SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended July 31, l995 Commission File No. 1-9389
CHARTER POWER SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 13-3314599
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3043 Walton Road
Plymouth Meeting, Pennsylvania 19462
(Address of principal executive office) (Zip Code)
(610) 828-9000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO_____
Number of shares of the Registrant's Common Stock outstanding on
September 8, 1995: 5,958,591
<PAGE>
CHARTER POWER SYSTEMS, INC.
AND SUBSIDIARIES
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1 - Financial Statements
Consolidated Balance Sheets -
July 31, 1995 and January 31, 1995 3
Consolidated Statements of Income -
Three and Six Months Ended July 31, 1995 and 1994 5
Consolidated Statements of Cash Flows -
Six Months Ended July 31, 1995 and 1994 6
Notes to Consolidated Financial Statements 8
Report of Independent Accountants 12
Item 2 - Management's Discussion and Analysis 13
of Financial Condition and Results
of Operations
PART II. OTHER INFORMATION 15
SIGNATURES 16
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CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
July 31, January 31,
1995 1995
---- ----
ASSETS:
Current assets:
Cash and cash equivalents $ 1,025 $ 1,097
Restricted cash and cash equivalents -- 75
Accounts receivable, less allowance for
doubtful accounts of $1,708 and
$1,404, respectively 32,324 30,253
Inventories 33,312 26,869
Deferred income taxes 5,633 5,231
Other current assets 664 553
------- -------
Total current assets 72,958 64,078
Property, plant and equipment, net 40,447 40,059
Intangible and other assets, net 5,267 5,314
Goodwill, net 2,654 2,686
------- -------
Total assets $121,326 $112,137
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current portion of long-term debt $ 3,113 $ 3,670
Accounts payable 20,034 15,601
Accrued liabilities 14,803 13,994
Other current liabilities 2,537 3,067
------- -------
Total current liabilities 40,487 36,332
Deferred income taxes 3,612 3,552
Long-term debt 12,517 14,183
Other liabilities 7,147 6,348
------- -------
Total liabilities 63,763 60,415
------- -------
The accompanying notes are an integral part of these statements.
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CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (continued)
(Dollars in thousands)
(Unaudited)
July 31, January 31,
1995 1995
---- ----
Commitments and contingencies
Stockholders' equity:
Common stock, $.01 par value,
10,000,000 shares authorized;
6,002,041 and 5,971,041 shares
issued, respectively 60 60
Additional paid-in capital 32,421 32,053
Notes receivable from stockholders (1,656) (1,656)
Retained earnings 28,042 21,265
Treasury stock, at cost, 57,400 shares (1,304) --
------- -------
Total stockholders' equity 57,563 51,722
------- -------
Total liabilities and
stockholders' equity $121,326 $112,137
======= =======
The accompanying notes are an integral part of these statements.
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CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited) (Unaudited)
Three months ended Six months ended
July 31, July 31,
1995 1994 1995 1994
----- ----- ----- -----
Net sales $63,381 $47,619 $122,158 $90,263
Cost of sales 48,057 36,656 93,042 68,935
------ ------ ------ ------
Gross profit 15,324 10,963 29,116 21,328
Selling, general and
administrative expenses 7,382 5,739 14,447 11,440
Research and development
expenses 1,447 1,423 3,040 2,325
------ ------ ------ ------
Operating income 6,495 3,801 11,629 7,563
Interest expense, net 294 355 525 590
Other expense, net 199 108 255 294
------ ------ ------ ------
Income before income
taxes 6,002 3,338 10,849 6,679
Provision for income taxes 2,072 1,168 3,744 2,501
------ ------ ------ ------
Net income $ 3,930 $ 2,170 $ 7,105 $ 4,178
====== ====== ======= ======
Net income per common and
common equivalent share $ .61 $ .35 $ 1.11 $ .68
====== ====== ====== ======
Weighted average common and
common equivalent shares 6,434 6,169 6,414 6,116
====== ====== ====== ======
Dividends per share $0.0275 $0.0275 $ 0.0550 $0.0550
====== ====== ======= ======
The accompanying notes are an integral part of these statements.
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CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Six months ended
July 31,
1995 1994
---- ----
Cash flows provided (used) by operating activities:
Net income $7,105 $4,178
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 3,138 3,459
Deferred taxes (342) --
Loss (gain) on disposal of assets 139 (225)
Changes in:
Accounts receivable (2,024) (7,905)
Inventories (6,418) (1,318)
Other current assets (185) (312)
Accounts payable 4,431 628
Accrued liabilities (27) 998
Income taxes payable 78 (1,299)
Other current liabilities (533) (1,343)
Other liabilities 799 486
Other, net (225) 359
------- -------
Net cash provided (used) by operating
activities 5,936 (2,294)
------- -------
Cash flows provided (used) by investing activities:
Acquisition of business, net -- (5,966)
Acquisition of property, plant and equipment (3,430) (3,600)
Proceeds from disposal of property,
plant and equipment -- 363
------- -------
Net cash used by investing activities (3,430) (9,203)
------- -------
Cash flows provided (used) by financing activities:
Reduction of long-term debt (2,223) (1,599)
Proceeds from new borrowings -- 10,338
Financing costs of long-term debt -- (34)
Issuance of shares under stock option plan 368 805
Payment of common stock dividends (492) (484)
Purchase of treasury stock (317) --
------- -------
Net cash (used) provided by financing
activities (2,664) 9,026
------- -------
Effect of exchange rate changes on cash 11 (14)
------- -------
The accompanying notes are an integral part of these statements.
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CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Dollars in thousands)
(Unaudited)
Six months ended
July 31,
1995 1994
---- ----
Decrease in cash and cash equivalents (147) (2,485)
Cash and cash equivalents at beginning
of period 1,172 3,821
------- -------
Cash and cash equivalents at end of
period $1,025 $1,336
======= =======
SUPPLEMENTAL CASH FLOW
DISCLOSURES
Interest paid, net $ 701 $ 701
Income taxes paid 4,008 3,800
SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Liabilities assumed in acquisition $ -- $ 3,132
The accompanying notes are an integral part of these statements.
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CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
(UNAUDITED)
1. INTERIM STATEMENTS
The accompanying interim consolidated financial statements
should be read in conjunction with the consolidated financial
statements and notes thereto contained in the Company's Annual Report
to Shareholders for the fiscal year ended January 31, 1995. The
consolidated financial statements presented herein are unaudited but,
in the opinion of management, include all necessary adjustments (which
comprise only normal recurring items) required for a fair presentation
of the consolidated financial position as of July 31, 1995, the
consolidated statements of income for the three and six months ended
July 31, 1995 and 1994 and consolidated statements of cash flows for
the six months ended July 31, 1995 and 1994. However, interim results
of operations necessarily involve more estimates than annual results
and are not indicative of results for the full fiscal year.
2. INVENTORIES
Inventories consisted of the following:
July 31, January 31,
1995 1995
---- ----
Raw materials $13,068 $ 9,780
Work-in-progress 9,399 7,893
Finished goods 10,845 9,196
------- -------
$33,312 $26,869
======= =======
3. INCOME TAXES
A reconciliation of the provision for income taxes from the
statutory rate to the effective rate is as follows:
Six months ended
July 31,
1995 1994
---- ----
U.S. statutory income tax 35.0% 35.0%
State tax, net of federal income
tax benefit 3.7 3.9
Reduction in valuation allowance (3.8) --
Other (0.4) (1.5)
---- ----
34.5% 37.4%
==== ====
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CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands)
(UNAUDITED)
4. CONTINGENT LIABILITIES
With regard to the following contingent liabilities there have
been no material changes since January 31, 1995.
Because the Company uses lead and other hazardous substances in
its manufacturing processes, it is subject to numerous federal,
Canadian, Mexican, state and local laws and regulations that are
designed to protect the environment and employee health and safety.
These laws and regulations include requirements of periodic reporting
to governmental agencies regarding the use and disposal of hazardous
substances and compliance with rigorous criteria regarding exposure to
employees and the disposal of scrap. In the opinion of the Company,
the Company complies in all material respects with these laws and
regulations, and such compliance has not had, and is not expected to
have, a material effect on the business, financial condition or
results of operations of the Company.
Notwithstanding such compliance, if damage to persons or the
environment has been or is caused by hazardous substances used or
generated in the conduct of the Company's business, the Company may be
held liable for the damage and be required to pay the cost of
remedying the same, and the amount of any such liability might be
material to the results of operations or financial condition.
However, under the terms of the purchase agreement with Allied for the
Acquisition of the Company (the "Acquisition Agreement"), Allied is
obligated to indemnify the Company for any liabilities of this type
resulting from conditions existing at January 28, 1986 that were not
disclosed by Allied to the Company in the schedules to the Acquisition
Agreement.
The Company, along with numerous other parties, has been
requested to provide information to the United States Environmental
Protection Agency (the "EPA") in connection with investigations of the
source and extent of contamination at several lead smelting facilities
(the "Third Party Facilities") to which the Company had made scrap
lead shipments for reclamation prior to the date of the Acquisition.
As of January 16, 1989, the Company, with the concurrence of Allied,
entered into an agreement with other potentially responsible parties
(PRPs) relating to remediation of a portion of one of the Third Party
Facilities, the former NL Industries ("NL"), facility in Pedricktown,
New Jersey (the "NL Site"), which agreement provides for their joint
funding on a proportionate basis of certain remedial investigation and
feasibility study activities with respect to that site.
9 of 16
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CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands)
(UNAUDITED)
4. CONTINGENT LIABILITIES (continued)
In fiscal 1993 in accordance with an EPA order, a group
comprised of the Company and 30 other parties commenced work on the
cleanup of a portion of the NL Site based on a specified remedial
approach which is now completed. Based on currently available
information and well defined contribution levels of the other parties,
including NL Industries, the Company does not expect to incur costs in
excess of the $138 previously reserved.
With regard to the remainder of the NL Site, the EPA is pursuing
negotiations with NL and the other PRPs, including the Company,
regarding the conduct and funding of the remedial work plan. The EPA
has proposed a cost allocation plan, however, the allocation
percentages between parties and the basis for allocation of cost are
not defined in the plan or elsewhere. Therefore, a reliable range of
the potential cost to the Company of this phase of the clean-up cannot
currently be determined. Accordingly, the Company has not created any
reserve for this potential exposure.
The remedial investigation and feasibility study at a second
Third Party Facility, the former Tonolli Incorporated facility at
Nesquehoning, Pennsylvania (the "Tonolli Site"), were completed in
fiscal 1993. The EPA and the PRPs are continuing to evaluate the
draft remedial design work plan for the site. Based on the estimated
cost of the remedial approach selected by the EPA, the Company
believes that the potential cost of remedial action at the Tonolli
Site is likely to range between $16,000 and $17,000. The Company's
allocable share of this cost has not been finally determined, and will
depend on such variables as the financial capability of various other
potentially responsible parties to fund their respective allocable
shares of the remedial cost. Based on currently available
information, however, the Company believes that its most likely
exposure with respect to the Tonolli Site will be the approximately
$579 previously reserved, the majority of which is expected to be paid
over the next three to five years.
The Company has responded to requests for information from the
EPA with regard to three other Third Party Facilities, one in
September 1991, one (the "Chicago Site") in October 1991 and the third
(the "ILCO Site") in October 1993. Of the three sites, the Company
has been identified as a PRP at the ILCO and Chicago Sites only.
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CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(UNAUDITED)
4. CONTINGENT LIABILITIES (continued)
Based on currently available information, the Company believes
that the potential cost of remediation at the ILCO Site is likely to
range between $54,000 and $59,000 (based on the estimated costs of the
remedial approach selected by the EPA). The Company's allocable share
of this cost has not been finally determined and will depend on such
variables as the financial capability of various other PRPs to fund
their respective allocable shares of the remedial cost. Based on
currently available information, however, the Company believes that
its most likely exposure with respect to the ILCO Site is an
immaterial amount which has been previously reserved, most of which is
expected to be paid over the next three to five years.
Based on currently available information, the Company believes
that the potential cost of the remediation at the Chicago site is
likely to range between $8,000 and $10,500 (based on the preliminary
estimated costs of the remediation approach negotiated with the EPA).
Sufficient information is not available to determine the Company's
allocable share of this cost. Based on the available preliminary
information, however, the Company believes that its exposure with
regard to the Chicago Site will be approximately $283, which has been
reserved for in the Company's consolidated financial statements, the
majority of which is expected to be paid over the next two to five
years.
Allied has accepted responsibility under the Acquisition
Agreement for potential liabilities relating to all Third Party
Facilities other than the aforementioned Sites. Based on currently
available information, management of the Company believes that the
foregoing will not have a material adverse effect on the Company's
financial condition or results of operations.
11 of 16
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors of
Charter Power Systems, Inc.
We have reviewed the accompanying consolidated balance sheet of
Charter Power Systems, Inc. and Subsidiaries as of July 31, 1995, the
related consolidated statements of income for the three and six months
ended July 31, 1995 and 1994 and the consolidated statements of cash
flows for the six months ended July 31, 1995 and 1994. These
financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by
the American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with
generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying consolidated financial
statements for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet as of January 31,
1995 and the related consolidated statements of income, stockholders'
equity and cash flows for the year then ended (not presented herein);
and in our report dated March 24, 1995, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated balance
sheet as of January 31, 1995, is fairly presented, in all material
respects, in relation to the consolidated balance sheet from which it
has been derived.
\s\ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
August 21, 1995
12 of 16
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Net sales for the fiscal 1996 second quarter and six months ended July
31, 1995 increased $15,762,000 or 33%, and $31,895,000 or 35%,
respectively, compared to the equivalent periods in fiscal 1995.
Sales recorded by International Power Systems, Inc. purchased as of
March 29, 1994 and sales of the switching power supply division of
Basler Electric Company purchased as of January 24, 1995 accounted for
29% and 43% of the increase for the quarter and year to date,
respectively. In addition, sales of standby power products increased
25% for the quarter and 24% for the half year due to increases during
both periods in telecommunications, control, UPS and sales to AT&T.
Motive power sales were up 32% for the current quarter and 20% for the
first half of the year due to higher volume and prices.
Gross profit increased $4,361,000 or 40% for the quarter and
$7,778,000 or 37% for the six-month period. Gross margin increased to
24.2% from 23.0% for the quarter and to 23.8% from 23.6% for the year
to date, primarily as a result of higher sales volumes and continued
improvements in operating efficiencies partially offset by higher
material costs.
Selling, general and administrative expenses for the quarter increased
29% primarily due to higher commission and sales expense due to volume
increases in the standby and motive power businesses, coupled with
costs associated with the Company's program to maximize shareholder
value. For the six-month period, selling, general and administrative
expenses increased 26% due to the power supply business acquired,
higher commission and sales expense due to volume increases in the
standby and motive power businesses and the Company's program to
maximize shareholder value discussed above.
Research and development expenses were relatively flat for the quarter
and increased $715,000 or 31% year to date, primarily due to the power
supply business acquired.
Interest expense, net, decreased for the quarter and six-month period
due to lower debt balances, partially offset by higher effective
rates.
Other expense, net, increased in the second quarter due to a foreign
exchange loss, partially offset by higher nonoperating income. For
the six-month period, other expense, net, decreased 13% due to a
foreign exchange gain in the current period versus an exchange loss in
the prior period, coupled with higher nonoperating income.
13 of 16
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
As a result of the above, income before income taxes increased by 80%
for the quarter and by 62% for the six-month period. Net income for
the quarter rose 81% to $3,930,000 or $0.61 per share while for the
six-month period, net income rose 70% to $7,105,000 or $1.11 per
share.
The effective tax rate decreased to 35% from 37% for the comparative
six-month period due to a reduction in the valuation allowance related
to the revaluation of the realization of the stock option compensation
deferred tax asset due to increases in the price of the Company's
common stock.
LIQUIDITY AND CAPITAL RESOURCES
Net cash flows provided by operating activities for the current period
increased to $5,936,000 compared to the $2,294,000 net cash used by
operating activities for the prior period. This increase was
primarily due to higher current year net income, higher payables
supporting higher inventories, the absence of a temporary
deterioration of receivables of the power supply business that
occurred in the prior year and timing of required tax payments, offset
by higher current year receivables and inventories supporting current
year higher sales volumes.
Net cash used by investing activities consisted of $3,430,000 for
acquisition of property, plant and equipment, a decrease of $5,773,000
from the prior year which included comparable property, plant and
equipment acquisitions and the purchase of the custom power supply
business and certain net assets of ITT PowerSystems Corporation.
Net cash used by financing activities was $2,664,000 compared to net
cash provided by financing activities of $9,026,000 in the prior year.
The additional borrowings in the prior year were used primarily to
fund the aforementioned acquisition.
The Company's availability under the current loan agreement is
expected to be sufficient to meet its ongoing cash needs for working
capital requirements, debt service, capital expenditures, repurchase
of up to 600,000 shares of the Company's Common Stock and possible
strategic acquisitions. Capital expenditures in the first half of
fiscal 1996 were incurred primarily to fund new product development,
capacity expansion, a continuing series of cost reduction programs,
normal maintenance capital, and regulatory compliance. Fiscal 1996
expenditures are expected to be approximately $8,000,000 for similar
purposes, excluding strategic acquisitions.
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<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held its annual meeting of shareholders on June
26, 1995.
(b) See Item 4(c) below.
(c) Each of David Beretta and Glenn M. Feit was elected as a
director by a vote of 5,429,682 for and 86,122 withheld.
Each of A. Lawrence Fagan, Merril M. Halpern, Jerome L.
Katz, Patricia R. Merrick and Alfred Weber was elected as a
director by a vote of 5,429,982 for and 85,822 withheld.
Warren A. Law was elected as a director by a vote of
5,429,282 with 86,522 withheld. George J. Sbordone was
elected as a director by a vote of 5,429,582 with 86,222
withheld.
The appointment of Coopers & Lybrand L.L.P. as the Company's
independent accountants for the year ending January 31, 1996
was ratified by a vote of 5,506,104 for and 500 against,
with 9,200 abstentions.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Stock Purchase Agreement dated May 26, 1988, between
Robert Alvine ("Alvine") and the Company; Option
Agreement dated May 26, 1988, between Alvine and the
Company; Registration Rights Agreement dated May 26,
1988, between Alvine and the Company; Amendment
Agreement dated May 30, 1989, between Alvine and the
Company (filed herewith).
10.2 Employment Agreement dated May 30, 1989, between Alfred
Weber ("Weber") and the Company; Stock Purchase
Agreement dated May 30, 1989, between Weber and the
Company; Option Agreement dated May 30, 1989, between
Weber and the Company; Registration Rights Agreement
dated May 30, 1989, between Weber and the Company
(filed herewith).
10.3 Employment Agreement dated January 26, 1990, between
Leslie Holden and the Company (filed herewith).
11. Computation of per share earnings (filed herewith).
15. Letter from Coopers & Lybrand L.L.P., independent
accountants for the Company regarding unaudited interim
financial information (filed herewith).
27. Financial Data Schedule
(b) Reports on Form 8-K:
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
CHARTER POWER SYSTEMS, INC.
September 12, 1995 BY: \s\ Alfred Weber
_________________________________
Alfred Weber
President and Chief
Executive Officer
September 12, 1995 BY: \s\ Stephen E. Markert, Jr.
_________________________________
Stephen E. Markert, Jr.
Vice President Finance and
Treasurer
Principal Financial and
Accounting Officer
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EXHIBIT INDEX
10.1 Stock Purchase Agreement dated May 26, 1988, between Robert
Alvine ("Alvine") and the Company; Option Agreement dated
May 26, 1988, between Alvine and the Company; Registration
Rights Agreement dated May 26, 1988, between Alvine and the
Company; Amendment Agreement dated May 30, 1989, between
Alvine and the Company.
10.2 Employment Agreement dated May 30, 1989, between Alfred
Weber ("Weber") and the Company; Stock Purchase Agreement
dated May 30, 1989, between Weber and the Company; Option
Agreement dated May 30, 1989, between Weber and the Company;
Registration Rights Agreement dated May 30, 1989, between
Weber and the Company.
10.3 Employment Agreement dated January 26, 1990, between Leslie
Holden and the Company.
11. Computation of per share earnings.
15. Letter from Coopers & Lybrand L.L.P., independent
accountants for the Company regarding unaudited interim
financial information.
27. Financial Data Schedule
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated May 26, 1988, be-
tween Charter Power Systems, Inc., a Delaware corporation (the
"Company"), and Robert Alvine (the "Purchaser").
WHEREAS, the Company has entered into an employment
agreement, dated the date hereof (the "Employment Agreement"),
with the Purchaser, pursuant to which the Company has engaged
the Purchaser to serve as Vice Chairman of its Board of Direc-
tors, in an executive capacity, upon the terms and subject to
the conditions set forth therein; and
WHEREAS, in connection therewith, the Purchase has
agreed to purchase from the Company, and the Company has
agreed to sell to the Purchaser, 316,515 shares (the
"Shares"), of the common stock, $.01 par value, of the Company
("Common Stock"), upon the terms and subject to the conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and
the mutual agreements hereinafter set forth, the parties
hereto agree as follows:
1. PURCHASE OF SHARES. The Purchaser hereby agrees to
purchase from the Company, and the Company hereby agrees to sell
to the Purchaser, the Shares, at a purchase price of $4.20 a
share.
<PAGE>
2. CLOSING OF PURCHASE. The closing of the purchase
and sale of the Shares hereunder (the "Closing") shall be sub-
ject to the approval of the sale of the Shares hereunder by
the holders of shares of Common Stock and to the approval of
the Shares for listing on the American Stock Exchange. The
Closing shall take place on a date within five business days
following the date that the Shares have been approved for
listing on the American Stock Exchange, or on such later date
as shall be agreed upon by the parties hereto. At the Clos-
ing, the Purchaser shall deliver to the Company (i) a duly
executed Secured Promissory Note in the form attached as Ex-
hibit A hereto (the "Note"), in the amount of $1,326,197.90,
representing the purchase price of the shares less the par
value thereof, and (ii) cash or a check in the amount of the
par value of the Shares plus the Company's good faith deter-
mination of its withholding tax obligation respecting the pur-
chase of the Shares. Also at the Closing, the Purchaser and
the Company shall enter into a Pledge and Security Agreement
in the form attached as Exhibit B hereto.
