAS:

 

(A) EnerSys S.p.A., EnerSys Ltd, EnerSys s.r.o., Hawker GmbH, Hawker Sarl, and
EnerSys GmbH (together the Buyers)have acquired, by means of intercompany loans
made available by the Company, the motive power battery business assets of,
respectively, F.I.A.M.M. S.p.A. (formerly owned by FIAMM S.p.A. and then
transferred to FMP S.r.l. before the Acquisition (as defined below)),and of
F.I.A.M.M. UK Ltd, F.I.A.M.M. Batterien- und Fanfaren GmbH, AKUMA-prumyslove
baterie S.r.o., F.I.A.M.M. Asia Pacific Pte Ltd., Sociéte de Composants
Electriques S.A., and Bären Batterie GmbH (together the Vendors);

 

(B) EnerSys Cayman L.P. has made indirectly available to the Company an
intercompany loan for an amount of Euro 25,000,000.00 (twenty five million) (the
Financing) which has been used for the financing of the Acquisition;

 

(C) The Company has requested that the Lenders refinance the Financing; and

 

(D) The Lenders have agreed to refinance the Company’s Financing on the terms
and conditions set out below.

 

1

--------------------------------------------------------------------------------

IT IS AGREED as follows:

 

1. INTERPRETATION

 

1.1 Definitions

 

In this Agreement:

 

Accounts Receivable Facility has the meaning given to it in the EnerSys Capital
Credit Agreement.

 

Accounts Receivable Facility Assets means Receivables (whether now existing or
arising in the future) of the Parent and its Subsidiaries which are transferred
to the Receivables Entity pursuant to the Accounts Receivable Facility Documents
and any related Accounts Receivable Related Assets which are also so transferred
to the Receivables Entity.

 

Accounts Receivable Facility Documents means each of the documents and
agreements entered into in connection with the Accounts Receivable Replacement
Facility, including all documents and agreements relating to the issuance,
funding and/or purchase of certificates and purchased interests, in each case as
such documents and agreements may be amended, modified, supplemented, refinanced
or replaced from time to time in accordance with the terms hereof and thereof.

 

Accounts Receivable Facility Transaction Date has the meaning given to it in the
EnerSys Capital Credit Agreement.

 

Accounts Receivable Related Assets means, with respect to any person, all of the
following property and interests in property of such person, whether now
existing or existing in the future or hereafter acquired or arising and in each
case to the extent relating to the Receivables of such person:

 

  (a) all unpaid seller’s or lessor’s rights (including, without limitation,
rescission, replevin, reclamation and stoppage in transit, relating to any of
the foregoing or arising therefrom);

 

  (b) all rights to any goods or merchandise represented by any of the foregoing
(including, without limitation, returned or repossessed goods);

 

  (c) all reserves and credit balances with respect to any such Receivable or
the respective account debtor;

 

  (d) all letters of credit, security or guarantees of any of the foregoing;

 

  (e) all insurance policies or reports relating to any of the foregoing;

 

  (f) all collection or deposit accounts relating to any of the foregoing;

 

  (g) all proceeds of any of the foregoing; and

 

  (h) all books and records relating to any of the foregoing.

 

Acquisition means the acquisition by the Buyers of the business concern relating
to the motive power battery business assets of the Vendors.

 

Administrative Party means a Mandated Lead Arranger or the Facility Agent.

 

2

--------------------------------------------------------------------------------

Affiliate means a Subsidiary or a Holding Company of a person or any other
Subsidiary of that Holding Company.

 

Asset Sale means any sale, transfer or other disposition by Holdings or any of
its Subsidiaries to any person other than Holdings or any wholly-owned
Subsidiary of Holdings of any asset (including, without limitation, any capital
stock or other Equity Interests of another person, but excluding the sale by
such person of its own Equity Interests) of Holdings or such Subsidiary other
than (i) sales, transfers or other dispositions of inventory made in the
ordinary course of business, and (ii) any other sale, transfer or other
disposition (for such purpose, treating any series of related sales, transfers
or dispositions as a single such transaction) that generates Net Proceeds of
less than US$250,000.

 

Attributable Indebtedness in respect of any Synthetic Lease Obligation, means,
on any date, the capitalised amount of the remaining lease payments under the
relevant lease that would appear on a balance sheet of such person prepared as
of such date in accordance with GAAP if such lease were accounted for as a
capital lease.

 

Availability Period means the period from and including the date of this
Agreement to and including 24th June, 2005.

 

Break Costs means the amount (if any) which a Lender is entitled to receive
under Clause 23.3 (Break Costs) as compensation if any part of the Loan or
overdue amount is repaid or prepaid.

 

Business Day means a day (other than a Saturday or a Sunday) on which banks are
open for general business in Milan and which is also a TARGET Day.

 

Cayman Partnership Shareholder has the meaning given to it in the EnerSys
Capital Credit Agreement.

 

Commitment means:

 

  (a) for an Original Lender, the amount set opposite its name in Schedule 1
(Original Parties) under the heading Commitments and the amount of any other
Commitment it acquires; and

 

  (b) for any other Lender, the amount of any Commitment it acquires,

 

to the extent not cancelled, transferred or reduced under this Agreement.

 

Compliance Certificate means a certificate substantially in the form of Schedule
5 (Form of Compliance Certificate) setting out, among other things, calculations
of the financial covenants.

 

Conditions to Permitted Acquisitions means:

 

  (a) the Parent and any of its wholly-owned Subsidiaries may from time to time
effect Permitted Acquisitions, so long as (in each case except to the extent:
(i) the Required Lenders under the EnerSys Capital Credit Agreement otherwise
specifically agree in writing where required in the case of a specific Permitted
Acquisition; and (ii) the Majority Lenders otherwise specifically agree in
writing in the case of a specific Permitted Acquisition (with such consent not
to be unreasonably withheld by the Majority Lenders):

 

  (i) no Default shall be in existence at the time of the consummation of the
proposed Permitted Acquisition or immediately after giving effect thereto;

 

3

--------------------------------------------------------------------------------

  (ii) the Company shall procure that the Parent shall have given the Facility
Agent and the Lenders at least 15 Business Days’ prior written notice of the
proposed Permitted Acquisition where the aggregate consideration payable exceeds
US$10,000,000;

 

  (iii) calculations are made by Holdings of:

 

  (A) compliance with the financial covenants contained in Clauses 17.3(a)
(Consolidated Interest Coverage Ratio), 17.3(b) (Leverage Ratio) and 17.3(c)
(Senior Secured Leverage Ratio) for the period of four consecutive fiscal
quarters (taken as one accounting period) most recently ended prior to the date
of such Permitted Acquisition (each, a Calculation Period), on a Pro Forma Basis
as if the respective Permitted Acquisition (as well as all other Permitted
Acquisitions theretofore consummated after the first day of such Calculation
Period) had occurred on the first day of such Calculation Period, and such
recalculations shall show that such financial covenants would have been complied
with if the Permitted Acquisition had occurred on the first day of such
Calculation Period (for this purpose, if the first day of the respective
Calculation Period occurs prior to the Utilisation Date, calculated as if the
covenants contained in said Clauses 17.3(a) (Consolidated Interest Coverage
Ratio), 17.3(b) (Leverage Ratio) and 17.3(c) (Senior Secured Leverage Ratio) (in
each case, giving effect to the last sentence appearing therein) had been
applicable from the first day of the Calculation Period); and

 

  (B) compliance with Clauses 17.3(b) (Leverage Ratio) and 17.3(c) (Senior
Secured Leverage Ratio) immediately after giving effect to the consummation of
the respective Permitted Acquisition (for this purpose, using the same ratio
which will be required to be met on the last day of the first fiscal quarter
ended on or after the date upon which the respective Permitted Acquisition is
consummated), and Holdings shall be in compliance therewith;

 

  (iv) all representations and warranties contained herein shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Permitted Acquisition (both before and after giving effect thereto), unless
stated to relate to a specific earlier date, in which case such representations
and warranties shall be true and correct in all material respects as of such
earlier date;

 

  (v) the Company shall procure that the Parent provides to the Facility Agent
for the Lenders as soon as available but not later than 5 Business Days after
the execution thereof, a copy of any executed purchase agreement or similar
agreement with respect to a Permitted Acquisition where the aggregate
consideration payable exceeds US$10,000,000;

 

  (vi) the aggregate consideration (excluding consideration consisting of
Holdings Common Stock or Qualified Preferred Stock) payable in connection with
the proposed Permitted Acquisition does not exceed US$25,000,000;

 

  (vii) the aggregate consideration payable in connection with the proposed
Permitted Acquisition does not exceed US$75,000,000;

 

4

--------------------------------------------------------------------------------

  (viii) the aggregate consideration (excluding consideration consisting of
Holdings Common Stock or Qualified Preferred Stock) payable in connection with
the proposed Permitted Acquisition, when combined with the aggregate
consideration (excluding consideration consisting of Holdings Common Stock or
Qualified Preferred Stock) paid in connection with all other Permitted
Acquisitions consummated prior to the date of the consummation of the proposed
Permitted Acquisition, does not exceed US$100,000,000;

 

  (ix) the aggregate consideration payable in connection with the proposed
Permitted Acquisition, when combined with the aggregate consideration paid in
connection with all other Permitted Acquisitions consummated prior to the date
of the consummation of the proposed Permitted Acquisition, does not exceed
US$200,000,000;

 

  (x) after giving effect to such Permitted Acquisition (but, for this purpose
calculated as if the payment of all post-closing purchase price adjustments
required (in the good faith determination of Holdings) in connection with such
Permitted Acquisition (and all other Permitted Acquisitions for which such
purchase price adjustments may be required to be made) and all capital
expenditures (and the financing thereof) reasonably anticipated by Holdings to
be made in the business acquired pursuant to such Permitted Acquisition within
the 90-day period (such period for any Permitted Acquisition, a Post-Closing
Period) following such Permitted Acquisition (and in the businesses acquired
pursuant to all other Permitted Acquisitions with Post-Closing Periods ended
during the Post-Closing Period of such Permitted Acquisition) were then being
paid, thereby being deemed to reduce the total unutilised Commitments to the
extent Holdings and its Subsidiaries have inadequate available cash on hand for
such purposes), the total unutilised revolving loan commitments under the
EnerSys Capital Credit Agreement shall equal or exceed US$10,000,000; and

 

  (xi) the Company shall procure that Holdings have delivered to the Facility
Agent on the date of the consummation of such a proposed Permitted Acquisition
where the aggregate consideration payable a exceeds US$10,000,000, a officer’s
certificate executed by authorised signatory of Holdings, certifying to the best
of his knowledge, compliance with the requirements of preceding clauses (i)
through (iv), inclusive, and clauses (vi), (vii), (viii), (ix) and (x) and
containing the calculations required by the preceding clauses (iii), (vi),
(vii), (viii), (ix) and (x).

 

  (b) The consummation of each Permitted Acquisition shall be deemed to be a
representation and warranty by each party to this Agreement that the
certifications by such party (or by one or more of its respective authorised
signatories) pursuant to Subclause (a) above, are true and correct and that all
conditions thereto have been satisfied and that same is permitted in accordance
with the terms of this Agreement, which representation and warranty shall be
deemed to be a representation and warranty for all purposes hereunder.

 

5

--------------------------------------------------------------------------------

Contingent Obligations means as to any person any obligation of such person
guaranteeing or intended to guarantee any Financial Indebtedness, leases,
dividends or other obligations (“primary obligations”) of any other person (the
“primary obligor”) in any manner, whether directly or indirectly, including,
without limitation, any obligation of such person, whether or not contingent:

 

  (a) to purchase any such primary obligation or any property constituting
direct or indirect security therefore;

 

  (b) to advance or supply funds (x) for the purchase or payment of any such
primary obligation or (y) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor;

 

  (c) to purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the primary
obligor to make payment of such primary obligation; or

 

  (d) otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection or standard contractual indemnities entered into, in each case in the
ordinary course of business.

 

The amount of any Contingent Obligation shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
such Contingent Obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
person is required to perform thereunder) as determined by such person in good
faith.

 

Default has the meaning given to that term in the EnerSys Capital Credit
Agreement.

 

Designated Assets means those assets of the Parent and its Subsidiaries
described on Schedule XIII to the EnerSys Capital Credit Agreement.

 

Disposals Account has the meaning given to it in Clause 7.9 (Disposals Account).

 

Domestic Subsidiary means each Subsidiary incorporated or organised in the
United States or any State or territory thereof (other than any Cayman
Partnership Shareholder).

 

Equity Interests of any person shall mean any and all shares, interests, rights
to purchase, warrants, options, participation or other equivalents of or
interest in (however designated) equity of such person, including any preferred
stock, any limited or general partnership interest and any limited liability
company membership interest.

 

EnerSys Capital Credit Agreement means the credit agreement between, amongst
others, the Parent, Bank of America N.A., Morgan Stanley Senior Funding, Inc.,
and Lehman Commercial Paper Inc., dated 17th March, 2004, as amended from time
to time.

 

EnerSys Pledge means the share pledge agreement to be entered into by the
Company and the Finance Parties in respect of 100% of the shares of EnerSys
S.p.A..

 

Environmental Claims means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violation, investigations or proceedings relating in any way
to any violation (or alleged violation) by Holdings or any of its Subsidiaries
under any Environmental Law (hereafter Claims) or any permit issued to Holdings
or any of its Subsidiaries under any such law, including, without limitation,
(a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal,

 

6

--------------------------------------------------------------------------------

response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.

 

Environmental Law means any U.S. or non-U.S. federal, state or local law, policy
having the force and effect of law, statute, rule, regulation, ordinance, code
or rule of common law now or hereafter in effect and in each case as amended,
and any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment (for purposes of
this definition (collectively, Laws)), relating to the environment, or Hazardous
Materials or health and safety to the extent such health and safety issues arise
under the Occupational Safety and Health Act of 1970, as amended.

 

EURIBOR means for a Term of the Loan or overdue amount in euro:

 

  (a) the applicable Screen Rate; or

 

  (b) if no Screen Rate is available for that Term of the Loan or overdue
amount, the arithmetic mean (rounded upward to four decimal places) of the rates
as supplied to the Facility Agent at its request quoted by the Reference Banks
to leading banks in the European interbank market,

 

as of 11.00 a.m. (Milan time) on the Rate Fixing Day for the offering of
deposits in euro for a period comparable to that Term.

 

euro means the single currency of the Participating Member States.

 

Event of Default means an event specified as such in Clause 19 (Event of
Default).

 

Excess Proceeds Amount has the meaning given to it in the EnerSys Capital Credit
Agreement.

 

Existing Accounts Receivable Facility has the meaning given to it in the EnerSys
Capital Credit Agreement.

 

Existing Indebtedness has the meaning given to it in section 7.21 of the EnerSys
Capital Credit Agreement.

 

Existing Overdraft Facilities means the overdraft facilities and lines of credit
of certain Foreign Subsidiaries of the Parent existing on the Utilisation Date
and as listed on part B of schedule IV of the EnerSys Capital Credit Agreement,
in each case in the committed amount set forth opposite such overdraft facility
or line of credit on said part B of schedule IV of the EnerSys Capital Credit
Agreement.

 

Facility means the term loan facility referred to in Clause 2.1 (Facility).

 

Facility Office means the office(s) notified by a Lender to the Facility Agent:

 

  (a) on or before the date it becomes a Lender; or

 

  (b) by not less than five Business Days’ notice,

 

as the office(s) through which it will perform its obligations under this
Agreement.

 

7

--------------------------------------------------------------------------------

Fee Letter means any letter entered into by reference to this Agreement between
one or more Administrative Parties and the Company setting out the amount of
certain fees referred to in this Agreement.

 

Final Maturity Date means 30th June, 2011.

 

Finance Document means:

 

  (a) this Agreement;

 

  (b) a Security Document;

 

  (c) a Fee Letter;

 

  (d) the US Guaranty;

 

  (e) a Transfer Certificate; or

 

  (f) any other document designated as such by the Facility Agent and the
Company.

 

Finance Party means a Lender or an Administrative Party.

 

Financial Indebtedness of any person means, without duplication:

 

  (i) all financial indebtedness of such person for borrowed money;

 

  (ii) the deferred purchase price of assets or services payable to the sellers
thereof or any of such seller’s assignees which in accordance with GAAP would be
shown on the liability side of the balance sheet of such person but excluding
deferred rent and trade payables not overdue by more than 60 days, both as
determined in accordance with GAAP;

 

  (iii) the face amount of all letters of credit issued for the account of such
person and, without duplication, all drafts drawn thereunder;

 

  (iv) all Financial Indebtedness of a second person secured by any lien on any
property owned by such first person, whether or not such Financial Indebtedness
has been assumed;

 

  (v) all Capitalised Lease Obligations of such person;

 

  (vi) all obligations of such person to pay a specified purchase price for
goods or services whether or not delivered or accepted, i.e., take-or-pay and
similar obligations;

 

  (vii) all obligations under any Swap Contract;

 

  (viii) all Contingent Obligations of such person;

 

  (ix) all Receivables Indebtedness; and

 

  (x) all Synthetic Lease Obligations, provided that Financial Indebtedness
shall not include trade payables and accrued expenses, in each case arising in
the ordinary course of business. The amount of any obligation under any Swap
Contract on any date shall be deemed to be the Swap Termination Value thereof as
of such date. The amount of any Synthetic Lease Obligation as of any date shall
be deemed to be the amount of Attributable Indebtedness in respect thereof as of
such date.

 

8

--------------------------------------------------------------------------------

Foreign Subsidiary means each Subsidiary other than a Domestic Subsidiary;
provided that, notwithstanding the foregoing, each Cayman Partnership
Shareholder shall be deemed to be (and shall be treated as) a Foreign Subsidiary
for all purposes of the Finance Documents.

 

GAAP shall mean generally accepted accounting principles in Luxembourg or the
United States of America (as the case may be) as in effect from time to time.

 

Group means Holdings and its Subsidiaries.

 

Hazardous Materials means:

 

  (a) any petrochemical or petroleum products, radioactive materials, asbestos
in any form that is or could become friable, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing levels
of polychlorinated biphenyls, and radon gas; and

 

  (b) any chemicals, materials or substances defined under any Environmental Law
as or included in the definition of “hazardous substances,” “hazardous wastes,”
“hazardous materials,” “restricted hazardous materials,” “extremely hazardous
wastes,” “restrictive hazardous wastes,” “toxic substances,” “toxic pollutants”.

 

Holdings means EnerSys, a Delaware corporation.

 

Holdings Common Stock has the meaning given to it in the EnerSys Capital Credit
Agreement.

 

Holding Company of any other person, means a company in respect of which that
other person is a Subsidiary.

 

Increased Cost means:

 

  (a) an additional or increased cost;

 

  (b) a reduction in the rate of return from a Facility or on its overall
capital; or

 

  (c) a reduction of an amount due and payable under any Finance Document,

 

which is incurred or suffered by a Finance Party or any of its Affiliates but
only to the extent attributable to that Finance Party having entered into any
Finance Document or funding or performing its obligations under any Finance
Document.

 

Intercompany Loan has the meaning given to it in section 9.05(vi) of the EnerSys
Capital Credit Agreement.

 

Interest Rate Protection Agreement means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement, interest rate
hedging agreement or other similar agreement or arrangement.

 

Italian Asset Sale means any sale, transfer or other disposition by EnerSys
S.p.A., any of its Subsidiaries or any other Italian organised Subsidiary of
Holdings to any person (other than Holdings or any of its wholly-owned
Subsidiaries) of any asset (other than discounted or factored receivables and
inventory sold, transferred or disposed of in the ordinary course of business),
to the extent (x) the gross sale proceeds therefrom, when aggregated with the
gross sale proceeds from all other such sales, transfers and dispositions by
EnerSys S.p.A. and such other Subsidiaries described above after the date of the
consummation of the Acquisition, do not exceed €16,000,000 and (y) the net sale
proceeds therefrom are required to be applied as in mandatory repayment under
Clause 7.3 (Mandatory prepayment – Net Proceeds).

 

9

--------------------------------------------------------------------------------

Italian Group Member means EnerSys S.p.A., any of its Subsidiaries or any other
Italian organised Subsidiary of Holdings.

 

InvenSys settlement has the meaning given to it in the EnerSys Capital Credit
Agreement.

 

Leasehold of any person shall mean all of the right, title and interest of such
person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.

 

Lender means:

 

  (a) an Original Lender; or

 

  (b) any person which becomes a Lender after the date of this Agreement.

 

Loan means, unless otherwise stated in this Agreement, the principal amount of
the single borrowing under this Agreement or the principal amount outstanding of
that borrowing.

 

Luxembourg means the Grand Duchy of Luxembourg.

 

Majority Lenders means, at any time, Lenders:

 

  (a) whose share in the outstanding Loan then aggregate 662/3 per cent. or more
of the aggregate of the outstanding Loan ;

 

  (b) if there is no Loan then outstanding, whose undrawn Commitments then
aggregate 662/3 per cent. or more of the Total Commitments; or

 

  (c) if there is no Loan then outstanding and the Total Commitments have been
reduced to zero, whose Commitments aggregated 662/3 per cent. or more of the
Total Commitments immediately before the reduction.

 

Margin means 1.15 per cent. per annum.

 

Material Adverse Effect means:

 

  (a) a material adverse effect on the business, properties, assets, operations,
liabilities or financial condition:

 

  (i) of the Parent and its Subsidiaries taken as a whole; or

 

  (ii) Holdings, the Parent and the Parent’s Subsidiaries taken as a whole; or

 

  (b) a material adverse effect:

 

  (i) on the rights or remedies of the Lenders or the Facility Agent hereunder
or under any other Finance Document; or

 

  (ii) on the ability of the Company or the Parent to perform its obligations to
the Lenders or the Facility Agent hereunder or under any other Finance Document,

 

taking into account in the case of either of Subclauses (a) or (b) above (in
each such case to the extent relevant) insurance, indemnities, rights of
contribution and/or similar rights and

 

10

--------------------------------------------------------------------------------

claims available and applicable to any determination pursuant to this definition
so long as consideration is given to the nature and quality of, and likelihood
of recovery under, such insurance, indemnities, rights of contribution and/or
similar rights and claims; provided that payments made by Holdings in connection
with the InvenSys settlement and previously disclosed to the Facility Agent in
writing shall not be taken into account for purposes of any determination
pursuant to clause (a) of this definition.

 

Net Proceeds means for any sale of assets, the gross cash proceeds (including
any cash received by way of deferred payment pursuant to a promissory note,
receivable or otherwise, but only as and when received) received from any sale
of assets, net of:

 

  (a) reasonable transaction costs (including, without limitation, any
underwriting, brokerage or other customary selling commissions and reasonable
legal, advisory and other fees and expenses, including title and recording
expenses, associated therewith) and payments of unassumed liabilities relating
to the assets sold at the time of, or within 30 days after, the date of such
sale;

 

  (b) the amount of such gross cash proceeds required to be used to repay any
Financial Indebtedness (other than Financial Indebtedness owed to the Lenders
pursuant to this Agreement) which is secured by the respective assets which were
sold; and

 

  (c) the estimated marginal increase in income taxes which will be payable by
Holdings’ consolidated group with respect to the fiscal year in which the sale
occurs as a result of such sale; provided, however, that such gross proceeds
shall not include any portion of such gross cash proceeds which Holdings
determines in good faith should be reserved for post-closing adjustments
(including indemnification payments) (to the extent the Company procures that
Holdings delivers to the Lenders a certificate signed by its chief financial
officer or treasurer, controller or chief accounting officer as to such
determination), it being understood and agreed that on the day that all such
post-closing adjustments have been determined (which shall not be later than six
months following the date of the respective asset sale), the amount (if any) by
which the reserved amount in respect of such sale or disposition exceeds the
actual post-closing adjustments payable by Holdings or any of its Subsidiaries
shall constitute Net Proceeds on such date received by Holdings and/or any of
its Subsidiaries from such sale, lease, transfer or other disposition.

