Exide Technologies (XIDE)

transactions” between the Company and related persons, including directors, executive officers, director nominees, 5% stockholder of the Company since the beginning of the last fiscal year, as well as the immediate family members of each of the foregoing individuals. These related person transactions apply to any transaction or series of transactions in which we or one of our subsidiaries is a participant, the amount involved exceeds $120,000 and a related person has a direct or indirect material interest.

 

We annually solicit information from our directors and executive officers in order to monitor potential conflicts of interest. Director nominees are also requested to provide us the foregoing information. The Audit Committee considers whether any related person has a material interest in a transaction and whether the transaction is on terms and conditions that are reasonable under the circumstances and in the best interest of stockholders. Except as described below, no related person transactions were reported.

 

On August 26, 2007, the Audit Committee evaluated a potential related person transaction between the Company and its two largest stockholders, Tontine and Legg Mason Investment Trust, Inc. (“Legg Mason”). After reviewing management’s evaluation of potential sources of capital and parties with whom a rights offering could be undertaken, the Audit Committee approved the related person transaction, concluding that it was on terms and conditions reasonable under the circumstances and was in the best interest of stockholders.

 

On August 28, 2007, we entered into a Standby Purchase Agreement (the “Standby Agreement”) with Tontine Capital Partners, L.P. (“Tontine”) and Legg Mason. Tontine and Legg Mason, or their respective affiliates, beneficially owned approximately 28.0% and 13.8%, respectively, of our outstanding common stock as of August 28, 2007. Under the Standby Agreement, Tontine and Legg Mason agreed to certain standby commitments with respect to their basic and oversubscription privileges under our $91.7 million rights offering to holders of our common stock (the “Rights Offering”), including, among others, (1) to purchase all of the shares of our common stock purchaseable with their basic subscription privilege, (2) not exercise their oversubscription privilege, and (3) purchase all of the shares of our common stock issuable upon the deemed exercise by Tontine and Legg Mason immediately prior to the expiration of the Rights Offering of any subscription rights that were not exercised by other stockholders prior to the expiration of the Rights Offering. Under the Standby Agreement, Tontine and Legg Mason also agreed to a maximum ownership limitation of 49.9% that restricted them from owning in the aggregate shares of our common stock on the closing date of the transactions contemplated by the Standby Agreement in an amount that exceeded 49.9% of the total outstanding shares of our common stock on that closing date. Under the Standby Agreement, two-thirds of the unsubscribed shares were allocated to Tontine and one-third of the unsubscribed shares were allocated to Legg Mason.

 

The subscription price in the Rights Offering was $6.55 per full share, which was based on the Board’s consideration of a number of factors, including: the likely cost of capital from other sources, the price at which our stockholders might be willing to participate in the rights offering, historical and current trading prices for our common stock, our need for liquidity and capital and the desire to provide an opportunity to our stockholders to participate in the rights offering on a pro rata basis. In connection with its review of these factors, the Board also reviewed a range of discounts to market value represented by the subscription prices in various prior rights offerings of public companies.

 

The Rights Offering closed on October 5, 2007 and resulted in the sale of 5,386,583 and 2,911,306 shares of our common stock to Tontine and Legg Mason, respectively, for $6.55 per full share, and Tontine and Legg Mason owned 30.7% and 15.1% of our common stock on that closing date. As of July 11, 2008, Tontine beneficially owned approximately 31.5% of our outstanding common stock and Legg Mason beneficially owned approximately 9.9% of our common stock.

family members of each of the foregoing individuals. These related person transactions apply to any transaction or series of transactions in which we or one of our subsidiaries is a participant, the amount involved exceeds $120,000 and a related person has a direct or indirect material interest.

 

We annually solicit information from our directors and executive officers in order to monitor potential conflicts of interest. A nominee for director is also requested to provide us the foregoing information. The Audit Committee considers whether any proposed related party transaction is on terms and conditions that are reasonable under the circumstances and in the best interest of shareholders.

 

On June 28, 2006, we entered into a Standby Purchase Agreement (the “Standby Agreement”) with Tontine Capital Partners, L.P. (“Tontine”), Arklow Capital, LLC (“Arklow”) and Legg Mason Investment Trust, Inc. (“Legg Mason”). Tontine and Arklow, or their affiliates, were owners of our common stock on June 28, 2006 and Legg Mason is currently an owner of our common stock. As of June 28, 2007, Tontine beneficially owned approximately 28.1% of our outstanding common stock, Legg Mason beneficially owned approximately 13.8% of our common stock and Arklow beneficially owned approximately 3.7% of our outstanding common stock (including warrants owned by Arklow). Under the Standby Agreement, Tontine, Legg Mason and Arklow agreed to certain standby commitments with regards to our $75.0 million rights offering to holders of our common stock (the “Rights Offering”). The subscription price in the Rights Offering was $3.50 per share, which was equal to 80% of the average closing price per share of our common stock for the 30-day-trading period ending July 6, 2006. Under the Standby Agreement, Tontine and Legg Mason also agreed to purchase additional shares of our common stock for $3.50 per share. The Rights Offering and sale of additional shares to Tontine and Legg Mason closed on September 18, 2006 and resulted in the sale of 14,758,483, 8,452,431 and 1,574,641 shares of our common stock to Tontine, Legg Mason and Arklow, respectively, for $3.50 per share.