3. FORFEITURE. The Purchaser hereby agrees that the
Shares shall be subject to forfeiture under the following
terms and conditions:
(a) subject to clauses (c), (d) and (e) below, 100%
of the Shares shall be forfeited to the Company if the Pur-
chaser's employment with the Company is terminated, other than
-2-
<PAGE>
by the Company without "Cause" (as defined in the Employment
Agreement) or by the Purchaser as a result of a material
breach by the Company of the Employment Agreement, prior to
May 1, 1989;
(b) subject to clauses (c), (d) and (e) below, 50%
of the Shares shall be forfeited to the Company if the Pur-
chaser's employment with the Company is terminated, other than
by the Company without Cause or by the Purchaser as a result
of a material breach by the Company of the Employment Agree-
ment, prior to May 1, 1990;
(c) in the event such termination is the result of
the death or disability (as defined in the Employment Agree-
ment) of the Purchaser, the portion of the Shares determined
by multiplying the total number of Shares by a fraction, the
numerator of which is the number of complete months during the
period from May 1, 1988 through the date of termination and
the denominator of which is 24, shall no longer be subject
to forfeiture;
(d) in the event of a Business Combination (as de-
fined in the Employment Agreement), the forfeiture shall cease
to apply to all the Shares simultaneous with the closing of
the transaction; and
(e) in the event of a Change of Control (as defined
in the Employment Agreement) other than a Business Combina-
tion, (i) the portion of the Shares determined as provided in
-3-
<PAGE>
clause (c) above and (ii) the percentage of the remainder of
the Shares equal to the percentage of the unvested Option (as
defined in the Option Agreement, dated the date hereof, be-
tween the Company and the Purchaser (the "Option Agreement"))
that simultaneously will vest on an accelerated basis pursuant
to clause (b) of the last paragraph of Schedule 1 to the Op-
tion Agreement, shall no longer be subject to forfeiture.
If and to the extent any portion of the Shares is forfeited to
the Company as aforesaid, (i) the equivalent portion of the
unpaid balance of the Note shall be deemed paid and a notation
to that effect shall be made by the Company on the face of the
Note, (ii) the Purchaser shall deliver to the Company, within
ten business days after the forfeiture, stock certificates
representing the forfeited portion of the Shares and (iii) the
Company shall deliver to the Purchaser, within ten business
after the forfeiture, cash or a check in the amount of the par
value of those Shares.
4. IMPUTED INCOME. The Company and the Purchaser ac-
knowledge that the Purchaser must recognize in the current
taxable year income for federal income tax purposes (the "Im-
puted Income") on the loan evidenced by the Note, and that the
related interest deductions will be available over the initial
five-year term of the Note. To facilitate the payment by the
Purchaser of his federal income tax liability on the portion
of the Imputed Income for which there will be no related in-
-4-
<PAGE>
terest deduction for 1988, the Company shall make a loan (the
"Loan") to the Purchaser, on April 15, 1989, in the amount of
88% of his federal income tax liability (without taking into
account any offsetting interest deductions) on the Imputed
Income (the "Imputed Liability"); PROVIDED, HOWEVER, that if,
on or before August 31, 1988, the Purchaser shall deliver to
the Company, (a) written notice that he will be taking the
Imputed Liability into account in making his federal quarterly
estimated tax payments and (b) a letter from his accountant
advising that he is required to do so, then the Company shall
make the Loan to the Purchaser in two equal advances on Sep-
tember 15, 1988 and January 15, 1989, respectively. The
amount of the Loan shall be determined by the Company's inde-
pendent accountants (whose determination, in the absence of
manifest error, shall be final and binding on the Company and
the Purchaser), based on the provisions of this Agreement and
assuming a federal income tax rate of 28%, and the Company
shall cause a copy of a schedule setting forth the calcula-
tions on the basis of which the determination is made to be
provided to the Purchaser within ten business days after the
date of the Closing. On the date the Loan (or each advance
thereof) is made, the Purchaser shall execute and deliver to
the Company a duly executed Secured Promissory Note in the
form attached as Exhibit C hereto. If the maturity of the
Note shall be extended until April 30, 1998 in accordance with
-5-
<PAGE>
clause (ii) of the second paragraph thereof, the Company shall
make an additional loan to the Purchaser, on April 15, 1994,
under the same terms and conditions as the Loan.
5. PURCHASER'S REPRESENTATIONS, WARRANTIES AND COVE-
NANTS.
(a) INVESTMENT INTENTION. The Purchaser represents
and warrants that he is acquiring the Shares solely for his
own account, for investment, and not with a view to or for
sale in connection with any distribution thereof. The Pur-
chaser shall not, directly or indirectly, offer, transfer,
sell or otherwise dispose of any of the Shares (or solicit any
offers to buy, purchase or otherwise acquire any of the
Shares), except in compliance with the Securities Act of 1933
(the "Act") and the rules and regulations thereunder. The
Purchaser further understands, acknowledges and agrees that
none of the Shares may be transferred, sold or otherwise dis-
posed of unless (i) the disposition is pursuant to an effec-
tive registration statement under the Act, (ii) the Purchaser
shall have delivered to the Company an opinion, from counsel
and in form and substance reasonably satisfactory to the Com-
pany, to the effect that the disposition is exempt from the
provisions of Section 5 of the Act or (iii) a no-action letter
from the Securities and Exchange Commission shall have been
obtained with respect to the disposition.
-6-
<PAGE>
(b) LEGEND. The certificate or certificates repre-
senting the Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF UNLESS (A)
THE DISPOSITION IS PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, (B) THE
HOLDER HEREOF SHALL HAVE DELIVERED TO THE COMPANY AN
OPINION, FROM COUNSEL AND IN FORM AND SUBSTANCE REASON-
ABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5
OF THAT ACT, OR (C) A NO-ACTION LETTER FROM THE SECURI-
TIES AND EXCHANGE COMMISSION SHALL HAVE BEEN OBTAINED
WITH RESPECT TO THE DISPOSITION. THE SHARES EVIDENCED
BY THIS CERTIFICATE ALSO ARE SUBJECT TO FORFEITURE UNDER
CERTAIN CIRCUMSTANCES IN ACCORDANCE WITH THE TERMS OF A
STOCK PURCHASE AGREEMENT, DATED MAY , 1988, BETWEEN
ROBERT ALVINE AND THE COMPANY, A COPY OF WHICH IS ON
FILE AT THE PRINCIPAL OFFICES OF THE COMPANY."
(c) COMPLIANCE WITH RULE 144. If any of the Shares
are disposed of in accordance with Rule 144 under the Act,
the Purchaser shall deliver to the Company at or prior to the
time of such disposition an executed copy of Form 144 (if
required by Rule 144) and such other documentation as the
Company may reasonably require in connection with the
disposition.
(d) SECTION 83(b) ELECTION. The Purchaser shall
make an election, pursuant to Section 83(b) of the Internal
Revenue Code of 1986, as amended, to include in his gross in-
come for 1988 the excess of the total fair market value of the
Shares on the date of the Closing over $1,329,363.
6. STOCKHOLDER APPROVAL; LISTING. The Company shall
solicit the holders of shares of Common Stock to approve the
-7-
<PAGE>
sale of the Shares hereunder and the grant of the Option
pursuant to the Option Agreement, and shall apply for the
listing on the American Stock Exchange of the Shares and the
shares of Common Stock issuable upon exercise of the Option
(subject to notice of issuance).
7. MISCELLANEOUS.
(a) NOTICES. All notices and other communications
required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been given if de-
livered personally or sent by certified mail, return receipt
requested, postage prepaid, to the Company at c/o Charterhouse
Group International, Inc., 535 Madison Avenue, New York, New
York 10022, Attention: Merril M. Halpern, with a copy to Feit
& Ahrens, 488 Madison Avenue, New York, New York 10022, Atten-
tion: Jonathan Shor, Esq., and to the Purchaser at the Pur-
chaser's address contained in the Company's records, with a
copy to Tyler Cooper & Alcorn, 205 Church Street, P.O. Box
1936, New Haven, Connecticut 06509, Attention: Jon T.
Hirschoff, Esq., or to such other address as either party to
this Agreement shall specify by notice to the other.
(b) BINDING EFFECT; BENEFITS. This Agreement shall
be binding upon and inure to the benefit of the parties to
this Agreement and their respective successors and permitted
assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than
-8-
<PAGE>
the parties to this Agreement or their respective successors
or permitted assigns any legal or equitable right, remedy or
claim under or in respect of any agreement or any provision
contained herein.
(c) AMENDMENT. This Agreement may be amended, mo-
dified or supplemented only by a written instrument executed
by the Purchaser and the Company.
(d) ASSIGNABILITY. Neither this Agreement nor any
right, remedy, obligation or liability arising hereunder or by
reason hereof shall be assignable by either the Company or
Purchaser without the prior written consent of the other
party.
(e) APPLICABLE LAW. This Agreement shall be gov-
erned by and construed in accordance with the laws of the State
of New York, without giving effect to the conflicts of
law provisions thereof.
(f) COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed to
be one and the same instrument.
(g) ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement and supersedes all prior agreements and
-9-
<PAGE>
understandings, both written and oral, among the parties with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company and the Purchaser
have executed this Agreement as of the date first above
written.
CHARTER POWER SYSTEMS, INC.
By: \s\ Merril M. Halpern
Title: Chairman
\s\ Robert Alvine
ROBERT ALVINE
-10-
<PAGE>
EXHIBIT A to
Stock Purchase Agreement
PURCHASE
SECURED PROMISSORY NOTE
$1,326,197.90 June___, 1988
FOR VALUE RECEIVED, ROBERT ALVINE (the "Payor")
hereby promises to pay to CHARTER POWER SYSTEMS, INC., a Dela-
ware corporation ("the Company"), the principal sum of One
Million Three Hundred Twenty Six Thousand One Hundred and
Ninety-Seven and 90/100 Dollars ($1,326,197.90), without in-
terest. Payment of principal is to be made in lawful money of
the United States of America at the offices of the Company or
at such other place as the holder hereof shall designate.
Subject to the prepayment and acceleration provi-
sions hereinafter set forth, this Note shall mature and be due
and payable in full on April 30, 1993; PROVIDED, HOWEVER, that
(i) if the employment of the Payor with the Company shall have
been terminated after October 31, 1991 and before May 1, 1993,
other than for "Cause", as defined in the employment agree-
ment, dated May 26, 1988, between the Payor and the Company (a
"Cause Termination"), the maturity of this Note shall be
extended until 18 months after the date of termination of the
Payor's employment with the Company; and (ii) if the employ-
ment of the Payor with the Company shall not have been termi-
nated on or before April 30, 1993, the maturity of this Note
shall be extended until April 30, 1998; PROVIDED, FURTHER,
that this Note shall mature and be due and payable 18 months
<PAGE>
after the date of termination (other than a Cause Termination)
of the Payor's employment with the Company, which termination
shall occur after April 30, 1993.
This Note is secured by the pledge by the Payor to
the Company of certain shares of common stock of the Company,
in accordance with the terms of a Pledge and Security Agree-
ment (the "Security Agreement") between the Payor and the Com-
pany, dated June ___, 1988, and in that respect is subject to
all of the terms, provisions and conditions of the Security
Agreement.
This Note evidences a loan made by the Company to
the Payor to enable him to purchase 316,515 shares of common
stock of the Company (the "Shares"). If the Payor shall sell
or transfer any of his Shares or the proceeds thereof, or any
cash (other than cash dividends), securities, or other prop-
erty at any time and from time to time receivable or otherwise
distributed in respect of or in exchange for any or all of the
Shares (collectively, the "Additional Shares"), there shall be
due and payable, immediately upon the consummation of the sale
or transfer, a payment of principal hereunder in an amount
equal to the product obtained by multiplying the then out-
standing principal amount of this Note by a fraction, the nu-
merator of which shall be the number of Shares and Additional
Shares then sold or transferred and the denominator of which
shall be the number of Shares and Additional Shares then owned by
the Payor (before giving effect to the sale or transfer).
-2-
<PAGE>
Nothing in this paragraph shall be deemed to permit any sale
or transfer by the Payor of any Shares or Additional Shares,
to the extent the same otherwise would be prohibited by the
provisions of any other agreement to which the Payor and the
Company are parties.
If: (i) the Payor fails to make any payment here-
under within ten days after notice from the Company to the
Payor that the payment is due; or (ii) a Cause Termination oc-
curs; or (iii) a Default (as defined in the Security Agree-
ment) shall have occurred under the Security Agreement (each
of the events listed in (i), (ii) and (iii) above being an "Event
of Default" hereunder); the then outstanding principal
balance hereof shall become immediately due and payable.
The Payor may, at any time and from time to time,
prepay in whole or part, without premium or penalty, the then
outstanding principal balance hereof.
The Payor hereby agrees to pay all reasonable costs,
fees and expenses incurred by the Company for the collection
of all sums due hereunder, including reasonable attorneys'
fees and court costs. The Payor hereby waives presentment,
demand, notice of dishonor, protest and all other demands and
notices in connection with this Note (including any accelera-
tion of the maturity hereof) and further agrees that this Note
shall be deemed to have been made under and shall be governed
by the laws of the State of New York in all respects (without
-3-
<PAGE>
giving effect to the conflicts of law provisions thereof), in-
cluding matters of construction, validity and performance, and
that none of its terms or provisions may be waived, altered,
modified or amended except to the extent the Company may con-
sent thereto in writing.
IN WITNESS WHEREOF, the Payor has executed and de-
livered this Note to the Company as of the date first above
written.
________________________
ROBERT ALVINE
-4-
<PAGE>
EXHIBIT B to
Stock Purchase Agreement
PLEDGE AND SECURITY AGREEMENT
AGREEMENT, dated June ___, 1988, between ROBERT
ALVINE ("Pledgor") and CHARTER POWER SYSTEMS, INC., a Delaware
corporation ("the Company").
WHEREAS, the Company has made a loan to Pledgor on
the date hereof in the amount of $1,326,197.90, pursuant to
the Stock Purchase Agreement, dated May 26, 1988 (the "Stock
Agreement"), between Pledgor and the Company, to enable the
Pledgor to purchase 316,515 shares (the "Purchased shares") of
Common Stock of the Company, par value $.01 per share ("Common
Stock"), and the Company in the future may make additional
loans to Pledgor pursuant to Section 4 of the Stock Purchase
Agreement and to enable Pledgor to purchase certain additional
shares of Common Stock (the "Option Shares") issuable upon the
exercise of an option granted to him pursuant to the Option
Agreement, dated May 26, 1988 (the "Option Agreement"), be-
tween Pledgor and the Company (collectively, the "Loans"); and
WHEREAS, in order to induce the Company to make the
Loans, Pledgor has agreed to grant, and does hereby grant, to
the Company, a security interest in the Purchased Shares and
all Option Shares hereinafter purchased by Pledgor with the
proceeds of any of the Loans (collectively, the "Shares").
<PAGE>
NOW, THEREFORE, in consideration of the premises and
the mutual agreements hereinafter contained, the parties here-
to agree as follows:
1. CREATION OF SECURITY INTEREST. As security for pay-
ment in full of the Loans, Pledgor hereby pledges, hypothe-
cates, assigns, transfers, sets over and delivers unto the
Company as collateral security, and hereby grants to the Com-
pany a first lien and security interest in, all of the Shares,
whether now owned or hereafter acquired, the proceeds thereof,
and all cash (other than cash dividends, except to the extent
expressly provided herein), securities or other property at
any time and from time to time receivable or otherwise distri-
buted in respect of or in exchange for any of the Shares (all
of such Shares, proceeds thereof, cash (other than cash divi-
dends, except to the extent expressly provided herein), secur-
ities and other property hereinafter being referred to collec-
tively as the "Collateral"). Concurrently with the execution
of this Agreement, Pledgor is delivering to the Company (i)
all stock certificates representing the Purchased Shares and
(ii) a duly endorsed irrevocable stock power in blank there-
fore. Upon the issuance of any Option Shares purchased by
Pledgor with the proceeds of any of the Loans, Pledgor shall
deliver to the Company (i) all stock certificates representing
those Option Shares and (ii) duly endorsed irrevocable stock
powers in blank therefor.
-2-
<PAGE>
2. STOCK DIVIDENDS AND ADJUSTMENTS; VOTING RIGHTS. If,
during the term of this Agreement, any stock dividend, re-
classification, stock split, readjustment, warrant, option or
right to acquire additional securities is issued with respect
to the Collateral or any part thereof, or any other change is
made in the capital structure of the Company, all new, substi-
tuted or additional shares or securities that Pledgor shall
become entitled to receive as a result thereof promptly shall
be delivered to the Company (together with appropriate instru-
ments of transfer duly endorsed in blank) and, from and after
the time Pledgor shall be entitled to receive the same, those
shares and securities shall be, and be deemed to be, part of
the property pledged hereunder and included in the term Col-
lateral as defined herein. So long as a Default (as herein-
after defined) shall not have occurred and be continuing,
Pledgor shall be entitled to receive all cash dividends pay-
able with respect to, and to exercise all rights to vote, the
securities contained in the Collateral. Upon the occurrence
and during the continuance of a Default, the Board of Direc-
tors of the Company shall be entitled to receive all such cash
dividends and to exercise all such voting rights.
3. REPRESENTATIONS, WARRANTIES AND COVENANTS. Pledgor
hereby represents, warrants and covenants that:
(a) Pledgor is and will be the sole legal and
equitable owner of the Collateral, and that Pledgor has and
-3-
<PAGE>
will have the right to transfer, pledge and deliver the Col-
lateral to the Company hereunder;
(b) there are and will be no outstanding liens, en-
cumbrances, or claims in respect of the Collateral other than
the security interest created by this Agreement;
(c) Pledgor will preserve and defend all right,
title and interest of the Company in and to the Collateral
against all claims thereon; and
(d) the pledge of the Collateral made hereby and
the delivery of the Collateral in accordance herewith are and
will be effective to vest in the Company a perfected, first
priority security interest in the Shares as set forth herein.
4. DEFAULT; REMEDIES. (a) A Default shall be deemed
to have occurred hereunder if:
(i) an Event of Default (as such term is de-
fined in the Notes evidencing the Loans (the "Notes")) shall
occur;
(ii) Pledgor sells, assigns, transfers or
otherwise disposes of, or grants a lien on or security in-
terest in or option or right with respect to, or otherwise en-
cumbers the Collateral or any part thereof or any interest
therein, unless concurrently therewith Pledgor repays the
Notes to the extent required in accordance with the terms
thereof;
-4-
<PAGE>
(iii) Pledgor becomes insolvent, makes a gen-
eral assignment for the benefit of creditors, or files or has
filed against him any petition under any bankruptcy or insol-
vency law or any action for the appointment of a receiver or
trustee; PROVIDED, HOWEVER, that in the event of an involun-
tary bankruptcy or insolvency proceeding, Pledgor shall have
60 days from the date of filing thereof to stay such proceed-
ing;
(iv) any of the Collateral shall be attached or
levied upon or seized in any legal proceedings, or held by
virtue of any levy or distraint, which attachment, levy or
distraint shall not be vacated within 60 days; PROVIDED, HOW-
EVER, that any such attachment, levy or distraint shall not
constitute a Default so long as it is stayed; or
(v) Pledgor otherwise defaults in any material
respect in the observance or performance of any representation
or other covenant or agreement contained herein or in any of
the Notes, and that default continues for a period of ten days
after notice thereof from the Company.
(b) If a Default shall have occurred and be con-
tinuing, the Company shall be entitled, in addition to any
other rights granted under the Notes, to exercise all of the
rights and remedies with respect to the Collateral of a se-
cured party under the Uniform Commercial Code or any other ap-
plicable law, all of which rights and remedies, to the full
extent permitted by law, shall be cumulative and not alterna-
-5-
<PAGE>
tive. Pledgor agrees that 30 days shall constitute reasonable
notice of a sale or other disposition of any of the Colla-
teral. The remainder of the proceeds from any such sale or
other disposition, after deducting therefrom all expenses in-
curred in connection therewith (including reasonable legal
fees and expenses) and after payment in full of Pledgor's ob-
ligations to the Company under the Notes and this Agreement,
shall be paid over to Pledgor. The Company shall not sell or
otherwise dispose of a greater number of Shares that it rea-
sonably determines is necessary for the payment in full of
Pledgor's obligations to the Company under the Notes and this
Agreement, including all expenses incurred in connection with
such sale or other disposition. Pledgor further agrees that a
private sale of the Collateral on such terms as the Company
approves shall be deemed to be commercially reasonable; PRO-
VIDED, HOWEVER, that the Company is authorized in its absolute
discretion to restrict the prospective purchasers to those
persons who represent and agree to the satisfaction of the
Company and its counsel that they are purchasing the Colla-
teral for their own account, for investment, and not with a
view to or for sale in connection with a distribution in vio-
lation of the Securities Act of 1933 or any other applicable
law or regulation.
5. WAIVER OF RIGHTS OR REMEDIES. (a) The Company, by
act, delay, omission, acceptance of partial payment or other-
wise, shall not be deemed to have waived any rights or reme-
-6-
<PAGE>
dies hereunder or under the Notes unless the waiver is in
writing and signed by the Company, and then only to the extent
therein set forth. A waiver by the Company of any right or
remedy on any one occasion, shall not be construed as a bar to
or waiver of any such right or remedy, or both, that the Com-
pany otherwise would have had on any future occasion.
(b) To the full extent that Pledgor may lawfully so
agree, Pledgor agrees that it will not at any time plead,
claim or take the benefit of any moratorium or redemption law
now or hereafter enforced, in order to prevent or delay the
enforcement of this Agreement or the application of any por-
tion or all of the Collateral as provided by this Agreement, and
Pledgor, for himself and all who may claim under Pledgor,
as far as they now or hereafter lawfully may, hereby waives
the benefit of all such laws.
6. AUTHORIZATION. The Company shall have and be en-
titled to exercise all such powers hereunder as are specific-
ally delegated to the Company by the terms hereof, together
with such powers as are reasonably incidental thereto. The
Company may execute any of its duties hereunder by or through
designees and shall be entitled to retain counsel and to act
in reliance upon the advise of such counsel concerning all
matters pertaining to its duties hereunder. Neither the Com-
pany, nor any director, officer or employee of the Company,
shall be liable to Pledgor for any action taken or omitted to
-7-
<PAGE>
be taken by it or them hereunder in connection herewith, ex-
cept for its or their own negligence or willful misconduct or
breach of this Agreement. The Company shall be entitled to
rely on any communication, instrument or document believed by
it to be genuine and correct and to have been signed or sent
by the proper person or persons.
7. FURTHER ASSURANCES. Pledgor agrees that he shall at
the request of the Company execute and deliver all such fur-
ther assignments, endorsements and other documents and take
all such further action as the Company may reasonably request
in order to effect the purposes and provisions of this Agree-
ment and to perfect, continue, better assure or confirm the
rights of the Company in the Collateral provided for here-
under.
8. TERMINATION. The security interest and assignment
created and granted hereunder shall terminate only when Pled-
gor has fully satisfied all of his obligations hereunder and
under the Notes, and at that time all Collateral remaining in
the possession of the Company shall be returned to Pledgor,
accompanied by appropriate stock powers.
9. NOTICES. Notices or other communications to either
of the parties shall be in writing and shall be deemed to have
been duly and properly given on the date such notices or other
communications are (i) personally delivered with receipt ac-
knowledged, or (ii) received when mailed by registered or cer-
tified mail, postage prepaid, return receipt requested, to the
-8-
<PAGE>
addresses set forth below or to such other address as either
party to this Agreement shall specify to the other:
To Pledgor: Robert Alvine
55 North Racebrook Road
Woodbridge, CT 06525
-with a copy to-
Tyler Cooper & Alcorn
205 Church Street
P.O. Box 1936
New Haven, CT 06509
Attention: Jon T. Hirschoff, Esq.