 

Net Proceeds shall not include any trade-in-credits or purchase price reductions
received by Holdings or any of its Subsidiaries in connection with an exchange
of equipment for replacement equipment that is the functional equivalent of such
exchanged equipment.

 

Original Financial Statements means the audited consolidated financial
statements of Holdings for the year ended 31st March, 2004.

 

Other Hedging Agreements means any foreign exchange contracts, currency swap
agreements or other similar agreements or arrangements designed to protect
against fluctuations in currency values.

 

Participating Member State means a member state of the European Communities that
adopts or has adopted the euro as its lawful currency under the legislation of
the European Community for Economic Monetary Union.

 

Party means a party to this Agreement, except in relation to the Parent, which
shall only be a party to this Agreement where it is expressly stated to be so.

 

Permitted Acquisition means: (i) the Acquisition; and (ii) the acquisition by
the Parent or any of its wholly-owned Subsidiaries (other than the Receivables
Entity) of assets constituting

 

11

--------------------------------------------------------------------------------

a business, division or product line of any Person, not already a Subsidiary of
Holdings or any of its wholly-owned Subsidiaries, or of 100% of the capital
stock or other Equity Interests of any such person, which person shall, as a
result of such acquisition, become a wholly-owned Subsidiary of the Parent or
such wholly-owned Subsidiary, provided that:

 

  (a) the consideration paid by the Parent or such wholly-owned Subsidiary
consists solely of cash, the issuance of Holdings Common Stock, the issuance of
Qualified Preferred Stock otherwise permitted pursuant to the EnerSys Capital
Credit Agreement or the incurrence of Financial Indebtedness otherwise permitted
in Clause 18.7 (Financial Indebtedness) and the assumption/acquisition of any
Permitted Acquired Debt relating to such business, division, product line or
person which is permitted to remain outstanding in accordance with the
requirements of Clause 18.7 (Financial Indebtedness),

 

  (b) in the case of the acquisition of 100% of the capital stock or other
Equity Interests of any person, such person (the Acquired Person) shall own no
capital stock or other Equity Interests of any other person unless either:

 

  (i) the Acquired Person owns 100% of the capital stock or other Equity
Interests of such other Person; or

 

  (ii) if the Acquired Person owns capital stock or Equity Interests in any
other person which is not a wholly-owned Subsidiary of the Acquired Person (a
Non-Wholly Owned Entity),

 

  (A) the Acquired Person shall not have been created or established in
contemplation of, or for purposes of, the respective Permitted Acquisition,

 

  (B) any Non-Wholly Owned Entity of the Acquired Person shall have been
non-wholly-owned prior to the date of the respective Permitted Acquisition and
not created or established in contemplation thereof and

 

  (C) the Acquired Person and/or its Wholly-Owned Subsidiaries own 80% of the
consolidated assets of such person and its Subsidiaries,

 

  (c) except in the case of any such acquisition by a wholly-owned Foreign
Subsidiary of the Parent, substantially all of the business, division or product
line acquired pursuant to the respective Permitted Acquisition, or the business
of the Acquired Person and its Subsidiaries taken as a whole, is in the United
States,

 

  (d) the assets acquired, or the business of the Acquired Person, shall be in a
Permitted Business; and

 

  (e) all applicable requirements of the Conditions to Permitted Acquisitions
and Clauses 18.9 (Mergers) and 18.11 (Acquisitions) applicable to Permitted
Acquisitions are satisfied. Notwithstanding anything to the contrary contained
in the immediately preceding sentence, an acquisition which does not otherwise
meet the requirements set forth above in the definition of Permitted Acquisition
shall constitute a Permitted Acquisition if, and to the extent: (i) the Required
Lenders under the EnerSys Capital Credit Agreement agree where required; and
(ii) the Majority Lenders agree (with such consent not to be unreasonably
withheld by the Majority Lenders), in writing that such acquisition shall
constitute a Permitted Acquisition for purposes of this Agreement.

 

12

--------------------------------------------------------------------------------

Permitted Acquired Debt means Financial Indebtedness of a Subsidiary acquired
pursuant to a Permitted Acquisition (or Financial Indebtedness assumed at the
time of a Permitted Acquisition of an asset securing such Financial
Indebtedness), provided that:

 

  (a) such Financial Indebtedness was not incurred in connection with, or in
anticipation or contemplation of, such Permitted Acquisition; and

 

  (b) at the time of such Permitted Acquisition, such Financial Indebtedness
does not exceed 25% of the total value of the assets of the Subsidiary so
acquired, or of the assets so acquired, as the case may be.

 

Permitted Business means the manufacture, distribution, installation and
servicing of batteries and reasonably related products, and activities
reasonably related to the foregoing.

 

Permitted Encumbrance means:

 

  (a) those liens, encumbrances and other matters affecting title to any Real
Property and found reasonably acceptable by the Facility Agent;

 

  (b) as to any particular Real Property at any time, such easements,
encroachments, covenants, rights of way, minor defects, irregularities or
encumbrances on title which could reasonably be expected to materially impair
such Real Property for the purpose for which it is held by the mortgagor
thereof, or the lien held by the Lenders;

 

  (c) zoning and other municipal ordinances which are not violated in any
material respect by the existing improvements and the present use made by the
mortgagor thereof of the premises;

 

  (d) general real estate taxes and assessments not yet delinquent; and

 

  (e) such other similar items as the Facility Agent may consent to (such
consent not to be unreasonably withheld).

 

Permitted Refinancing Indebtedness means any Financial Indebtedness of the
Parent and its Subsidiaries issued or given in exchange for, or the proceeds of
which are used to, extend, refinance, renew, replace, substitute or refund any
Existing Indebtedness, Permitted Acquired Debt, or any Financial Indebtedness
issued to so extend, refinance, renew, replace, substitute or refund any such
Financial Indebtedness, so long as:

 

  (a) such Financial Indebtedness has a weighted average life to maturity
greater than or equal to the weighted average life to maturity of the Financial
Indebtedness being refinanced;

 

  (b) such refinancing or renewal does not:

 

  (i) increase the amount of such Indebtedness outstanding immediately prior to
such refinancing or renewal by more than 3%; or

 

  (ii) add guarantors, obligors or security from that which applied to such
Indebtedness being refinanced or renewed;

 

  (c) such refinancing or renewal Indebtedness has substantially the same (or,
from the perspective of the Lenders, more favourable) subordination provisions,
if any, as applied to the Indebtedness being renewed or refinanced; and

 

13

--------------------------------------------------------------------------------

  (d) all other terms of such refinancing or renewal (including, without
limitation, with respect to the amortisation schedules, redemption provisions,
maturities, covenants, defaults and remedies), are not, taken as a whole,
materially less favorable to the respective borrower than those previously
existing with respect to the Financial Indebtedness being refinancing or
renewed, provided, however, that any intercompany Existing Indebtedness (and
subsequent extensions, refinancings, renewals, replacements and refundings
thereof as provided above in this definition) may only be extended, refinanced,
renewed, replaced or refunded as provided above in this definition if the
Indebtedness so extended, refinanced, renewed, replaced or refunded has the same
obligors(s) and obligee(s) as the Indebtedness being extended, refinanced,
renewed, replaced or refunded.

 

Preferred Stock means as applied to the capital stock of any person, means
capital stock of such person (other than common stock of such person) of any
class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such person, to shares of capital
stock of any other class of such person, and shall include any Qualified
Preferred Stock and any preferred stock which is not Qualified Preferred Stock.

 

Pro Rata Share means:

 

  (a) for the purpose of determining a Lender’s share in the utilisation of the
Facility, the proportion which its Commitment bears to the Total Commitments;
and

 

  (b) for any other purpose on a particular date:

 

  (i) the proportion which a Lender’s share of the Loan (if any) bears to the
Loan;

 

  (ii) if there is no Loan outstanding on that date, the proportion which its
Commitment bears to the Total Commitments on that date; or

 

  (iii) if the Total Commitments have been cancelled, the proportion which its
Commitment bore to the Total Commitments immediately before being cancelled.

 

Qualified Preferred Stock has the meaning given to it in the EnerSys Capital
Credit Agreement.

 

Rate Fixing Day means the second TARGET Day before the first day of a Term or
such other day as the Facility Agent determines is generally treated as the rate
fixing day by market practice in the european interbank market.

 

Real Property of any person shall mean all of the right, title and interest of
such person in and to land, improvements and fixtures, including Leaseholds.

 

Recapitalization means, collectively, the Sponsor Distribution and the
Refinancing.

 

Receivables means all accounts receivable (including, without limitation, all
rights to payment created by or arising from sales of goods, leases of goods or
the rendering of services no matter how evidenced and whether or not earned by
performance).

 

Receivables Entity has the meaning given to it in the EnerSys Capital Credit
Agreement.

 

Receivables Indebtedness means indebtedness of the Parent and/or its
Subsidiaries deemed to exist pursuant to the Existing Accounts Receivable
Facility and, after the Accounts Receivable Facility Transaction Date, the
Accounts Receivable Facility, in each case

 

14

--------------------------------------------------------------------------------

determined as if such Existing Accounts Receivable Facility and Accounts
Receivable Facility were structured as a secured financing transaction as
opposed to an asset purchase and sale transaction.

 

Receivables Sellers means the Parent and any Subsidiary Guarantors, in each case
to the extent such person is party (as a seller) to the Accounts Receivable
Facility Documents.

 

Reference Banks means the Facility Agent, Banca Intesa S.p.A. and ABN AMRO Bank
N.V. and any other bank or financial institution appointed as such by the
Facility Agent under this Agreement.

 

Refinancing has the meaning given to it in the EnerSys Capital Credit Agreement.

 

Refinancing Senior Subordinated Notes has the meaning given to it in the EnerSys
Capital Credit Agreement.

 

Refinancing Senior Subordinated Notes Documents has the meaning given to it in
the EnerSys Capital Credit Agreement.

 

Release means disposing, discharging, injecting, spilling, pumping, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing, pouring and
the like, into or upon any land or water or air, or otherwise entering into the
environment.

 

Repayment Instalment means each instalment for repayment of the Loan.

 

Repeating Representations means the representations which are deemed to be
repeated under Clause 15.18 (Times for making representations).

 

Request means the request for the Loan, substantially in the form of Schedule 3
(Form of Request).

 

Required Lenders has the meaning given to that term in the EnerSys Capital
Credit Agreement.

 

Screen Rate means the percentage rate per annum determined by the Banking
Federation of the European Union, for the relevant currency and Term displayed
on the appropriate page of the Telerate screen selected by the Facility Agent.
To the extent that the percentage rate per annum for the relevant currency and
Term is not available on the relevant Telerate screen, the percentage rate shall
be calculated by means of a linear interpolation between the available
percentage rates for the quoted period immediately preceding and immediately
following the period of the relevant Term. If the relevant page is replaced or
the service ceases to be available, the Facility Agent (after consultation with
the Company and the Lenders) may specify another page or service displaying the
appropriate rate.

 

Security Document means:

 

  (a) the EnerSys Pledge; and

 

  (b) any other document required to be entered in to in connection with the
continuation or confirmation of the EnerSys Pledge.

 

Security Interest means any mortgage, pledge, lien, charge, assignment,
hypothecation or security interest or any other agreement or arrangement having
a similar effect.

 

Shareholder Subordinated Note shall mean an unsecured junior subordinated note
issued by Holdings (and not guaranteed or supported in any way by the Parent or
any of its

 

15

--------------------------------------------------------------------------------

Subsidiaries), which note shall be in the form of Exhibit M of the EnerSys
Capital Credit Agreement, provided that additional provisions may be included so
long as such provisions do not adversely affect the interests of the Lenders and
are not in conflict with the provisions of this Agreement or any other credit
document.

 

Sponsor Distribution has the meaning given to it in the EnerSys Capital Credit
Agreement.

 

Subsidiary of any person means and include:

 

  (a) any corporation more than 50% of whose stock of any class or classes
having by the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the time stock
of any class or classes of such corporation shall have or might have voting
power by reason of the happening of any contingency) is at the time owned by
such person directly or indirectly through Subsidiaries; and

 

  (b) any partnership, limited liability company, association, joint venture or
other entity (other than a corporation) in which such person directly or
indirectly through Subsidiaries, has more than a 50% equity interest at the
time.

 

Subsidiary Guarantor means each wholly-owned Domestic Subsidiary of Holdings
(other than the Parent, the Receivables Entity and the Cayman Partnership
Shareholders).

 

Swap Contract means:

 

  (a) any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options,
forward commodity contracts, equity or equity index swaps or options, bond or
bond price or bond index swaps or options or forward bond or forward bond price
or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of
the foregoing), whether or not any such transaction is governed by or subject to
any master agreement: and

 

  (b) any and all transactions of any kind, and the related confirmations, which
are subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association,
Inc., any International Foreign Exchange Master Agreement, or any other master
agreement (any such master agreement, together with any related schedules, a
Master Agreement), including any such obligations or liabilities under any
Master Agreement.

 

Swap Termination Value means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts:

 

  (a) for any date on or after the date such Swap Contracts have been closed out
and termination value(s) determined in accordance therewith, such termination
value(s); and

 

  (b) for any date prior to the date referenced in clause (a), the amount(s)
determined as the mark-to-market value(s) for such Swap Contracts, as determined
based upon one or more mid-market or other readily available quotations provided
by any recognized dealer in such Swap Contracts (which may include a Lender or
any Affiliate of a Lender).

 

16

--------------------------------------------------------------------------------

Synthetic Lease Obligation means the monetary obligation of a person under:

 

  (a) a so-called synthetic, off-balance sheet or tax retention lease; or

 

  (b) an agreement for the use or possession of property creating obligations
that do not appear on the balance sheet of such person but which, upon the
insolvency or bankruptcy of such person, would be characterised as the
indebtedness of such person (without regard to accounting treatment).

 

TARGET Day means a day on which the Trans-European Automated Real-time Gross
Settlement Express Transfer payment system is open for the settlement of
payments in euro.

 

Tax means any tax, levy, impost, duty or other charge or withholding of a
similar nature (including any related penalty or interest).

 

Tax Deduction means a deduction or withholding for or on account of Tax from a
payment under a Finance Document.

 

Tax Payment means a payment made by the Company or the Parent to a Finance Party
in any way relating to a Tax Deduction or under any indemnity given by the
Company or the Parent in respect of Tax under any Finance Document.

 

Term means each period determined under this Agreement by reference to which
interest on the Loan or an overdue amount is calculated.

 

Total Commitments means the aggregate of the Commitments of all the Lenders.

 

Transaction has the meaning given to it in the EnerSys Capital Credit Agreement.

 

Transfer Certificate means a certificate, substantially in the form of Schedule
4 (Form of Transfer Certificate), with such amendments as the Facility Agent may
approve or reasonably require or any other form agreed between the Facility
Agent and the Company.

 

US Guaranty means the guarantee given by EnerSys Capital Inc. to the Facility
Agent (acting on behalf of the Finance Parties) in respect of the Company,
governed by the laws of the state of New York, entered in to as a condition
precedent to draw down.

 

Utilisation Date means the date on which the Facility is utilised.

 

1.2 Construction

 

(a) In this Agreement, unless the contrary intention appears, a reference to:

 

  (i) an amendment includes a supplement, novation, restatement or re-enactment
and amended will be construed accordingly;

 

  (ii) assets includes present and future properties, revenues and rights of
every description;

 

  (iii) an authorisation includes an authorisation, consent, approval,
resolution, licence, exemption, filing, registration or notarisation;

 

17

--------------------------------------------------------------------------------

  (iv) disposal means a sale, transfer, grant, lease or other disposal, whether
voluntary or involuntary, and dispose will be construed accordingly;

 

  (v) indebtedness includes any obligation (whether incurred as principal or as
surety) for the payment or repayment of money;

 

  (vi) know your customer requirements are the identification checks that a
Finance Party requests in order to meet its obligations under any applicable law
or regulation to identify a person who is (or is to become) its customer;

 

  (vii) a person includes any individual, company, corporation, unincorporated
association or body (including a partnership, trust, joint venture or
consortium), government, state, agency, organisation or other entity whether or
not having separate legal personality;

 

  (viii) a regulation includes any regulation, rule, official directive, request
or guideline (whether or not having the force of law but, if not having the
force of law, being of a type with which any person to which it applies is
accustomed to comply) of any governmental, inter-governmental or supranational
body, agency, department or regulatory, self-regulatory or other authority or
organisation;

 

  (ix) a currency is a reference to the lawful currency for the time being of
the relevant country;

 

  (x) an Event of Default being outstanding means that it has not been remedied
or waived;

 

  (xi) a provision of law is a reference to that provision as extended, applied,
amended or re-enacted and includes any subordinate legislation;

 

  (xii) a Clause, a Subclause or a Schedule is a reference to a clause or
subclause of, or a schedule to, this Agreement;

 

  (xiii) a Party or any other person includes its successors in title, permitted
assigns and permitted transferees;

 

  (xiv) a Finance Document or another document is a reference to that Finance
Document or other document as amended; and

 

  (xv) a time of day is a reference to Milan time.

 

(b) Unless the contrary intention appears, a reference to a month or months is a
reference to a period starting on one day in a calendar month and ending on the
numerically corresponding day in the next calendar month or the calendar month
in which it is to end, except that:

 

  (i) if the numerically corresponding day is not a Business Day, the period
will end on the next Business Day in that month (if there is one) or the
preceding Business Day (if there is not);

 

  (ii) if there is no numerically corresponding day in that month, that period
will end on the last Business Day in that month; and

 

  (iii) notwithstanding sub-paragraph (i) above, a period which commences on the
last Business Day of a month will end on the last Business Day in the next month
or the calendar month in which it is to end, as appropriate.

 

18

--------------------------------------------------------------------------------

(c) Unless the contrary intention appears:

 

  (i) a reference to a Party will not include that Party if it has ceased to be
a Party under this Agreement;

 

  (ii) a word or expression used in any other Finance Document or in any notice
given in connection with any Finance Document has the same meaning in that
Finance Document or notice as in this Agreement; and

 

  (iii) any obligation of the Company or the Parent under the Finance Documents
which is not a payment obligation remains in force for so long as any payment
obligation of the Company or the Parent is or may be outstanding under the
Finance Documents.

 

(d) The headings in this Agreement do not affect its interpretation.

 

2. FACILITY

 

2.1 Facility

 

Subject to the terms of this Agreement, the Lenders make available to the
Company a term loan facility in an aggregate amount equal to the Total
Commitments.

 

2.2 Nature of a Finance Party’s rights and obligations

 

Unless all the Finance Parties agree otherwise:

 

  (a) the obligations of a Finance Party under the Finance Documents are
several;

 

  (b) failure by a Finance Party to perform its obligations does not affect the
obligations of any other Party under the Finance Documents;

 

  (c) no Finance Party is responsible for the obligations of any other Finance
Party under the Finance Documents;

 

  (d) the rights of a Finance Party under the Finance Documents are separate and
independent rights;

 

  (e) a Finance Party may, except as otherwise stated in the Finance Documents:

 

  (i) separately enforce those rights, and

 

  (ii) following any syndication of the Facility, jointly enforce those rights;
and

 

  (f) a debt arising under the Finance Documents to a Finance Party is a
separate and independent debt.

 

3. PURPOSE

 

3.1 Loan

 

The Loan may only be used for repaying the Financing in full.

 

3.2 No obligation to monitor

 

No Finance Party is bound to monitor or verify the utilisation of the Facility.

 

19

--------------------------------------------------------------------------------

4. CONDITIONS PRECEDENT

 

4.1 Conditions precedent documents

 

The Request may not be given until the Facility Agent has notified the Company
and the Lenders that it has received all of the documents and evidence set out
in Schedule 2 (Conditions precedent documents) in form and substance
satisfactory to the Facility Agent, with the exception of the condition
precedent relating to the perfection of the EnerSys Pledge, which shall be
perfected on the day after the Request is given. The Facility Agent must give
this notification to the Company and the Lenders promptly upon being so
satisfied.

 

4.2 Further conditions precedent

 

The obligations of each Lender to participate in the Loan are subject to the
further conditions precedent that on both the date of the Request and the
Utilisation Date for the Loan:

 

  (a) the Repeating Representations are correct in all material respects; and

 

  (b) no Event of Default is outstanding or would result from the Loan.

 

5. UTILISATION - LOAN

 

5.1 Giving of Requests

 

(a) The Company may borrow the Loan by giving to the Facility Agent a duly
completed Request.

 

(b) Unless the Facility Agent otherwise agrees, the latest time for receipt by
the Facility Agent of a duly completed Request is 11.00 a.m. two Business Days
before the Utilisation Date.

 

(c) The Request is irrevocable.

 

5.2 Completion of Requests

 

The Request for the Loan will not be regarded as having been duly completed
unless:

 

  (a) the Utilisation Date is a Business Day falling within the Availability
Period;

 

  (b) the amount of the Loan requested is €25,000,000; and

 

  (c) the proposed Term complies with this Agreement.

 

Only one Request may be delivered and only one Loan may be requested in the
Request.

 

5.3 Advance of Loan

 

(a) The Facility Agent must promptly notify each Lender of the details of the
requested Loan and the amount of its share in the Loan.

 

(b) The amount of each Lender’s share of the Loan will be its Pro Rata Share on
the proposed Utilisation Date.

 

(c) No Lender is obliged to participate in the Loan if, as a result, the Loan
would exceed the Total Commitments.

 

20

--------------------------------------------------------------------------------

(d) If the conditions set out in this Agreement have been met, each Lender must
make its share in the Loan available to the Facility Agent for the Company
through its Facility Office on the Utilisation Date.

 

6. REPAYMENT

 

(a) The Company must repay in full the Loan, on the dates set out in column (1)
below (each a Repayment Date), in the amounts set out below in column (2) (each
a Repayment Instalment):

 

Column (1)

 

Repayment Date

--------------------------------------------------------------------------------

  

Column (2)

 

Repayment

Instalment (euro)

--------------------------------------------------------------------------------

31st March, 2007

   1,000,000

30th June, 2007

   1,000,000

30th September, 2007

   1,000,000

31st December, 2007

   1,000,000

31st March, 2008

   1,250,000

30th June, 2008

   1,250,000

30th September, 2008

   1,250,000

31st December, 2008

   1,250,000

31st March, 2009

   1,500,000

30th June, 2009

   1,500,000

30th September, 2009

   1,500,000

31st December, 2009

   1,500,000

31st March, 2010

   1,750,000

30th June, 2010

   1,750,000

30th September, 2010

   1,750,000

31st December, 2010

   1,750,000

31st March, 2011

   1,500,000

30th June, 2011

   1,500,000

Total Repayments

   25,000,000

 

21

--------------------------------------------------------------------------------

(b) Each Repayment Instalment shall be paid in euro.

 

(c) Any amount of the Loan outstanding on the Final Maturity Date shall be
repaid in full on the Final Maturity Date.

 

7. PREPAYMENT AND CANCELLATION

 

7.1 Mandatory prepayment - illegality

 

(a) A Lender must notify the Company promptly if it becomes aware that it is
unlawful in any jurisdiction for that Lender to perform any of its obligations
under a Finance Document or to fund or maintain its share in the Loan.

 

(b) After notification under paragraph (a) above:

 

  (i) the Company must repay or prepay the share of that Lender in the Loan made
to it on the date specified in paragraph (c) below; and

 

  (ii) the Commitment of that Lender will be immediately cancelled.

 

(c) The date for repayment or prepayment of a Lender’s share in the Loan will
be:

 

  (i) the last day of the current Term of the Loan; or

 

  (ii) if earlier, the date specified by the Lender in the notification under
paragraph (a) above and which must not be earlier than the last day of any
applicable grace period allowed by law.