To the Company: Charter Power Systems, Inc.
c/o Charterhouse Group International,
Inc.
535 Madison Avenue
New York, New York 10022
Attention: Merril M. Halpern
-with a copy to-
Feit & Ahrens
488 Madison Avenue
New York, New York 10022
Attention: Jonathan Shor, Esq.
10. MISCELLANEOUS. (a) This Agreement shall be gov-
erned by and interpreted under the laws of the State of New
York applicable to contracts made and performed therein with-
out regard to the principles of conflict of laws thereof. If
any term or provision of this Agreement shall, for any reason,
be held to be illegal, invalid or unenforceable under the laws
of any governmental authority to which this Agreement is sub-
ject, the term or provision shall be deemed severed from this
Agreement, and the remaining terms and provisions shall be en-
forceable, to the fullest extent permitted by law.
-9-
<PAGE>
(b) This Agreement shall inure to the benefit of
and shall be binding upon the respective successors, assigns
and legal representatives of the parties, except that Pledgor
shall not be permitted to assign this Agreement or any inter-
est herein or in the Collateral, or any part thereof, or
otherwise pledge, encumber or grant any option with respect to
the Collateral, or any part thereof, or any cash or property
held by the Company as Collateral under this Agreement, except
to the extent provided herein. The Company may assign this
Agreement, any interest herein or in the Collateral or any
part thereof, to an affiliated entity of the Company.
(c) Captions used herein are inserted for reference
purposes only and shall not affect the interpretation or
meaning of this Agreement.
(d) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same agree-
ment.
(e) This Agreement may not be changed, modified or,
except as provided in Section 8 hereof, terminated, in whole
or in part, except by a written instrument signed by the party
-10-
<PAGE>
against who any such change, modification or termination is
sought to be enforced.
IN WITNESS WHEREOF, Pledgor has executed this Agree-
ment on the date hereinabove first written.
________________________
ROBERT ALVINE
AGREED TO AND ACCEPTED:
CHARTER POWER SYSTEMS, INC.
By:________________________
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<PAGE>
EXHIBIT C to
Stock Purchase Agreement
IMPUTED INCOME
SECURED PROMISSORY NOTE
$___________ [Date]
FOR VALUE RECEIVED, ROBERT ALVINE (the "Payor")
hereby promises to pay to CHARTER POWER SYSTEMS, INC., a Dela-
ware corporation ("the Company"), the principal sum of _______
____________________________________ ($__________), without in-
terest, in four equal annual installments on April 15 of each
of 1990 through 1993. Payment of principal is to be made in
lawful money of the United States of America at the offices of
the Company or at such other place as the holder hereof shall
designate.
This Note is secured by the pledge by the Payor to
the Company of certain shares of common stock of the Company,
in accordance with the terms of a Pledge and Security Agree-
ment (the "Security Agreement") between the Payor and the Com-
pany, dated June ___, 1988, and in that respect is subject to
all of the terms, provisions and conditions of the Security
Agreement.
This Note evidences a loan made by the Company to
the Payor to enable him to purchase 316,515 shares of common
stock of the Company (the "Shares"). If the Payor shall sell
or transfer any of his Shares or the proceeds thereof, or any
<PAGE>
cash (other than cash dividends), securities, or other prop-
erty at any time and from time to time receivable or otherwise
distributed in respect of or in exchange for any or all of the
Shares (collectively, the "Additional Shares"), there shall be
due and payable, immediately upon the consummation of the sale
or transfer, a payment of principal hereunder in an amount
equal to the product obtained by multiplying the then out-
standing principal amount of this Note by a fraction, the nu-
merator of which shall be the number of Shares and Additional
Shares then sold or transferred and the denominator of which
shall be the number of Shares and Additional Shares then owned
by the Payor (before giving effect to the sale or transfer).
Nothing in this paragraph shall be deemed to permit any sale
or transfer by the Payor of any Shares or Additional Shares,
to the extent the same otherwise would be prohibited by the
provisions of any other agreement to which the Payor and the
Company are parties.
If: (i) the Payor fails to make any payment
hereunder within ten days after notice from the Company to the
Payor that the payment is due; or (ii) the Payor's employment
with the Company is terminated for "Cause", as defined in the
employment agreement, dated May 26, 1988, between the Payor
and the Company; or (iii) a Default (as is defined in the Se-
curity Agreement) shall have occurred under the Security
Agreement (each of the events listed in (i), (ii) and (iii)
-2-
<PAGE>
above being an "Event of Default" hereunder); the then out-
standing principal balance hereof shall become immediately due
and payable.
The Payor may, at any time and from time to time,
prepay in whole or part, without premium or penalty, the then
outstanding principal balance hereof.
The Payor hereby agrees to pay all reasonable costs,
fees and expenses incurred by the Company for the collection
of all sums due hereunder, including reasonable attorneys'
fees and court costs. The Payor hereby waives presentment,
demand, notice of dishonor, protest and all other demands and
notices in connection with this Note (including any accelera-
tion of the maturity hereof) and further agrees that this Note
shall be deemed to have been made under and shall be governed
by the laws of the State of New York in all respects (without
giving effect to the conflicts of law provisions thereof), in-
cluding matters of construction, validity and performance, and
that none of its terms or provisions may be waived, altered,
modified or amended except to the extent the Company may con-
sent thereto in writing.
IN WITNESS WHEREOF, the Payor has executed and de-
livered this Note to the Company as of the date first above
written.
_________________________
ROBERT ALVINE
-3-
<PAGE>
OPTION AGREEMENT
ROBERT ALVINE (the "Optionee") hereby is granted the
option (the "Option") to purchase Two Hundred Eleven Thousand
and Ten (211,010) fully paid and nonassessable shares of the
common stock, par value $.01 per share (the "Common Stock"),
of Charter Power systems, Inc., a Delaware corporation (the
"Company"), upon and subject to the following terms and condi-
tions:
1. Option Price. The price at which shares of Common
Stock subject to the Option may be purchased is $6.04 a share.
2. Duration of Option. The Option shall expire, and
all rights to purchase share of Common Stock pursuant thereto
shall cease, on April 30, 1993 (the "Expiration Date").
3. Vesting of Option. No portion of the Option may be
exercised until it has vested. The Option shall vest as set
forth in Schedule 1 attached hereto.
4. Exercise of Options. A person entitled to exercise
the Option may exercise it in whole at any time, or in part
from time to time, by delivering to the Company at its princi-
pal office, directed to the attention of its Treasurer, (a)
written notice specifying the number of share of Common Stock
with respect to which the Option is being exercised, (b) pay-
<PAGE>
ment in full of the purchase price for those shares and (c)
payment of the amount required for the Company to satisfy its
withholding tax obligation respecting that exercise as deter-
mined by the Company's independent accountants. Those pay-
ments shall be made in cash, by check to the order of the Com-
pany or, in the case of a payment of the amount described in
clause (b) above (less the par value of the relevant shares),
by delivery of a Secured Promissory Note in the form attached
as Exhibit A hereto.
5. Nontransferability. The Option shall not be trans-
ferable other than by will or the laws of descent and distri-
bution and the Option may not be exercised by anyone other
than the Optionee, except that, if the Optionee dies or be-
comes incapacitated, the Option may be exercised by the Op-
tionee's estate, legal representative or beneficiary, as the
case may be, subject to all other terms and conditions con-
tained in this Agreement.
6. Termination of Employment. The following rules
shall apply in the event of the termination of the Optionee's
employment with the Company:
(i) if the termination is for "Cause", as defined
in the employment agreement, dated the date hereof, be-
tween the Optionee and the Company, the Option immedi-
ately shall terminate;
-2-
<PAGE>
(ii) if the termination is other than for Cause (in-
cluding due to death or disability), the Option shall ex-
pire 18 months after the date of termination, or on the
applicable Expiration Date, whichever first shall occur;
and
(iii) anything contained in this Section 6 to the
contrary notwithstanding, except as provided in part B of
Schedule 1 hereto, the Option may be exercised following
termination of the Optionee's employment only if, and to
the extent that, the Option was exercisable as of the
date of termination.
7. No Rights as Stockholder or to Continued Employ-
ment. The Optionee shall not have any rights as a stockholder
of the Company with respect to any shares covered by the Op-
tion prior to the date of issuance to the Optionee of the cer-
tificate or certificates for such shares, and the Option shall
not confer upon the Optionee any right to continuance of em-
ployment with the Company or any of its subsidiaries or inter-
fere in any way with the right of the Company or of its sub-
sidiaries to terminate the employment of the Optionee.
8. Issuance of Shares; Restrictions. (a) Subject to
the conditions and restrictions provided to this Section 8,
the Company shall, within 20 business days after the Option
has been duly exercised in whole or in part, deliver to the
person who exercised the Option one or more certificates, reg-
-3-
<PAGE>
istered in the name of that person, for the number of shares
of Common Stock with respect to which the Option was exer-
cised. The Company may place a legend on any stock certifi-
cate issued hereunder to reflect any restriction s provided for
in this Section 8.
(b) Unless the issuance of the shares subject to
the Option has been registered under the securities Act of
1933 (the "Act") (and, if the Optionee may be deemed an "af-
filiate" of the Company, as defined in Rule 405 under the Act,
if the resale by the Optionee of those shares also has been
registered under the Act), or the Company (based upon advice
of counsel) has determined that an exemption from registration
under the Act is available, the Company may require prior to
and as a condition of the issuance of any shares of Common
Stock, that the person exercising the Option hereunder provide
to the Company a written representation in a form prescribed
by the Committee to the effect that that person is acquiring
those shares solely with a view to investment, for that per-
son's own account, and not with a view to the resale or dis-
tribution of all or any part thereof, and that such person
will not dispose of any of those shares other than in accord-
ance with the registration provisions of the Act, unless the
Company (based upon advice of counsel) is satisfied that an ex-
emption from such registration is available.
-4-
<PAGE>
(c) Anything contained herein to the contrary not-
withstanding, the Company shall not be obligated to issue any
shares of Common Stock upon the exercise of the Option granted
hereunder unless and until the Company is satisfied that such
issuance complies with all applicable provisions of the Act
and all other applicable laws or regulations by which the Com-
pany is bound or to which the Company or those shares are sub-
ject.
9. Adjustments. The number of shares of Common Stock
covered by the Option and the exercise price therefor shall be
adjusted proportionately for any increase or decrease in the
number of outstanding shares of Common Stock resulting from a
stock split or other subdivision or consolidation of shares or
other capital adjustment, or the payment of a stock dividend;
provided, however, that any fractional shares resulting from
any such adjustment shall be eliminated. Notwithstanding the
foregoing, no adjustment shall be made upon the issuance of
new shares of Common Stock for fair consideration.
10. Condition. The Option is subject to the approval
thereof by the holders of shares of Common Stock and to the
listing on the American Stock Exchange of the shares of Common
Stock issuable upon exercise of the Option (subject to notice
of issuance).
11. Miscellaneous.
(a) Notices. All notices and other communications
required or permitted to be given hereunder shall be in
writing and shall be deemed to have been given if delivered
personally or sent by certified mail, return receipt re-
-5-
<PAGE>
quested, postage prepaid, to the Company at c/o Charterhouse
Group International, Inc., 535 Madison Avenue, New York, New
York 10022, Attention: Merril M. Halpern, with a copy to Feit
& Ahrens, 488 Madison Avenue, New York, New York 10022, Atten-
tion: Jonathan Shor, Esq., and to the Optionee at the Op-
tionee's address contained in the Company's records, with a
copy to Tyler Cooper & Alcorn, 205 Church Street, P.O. Box
1936, New Haven, Connecticut 06509, Attention: Jon T.
Hirschoff, Esq., or to such other address as either party to
this Agreement shall specify by notice to the other.
(b) Binding Effect; Benefits. This Agreement shall
be binding upon and inure to the benefit of the parties to
this Agreement and their respective successors and permitted
assigns. Nothing in this Agreement, express or implied, is
intended or shall be construed to give any person other than
the parties to this Agreement or their respective successors
or permitted assigns any legal or equitable right, remedy or
claim under or in respect of any agreement or any provision
contained herein.
(c) Amendment. This Agreement may be amended, mo-
dified or supplemented only by a written instrument executed
by the Optionee and the Company.
(d) Applicable Law. This Agremeent shall be gov-
erened by and construed in accordance with the laws of the
State of New York, without giving effect to the conflicts of
law provisions thereof.
-6-
<PAGE>
(e) Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed to
be one and the same instrument.
(f) Entire Agreement. This Agremeent constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company and the Optionee
have executed this Agreement as of the date written below.
Date of Grant: May 26, 1988.
CHARTER POWER SYSTEMS, INC.
By: \s\ Merril M. Halpern
Chairman
\s\ Robert Alvine
ROBERT ALVINE
-7-
<PAGE>
Schedule 1
A. Vesting of Option.
The Option shall vest: (i) to the extent of 105,505
shares as of January 31, 1990, only if the Company's earnings
per share (the "EPS") for the fiscal year ending January 31,
1990 equal or exceed $1.05; and (ii) to the extent of the re-
maining 105,505 shares (the "Second Portion"), as of January
31, 1991, only if the EPS for the fiscal year ending January
31, 1991 equal to or exceed $1.25. For this purpose, the EPS
shall be as reported in the Company's audited financial state-
ments for the relevant fiscal year, adjusted to exclude from
the calculation of EPS (a) any extraordinary items (as deter-
mined by the Company's independent accountants in accordance
with generally accepted accounting principles), (b) any shares
issued or issuable pursuant to the Company's Stock Option Plan
and (c) any increase or decrease in the number of outstanding
shares resulting from a stock split or other subdivision or
consolidation of shares or other capital adjustment, or the
payment of a stock dividend.
If the employment of the Optionee with the Company
is terminated due to death or disability (as defined in the
employment agreement, dated the date hereof, between the Op-
tionee and the Company (the "Employment Agreement")) after
October 31, 1989 or 1990 and the applicable EPS amount for the
(i)
<PAGE>
fiscal year ending January 31, 1990 or 1991, as the case may
be, is met, the Optionee shall be deemed to have been employed
through the end of the relevant fiscal year for the purpose of
the vesting of the Option.
B. Accelerated Vesting.
The Option (if (i) the circumstance or transaction
described in paragraph 1 or 2(a) below occurs or is completed
on or before January 31, 1991 or (ii) the transaction de-
scribed in paragraph 2(b) below is completed on or before
January 31, 1990) or the Second Portion (if the transaction
described in paragraph 2(b) below occurs or is completed after
January 31, 1990 and on or before January 31, 1991) shall vest
on an accelerated basis to the extent provided below:
1. If the average of the daily closing prices of the
Common Stock of the Company, as reported by the American Stock
Exchange (the "AMEX"), during any 60-day period equals or
exceeds $15.00 a share, full accelerated vesting shall occur on
the last day of that 60-day period.
2. If: (a) a Business Combination (as defined in the
Employment Agreement) has occurred at a weighted average price
per share on a fully diluted basis (the "Transaction Price") of
not less than $11.00; or (b) a Change of Control (as de-
fined in the Employment Agreement) other than a Business Com-
bination has occurred and the average of the daily closing
prices of a share of the Common Stock of the Company, as re-
ported by the AMEX, during the 20 trading days prior thereto
(ii)
<PAGE>
(the "CC Price"), is not less than $11.00; accelerated vesting
to the extent of the percentage specified below shall occur
upon consummation of the transaction:
Transaction Price Percentage of Unvested
or CC Price Option to Vest
$11.00 - $11.99 20%
$12.00 - $12.99 40%
$13.00 - $13.99 60%
$14.00 - $14.99 80%
$15.00 or greater 100%
(iii)
<PAGE>
EXHIBIT A to
Option Agreement
OPTION
SECURED PROMISSORY NOTE
$ _________ [Date]*
FOR VALUE RECEIVED, ROBERT ALVINE (the "Payor")
hereby promises to pay to CHARTER POWER SYSTEMS, INC., a Dela-
ware corporation ("the Company"), the principal sum of _______
_____________________________ ($____________), without inter-
est, on ___________**. Payment of principal is to be made in
lawful money of the United States of America at the offices of
the Company or at such other place as the holder hereof shall
designate.
This Note is secured by the pledge by the Payor to
the Company of certain shares of common stock of the Company,
in accordance with the terms of a Pledge and Security Agree-
ment (the "Security Agreement") between the Payor and the Com-
pany, dated June ___, 1988, and in that respect is subject to
all of the terms, provisions and conditions of the Security
Agreement.
________________
* Insert date of exercise of option respecting Shares pur-
chased with the principal amount of this Note.
** Insert date that is 18 months subsequent to date of this
Note.
<PAGE>
This Note evidences a loan made by the Company to
the Payor to enable him to purchase _______*** shares of common
stock of the Company (the "Shares"). If the Payor shall sell
or transfer any of his Shares or the proceeds thereof, or any
cash (other than cash dividends), securities, or other prop-
erty at any time and from time to time receivable or otherwise
distributed in respect of or in exchange for any or all of the
Shares (collectively, the "Additional Shares"), there shall be
due and payable, immediately upon the consummation of the sale
or transfer, a payment of principal hereunder in an amount
equal to the product obtained by multiplying the then out-
standing principal amount of this Note by a fraction, the nu-
merator of which shall be the number of Shares and Additional
Shares then sold or transferred and the denominator of which
shall be the number of Shares and Additional Shares then owned
by the Payor (before giving effect to the sale or transfer).
Nothing in this paragraph shall be deemed to permit any sale
or transfer by the Payor of any Shares or Additional Shares,
to the extent the same otherwise would be prohibited by the
provisions of any other agreement to which the Payor and the
Company are parties.
____________
*** Insert number of Shares purchased with the principal
amount of this Note.
-2-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated May 26, 1988, between ROBERT ALVINE
(the "Shareholder") and CHARTER POWER SYSTEMS, INC., a Dela-
ware corporation (the "Company").
WHEREAS, the Shareholder on the date hereof has
agreed to purchase 316,515 shares of Common Stock, $.01 par
value, of the Company ("Common Stock") and has been granted
the option to purchase an additional 211,010 shares of Common
Stock (all such shares hereinafter are referred to
collectively as the "Shares");
WHEREAS, the Company has agreed to provide the
Shareholder with certain registration rights respecting the
Shares.
NOW, THEREFORE, in consideration of the foregoing
and of the mutual covenants and agreements set forth herein,
the parties hereto agree as follows:
1. DEMAND REGISTRATION. During each of the fol-
lowing periods: (a) the 18-month period following the termina-
tion of the employment of the Shareholder with the Company
without "Cause" (as defined in the Employment Agreement, of
even date herewith, between the Company and the Shareholder);
or (b) at any time after April 30, 1991, so long as the Share-
holder is employed by the Company at that time; the Share-
holder shall be entitled to request, and the Company thereupon
shall diligently effect in accordance with the terms hereof,
one registration under the Securities Act of 1933 (the "Act")
of all or any portion of his Shares owned at the time of the
request, in the case of clause (a) above, or up to 50% of such
Shares, in the case of clause (b) above, in which the Company
shall pay all Registration Expenses (as defined in Section 6
hereof) (the "Demand Registrations"). A registration will not
be deemed a Demand Registration permitted pursuant to this
Section 1 unless it has become effective and the Shareholder
is legally permitted to sell the Shares that are requested and
required to be included in that registration and the Company
has complied with the other applicable provisions of this
Agreement.
2. NO-SALE AGREEMENT. The obligation of the Com-
pany to include Shares in the Demand Registrations as provided
in Section 1 hereof shall be subject to the Company's receipt
from the Shareholder of a written agreement not to effect any
<PAGE>
public sale or distribution (other than through the registered
public offering) of equity securities of the Company during
the ten days prior to and the 90-day period beginning on the
effective date of that registration or, if sooner, until all
Shares and other securities included in that registration have
been sold.
3. EFFECTING THE REGISTRATION. Whenever the Share-
holder requests that any Shares be registered pursuant to the
provisions of this Agreement, the Company shall use its best
efforts to effect the registration and the sale of those
Shares in accordance with the intended method of disposition
thereof and, pursuant thereto, the Company shall, as expedi-
tiously as possible:
(a) prepare and file with the Securities and
Exchange Commission (subject to its receipt from the Share-
holder of the written information specified in Section 7(b)
hereof) a registration statement with respect to those Shares,
which registration statement shall state that the Shareholder
may sell those Shares either under that registration statement
or (to the extent available to the Shareholder) pursuant to
Rule 144 (or any similar rule then in effect), and shall use
its best efforts to cause such registration statement to be-
come effective;
(b) prepare and file with the Securities and
Exchange Commission (subject to its receipt from the Share-
holder of the written information specified in Section 7(b)
hereof) such amendments and supplements to that registration
statement and the prospectus used in connection therewith as
may be necessary to keep that registration statement effective
for a period of not less than six months and comply with the
provisions of the Act with respect to the disposition of all
securities covered by that registration statement during that
six-month period in accordance with the intended method of
disposition by the Shareholder set forth in that registration
statement;
(c) provide to the Shareholder such number of
copies of that registration statement, each amendment and sup-
plement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such
other documents as the Shareholder reasonably may request in
order to facilitate the disposition of the Shares owned by the
Shareholder included in that registration statement;
(d) use its best efforts to register or qualify
those Shares under the securities or blue-sky laws of such
jurisdictions as the Shareholder reasonably requests and do
any and all other acts and things that may be reasonably
-2-
<PAGE>
necessary or advisable to enable the Shareholder to consummate
the disposition in those jurisdictions of the Shares owned by
the Shareholder included in that registration statement (PRO-
VIDED, HOWEVER, that the Company shall not be required, in
order to complete that registration or qualification, to (i)
qualify generally to do business in any such jurisdiction
where it otherwise would not be required to qualify but for
this subparagraph, (ii) subject itself to taxation in any such
jurisdiction, (iii) consent to general service of process in
any such jurisdiction (it being agreed that the Company shall
be obligated, to the extent required in any applicable juris-
diction, to consent to limited service of process with respect
to matters relating to the offering being so registered or
qualified), or (iv) otherwise subject itself or any of its af-
filiates to unreasonable expense or restrictions);
(e) notify the Shareholder, at any time when a
prospectus relating thereto is required to be delivered under
the Act, of the happening of any event or the discovery of any
information, as a result of which the prospectus included in
that registration statement contains any statement which, at
the time and in light of the circumstances under which it was
made, is false or misleading with respect to any material fact
or omits to state a material fact required to be stated
therein or necessary in order to make the statement therein
not false or misleading, and, at the request of the Share-
holder, the Company shall prepare a supplement or amendment to
that prospectus so that, as thereafter delivered to the pur-
chasers of those Shares, that prospectus will not contain any
statement which, at the time and in light of the circumstances
under which it was made, is false or misleading with respect
to any material fact or omits to state a material fact re-
quired to be stated therein or necessary in order to make the
statements therein not false or misleading;
(f) enter into such customary agreements (in-
cluding an underwriting agreement in customary form and on
terms reasonably agreeable to it) and take all such other ac-
tions as the holders of a majority of the securities covered
by the registration statement or the underwriters, if any,
reasonably request in order to expedite or facilitate the dis-
position of those securities; and
(g) make available for inspection by the Share-
holder, any underwriter participating in any disposition pur-
suant to the registration statement, and any attorney, ac-
countant or other agent retained by the Shareholder or that
underwriter, all financial and other records, pertinent corpo-
rate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all in-
-3-
<PAGE>
formation reasonably requested by the Shareholder or that un-
derwriter, attorney, accountant or agent in connection with
that registration statement.
Notwithstanding anything contained in this Section 3 to the
contrary, the Company shall not be required to file any regis-
tration statement pursuant to Section 1 hereof; (i) until it
has filed its Form 10-Q (or its then equivalent) for its most
recently completed fiscal quarter (unless the Company meets
the eligibility requirements for the use of a registration
statement on Form S-2) and its Form 10-K for its most recently
completed fiscal year; or (ii) during any period of time when
(A) the Company is contemplating an underwritten public offer-
ing of any of its securities within three months and, in the
judgement of the managing or principal underwriter thereof or
of the Company, that filing would have an adverse effect on
the contemplated offering, (B) the Company is in possession of
material nonpublic information (notice of which shall have
been given by the Company to the Shareholder) that it deems in
its legitimate business interest not to disclose in a regis-
tration statement or (C) the Company is engaged in any program
for the purchase of shares of its Common Stock; PROVIDED, HOW-
EVER, that the aggregate of the periods in this clause (ii)
shall not exceed 120 days during the 18-month period provided
in Section 1(a) hereof).
4. OPINION OF COUNSEL AND LETTER FROM ACCOUNTANTS.
If and whenever the Company is required by the provisions of
this Agreement to use its best efforts to effect the registra-
tion of Shares under the Act, the Company shall provide, at
the request of the Shareholder, on the date that those Shares
are delivered to the underwriters for sale pursuant to that
registration or, if those Shares are not being sold through
underwriters, on the date the registration statement with re-
spect to those Shares becomes effective: (a) an opinion, dated
such date, of the independent counsel representing the Company
for the purposes of such registration, addressed to the under-
writers, if any, and to the Shareholder, to the effect that
(i) the registration statement, the related prospectus and
each amendment or supplement thereto, comply as to form in all
material respects with the requirements of the Act and the ap-
plicable rules and regulations of the Securities and Exchange
Commission thereunder (except that such counsel need express
no opinion as to the financial statements and schedules and
other financial and statistical data contained therein), (ii)
while such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of
the statements contained in the registration statement and the
prospectus (except for the matters referred to in clause (iii)
below), such counsel has no reason to believe either that the
registration statement or the prospectus (and any amendment or
supplement thereto), at the time that registration statement
became effective (or in the case of an amendment or supple-
-4-
<PAGE>
ment, at the time it was filed), and with respect to the pros-
pectus, on the date of such prospectus, contains any statement
which, at the time and in light of the circumstances under
which it was made, is false or misleading with respect to any
material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements
therein not false or misleading (except that such counsel need
express no opinion as to the financial statements and sched-
ules and other financial and statistical data, or the informa-
tion provided by the Shareholder pursuant to Section 7(b)
hereof, contained therein), and (iii) all of the Shares in-
cluded in the registration statement have been duly authorized
and validly issued, and are fully paid and nonassessable; and
(b) a letter, dated that date, from the independent certified
public accountants of the Company, addressed to the under-
writers, if any, and to the Shareholder, if he would be deemed
an affiliate of the Company as defined in Rule 405 under the
Act, stating (i) that they are independent certified public
accountants within the meaning of the Act and that in the
opinion of such accountants, the financial statements and
schedules of the Company included in the registration state-
ment or the prospectus, or any amendment or supplement there-
to, comply as to form in all material respects with the appli-
cable accounting requirements of the Act, and (ii) such other
financial matters (including information as to the period end-
ing not more than five business days prior to the date of such
letter) with respect to the registration statement as the un-
derwriters, if any, or the Shareholder, if he would qualify as
an underwriter, may reasonably request; PROVIDED, HOWEVER,
that the Company shall not be considered to be in breach of
this Section 4 if its independent certified public accountants
or counsel shall have refused to deliver all or any part of
the letter or opinion specified in this Section 4 without
qualification or limitation (other than standard qualifica-
tions and limitations) not specified above, if the Company
shall have requested such accountants or counsel to provide
the same and shall have cooperated in all reasonable respects,
to the extent requested by such accountants or counsel, in
providing them with information required for the preparation
of that letter or opinion.
5. REVIEW BY THE SHAREHOLDER. No less than five
business days prior to the filing of a registration statement
or prospectus, or any amendment or supplement thereto, the
Company shall provide the Shareholder with a substantially
final copy of such proposed registration statement, pros-
pectus, amendment or supplement. If, prior to that filing,
the Company shall receive written notice from the Shareholder
to the effect that that registration statement, prospectus,
amendment or supplement contains any statement relating to the
Shareholder which is false or misleading or omits to state a
material fact, then the Company shall not file that registra-
tion statement, prospectus, amendment or supplement without
-5-
<PAGE>
the prior written consent of the Shareholder, which consent
shall not be unreasonably withheld.
6. EXPENSES. All expenses incident to the Com-
pany's performance of or compliance with the registration ob-
ligations set forth in this Agreement, including all registra-
tion and filing fees, expenses of compliance with securities
or blue-sky laws, printing expenses, messenger and delivery
expenses, and fees and disbursements of counsel for the Com-
pany (but not counsel for the Shareholder) and all independent
certified public accountants, underwriters (excluding dis-
counts and commissions) and other persons retained by the Com-
pany (all such expenses being herein called "Registration Ex-
penses"), shall be borne by the Company.
7. INDEMNIFICATION. (a) The Company shall indem-
nify, to the extent permitted by law, the Shareholder and any
underwriter (and any controlling person thereof) acting on
his behalf, against all losses, claims, damages, liabilities
and expenses (including reasonable attorneys' fees and dis-
bursements) resulting from any untrue or alleged untrue state-
ment of material fact contained in any registration statement,
prospectus or preliminary prospectus, or any amendment or sup-
plement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or ne-
cessary to make the statements therein not misleading, except
insofar as the same are caused by or contained in any informa-
tion provided in writing to the Company by the Shareholder ex-
pressly for use therein or by the Shareholder's or such under-
writers' failure to deliver a copy of the registration state-
ment or prospectus or any amendments or supplements thereto
after the Company has provided the Shareholder or such under-
writer with a sufficient number of copies of the same.
(b) In connection with any registration state-
ment or amendment thereto in which the Shareholder is partici-
pating pursuant to the provisions of this Agreement, the
Shareholder shall provide the Company in writing with such in-
formation and affidavits as the Company reasonably shall re-
quest for use in connection with any such registration state-
ment or amendment and, to the extent permitted by law, shall
indemnify the Company, its directors and officers, each person
who controls the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act of 1934 (the "Ex-
change Act") and any underwriter (and any controlling person
thereof) acting on the Company's behalf against any losses,
claims, damages, liabilities and expenses (including reason-
able attorneys' fees and disbursements) resulting from any un-
true or alleged untrue statement of material fact or any omis-
sion or alleged omission of a material fact required to be
stated in the registration statement or any amendment thereof
-6-
<PAGE>
or supplement thereto or necessary to make the statements
therein not misleading, but only to the extent that such un-
true statement or omission is contained in (or should have
been contained in, but was omitted from) any information or
affidavit so provided in writing by the Shareholder.
(c) Any person entitled to indemnification
hereunder shall (i) give prompt notice to the indemnifying
party of any claim with respect to which the indemnified party
seeks indemnification and (ii) unless in the indemnified
party's reasonable judgement a conflict of interest between the
indemnified and indemnifying parties may exist with respect to
such claim, permit such indemnifying party to assume the de-
fense of such claim with counsel reasonably satisfactory to
the indemnified part. If such defense is assumed, the indem-
nifying party shall be entitled in its sole discretion to set-
tle such claim at no cost to the indemnified party. An indem-
nifying party who is not entitled to, or elects not to, assume
the defense of a claim shall not be obligated to pay the fees
and expenses of more than one counsel for all parties indemni-
fied by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party
and any other indemnified party with respect to such claim.
Notwithstanding the foregoing, any indemnified party shall
have the right, in any action the defense of which has been
assumed by the indemnifying party, to employ separate counsel
and to participate in the defense of such action, but the fees
and expenses of such counsel (except those, if any, incurred
before the defense was assumed by the indemnifying party)
shall be the responsibility of the indemnified party.
8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
The Shareholder may not participate in any underwritten regis-
tration pursuant to the provisions of this Agreement unless he
(i) agrees to sell his Shares on the basis provided in any un-
derwriting arrangements approved by the person entitled here-
under to approve such arrangements and (ii) completes and ex-
ecutes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the
terms of such underwriting arrangements.
9. SELECTION OF UNDERWRITERS. If any registration
pursuant hereto is an underwritten offering, the Company will
have the right to reasonably approve the investment banker(s)
and manager(s) selected by the Shareholder to administer the
offering.
10. COVENANTS OF THE COMPANY. The Company shall
use its best efforts to file in a timely manner all reports
required to be filed by it pursuant to the Exchange Act and,
upon request of the Shareholder, shall provide the Shareholder
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<PAGE>
with such information as may be necessary to enable the
Shareholder to effect routine sales pursuant to Rule 144 under
the Act.
11. MISCELLANEOUS. (a) NOTICES. All notices and
other communications required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have
been given if delivered by hand, sent by telex, telecopy,
cable, same day or overnight courier, or mailed (registered or
certified mail, return receipt requested) to the Company at
c/o Charterhouse Group International, Inc., 535 Madison Ave-
nue, New York, NY 10022, Attention: Merril M. Halpern, with a
copy to Feit & Ahrens, 488 Madison Avenue, New York, New York
10022, Attention: Jonathan Shor, Esq., and to the Shareholder
at his address contained in the stock record book of the Com-
pany, with a copy to Tyler Cooper & Alcorn, 205 Church Street,
P.O. Box 1936, New Haven, Connecticut 06509, Attention: Jon
T. Hirschoff, Esq., or to such other address as a party to
this Agreement shall specify by notice to the other.
(b) BINDING EFFECT; BENEFITS. This Agreement
shall be binding upon and inure to the benefit of the parties
to this Agreement, and the successors and assigns of the Com-
pany, on the one hand, and any other person which acquires any
Shares from the Shareholder in a transaction that is exempt
from the registration and prospectus delivery requirements of
the Act and has given written notice to the Company of its ac-
quisition of these Shares, on the other hand. Nothing in this
Agreement, expressed or implied, is intended or shall be con-
strued to give any other person any legal or equitable right,
remedy or claim under or in respect of any agreement or any
provision contained herein. Except as provided in this sub-
section (b), neither this Agreement nor any right, remedy, ob-
ligation or liability arising hereunder or by reason hereof
shall be assignable by the Shareholder without the prior
written consent of the Company.
(c) WAIVER, AMENDMENT.
(i) WAIVER. Any party hereto may by written
notice to the others (a) extend the time for the performance
of any of the obligations or other actions of any other party
to it under this Agreement, (b) waive complaince with any of
the conditions or covenants of any other party to it contained
in this Agreement, and (c) waive or modify performance of any
of the obligations of any other party to it under this Agree-
ment. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including, without limita-
tion, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action
of compliance with any representations, warranties, covenants
or agreements contained herein. The waiver by any party here-
to of a breach of any provision of the Agreement shall not
-8-
<PAGE>
operate or be construed as a waiver of any preceding or suc-
ceeding breach and no failure by any party to exercise any
right or privilege hereunder shall be deemed a waiver of such
party's rights or privileges hereunder or shall be deemed a
waiver of such party's rights to exercise the same at any sub-
sequent time or times hereunder.
(ii) AMENDMENT. This Agreement may be amend-
ed, modified or supplemented only by a written instrument exe-
cuted by the Shareholder and the Company.
(d) APPLICABLE LAW. This Agreement shall be
governed as to its validity, interpretation and effect and
constured in accordance with the laws of the State of New
York, regardless of the law that might be applied under the
principles of conflicts of law.
(e) COUNTERPARTS. This Agreement and any amend-
ments, waivers, consents or supplements hereto may be executed
in any number of counterparts, each of which when so executed
shall be deemed to be an original, but all of which counter-
parts when taken together shall constitute one and the same
instrument.
(f) ENTIRE AGREEMENT. This Agreement constitu-
tutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
(g) ADJUSTMENTS AFFECTING SECURITIES. The term
"Shares" as used herein shall include all additional equity
securities issued with respect thereto pursuant to any subse-
quent stock split, stock dividend, recapitalization, merger,
consolidation or other reorganization affecting the number of
outstanding shares of Common Stock.
(h) SEVERABILITY. If any provision of this
Agreement is unenforceable for any reason, the remaining pro-
visions hereof shall not be effected thereby and shall never-
theless remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Agree-
ment on the date first written above.
CHARTER POWER SYSTEMS, INC.
By: \s\ Merril M. Halpern
Chairman
\s\ Robert Alvine
ROBERT ALVINE
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<PAGE>
AMENDMENT AGREEMENT
Amendment Agreement, dated May 30, 1989, between
Robert Alvine (the "Executive") and Charter Power Systems,
Inc., a Delaware corporation (the "Company").
WHEREAS, on May 26, 1988, the Executive and the
Company entered into an employment agreement (the
"Employment Agreement") and an Option Agreement (the "Option
Agreement"); and
WHEREAS, the Executive and the Company desire to
amend the terms of the Employment Agreement and the Option
Agreement as hereinafter set forth.
NOW, THEREFORE, the parties hereby agree as
follows:
1. Section 1(a) of the Employment Agreement is
hereby amended by replacing the date "April 30, 1991" on the
fifth line thereof with the date "April 30, 1992".
2. The second sentence of Section 2 of the
Employment Agreement is hereby deleted in its entirety and
replaced with the following:
"On May 1, 1991 and on the first day of each Renewal Term of
this agreement, if any, the Base Salary shall be adjusted by
multiplying the Base Salary by a fraction (i) the numerator
of which shall be the Consumer Price Index (for urban wage
earners and clerical workers, all items) as reported by the
Bureau of Labor Statistics of the United States Department of
Labor for the New York, New York-Northeastern New Jersey area
(or such other successor government agency as then shall
perform that reporting function) (the "Index") for the month
immediately preceding the month in which the Base Salary
<PAGE>
adjustment shall occur and (ii) the denominator of which
shall be the Index for the month immediately preceding the
month in which the immediately preceding term commenced (or,
in the case of the Base Salary adjustment occurring on May 1,
1991, for the month of April 1988); PROVIDED, HOWEVER, that
in no event shall any such adjustment result in a decrease in
the Base Salary".
3. The first sentence of Section 6 of the
Employment Agreement is hereby amended by adding the phrase
"(the "Other Agreements")" after the word "agreements" on the
third line thereof.
4. The second sentence of Section 12(c) of the
Employment Agreement is hereby amended (a) by adding after
the first word thereof the phrase ", as used herein and in
the Other Agreements," and (b) by adding after clause (ii)
thereof the following:
"(an "Unexcused Voluntary Termination"); PROVIDED, HOWEVER,
that anything herein or in the Other Agreements to the
contrary notwithstanding, in the case of an Unexcused
Voluntary Termination, the Company shall not (except in
connection with any claim, litigation or judicial or
administrative proceeding that may arise therefrom or relate
thereto) make any public statement to the effect that such
termination constituted a termination for Cause, PROVIDED
that the Company shall not be restricted from making public
statements describing the consequences of such termination
pursuant to this agreement and the Other Agreements;".
5. Section 2 of the Option Agreement is hereby
amended by replacing the date "April 30, 1993" appearing
therein with the date "April 30, 1994".
2
<PAGE>
6. Schedule 1 to the Option Agreement is hereby
deleted in its entirety and replaced with Schedule 1 attached
hereto.
7. Except as provide herein, the Employment
Agreement and the Option Agreement shall remain in full force
and effect, without modification or amendment.
CHARTER POWER SYSTEMS, INC.
By: \s\ D. L. Nevins, Jr.
VP Finance
\s\ Robert Alvine
Robert Alvine
3
<PAGE>
Alvine
Schedule
SCHEDULE 1
A. VESTING OF OPTION.
The Option shall vest: (i) to the extent of
105,505 shares (the "First Portion"), as of January 31, 1990,
only if the Company's earnings per share (the "EPS") for the
fiscal year ending January 31, 1990 equal or exceed $1.05;
and (ii) to the extent of the remaining 105,505 shares (the
"Second Portion"), as of January 31, 1991, only if the EPS
for the fiscal year ending January 31, 1991 equal or exceed
$1.25. For this purpose, the EPS shall be as reported in the
Company's audited financial statements for the relevant
fiscal year, adjusted to exclude from the calculation of EPS
(a) any extraordinary items (as determined by the Company's
independent accountants in accordance with generally accepted
accounting principles), (b) any shares issued or issuable
pursuant to the Company's Stock Option Plan and (c) any
increase or decrease in the number of outstanding shares
resulting from a stock split or other subdivision or
consolidation of shares or other capital adjustment, or the
payment of a stock dividend.
If the employment of the Optionee with the Company
is terminated due to death or disability (as defined in the
employment agreement, dated the date hereof, between the
Optionee and the Company (the "Employment Agreement") after
1
<PAGE>
October 31, 1989 or 1990 and the applicable EPS amount for
the fiscal year ending January 31, 1990 or 1991, as the case
may be, is met, the Optionee shall be deemed to have been
employed through the end of the relevant fiscal year for the
purpose of the vesting of the Option.
B. ALTERNATIVE VESTING.
The Option (if (i) the circumstance or transaction
described in paragraph 1 or 2(a) below occurs or is completed
on or before January 31, 1992 or (ii) the transaction
described in paragraph 2(b) below is completed on or before
January 31, 1991) or the Second Portion (if the transaction
described in paragraph 2(b) below occurs or is completed
after January 31, 1991 and on or before January 31, 1992)
shall vest on an accelerated basis to the extent provided
below:
1. If the average of the daily closing prices of
the Common Stock of the Company, as reported by the American
Stock Exchange (the "AMEX"), during any 60-day period equals
or exceeds $15.00 a share, full alternative vesting shall
occur on the last day of that 60-day period.
2. If: (a) a Business Combination (as defined in
the Employment Agreement) has occurred at a weighted average
price per share on a fully diluted basis (the "Transaction
Price") of not less than $11.00; or (b) a Change of Control
(as defined in the Employment Agreement) other than a
2
<PAGE>
Business Combination has occurred and the average of the
daily closing prices of a share of the Common Stock of the
Company, as reported by the AMEX, during the 20 trading days
prior thereto (the "CC Price"), is not less than $11.00,
alternative vesting to the extent of the percentage specified
below shall occur upon consummation of the transaction:
Transaction Price Percentage of Unvested
or CC Price Option to Vest
$11.00 - $11.99 20%
$12.00 - $12.99 40%
$13.00 - $13.99 60%
$14.00 - $14.99 80%
$15.00 or greater 100%
PROVIDED, HOWEVER, that notwithstanding the foregoing, with
respect to the First Portion, if the Change in Control shall
occur during the period from February 1, 1990 through January
31, 1991 (it being agreed that alternative vesting shall
occur with respect to the Second Portion to the extent, if
any, hereinabove provided without regard to this proviso if
the Change in Control shall occur during that period), and
with respect to the Second Portion, if the Change in Control
shall occur during the period from February 1, 1991 through
January 31, 1992 (it being agreed that alternative vesting
shall not occur with respect to the First Portion on account
of a Change in Control that occurs during that period),
alternative vesting shall occur only if the CC Price is not
less than $12.00 (but the percentage of alternative vesting
if the CC Price is from $12.00 - $12.99 shall remain 40%).
3
CHARTER POWER SYSTEMS, INC.
3043 Walton Road
Plymouth Meeting, Pa. 19462
May 30, 1989
Mr. Alfred Weber
158 Beecher Drive
Southbury, CT 06488
Dear Mr. Weber:
Charter Power Systems, Inc., a Delaware corporation
(the "Company"), agrees to employ you and you agree to accept
such employment under the following terms and conditions:
1. Term of Employment. (a) Except for earlier
termination as is provided in Section 12 below, your
employment under this agreement and the term of this
agreement shall be for an initial term commencing as of April
4, 1989 (the "Effective Date") and terminating on April 30,
1992 (the "Initial Term"); provided, however, that if a
Change of Control (as hereinafter defined) of the Company
occurs at any time during the Initial Term of during the
first Renewal Term provided for in subsection (b) below, you
shall have the right, by giving written notice to the Company
within 90 days after that Change of Control, to terminate
your employment hereunder effective the date of that notice,
<PAGE>
whereupon the Initial Term or the first Renewal Term, as the
case may be, shall be deemed to have ended. As used herein,
the term "Change of Control" shall mean (i) any transaction
or set of circumstances that would be required to be reported
as a change of control under Item 6(e) of Schedule 14A (Rule
14a-101) promulgated under the Securities Exchange Act of
1934 (the "Exchange Act"), unless you are individually, or
you are an executive officer or a more than 5% equity holder
of an entity that is, directly or indirectly one of the new
controlling parties, or (ii) the completion by the Company of
a merger or consolidation with, or a sale of all or
substantially all of its assets to, another company, unless
either (A) the Company is the surviving corporation and has
not become a wholly owned subsidiary of another person or
entity or (B) you are an executive officer or a more that 5%
equity holder of the other party to the transaction or of any
entity controlling that party (any transaction of the type
described in this clause (ii) hereinafter being described as
a "Business Combination").
(b) After the Initial Term, this agreement and
your employment hereunder shall be renewed automatically for
successive terms of one year each (each, a "Renewal Term"),
unless prior to the end of the Initial Term or any Renewal
Term either party shall have given to the other party at
least three months' prior written notice (a "Termination
Notice") of termination of this agreement or you shall have
2
<PAGE>
exercised your right of termination upon a Change in Control
(to the extent applicable) provided for in subsection (a)
above. If a Termination Notice is given by either party, (i)
the Company shall, without any liability to you, have the
right, exercisable at any time after the Termination Notice
is given, to elect any other person to the office or offices
in which you are then serving and to remove you from such
office or offices, but (ii) all other obligations each of you
and the Company have to the other, including the Company's
obligation to pay your compensation and make available the
fringe benefits to which you are entitled hereunder, shall
continue until the end of the Initial Term or any Renewal
Term, as the case may be.