 

7.2 Mandatory prepayment - change of control

 

(a) For the purposes of this Clause:

 

a change of control occurs if the Parent ceases to control the Company;

 

control means the power to direct the management and policies of an entity,
whether through the ownership of voting capital, by contract or otherwise.

 

(b) The Company must promptly notify the Facility Agent if it becomes aware of
any change of control.

 

(c) After a change of control, if the Majority Lenders so require, the Facility
Agent must, by notice to the Company:

 

  (i) cancel the Total Commitments; and

 

  (ii) declare the outstanding Loan, together with accrued interest and all
other amounts accrued under the Finance Documents, to be immediately due and
payable.

 

Any such notice will take effect in accordance with its terms.

 

22

--------------------------------------------------------------------------------

7.3 Mandatory prepayment – Net Proceeds

 

(a) If an Italian Asset Sale is made, the Company, unless the Facility Agent
shall otherwise consent in writing, shall apply (or shall procure that, where a
Subsidiary can do so without breach of applicable law, a Subsidiary of it shall
apply) forthwith an amount equal to the Net Proceeds arising from the disposal
in or towards prepayment of the Loan, subject to SubClauses (b) and (c) below.

 

(b) The Company shall not be required to procure that a prepayment of the Loan
is made under SubClause (a) above in respect of Net Proceeds arising from an
Italian Asset Sale, where such assets are to be replaced by other assets being
acquired for the business of an Italian Group Member and are so replaced
(including, without limitation, the purchase of the capital stock of a person
engaged in such business) within twelve months of the date of such disposal
(save to the extent the Net Proceeds exceed the acquisition cost of those other
assets in which case the amount in excess of the acquisition cost shall be
applied in prepayment of the Facility in accordance with SubClause (a) above)
and where an amount equal to such Net Proceeds is paid into the Disposals
Account as referred to below at the time of receipt of such Net Proceeds by the
relevant Italian Group Member.

 

(c) The Company shall not be required to make (or procure that there is made) a
prepayment of the Loan under SubClause (a) above, when the aggregate of gross
sale proceeds from Italian Asset Sales which have been applied in prepayment of
the Loan under SubClause (a) above has reached €16,000,000.

 

7.4 Voluntary prepayment

 

(a) The Company may, by giving not less than 5 Business Days’ prior notice to
the Facility Agent, prepay the Loan at any time in whole or in part, subject to
the payment of Break Costs.

 

(b) A prepayment of part of the Loan must be in a minimum amount of €1,000,000
and an integral multiple of €1,000,000.

 

7.5 Automatic cancellation

 

The Commitment of each Lender will be automatically cancelled at the close of
business on the last day of the Availability Period.

 

7.6 Involuntary prepayment and cancellation

 

(a) If the Company is, or will be, required to pay to a Lender:

 

  (i) a Tax Payment; or

 

  (ii) an Increased Cost,

 

the Company may, while the requirement continues, give notice to the Facility
Agent requesting prepayment and cancellation in respect of that Lender.

 

(b) After notification under paragraph (a) above:

 

  (i) the Company must repay or prepay that Lender’s share in the Loan made to
it on the date specified in paragraph (c) below; and

 

  (ii) the Commitment of that Lender will be immediately cancelled.

 

(c) The date for repayment or prepayment of a Lender’s share in the Loan will
be:

 

  (i) the last day of the current Term for the Loan; or

 

23

--------------------------------------------------------------------------------

  (ii) if earlier, the date specified by the Company in its notification.

 

7.7 Partial prepayment of Loan

 

(a) Except where this Clause expressly provides otherwise any partial prepayment
of the Loan will be applied against the remaining Repayment Instalments pro
rata.

 

(b) Any voluntary prepayment of the Loan will be applied against the remaining
Repayment Instalments in inverse order of maturity.

 

(c) No amount of the Loan prepaid under this Agreement may subsequently be
re-borrowed.

 

7.8 Miscellaneous provisions

 

(a) Any notice of prepayment and/or cancellation under this Agreement is
irrevocable and must specify the relevant date(s) and the affected Commitments.
The Facility Agent must notify the Lenders promptly of receipt of any such
notice.

 

(b) All prepayments under this Agreement must be made with accrued interest on
the amount prepaid. No premium or penalty is payable in respect of any
prepayment except for Break Costs, which are payable in relation to voluntary
prepayments not made on the last day of the current Term.

 

(c) For the avoidance of doubt, Break Costs shall not be payable in relation to
mandatory prepayments.

 

(d) The Majority Lenders may agree a shorter notice period for a voluntary
prepayment or a voluntary cancellation.

 

(e) No prepayment or cancellation is allowed except in accordance with the
express terms of this Agreement.

 

(f) No amount of the Total Commitments cancelled under this Agreement may
subsequently be reinstated.

 

7.9 Disposals Account

 

(a) The Company must maintain a disposals account designated the Disposals
Account at the Lodi branch of the Facility Agent with account number
08041/1301/09601287 in the name of the Company, and any amounts standing to the
credit of the Disposals Account may be used solely for the purpose set out in
this Clause 7.9.

 

(b) If the Company gives notice to the Facility Agent that it wishes the
provisions of Clause 7.3(b) (Mandatory prepayment – Net Proceeds) to apply the
Company may pay or procure the payment at the time of receipt by the relevant
Italian Group Member of the Net Proceeds into the Disposals Account of an amount
equal to the Net Proceeds received by such member of the Group.

 

(c) No amounts may be paid into the Disposals Account save as expressly
permitted by this Clause 7.3 (Mandatory prepayment – Net Proceeds).

 

(d) While any amount remains outstanding under any of the Finance Documents no
amount may be withdrawn by any Italian Group Member from the Disposals Account
except for:

 

  (i) application in the acquisition of an asset required for the business of
any Italian Group Member (as contemplated in Clause 7.3(b) (Mandatory prepayment
– Net Proceeds) above) within twelve months of the date on which the assets
which are being replaced were disposed of; or

 

24

--------------------------------------------------------------------------------

  (ii) application in repayment or prepayment of the Loan.

 

(e) At any time after an Event of Default has occurred which is continuing
unwaived the Facility Agent may (but is not obliged to) apply the whole or any
part of the sums standing to the credit of the Disposals Account in or towards
payment of any amount due from the Company or the Parent under the Finance
Documents but unpaid.

 

(f) The Company must ensure that the Disposals Account does not go in to
overdraft.

 

(g) No Finance Party is responsible or liable to the Company for:

 

  (i) any non-payment of any liability of the Company which could be paid out of
moneys standing to the credit of a Disposals Account; or

 

  (ii) any withdrawal wrongly made, if made in good faith and without gross
negligence.

 

(h) The Company must, within five Business Days of any request by the Facility
Agent, supply the Facility Agent with the following information in relation to
any payment received in the Disposals Account:

 

  (i) the date of payment or receipt;

 

  (ii) the payer; and

 

  (iii) the purpose of the payment or receipt.

 

8. INTEREST

 

8.1 Calculation of interest

 

The rate of interest on the Loan for each Term is the percentage rate per annum
equal to the aggregate of the applicable:

 

  (a) Margin; and

 

  (b) EURIBOR.

 

8.2 Payment of interest

 

Except where it is provided to the contrary in this Agreement, the Company must
pay accrued interest on the Loan made to it on the last day of each Term and
also, if the Term is longer than six months, on the dates falling at six-monthly
intervals after the first day of that Term.

 

8.3 Interest on overdue amounts

 

(a) If the Company or the Parent fails to pay any amount payable by it under the
Finance Documents, it must immediately on demand by the Facility Agent pay
interest on the overdue amount from its due date up to the date of actual
payment, both before, on and after judgment.

 

(b) Interest on an overdue amount is payable at a rate determined by the
Facility Agent to be two per cent. per annum above the rate which would have
been payable if the overdue amount

 

25

--------------------------------------------------------------------------------

had, during the period of non-payment, constituted the Loan in the currency of
the overdue amount. For this purpose, the Facility Agent may (acting
reasonably):

 

  (i) select successive Terms of any duration of up to three months; and

 

  (ii) determine the appropriate Rate Fixing Day for that Term.

 

(c) Notwithstanding paragraph (b) above, if the overdue amount is a principal
amount of the Loan and becomes due and payable before the last day of its
current Term, then:

 

  (i) the first Term for that overdue amount will be the unexpired portion of
that Term; and

 

  (ii) the rate of interest on the overdue amount for that first Term will be
one per cent. per annum above the rate then payable on the Loan.

 

After the expiry of the first Term for that overdue amount, the rate on the
overdue amount will be calculated in accordance with paragraph (b) above.

 

(d) Interest payable under this Clause 8.3 will not be compounded.

 

8.4 Notification of rates of interest

 

The Facility Agent must promptly notify each relevant Party of the determination
of a rate of interest under this Agreement.

 

9. TERMS

 

9.1 Selection

 

(a) The Loan has successive Terms.

 

(b) The Company must select the first Term for the Loan in the relevant Request
and each subsequent Term in an irrevocable notice received by the Facility Agent
not later than 11.00 a.m. one Business Day before the Rate Fixing Day for that
Term. Each Term for the Loan will start on the Utilisation Date or on the expiry
of the preceding Term.

 

(c) If the Company fails to select a Term for the outstanding Loan under
paragraph (b) above, that Term will, subject to the other provisions of this
Clause, be three months.

 

(d) Subject to the following provisions of this Clause, each Term for the Loan
will be one, two, three or six months or any other period agreed by the Company
and the Lenders.

 

9.2 Coincidence with Repayment Instalment dates

 

(a) The Company may select any Term for the Loan to ensure that the Loan has a
Term ending on a date for repayment of a Repayment Instalment.

 

(b) If the Company fails to make a selection in the circumstances envisaged in
paragraph (a) above, the Facility Agent may before the Rate Fixing Day for the
relevant Term shorten any Term for the Loan to achieve the same end.

 

9.3 No overrunning the Final Maturity Date

 

If a Term would otherwise overrun the Final Maturity Date, it will be shortened
so that it ends on the Final Maturity Date.

 

26

--------------------------------------------------------------------------------

9.4 Notification

 

The Facility Agent must notify each relevant Party of the duration of each Term
promptly after ascertaining its duration.

 

10. MARKET DISRUPTION

 

10.1 Failure of a Reference Bank to supply a rate

 

If EURIBOR is to be calculated by reference to the Reference Banks but a
Reference Bank does not supply a rate by 12.00 noon (local time) on a Rate
Fixing Day, the applicable EURIBOR will, subject as provided below, be
calculated on the basis of the rates of the remaining Reference Banks.

 

10.2 Market disruption

 

(a) In this Clause, each of the following events is a market disruption event:

 

  (i) EURIBOR is to be calculated by reference to the Reference Banks but no, or
only one, Reference Bank supplies a rate by 12.00 noon (local time) on the Rate
Fixing Day; or

 

  (ii) the Facility Agent receives by close of business on the Rate Fixing Day
notification from Lenders whose shares in the Loan exceed 30 per cent. of the
Loan that the cost to them of obtaining matching deposits in the relevant
interbank market is in excess of EURIBOR for the relevant Term.

 

(b) The Facility Agent must promptly notify the Company and the Lenders of a
market disruption event.

 

(c) After notification under paragraph (b) above, the rate of interest on each
Lender’s share in the Loan for the relevant Term will be the aggregate of the
applicable:

 

  (i) Margin; and

 

  (ii) rate notified to the Facility Agent by that Lender as soon as
practicable, and in any event before interest is due to be paid in respect of
that Term, to be that which expresses as a percentage rate per annum the cost to
that Lender of funding its share in the Loan from whatever source it may
reasonably select.

 

10.3 Alternative basis of interest or funding

 

(a) If a market disruption event occurs and the Facility Agent or the Company so
requires, the Company and the Facility Agent must enter into negotiations for a
period of not more than 30 days with a view to agreeing an alternative basis for
determining the rate of interest and/or funding for the Loan.

 

(b) Any alternative basis agreed will be, with the prior consent of all the
Lenders, binding on all the Parties.

 

11. TAXES

 

11.1 General

 

In this Clause Tax Credit means a credit against any Tax or any relief or
remission for Tax (or its repayment).

 

27

--------------------------------------------------------------------------------

11.2 Tax gross-up

 

(a) The Company and the Parent must make all payments to be made by it under the
Finance Documents without any Tax Deduction, unless a Tax Deduction is required
by law.

 

(b) If the Company, the Parent or a Lender is aware that the Company or the
Parent must make a Tax Deduction (or that there is a change in the rate or the
basis of a Tax Deduction), it must promptly notify the Facility Agent. The
Facility Agent must then promptly notify the affected Parties.

 

(c) If a Tax Deduction is required by law to be made by the Company or the
Parent or the Facility Agent, the amount of the payment due from the Company or
the Parent will be increased to an amount which (after making the Tax Deduction)
leaves an amount equal to the payment which would have been due if no Tax
Deduction had been required.

 

(d) If the Company or the Parent is required to make a Tax Deduction, Company or
the Parent (as the case may be) must make the minimum Tax Deduction allowed by
law and must make any payment required in connection with that Tax Deduction
within the time allowed by law.

 

(e) Within 30 days of making either a Tax Deduction or a payment required in
connection with a Tax Deduction, the Company or the Parent making that Tax
Deduction must deliver to the Facility Agent for the relevant Finance Party
evidence satisfactory to that Finance Party (acting reasonably) that the Tax
Deduction has been made or (as applicable) the appropriate payment has been paid
to the relevant taxing authority.

 

11.3 Tax indemnity

 

(a) Except as provided below, the Company must indemnify a Finance Party against
any loss or liability which that Finance Party (in its absolute discretion)
determines will be or has been suffered (directly or indirectly) by that Finance
Party for or on account of Tax in relation to a payment received or receivable
(or any payment deemed to be received or receivable) under a Finance Document.

 

(b) Paragraph (a) above does not apply to any Tax assessed on a Finance Party
under the laws of the jurisdiction in which:

 

  (i) that Finance Party is incorporated or, if different, the jurisdiction (or
jurisdictions) in which that Finance Party has a Facility Office and is treated
as resident for tax purposes; or

 

  (ii) that Finance Party’s Facility Office is located in respect of amounts
received or receivable in that jurisdiction,

 

if that Tax is imposed on or calculated by reference to the net income received
or receivable by that Finance Party. However, any payment deemed to be received
or receivable, including any amount treated as income but not actually received
by the Finance Party, such as a Tax Deduction, will not be treated as net income
received or receivable for this purpose.

 

(c) A Finance Party making, or intending to make, a claim under paragraph (a)
above must promptly notify the Company of the event which will give, or has
given, rise to the claim.

 

11.4 Tax Credit

 

If the Company or the Parent makes a Tax Payment and the relevant Finance Party
(in its absolute discretion) determines that:

 

  (a) a Tax Credit is attributable to that Tax Payment; and

 

28

--------------------------------------------------------------------------------

  (b) it has used and retained that Tax Credit,

 

the Finance Party must pay an amount to the Company or the Parent (as the case
may be) which that Finance Party determines (in its absolute discretion) will
leave it (after that payment) in the same after-tax position as it would have
been if the Tax Payment had not been required to be made by the Company or the
Parent.

 

11.5 Stamp taxes

 

The Company must pay and indemnify each Finance Party against any stamp duty,
stamp duty land tax, registration or other similar Tax payable in connection
with the entry into, performance or enforcement of any Finance Document, except
for any such Tax payable in connection with the entry into a Transfer
Certificate.

 

11.6 Value added taxes

 

(a) Any amount payable under a Finance Document by the Company or the Parent is
exclusive of any value added tax or any other Tax of a similar nature which
might be chargeable in connection with that amount. If any such Tax is
chargeable, the Company or the Parent must pay to the Finance Party (in addition
to and at the same time as paying that amount) an amount equal to the amount of
that Tax.

 

(b) Where a Finance Document requires any Party to reimburse a Finance Party for
any costs or expenses, that Party must also at the same time pay and indemnify
the Finance Party against all value added tax or any other Tax of a similar
nature incurred by the Finance Party in respect of those costs or expenses but
only to the extent that the Finance Party (acting reasonably) determines that it
is not entitled to credit or repayment from the relevant tax authority in
respect of the Tax.

 

11.7 U.S. Tax forms

 

(a) In this Subclause:

 

U.S. person has the meaning given to it in Section 7701(a)(30) of the United
States Internal Revenue Code of 1986.

 

(b) Each Lender that is not a U.S. person must supply to the Facility Agent and
the Parent the U.S. Internal Revenue Service forms that are necessary to enable
the Parent to make payments to that Lender under the Finance Documents without
any deduction or withholding in respect of any Tax in the United States of
America.

 

(c) A Lender is not obliged to supply any form under paragraph (b) above if it
is unable to do so by reason of any change after the date of this Agreement in
(or in the interpretation, administration or application of) any law or
regulation or any published practice or concession of any relevant taxing
authority.

 

(d) The Parent is not obliged to pay any Tax Payment to a Lender to the extent
that the Tax Payment would not have been payable if that Lender had complied
with its obligations under this Subclause.

 

29

--------------------------------------------------------------------------------

12. INCREASED COSTS

 

12.1 Increased Costs

 

Except as provided below in this Clause, the Company must pay to a Finance Party
the amount of any Increased Cost incurred by that Finance Party or any of its
Affiliates as a result of:

 

  (a) the introduction of, or any change in, or any change in the
interpretation, administration or application of, any law or regulation; or

 

  (b) compliance with any law or regulation made after the date of this
Agreement.

 

12.2 Exceptions

 

The Company need not make any payment for an Increased Cost to the extent that
the Increased Cost is:

 

  (a) compensated for under another Clause or would have been but for an
exception to that Clause; or

 

  (b) attributable to a Finance Party or its Affiliate wilfully failing to
comply with any law or regulation.

 

12.3 Claims

 

(a) A Finance Party intending to make a claim for an Increased Cost must notify
the Facility Agent of the circumstances giving rise to and the amount of the
claim, following which the Facility Agent will promptly notify the Company.

 

(b) Each Finance Party must, as soon as practicable after a demand by the
Facility Agent, provide a certificate confirming the amount of its Increased
Cost.

 

13. MITIGATION

 

13.1 Mitigation

 

(a) Each Finance Party must, in consultation with the Company, take all
reasonable steps to mitigate any circumstances which arise and which result or
would result in:

 

  (i) any Tax Payment or Increased Cost being payable to that Finance Party;

 

  (ii) that Finance Party being able to exercise any right of prepayment and/or
cancellation under this Agreement by reason of any illegality; or

 

  (iii) that Finance Party incurring any cost of complying with the minimum
reserve requirements of the European Central Bank,

 

including transferring its rights and obligations under the Finance Documents to
an Affiliate or changing its Facility Office.

 

(b) Paragraph (a) above does not in any way limit the obligations of the Company
or the Parent under the Finance Documents.

 

(c) The Company must indemnify each Finance Party for all costs and expenses
reasonably incurred by that Finance Party as a result of any step taken by it
under this Subclause.

 

30

--------------------------------------------------------------------------------

(d) A Finance Party is not obliged to take any step under this Subclause if, in
the opinion of that Finance Party (acting reasonably), to do so might be
prejudicial to it.

 

13.2 Conduct of business by a Finance Party

 

No term of this Agreement will:

 

  (a) interfere with the right of any Finance Party to arrange its affairs (Tax
or otherwise) in whatever manner it thinks fit;

 

  (b) oblige any Finance Party to investigate or claim any credit, relief,
remission or repayment available to it in respect of Tax or the extent, order
and manner of any claim; or

 

  (c) oblige any Finance Party to disclose any information relating to its
affairs (Tax or otherwise) or any computation in respect of Tax.

 

14. PAYMENTS

 

14.1 Place

 

Unless a Finance Document specifies that payments under it are to be made in
another manner, all payments by a Party (other than the Facility Agent) under
the Finance Documents must be made to the Facility Agent to its account, being
“BIR” ABI 1025 CAB 03253, swift transfer to IBSPITTMB99, notice code MT199, or
to such other account at such office or bank in Milan, as it may notify to that
Party for this purpose by not less than five Business Days’ prior notice.

 

14.2 Funds

 

Payments under the Finance Documents to the Facility Agent must be made for
value on the due date at such times and in such funds as the Facility Agent may
specify to the Party concerned as being customary at the time for the settlement
of transactions in that currency in the place for payment.

 

14.3 Distribution

 

(a) Each payment received by the Facility Agent under the Finance Documents for
another Party must, except as provided below, be made available by the Facility
Agent to that Party by payment (as soon as practicable after receipt) to its
account with such office or bank in Milan, as it may notify to the Facility
Agent for this purpose by not less than five Business Days’ prior notice.

 

(b) The Facility Agent may apply any amount received by it for the Company or
the Parent in or towards payment (as soon as practicable after receipt) of any
amount due from Company or the Parent (as the case may be) under the Finance
Documents or in or towards the purchase of any amount of any currency to be so
applied.

 

(c) Where a sum is paid to the Facility Agent under this Agreement for another
Party, the Facility Agent is not obliged to pay that sum to that Party until it
has established that it has actually received it. However, the Facility Agent
may assume that the sum has been paid to it, and, in reliance on that
assumption, make available to that Party a corresponding amount. If it
transpires that the sum has not been received by the Facility Agent, that Party
must immediately on demand by the Facility Agent refund any corresponding amount
made available to it together with interest on that amount from the date of
payment to the date of receipt by the Facility Agent at a rate calculated by the
Facility Agent to reflect its cost of funds.

 

31

--------------------------------------------------------------------------------

14.4 Currency

 

(a) Unless a Finance Document specifies that payments under it are to be made in
a different manner, the currency of each amount payable under the Finance
Documents is determined under this Clause.

 

(b) Amounts payable in respect of Taxes, fees, costs and expenses are payable in
the currency in which they are incurred.

 

(c) Each other amount payable under the Finance Documents is payable in euros.

 

14.5 No set-off or counterclaim

 

All payments made by the Company or the Parent under the Finance Documents must
be made without set-off or counterclaim.

 

14.6 Business Days

 

(a) If a payment under the Finance Documents is due on a day which is not a
Business Day, the due date for that payment will instead be the next Business
Day in the same calendar month (if there is one) or the preceding Business Day
(if there is not) or whatever day the Facility Agent determines is market
practice.

 

(b) During any extension of the due date for payment of any principal under this
Agreement interest is payable on that principal at the rate payable on the
original due date.

 

14.7 Partial payments

 

(a) If any Administrative Party receives a payment insufficient to discharge all
the amounts then due and payable by the Company or the Parent under the Finance
Documents, the Administrative Party must apply that payment towards the
obligations of the Company or the Parent under the Finance Documents in the
following order:

 

  (i) first, in or towards payment pro rata of any unpaid fees, costs and
expenses of the Administrative Parties under the Finance Documents;

 

  (ii) secondly, in or towards payment pro rata of any accrued interest or fee
due but unpaid under this Agreement;

 

  (iii) thirdly, in or towards payment pro rata of any principal amount due but
unpaid under this Agreement; and

 

  (iv) fourthly, in or towards payment pro rata of any other sum due but unpaid
under the Finance Documents.

 

(b) The Facility Agent must, if so directed by the Majority Lenders, vary the
order set out in sub-paragraphs (a)(ii) to (iv) above.

 

(c) This Subclause will override any appropriation made by the Company or the
Parent.

 

32

--------------------------------------------------------------------------------

14.8 Timing of payments

 

If a Finance Document does not provide for when a particular payment is due,
that payment will be due within three Business Days of demand by the relevant
Finance Party.

 

15. REPRESENTATIONS

 

15.1 Representations

 

The representations set out in this Clause are made by Company and the Parent or
(if it so states) either one of them to each Finance Party.

 

15.2 Status

 

(a) The Company is a limited liability company, duly incorporated and validly
existing under the laws of its jurisdiction of original incorporation.

 

(b) The Parent is a corporation, duly incorporated and validly existing under
the laws of its jurisdiction of original incorporation.