(2) Compensation. You shall be compensated for
performance of your obligations under this agreement at the
rate of $237,000 per annum (such salary, as adjusted from
time to time, hereinafter is referred to as the "Base
Salary"), payable in such manner as is consistent with the
Company's payroll practices for executive employees. On May
1, 1991 and the first day of each Renewal Term of this
Agreement, if any, the Base Salary shall be adjusted by
multiplying the Base Salary by a fraction (i) the numerator
of which shall be the Consumer Price Index (for urban wage
earners and clerical workers, all items) as reported by the
Bureau of Labor Statistics of the United States Department of
Labor for the New York, New York-Northeastern New Jersey area
3
<PAGE>
(or such other successor government agency as then shall
perform that reporting function) (the "Index") for the month
immediately preceding the month in which the Base Salary
adjustment shall occur and (ii) the denominator of which
shall be the Index for the month immediately preceding the
month in which the immediately preceding term commenced (or,
in the case of the Base Salary adjustment on May 1, 1991, for
the month of April 1989); provided, however, that in no event
shall any such adjustment result in a decrease in the Base
Salary.
3. Duties. (a) During the term of your
employment hereunder, including any Renewal Term hereof, you
shall serve and the Company shall employ you as the President
of the Company or in such other executive capacity with
duties, title and responsibilities of a similar or greater
nature and stature as those initially undertaken by you as
the Board of Directors from time to time may determine. In
your capacity as President, you shall serve as the Chief
Operating Officer of the Company, reporting to and under the
supervision and direction of the Chairman of the Board and
Chief Executive Officer. You also shall perform such other
services and duties consistent with the office or offices in
which you are serving and its responsibilities as from time
to time may be prescribed by the Board of Directors. You
shall be nominated, on an annual basis so long as you
continue to be employed hereunder, for election as a director
4
<PAGE>
of the Company and, if elected, you shall serve as such and
as an officer and/or director of any of the Company's
subsidiaries, in all cases in conformity to the by-laws and
the policy of the Board of Directors of each such
corporation.
(b) You shall be required to devote your entire
business time and energies during normal business hours to
the business and affairs of the Company and its subsidiaries.
Nothing in this Section shall be construed as prohibiting you
from (i) investing your personal assets in businesses in
which your participation is solely that of a passive investor
in such form or manner as will not violate Section 9 hereof
or require any services on your part in the operation or
affairs of those businesses or (ii) devoting a portion of
your time, which is not expected to be substantial, to the
matter described in a letter, dated as of the date hereof,
delivered by you to the Company.
(c) You shall cooperate with the Company,
including taking such medical examinations as the Company
reasonably shall deem necessary, if the Company shall desire
or be required (such as pursuant to the terms of any bank
loan or any agreement for merger, sale or purchase or any
Company medical, disability or life insurance plan) to
certify in writing the current state of your physical health.
Where reasonably possible, the Company shall cooperate with
your request to have such examinations performed by your
5
<PAGE>
personal physician or another physician reasonably acceptable
to you.
(d) You shall be subject to the Company's rules,
practices and policies applicable to the Company's senior
executive employees, except to the extent the same are
inconsistent with any of the express provisions hereof.
4. Benefits. (a) Subject to Section 4(b) hereof,
you shall have the benefit of and be entitled to participate
in such employee benefit plans and programs, including life,
disability and medical insurance, pension, savings and other
similar plans, as the Company now has or hereafter may
establish from time to time, and in which you would be
entitled to participate pursuant to the terms thereof;
provided, however, that notwithstanding the provisions of
Section 2 hereof, your base salary for the purpose of
determining the level of benefits available to you under
those plans and programs shall be deemed to be $200,000,
subject to adjustment in the same manner as the Base Salary
is to be adjusted pursuant to Section 2. The foregoing,
however, shall not be construed to require the Company to
establish any such plans or to prevent the Company from
modifying or terminating any such plans, and no such action
or failure thereof shall affect this agreement.
(b) You shall not be entitled to participate in
the Company's Incentive Compensation Plan; however, the
Compensation Committee shall consider annually granting you a
6
<PAGE>
cash bonus, to the extent (if any) it deems appropriate in
its sole discretion, (i) for the Company's fiscal years
ending January 31, 1990 and 1991, respectively, as a
mitigating factor if you fail to meet the performance
criterion for the relevant year for the vesting of your
Option (as defined in the Option Agreement attached as
Exhibit A hereto (the "Option Agreement")) and (ii) for any
fiscal year, if your performance for that year is considered
exceptional. You shall not be entitled to be granted options
under the Company's Stock Option Plan.
(c) You shall be entitled to four weeks of
vacation each year.
5. Change of Control; Severance Pay. If you elect
to terminate the Initial Term or the first Renewal Term as a
result of a Change of Control of the Company, then within ten
business days after the termination date of the relevant term
(the "Termination Date") the Company shall pay to you an
amount in cash (the "Termination Payment") equal to your Base
Salary at that time; provided, however, that if the
Termination Date occurs less than 12 months before the
original expiration date of the relevant term as provided
herein (the "Original Date"), then a portion of the
Termination Payment (the "Adjustment Portion"), determined by
multiplying the original amount of the Termination Payment by
a fraction (a) the numerator of which shall be 12 minus the
number of whole calendar months in the period from the
7
<PAGE>
Termination Date through the Original Date and (b) the
denominator of which shall be 12, shall be adjusted by
multiplying the Adjustment Portion by a fraction (i) the
numerator of which shall be the Index for the month
immediately preceding the month in which the Termination Date
occurs and (ii) the denominator of which shall be the Index
for the month immediately preceding the month in which the
relevant term commenced. The Termination Payment shall be
considered severance pay, and you shall not be under any duty
to mitigate damages by seeking further employment nor shall
any compensation that you may receive from future employment
be offset against your rights to receive that payment.
6. Other Agreements. As additional incentives for
you to enter into this agreement, you and the Company shall
enter into the following additional agreements (the "Other
Agreements"): (i) the Option Agreement; (ii) the Stock
Purchase Agreement attached as Exhibit B hereto; and (iii)
the Registration Rights Agreement attached as Exhibit C
hereto. If, at any time after the date hereof, the Company
shall amend the comparable agreements (including the
employment agreement) entered into as of May 26, 1988 with
Donald L. Nevins, Jr. so as to increase or otherwise improve
any of the rights or benefits available to Mr. Nevins
thereunder, the Company simultaneously shall cause the
relevant agreement with you to be amended so that those
8
<PAGE>
increased or improved rights or benefits also are made
available to you.
7. Working and Other Facilities. During the
Initial Term and any Renewal Term, you shall be provided with
such working facilities and other support services as are
suitable to your position and appropriate for the performance
of your duties.
8. Expenses. The Company shall reimburse you for
all legal and accounting fees and expenses incurred by you in
connection with the structuring, negotiation and preparation
of this agreement and the other agreements referred to in
Section 6 hereof, up to an aggregate maximum of $10,000, upon
the presentation by you of appropriate substantiation
thereof. In addition: (a) if you relocate the principal
residence of your family to the vicinity of the Company's
headquarters in Plymouth Meeting, Pennsylvania on or before
May 31, 1990, the Company shall reimburse you for expenses,
up to an aggregate maximum of $35,000, reasonably incurred by
you in effecting that relocation; and (b) the Company shall
reimburse you for all reasonable expense incurred by you in
connection with the performance of your obligations
hereunder, upon the presentation by you of appropriate
substantiation of such expenses and approval thereof by a
member of the Compensation Committee in accordance with
normal Company expense reimbursement policies.
9
<PAGE>
9. Restrictive Covenants. (a) During such time
as you shall be employed by the Company, and for a period of
one year thereafter, you shall not, without the prior written
consent of the Board of Directors, directly or indirectly
become associated with, render services to, invest in,
represent, advise or otherwise participate as an officer,
employee, director, stockholder, partner, agent of or a
consultant for, any business that is "In Competition" with
the Company at the time your employment with the Company
ceases; provided, however, that nothing herein shall prevent
you from (i) investing (A) without limit in the securities of
any company listed on a national securities exchange or
quoted on the NASDAQ quotation system, or (B) to the extent
of no more than 20% of the equity in any other company,
provided that (with reference to clauses (A) and (B) above)
your involvement (directly or through any affiliated person
or entity) with any such company is solely that of a
stockholder, (ii) retaining (or exercising your right to
acquire and thereafter retaining) any investment that you
owned (or had the contractual right to acquire) as of the
date of commencement of your employment with the Company, or
(iii) being employed during the one-year period referred to
above by any business that is not In Competition with the
Company. As used herein, the term "In Competition", when
used with reference to any business, means that (1) not less
than 25% of the consolidated revenues of that business are
10
<PAGE>
provided by one or more classes of products manufactured and
sold by such business and services provided by such business
(the "Common Classes") that, in the aggregate, provide not
less than 25% of the Company's consolidated revenues and (2)
at least one of the Common Classes individually provides not
less than 15% of the consolidated revenues of that business
and of the Company, respectively.
(b) The parties hereto intend that the covenant
contained in this Section 9 shall be deemed a series of
separate covenants for each appropriate jurisdiction. If,
in any judicial proceeding, a court shall refuse to enforce
all the separate covenants deemed included in this Section 9
on grounds that, taken together, they cover too extensive a
geographic area, the parties intend that those covenants
(taken in order of the jurisdictions that are the least
populous) that, if eliminated would permit the remaining
separate covenants to be enforced in that proceeding, shall,
for the purpose of such proceeding, be deemed eliminated
from the provisions of this Section 9.
10. Confidentiality, Noninterference and Proprietary
Information. (a) In the course of your employment by the
Company hereunder, you will have access to confidential or
proprietary data or information of the Company. You shall not
at any time divulge or communicate to any person, nor shall you
direct any Company employee to divulge or communicate to any
person (other than to a person bound by confidentiality
11
<PAGE>
obligations similar to those contained herein and other than as
necessary in performing your duties hereunder) or use to the
detriment of the Company or for the benefit of any other
person, any of such confidential or proprietary data or
information, except to the extent the same (i) becomes publicly
known other than through a breach of this agreement by you,
(ii) was known to you prior to the disclosure thereof by the
Company to you or (iii) is subsequently disclosed to you by a
third party who shall not have received it under any obligation
of confidentiality to the Company. The provisions of this
Section 10(a) shall survive your employment hereunder, whether
by the normal expiration thereof or otherwise, for as long as
such data or information remains confidential. The term
"confidential or proprietary data or information" as used in
this agreement shall mean data or information not generally
available to the public, including personnel information,
financial information, customer lists, supplier lists, product
and trading specifications, trade secrets, information
concerning product composition and formulas, tools and dies,
drawings and schematics, manufacturing processes, information
regarding operations, systems and services, knowhow, computer
and any other processed or collated data, computer programs,
and pricing, marketing, sales and advertising data.
(b) You shall not, during the term of this Agreement
and for a period of one year after the termination of your
employment by the Company, for your own account or for the
12
<PAGE>
account of any other person, interfere with the Company's
relationship with any of its suppliers, customers or employees;
provided, however, that your employment by a competitor of the
Company, if not in violation of your noncompetition agreement
contained in Section 9(a) hereof, and your contacting of
suppliers and customers in connection therewith, if not in
violation of this Section 10, shall not constitute
"interference" hereunder.
(C) You shall at all times promptly disclose to the
Company, in such form and manner as the Company reasonably may
require, any inventions, improvements or procedural or
methodological innovations, programs methods, forms, systems,
services, designs, marketing ideas, products or processes
(whether or not capable of being trade-marked, copyrighted or
patented) conceived or developed or created by you during and
in connection with your employment hereunder and which relate
to the business of the Company ("Intellectual Property"). All
such Intellectual Property shall be the sole property of the
Company. You shall execute such instruments and perform such
acts as reasonably may be requested by the Company to transfer
to and perfect in the Company all legally protectable rights in
such Intellectual Property. If the Company is unable for any
reason to secure your signature on such instruments, you
irrevocably appoint the Company and its duly authorized
officers and agents as your agents and attorneys-in-fact to
execute such instruments and to do such things with the same
13
<PAGE>
legal force and effect as if executed or done by you. The
Company shall not claim any benefits under this paragraph if
the same are substantially derived or adapted from information
or data held or possessed by third parties and generally
available to you whether or not employed by the Company.
(d) All written materials, records and documents
made by you or coming into your possession during your
employment concerning any products, processes or equipment,
manufactured, used, developed, investigated or considered by
the Company or otherwise concerning the business or affairs of
the Company, shall be the sole property of the Company, and
upon termination of your employment, or upon the request of the
Company during your employment, you shall deliver the same to
the Company. In addition, upon termination of your employment,
or upon request of the Company during your employment, you
shall deliver to the Company all other Company property in your
possession or under your control, including confidential or
proprietary data or information and all Company credit cards
and automobiles.
11. Equitable Relief. With respect to the covenants
contained in Sections 9 and 10 of this agreement, you
acknowledge that any remedy at law for any breach of said
covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of
injunctive or other equitable relief to enforce its rights
hereunder.
14
<PAGE>
12. Earlier Termination; Continued Compensation.
Your employment hereunder shall terminate prior to the stated
expiration date of the Initial Term or, if applicable, the then
current Renewal Term (the "Stated Expiration Date") on the
following terms and conditions:
(a) This agreement shall terminate
automatically on the date of your death. Notwithstanding the
foregoing, the Company shall: (i) continue to make payments to
your estate of your Base Salary as then in effect pursuant to
this agreement until six months after your death; provided,
however, that to the extent those Base Salary payments continue
beyond the original expiration date of the term of this
agreement during which you shall have died, the amount of each
of the payments to be made after that original expiration date
shall be adjusted by multiplying the same by a fraction (A) the
numerator of which shall be the Index for the last month of the
term in which you died (as originally provided for herein) and
(B) the denominator of which shall be the Index for the month
immediately preceding the month in which that term commenced;
and (ii) pay your estate any reimbursable expenses that had
been incurred by you and for which you had not been reimbursed
as provided herein as of the date of your death.
(b) This agreement shall be terminated, at the
option of the Company, if you are unable to perform your duties
hereunder for 90 days (whether or not continuous) during any
period of 365 consecutive days by reason of physical or mental
15
<PAGE>
disability. The disability shall be deemed to have occurred on
the 90th day of your inability to perform your duties due to
disability, and notice of termination on account of such
disability shall be given (if at all) by the Company within 30
days after that date. Notwithstanding the foregoing, the
Company shall: (i) continue to pay to you your Base Salary as
then in effect pursuant to this agreement (less any amounts
paid to you pursuant to any disability policy provided by the
Company), until six months after such disability; provided,
however, that to the extent those Base Salary payments continue
beyond the original expiration date of the term of this
agreement during which you shall have been determined to be
disabled, the amount of each of the payments to be made after
that original expiration date shall be adjusted by multiplying
the same by a fraction (A) the numerator of which shall be the
Index for the last month of the term during which you were
determined to be disabled (as originally provided for herein)
and (B) the denominator of which shall be the Index for the
month immediately preceding the month in which that term
commenced; and (ii) pay you any reimbursable expenses that had
been incurred by you and had not been reimbursed as provided
herein as of the date of termination due to such disability.
Disability as used in this paragraph shall mean any single or
series of related physical or mental conditions, illnesses or
diseases which, in the opinion of a competent and mutually
selected medical specialist in the locale of your residence,
16
<PAGE>
independent of you and the Company, prevents you (as the date
of that specialist's examination of you, which shall not take
place until the condition, illness or disease in question shall
have continued for at least 90 days) from substantially
fulfilling your duties for the Company. If the parties do not
agree on a physician mutually satisfactory to both you and the
Company within ten days after written demand by one or the
other, a physician shall be selected by the president of the
Pennsylvania Medical Association, and the physician shall,
within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. The
services of the physician shall be paid for by the Company. No
termination for disability shall be effective unless (i) you
have first received notice in writing of the Company's
determination to have you medically examined and such
examination has taken place or (ii) you have unreasonably
delayed, or interfered or refused to cooperate with, the
examination process.
(c) This agreement shall terminate immediately
upon the Company's sending you written notice terminating your
employment hereunder for cause. "Cause", as used herein and in
the Other Agreements, shall mean: (i) your conviction of a
felony; (ii) your material breach of any obligations under this
agreement (including voluntary termination by you of this
agreement (other than at the end of the Initial Term or any
Renewal Term or by exercise of your right of termination
17
<PAGE>
provided for in Section 1(a) hereof) without a material breach
by the Company of its obligations hereunder (an "Unexcused
Voluntary Termination"); provided, however, that anything
herein or in the Other Agreements to the contrary
notwithstanding, in the case of an Unexcused Voluntary
Termination, the Company shall not (except in connection with
any claim, litigation or judicial or administrative proceeding
that may arise therefrom or relate thereto) make any public
statement to the effect that such termination constituted a
termination for Cause, provided that the Company shall not be
restricted from making public statements describing the
consequences of such termination pursuant to this agreement and
the Other Agreements; or (iii) your gross negligence or willful
misconduct with respect to your duties or gross misfeasance of
office.
(d) Upon termination of this agreement, the
Company's obligations hereunder shall cease except as provided
in subsections (a) and (b) above and Section 5 hereof.
13. Entire Agreement; Modification; Construction.
This agreement constitutes the full and complete understanding
of the parties, and supersedes all prior agreements and
understandings, oral or written, between the parties, with
respect to the subject matter hereof. You acknowledge that you
have (a) carefully read this agreement, (b) had an opportunity
to consult with independent counsel with respect to this
agreement and (c) entered into this agreement of your own free
18
<PAGE>
will. You represent and warrant that you are not a party to,
or otherwise bound by, any employment contracts, restrictive
covenants or any other contracts preventing full performance of
your duties hereunder. Each party to this agreement
acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by either party,
or anyone acting on behalf of either party, which are not
embodied or referred to herein and that, except for the
agreements referred to in Section 6 hereof, no other
agreement, statement or promise pertaining to the terms of your
employment by the Company and not contained in this agreement
shall be valid or binding. This agreement may not be modified
or amended except by an instrument in writing signed by the
party against which enforcement thereof may be sought.
14. Severability. Any term or provision of this
agreement that is held to be invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to
the extent of that invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this agreement or affecting the validity or
enforceability of any of the terms or provisions of this
agreement in any other jurisdiction.
15. Waiver of Breach. The waiver by either party of
a breach of any provision of this agreement, which waiver must
be in writing to be effective, shall not operate as or be
construed as a waiver of any subsequent breach.
19
<PAGE>
16. Notices. All notices hereunder shall be in
writing and shall be sent by messenger or by certified or
registered mail, postage prepaid, return receipt requested, if
to you, to your residence set forth above, with a copy to
Friedman & Kaplan, 150 East 52nd Street, New York, New York
10022, Attention: Gary D. Friedman, Esq., and if to the
Company, to the address set forth above with copies to Robert
Alvine, at the Company's address, and to Proskauer Rose Goetz &
Mendelsohn, 300 Park Avenue, New York, New York 10022,
Attention: Jonathan Shor, Esq., or to such other address as
either party to this agreement shall specify to the other.
17. Assignability; Binding Effect. This agreement
shall not be assignable by you without the written consent of
the Board of Directors of the Company. This agreement shall be
binding upon and inure to the benefit of you, your legal
representatives, heirs and distributees, and shall be binding
upon and inure to the benefit of the Company, its successors
and assigns.
18. Governing Law. All questions pertaining to the
validity, construction, execution and performance of this
agreement shall be construed and governed in accordance with
the laws of the State of New York, without giving effect to the
conflicts or choice of law provisions thereof.
19. Arbitration. Any disputes which arise under
this Agreement shall be settled by arbitration at New York, New
20
<PAGE>
York or a mutually acceptable location pursuant to the rules of
the American Arbitration Association.
20. Headings. The headings in this agreement are
intended solely for convenience of reference and shall be given
no effect in the construction or interpretation of this
agreement.
21. Counterparts. This agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the
same instrument.
21
<PAGE>
If this letter correctly sets forth our
understanding, please sign the duplicate original in the space
provided below and return it to the Company, whereupon this
shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
CHARTER POWER SYSTEMS, INC.
By: \s\ Robert Alvine
------------------
Chairman
Agreed as of the date
first above written:
\s\ Alfred Weber
-----------------------
Alfred Weber
22
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated May 30, 1989,
between Charter Power Systems, Inc., a Delaware corporation
(the "Company"), and Alfred Weber (the "Purchaser").
WHEREAS, the Company has entered into an employment
agreement, date as of May 30, 1989 (the "Employment
Agreement"), with the Purchaser, pursuant to which the
Company has engaged the Purchaser to serve as President,
upon the terms and subject to the conditions set forth
therein; and
WHEREAS, in connection with the Employment
Agreement, the Purchaser has agreed to purchase from the
Company, and the Company has agreed to sell to the Purchaser,
60,000 shares (the "Shares") of the common stock, $.01 par
value, of the Company ("Common Stock") upon the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements hereinafter set forth, the parties
hereto agree as follows:
1. Purchase of Shares. The Purchaser hereby
agrees to purchase from the Company, and the Company hereby
agrees to sell to the Purchaser, the Shares, at a purchase
price of $5.50 a share.
<PAGE>
2. Closing of Purchase.
(a) The closing of the purchase and sale of the
Shares hereunder (the "Closing") shall be subject to the
approval of the Shares for listing on the American Stock
Exchange. The Closing shall take place on a date within five
business days following the date that the Shares have been
approved for listing on the American Stock Exchange, or on
such later date as shall be agreed upon by the parties
hereto. At the Closing, the Purchaser shall deliver to the
Company, (i) a duly executed Secured Promissory Note in the
form attached as Exhibit A hereto (the "Note"), in the amount
of $329,400.00, representing the purchase price of the Shares
less the par value thereof, and (ii) cash or a check in the
amount of the par value of the Shares plus the Company's good
faith determination of its withholding tax obligation
respecting the purchase of the Shares. Also at the Closing,
the Purchaser and the Company shall enter into a Pledge and
Security Agreement in the form attached as Exhibit B hereto.
3. Forfeiture. The Purchaser hereby agrees that
the Shares shall be subject to forfeiture under the following
terms and conditions:
(a) subject to clauses (c), (d) and (e) below,
100% of the Shares shall be forfeited to the Company if the
Purchaser's employment with the Company is terminated, other
than by the Company without "Cause" (as defined in the
2
<PAGE>
Employment Agreement) or by the Purchaser as a result of a
material breach by the Company of the Employment Agreement,
prior to May 1, 1990;
(b) subject to clauses (c), (d) and (e) below, 50%
of the Shares shall be forfeited to the Company if the
Purchaser's employment with the Company is terminated, other
than by the Company without Cause or by the Purchaser as a
result of a material breach by the Company of the Employment
Agreement, prior to May 1, 1991;
(c) in the event such termination is the result of
the death or disability (as defined in the Employment
Agreement) of the Purchaser, the portion of the Shares
determined by multiplying the total number of Shares by a
fraction, the numerator of which is the number of complete
months during the period from May 1, 1989 through the date of
termination and the denominator of which is 24, shall no
longer be subject to forfeiture;
(d) in the event of a Business Combination (as
defined in the Employment Agreement), the forfeiture shall
cease to apply to all the Shares simultaneous with the
closing of the transaction; and
(e) in the event of a Change of Control (as
defined in the Employment Agreement) other than a Business
Combination, (i) the portion of the Shares determined as
3
<PAGE>
provided in clause (c) above and (ii) the percentage of the
remainder of the Shares equal to the percentage of the
unvested Option (as defined in the Option Agreement, dated
the date hereof, between the Company and the Purchaser (the
"Option Agreement")) that simultaneously will vest on an
accelerated basis pursuant to clause (b) of the last
paragraph of Schedule 1 to the Option Agreement, shall no
longer be subject to forfeiture.