 

(c) It and each of its Subsidiaries has the power to own its assets and carry on
its business as it is being conducted.

 

15.3 Powers and authority

 

(a) It has the power to enter into and perform, and has taken all necessary
action to authorise the entry into and performance of, the Finance Documents to
which it is or will be a party and the transactions contemplated by those
Finance Documents.

 

(b) Each Finance Document to which it is a party is in the proper form for its
enforcement in the jurisdiction of its incorporation.

 

15.4 Legal validity

 

(a) Subject to any general principles of law limiting its obligations and
referred to in any legal opinion required under this Agreement, each Finance
Document to which it is a party is its legally binding, valid and enforceable
obligation.

 

(b) Each Finance Document to which it is a party is in the proper form for its
enforcement in the jurisdiction of its incorporation.

 

15.5 Non-conflict

 

The entry into and performance by it of, and the transactions contemplated by,
the Finance Documents do not conflict with:

 

  (a) any law or regulation applicable to it;

 

  (b) its or any of its Subsidiaries’ constitutional documents; or

 

  (c) any document which is binding upon it or any of its Subsidiaries or any of
its or its Subsidiaries’ assets.

 

33

--------------------------------------------------------------------------------

15.6 No Event of Default

 

(a) No Event of Default is outstanding or will result from the execution of, or
the performance of any transaction contemplated by, any Finance Document; and

 

(b) no other event is outstanding which constitutes a default under any document
which is binding on it or any of its Subsidiaries or any of its or its
Subsidiaries’ assets to an extent or in a manner which has a Material Adverse
Effect.

 

15.7 Authorisations

 

All authorisations required by it in connection with the entry into,
performance, validity and enforceability of, and the transactions contemplated
by, the Finance Documents have been obtained or effected (as appropriate) and
are in full force and effect.

 

15.8 Financial statements

 

Holdings’ audited financial statements most recently delivered to the Facility
Agent (which, in the case of Holdings at the date of this Agreement, are the
Original Financial Statements):

 

  (a) have been prepared in accordance with GAAP in the United States of
America, consistently applied; and

 

  (b) fairly represent its financial condition (consolidated, if applicable) as
at the date to which they were drawn up,

 

except, in each case, as disclosed to the contrary in those financial
statements.

 

15.9 No material adverse change

 

As at the date of this Agreement there has been no material adverse change in
the consolidated financial condition of the Parent and the Company since the
date to which the Original Financial Statements were drawn up.

 

15.10 Litigation

 

No litigation, arbitration or administrative proceedings are current or, to its
knowledge, pending or threatened, which have a Material Adverse Effect.

 

15.11 Taxes on payments

 

As at the date of this Agreement, all amounts payable by it under the Finance
Documents may be made without any Tax Deduction.

 

15.12 Stamp duties

 

As at the date of this Agreement, except for any registration fees payable at
the trade and companies registry in Luxembourg in respect of any Finance
Document, no stamp or registration duty or similar Tax or charge is payable in
its jurisdiction of incorporation in respect of any Finance Document.

 

15.13 Immunity

 

(a) The execution by it of each Finance Document constitutes, and the exercise
by it of its rights and performance of its obligations under each Finance
Document will constitute, private and commercial acts performed for private and
commercial purposes; and

 

34

--------------------------------------------------------------------------------

(b) it will not be entitled to claim immunity from suit, execution, attachment
or other legal process in any proceedings taken in its jurisdiction of
incorporation in relation to any Finance Document.

 

15.14 No adverse consequences

 

(a) It is not necessary under the laws of its jurisdiction of incorporation:

 

  (i) in order to enable any Finance Party to enforce its rights under any
Finance Document; or

 

  (ii) by reason of the execution of any Finance Document or the performance by
it of its obligations under any Finance Document,

 

that any Finance Party should be licensed, qualified or otherwise entitled to
carry on business in its jurisdiction of incorporation; and

 

(b) no Finance Party is or will be deemed to be resident, domiciled or carrying
on business in its jurisdiction of incorporation by reason only of the
execution, performance and/or enforcement of any Finance Document.

 

15.15 Jurisdiction/governing law

 

(a) Its:

 

  (i) irrevocable submission under this Agreement to the jurisdiction of the
courts of Milan; and

 

  (ii) agreement that this Agreement is governed by Italian law;

 

are legal, valid and binding under the laws of its jurisdiction of
incorporation; and

 

(b) any judgment obtained in Italy will be recognised and be enforceable by the
courts of its jurisdiction of incorporation.

 

15.16 United States laws

 

(a) In this Subclause:

 

Anti-Terrorism Law means each of:

 

  (a) Executive Order No. 13224 on Terrorist Financing: Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support
Terrorism issued September 23, 2001, as amended by Order 13268 (as so amended,
the Executive Order);

 

  (b) the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56
(commonly known as the USA Patriot Act);

 

  (c) the Money Laundering Control Act of 1986, 18 U.S.C. sect. 1956; and

 

  (d) any similar law enacted in the United States of America subsequent to the
date of this Agreement.

 

35

--------------------------------------------------------------------------------

holding company has the meaning given to it in the United States Public Utility
Holding Company Act of 1935.

 

investment company has the meaning given to it in the United States Investment
Company Act of 1940.

 

public utility has the meaning given to it in the United States Federal Power
Act of 1920.

 

Restricted Party means any person listed:

 

  (a) in the Annex to the Executive Order;

 

  (b) on the “Specially Designated Nationals and Blocked Persons” list
maintained by the Office of Foreign Assets Control of the United States
Department of the Treasury; or

 

  (c) in any successor list to either of the foregoing.

 

(b) The Parent is not:

 

  (i) a holding company or subject to regulation under the United States Public
Utility Holding Company Act of 1935;

 

  (ii) a public utility or subject to regulation under the United States Federal
Power Act of 1920;

 

  (iii) required to be registered as an investment company or subject to
regulation under the United States Investment Company Act of 1940; or

 

  (iv) subject to regulation under any United States Federal or State law or
regulation that limits its ability to incur or guarantee indebtedness.

 

(c) To the best of its knowledge, neither the Company nor the Parent nor any of
their Affiliates:

 

  (i) is, or is controlled by, a Restricted Party;

 

  (ii) has received funds or other property from a Restricted Party; or

 

  (iii) is in breach of or is the subject of any action or investigation under
any Anti-Terrorism Law.

 

(d) It and each of its Affiliates have taken reasonable measures to ensure
compliance with the Anti-Terrorism Laws.

 

15.17 Environmental matters

 

(a) Each of Holdings and each of its Subsidiaries has complied with, and on the
date of each Term is in compliance with, all applicable Environmental Laws and
the requirements of any permits issued under such Environmental Laws and neither
Holdings nor any of its Subsidiaries is liable for any material penalties, fines
or forfeitures for failure to comply with any of the foregoing. There are no
pending or past or, to the best knowledge of Holdings or the Parent, threatened
Environmental Claims against Holdings or any of its Subsidiaries or any Real
Property owned or operated by Holdings or any of its Subsidiaries. There are no
facts, circumstances, conditions or occurrences on any Real Property owned or
operated by Holdings or any of its Subsidiaries or on any property adjoining or
in the vicinity of any such Real Property that would reasonably be expected (i)
to form the basis of an Environmental Claim against Holdings or any of its
Subsidiaries or any such Real Property or (ii) to cause

 

36

--------------------------------------------------------------------------------

any such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability of such Real Property by Holdings or any of
its Subsidiaries under any applicable Environmental Law.

 

(b) Hazardous Materials have not at any time been generated, used, treated or
stored on, or transported to or from, any Real Property owned or operated by
Holdings or any of its Subsidiaries except in compliance with all applicable
Environmental Laws and reasonably required in connection with the operation, use
and maintenance of such Real Property by Holdings’ or such Subsidiary’s
business. Hazardous Materials have not at any time been Released on or from any
Real Property owned or operated by Holdings or any of its Subsidiaries or by any
person acting for or under contract to Holdings or any of its Subsidiaries, or
to the knowledge of Holdings, by any other Person in respect of Real Property
owned or operated by Holdings or any of its Subsidiaries, except in compliance
with all applicable Environmental Laws.

 

(c) Notwithstanding anything to the contrary in this Clause, the representations
made in this Clause shall only be untrue if the aggregate effect of all
conditions, failures, noncompliances, Environmental Claims, Hazardous Materials,
Releases and presence of underground storage tanks, in each case of the types
described above, has had (unless same has ceased to exist in all respects) a
Material Adverse Effect.

 

15.18 Times for making representations

 

(a) The representations set out in this Clause are made by the Company and the
Parent on the date of this Agreement.

 

(b) Unless a representation is expressed to be given at a specific date, each
representation is deemed to be repeated by the Company and the Parent on the
date of each Request and the first day of each Term.

 

(c) When a representation is repeated, it is applied to the circumstances
existing at the time of repetition.

 

16. INFORMATION COVENANTS

 

16.1 Financial statements

 

(a) The Company must supply to the Facility Agent in sufficient copies for all
the Lenders:

 

  (i) Holdings’ audited consolidated financial statements for each of its
financial years;

 

  (ii) the Parent’s financial statements and the Company’s financial statements
for each of its financial years; and

 

  (iii) Holdings’ quarterly unaudited consolidated financial statements for each
quarter for each of its financial years.

 

(b) All financial statements must be supplied as soon as they are available and:

 

  (i) in the case of the audited consolidated financial statements, within 90
days;

 

  (ii) in the case of the Parent’s financial statements and the Company’s
financial statements, within 180 days; and

 

  (iii) in the case of Holdings’ interim financial statements, within 45 days,
of the end of the relevant financial period.

 

37

--------------------------------------------------------------------------------

16.2 Form of financial statements

 

(a) The Company must ensure that each set of financial statements supplied under
this Agreement fairly represents, the financial condition (consolidated or
otherwise) of the relevant person as at the date to which those financial
statements were drawn up.

 

(b) The Company must notify the Facility Agent of any change to the manner in
which Holdings’ audited consolidated financial statements are prepared.

 

(c) If requested by the Facility Agent, the Company must supply to the Facility
Agent:

 

  (i) a full description of any change notified under paragraph (b) above; and

 

  (ii) sufficient information to enable the Finance Parties to make a proper
comparison between the financial position shown by the set of financial
statements prepared on the changed basis and its most recent audited
consolidated financial statements delivered to the Facility Agent under this
Agreement.

 

16.3 Compliance Certificate

 

(a) The Company must supply to the Facility Agent a Compliance Certificate with
each set of its financial statements sent to the Facility Agent under this
Agreement, together with:

 

  (i) a copy of any Compliance Certificate provided by the Parent under the
EnerSys Capital Credit Agreement; and

 

  (ii) in the case of a Compliance Certificate supplied with Holdings’ annual
audited consolidated financial statements, a letter confirming compliance with
the financial covenants from the Group’s auditors.

 

(b) A Compliance Certificate must be signed by one authorised signatory of the
Company.

 

16.4 Information - miscellaneous

 

The Company must supply to the Facility Agent, in sufficient copies for all the
Lenders if the Facility Agent so requests:

 

(a) promptly upon becoming aware of them, details of any litigation, arbitration
or administrative proceedings which are current, threatened or pending and which
have or might, if adversely determined, have a Material Adverse Effect;

 

(b) promptly on request, a list of the then current Material Subsidiaries; and

 

(c) promptly on request, such further information regarding the financial
condition and operations of the members of the Group incorporated in the
European Union as any Finance Party through the Facility Agent may reasonably
request.

 

16.5 Environmental matters

 

Promptly after any officer of Holdings or any of its Subsidiaries obtains actual
knowledge of any of the following (but only to the extent that any of the
following, either individually or in the aggregate, has had (unless same has
ceased to exist in all respects) (a) a Material Adverse Effect or (b) a remedial
cost to Holdings or any of its Subsidiaries in excess of US$5,000,000), written
notice of:

 

  (a) any pending or threatened Environmental Claim against Holdings or any of
its Subsidiaries or any Real Property owned or operated by Holdings or any of
its Subsidiaries;

 

38

--------------------------------------------------------------------------------

  (b) any condition or occurrence on any Real Property owned or operated by
Holdings or any of its Subsidiaries that (x) results in noncompliance by
Holdings or any of its Subsidiaries with any applicable Environmental Law or (y)
could reasonably be anticipated to form the basis of an Environmental Claim
against Holdings or any of its Subsidiaries or any such Real Property;

 

  (c) any condition or occurrence on any Real Property owned or operated by
Holdings or any of its Subsidiaries that could reasonably be anticipated to
cause such Real Property to be subject to any restrictions on the ownership,
occupancy, use or transferability by Holdings or such Subsidiary, as the case
may be, of its interest in such Real Property under any Environmental Law; and

 

  (d) the taking of any removal or remedial action in response to the actual or
alleged presence of any Hazardous Material on any Real Property owned or
operated by Holdings or any of its Subsidiaries.

 

All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal or remedial action and Holdings’
response or proposed response thereto. In addition, the Company and the Parent
agree to provide the Lenders with copies of such detailed reports relating to
any of the matters set forth in Subclauses (a)-(d) above as may reasonably be
requested by the Facility Agent or the Majority Lenders.

 

16.6 Notification of Event of Default

 

(a) Unless the Facility Agent has already been so notified by the Company or the
Parent, the Company and the Parent must notify the Facility Agent of any Event
of Default (and the steps, if any, being taken to remedy it) promptly upon
becoming aware of its occurrence.

 

(b) Promptly on request by the Facility Agent, the Company must supply to the
Facility Agent a certificate, signed by one of its authorised signatories on its
behalf, certifying that no Event of Default is outstanding or, if an Event of
Default is outstanding, specifying the Event of Default and the steps, if any,
being taken to remedy it.

 

16.7 Year end

 

The Company must not change its financial year end without the prior approval of
the Lenders.

 

16.8 Know your customer requirements

 

(a) The Company and the Parent must promptly on the request of any Finance Party
supply to that Finance Party any documentation or other evidence which is
reasonably requested by that Finance Party (whether for itself, on behalf of any
Finance Party or any prospective new Lender) to enable a Finance Party or
prospective new Lender to carry out and be satisfied with the results of all
applicable know your customer requirements.

 

(b) Each Lender must promptly on the request of the Facility Agent supply to the
Facility Agent any documentation or other evidence which is reasonably required
by the Facility Agent to carry out and be satisfied with the results of all know
your customer requirements.

 

39

--------------------------------------------------------------------------------

17. FINANCIAL COVENANTS

 

17.1 Definitions

 

In this Clause:

 

Capital Expenditures means, with respect to any person, for any period, all
expenditures by such person which should be capitalised in accordance with GAAP
during such period and are, or are required to be, included in property, plant
or equipment reflected on the consolidated balance sheet of such person
(including, without limitation, expenditures for maintenance and repairs which
should be so capitalized in accordance with GAAP) and, without duplication, the
amount of all Capitalised Lease Obligations incurred by such person during such
period.

 

Capital Lease, as applied to any person, means any lease of any property
(whether real, personal or mixed) by that person as lessee which, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
person.

 

Capitalised Lease Obligations shall mean all obligations under Capital Leases of
Holdings or any of its Subsidiaries, in each case taken at the amount thereof
accounted for as liabilities in accordance with GAAP.

 

Cash Equivalents means:

 

  (a) demand deposit accounts held in accounts denominated in US dollars and in
the case of any of the Foreign Subsidiaries of the Parent, such local currencies
held by them from time to time in the ordinary course of their businesses;

 

  (b) securities issued or directly fully guaranteed or insured by the
governments of the United States, The Netherlands, Great Britain, France or
Germany or any agency or instrumentality thereof (provided that the full faith
and credit of the respective such government is pledged in support thereof)
having maturities of not more than six months from the date of acquisition;

 

  (c) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers’ acceptances with
maturities not exceeding six months and overnight bank deposits, in each case
with any domestic commercial bank or commercial bank of a foreign country
recognised by the United States, in each case having capital and surplus in
excess of US$500,000,000 (or the foreign currency equivalent thereof) and has
outstanding debt which is rated “A” (or similar equivalent thereof) or higher by
at least one nationally recognized statistical rating organization (as defined
under Rule 436 under the Securities Act of the United States of America) or any
money-market fund sponsored by a registered broker dealer or mutual fund
distributor;

 

  (d) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (b) and (c) above
entered into with any financial institution meeting the qualifications specified
in clause (c) above; and

 

  (e) commercial paper having one of the two highest ratings obtainable from S&P
or Moody’s and in each case maturing within six months after the date of
acquisition. Furthermore, with respect to Foreign Subsidiaries of the Parent,
Cash Equivalents shall include bank deposits (and investments pursuant to
operating account agreements) maintained with various local banks in the
ordinary course of business consistent with past practice of the Parent’s
Foreign Subsidiaries.

 

40

--------------------------------------------------------------------------------

Consolidated Debt means, at any time, (A) the sum of (without duplication) (i)
the principal amount of all Financial Indebtedness of Holdings and its
Subsidiaries (on a consolidated basis) as would be required to be reflected as
debt or capital leases on the liability side of a consolidated balance sheet of
Holdings and its Subsidiaries in accordance with GAAP, (ii) all Financial
Indebtedness of Holdings and its Subsidiaries of the type described in clause
(iii) of the definition of Financial Indebtedness, (iii) the aggregate amount of
Receivables Indebtedness of the Parent and its Subsidiaries (including the
Receivables Entity) outstanding at such time, and (iv) Attributable Indebtedness
in respect of Synthetic Lease Obligations at such time minus (B) the aggregate
amount of cash and Cash Equivalents of the Holdings, the Parent and the
Subsidiary Guarantors at such time to the extent same would be reflected on a
consolidated balance sheet of Holdings if same were prepared on such date.

 

Consolidated EBIT means, for any period, the Consolidated Net Income of the
Company and its Subsidiaries plus, in each case to the extent actually deducted
in determining Consolidated Net Income for such period, consolidated interest
expense of the Company and its Subsidiaries and provision for income taxes,
adjusted to exclude for such period (i) any extraordinary gains or losses, (ii)
gains or losses from sales of assets other than inventory sold in the ordinary
course of business, (iii) any write-downs of non-current assets relating to
impairments or the sale of non-current assets or (iv) any non-cash expenses
incurred in connection with stock options, stock appreciation rights or similar
equity rights.

 

Consolidated EBITDA means for any period, Consolidated EBIT, adjusted by (x)
adding thereto (in each case to the extent deducted in determining Consolidated
Net Income for such period and not already added back in determining
Consolidated EBIT) the amount of (i) all amortisation and depreciation that were
deducted in arriving at Consolidated EBIT for such period, (ii) any non-cash
charges in such period to the extent that such non-cash charges do not give rise
to a liability that would be required to be reflected on the consolidated
balance sheet of Holdings and so long as no cash payments or cash expenses will
be associated therewith (whether in the current period or for any future
period), (iii) in the case of any period including the fiscal quarter of
Holdings ended nearest to December 31, 2003, the non-recurring charges specified
on Schedule XV hereto incurred during such fiscal quarter in an aggregate amount
not to exceed US$35.2 million, (iv) in the case of any period including the
fiscal quarter of Holdings ended nearest to March 31, 2005, one-time cash
charges incurred by Holdings in connection with the Recapitalization in an
aggregate amount not to exceed US$20.0 million (representing expenses incurred
in connection with the payments pursuant to the Recapitalization and the early
termination and repayment of Financial Indebtedness pursuant to the
Refinancing), (v) in the case of any period which includes any portion of any
fiscal quarter of Holdings set forth on Schedule XV of the EnerSys Capital
Credit Agreement, an amount up to the amount set forth under the captions
“Montecchio Start-Up Costs” and “FIAMM Corporate Fees” on Schedule XV thereto,
to the extent (x) the respective charge was actually recorded or accrued during
such period for the purpose specified on that Schedule XV for such charge and
(y) the respective charge was deducted in the determination of Consolidated
EBITDA for such period (directly or through reductions to Consolidated Net
Income) and (vi) in the case of any period including any fiscal quarter of
Holdings ended on or prior March 31, 2006, one-time cash fees and expenses
actually incurred by Holdings and any of its Subsidiaries during such fiscal
quarter in an aggregate amount not to exceed the Dollar Equivalent of
€1,700,000, so long as (x) such fees and expenses were deducted in the
determination of Consolidated EBITDA for such period (directly or through
reductions to Consolidated Net Income) and (y) Holdings has at all times
complied with the requirements of clause (z) of Section 8.01(d) of the EnerSys
Capital Credit Agreement, requiring Holdings to certify as to the amount and
type of such costs incurred in any fiscal quarter of Holdings included in such
period and added back to Consolidated EBITDA and (y) subtracting therefrom, to
the extent included in arriving at Consolidated EBIT for such period, the amount
of non-cash gains during such period.

 

41

--------------------------------------------------------------------------------

Consolidated Interest Coverage Ratio means for any period, the ratio of
Consolidated EBITDA to Consolidated Net Interest Expense for such period.

 

Consolidated Net Income means, for any period, the net after tax income (or
loss) of Holdings and its Subsidiaries determined on a consolidated basis in
accordance with GAAP, provided that in determining Consolidated Net Income of
Holdings and its Subsidiaries (i) the net income of any of person which is not a
Subsidiary of Holdings or is accounted for by the Company by the equity method
of accounting shall be included only to the extent of the payment of dividends
or disbursements by such person to Holdings or a wholly-owned Subsidiary of
Holdings during such period, (ii) except for determinations expressly required
to be made on a Pro Forma Basis, the net income (or loss) of any person accrued
prior to the date it becomes a Subsidiary or all or substantially all of the
property or assets of such person are acquired by a Subsidiary shall be excluded
from such determination and (iii) the net income of any Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by such
Subsidiary of such net income is not at the time permitted by the operation of
the terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary shall be
excluded from such determination.

 

Consolidated Net Interest Expense means, for any period, (i) the total
consolidated interest expense of Holdings and its Subsidiaries for such period
(calculated without regard to any limitations on payment thereof) plus, to the
extent not included above, Accounts Receivables Facility Financing Costs
pursuant to the Accounts Receivable Facility for such period, adjusted to
exclude (to the extent same would otherwise be included in the calculation above
in this clause (i)) (A) the amortization of any deferred financing costs for
such period, (B) non-cash interest expense (including amortization of discount
and interest which will be added to, and thereafter become part of, the
principal or liquidation preference of the respective Financial Indebtedness or
Preferred Stock through a pay-in-kind feature or otherwise, but excluding all
regularly accruing interest expense which will be payable in cash in a
subsequent period) payable in respect of any Financial Indebtedness or Preferred
Stock and (C) dividends on Qualified Preferred Stock in the form of additional
Qualified Preferred Stock plus (ii) without duplication, that portion of
Capitalised Lease Obligations of Holdings and its Subsidiaries on a consolidated
basis representing the interest factor for such period minus (iii) the cash
portion of interest income of Holdings and its Subsidiaries on a consolidated
basis for such period (for this purpose, excluding any cash interest income
received by any non-wholly-owned Subsidiary to the same extent as such amount,
if representing net income, would be excluded from Consolidated Net Income
pursuant to the proviso to the definition thereof), all as determined in
accordance with GAAP (subject to the express requirements set forth above).

 

Leverage Ratio means on any date of determination the ratio of (i) Consolidated
Debt on such date to (ii) Consolidated EBITDA for the Test Period most recently
ended on or prior to such date; provided that Consolidated EBITDA shall be
determined on a Pro Forma Basis to give effect to all Permitted Acquisitions (if
any) actually made during such most recently ended Test Period.

 

Pro Forma Basis means, in connection with any calculation of compliance with any
financial covenant or financial term, the calculation thereof after giving
effect on a pro forma basis to (x) the Permitted Acquisition then being
consummated as well as any other Permitted Acquisition consummated after the
first day of the relevant Test Period or Calculation Period, as the case may be,
and on or prior to the date of the respective Permitted Acquisition then being
effected and (y) the incurrence of any Financial Indebtedness that is incurred
in connection with, or to finance, the Transaction, one or more Permitted
Acquisitions and/or any other transaction to be consummated on a “Pro Forma
Basis”; provided that, for purposes of calculations pursuant to (I) 17.3(a)
(Consolidated Interest Coverage Ratio) for any Test

 

42

--------------------------------------------------------------------------------

Period ended prior to (but not after) the first anniversary of the Utilisation
Date, and (II) the Conditions to Permitted Acquisitions, such calculations shall
also give effect on a pro forma basis to (a) the incurrence of any Financial
Indebtedness (other than revolving Financial Indebtedness, except to the extent
same is incurred to refinance other outstanding Financial Indebtedness or to
finance a Permitted Acquisition) after the first day of the relevant Calculation
Period as if such Financial Indebtedness had been incurred (and the proceeds
thereof applied) on the first day of the relevant Calculation Period and (b) the
permanent repayment of any Financial Indebtedness (other than revolving
Financial Indebtedness) after the first day of the relevant Calculation Period
as if such Financial Indebtedness had been retired or redeemed on the first day
of the relevant Calculation Period, with the following rules to apply in
connection therewith:

 

  (a) for the purposes of (I) 17.3(a) (Consolidated Interest Coverage Ratio) for
any Test Period ended prior to (but not after) the first anniversary of the
Utilisation Date and (II) the Conditions to Permitted Acquisitions, all
Financial Indebtedness (x) (other than revolving Financial Indebtedness, except
to the extent same is incurred to finance the Transaction, to refinance other
outstanding Financial Indebtedness or to finance Permitted Acquisitions)
incurred or issued after the first day of the relevant Calculation Period
(whether incurred to finance a Permitted Acquisition, to refinance Financial
Indebtedness or otherwise) shall be deemed to have been incurred or issued (and
the proceeds thereof applied) on the first day of the respective Test Period or
Calculation Period and remain outstanding through the date of determination (and
thereafter in the case of projections pursuant to the Conditions to Permitted
Acquisitions) and (y) (other than revolving Financial Indebtedness) permanently
retired or redeemed after the first day of the relevant Test Period or
Calculation Period shall be deemed to have been retired or redeemed on the first
day of the respective Test Period or Calculation Period and remain retired
through the date of determination (and thereafter in the case of projections
pursuant to the Conditions to Permitted Acquisitions); or

 

  (b) for the purposes of (I) 17.3(a) (Consolidated Interest Coverage Ratio) for
any Test Period ended prior to (but not after) the first anniversary of the
Initial Borrowing Date and (II) the Conditions to Permitted Acquisitions, all
Financial Indebtedness assumed to be outstanding pursuant to preceding clause
(i) shall be deemed to have borne interest at (x) the rate applicable thereto,
in the case of fixed rate indebtedness or (y) the rates which would have been
applicable thereto during the respective period when same was deemed
outstanding, in the case of floating rate Financial Indebtedness (although
interest expense with respect to any Financial Indebtedness for periods while
same was actually outstanding during the respective period shall be calculated
using the actual rates applicable thereto while same was actually outstanding);
provided that all Financial Indebtedness (whether actually outstanding or deemed
outstanding) bearing interest at a floating rate of interest shall be tested on
the basis of the rates applicable at the time the determination is made pursuant
to said provisions;

 

  (c) for purposes of determinations of Clause 17.3(b) (Leverage Ratio) (other
than for purposes of the Conditions to Permitted Acquisitions), Consolidated
Debt shall be the actual amount thereof as of the last day of the respective
Calculation Period or Test Period, as the case may be;

 

  (d) in making any determination of Consolidated EBITDA on a Pro Forma Basis,
pro forma effect shall be given to any Permitted Acquisition effected during the
respective Calculation Period or Test Period (or thereafter for purposes of the
Conditions to Permitted Acquisitions) as if same had occurred on the first day
of the respective Calculation Period or Test Period, as the case may be, taking
into account, in the case of any Permitted Acquisition, factually supportable
and identifiable cost savings and expenses, as if such cost savings or expenses
were realised on the first day of the respective period.

 

43

--------------------------------------------------------------------------------

Qualified IPO means a bona fide underwritten sale to the public of common stock
of Holdings pursuant to a registration statement (other than on Form S-8 or any
other form relating to securities issuable under any benefit plan of Holdings or
any of its Subsidiaries, as the case may be) that is declared effective by the
SEC and results in gross cash proceeds (exclusive of underwriter’s discounts and
commissions and other expenses) of at least US$50,000,000 (or, for purposes of
Clause 17.3(d) (Capital Expenditures), US$150,000,000).

 

Senior Secured Consolidated Debt shall mean, at any time, the remainder of
Consolidated Debt at such time less the amount of all Consolidated Debt at such
time which is not secured by any asset or property of the Company or any of its
Subsidiaries.

 

Senior Secured Leverage Ratio means on any date of determination the ratio of
(i) Senior Secured Consolidated Debt on such date to (ii) Consolidated EBITDA
for the Test Period most recently ended on or prior to such date; provided that
Consolidated EBITDA shall be determined on a Pro Forma Basis to give effect to
all Permitted Acquisitions (if any) actually made during such most recently
ended Test Period.

 

Test Period means each period of four consecutive fiscal quarters then last
ended, in each case taken as one accounting period.

 

17.2 Interpretation

 

(a) Except as provided to the contrary in this Agreement, an accounting term
used in this Clause is to be construed in accordance with the principles applied
in connection with the Original Financial Statements.

 

(b) Any amount in a currency other than euros is to be taken into account at its
euro equivalent calculated on the basis of:

 

  (i) the Facility Agent’s spot rate of exchange for the purchase of the
relevant currency in the London foreign exchange market with euros at or about
11.00 a.m. on the day the relevant amount falls to be calculated; or

 

  (ii) if the amount is to be calculated on the last day of a financial period
of the Company, the relevant rates of exchange used by the Company in, or in
connection with, its financial statements for that period.

 

(c) No item must be credited or deducted more than once in any calculation under
this Clause.

 

17.3 EnerSys Capital Credit Agreement Financial Covenants

 

The Company shall procure that Holdings complies with the following Financial
Covenants:

 

(a) Consolidated Interest Coverage Ratio:

 

  (i) Holdings will not permit the Consolidated Interest Coverage Ratio for any
Test Period ended on the last day of a fiscal quarter set forth below to be less
than the ratio set forth opposite such fiscal quarter below:

 

Fiscal Quarter Ended Closest to

--------------------------------------------------------------------------------

   Ratio

--------------------------------------------------------------------------------

June 30, 2005

   3.10:1.00

September 30, 2005

   3.10:1.00

December 31, 2005

   3.10:1.00

March 31, 2006

   3.20:1.00

June 30, 2006

   3.20:1.00

September 30, 2006

   3.20:1.00

December 31, 2006

   3.20:1.00

March 31, 2007

   3.30:1.00

June 30, 2007

   3.30:1.00

September 30, 2007

   3.30:1.00

December 31, 2007

   3.30:1.00

March 31, 2008

   3.40:1.00

June 30, 2008

   3.40:1.00

September 30, 2008

   3.40:1.00

December 31, 2008

   3.40:1.00

March 31, 2009 and each fiscal quarter thereafter

   3.50:1.00

 

44

--------------------------------------------------------------------------------

  (ii) For purposes of making determinations pursuant to (x) this Clause for any
Test Period ended prior to (but not after) the first anniversary of the
Utilisation Date and (y) the Conditions to Permitted Acquisitions, the
Consolidated Interest Coverage Ratio shall be calculated on a Pro Forma Basis
(it being understood that this sentence shall not affect any adjustments
required pursuant to the definitions of Consolidated Net Interest Expense or
Consolidated EBITDA).

 

(b) Leverage Ratio: Holdings will not permit the Leverage Ratio on the last day
of a fiscal quarter set forth below to be greater than the ratio set forth
opposite such fiscal quarter below:

 

Fiscal Quarter Ended Closest to

--------------------------------------------------------------------------------

   Ratio

--------------------------------------------------------------------------------

June 30, 2005

   4.80:1.00

September 30, 2005

   4.80:1.00

December 31, 2005

   4.80:1.00

March 31, 2006

   4.40:1.00

June 30, 2006

   4.40:1.00

September 30, 2006

   4.40:1.00

December 31, 2006

   4.40:1.00

March 31, 2007

   3.90:1.00

June 30, 2007

   3.90:1.00

September 30, 2007

   3.90:1.00

December 31, 2007

   3.90:1.00

March 31, 2008

   3.30:1.00

June 30, 2008

   3.30:1.00

September 30, 2008

   3.30:1.00

December 31, 2008

   3.30:1.00

March 31, 2009 and each fiscal quarter thereafter

   2.70:1.00

 

45

--------------------------------------------------------------------------------

  (ii) Notwithstanding anything to the contrary contained in this Agreement, all
determinations of the Leverage Ratio for purposes of this Subclause shall
include Consolidated EBITDA as calculated on a Pro Forma Basis to give effect to
all Permitted Acquisitions, if any, effected during the respective Test Period
for which Consolidated EBITDA is being determined, as provided in the first
sentence of the definition of Leverage Ratio contained herein (with the second
sentence of the definition of Leverage Ratio being inapplicable to
determinations pursuant to this Subclause).

 

(c) Senior Secured Leverage Ratio: Holdings will not permit the Senior Secured
Leverage Ratio on the last day of a fiscal quarter set forth below to be greater
than the ratio set forth opposite such fiscal quarter below:

 

Fiscal Quarter Ended Closest to

--------------------------------------------------------------------------------

   Ratio

--------------------------------------------------------------------------------

June 30, 2005

   4.00:1.00

September 30, 2005

   4.00:1.00

December 31, 2005

   4.00:1.00

March 31, 2006

   3.80:1.00

June 30, 2006

   3.60:1.00

September 30, 2006

   3.60:1.00

December 31, 2006

   3.40:1.00

March 31, 2007

   3.00:1.00

June 30, 2007

   3.00:1.00

September 30, 2007

   3.00:1.00

December 31, 2007

   3.00:1.00

March 31, 2008

   2.40:1.00

June 30, 2008

   2.40:1.00

September 30, 2008

   2.40:1.00

December 31, 2008

   2.40:1.00

March 31, 2009 and each fiscal quarter thereafter

   2.00:1.00

 

  (ii) Notwithstanding anything to the contrary contained in this Agreement, all
determinations of the Senior Secured Leverage Ratio for purposes of this
Subclause

 

46

--------------------------------------------------------------------------------

shall include Consolidated EBITDA as calculated on a Pro Forma Basis to give
effect to all Permitted Acquisitions, if any, effected during the respective
Test Period for which Consolidated EBITDA is being determined, as provided in
the first sentence of the definition of Senior Secured Leverage Ratio contained
herein.

 

(d) Capital Expenditures:

 

  (i) Holdings will not, and will not permit any of its Subsidiaries to, make
any Capital Expenditures, except that (i) prior to a Qualified IPO, during any
fiscal year of Holdings set forth below (taken as one accounting period), the
Parent and its Subsidiaries may make Capital Expenditures so long as the
aggregate amount of such Capital Expenditures does not exceed the amount set
forth below opposite such fiscal year under the heading “Pre-IPO Amount” and
(ii) after the occurrence of a Qualified IPO, during any fiscal year of the
Company set forth below (taken as one accounting period), the Parent and its
Subsidiaries may make Capital Expenditures so long as the aggregate amount of
such Capital Expenditures does not exceed the amount set forth below opposite
such fiscal year under the heading “Post-IPO Amount”:

 

Period

--------------------------------------------------------------------------------

   Pre-IPO Amount

--------------------------------------------------------------------------------

   Post-IPO Amount

--------------------------------------------------------------------------------

Fiscal year ended closest to March 31, 2005

   US$ 40,000,000    US$ 45,000,000

Fiscal year ended closest to March 31, 2006

   US$ 50,000,000    US$ 60,000,000

Fiscal year ended closest to March 31, 2007

   US$ 55,000,000    US$ 60,000,000

Fiscal year ended closest to March 31, 2008

   US$ 50,000,000    US$ 60,000,000

Fiscal year ended closest to March 31, 2009

   US$ 50,000,000    US$ 60,000,000

Fiscal year ended closest to March 31, 2010

   US$ 50,000,000    US$ 60,000,000

Fiscal year ended closest to March 31, 2011

   US$ 50,000,000    US$ 60,000,000

 

  (ii) Notwithstanding the foregoing, in the event that the amount of Capital
Expenditures permitted to be made by the Parent and its Subsidiaries pursuant to
Subclause (ii) above during any fiscal year of Holdings commencing after the
fiscal year Holdings ended March 31, 2004 (before giving effect to any increase
in such permitted Capital Expenditure amount pursuant to this clause (b)) is
greater than the amount of Capital Expenditures actually made by the Parent and
its Subsidiaries during such fiscal year, such excess may be carried forward and
utilized to make Capital Expenditures in the immediately succeeding fiscal year,
provided that no amounts once carried forward pursuant to this Subclause (ii)
may be carried forward to any subsequent fiscal year thereafter and such amounts
may only be utilised after the Parent and its Subsidiaries have utilised in full
the permitted Capital Expenditure amount for such fiscal year as set forth in
the table in Subclause (i) above (without giving effect to any increase in such
amount pursuant to this Subclause (ii)).

 

  (iii) In addition to the foregoing, the Parent and its Subsidiaries may make
additional Capital Expenditures (which Capital Expenditures will not be included
in any determination under Subclause (i) above) with the Net Proceeds of Asset
Sales to the extent such proceeds are not required to be applied to repay the
Loan pursuant to Clause 7.3 (Mandatory prepayment – Net Proceeds).

 

47

--------------------------------------------------------------------------------

  (iv) In addition to the foregoing, the Parent and its Subsidiaries may make
additional Capital Expenditures (which Capital Expenditures will not be included
in any determination under Subclause (i) above) with the insurance proceeds
received by the Parent or any of its Subsidiaries from any Recovery Event so
long as such Capital Expenditures are to replace or restore any properties or
assets in respect of which such proceeds were paid within one year (or, to the
extent permitted by section 4.02(f) of the EnerSys Capital Credit Agreement, 18
months) following the date of the receipt of such insurance proceeds to the
extent such insurance proceeds are not required to be applied to repay term
loans and/or reduce the total revolving loan commitment under and pursuant to
section 4.02(f) of the EnerSys Capital Credit Agreement.

 

  (v) In addition to the foregoing, the Parent and the Subsidiaries may make
additional Capital Expenditures (which Capital Expenditures will not be included
in any determination under Subclause (i) above) constituting Permitted
Acquisitions effected in accordance with the requirements of the Conditions to
Permitted Acquisitions.

 

  (vi) In addition to the foregoing, the Parent and its Subsidiaries may make
Capital Expenditures at any time in an aggregate amount equal to the Excess
Proceeds Amount at such time (which Capital Expenditures will not be included in
any determination under Subclause (i) above).

 

18. GENERAL COVENANTS

 

18.1 General

 

The Company agrees to be bound by the covenants set out in this Clause relating
to it and, where the covenant is expressed to apply to each member of the Group
the Company must ensure that each member of the Group performs that covenant.

 

18.2 Authorisations

 

The Company must, and shall procure that the Parent shall, promptly obtain,
maintain and comply with the terms of any authorisation required under any law
or regulation to enable it to perform its obligations under, or for the validity
or enforceability of, any Finance Document.

 

18.3 Compliance with laws

 

Each member of the Group must comply in all respects with all laws to which it
is subject where failure to do so has a Material Adverse Effect.

 

18.4 Pari passu ranking

 

The Company and each Subsidiary incorporated in Italy must ensure that its
payment obligations under the Finance Documents rank at least pari passu with
all its other present and future unsecured payment obligations, except for
obligations mandatorily preferred by law applying to companies generally.

 

18.5 Negative pledge

 

  (a) Except as provided below, no member of the Group may create or allow to
exist any Security Interest on any of its assets.

 

48

--------------------------------------------------------------------------------

(b) Paragraph (a) does not apply to (collectively Permitted Security Interests):

 

  (i) any Security Interest constituted by the Security Documents;

 

  (ii) any liens and the property subject thereto listed and described in
schedule IX of the EnerSys Capital Credit Agreement, plus any extensions or
renewals of such liens, provided that (x) the aggregate principal amount of the
Financial Indebtedness, if any, secured by such liens does not increase from
that amount outstanding at the time of any such renewal, replacement or
extension and (y) any such renewal, replacement or extension does not encumber
any additional assets or properties of Holdings or any of its Subsidiaries;

 

  (iii) any Security Interest comprising a netting or set-off arrangement
entered into by a member of the Group in the ordinary course of its banking
arrangements for the purpose of netting debit and credit balances;

 

  (iv) any lien arising from a judgment, decree or attachment in circumstances
not constituting an Event of Default, provided that no cash or other property
shall be pledged by Holdings or any of its Subsidiaries as security therefor;

 

  (v) any lien in respect of property or assets of the Parent or any of its
Subsidiaries imposed by law which were incurred in the ordinary course of
business and which have not arisen to secure Financial Indebtedness for borrowed
money, such as carriers’, warehousemen’s and mechanics’ liens, statutory
landlord’s liens, and other similar liens arising in the ordinary course of
business, and which either (x) do not in the aggregate materially detract from
the value of such property or assets or materially impair the use thereof in the
operation of the business of the Parent or any of its Subsidiaries or (y) are
being contested in good faith by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property or asset subject
to such lien;

 

  (vi) any inchoate lien for taxes, assessments or governmental charges or
levies not yet due and payable or lien for taxes, assessments or governmental
charges or levies being contested in good faith and by appropriate proceedings
for which adequate reserves have been established in accordance with GAAP;

 

  (vii) any lien (x) incurred or deposits made in the ordinary course of
business of the Parent and its Subsidiaries in connection with workers’
compensation, unemployment insurance and other similar liens, (y) to secure the
performance by the Parent and its Subsidiaries of tenders, statutory obligations
(other than excise taxes), surety, stay and customs bonds, statutory bonds,
bids, leases, government contracts, trade contracts, performance and return of
money bonds and other similar obligations (exclusive of obligations for the
payment of borrowed money) or (z) to secure the performance by the Parent and
its Subsidiaries of leases of Real Property, to the extent incurred or made in
the ordinary course of business consistent with past practices, provided that
the aggregate amount of deposits at any time pursuant to preceding sub-clause
(y) and sub-clause (z) shall not exceed US$7,500,000 in the aggregate;

 

  (viii) licenses, leases or subleases granted to third persons in the ordinary
course of business not interfering in any material respect with the business of
Holdings or any of its Subsidiaries;

 

  (ix) liens arising from or related to precautionary UCC financing statements
regarding operating leases entered into by the Parent and its Subsidiaries
(other than the Receivables Entity);

 

49

--------------------------------------------------------------------------------

  (x) any lien created pursuant to Capital Leases permitted by Clause
18.7(b)(ii) (Financial Indebtedness), provided that (x) such liens only serve to
secure the payment of Indebtedness arising under such Capitalised Lease
Obligation and (y) the lien encumbering the asset giving rise to the Capitalised
Lease Obligation does not encumber any other asset of the Company or any of its
Subsidiaries;

 

  (xi) any lien arising pursuant to purchase money, mortgages or Security
Interests securing Financial Indebtedness representing the purchase price (or
financing of the purchase price within 30 days after the respective purchase) of
assets acquired after the Utilisation Date by the Parent and its Subsidiaries
(other than the Receivables Entity), provided that (i) any such lien attaches
only to the assets so purchased, (ii) the Financial Indebtedness secured by any
such lien does not exceed 100%, nor is less than 80% (unless the Finance Parties
have a fully perfected second subordinated lien on such property pursuant to a
Security Document), of the lesser of the fair market value or the purchase price
of the property being purchased at the time of the incurrence of such Financial
Indebtedness and (iii) the Financial Indebtedness secured thereby is permitted
to be incurred pursuant to Clause 18.7(b)(ii) (Financial Indebtedness);

 

  (xii) any lien on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Subsidiary of the Parent in existence
at the time such Subsidiary is acquired pursuant to a Permitted Acquisition,
provided that (i) any Financial Indebtedness that is secured by such lien is
permitted to exist under Clause 18.7(b)(ii) (Financial Indebtedness), and (ii)
such lien is not incurred in connection with, or in contemplation or
anticipation of, such Permitted Acquisition and do not attach to any other asset
of Holdings or any of its Subsidiaries;

 

  (xiii) restrictions imposed in the ordinary course of business and consistent
with past practices on the sale or distribution of designated inventory pursuant
to agreements with customers under which such inventory is consigned by the
customer or such inventory is designated for sale to one or more customers;

 

  (xiv) any lien in favour of customs or revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the importation of
goods;

 

  (xv) any lien on the assets of a Foreign Subsidiary which is not a Subsidiary
Guarantor securing Financial Indebtedness incurred by such Foreign Subsidiary in
accordance with Clause 18.7 (Financial Indebtedness);

 

  (xvi) any lien on assets (x) owned by Foreign Subsidiaries of the Parent
securing permitted secured Financial Indebtedness of such Foreign Subsidiaries
of the Parent and/or (y) consisting of equipment, receivables, inventory and
Real Property owned by the Parent and/or one or more of its Foreign Subsidiaries
securing permitted secured Financial Indebtedness of such persons pursuant to
Clause 18.7(b)(xix) (Financial Indebtedness), provided that the aggregate fair
market value of all such assets as described in preceding clause (y) securing
Financial Indebtedness pursuant to Clause 18.7(b)(xix) (Financial Indebtedness)
of the persons described in preceding clause (y) shall at no time exceed 150% of
the outstanding principal amount of the Financial Indebtedness secured by such
assets (which shall at no time exceed US$35,000,000); and

 

  (xvii) any other lien incidental to the conduct of the business or the
ownership of the assets of the Parent or any Subsidiary of the Parent that (x)
were not incurred in connection with borrowed money, (y) do not encumber any
collateral or any Real Property owned by Holdings or any Subsidiary of Holdings
and do not in the aggregate

 

50

--------------------------------------------------------------------------------

materially detract from the value of the assets subject thereto or materially
impair the use thereof in the operation of such business and (z) do not secure
obligations in excess of US$5,000,000 in the aggregate for all such liens;

 

  (xviii) any Security Interest entered into pursuant to a Finance Document;

 

  (xix) Permitted Encumbrances;

 

  (xx) on and after the Accounts Receivable Facility Transaction Date, liens:

 

  (A) granted by the Receivables Sellers in favour of the Receivables Entity
consisting of UCC-1 financing statements filed to effect the sale of Accounts
Receivable Facility Assets pursuant to the Replacement Receivables Facility
Documents;

 

  (B) granted by the Receivables Entity on those Accounts Receivable Facility
Assets acquired by it pursuant to the Accounts Receivable Facility Documents to
the extent that such liens are created by the Accounts Receivable Facility
Documents; and

 

  (C) consisting of the right of setoff granted by the Receivables Entity to any
financial institution acting as a lockbox bank in connection with the Accounts
Receivable Facility ;

 

  (xxi) liens securing Permitted Refinancing Indebtedness permitted pursuant to
Subclause (xv) above to the extent such Liens comply with clause (b)(ii) of the
definition of Permitted Refinancing Indebtedness.

 

18.6 Disposals

 

(a) Except as provided below, no member of the Group may, either in a single
transaction or in a series of transactions and whether related or not, dispose
of all or any part of its assets.