If and to the extent any portion of the Shares is forfeited
to the Company as aforesaid, (i) the equivalent portion of
the unpaid balance of the Note shall be deemed paid and a
notation to that effect shall be made by the Company on the
face of the Note, (ii) the Purchaser shall deliver to the
Company, within ten business days after the forfeiture, stock
certificates representing the forfeited portion of the Shares
and (iii) the Company shall deliver to the Purchaser, within
ten business after the forfeiture, cash or a check in the
amount of the par value of those Shares.
4. Purchaser's Representations, Warranties and
Covenants.
(a) Investment Intention. The Purchaser
represents and warrants that he is acquiring the Shares
solely for his own account, for investment, and not with a
view to or for sale in connection with any distribution
thereof. The Purchaser shall not, directly or indirectly,
offer, transfer, sell or otherwise dispose of any of the
4
<PAGE>
Shares (or solicit any offers to buy, purchase or otherwise
acquire any of the Shares), except in compliance with the
Securities Act of 1933 (the "Act") and the rules and
regulations thereunder. The Purchaser further understands,
acknowledges and agrees that none of the Shares may be
transferred, sold or otherwise disposed of unless (i) the
disposition is pursuant to an effective registration
statement under the Act, (ii) the Purchaser shall have
delivered to the Company an opinion, from counsel and in form
and substance reasonably satisfactory to the Company, to the
effect that the disposition is exempt from the provisions of
Section 5 of the Act or (iii) a no-action letter from the
Securities and Exchange Commission shall have been obtained
with respect to the disposition.
(b) Legend. The certificate or certificates
representing the Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
UNLESS (A) THE DISPOSITION IS PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, (B) THE HOLDER HEREOF
SHALL HAVE DELIVERED TO THE COMPANY, AN OPINION
FROM COUNSEL AND IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF
SECTION 5 OF THAT ACT, OR (C) A NO-ACTION LETTER
FROM THE SECURITIES AND EXCHANGE COMMISSION SHALL
HAVE BEEN OBTAINED WITH RESPECT TO THE DISPOSITION.
THE SHARES EVIDENCED BY THIS CERTIFICATE ALSO ARE
SUBJECT TO FORFEITURE UNDER CERTAIN CIRCUMSTANCES
IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE
AGREEMENT, DATED MAY 30, 1989, BETWEEN ALFRED
5
<PAGE>
WEBER AND THE COMPANY, A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL OFFICES OF THE COMPANY.
(c) Compliance with Rule 144. If any of the
Shares are disposed of in accordance with Rule 144 under the
Act, the Purchaser shall deliver to the Company at or prior
to the time of such disposition an executed copy of Form 144
(if required by Rule 144) and such other documentation as the
Company may reasonably require in connection with the
disposition.
(d) Section 83(b) Election. The Purchaser shall
make an election, pursuant to Section 83(b) of the Internal
Revenue Code of 1986, to include in his gross income for 1989
the excess of the total fair market value of the Shares on
the date of the Closing over $330,000.
5. Listing. The Company shall apply for the
listing on the American Stock Exchange of the Shares and the
shares of Common Stock issuable upon exercise of the Option
(subject to notice of issuance).
6. Miscellaneous.
(a) Notices. All notices and other communications
required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been given if
delivered personally or sent by certified mail, return
receipt requested, postage prepaid, to the Company at 3043
6
<PAGE>
Walton Road, Plymouth Meeting, Pennsylvania 19462,
Attention: Robert Alvine, with a copy to Proskauer Rose
Goetz & Mendelsohn, 300 Park Avenue, New York, New York
10022, Attention: Jonathan Shor, Esq., and to the Purchaser
at the Purchaser's address contained in the Company's
records, with a copy to Friedman & Kaplan, 150 East 52nd
Street, New York, New York 10022, Attention: Gary D.
Friedman, Esq., or to such other address as either party to
this Agreement shall specify by notice to the other.
(b) Binding Effect; Benefits. This Agreement
shall be binding upon and inure to the benefit of the parties
to this Agreement and their respective successors and
permitted assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person
other than the parties to this Agreement or their respective
successors or permitted assigns any legal or equitable right,
remedy or claim under or in respect of any agreement or any
provision contained herein.
(c) Amendment. This Agreement may be amended,
modified or supplemented only by a written instrument
executed by the Purchaser and the Company.
(d) Assignability. Neither this Agreement nor
any right, remedy, obligation or liability arising hereunder
or by reason hereof shall be assignable by either the Company
7
<PAGE>
or Purchaser without the prior written consent of the other
party.
(e) Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, without giving effect to the conflicts of
law provisions thereof.
(f) Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed
to be one and the same instrument.
(g) Entire Agreement. This Agreement constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company and the Purchaser
have executed this Agreement as of the date first above
written.
CHARTER POWER SYSTEMS, INC.
By: \s\ President
------------------
Title:
\s\ Alfred Weber
-----------------
Alfred Weber
8
<PAGE>
EXHIBIT A to
Stock Purchase Agreement
PURCHASE
SECURED PROMISSORY NOTE
$329,400.00 June , 1989
FOR VALUE RECEIVED, ALFRED WEBER (the "Payor")
hereby promises to pay to CHARTER POWER SYSTEMS, INC., a
Delaware corporation ("the Company"), the principal sum of
Three Hundred Twenty Nine Thousand Four Hundred Dollars
($329,400.00) with interest on the outstanding principal
balance hereof until paid in full at the rate of 12.5% per
annum. Payment of principal and interest is to be made in
lawful money of the United States of America at the offices
of the Company or at such other place as the holder hereof
shall designate.
Interest hereon shall be due and payable, in
arrears, on the first business day of each month, commencing
August 1, 1989. Subject to the prepayment and acceleration
provisions hereinafter set forth, this Note shall mature and
the principal and any accrued and unpaid interest shall be
due and payable in full on April 30, 1993; provided, however,
that (i) if the employment of the Payor with the Company
shall have been terminated after October 31, 1991 and before
May 1, 1993, other than for "Cause" as defined in the
employment agreement, dated May 30, 1989, between the Payor
and the Company (a "Cause Termination"), the maturity of this
<PAGE>
Note shall be extended until 18 months after the date of
termination of the Payor's employment with the Company; and
(ii) if the employment of the Payor with the Company shall
not have been terminated on or before April 30, 1993, the
maturity of this Note shall be extended until April 30, 1998;
provided, further, that this Note shall mature and be due and
payable 18 months after the date of termination (other than a
Cause Termination) of the Payor's employment with the
Company, which termination shall occur after April 30, 1993.
This Note is secured by the pledge by the Payor to
the Company of certain shares of common stock of the Company,
in accordance with the terms of a Pledge and Security
Agreement (the "Security Agreement") between the Payor and
the Company, dated June , 1989, and in that respect is
subject to all of the terms, provisions and conditions of the
Security Agreement.
This Note evidences a loan made by the Company to
the Payor to enable him to purchase 60,000 shares of common
stock of the Company (the "Shares). If the Payor shall sell
or transfer any of his Shares or the proceeds thereof, or any
cash (other than cash dividends), securities, or other
property at any time and from time to time receivable or
otherwise distributed in respect of or in exchange for any or
all of the Shares (collectively, the "Additional Shares"),
there shall be due and payable, immediately upon the
consummation of the sale or transfer, a payment of principal
2
<PAGE>
hereunder in an amount equal to the product obtained by
multiplying the then outstanding principal amount of this
Note by a fraction, the numerator of which shall be the
number of Shares and Additional Shares then sold or
transferred and the denominator of which shall be the number
of Shares and Additional Shares then owned by the Payor
(before giving effect to the sale or transfer). Nothing in
this paragraph shall be deemed to permit any sale or transfer
by the Payor of any Shares by the Payor of any Shares or
Additional Shares, to the extent the same otherwise would be
prohibited by the provisions of any other agreement to which
the Payor and the Company are parties.
If: (i) the Payor fails to make any payment
hereunder within ten days after notice from the Company to
the Payor that the payment is due; or (ii) a Cause
Termination occurs; or (iii) a Default (as defined in the
Security Agreement) shall have occurred under the Security
Agreement (each of the events listed in (i), (ii) and (iii)
above being an "Event of Default" hereunder); the then
outstanding principal balance hereof shall become immediately
due and payable.
The Payor may, at any time and from time to time,
prepay in whole or part, without premium or penalty, the then
outstanding principal balance hereof.
The Payor hereby agrees to pay all reasonable
costs, fees and expenses incurred by the Company for the
3
<PAGE>
collection of all sums due hereunder, including reasonable
attorneys' fees and court costs. The Payor hereby waives
presentment, demand, notice of dishonor, protest and all
other demands and notices in connection with this Note
(including any acceleration of the maturity hereof) and
further agrees that this Note shall be governed by the laws
of the State of New York in all respects (without giving
effect to the conflicts of law provisions thereof), including
matters of construction, validity and performance, and that
none of its terms or provisions may be waived, altered,
modified or amended except to the extent the Company may
consent thereto in writing.
IN WITNESS WHEREOF, the Payor has executed and
delivered this Note to the Company as of the date first above
written.
\s\ Alfred Weber
-----------------
ALFRED WEBER
4
<PAGE>
EXHIBIT B to
Stock Purchase Agreement
PLEDGE AND SECURITY AGREEMENT
AGREEMENT, dated June , 1989, between ALFRED
WEBER ("Pledgor") and CHARTER POWER SYSTEMS, INC., a
Delaware corporation ("the Company").
WHEREAS, the Company has made a loan to Pledgor on
the date hereof in the amount of $329,400.00, pursuant to
the Stock Purchase Agreement, dated May 30, 1989 (the "Stock
Agreement"), between Pledgor and the Company, to enable the
Pledgor to purchase 60,000 shares (the "Purchased Shares") of
Common Stock of the Company, par value $.01 per share
("Common Stock"), and the Company in the future may make
additional loans to Pledgor to enable Pledgor to purchase
certain additional shares of Common Stock (the "Option
Shares") issuable upon the exercise of an option granted to
him pursuant to the Option Agreement dated May 30, 1989 (the
"Option Agreement"), between Pledgor and the Company
(collectively, the "Loans"); and
WHEREAS, in order to induce the Company to make the
Loans, Pledgor has agreed to grant, and does hereby grant, to
the Company, a security interest in the Purchased Shares and
all Option Shares hereafter purchased by Pledgor with the
proceeds of any of the Loans (collectively, the "Shares").
<PAGE>
NOW THEREFORE, in consideration of the premises and
the mutual agreements hereinafter contained, the parties
hereto agree as follows:
1. Creation of Security Interest. As security for
payment in full of the Loans, Pledgor hereby pledges,
hypothecates, assigns, transfers, sets over and delivers unto
the Company as collateral security, and hereby grants to the
Company a first lien and security interest in, all of the
Shares, whether now owned or hereafter acquired, the proceeds
thereof, and all cash (other than cash dividends, except to
the extent expressly provided herein), securities or other
property at any time and from time to time receivable or
otherwise distributed in respect of or in exchange for any of
the Shares (all of such Shares, proceeds thereof, cash (other
than cash dividends, except to the extent expressly provided
herein), securities and other property hereinafter being
referred to collectively as the "Collateral"). Concurrently
with the execution of this Agreement, Pledgor is delivering
to the Company (i) all stock certificates representing the
Purchased Shares and (ii) a duly endorsed irrevocable stock
power in blank therefor. Upon the issuance of any Option
Shares purchased by Pledgor with the proceeds of any of the
Loans, Pledgor shall deliver to the Company (i) all stock
certificates representing those Option Shares and (ii) duly
endorsed irrevocable stock powers in blank therefor.
2
<PAGE>
2. Stock Dividends and Adjustments; Voting Rights.
If, during the term of this Agreement, any stock dividend,
reclassification, stock split, readjustment, warrant, option
or right to acquire additional securities is issued with
respect to the Collateral or any part thereof, or any other
change is made in the capital structure of the Company, all
new, substituted or additional shares or securities that
Pledgor shall become entitled to receive as a result thereof
promptly shall be delivered to the Company (together with
appropriate instruments of transfer duly endorsed in blank)
and, from and after the time Pledgor shall be entitled to
receive the same, those shares and securities shall be, and
be deemed to be, part of the property pledged hereunder and
included in the term Collateral as defined herein. So long
as a Default (as hereinafter defined) shall not have occurred
and be continuing, Pledgor shall be entitled to receive all
cash dividends payable with respect to, and to exercise all
rights to vote, the securities contained in the Collateral.
Upon the occurrence and during the continuance of a Default,
the Company shall be entitled to receive all such cash
dividends and to exercise all such voting rights.
3. Representations, Warranties and Covenants.
Pledgor hereby represents, warrants and covenants that:
(a) Pledgor is and will be the sole legal and
equitable owner of the Collateral, and that Pledgor has and
3
<PAGE>
will have the right to transfer, pledge and deliver the
Collateral to the Company hereunder;
(b) there are and will be no outstanding
liens, encumbrances, or claims in respect of the Collateral
other than the security interest created by this Agreement;
(c) Pledgor will preserve and defend all
right, title and interest of the Company in and to the
Collateral against all claims thereon; and
(d) the pledge of the Collateral made hereby
and the delivery of the Collateral in accordance herewith are
and will be effective to vest in the Company a perfected,
first priority security interest in the Shares as set forth
herein.
4. Default; Remedies. (a) A Default shall be
deemed to have occurred hereunder if:
(i) an Event of Default (as such term is
defined in the Notes evidencing the Loans (the "Notes"))
shall occur;
(ii) Pledgor sells, assigns, transfers or
otherwise disposes of, or grants a lien on or security
interest in or option or right with respect to, or otherwise
encumbers the Collateral or any part thereof or any interest
therein, unless concurrently therewith Pledgor repays the
Notes to the extent required in accordance with the terms
thereof;
4
<PAGE>
(iii) Pledgor becomes insolvent, makes a
general assignment for the benefit of creditors, or files or
has filed against him any petition under any bankruptcy or
insolvency law or any action for the appointment of a
receiver or trustee; provided, however, that in the event of
an involuntary bankruptcy or insolvency proceeding, Pledgor
shall have 60 days from the date of filing thereof to stay such
proceeding;
(iv) any of the Collateral shall be attached
or levied upon or seized in any legal proceedings, or held by
virtue of any levy or distraint, which attachment, levy or
distraint shall not be vacated within 60 days; provided,
however, that any such attachment, levy or distraint shall
not constitute a Default so long as it is stayed; or
(v) Pledgor otherwise defaults in any
material respect in the observance or performance of any
representation or other covenant or agreement contained
herein or in any of the Notes, and that default continues for
a period of ten days after notice thereof from the Company.
(b) If a Default shall have occurred and be
continuing, the Company shall be entitled, in addition to any
other rights granted under the Notes, to exercise all of the
rights and remedies with respect to the Collateral of a
secured party under the Uniform Commercial Code or any other
applicable law, all of which rights and remedies, to the full
extent permitted by law, shall be cumulative and not
5
<PAGE>
alternative. Pledgor agrees that 30 days shall constitute
reasonable notice of a sale or other disposition of any of
the Collateral. The remainder of the proceeds from any such
sale or other disposition, after deducting therefrom all
expenses incurred in connection therewith (including
reasonable legal fees and expenses) and after payment in full
of Pledgor's obligations to the Company under the Notes and
this Agreement, shall be paid over to Pledgor. The Company
shall not sell or otherwise dispose of a greater number of
Shares than it reasonably determines is necessary for the
payment in full of Pledgor's obligations to the Company under
the Notes and this Agreement, including all expenses incurred
in connection with such sale or other disposition. Pledgor
further agrees that a private sale of the Collateral on such
terms as the Company approves shall be deemed to be
commercially reasonable; provided, however, that the Company
is authorized in its absolute discretion to restrict the
prospective purchasers to those persons who represent and
agree to the satisfaction of the Company and its counsel that
they are purchasing the Collateral for their own account, for
investment, and not with a view to or for sale in connection
with a distribution in violation of the Securities Act of
1933 or any other applicable law or regulation.
5. Waiver of Rights or Remedies. (a) The
Company, by act, delay, omission, acceptance of partial
payment or otherwise, shall not be deemed to have waived any
6
<PAGE>
rights or remedies hereunder or under the Notes unless the
waiver is in writing and signed by the Company, and then only
to the extent therein set forth. A waiver by the Company of
any right or remedy on any one occasion, shall not be
construed as a bar to or waiver of any such right or remedy,
or both, that the Company otherwise would have had on any
future occasion.
(b) To the full extent that Pledgor may lawfully
so agree, Pledgor agrees that it will not at any time plead,
claim or take the benefit of any moratorium or redemption law
now or hereafter enforced, in order to prevent or delay the
enforcement of this Agreement or the application of any
portion or all of the Collateral as provided by this
Agreement, and Pledgor, for himself and all who may claim
under Pledgor, as far as they now or hereafter lawfully may,
hereby waives the benefit of all such laws.
6. Authorization. The Company shall have and be
entitled to exercise all such powers hereunder as are
specifically delegated to the Company by the terms hereof,
together with such powers as are reasonable incidental
thereto. The Company may execute any of its duties hereunder
by or through designees and shall be entitled to retain
counsel and to act in reliance upon the advice of such
counsel concerning all matters pertaining to its duties
hereunder. Neither the Company, nor any director, officer or
employee of the Company, shall be liable to Pledgor for any
7
<PAGE>
action taken or omitted to be taken by it or them hereunder
in connection herewith, except for its or their own
negligence or willful misconduct or breach of this Agreement.
The Company shall be entitled to rely on any communication,
instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person
or persons.
7. Further Assurances. Pledgor agrees that he
shall at the request of the Company execute and deliver all
such further assignments, endorsements and other documents
and take all such further action as the Company may
reasonably request in order to effect the purposes and
provisions of this Agreement and to perfect, continue, better
assure or confirm the rights of the Company in the Collateral
provided for hereunder.
8. Termination. The security interest and
assignment created and granted hereunder shall terminate only
when Pledgor has fully satisfied all of his obligations
hereunder and under the Notes, and at that time all
Collateral remaining in the possession of the Company shall
be returned to Pledgor, accompanied by appropriate stock
powers.
9. Notices. Notices or other communications to
either of the parties shall be in writing and shall be deemed
to have been duly and properly given on the date such notices
8
<PAGE>
or other communications are (i) personally delivered with
receipt acknowledged, or (ii) received when mailed by
registered or certified mail, postage prepaid, return receipt
requested, to the addresses set forth below or to which other
address as either party to this Agreement shall specify to
the other:
To Pledgor: Alfred Weber
158 Beecher Drive
Southbury, CT 06488
-with a copy to-
Friedman & Kaplan
150 East 52nd Street
New York, New York 10022
Attention: Gary D. Friedman, Esq.
To the Company: Charter Power Systems, Inc.
3043 Walton Road
Plymouth Meeting, Pennsylvania
Attention: Robert Alvine
-with a copy to-
Proskauer Rose Goetz
& Mendelsohn
300 Park Avenue
New York, New York 10022
Attention: Jonathan Shor, Esq.
10. Miscellaneous. (a) This Agreement shall be
governed by and interpreted under the laws of the State of
New York applicable to contracts made and performed therein
without regard to the principles of conflict of laws thereof.
If any term or provision of this Agreement shall, for any
reason, be held to be illegal, invalid or unenforceable under
the laws of any governmental authority to which this
9
<PAGE>
Agreement is subject, the term or provision shall be deemed
severed from this Agreement, and the remaining terms and
provisions shall be enforceable, to the fullest extent
permitted by law.
(b) This Agreement shall inure to the benefit of
and shall be binding upon the respective successors, assigns
and legal representatives of the parties, except that
Pledgor shall not be permitted to assign this Agreement or
any interest herein or in the Collateral, or any part
thereof, or otherwise pledge, encumber or grant any option
with respect to the Collateral, or any part thereof, or any
cash or property held by the Company as Collateral under this
Agreement, except to the extent provided herein. The Company
may assign this Agreement, any interest herein or in the
Collateral or any part thereof, to any wholly owned
affiliated entity of the Company.
(c) Captions used herein are inserted for
reference purposes only and shall not affect the
interpretation or meaning of this Agreement.
(d) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
agreement.
(e) This Agreement may not be changed, modified
or, except as provided in Section 8 hereof, terminated, in
whole or in part, except by a written instrument signed by
10
<PAGE>
the party against whom any such change, modification or
termination is sought to be enforced.
IN WITNESS WHEREOF, Pledgor has executed this
Agreement on the date hereinabove first written.
\s\ Alfred Weber
-----------------------
Alfred Weber
AGREED TO AND ACCEPTED:
CHARTER POWER SYSTEMS, INC.
By: \s\ D. L. Nevins, Jr.
-----------------------------
Vice President Finance
11
<PAGE>
OPTION AGREEMENT
ALFRED WEBER (the "Optionee") hereby is granted the
option (the "Option") to purchase One Hundred Ten Thousand
(110,000) fully paid and nonassessable shares of the common
stock, par value $.01 per share (the "Common Stock"), of
Charter Power Systems, Inc., a Delaware corporation (the
"Company"), upon and subject to the following terms and
conditions:
1. OPTION PRICE. The price at which shares of
Common Stock subject to the Option may be purchased is $6.04
a share.
2. DURATION OF OPTION. The Option shall expire,
and all rights to purchase shares of Common Stock pursuant
thereto shall cease, on April 30, 1994 (the "Expiration
Date").
3. VESTING OF OPTION. No portion of the Option
may be exercised until it has vested. The Option shall vest
as set forth in SCHEDULE 1 attached hereto.
4. EXERCISE OF OPTIONS. A person entitled to
exercise the Option may exercise it in whole at any time, or
in part from time to time, by delivering to the Company at
its principal office, directed to the attention of its
President, (a) written notice specifying the number of shares
of Common Stock with respect to which the Option is being
<PAGE>
exercised, (b) payment in full of the purchase price for
those shares and (c) payment of the amount required for the
Company to satisfy its withholding tax obligation respecting
that exercise as determined by the Company's independent
accountants. Those payments shall be made in cash, by check
to the order of the Company or, in the case of a payment of
the amount described in clause (b) above (less the par value
of the relevant shares), by delivery of a Secured Promissory
Note in the form attached as Exhibit A hereto.
5. NONTRANSFERABILITY. The Option shall not be
transferable other than by will or the laws of descent and
distribution, and the Option may not be exercised by anyone
other than the Optionee, except that, if the Optionee dies or
becomes incapacitated, the Option may be exercised by the
Optionee's estate, legal representative or beneficiary, as
the case may be, subject to all other terms and conditions
contained in this Agreement.
6. TERMINATION OF EMPLOYMENT. The following
rules shall apply in the event of the termination of the
Optionee's employment with the Company:
(i) if the termination is for "Cause", as
defined in the employment agreement, dated the
date hereof, between the Optionee and the Company,
the Option immediately shall terminate;
2
<PAGE>
(ii) if the termination is other than for
Cause (including due to death or disability), the
Option shall expire 18 months after the date of
termination, or on the applicable Expiration Date,
whichever first shall occur; and
(iii) anything contained in this Section 6 to
the contrary notwithstanding, except as provided in
Part B of SCHEDULE 1 hereto, the Option may be
exercised following termination of the Optionee's
employment only if, and to the extent that, the
Option was exercisable as of the date of
termination.
7. NO RIGHTS AS STOCKHOLDER OR TO CONTINUED
EMPLOYMENT. The Optionee shall not have any rights as a
stockholder of the Company with respect to any shares covered
by the Option prior to the date of issuance to the Optionee
of the certificate or certificates for such shares, and the
Option shall not confer upon the Optionee any right to
continuance of employment with the Company or any of its
subsidiaries or interfere in any way with the right of the
Company or of its subsidiaries to terminate the employment of
the Optionee.
8. ISSUANCE OF SHARES; RESTRICTIONS. (a)
Subject to the conditions and restrictions provided in this
Section 8, the Company shall, within 20 business days after
3
<PAGE>
the Option has been duly exercised in whole or in part,
deliver to the person who exercised the Option one or more
certificates, registered in the name of that person, for the
number of shares of Common Stock with respect to which the
Option was exercised. The Company may place a legend on any
stock certificate issued hereunder to reflect any restrict-
ions provided for in this Section 8.
(b) Unless the issuance of the shares subject to
the Option has been registered under the Securities Act of
1933 (the "Act") (and, if the Optionee may be deemed an
"affiliate" of the Company, as defined in Rule 405 under the
Act, if the resale by the Optionee of those shares also has
been registered under the Act), or the Company (based on
advice of counsel) has determined that an exemption from
registration under the Act is available, the Company may
require prior to and as a condition of the issuance of any
shares of Common Stock, that the person exercising the Option
hereunder provide to the Company a written representation in
a form prescribed by the Company to the effect that that
person is acquiring those shares solely with a view to
investment, for that person's own account, and not with a
view to the resale or distribution of all or any part hereof,
and that such a person will not dispose of any of those
shares other than in accordance with the registration
provisions of the Act, unless the Company (based upon advice
4
<PAGE>
of counsel) is satisfied that an exemption from such
registration is available.
(c) Anything contained herein to the contrary
notwithstanding, the Company shall not be obligated to issue
any shares of Common Stock upon the exercise of the Option
granted hereunder unless and until the Company is satisfied
that such issuance complies with all applicable provisions of
the Act and all other applicable laws or regulations by which
the Company is bound or to which the Company or those shares
are subject.
9. ADJUSTMENTS. The number of shares of Common
Stock covered by the Option and the exercise price therefore
shall be adjusted proportionately for any increase or
decrease in the number of outstanding shares of Common Stock
resulting from a stock split or other subdivision or
consolidation of shares or other capital adjustment, or the
payment of a stock dividend; PROVIDED, HOWEVER, that any
fractional shares resulting from any such adjustment shall be
eliminated. Notwithstanding the foregoing, no adjustment
shall be made upon the issuance of new shares of Common Stock
for fair consideration.
10. CONDITION. The Option is subject to the
listing on the American Stock Exchange of the shares of
Common Stock issuable upon exercise of the Option (subject to
notice of issuance).
5
<PAGE>
11. MISCELLANEOUS. (a) NOTICES. All notices and
other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified mail,
return receipt requested, postage prepaid, to the Company at
3043 Walton Road, Plymouth Meeting, Pennsylvania 19462,
Attention: Robert Alvine, with a copy to Proskauer Rose Goetz
& Mendelsohn, 300 Park Avenue, New York, New York 10022,
Attention: Jonathan Shor, Esq., and to the Optionee at the
Optionee's address contained in the Company's records, with a
copy to Friedman & Kaplan, 150 East 52nd Street, New York,
New York 10022, Attention: Gary D. Friedman, Esq., or to such
other address as either party to this Agreement shall
specify by notice to the other.
(b) BINDING EFFECT; BENEFITS. This Agreement
shall be binding upon and inure to the benefit of the parties
to this Agreement and their respective successors and
permitted assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person
other than the parties to this Agreement or their respective
successors or permitted assigns any legal or equitable right,
remedy or claim under or in respect of any agreement or any
provision contained herein.
6
<PAGE>
(c) AMENDMENT. This Agreement may be amended,
modified or supplemented only by a written instrument
executed by the Optionee and the Company.
(d) APPLICABLE LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, without giving effect to the conflicts of
law provisions thereof.
(e) COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed
to be one and the same instrument.
(f) ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company and the Optionee
have executed this Agreement as of the date written below.
Date of Grant: May 30, 1989
CHARTER POWER SYSTEMS, INC.
By: \s\ D. L. Nevins, Jr.
VP Finance
\s\ Alfred Weber
Alfred Weber
7
<PAGE>
SCHEDULE 1
A. VESTING OF OPTION.
The Option shall vest: (i) to the extent of 27,500
shares, as of January 31, 1990, only if the Company's
earnings per share (the "EPS") for the fiscal year ending
January 31, 1990 equal or exceed $.90; (ii) to the extent of
an additional 27,500 shares (together with the initial 27,500
shares, the "First Portion"), as of January 31, 1990, only if
the EPS for the fiscal year ending January 31, 1990, equal or
exceed $1.05; and (iii) to the extent of the remaining 55,000
shares (the "Second Portion"), as of January 31, 1991, only
if the EPS for the fiscal year ending January 31, 1991 equal
or exceed $1.25. For this purpose, the EPS shall be as
reported in the Company's audited financial statements for
the relevant fiscal year, adjusted to exclude from the
calculation of EPS (a) any extraordinary items (as determined
by the Company's independent accountants in accordance with
generally accepted accounting principles), (b) any shares
issued or issuable pursuant to the Company's Stock Option
Plan and (c) any increase or decrease in the number of
outstanding shares resulting from a stock split or other
subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend.
If the employment of the Optionee with the Company
is terminated due to death or disability (as defined in the
1
<PAGE>
employment agreement, dated the date hereof, between the
Optionee and the Company (the "Employment Agreement") after
October 31, 1989 or 1990 and the applicable EPS amount for
the fiscal year ending January 31, 1990 or 1991, as the case
may be, is met, the Optionee shall be deemed to have been
employed through the end of the relevant fiscal year for the
purpose of the vesting of the Option.
B. ALTERNATIVE VESTING.
The Option (if (i) the circumstance or transaction
described in paragraph 1 or 2(a) below occurs or is completed
on or before January 31, 1992 or (ii) the transaction
described in paragraph 2(b) below is completed on or before
January 31, 1991) or the Second Portion (if the transaction
described in paragraph 2(b) below occurs or is completed
after January 31, 1991 and on or before January 31, 1992)
shall vest on an accelerated basis to the extent provided
below:
1. If the average of the daily closing prices of
the Common Stock of the Company, as reported by the American
Stock Exchange (the "AMEX"), during any 60-day period equals
or exceeds $15.00 a share, full alternative vesting shall
occur on the last day of that 60-day period.
2. If: (a) a Business Combination (as defined in
the Employment Agreement) has occurred at a weighted average
price per share on a fully diluted basis (the "Transaction
2
<PAGE>
Price") of not less than $11.00; or (b) a Change of Control
(as defined in the Employment Agreement) other than a
Business Combination has occurred and the average of the
daily closing prices of a share of the Common Stock of the
Company, as reported by the AMEX, during the 20 trading days
prior thereto (the "CC Price"), is not less than $11.00,
alternative vesting to the extent of the percentage specified
below shall occur upon consummation of the transaction:
Transaction Price Percentage of Unvested
or CC Price Option to Vest
$11.00 - $11.99 20%
$12.00 - $12.99 40%
$13.00 - $13.99 60%
$14.00 - $14.99 80%
$15.00 or greater 100%
PROVIDED, HOWEVER, that notwithstanding the foregoing, with
respect to the First Portion, if the Change in Control shall
occur during the period from February 1, 1990 through January
31, 1991 (it being agreed that alternative vesting shall
occur with respect to the Second Portion to the extent, if
any, hereinabove provided without regard to this proviso if
the Change in Control shall occur during that period), and
with respect to the Second Portion, if the Change in Control
shall occur during the period from February 1, 1991 through
January 31, 1992 (it being agreed that alternative vesting
shall not occur with respect to the First Portion on account
of a Change in Control that occurs during that period),
alternative vesting shall occur only if the CC Price is not
3
<PAGE>
less than $12.00 (but the percentage of alternative vesting
if the CC Price is from $12.00 - $12.99 shall remain 40%).
4
<PAGE>
EXHIBIT A to
Option Agreement
OPTION
SECURED PROMISSORY NOTE
$___________ [Date] [1]
FOR VALUE RECEIVED, ALFRED WEBER (the "Payor")
hereby promises to pay to CHARTER POWER SYSTEMS, INC., a
Delaware corporation ("the Company"), the principal sum of
________________________ (S________), without interest, on
____.[2] Payment of principal is to be made in lawful money of
the United States of America at the offices of the Company or
at such other place as the holder hereof shall designate.
This Note is secured by the pledge by the Payor to
the Company of certain shares of common stock of the Company,
in accordance with the terms of a Pledge and Security Agree-
ment (the "Security Agreement") between the Payor and the
Company, dated as of June ____, 1989, and in that respect is
subject to all of the terms, provisions and conditions of the
Security Agreement.
___________________
[1] Insert date of exercise of option respecting Shares
purchased with the principal amount of this Note.
[2] Insert date that is 18 months subsequent to date of this
Note.
<PAGE>
This Note evidences a loan made by the Company to
the Payor to enable him to purchase ________[3] shares of common
stock of the Company (the "Shares"). If the Payor shall sell
or transfer any of his Shares or the proceeds thereof, or any
cash (other than cash dividends), securities, or other prop-
erty at any time and from time to time receivable or
otherwise distributed in respect of or in exchange for any or
all of the Shares (collectively, the "Additional Shares"),
there shall be due and payable, immediately upon the
consummation of the sale or transfer, a payment of principal
hereunder in an amount equal to the product obtained by
multiplying the then outstanding principal amount of this
Note by a fraction, the numerator of which shall be the
number of Shares and Additional Shares then sold or
transferred and the denominator of which shall be the number
of Shares and Additional Shares then owned by the Payor
(before giving effect to the sale or transfer). Nothing in
this paragraph shall be deemed to permit any sale or transfer
by the Payor of any Shares or Additional Shares, to the
extent the same otherwise would be prohibited by the
provisions of any other agreement to which the Payor and the
Company are parties.
If: (i) the Payor fails to make any payment here-
under within ten days after notice from the Company to the
_____________________
[3] Insert numer of Shares purchased with the principal
amount of this Note.
2
<PAGE>
Payor that the payment is due; or (ii) the Payor's employment
with the Company is terminated for "Cause", as defined in the
employment agreement, dated as of April 4, 1989, between the
Payor and the Company; or (iii) a Default (as such term is
defined in the Security Agreement) shall have occurred under
the Security Agreement (each of the events listed in (i),
(ii) and (iii) above being an "Event of Default" hereunder);
the then outstanding principal balance hereof shall be
immediately due and payable.
The Payor may, at any time and from time to time,
prepay in whole or part, without premium or penalty, the then
outstanding principal balance hereof.
The Payor hereby agrees to pay all reasonable
costs, fees and expenses incurred by the Company for the
collection of all sums due hereunder, including reasonable
attorneys' fees and court costs. The Payor hereby waives
presentment, demand, notice of dishonor, protest and all
other demands and notices in connection with this Note
(including any acceleration of the maturity hereof) and
further agrees that this Note shall be deemed to have been
made under and shall be governed by the laws of the State of
New York in all respects (without giving effect to the
conflicts of law provisions thereof), including matters of
construction, validity and performance, and that none of its
terms or provisions may be waived, altered, modified or
3
<PAGE>
amended except to the extent the Company may consent thereto
in writing.
IN WITNESS WHEREOF, the Payor has executed and
delivered this Note to the Company as of the date first above
written.
________________________
ALFRED WEBER
4
<PAGE>
REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated May 30, 1989, between ALFRED
WEBER (the "Shareholder") and CHARTER POWER SYSTEMS, INC., a
Delaware corporation (the "Company").
WHEREAS, the Shareholder on the date hereof has
agreed to purchase 60,000 shares of Common Stock, $.01 par
value, of the Company ("Common Stock"), may purchase up to
5,000 additional shares of Common Stock in the open market
and has been granted the option to purchase an additional
110,000 shares of Common Stock (all such shares hereinafter
are referred to collectively as the "Shares");
WHEREAS, the Company and Robert Alvine ("Alvine")
have entered into a Registration Rights Agreement on May 26,
1988 (the "Alvine Agreement");
WHEREAS, the Company has agreed to provide the
Shareholder with certain registration rights respecting the
Shares.
NOW, THEREFORE, in consideration of the foregoing
and of the mutual covenants and agreements set forth herein,
the parties hereto agree as follows:
1. PIGGYBACK REGISTRATION. Whenever the Company
proposes to register under the Securities Act of 1933 (the
"Act") any shares of Common Stock owned by Alvine, in
accordance with the terms of the Alvine Agreement, the
Company shall give prompt written notice to the Shareholder
of its intention to effect such a registration. The Company
shall include in such registration all or any portion of the
Shares owned by the Shareholder at the time of the notice, in
the case of clause 1(a) of the Alvine Agreement, or up to 50%
of such Shares, in the case of clause 1(b) of the Alvine
Agreement, with respect to which the Company has received
written request for inclusion therein within 30 days after
the date of the Company's notice to the Shareholder (the
"Piggyback Registrations"). The Company shall pay all
Registration Expenses (as defined in Section 6 hereof).
2. NO-SALE AGREEMENT. The obligation of the Com-
pany to include Shares in the Piggyback Registrations as
provided in Section 1 hereof shall be subject to the
Company's receipt from the Shareholder of a written agreement
not to effect any public sale or distribution (other than
through the registered public offering) of equity securities
of the Company during the ten days prior to and the 90-day
period beginning on the effective date of that registration
or, if sooner, until all Shares and other securities included
in that registration have been sold.
<PAGE>
3. EFFECTING THE REGISTRATION. Whenever the
Shareholder requests that any Shares be registered pursuant
to the provisions of this Agreement, the Company shall use
its best efforts to effect the registration and the sale of
those Shares in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall,
as expeditiously as possible:
(a) prepare and file with the Securities and
Exchange Commission (subject to its receipt from the Share-
holder of the written information specified in Section 7(b)
hereof) a registration statement with respect to those
Shares, which registration statement shall state that the
Shareholder may sell those Shares either under that
registration statement or (to the extent available to the
Shareholder) pursuant to Rule 144 (or any similar rule then
in effect), and shall use its best efforts to cause such
registration statement to become effective;
(b) prepare and file with the Securities and
Exchange Commission (subject to its receipt from the Share-
holder of the written information specified in Section 7(b)
hereof) such amendments and supplements to that registration
statement and the prospectus used in connection therewith as
may be necessary to keep that registration statement
effective for a period of not less than six months and comply
with the provisions of the Act with respect to the
disposition of all securities covered by that registration
statement during that six-month period in accordance with the
intended method of disposition by the Shareholder set forth
in that registration statement;
(c) provide to the Shareholder such number of
copies of that registration statement, each amendment and
supplement thereto, the prospectus included in such
registration statement (including each preliminary
prospectus) and such other documents as the Shareholder
reasonably may request in order to facilitate the disposition
of the Shares owned by the Shareholder included in that
registration statement;
(d) use its best efforts to register or
qualify those Shares under the securities or blue-sky laws of
such jurisdictions as the Shareholder reasonably requests and
do any and all other acts and things that may be reasonably
necessary or advisable to enable the Shareholder to
consummate the disposition in those jurisdictions of the
Shares owned by the Shareholder included in that registration
statement (PROVIDED, HOWEVER, that the Company shall not be
required, in order to complete that registration or
qualification, to (i) qualify generally to do business in any
2
<PAGE>
such jurisdiction where it otherwise would not be required to
qualify but for this subparagraph, (ii) subject itself to
taxation in any such jurisdiction, (iii) consent to general
service or process in any such jurisdiction (it being agreed
that the Company shall be obligated, to the extent required
in any applicable jurisdiction, to consent to limited service
of process with respect to matters relating to the offering
being so registered or qualified), or (iv) otherwise subject
itself or any of its affiliates to unreasonable expense or
restrictions);
(e) notify the Shareholder, at any time when
a prospectus relating thereto is required to be delivered
under the Act, of the happening of any event or the discovery
of any information, as a result of which the prospectus
included in that registration statement contains any
statement which, at the time and in light of the
circumstances under which it was made, is false or misleading
with respect to any material fact or omits to state a
material fact required to be stated therein or necessary in
order to make the statement therein not false or misleading,
and, at the request of the Shareholder, the Company shall
prepare a supplement or amendment to that prospectus so that,
as thereafter delivered to the purchasers of those Shares,
that prospectus will not contain any statement which, at the
time and in light of the circumstances under which it was
made, is false or misleading with respect to any material
fact or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein
not false or misleading;
(f) enter into such customary agreements (in-
cluding an underwriting agreement in customary form and on
terms reasonably agreeable to it) and take all such other ac-
tions as the holders of a majority of the securities covered
by the registration statement or the underwriters, if any,
reasonably request in order to expedite or facilitate the
disposition of those securities; and
(g) make available for inspection by the
Shareholder, any underwriter participating in any disposition
pursuant to the registration statement, and any attorney, ac-
countant or other agent retained by the Shareholder or that
underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all
information reasonably requested by the Shareholder or that
underwriter, attorney, accountant or agent in connection with
that registration statement.
Notwithstanding anything contained in this Section 3 to the
contrary, the Company shall not be required to file any
3
<PAGE>
registration statement pursuant to Section 1 hereof; (i)
until it has filed its Form 10-Q (or its then equivalent) for
its most recently completed fiscal quarter (unless the
Company meets the eligibility requirements for the use of a
registration statement on Form S-2) and its Form 10-K for its
most recently completed fiscal year; or (ii) during any
period of time when (A) the Company is contemplating an
underwritten public offering of any of its securities within
three months and, in the judgement of the managing or
principal underwriter thereof or of the Company, that filing
would have an adverse effect on the contemplated offering,
(B) the Company is in possession of material nonpublic
information (notice of which shall have been given by the
Company to the Shareholder) that it deems in its legitimate
business interest not to disclose in a registration
statement or (C) the Company is engaged in any program for
the purchase of shares of its Common Stock; PROVIDE, HOW-
EVER, that the aggregate of the periods in this clause (ii)
shall not exceed 120 days during the 18-month period provided
in Section 1(a) hereof).
4. OPINION OF COUNSEL AND LETTER FROM
ACCOUNTANTS. If and whenever the Company is required by the
provisions of this Agreement to use its best efforts to
effect the registration of Shares under the Act, the Company
shall provide, at the request of the Shareholder, on the date
that those Shares are delivered to the underwriters for sale
pursuant to that registration or, if those Shares are not
being sold through underwriters, on the date the registration
statement with respect to those Shares becomes effective: (a)
an opinion, dated such date, of the independent counsel
representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to
the Shareholder, to the effect that (i) the registration
statement, the related prospectus and each amendment or
supplement thereto, comply as to form in all material
respects with the requirements of the Act and the applicable
rules and regulations of the Securities and Exchange
Commission thereunder (except that such counsel need express
no opinion as to the financial statements and schedules and
other financial and statistical data contained therein), (ii)
while such counsel is not passing upon and does not assume
any responsibility for the accuracy, completeness or fairness
of the statements contained in the registration statement and
the prospectus (except for the matters referred to in clause
(iii) below), such counsel has no reason to believe either
that the registration statement or the prospectus (and any
amendment or supplement thereto), at the time that
registration statement became effective (or in the case of an
amendment or supplement, at the time it was filed), and with
respect to the prospectus, on the date of such prospectus,
contains any statement which, at the time and in light of the
4
<PAGE>
circumstances under which it was made, is false or misleading
with respect to any material fact or omits to state a
material fact required to be stated therein or necessary in
order to make the statements therein not false or misleading
(except that such counsel need express no opinion as to the
financial statements and schedules and other financial and
statistical data, or the information provided by the
Shareholder pursuant to Section 7(b) hereof, contained
therein), and (iii) all of the Shares included in the
registration statement have been duly authorized and validly
issued, and are fully paid and nonassessable; and (b) a
letter, dated that date, from the independent certified
public accountants of the Company, addressed to the under-
writers, if any, and to the Shareholder, if he would be
deemed an affiliate of the Company as defined in Rule 405
under the Act, stating (i) that they are independent
certified public accountants within the meaning of the Act
and that in the opinion of such accountants, the financial
statements and schedules of the Company included in the
registration statement or the prospectus, or any amendment or
supplement thereto, comply as to form in all material
respects with the applicable accounting requirements of the
Act, and (ii) such other financial matters (including
information as to the period ending not more than five
business days prior to the date of such letter) with respect
to the registration statement as the underwriters, if any, or
the Shareholder, if he would qualify as an underwriter, may
reasonably request; PROVIDED, HOWEVER, that the Company shall
not be considered to be in breach of this Section 4 if its
independent certified public accountants or counsel shall
have refused to deliver all or any part of the letter or
opinion specified in this Section 4 without qualification or
limitation (other than standard qualifications and
limitations) not specified above, if the Company shall have
requested such accountants or counsel to provide the same and
shall have cooperated in all reasonable respects, to the
extent requested by such accountants or counsel, in
providing them with information required for the preparation
of that letter or opinion.
5. REVIEW BY THE SHAREHOLDER. No less than five
business days prior to the filing of a registration statement
or prospectus, or any amendment or supplement thereto, the
Company shall provide the Shareholder with a substantially
final copy of such proposed registration statement, pros-
pectus, amendment or supplement. If, prior to that filing,
the Company shall receive written notice from the Shareholder
to the effect that the registration statement, prospectus,
amendment or supplement contains any statement relating to
the Shareholder which is false or misleading or omits to
state a material fact, then the Company shall not file that
registration statement, prospectus, amendment or supplement
5
<PAGE>
without the prior written consent of the Shareholder, which
consent shall not be unreasonably withheld.
6. EXPENSES. All expenses incident to the Com-
pany's performance of or compliance with the registration ob-
ligations set forth in this Agreement, including all
registration and filing fees, expenses of compliance with
securities or blue-sky laws, printing expenses, messenger and
delivery expenses, and fees and disbursements of counsel for
the Company (but not counsel for the Shareholder) and all
independent certified public accountants, underwriters
(excluding discounts and commissions) and other persons
retained by the company (all such expenses being herein
called "Registration Expenses"), shall be borne by the
Company.