 

(b) Paragraph (a) does not apply to any disposal:

 

  (i) made in the ordinary course of business of the disposing entity;

 

  (ii) of assets in exchange for other assets comparable or superior as to type,
value and quality;

 

  (iii) by a member of the Group incorporated in Italy where the aggregate book
value exceeds €16,000,000 which have the prior written consent of the Lenders;

 

  (iv) by members of the Group where the aggregate book value is less than
€50,000,000;

 

  (v) between or among members of the Group;

 

  (vi) the Parent and its Subsidiaries (other than the Receivables Entity) may
sell assets (other than the Equity Interests of any Subsidiary or joint
venture), so long as:

 

  (A) no Event of Default then exists or would result therefrom;

 

  (B) each such sale is in an arm’s-length transaction and the Parent or the
respective Subsidiary receives at least fair market value (as determined in good
faith by the Parent or such Subsidiary, as the case may be);

 

51

--------------------------------------------------------------------------------

  (C) the total consideration received by the Parent or such Subsidiary is at
least 70% cash and is paid at the time of the closing of such sale;

 

  (D) the Net Proceeds therefrom are applied and/or reinvested as (and to the
extent) required by section 4.02(c) of the EnerSys Capital Credit Agreement; and

 

  (E) the aggregate amount of the proceeds received from all assets sold
pursuant to this Subclause (A) above shall not exceed US$10,000,000 in any
fiscal year of the Parent;

 

  (vii) each of the Parent and its Subsidiaries (other than the Receivables
Entity) may grant leases or subleases to other persons not materially
interfering with the conduct of the business of the Parent or any of its
Subsidiaries;

 

  (viii) on and after the Accounts Receivable Facility Transaction Date, the
Receivables Sellers may:

 

  (A) contribute cash to the Receivables Entity the proceeds of which are used
to acquire Accounts Receivable Facility Assets from the Receivables Sellers; and

 

  (B) transfer and reacquire Accounts Receivable Facility Assets to and from the
Receivables Entity, in each case pursuant to, and in accordance with the terms
of, the Accounts Receivable Facility Documents;

 

  (ix) on and after the Accounts Receivable Facility Transaction Date, the
Receivables Entity may transfer and reacquire Accounts Receivable Facility
Assets (to the extent acquired from the Receivables Sellers as provided in
Subclause (viii) above) pursuant to, and in accordance with the terms of, the
Accounts Receivable Facility Documents;

 

  (x) the Parent and its Subsidiaries (other than the Receivables Entity) may
sell or otherwise dispose of Designated Assets, so long as:

 

  (A) no Default or Event of Default then exists or would result therefrom;

 

  (B) each such sale is in an arm’s-length transaction and the Parent or the
respective Subsidiary receives at least fair market value (as determined in good
faith by the Parent or such Subsidiary, as the case may be); and

 

  (C) the aggregate amount of the Net Proceeds received from the sale or other
disposition of such Designated Assets does not exceed US$5,000,000 (it being
understood, however, that if the Net Proceeds from the sale or other disposition
of Designated Assets exceeds US$5,000,000, such excess may be independently
permitted pursuant to Subclause (vi) above); or

 

  (xi) where the higher of the market value and consideration receivable (when
aggregated with the higher of the market value and consideration for any other
disposal not allowed under the preceding sub-paragraphs) does not exceed
€15,000,000 or its equivalent in any financial year of the Company (excluding
(i) intra-group transactions and (ii) disposals by members of the Group
incorporated in Italy above the threshold of €16,000,000, as permitted under
Subclause (iii) above).

 

(c) For the avoidance of doubt, Holdings is permitted to acquire its own
Holdings Common Stock up to an aggregate amount not exceeding US$15,000,000.

 

52

--------------------------------------------------------------------------------

18.7 Financial Indebtedness

 

(a) Except as provided below, no member of the Group may incur any Financial
Indebtedness.

 

(b) Paragraph (a) does not apply to:

 

  (i) any Financial Indebtedness incurred under the Finance Documents;

 

  (ii) Capitalised Lease Obligations and Financial Indebtedness of the Parent
and its Subsidiaries representing purchase money Financial Indebtedness secured
by liens permitted pursuant to Clause 18.5(b)(xi) (Negative pledge), provided
that:

 

  (A) all such Capitalised Lease Obligations are permitted under Clause 17.3(d)
(Capital Expenditures); and

 

  (B) the sum of (x) the aggregate Capitalised Lease Obligations outstanding at
any time plus (y) the aggregate principal amount of such purchase money
Financial Indebtedness outstanding at such time shall not exceed US$20,000,000;

 

  (iii) Financial Indebtedness of the credit parties incurred pursuant to the
EnerSys Capital Credit Agreement and the other credit documents under the
EnerSys Capital Credit Agreement;

 

   

(iv)

     (A)      Existing Indebtedness outstanding on the Utilisation Date and
listed on part A of schedule IV of the EnerSys Capital Credit Agreement, without
giving effect to any subsequent extension, renewal or refinancing thereof except
to the extent expressly permitted by part A of schedule IV the EnerSys Capital
Credit Agreement (or otherwise permitted by Subclause (xvi) below); provided
that any intercompany Financial Indebtedness among Holdings or any of its
Subsidiaries set forth on part A of schedule IV of the EnerSys Capital Credit
Agreement shall be subject to the requirements applicable to Intercompany Loans
as set forth in the proviso appearing in section 9.05(vi) of the EnerSys Capital
Credit Agreement as if such intercompany Financial Indebtedness were an
Intercompany Loan; and            (B)      Financial Indebtedness of Foreign
Subsidiaries of the Parent under the Existing Overdraft Facilities in an
aggregate outstanding principal amount not to exceed at any time the aggregate
commitments under such Existing Overdraft Facilities as set forth on part B of
schedule IV of the EnerSys Capital Credit Agreement, together with any
extension, renewal or refinancing of any Existing Overdraft Facility (or
extension, renewal or refinancing thereof permitted hereby) to the extent such
extension, renewal or refinancing does not:

 

  I. increase the amount of available commitments (or maximum Financial
Indebtedness permitted to be incurred) under the respective Existing Overdraft
Facility (or extension, renewal or refinancing thereof permitted hereby) to be
so extended, renewed or refinanced; or

 

  II. add guarantors, obligors or security from that which applied to such
Financial Indebtedness being extended, renewed or refinanced;

 

53

--------------------------------------------------------------------------------

  (v) Financial Indebtedness under Interest Rate Protection Agreements entered
into to protect the Parent against fluctuations in interest rates in respect of
Financial Indebtedness otherwise permitted under the EnerSys Capital Credit
Agreement;

 

   

(vi)

     (A)      Financial Indebtedness of Holdings and its Subsidiaries (other
than the Receivables Entity) constituting Intercompany Loans permitted by
section 9.05(vi) of the EnerSys Capital Credit Agreement; and            (B)
     intercompany Financial Indebtedness of wholly-owned Foreign Subsidiaries
permitted pursuant to section 9.05(xi) of the EnerSys Capital Credit Agreement;

 

  (vii) Permitted Acquired Debt;

 

  (viii) on and after the Accounts Receivable Facility Transaction Date,
Financial Indebtedness which may be deemed to exist pursuant to the Accounts
Receivable Facility, so long as the aggregate amount of Receivables Indebtedness
attributable thereto at any time does not exceed US$50,000,000 at any time
outstanding;

 

  (ix) Financial Indebtedness of Foreign Subsidiaries of the Parent under lines
of credit to any such Foreign Subsidiary from persons other than Holdings or any
of its Subsidiaries, the proceeds of which Financial Indebtedness are used for
such Foreign Subsidiary’s working capital and other general corporate purposes,
provided that the aggregate principal amount of all such Financial Indebtedness
outstanding at any time for all such Foreign Subsidiaries shall not exceed
US$40,000,000;

 

  (x) Financial Indebtedness of Holdings under Shareholder Subordinated Notes
issued pursuant to section 9.06(ii) of the EnerSys Capital Credit Agreement;

 

  (xi) guarantees by the Parent and the Subsidiary Guarantors of each other’s
Financial Indebtedness (other than any Receivables Indebtedness) to the extent
that such Financial Indebtedness is otherwise permitted under this Clause;

 

  (xii) Financial Indebtedness arising from the honouring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient funds in
the ordinary course of business so long as such Financial Indebtedness is
extinguished within three Business Days of the incurrence thereof;

 

  (xiii) Financial Indebtedness in respect of Other Hedging Agreements to the
extent permitted by Section 9.05(xiii) of the EnerSys Capital Credit Agreement
and forward commodities purchases to the extent permitted by Section 9.05(xv) of
the EnerSys Capital Credit Agreement;

 

  (xiv) Financial Indebtedness of the Parent or any of its Subsidiaries
evidenced by completion guarantees, performance bonds and surety bonds incurred
in the ordinary course of business for purposes of insuring the performance of
the Parent or such Subsidiary in an aggregate amount not to exceed at any time
outstanding US$30,000,000;

 

  (xv) Financial Indebtedness of the Parent or any Subsidiary of the Parent
arising from agreements of the Parent or a Subsidiary of the Parent providing
for indemnification, adjustment of purchase price, earn out or other similar
obligations, in each case, incurred or assumed in connection with the
disposition of any business, assets or a Subsidiary of the Parent permitted
under the EnerSys Capital Credit Agreement, other than guarantees of Financial
Indebtedness incurred by any person acquiring all or any

 

54

--------------------------------------------------------------------------------

portion of such business, assets or Subsidiary for the purpose of financing such
acquisition, provided that the maximum assumable liability in respect of all
such Financial Indebtedness shall at no time exceed the gross proceeds actually
received by the Parent and its Subsidiaries in connection with such disposition;

 

  (xvi) Permitted Refinancing Indebtedness, so long as no Default or Event of
Default is in existence at the time of the incurrence of such Permitted
Refinancing Indebtedness and immediately after giving effect thereto;

 

  (xvii) unsecured subordinated Financial Indebtedness of the Parent incurred
under the Refinancing Senior Subordinated Notes and of the Subsidiary Guarantors
(and so long as same remain Subsidiary Guarantors) under subordinated guarantees
of the obligations of the Parent provided under the Refinancing Senior
Subordinated Notes Documents to which they are a party, in the aggregate
principal amount permitted by the definition of Refinancing Senior Subordinated
Notes at the time of issuance thereof (less the amount of any repayments of
principal thereof), so long as such Financial Indebtedness is incurred in
accordance with the requirements of the definition of Refinancing Senior
Subordinated Notes;

 

  (xviii) unsecured Financial Indebtedness of the Parent evidenced by a guaranty
of the Financial Indebtedness of Foreign Subsidiaries permitted pursuant to
Subclauses (iv)(A) and (ix);

 

additional Financial Indebtedness of the Parent and its Subsidiaries not
otherwise permitted hereunder not exceeding US$35,000,000 in aggregate principal
amount at any time outstanding, provided that not more than US$35,000,000 of
such Financial Indebtedness outstanding at any time may be secured and any such
security shall be granted in accordance with Clause 18.5(b)(xvi) (Negative
pledge); or

 

  (xix) Financial Indebtedness of any Foreign Subsidiary of Holdings which is
secured, which in aggregate does not exceed US$35,000,000 or its equivalent at
any time;

 

  (xx) Financial Indebtedness of any Foreign Subsidiary of Holdings which is
unsecured, which in aggregate does not exceed US$40,000,000 or its equivalent.

 

18.8 Change of business

 

The Company must ensure that no substantial change is made to the general nature
of the business of the Company or the Group from that of a Permitted Business.

 

18.9 Mergers

 

(a) Neither the Company nor the Parent may enter into any amalgamation,
demerger, merger or reconstruction otherwise than under:

 

  (i) provided that EnerSys S.p.A. is always the surviving entity and the
EnerSys Pledge is not prejudiced or compromised in any way, an intra-Group
re-organisation on a solvent basis; or

 

  (ii) other transaction agreed by the Majority Lenders.

 

(b) EnerSys S.p.A. shall only be transformed into a società a responsabilità
limitata if the Company has obtained the prior approval of the Majority Lenders.

 

55

--------------------------------------------------------------------------------

18.10 The Company

 

The Company shall not publicly issue its shares or any debt instrument unless it
changes its corporate form allowing a public issue or debt instrument.

 

18.11 Acquisitions

 

(a) Except as provided below, no member of the Group may make any acquisition or
investment.

 

(b) Paragraph (a) does not apply to:

 

  (i) acquisitions or investments made in the ordinary course of trade; or

 

  (ii) a Permitted Acquisition.

 

18.12 Environmental matters

 

(a) The Company will procure that:

 

  (i) Holdings will comply, and will cause each of its Subsidiaries to comply,
in all material respects with all Environmental Laws applicable to the ownership
or use of its Real Property now or hereafter owned or operated by Holdings or
any of its Subsidiaries, will promptly pay or cause to be paid all costs and
expenses incurred in connection with such compliance, and will keep or cause to
be kept all such Real Property free and clear of any liens imposed pursuant to
such Environmental Laws; and

 

  (ii) neither Holdings nor any of its Subsidiaries will generate, use, treat,
store, Release or dispose of, or permit the generation, use, treatment, storage,
release or disposal of, Hazardous Materials on any Real Property owned or
operated by Holdings or any of its Subsidiaries, or transport or permit the
transportation of Hazardous Materials to or from any such Real Property, except
in compliance with all applicable Environmental Laws and reasonably required in
connection with the operation, use and maintenance of such Real Property by
Holdings’ or such Subsidiary’s business, unless any failures to comply with the
requirements specified in Subclauses (i) or (ii) above, either individually or
in the aggregate, have not had (unless same has ceased to exist in all respects)
a Material Adverse Effect. If Holdings or any of its Subsidiaries, or any tenant
or occupant of any Real Property owned or operated by Holdings or any of its
Subsidiaries, causes or permits any intentional or unintentional act or omission
resulting in the presence or Release of any Hazardous Material (except in
compliance with applicable Environmental Laws), Holdings agrees, if required to
do so under any final applicable directive or order of any governmental agency,
to undertake, and/or to cause any of its Subsidiaries, tenants or occupants to
undertake, at their sole expense, any clean up, removal, remedial or other
action required pursuant to Environmental Laws to remove and clean up any
Hazardous Materials from any Real Property except where the failure to do so has
not had (unless same has ceased to exist in all respects) a Material Adverse
Effect.

 

(b) At the written request of the Facility Agent or the Majority Lenders, which
request shall specify in reasonable detail the basis therefor, at any time and
from time to time, the Parent will provide, at its and Holdings sole cost and
expense, an environmental site assessment report concerning any Real Property
now or hereafter owned or operated by Holdings or any of its Subsidiaries,
prepared by an environmental consulting firm approved by the Facility Agent,
addressing the matters in Subclause (i) or (ii) below which gives rise to such
request (or, in the case of a request pursuant to following Subclause: (i),
addressing such matter as may be requested by the Facility Agent or the Majority
Lenders) and estimating the range of

 

56

--------------------------------------------------------------------------------

the potential costs of any removal, remedial or other corrective action in
connection with any such matter; provided that in no event shall such request be
made unless:

 

  (i) a Default or Event of Default has occurred and is continuing; or

 

  (ii) the Lenders receive notice under Clause 16.5 (Environmental matters) any
event referred to in that Clause which, either individually or in the aggregate,
has had (unless same has ceased to exist in all respects) or (a) a Material
Adverse Effect or (b) a remedial cost to Holdings or any of its Subsidiaries in
excess of US$10,000,000. If the Company and/or the Parent fails to provide the
same within 60 days after such request was made, the Facility Agent may order
the same, and the Company and the Parent shall grant and hereby do grant, to the
Facility Agent and the Lenders and their agents access to such Real Property and
specifically grant the Facility Agent and the Lenders and their agents an
irrevocable non-exclusive license, subject to the right of tenants, to undertake
such an assessment, all at the Company and the Parent’s expense.

 

18.13 Insurance

 

Each member of the Group must insure its business and assets with insurance
companies to such an extent and against such risks as companies engaged in a
similar business normally insure.

 

18.14 Hedging

 

The Facility Agent has the right of first refusal in respect of any Interest
Rate Protection Agreement to be entered in to by the Company in respect of the
Facility.

 

18.15 United States laws

 

(a) In this Subclause:

 

Code means the United States Internal Revenue Code of 1986.

 

ERISA means the United States Employee Retirement Income Security Act of 1974.

 

ERISA Affiliate means any person treated as a single employer with the Company
or the Parent for the purpose of section 414 of the Code.

 

Margin Regulations means Regulations U and X issued by the Board of Governors of
the United States Federal Reserve System.

 

Margin Stock has the meaning given to it in the Margin Regulations.

 

Plan means an employee benefit plan as defined in section 3(3) of ERISA:

 

  (a) maintained by the Parent or any ERISA Affiliate; or

 

  (b) to which the Parent or any ERISA Affiliate is required to make any payment
or contribution.

 

  Reportable Event means:

 

  (a) an event specified as such in section 4043 of ERISA or any related
regulation, other than an event in relation to which the requirement to give
notice of that event is waived by any regulation; or

 

57

--------------------------------------------------------------------------------

  (b) a failure to meet the minimum funding standard under section 412 of the
Code or section 302 of ERISA, whether or not there has been any waiver of notice
or waiver of the minimum funding standard under section 412 of the Code.

 

(b) The Parent shall not:

 

  (i) extend credit for the purpose, directly or indirectly, of buying or
carrying Margin Stock; or

 

  (ii) use the Loan, directly or indirectly, to buy or carry Margin Stock or for
any other purpose in violation of the Margin Regulations.

 

(c) The Parent shall not use any part of the Loan to acquire any security in a
transaction that is subject to the reporting requirements of section 13 or 14 of
the United States Securities Exchange Act of 1934.

 

(d) The Parent must promptly upon becoming aware of it notify the Facility Agent
of:

 

  (i) any Reportable Event;

 

  (ii) the termination of or withdrawal from any Plan subject to Title IV of
ERISA; and

 

  (iii) a claim or other communication alleging material non-compliance with any
law or regulation relating to any Plan.

 

(e) The Parent shall not, nor shall any of its ERISA Affiliates make or be
required to make any payment or contribution with respect to any Plan.

 

(f) The Parent and its ERISA Affiliates must ensure that no event or condition
exists at any time in relation to a Plan which results in the imposition of a
lien or other encumbrance on any of its assets or which have a Material Adverse
Effect.

 

19. EVENT OF DEFAULT

 

19.1 Events of Default

 

(a) Each of the events set out in this Clause is an Event of Default.

 

(b) In this Clause:

 

Permitted Transaction means:

 

  (i) an intra-Group re-organisation of a member of the Group on a solvent
basis; or

 

  (ii) any other transaction agreed by the Majority Lenders.

 

19.2 Non-payment

 

The Company or the Parent does not pay on the due date any amount payable by it
under the Finance Documents in the manner required under the Finance Documents,
unless the non-payment:

 

  (a) is caused by technical or administrative error; and

 

  (b) is remedied within three Business Days of the due date.

 

58

--------------------------------------------------------------------------------

19.3 Breach of other obligations

 

The Company or the Parent does not comply with any term of the Finance
Documents, unless the non-compliance:

 

  (i) is capable of remedy; and

 

  (ii) is remedied within fifteen days of the earlier of the Facility Agent
giving notice and the Company or the Parent becoming aware of the
non-compliance.

 

19.4 Misrepresentation

 

A representation made or repeated by the Company or the Parent in any Finance
Document or in any document delivered by or on behalf of the Company or the
Parent under any Finance Document is incorrect in any material respect when made
or deemed to be repeated.

 

19.5 Cross-default

 

Any of the following occurs in respect of a member of the Group:

 

  (a) any of its Financial Indebtedness is not paid when due (after the expiry
of any originally applicable grace period);

 

  (b) any of its Financial Indebtedness:

 

  (i) becomes prematurely due and payable;

 

  (ii) is placed on demand; or

 

  (iii) is capable of being declared by a creditor to be prematurely due and
payable or being placed on demand,

 

in each case, as a result of an event of default (howsoever described); or

 

  (c) any commitment for its Financial Indebtedness is cancelled or suspended as
a result of an event of default (howsoever described),

 

unless the aggregate amount of Financial Indebtedness falling within all or any
of paragraphs (a)-(c) above is less than US$5,000,000 or its equivalent.

 

19.6 Insolvency

 

Any of the following occurs in respect of Holdings or any of its Subsidiaries:

 

  (a) it is, or is deemed for the purposes of any law to be, unable to pay its
debts as they fall due or insolvent;

 

  (b) it admits its inability to pay its debts as they fall due;

 

  (c) it suspends making payments on any of its debts or announces an intention
to do so;

 

  (d) by reason of actual or anticipated financial difficulties, it begins
negotiations with any creditor for the rescheduling of any of its indebtedness;
or

 

  (e) a moratorium is declared in respect of any of its indebtedness.

 

59

--------------------------------------------------------------------------------

If a moratorium occurs in respect of any member of the Group, the ending of the
moratorium will not remedy any Event of Default caused by the moratorium.

 

19.7 Insolvency proceedings

 

(a) Except as provided below, any of the following occurs in respect of Holdings
or any of its Subsidiaries:

 

  (i) any step is taken with a view to a moratorium or a composition, assignment
or similar arrangement with any of its creditors;

 

  (ii) a meeting of its shareholders, directors or other officers is convened
for the purpose of considering any resolution for, to petition for or to file
documents with a court or any registrar for, its winding-up, administration or
dissolution or any such resolution is passed;

 

  (iii) any person presents a petition, or files documents with a court or any
registrar, for its winding-up, administration or dissolution;

 

  (iv) an order for its winding-up, administration or dissolution is made;

 

  (v) any liquidator, trustee in bankruptcy, judicial custodian, compulsory
manager, receiver, administrative receiver, administrator or similar officer is
appointed in respect of it or any of its assets;

 

  (vi) its shareholders, directors or other officers request the appointment of,
or give notice of their intention to appoint, a liquidator, trustee in
bankruptcy, judicial custodian, compulsory manager, receiver, administrative
receiver, administrator or similar officer; or

 

  (vii) any other analogous step or procedure is taken in any jurisdiction.

 

In respect of the Company, the appointment of a receiver, administrative
receiver, administrator or the like, includes, without limitation, a juge
délégué, commissaire, juge commissaire, liquidateur or curateur, and a
winding-up, administration or dissolution includes, without limitation,
bankruptcy (faillite), insolvency, liquidation, composition with creditors
(concordat préventif de faillite), moratorium or reprieve from payment (sursis
de paiement), controlled management (gestion contrôlée), fraudulent conveyance
(actio pauliana), general settlement with creditors, reorganisation or similar
laws affecting the rights of creditors generally.

 

(b) Paragraph (a) does not apply to:

 

  (i) any step or procedure which is part of a Permitted Transaction; or

 

  (ii) a petition for winding-up presented by a creditor which is being
contested in good faith and with due diligence and is discharged or struck out
within 15 days.

 

19.8 Creditors’ process

 

Any attachment, sequestration, distress, execution or analogous event affects
any asset(s) of a member of the Group which has an aggregate value in excess of
US$5,000,000, and is not discharged within 15 days.

 

60

--------------------------------------------------------------------------------

19.9 United States Bankruptcy Laws

 

(a) In this Subclause:

 

U.S. Bankruptcy Law means the United States Bankruptcy Code 1978 or any other
United States Federal or State bankruptcy, insolvency or similar law.

 

U.S. Debtor means the Parent or any other member of the Group that is
incorporated in the United States of America or any State of the United States
of America (including District of Columbia) or that has a place of business or
property in the United States of America.

 

(b) Any of the following occurs in respect of a U.S. Debtor:

 

  (i) it makes a general assignment for the benefit of creditors;

 

  (ii) it commences a voluntary case or proceeding under any U.S. Bankruptcy
Law; or

 

  (iii) an involuntary case under any U.S. Bankruptcy Law is commenced against
it and is not controverted within 20 days or is not dismissed or stayed within
90 days after commencement of the case; or

 

  (iv) an order for relief or other order approving any case or proceeding is
entered under any U.S. Bankruptcy Law.

 

19.10 Cessation of business

 

A member of the Group ceases, or threatens to cease, to carry on business
except:

 

  (a) as part of a Permitted Transaction; or

 

  (b) as a result of any disposal allowed under this Agreement.

 

19.11 Effectiveness of Finance Documents

 

(a) It is or becomes unlawful for the Company or the Parent to perform any of
its obligations under the Finance Documents.

 

(b) Any Finance Document is not effective in accordance with its terms or is
alleged by the Company or the Parent to be ineffective in accordance with its
terms for any reason.

 

(c) The Company or the Parent repudiates a Finance Document or evidences an
intention to repudiate a Finance Document.

 

19.12 Ownership

 

The Parent is not or ceases to be a Subsidiary of Holdings.

 

19.13 Material adverse change

 

Any event or series of events occurs which, in the opinion of the Majority
Lenders, has a Material Adverse Effect on the ability of the Company or the
Parent to perform any of its payment obligations under the Finance Documents.

 

19.14 Acceleration

 

(a) Subject to Sub-clauses (b) and (c) below, if an Event of Default is
outstanding, the Facility Agent may, by notice to the Company:

 

  (i) declare that an Event of Default has occurred; and/or

 

61

--------------------------------------------------------------------------------

  (ii) rescind this Agreement; and/or

 

  (iii) accelerate all or part the payment obligations of the Company; and/or

 

  (iv) if the Event of Default is ascribable to the Company and except for the
Events of Default set out in Clause 19.3 (Breach of other obligations),
terminate this Agreement in accordance with article 1456 of the Italian civil
code; and/or

 

  (v) if the Event of Default is ascribable to the Company, terminate this
Agreement in accordance with article 1453 of the Italian civil code.

 

(b) Notwithstanding Sub-clause (a)(ii) to (v) inclusive above, if an Event of
Default is outstanding in relation to Clauses 17 (Financial covenants), 18.5
(Negative pledge), 18.6 (Disposals), 18.7 (Financial Indebtedness) and 18.12
(Environmental matters) the Facility Agent may only:

 

  (i) rescind this Agreement; and/or

 

  (ii) accelerate all or part the payment obligations of the Company; and/or

 

  (iii) if the Event of Default is ascribable to the Company and except for the
Events of Default set out in Clause 19.3 (Breach of other obligations),
terminate this Agreement in accordance with article 1456 of the Italian civil
code; and/or

 

  (iv) if the Event of Default is ascribable to the Company, terminate this
Agreement in accordance with article 1453 of the Italian civil code,

 

if there is there is an acceleration in respect of the corresponding clause
8.01(g) (Environmental Matters), 9.02 (Consolidation; Merger; Sale or Purchase
of Assets; etc.), 9.03 (Liens), 9.04 (Indebtedness) 9.08 (Consolidated Interest
Coverage Ratio), 9.09 (Leverage Ratio), 9.10 (Senior Secured Leverage Ratio) or
9.11 (Capital Expenditures) (as the case may be) under the EnerSys Capital
Credit Agreement.

 

(c) Notwithstanding Sub-clause (a)(ii) to (v) inclusive above, if an Event of
Default is outstanding in relation to Clauses 19.6 (Insolvency), 19.7
(Insolvency proceedings), 19.8 (Creditors’ process), 19.9 (United States
Bankruptcy Laws), or 19.10 (Cessation of business) the Facility Agent may only:

 

  (i) rescind this Agreement; and/or

 

  (ii) accelerate all or part the payment obligations of the Company; and/or

 

  (iii) if the Event of Default is ascribable to the Company and except for the
Events of Default set out in Clause 19.3 (Breach of other obligations),
terminate this Agreement in accordance with article 1456 of the Italian civil
code; and/or

 

  (iv) if the Event of Default is ascribable to the Company, terminate this
Agreement in accordance with article 1453 of the Italian civil code,

 

if there is an acceleration in respect of the corresponding clause 10.05
(Bankruptcy, etc.), 10.06 (ERISA), or 10.09 (Judgments) under the EnerSys
Capital Credit Agreement, UNLESS in the opinion of the Majority Lenders it is
reasonable to rescind or terminate this Agreement or accelerate the payment
obligations in the manner set out in paragraphs (i) to (iv) (inclusive) above,
without there being an acceleration under the EnerSys Capital Credit Agreement.

 

62

--------------------------------------------------------------------------------

(d) For the purposes of this Subclause, the expression “rescind the Agreement”
shall be construed as the Italian expression “recedere dal contratto”, the
expression “accelerate the payment obligations of the Company” as the Italian
expression “dichiarare il debitore decaduto dal beneficio del termine”, the term
“ascribable” as the Italian expression “imputabile” and the term terminate as a
reference to “risoluzione del contratto”. Subparagraphs (a)(v), b(iv) and
(c)(iv) above shall be construed, in conjunction with the other provisions of
this Clause, as a clausola risolutiva espressa under article 1456 of the Italian
civil code.

 

(e) Upon rescission, acceleration or termination under paragraph (a), (b) or (c)
above:

 

  (i) All amounts accelerated under this Agreement shall be immediately due and
payable together with all other amount payable by the Company under the Finance
Documents; and

 

  (ii) the Total Commitments shall be cancelled forthwith.

 

(f) The remedies set out in this Subclause are in addition to any remedy
available to the Lender under this Agreement, any other Finance Document or the
applicable law.

 

20. THE ADMINISTRATIVE PARTIES

 

20.1 Appointment and duties of the Facility Agent

 

(a) Each Finance Party (other than the Facility Agent) irrevocably appoints the
Facility Agent to act as its agent under the Finance Documents.

 

(b) Each Finance Party irrevocably authorises the Facility Agent to:

 

  (i) perform the duties and to exercise the rights, powers and discretions that
are specifically given to it under the Finance Documents, together with any
other incidental rights, powers and discretions; and

 

  (ii) execute each Finance Document expressed to be executed by the Facility
Agent.

 

(c) The Facility Agent has only those duties which are expressly specified in
the Finance Documents. Those duties are solely of a mechanical and
administrative nature.

 

20.2 Role of the Mandated Lead Arrangers

 

Except as specifically provided in the Finance Documents, no Mandated Lead
Arranger has any obligations of any kind to any other Party in connection with
any Finance Document.

 

20.3 No fiduciary duties

 

Except as specifically provided in a Finance Document, nothing in the Finance
Documents makes an Administrative Party a trustee or fiduciary for any other
Party or any other person. No Administrative Party need hold in trust any moneys
paid to it for a Party or be liable to account for interest on those moneys.

 

20.4 Individual position of an Administrative Party

 

(a) If it is also a Lender, each Administrative Party has the same rights and
powers under the Finance Documents as any other Lender and may exercise those
rights and powers as though it were not an Administrative Party.

 

(b) Each Administrative Party may:

 

  (i) carry on any business with the Company or the Parent or their related
entities (including acting as an agent or a trustee for any other financing);
and

 

63

--------------------------------------------------------------------------------

  (ii) retain any profits or remuneration it receives under the Finance
Documents or in relation to any other business it carries on with Company or the
Parent or their related entities.

 

20.5 Reliance

 

The Facility Agent may:

 

  (a) rely on any notice or document believed by it to be genuine and correct
and to have been signed by, or with the authority of, the proper person;

 

  (b) rely on any statement made by any person regarding any matters which may
reasonably be assumed to be within his knowledge or within his power to verify;

 

  (c) engage, pay for and rely on professional advisers selected by it
(including those representing a Party other than the Facility Agent); and

 

  (d) act under the Finance Documents through its personnel and agents.

 

20.6 Majority Lenders’ instructions

 

(a) The Facility Agent is fully protected if it acts on the instructions of the
Majority Lenders in the exercise of any right, power or discretion or any matter
not expressly provided for in the Finance Documents. Any such instructions given
by the Majority Lenders will be binding on all the Lenders. In the absence of
instructions, the Facility Agent may act as it considers to be in the best
interests of all the Lenders.

 

(b) The Facility Agent may assume that unless it has received notice to the
contrary, any right, power, authority or discretion vested in any Party or the
Majority Lenders has not been exercised.

 

(c) The Facility Agent is not authorised to act on behalf of a Lender (without
first obtaining that Lender’s consent) in any legal or arbitration proceedings
in connection with any Finance Document.

 

(d) The Facility Agent may require the receipt of security satisfactory to it,
whether by way of payment in advance or otherwise, against any liability or loss
which it may incur in complying with the instructions of the Majority Lenders.

 

20.7 Responsibility

 

(a) No Administrative Party is responsible for the adequacy, accuracy or
completeness of any statement or information (whether written or oral) made in
or supplied in connection with any Finance Document.

 

(b) No Administrative Party is responsible for the legality, validity,
effectiveness, adequacy, completeness or enforceability of any Finance Document
or any other document.

 

(c) Without affecting the responsibility of the Company or the Parent for
information supplied by it or on its behalf in connection with any Finance
Document, each Lender confirms that it:

 

  (i) has made, and will continue to make, its own independent appraisal of all
risks arising under or in connection with the Finance Documents (including the
financial condition and affairs of Company or the Parent and their related
entities and the nature and extent of any recourse against any Party or its
assets); and

 

64

--------------------------------------------------------------------------------

  (ii) has not relied exclusively on any information provided to it by any
Administrative Party in connection with any Finance Document.

 

20.8 Exclusion of liability

 

(a) The Facility Agent is not liable or responsible to any other Finance Party
for any action taken or not taken by it in connection with any Finance Document,
unless directly caused by its gross negligence or wilful misconduct.

 

(b) No Party (other than the Facility Agent) may take any proceedings against
any officer, employee or agent of the Facility Agent in respect of any claim it
might have against the Facility Agent or in respect of any act or omission of
any kind by that officer, employee or agent in connection with any Finance
Document. Any officer, employee or agent of the Facility Agent may rely on this
Subclause.

 

(c) The Facility Agent is not liable for any delay (or any related consequences)
in crediting an account with an amount required under the Finance Documents to
be paid by the Facility Agent if the Facility Agent has taken all necessary
steps as soon as reasonably practicable to comply with the regulations or
operating procedures of any recognised clearing or settlement system used by the
Facility Agent for that purpose.

 

(d)        (i)             Nothing in this Agreement will oblige any
Administrative Party to satisfy any know your customer requirement in relation
to the identity of any person on behalf of any Finance Party.

 

  (ii) Each Finance Party confirms to each Administrative Party that it is
solely responsible for any know your customer requirements it is required to
carry out and that it may not rely on any statement in relation to those
requirements made by any other person.

 

20.9 Event of Default

 

(a) The Facility Agent is not obliged to monitor or enquire whether an Event of
Default has occurred. The Facility Agent is not deemed to have knowledge of the
occurrence of an Event of Default.

 

(b) If the Facility Agent:

 

  (i) receives notice from a Party referring to this Agreement, describing an
Event of Default and stating that the event is an Event of Default; or

 

  (ii) is aware of the non-payment of any principal, interest or fee payable to
a Finance Party (other than the Facility Agent or an Mandated Lead Arranger)
under this Agreement,

 

it must promptly notify the other Finance Parties.

 

20.10 Information

 

(a) The Facility Agent must promptly forward to the person concerned the
original or a copy of any document which is delivered to the Facility Agent by a
Party for that person.

 

65

--------------------------------------------------------------------------------

(b) Except where a Finance Document specifically provides otherwise, the
Facility Agent is not obliged to review or check the adequacy, accuracy or
completeness of any document it forwards to another Party.

 

(c) Except as provided above, the Facility Agent has no duty:

 

  (i) either initially or on a continuing basis to provide any Lender with any
credit or other information concerning the risks arising under or in connection
with the Finance Documents (including any information relating to the financial
condition or affairs of the Company or the Parent or their related entities or
the nature or extent of recourse against any Party or its assets) whether coming
into its possession before, on or after the date of this Agreement; or

 

  (ii) unless specifically requested to do so by a Lender in accordance with a
Finance Document, to request any certificate or other document from the Company
or the Parent.

 

(d) In acting as the Facility Agent, the agency division of the Facility Agent
is treated as a separate entity from its other divisions and departments. Any
information acquired by the Facility Agent which, in its opinion, is acquired by
it otherwise than in its capacity as the Facility Agent may be treated as
confidential by the Facility Agent and will not be treated as information
possessed by the Facility Agent in its capacity as such.

 

(e) The Facility Agent is not obliged to disclose to any person any confidential
information supplied to it by or on behalf of a member of the Group solely for
the purpose of evaluating whether any waiver or amendment is required in respect
of any term of the Finance Documents.

 

(f) The Company or the Parent irrevocably authorises the Facility Agent to
disclose to the other Finance Parties any information which, in its opinion, is
received by it in its capacity as the Facility Agent.

 

20.11 Indemnities

 

(a) Without limiting the liability of the Company or the Parent under the
Finance Documents, each Lender must indemnify the Facility Agent for that
Lender’s Pro Rata Share of any loss or liability incurred by the Facility Agent
in acting as the Facility Agent, except to the extent that the loss or liability
is caused by the Facility Agent’s gross negligence or wilful misconduct.

 

(b) The Facility Agent may deduct from any amount received by it for a Lender
any amount due to the Facility Agent from that Lender under a Finance Document
but unpaid.

 

20.12 Compliance

 

Each Administrative Party may refrain from doing anything (including disclosing
any information) which might, in its opinion, constitute a breach of any law or
regulation or be otherwise actionable at the suit of any person, and may do
anything which, in its opinion, is necessary or desirable to comply with any law
or regulation.

 

20.13 Resignation of the Facility Agent

 

(a) The Facility Agent may resign and appoint any of its Affiliates as successor
Facility Agent by giving notice to the other Finance Parties and the Company.

 

(b) Alternatively, the Facility Agent may resign by giving notice to the Finance
Parties and the Company, in which case the Majority Lenders may appoint a
successor Facility Agent.

 

66

--------------------------------------------------------------------------------

(c) If no successor Facility Agent has been appointed under paragraph (b) above
within 30 days after notice of resignation was given, the Facility Agent may
appoint a successor Facility Agent.

 

(d) The person(s) appointing a successor Facility Agent must, if practicable,
consult with the Company prior to the appointment.

 

(e) The resignation of the Facility Agent and the appointment of any successor
Facility Agent will both become effective only when the successor Facility Agent
notifies all the Parties that it accepts its appointment. On giving the
notification, the successor Facility Agent will succeed to the position of the
Facility Agent and the term Facility Agent will mean the successor Facility
Agent.

 

(f) The retiring Facility Agent must, at its own cost, make available to the
successor Facility Agent such documents and records and provide such assistance
as the successor Facility Agent may reasonably request for the purposes of
performing its functions as the Facility Agent under the Finance Documents.

 

(g) Upon its resignation becoming effective, this Clause will continue to
benefit the retiring Facility Agent in respect of any action taken or not taken
by it in connection with the Finance Documents while it was the Facility Agent,
and, subject to paragraph (f) above, it will have no further obligations under
any Finance Document.

 

(h) The Majority Lenders may, by notice to the Facility Agent, require it to
resign under paragraph (b) above.

 

20.14 Relationship with Lenders

 

(a) The Facility Agent may treat each Lender as a Lender, entitled to payments
under this Agreement and as acting through its Facility Office(s) until it has
received not less than five Business Days’ prior notice from that Lender to the
contrary.

 

(b) The Facility Agent may at any time, and must if requested to do so by the
Majority Lenders, convene a meeting of the Lenders.

 

(c) The Facility Agent must keep a register of all the Parties and supply any
other Party with a copy of the register on request. The register will include
each Lender’s Facility Office(s) and contact details for the purposes of this
Agreement.

 

20.15 Facility Agent’s management time

 

If the Facility Agent requires, any amount payable to the Facility Agent by any
Party under any indemnity or in respect of any costs or expenses incurred by the
Facility Agent under the Finance Documents after the date of this Agreement may
include any extraordinary costs of using its management time or other resources
and will be calculated on the basis of such reasonable daily or hourly rates as
the Facility Agent may notify to the relevant Party. This is in addition to any
amount in respect of fees or expenses paid or payable to the Facility Agent
under any other term of the Finance Documents.

 

20.16 Notice period

 

Where this Agreement specifies a minimum period of notice to be given to the
Facility Agent, the Facility Agent may, at its discretion, accept a shorter
notice period.

 

67

--------------------------------------------------------------------------------

21. EVIDENCE AND CALCULATIONS

 

21.1 Accounts

 

Accounts maintained by a Finance Party in connection with this Agreement are
prima facie evidence of the matters to which they relate for the purpose of any
litigation or arbitration proceedings.

 

21.2 Certificates and determinations

 

Any certification or determination by a Finance Party of a rate or amount under
the Finance Documents will be, in the absence of manifest error, conclusive
evidence of the matters to which it relates.

 

21.3 Calculations

 

Any interest or fee accruing under this Agreement accrues from day to day and is
calculated on the basis of the actual number of days elapsed and a year of 360
days.

 

22. FEES

 

22.1 Facility Agent’s fee

 

The Company must pay to the Facility Agent for its own account an agency fee in
the manner agreed in the Fee Letter between the Facility Agent and the Company.

 

22.2 Arrangement fee

 

The Company must pay to the Mandated Lead Arrangers for their own account an
arrangement fee in the manner agreed in the Fee Letter between the Mandated Lead
Arrangers and the Company.

 

22.3 Commitment fee

 

(a) The Company must pay a commitment fee computed at the rate of 50 per cent.
of the Margin per annum on the undrawn, uncancelled amount of each Lender’s
Commitment.

 

(b) Accrued commitment fee is payable quarterly in arrear. Accrued commitment
fee is also payable to the Facility Agent for a Lender on the date its
Commitment is cancelled in full.

 

23. INDEMNITIES AND BREAK COSTS

 

23.1 Currency indemnity

 

(a) The Company must, as an independent obligation, indemnify each Finance Party
against any loss or liability which that Finance Party incurs as a consequence
of:

 

  (i) that Finance Party receiving an amount in respect of Company or the Parent
‘s liability under the Finance Documents; or

 

  (ii) that liability being converted into a claim, proof, judgment or order,

 

in a currency other than the currency in which the amount is expressed to be
payable under the relevant Finance Document.

 

68

--------------------------------------------------------------------------------

(b) Unless otherwise required by law, Company and the Parent each waive any
right it may have in any jurisdiction to pay any amount under the Finance
Documents in a currency other than that in which it is expressed to be payable.

 

23.2 Other indemnities

 

(a) The Company must indemnify each Finance Party against any actual loss or
liability which that Finance Party incurs as a consequence of:

 

  (i) the occurrence of any Event of Default;

 

  (ii) any failure by the Company to pay any amount due under a Finance Document
on its due date, including any resulting from any distribution or redistribution
of any amount among the Lenders under this Agreement;

 

  (iii) (other than by reason of negligence or default by that Finance Party)
the Loan not being made after a Request has been delivered for the Loan; or

 

  (iv) the Loan (or part of the Loan) not being prepaid in accordance with this
Agreement.

 

The Company’s liability in each case includes any loss or expense on account of
funds borrowed, contracted for or utilised to fund any amount payable under any
Finance Document or the Loan.

 

(b) The Company must indemnify the Facility Agent against any actual loss or
liability incurred by the Facility Agent as a result of:

 

  (i) investigating any event which the Facility Agent reasonably believes to be
an Event of Default; or

 

  (ii) acting or relying on any notice which the Facility Agent reasonably
believes to be genuine, correct and appropriately authorised.

 

23.3 Break Costs

 

(a) The Company must pay to each Lender its Break Costs.

 

(b) Break Costs are the amount (if any) determined by the relevant Lender by
which:

 

  (i) the interest which that Lender would have received for the period from the
date of receipt of any part of its share in the Loan or an overdue amount to the
last day of the applicable Term for the Loan or overdue amount if the principal
or overdue amount received had been paid on the last day of that Term;

 

exceeds

 

  (ii) the amount which that Lender would be able to obtain by placing an amount
equal to the amount received by it on deposit with a leading bank in the
appropriate interbank market for a period starting on the Business Day following
receipt and ending on the last day of the applicable Term.

 

(c) Each Lender must supply to the Facility Agent for the Company details of the
amount of any Break Costs claimed by it under this Subclause.

 

69

--------------------------------------------------------------------------------

24. EXPENSES

 

24.1 Initial costs

 

(a) The Company must pay to each Administrative Party the amount of costs and
expenses (excluding legal fees) reasonably incurred by it in connection with the
negotiation, preparation, printing, and execution of the Finance Documents, up
to an amount not exceeding €3,000.

 

(b) The Company must pay to each Administrative Party the amount of its legal
fees as agreed between the Administrative Parties and the Company separately,
and such fees shall be payable on the date of this Agreement.

 

24.2 Subsequent costs

 

The Company must pay to the Facility Agent the amount of all costs and expenses
(including legal fees) reasonably incurred by it in connection with:

 

  (a) the negotiation, preparation, printing and execution of any Finance
Document (other than a Transfer Certificate, and any internal costs of the
Finance Parties) executed after the date of this Agreement; and

 

  (b) any amendment, waiver or consent requested by or on behalf of the Company
or the Parent or specifically allowed by this Agreement.

 

24.3 Enforcement costs

 

The Company must pay to each Finance Party the amount of all costs and expenses
(including legal fees) incurred by it in connection with the enforcement of, or
the preservation of any rights under, any Finance Document.

 

25. AMENDMENTS AND WAIVERS

 

25.1 Procedure

 

(a) Except as provided in this Clause, any term of the Finance Documents may be
amended or waived with the agreement of the Company and the Majority Lenders.
The Facility Agent may effect, on behalf of any Finance Party, an amendment or
waiver allowed under this Clause.

 

(b) The consent to any amendment to Clauses 17 (Financial covenants), 18.5
(Negative pledge), 18.6 (Disposals), 18.7 (Financial Indebtedness) and 18.12
(Environmental matters) requested in order to conform such Clause with the
corresponding clause 8.01(g) (Environmental Matters), 9.02 (Consolidation;
Merger; Sale or Purchase of Assets; etc.), 9.03 (Liens), 9.04 (Indebtedness)
9.08 (Consolidated Interest Coverage Ratio), 9.09 (Leverage Ratio), 9.10 (Senior
Secured Leverage Ratio) or 9.11 (Capital Expenditures) (as the case may be)in
the EnerSys Capital Credit Agreement shall not be unreasonably withheld.

 

(c) The Facility Agent must promptly notify the other Parties of any amendment
or waiver effected by it under paragraph (a) above. Any such amendment or waiver
is binding on all the Parties.

 

25.2 Exceptions

 

(a) An amendment or waiver which relates to:

 

  (i) the definition of Majority Lenders in Clause 1.1 (Definitions);

 

70

--------------------------------------------------------------------------------

  (ii) an extension of the date of payment of any amount to a Lender under the
Finance Documents;

 

  (iii) a reduction in the Margin or a reduction in the amount of any payment of
principal, interest, fee or other amount payable to a Lender under the Finance
Documents;

 

  (iv) an increase in, or an extension of, a Commitment or the Total
Commitments;

 

  (v) a release of the Company or the Parent other than in accordance with the
terms of this Agreement;

 

  (vi) a release of any Security Document other than in accordance with the
terms of the Finance Documents;

 

  (vii) a term of a Finance Document which expressly requires the consent of
each Lender;

 

  (viii) the right of a Lender to assign or transfer its rights or obligations
under the Finance Documents; or

 

  (ix) this Clause,

 

may only be made with the consent of all the Lenders.

 

(b) A Fee Letter may be amended or waived with the agreement of the
Administrative Party that is a party to that Fee Letter and the Company.

 

25.3 Change of currency

 

If a change in any currency of a country occurs (including where there is more
than one currency or currency unit recognised at the same time as the lawful
currency of a country), the Finance Documents will be amended to the extent the
Facility Agent (acting reasonably and after consultation with the Company)
determines is necessary to reflect the change.

 

25.4 Waivers and remedies cumulative

 

The rights of each Finance Party under the Finance Documents:

 

  (a) may be exercised as often as necessary;

 

  (b) are cumulative and not exclusive of its rights under the general law; and

 

  (c) may be waived only in writing and specifically.

 

Delay in exercising or non-exercise of any right is not a waiver of that right.

 

26. CHANGES TO THE PARTIES

 

26.1 Assignments and transfers by the Company and the Parent

 

Neither the Company nor the Parent may assign or transfer any of its rights and
obligations under the Finance Documents without the prior consent of all the
Lenders.

 

71

--------------------------------------------------------------------------------

26.2 Transfers by Lenders

 

(a) A Lender (the Existing Lender) may at any time transfer in whole or in part
its participation in the Facility to any other person (the New Lender) (each, a
Transfer) in compliance with Clause 26.3 (Procedure for Transfers).

 

(b) The consent of the Company is required for any Transfer unless the New
Lender is another Lender or an Affiliate of a Lender or an Event of Default is
outstanding. The consent of the Company must not be unreasonably withheld or
delayed. The Company will be deemed to have given its consent five Business Days
after the Company is given notice of the request unless it is expressly refused
by the Company within that time.

 

(c) Unless the Company and the Facility Agent otherwise agree, a Transfer shall
be in a minimum amount of €4,000,000.

 

(d) Upon each Transfer the New Lender shall be assigned the rights and assume
the obligations of the Existing Lender, in their entirety or, in the case of
Transfer of part of the participation of the Existing Lender, pro-rata, under,
and shall become a Party to, this Agreement and the other Finance Documents to
which the Existing Lender is a party. The obligations of the Existing Lender
shall, to the extent assumed by the New Lender, be discharged.

 

(e) The Facility Agent is not obliged to execute a Transfer Certificate until it
has completed all know your customer requirements to its satisfaction. The
Facility Agent must promptly notify the Existing Lender and the New Lender if
there are any such requirements.

 

(f) Unless the Facility Agent otherwise agrees, the New Lender must pay to the
Facility Agent for its own account, on or before the date any assignment or
transfer occurs, a fee of €5,000.

 

(g) Any reference in this Agreement to a Lender includes a New Lender but
excludes a Lender if no amount is or may be owed to or by it under this
Agreement.

 

26.3 Procedure for Transfers

 

(a) A Transfer is effected if:

 

  (i) the Existing Lender and the New Lender deliver to the Facility Agent a
duly completed Transfer Certificate; and

 

  (ii) the Facility Agent executes the Transfer Certificate and delivers a copy
of it to the Company.

 

(b) The Transfer shall be effective on the date on which the Facility Agent
executes the Transfer Certificate, or, if later, the date specified in the
Transfer Certificate (the Transfer Date).

 

26.4 Limitation of responsibility of Existing Lender

 

(a) Unless expressly agreed to the contrary, an Existing Lender is not
responsible to a New Lender for the legality, validity, adequacy, accuracy,
completeness or performance of:

 

  (i) any Finance Document or any other document; or

 

  (ii) any statement or information (whether written or oral) made in or
supplied in connection with any Finance Document,

 

and any representations or warranties implied by law are excluded.

 

72

--------------------------------------------------------------------------------

(b) Each New Lender confirms to the Existing Lender and the other Finance
Parties that it:

 

  (i) has made, and will continue to make, its own independent appraisal of all
risks arising under or in connection with the Finance Documents (including the
financial condition and affairs of the Company or the Parent and its related
entities and the nature and extent of any recourse against any Party or its
assets) in connection with its participation in this Agreement; and

 

  (ii) has not relied exclusively on any information supplied to it by the
Existing Lender in connection with any Finance Document.

 

(c) Nothing in any Finance Document requires an Existing Lender to:

 

  (i) accept a re-transfer from a New Lender of any of the rights and
obligations assigned or transferred under this Clause; or

 

  (ii) support any losses incurred by the New Lender by reason of the
non-performance by either the Company or the Parent of its obligations under any
Finance Document or otherwise.

 

26.5 Costs resulting from change of Lender or Facility Office

 

If:

 

  (a) a Lender assigns or transfers any of its rights and obligations under the
Finance Documents or changes its Facility Office; and

 

  (b) as a result of circumstances existing at the date the assignment, transfer
or change occurs, the Company or the Parent would be obliged to pay a Tax
Payment or an Increased Cost,

 

then, unless the assignment, transfer or change is made by a Lender to mitigate
any circumstances giving rise to the Tax Payment, Increased Cost or a right to
be prepaid and/or cancelled by reason of illegality, the Company or the Parent
(as the case may be)need only pay that Tax Payment or Increased Cost to the same
extent that it would have been obliged to if no assignment, transfer or change
had occurred.

 

26.6 Changes to the Reference Banks

 

If a Reference Bank (or, if a Reference Bank is not a Lender, the Lender of
which it is an Affiliate) ceases to be a Lender, the Facility Agent must (with
the consent of the Company) appoint another Lender or an Affiliate of a Lender
to replace that Reference Bank.

 

27. DISCLOSURE OF INFORMATION

 

(a) Each Finance Party must keep confidential any information supplied to it by
or on behalf of the Company or the Parent in connection with the Finance
Documents. However, a Finance Party is entitled to disclose information:

 

  (i) which is publicly available, other than as a result of a breach by that
Finance Party of this Clause;

 

  (ii) in connection with any legal or arbitration proceedings;

 

  (iii) if required to do so under any law or regulation;

 

73

--------------------------------------------------------------------------------

  (iv) to a governmental, banking, taxation or other regulatory authority;

 

  (v) to its professional advisers;

 

  (vi) to the extent allowed under paragraph (b) below;

 

  (vii) to the Company or the Parent (as the case may be); or

 

  (viii) with the agreement of the Company or the Parent (as the case may be).

 

(b) A Finance Party may disclose to an Affiliate or any person with whom it may
enter, or has entered into, any kind of transfer, participation or other
agreement in relation to this Agreement (a participant):

 

  (i) a copy of any Finance Document; and

 

  (ii) any information which that Finance Party has acquired under or in
connection with any Finance Document.

 

However, before a participant may receive any confidential information, it must
agree with the relevant Finance Party to keep that information confidential on
the terms of paragraph (a) above.

 

(c) This Clause supersedes any previous confidentiality undertaking given by a
Finance Party in connection with this Agreement prior to it becoming a Party.

 

28. SET-OFF

 

A Finance Party may set off any matured obligation owed to it by the Company or
the Parent under the Finance Documents (to the extent beneficially owned by that
Finance Party) against any obligation (whether or not matured) owed by that
Finance Party to the Company or the Parent (as the case may be), regardless of
the place of payment, booking branch or currency of either obligation. If the
obligations are in different currencies, the Finance Party may convert either
obligation at a market rate of exchange in its usual course of business for the
purpose of the set-off.

 

29. PRO RATA SHARING

 

29.1 Redistribution

 

If any amount owing by the Company or the Parent under this Agreement to a
Lender (the recovering Lender) is discharged by payment, set-off or any other
manner other than through the Facility Agent under this Agreement (a recovery),
then:

 

  (a) the recovering Lender must, within three Business Days, supply details of
the recovery to the Facility Agent;

 

  (b) the Facility Agent must calculate whether the recovery is in excess of the
amount which the recovering Lender would have received if the recovery had been
received and distributed by the Facility Agent under this Agreement; and

 

  (c) the recovering Lender must pay to the Facility Agent an amount equal to
the excess (the redistribution).

 

74

--------------------------------------------------------------------------------

29.2 Effect of redistribution

 

(a) The Facility Agent must treat a redistribution as if it were a payment by
the Company or the Parent (as the case may be) under this Agreement and
distribute it among the Lenders, other than the recovering Lender, accordingly.

 

(b) When the Facility Agent makes a distribution under paragraph (a) above, the
recovering Lender will be subrogated to the rights of the Finance Parties which
have shared in that redistribution.

 

(c) If and to the extent that the recovering Lender is not able to rely on any
rights of subrogation under paragraph (b) above, the Company or the Parent (as
the case may be) will owe the recovering Lender a debt which is equal to the
redistribution, immediately payable and of the type originally discharged.

 

(d) If:

 

  (i) a recovering Lender must subsequently return a recovery, or an amount
measured by reference to a recovery, to the Company or the Parent; and

 

  (ii) the recovering Lender has paid a redistribution in relation to that
recovery,

 

each Finance Party must reimburse the recovering Lender all or the appropriate
portion of the redistribution paid to that Finance Party, together with interest
for the period while it held the redistribution. In this event, the subrogation
in paragraph (b) above will operate in reverse to the extent of the
reimbursement.

 

29.3 Exceptions

 

Notwithstanding any other term of this Clause, a recovering Lender need not pay
a redistribution to the extent that:

 

  (a) it would not, after the payment, have a valid claim against the Company or
the Parent (as the case may be) in the amount of the redistribution; or

 

  (b) it would be sharing with another Finance Party any amount which the
recovering Lender has received or recovered as a result of legal or arbitration
proceedings, where:

 

  (i) the recovering Lender notified the Facility Agent of those proceedings;
and

 

  (ii) the other Finance Party had an opportunity to participate in those
proceedings but did not do so or did not take separate legal or arbitration
proceedings as soon as reasonably practicable after receiving notice of them.

 

30. SEVERABILITY

 

If a term of a Finance Document is or becomes illegal, invalid or unenforceable
in any jurisdiction, that will not affect:

 

  (a) the legality, validity or enforceability in that jurisdiction of any other
term of the Finance Documents; or

 

  (b) the legality, validity or enforceability in other jurisdictions of that or
any other term of the Finance Documents.

 

75

--------------------------------------------------------------------------------

31. NOTICES

 

31.1 In writing

 

(a) Any communication in connection with a Finance Document must be in writing
and, unless otherwise stated, may be given in person, by post or fax.

 

(b) For the purpose of the Finance Documents, an electronic communication
accompanied by a delivery receipt will be treated as being in writing.

 

(c) Unless it is agreed to the contrary, any consent or agreement required under
a Finance Document must be given in writing.

 

31.2 Contact details

 

(a) Except as provided below, the contact details of each Party for all
communications in connection with the Finance Documents are those notified by
that Party for this purpose to the Facility Agent on or before the date it
becomes a Party.

 

(b) The contact details of the Company for this purpose are:

 

Address:    6 avenue Pasteur, L-2310, Luxembourg Fax number:    +35 2 26478563
Attention:    Tamy Feller,

 

And a copy of any communication must also be sent to Holdings:

 

Address:    2366 Bernville Road, Reading, PA 19605, U.S.A. Fax number:    +1 610
208 1671

Attention:

Michael G. Hastings – Vice President and Treasurer of Holdings,

Thomas L. O’Neill – Assistant Treasurer of Holdings, and

John J. Phillips – Assistant Treasurer of Holdings.

 

(c) The contact details of the Parent for this purpose are:

 

Address:    2366 Bernville Road, Reading, PA 19605, U.S.A. Fax number:    +1 610
208 1671 Attention:    Frank Macerato.

 

(d) The contact details of the Facility Agent for this purpose are:

 

Address:    Direzione Imprese      Funzione Prodotti di Finanza Specialistica  
   Piazza San Carlo, 156 -10121 Turin, Italy Fax number:    +39 011 5552991
Attention:    Daniele Bertolotto/Adriana Morino.

 

(e) Any Party may change its contact details by giving five Business Days’
notice to the Facility Agent or (in the case of the Facility Agent) to the other
Parties.

 

(f) Where a Party nominates a particular department or officer to receive a
communication, a communication will not be effective if it fails to specify that
department or officer.

 

76

--------------------------------------------------------------------------------

31.3 Effectiveness

 

(a) Except as provided below, any communication in connection with a Finance
Document will be deemed to be given as follows:

 

  (i) if delivered in person, at the time of delivery;

 

  (ii) if posted, five days after being deposited in the post, postage prepaid,
in a correctly addressed envelope; and

 

  (iii) if by fax, when received in legible form.

 

(b) A communication given under paragraph (a) above but received on a
non-working day or after business hours in the place of receipt will only be
deemed to be given on the next working day in that place.

 

31.4 The Company and the Parent

 

(a) All communications under the Finance Documents to or from the Company or the
Parent must be sent through the Facility Agent.

 

(b) All communications under the Finance Documents to or from the Parent must be
sent through the Company.

 

(c) The Parent irrevocably appoints the Company to act as its agent:

 

  (i) to give and receive all communications under the Finance Documents;

 

  (ii) to supply all information concerning itself to any Finance Party; and

 

  (iii) to sign all documents under or in connection with the Finance Documents.

 

(d) Any communication given to the Company in connection with a Finance Document
will be deemed to have been given also to the Parent.

 

(e) The Facility Agent may assume that any communication made by the Company is
made with the consent of the Parent.

 

32. LANGUAGE

 

(a) Any notice given in connection with a Finance Document must be in English.

 

(b) Any other document provided in connection with a Finance Document must be:

 

  (i) in English; or

 

  (ii) (unless the Facility Agent otherwise agrees) accompanied by an English
translation. In this case, the English translation prevails unless the document
is a statutory or other official document.

 

33. GOVERNING LAW

 

This Agreement is governed by Italian law.

 

77

--------------------------------------------------------------------------------

34. ENFORCEMENT

 

34.1 Jurisdiction

 

(a) The courts of Milan have exclusive jurisdiction to settle any dispute in
connection with any Finance Document.

 

(b) Notwithstanding paragraph (a) above, any New York State court or Federal
court sitting in the City and County of New York City also has jurisdiction to
settle any dispute in connection with any Finance Document (save for a Security
Document).

 

(c) The courts of Milan and New York courts are the most appropriate and
convenient courts to settle any such dispute and the Company and the Parent each
waive objection to those courts on the grounds of inconvenient forum or
otherwise in relation to proceedings in connection with any Finance Document.

 

(d) This Clause is for the benefit of the Finance Parties only. To the extent
allowed by law, a Finance Party may take:

 

  (i) proceedings in any other court; and

 

  (ii) concurrent proceedings in any number of jurisdictions.

 

34.2 Service of process

 

(a) The Parent, not being incorporated or having a place of business in New York
State, irrevocably appoints CSC, 1133 Avenue of the Americas; Suite 3100, New
York, New York 10036 as its agent for service of process in any proceedings
before any court located in the State of New York.

 

(b) If any person appointed as process agent is unable for any reason to act as
agent for service of process, the Company (on behalf of the Parent) must
immediately appoint another agent on terms acceptable to the Facility Agent.
Failing this, the Facility Agent may appoint another agent for this purpose.

 

(c) Each of the Company and the Parent agree that failure by a process agent to
notify it of any process will not invalidate the relevant proceedings.

 

(d) This Clause does not affect any other method of service allowed by law.

 

34.3 Waiver of immunity

 

Each of the Company and the Parent irrevocably and unconditionally:

 

  (a) agree not to claim any immunity from proceedings brought by a Finance
Party against it in relation to a Finance Document and to ensure that no such
claim is made on its behalf;

 

  (b) consent generally to the giving of any relief or the issue of any process
in connection with those proceedings; and

 

  (c) waive all rights of immunity in respect of it or its assets.

 

78

--------------------------------------------------------------------------------

34.4 Waiver of trial by jury

 

EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION IN CONNECTION WITH ANY FINANCE DOCUMENT OR ANY TRANSACTION CONTEMPLATED
BY ANY FINANCE DOCUMENT. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO
TRIAL BY COURT.

 

This Agreement has been entered into on the date stated at the beginning of this
Agreement.

 

79

--------------------------------------------------------------------------------

SCHEDULE 1

 

ORIGINAL PARTIES

 

Name of Original Lenders

--------------------------------------------------------------------------------

   Commitments

--------------------------------------------------------------------------------

Banca Intesa S.p.A.

     6,500,000

SanPaolo IMI S.p.A.

     18,500,000     

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

Total Commitments

   € 25,000,000     

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

 

80

--------------------------------------------------------------------------------

SCHEDULE 2

 

CONDITIONS PRECEDENT DOCUMENTS

 

Company

 

1. A copy of the constitutional documents of the Company and the Parent.

 

2. A copy of a resolution of the board of directors or board of managers (as the
case may be) of the Company and the Parent approving the terms of, and the
transactions contemplated by, this Agreement.

 

3. A specimen of the signature of each person authorised on behalf of the
Company and the Parent to execute or witness the execution of any Finance
Document or to sign or send any document or notice in connection with any
Finance Document.

 

4. A certificate of an authorised signatory of the Company and the Parent
confirming that utilising the Total Commitments in full would not breach any
limit binding on it.

 

5. A certificate of an authorised signatory of the Company certifying that each
copy document specified in this Schedule is correct, complete and in full force
and effect as at a date no earlier than the date of this Agreement.

 

6. Evidence that the agent of the Parent under the Finance Documents for service
of process in New York has accepted its appointment.

 

Security Document(s)

 

6. The following Security Document duly executed and perfected by the parties to
it:

 

the EnerSys Pledge.

 

7. Share certificates.

 

Legal opinions

 

8. A legal opinion of Bonn Schmitt Steichen, legal advisers in Luxembourg to the
Company, addressed to the Finance Parties.

 

9. A legal opinion of Skadden, Arps, Slate, Meagher & Flom LLP, legal advisers
in New York to the Parent, addressed to the Finance Parties.

 

10. A legal opinion of Allen & Overy – Studio Legale Associato, legal advisers
in Italy to the Mandated Lead Arrangers and the Facility Agent, addressed to the
Finance Parties.

 

Other documents and evidence

 

11. Executed originals of each Finance Document.

 

12. Quota and business transfer agreement in relation to the Acquisition, duly
executed.

 

13. Evidence that all fees and expenses then due and payable from the Company
under this Agreement have been or will be paid by the Utilisation Date.

 

81

--------------------------------------------------------------------------------

14. A copy of any other authorisation or other document, opinion or assurance
which the Facility Agent has notified the Company is necessary or desirable in
connection with the entry into and performance of, and the transactions
contemplated by, any Finance Document or for the validity and enforceability of
any Finance Document.

 

15. Structure memorandum.

 

82

--------------------------------------------------------------------------------

SCHEDULE 3

 

FORM OF REQUEST

 

To:

   [AGENT] as Facility Agent

From:

   [                                         ]

Date:

   [                                         ]

 

ENERSYS HOLDINGS (LUXEMBOURG) S.A R.L.-€25,000,000 Credit Agreement

dated [            ], 2005 (the Agreement)

 

1. We refer to the Agreement. This is a Request.

 

2. We wish to borrow the Loan on the following terms:

 

  (a) Utilisation Date: [                                        ]

 

  (b) Amount/currency: [                                        ]

 

  (c) Term: [                                        ].

 

3. Our payment instructions are: [                                        ].

 

4. We confirm that each condition precedent under the Agreement which must be
satisfied on the date of this Request is so satisfied.

 

5. This Request is irrevocable.

 

By:

 

[                                         ]

 

83

--------------------------------------------------------------------------------

SCHEDULE 4

 

FORM OF TRANSFER CERTIFICATE

 

To: [AGENT] as Facility Agent

 

From: [THE EXISTING LENDER] (the Existing Lender) and [THE NEW LENDER] (the New
Lender)

 

Date: [                    ]

 

ENERSYS HOLDINGS (LUXEMBOURG) S.A R.L. - €25,000,000 Credit Agreement

dated [            ], 2005 (the Agreement)

 

1. We refer to the Agreement. This is a Transfer Certificate.

 

2. The Existing Lender and the New Lender have agreed to the Existing Lender
transferring to the New Lender [its entire participation in the Facility] [its
participation in the Facility for an amount of euro [·]] in accordance with
Clause 26.3 (Procedure for Transfers) of the Agreement.

 

3. The proposed Transfer Date is [    ].

 

4. Effective as of the Transfer Date, the New Lender shall become party as a
Lender to the Agreement and the other Finance Documents to which the Existing
Lender is a party.

 

5. The administrative details of the New Lender for the purposes of the
Agreement are set out in the Schedule.

 

6. This Transfer Certificate is governed by Italian law.

 

 

84

--------------------------------------------------------------------------------

THE SCHEDULE

 

Rights and obligations to be transferred by novation

[insert relevant details, including applicable Commitment (or part)]

 

Administrative details of the New Lender

[insert details of Facility Office, address for notices and payment details
etc.]

 

[EXISTING LENDER]       [NEW LENDER] By:       By:

 

The Transfer Date is confirmed by the Facility Agent as [                    ].

 

[AGENT]

 

By:

 

85

--------------------------------------------------------------------------------

SCHEDULE 5

 

FORM OF COMPLIANCE CERTIFICATE

 

To: [AGENT] as Facility Agent

 

From: ENERSYS HOLDINGS (LUXEMBOURG) S.A R.L.

 

Date: [                     ]

 

ENERSYS HOLDINGS (LUXEMBOURG) S.A R.L. - €25,000,000 Credit Agreement

dated [            ], 2005 (the Agreement)

 

1. We refer to the Agreement. This is a Compliance Certificate.

 

2. We confirm that as at [relevant testing date]:

 

(a)     [·].

 

3. We set out below calculations establishing the figures in paragraph 2 above:

 

[                    ].

 

4. [We confirm that no Event of Default is outstanding as at [relevant testing
date].1

 

ENERSYS HOLDINGS (LUXEMBOURG) S.A. R.L.

 

By:

 

[insert applicable certification language]

 

for                         

--------------------------------------------------------------------------------

1 If this statement cannot be made, the certificate should identify any Default
that is outstanding and the steps, if any, being taken to remedy it.

 

86

--------------------------------------------------------------------------------

* * *

 

/s/ Massimo Locati

--------------------------------------------------------------------------------

For and on behalf of

 

BANCA INTESA S.p.A.

 

(as Mandated Lead Arranger and Original Lender)

 

/s/ Massimo Locati

--------------------------------------------------------------------------------

For and on behalf of

 

SANPAOLO IMI S.p.A.

 

(as Mandated Lead Arranger, Original Lender and Facility Agent)

 

I, Paul Bettingen, a notary of Niederanven, Luxembourg, certify that this
contract was signed before me on 15 June 2005 in Luxembourg, by:

 

Massimo Locati

 

as set forth in the list of signatories contained in the contract and whose
identities and signatures I have verified.

 

LUXEMBOURG, 15 June 2005

 

/s/ Paul Bettingen, Notary

--------------------------------------------------------------------------------

 

 

87

--------------------------------------------------------------------------------

* * *

 

/s/ Sergio Anania, by Proxy

--------------------------------------------------------------------------------

For and on behalf of

 

ENERSYS HOLDINGS (LUXEMBOURG) S.à r.l.

 

I, Paul Bettingen, a notary of Niederanven, Luxembourg, certify that this
contract was signed before me on 15 June 2005 in Luxembourg, by:

 

Sergio Anania

 

as set forth in the list of signatories contained in the contract and whose
identities and signatures I have verified.

 

LUXEMBOURG, 15 June 2005

 

/s/ Paul Bettingen, Notary

--------------------------------------------------------------------------------

 

88

--------------------------------------------------------------------------------

* * *

 

/s/ Thomas L. O’Neill, Assistant Treasurer

--------------------------------------------------------------------------------

For and on behalf of

 

ENERSYS CAPITAL INC.

 

STATE OF PENNSYLVANIA   )         )           ss. COUNTY OF BERKS   )    

 

On this 15 day of June, 2005 before me personally appeared Thomas L. O’Neill in
Reading, Pennsylvania, proved to me on the basis of satisfactory evidence to be
the person who executed the foregoing instrument on behalf of ENERSYS CAPITAL
INC., who being by me duly sworn did depose and say that he is an authorized
officer of said corporation, that the said instrument was signed on behalf of
said corporation as authorized by its Board of Directors and that he
acknowledged said instrument to be the free act and deed of said corporation.

 

/s/ Jerry L. Seyler

--------------------------------------------------------------------------------

Notary Public

 

{seal}

 

89