7. INDEMNIFICATION. (a) The Company shall indem-
nify, to the extent permitted by law, the Shareholder and any
underwriter (and any controlling person thereof) acting on
his behalf, against all losses, claims, damages, liabilities
and expenses (including reasonable attorneys' fees and dis-
bursements) resulting from any untrue or alleged untrue
statement of material fact contained in any registration
statement, prospectus or preliminary prospectus, or any
amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or
contained in any information provided in writing to the
Company by the Shareholder expressly for use therein or by
the Shareholder's or such underwriters' failure to deliver a
copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has
provided the Shareholder or such underwriter with a
sufficient number of copies of the same.
(b) In connection with any registration
statement or amendment thereto in which the Shareholder is
participating pursuant to the provisions of this Agreement,
the Shareholder shall provide the Company in writing with
such information and affidavits as the Company reasonably
shall request for use in connection with any such
registration statement or amendment and, to the extent
permitted by law, shall indemnify the Company, its directors
and officers, each person who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act of 1934 (the "Exchange Act") and any underwriter
(and any controlling person thereof) acting on the Company's
behalf against any losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and
disbursements) resulting from any untrue or alleged untrue
statement of material fact or any omission or alleged
6
<PAGE>
omission of a material fact required to be stated in the
registration statement or any amendment thereof or supplement
thereto or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement
or omission is contained in (or should have been contained
in, but was omitted from) any information or affidavit so
provided in writing by the Shareholder.
(c) Any person entitled to indemnification
hereunder shall (i) give prompt notice to the indemnifying
party of any claim with respect to which the indemnified
party seeks indemnification and (ii) unless in the
indemnified party's reasonable judgement a conflict of
interest between the indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying
party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such
defense is assumed, the indemnifying party shall be entitled
in its sole discretion to settle such claim at no cost to the
indemnified party. An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim shall not
be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable
judgement of any indemnified party a conflict of interest may
exist between such indemnified party and any other
indemnified party with respect to such claim.
Notwithstanding the foregoing, any indemnified party shall
have the right, in any action the defense of which has been
assumed by the indemnifying party, to employ separate counsel
and to participate in the defense of such action, but the
fees and expenses of such counsel (except those, if any,
incurred before the defense was assumed by the indemnifying
party) shall be the responsibility of the indemnified party.
8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
The Shareholder may not participate in any underwritten
registration pursuant to the provisions of this Agreement
unless he (i) agrees to sell his Shares on the basis provided
in any underwriting arrangements approved by the person
entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other
documents required under the terms of such underwriting
arrangements.
9. SELECTION OF UNDERWRITERS. If any registration
pursuant hereto is an underwritten offering, the Company will
have the right to reasonably approve the investment banker(s)
and manager(s) selected by the Shareholder to administer the
offering.
7
<PAGE>
10. COVENANTS OF THE COMPANY. The Company shall
use its best efforts to file in a timely manner all reports
required to be filed by it pursuant to the Exchange Act and,
upon request of the Shareholder, shall provide the
Shareholder with such information as may be necessary to
enable the Shareholder to effect routine sales pursuant to
Rule 144 under the Act.
11. MISCELLANEOUS. (a) NOTICES. All notices and
other communications required or permitted to be given under
this Agreement shall be in writing and shall be deemed to
have been given if delivered by hand, sent by telex,
telecopy, cable, same day or overnight courier, or mailed
(registered or certified mail, return receipt requested) to
the Company at 3043 Walton Road, Plymouth Meeting,
Pennsylvania 19462, Attention: Robert Alvine, with a copy to
Proskauer Rose Goetz & Mendelsohn, 300 Park Avenue, New York,
New York 10022, Attention: Jonathan Shor, Esq., and to the
Shareholder at his address contained in the stock record book
of the Company, with a copy to Friedman & Kaplan, 150 East
52nd Street, New York, New York 10022, Attention: Gary D.
Friedman, Esq., or to such other address as a party to this
Agreement shall specify by notice to the other.
(b) BINDING EFFECT; BENEFITS. This Agreement
shall be binding upon and inure to the benefit of the parties
to this Agreement, and the successors and assigns of the Com-
pany, on the one hand, and any other person which acquires
any Shares from the Shareholder in a transaction that is
exempt from the registration and prospectus delivery
requirements of the Act and has given written notice to the
Company of its acquisition of these Shares, on the other
hand. Nothing in this Agreement, expressed or implied, is
intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect
of any agreement or any provision contained herein. Except
as provided in this subsection (b), neither this Agreement
nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by the
Shareholder without the prior written consent of the Company.
(c) WAIVER, AMENDMENT.
(i) WAIVER. Any party hereto may by
written notice to the others (a) extend the time for the
performance of any of the obligations or other actions of any
other party to it under this Agreement, (b) waive complaince
with any of the conditions or covenants of any other party to
it contained in this Agreement, and (c) waive or modify
performance of any of the obligations of any other party to
it under this Agreement. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement,
8
<PAGE>
including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver
by the party taking such action of compliance with any
representations, warranties, covenants or agreements
contained herein. The waiver by any party hereto of a breach
of any provision of the Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach
and no failure by any party to exercise any right or
privilege hereunder shall be deemed a waiver of such party's
rights or privileges hereunder or shall be deemed a waiver of
such party's rights to exercise the same at any subsequent
time or times hereunder.
(ii) AMENDMENT. This Agreement may be
amended, modified or supplemented only by a written
instrument executed by the Shareholder and the Company.
(d) APPLICABLE LAW. This Agreement shall be
governed as to its validity, interpretation and effect and
constured in accordance with the laws of the State of New
York, regardless of the law that might be applied under the
principles of conflicts of law.
(e) COUNTERPARTS. This Agreement and any
amendments, waivers, consents or supplements hereto may be
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original, but all of which
counterparts when taken together shall constitute one and the
same instrument.
(f) ENTIRE AGREEMENT. This Agreement
constitututes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
(g) ADJUSTMENTS AFFECTING SECURITIES. The
term "Shares" as used herein shall include all additional
equity securities issued with respect thereto pursuant to any
subsequent stock split, stock dividend, recapitalization,
merger, consolidation or other reorganization affecting the
number of outstanding shares of Common Stock.
(h) SEVERABILITY. If any provision of this
Agreement is unenforceable for any reason, the remaining pro-
visions hereof shall not be effected thereby and shall never-
theless remain in full force and effect.
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date first written above.
CHARTER POWER SYSTEMS, INC.
By: \s\ D. L. Nevins, Jr.
Vice President - Finance
\s\ Alfred Weber
ALFRED WEBER
10
C&D CHARTER POWER SYSTEMS, INC.
3043 Walton Road
Plymouth Meeting, PA 19462
April 3, 1995
Dr. Leslie S. Holden
121 Orchard Court
Blue Bell, PA 19422
Dear Dr. Holden:
We refer to the Employment Agreement (the "Employment
Agreement"), dated January 26, 1990, between C&D Charter Power
Systems, Inc., a Delaware corporation, and you.
Section 2 of the Employment Agreement is hereby amended
by inserting "(a)" after the caption thereof, and by inserting
the following new paragraph at the end of such Section:
"(b) If your employment hereunder shall be
terminated (i) by the Company without Cause
(as defined in Section 10(c) therefor having
been given to you (other than pursuant to
Sections 10(a) or lO(b), or (ii) as a result
of the non-renewal of this Agreement by the
Company upon expiration of the Initial Term
or any renewal term, then for a one year
period after the effective date of such
termination the Company shall pay you at the
rate of your Base Salary in effect at the
time of such termination.
Section 7(a) the Employment Agreement is hereby amended
by deleting the last sentence thereof.
Section 10(b) of the Employment Agreement is hereby
amended by adding the following sentence after the first sentence
thereof:
A:\225152.LS
<PAGE>
Page Two
Notwithstanding the foregoing, if this
Agreement is terminated pursuant to this
Section, the Company shall pay any accrued
but unpaid Base Salary through the date of
termination and any reimbursable expenses due
to you hereunder.
Except as modified hereby, the Employment Agreement
remains unchanged and in full force and effect.
If you are in agreement with the foregoing, please so
indicate by signing in the space indicated below, whereupon this
letter will become a binding agreement between us amending the
Employment Agreement.
Very truly yours,
C&D CHARTER POWER SYSTEMS, INC.
By \s\ Alfred Weber
Alfred Weber
President
Agreed to and accepted
as of the date first above written:
\s\ L. S. Holden
Leslie S. Holden
<PAGE>
C&D CHARTER POWER SYSTEMS, INC.
3043 Walton Road
Plymouth fleeting, PA 19462
January 26, 1990
Dr. Leslie Holden
121 Orchard Court
Blue Bell, PA 19422
Dear Dr. Holden:
C&D Charter Power Systems, Inc., a Delaware corporation (the
"Company"), agrees to employ you and you agree to accept
such employment under the following terms and conditions:
1. Term of Employment.
(a) Except for earlier termination as is provided in
Section 10 below, your employment under this
agreement shall be for a term commencing on
January 26, 1990 (the "Effective Date") and
terminating on January 25, 1991 (the"Initial Term").
(b) After the Initial Term, this agreement
shall be automatically renewed for successive terms
of one month each, unless prior to the Initial
Term, either party shall have given to the other
party 60 days prior written notice of the
termination of this agreement. If such 60 days'
prior written notice is given by either party, (i)
the Company shall, without any liability to you,
have the right, exercisable at any time after such
notice is sent, to elect any other person to the
office or offices in which you are then serving and
to remove you from such office or offices, but (ii)
all other obligations each of you and the Company
have to the other, including the Company's
obligation to pay your compensation and make
available the fringe benefits to which you are
entitled hereunder, shall continue until 60 days
after such notice is given.
<PAGE>
Leslie Holden
Page 2
2. Compensation
You shall be compensated for all services rendered by
you under this agreement at the rate of $100,000 per
annum, (such salary, as it is from time to time
adjusted, is herein referred to as the "Base Salary").
Such salary shall be earned monthly and shall be payable
in periodic installments no less frequently than twice
monthly in accordance with the Company's payroll
practices for executive employees. The Board of
Directors shall review such Base Salary prior to
December 31 of each year during the term of this
agreement and shall make such adjustments, if any, as
the Board shall determine; provided; however, that no
adjustment shall reduce the Base Salary below $100,000.
3. Duties.
(a) During the term of your employment hereunder,
including any renewal term hereof, you agree to
serve as the Vice President-Technology of the
Company or in such other executive capacity with
duties and responsibilities of a similar nature as
those initially undertaken by you as the Board of
Directors may from time to time determine. Your
duties may be changed at any time and from time to
time hereafter, upon mutual agreement, in a manner
appropriate to the Company for the times and
circumstances for which the change is to be made.
You also agree to perform such other services and
duties consistent with the office or offices in
which you are serving and its responsibilities as
may from time to time be prescribed by the Board of
Directors, and you also agree to serve, if elected,
as an officer and/or director of the Company, the
Company's parent corporation, and/or any of the
Company's direct or indirect subsidiaries, in all
cases in conformity to the by-laws of each such
corporation. Unless you otherwise agree, you will
not be required to relocate your principal office
from the Plymouth Meeting, Pennsylvania area.
(b) You shall devote your full employment energies
interest, abilities, time and attention during
normal business hours (excluding the vacation
periods provided in Section 4(b) below) exclusively
to the business and affairs of the Company, its
<PAGE>
Leslie Holden
Page 3
parent corporation and subsidiaries, if any, and
shall not engage in any activity which conflicts or
interferes with the performance of duties hereunder.
(c) You agree to cooperate with the Company, including
taking such reasonable medical examinations as may
be necessary, in the event the Company shall desire
or be required (such as pursuant to the terms of
any bank loan or any other agreement) to obtain
life insurance insuring your life.
(d) You shall, except as otherwise provided herein, be
subject to the Company's rules, practices and
policies applicable to the Company's senior
executive employees.
4. Benefits
(a) You shall have the benefit of the life and medical
insurance plans, pensions, bonus, stock option and
other similar plans as the Company may have or may
establish from time to time, and in which you would
be entitled to participate pursuant to the terms
thereof. The foregoing, however, shall not be
construed to require the Company to establish any
such plans or to prevent the Company from modifying
or terminating any such plans, and no such action
or failure thereof, shall affect this Agreement.
(b) You shall be entitled to a vacation of four weeks
each year.
(c) The Company will provide you with the following
under the terms of this agreement: (i) an annual
physical examination, and (ii) key executive life
insurance.
5. Working and Other Facilities. During the Initial Term
of this agreement and any renewal term thereof, you
shall be furnished with such working facilities and
other services as are suitable to your position and
adequate for the performance of your duties.
6. Expenses. The Company will reimburse you for reasonable
expenses, including traveling expenses, incurred by you
in connection with the business of the Company upon the
presentation by you of appropriate substantiation for
such expenses.
<PAGE>
Leslie Holden
Page 4
7. Restrictive Covenants and Severance Pay.
(a) During such time as you shall be employed by the
Company, and for a period of one year thereafter,
you shall not, without the written consent of the
Board of Directors, directly or indirectly become
associated with, render services to, invest in,
represent, advise or otherwise participate as an
officer, employee, director, stockholder, partner,
agent of or consultant for, any business which is
competitive with the business in which the Company
is engaged at the time your employment with the
Company ceases; provided, however, that nothing
herein (i) shall prevent you from investing without
limit in the securities of any company listed on a
national securities exchange or quoted on the
NASDAQ quotation system, provided your involvement
with any such company is solely that of a
stockholder, and (ii) is intended to prevent you
from being employed during the one-year period
referred to herein for the foregoing non-
competitive business. In consideration for the
foregoing non-competitive agreement, if your
employment hereunder shall be terminated (i) by the
Company without cause therefor having been given it
by you, or (ii) as a result of the non-renewal of
this agreement upon expiration of the Initial Term
or any renewal term, then for a one-year period the
Company shall pay you at the rate of your Base
Salary in effect at the time of such termination.
(b) The parties hereto intend that the covenant
contained in this Section 7 shall be deemed a
series of separate covenants for each state, county
and city. If, in any judicial proceeding, a court
shall refuse to enforce all the separate covenants
deemed included in this Section 7, because, taken
together, they cover too extensive a geographic
area, the parties intend that those of such
covenants (taken in order of the states, counties
and cities therein which are least populous),
which, if eliminated would permit the remaining
separate covenants to be enforced in such
proceeding, shall, for the purpose of such
proceeding, be deemed eliminated from the
provisions of this Section 7.
<PAGE>
Leslie Holden
Page 5
8. Confidentiality Non-Interference, Inventions and
Proprietary Information.
8.1. Confidentiality. In the course of (i) your
employment by the Company hereunder, and (ii) your
prior employment with the Company, you will have
and have had access to confidential or proprietary
data or information of the Company. You will not
at any time divulge or communicate to any person
nor shall you direct any Company employee to
divulge or communicate to any person (other than to
a person bound by confidentiality obligations
similar to those contained herein and other than as
necessary in performing your duties hereunder) or
use to the detriment of the Company or for the
benefit of any other person, any of such data or
information. The provisions of this Section 8.1
shall survive your employment hereunder, whether by
the normal expiration thereof or otherwise. The
term "confidential or proprietary data or
information" as used in this agreement shall mean
information not generally available to the public,
including, without limitation, personnel
information, financial information, customer lists,
supplier lists, product and tooling specifications,
trade secrets, product composition and formulae,
tools and dies, drawings and schematics,
manufacturing processes, knowhow, computer and any
other processed or collated data, computer
programs, pricing, marketing and advertising data.
8.2 Non-Interference. You agree that you will not at
any time after the termination of your employment
by the Company, for your own account or for the
account of any other person, interfere with the
Company's relationship with any of its suppliers,
customers or employees; provided that your
employment by a competitor of the Company, if not
in violation of your non-competition agreement
contained in Section 7(a) above, and your
contraction of suppliers and customers in
connection therewith, if not in violation of
Section 8.1 above or Sections 8.3 or 8.4 below,
shall not constitute "interference" hereunder.
8.3 Inventions. It is understood that you may, during
your employment, conceive or develop certain
<PAGE>
Leslie Holden
Page 6
inventions, innovations or discoveries related to
any business in which the Company may be engaged,
either solely or jointly with others. In
connection with the conception or development
thereof, you agree to disclose promptly to the
Company all such inventions, innovations and
discoveries, to assign, and hereby do assign, to
the Company all of your right, title and interest
in and to said inventions, innovations and
discoveries, and to do all things and sign all
documents deemed by the Company to be necessary or
appropriate to vest in it, its successors and
assigns, all of your right, title and interest in
and to such inventions, innovations or discoveries
and to procure for it, at the Company's expense,
patents, copyrights and/or trademarks covering such
inventions, innovations or discoveries in the
United States and its possessions and in foreign
countries, at the discretion and under the
direction of the Company. In the event the Company
is unable for any reason to assure your signature
on such documents, you irrevocably appoint the
Company and its duly authorized officers and agents
as your agents and attorneys-in-fact to execute
such documents and to do such things with the same
legal force and effect as if executed or done by
you.
8.4 Return of Property. All written materials, records
and documents made by you or coming into your
possession during your employment concerning any
products, processes or equipment, manufactured,
used, developed, investigated or considered by the
Company or otherwise concerning the business or
affairs of the Company, shall be the sole property
of the Company, and upon termination of your
employment, or upon request of the Company during
your employment, you shall promptly deliver the
same to the Company. In addition, upon termination
of your employment, or upon request of the Company
during your employment, you will deliver to the
Company all other Company property in your
possession or under your control, including but not
limited to, financial statements, marketing and
sales data, patent applications, drawings and other
documents, and all Company credit cards and
automobiles.
<PAGE>
Leslie Holden
page 7
9. Equitable Relief. With respect to the covenants
contained in Sections 7 and 8 of this Agreement,
you agree that any remedy at law for any breach of said
convenants may be inadequate and that the Company shall
be entitled to specific performance or any other mode
of injunctive and/or other equitable relief to enforce
its rights hereunder or any other relief a court might
award.
10. Earlier Termination. Your employment hereunder shall
terminate prior to the Initial Term (or any renewal
term, in the event of renewal) on the following terms
and conditions:
(a) This agreement shall terminate automatically on the
date of your death. Notwithstanding the foregoing
the Company shall (i) continue to make payments to
your estate of your Base Salary as then in effect
pursuant to this agreement for six months after
your death, and (ii) pay your estate any
reimburseable expenses which otherwise would have
been paid to you to the date of your death.
(b) This agreement shall be terminated if you are
unable to perform your duties hereunder for a
period of any 180 days in any 365 consecutive day
period by reason of physical or mental disability.
For purposes of this agreement "physical or mental
disability" shall mean your inability, due to
health reasons to discharge properly your duties of
employment, supported by the opinion of a physician
satisfactory to both you and the Company. If the
parties do not agree on a physician mutually
satisfactory to both you and the Company within ten
days of written demand by one or the other, a
physician shall be selected by the president of the
Pennsylvania Medical Association, and the physician
shall, within 30 days thereafter, make a
determination as to whether disability exists and
certify the same in writing. Services of the
physician shall be paid for by the Company. You
shall fully cooperate with the examining physician
including submitting yourself to such examinations
as may be requested by the physician for the
purpose of determining whether you are disabled.
<PAGE>
Leslie Holden
Page 8
10. (c) This agreement shall terminate immediately upon the
Company's sending you written notice terminating
your employment hereunder for Cause. The Company
may terminate this Agreement for Cause, but only
after written notice specifying the Cause of such
action shall have been rendered to you by the
President and Chief Operating Officer of the
Company. "Cause" shall mean:
(i) Refusal or inability to perform duties assigned in
accordance with the terms of this Agreement or overt
and willful disobedience of orders or directives
issued to you by the Company and within the scope
of your duties to the Company.
(ii) Willful misconduct in the performance of your
duties, functions and responsibilities.
(iii) Conviction of commission of illegal acts in
connection with the performance of the duties under
this Agreement.
(iv) Conviction of any felony offense during the term of
this Agreement.
(v) Violation of Company rules and regulations
concerning conflict of interest.
(vi) Gross mismanagement of the assets of the Company.
(vii) Gross incompetency, gross insubordination or gross
neglect in the performance of your duties hereunder
or being under the habitual influence of alcohol
while on duty or possession, use, manufacture,
distribution, dispensation or sale of illegal drugs
while on or off duty.
If the Company terminates this Agreement for Cause under
this Section, the Company shall not be obligated to make any
further payments under this Agreement except for amounts due
at the time of such termination.
Existence of inability to perform or of Cause shall be
conclusively determined for all purposes hereunder by the
President and Chief Operating Officer of the Company. Such
advice and consultation shall be utilized as such officer
regards as appropriate, and no obligation or duty with
respect to any procedure or formality is created by this
Agreement.
<PAGE>
Leslie Holden
Page 9
11. Post-employment Benefits Coverage
(a) Your coverage under the benefits program provided
by the Company will cease effective on your
termination date. You will be entitled to elect
continuation of your medical and dental benefits at
your cost pursuant to the provision of the
Consolidated Omnibus Budget Reconciliation Act,
(COBRA). Details with regard to COBRA continuation
coverage will be provided to you following your
termination date.
(b) Life Insurance coverage will cease upon your
termination date. You may, however, apply to
Connecticut General Life Insurance Co. for an
individual converted life policy, with such
application and payment of the first premium
required to be accomplished within 31 days after
your termination date. Details regarding this
conversion option will be provided to you shortly
after your termination date.
(c) Accidental Death and Dismemberment and Long Term
Disability Coverages cease with your termination
date and may not be extended or converted.
12. Termination of Prior Agreement; Modification. This
Agreement constitutes the full and complete
understanding of the parties, and will, on the
Effective Date, supersede all prior agreements and
understandings, oral or written, between the parties.
This agreement may not be modified or amended except by
an instrument in writing signed by the party against
which enforcement thereof may be sought.
13. Entire Agreement. Each party to this Agreement
acknowledges that no representations, inducements,
promises or agreements, oral or written, have been made
by either party or anyone acting on behalf of either
party, which are not embodied herein and that no other
agreement, statement or promise not contained in this
Agreement shall be valid or binding.
<PAGE>
Leslie Holden
Page 10
14. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any Jurisdiction
shall, as to such jurisdiction, be ineffective to the
extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
15. Waiver of Breach. The waiver by either party of a
breach of any provision of this Agreement shall not
operate as or be construed as a waiver of any
subsequent breach.
16. Notices. All notices hereunder shall be in writing and
shall be sent by express mail or by certified or
registered mail, postage prepaid, return receipt
requested; if to you, to your residence as listed in
the Company's records; and if to the Company, to the
address set forth above with copies to Charterhouse
Group International, Inc., 535 Madison Avenue, New
York, New York 10022, Attention:
_____________________________________________________
_____________________________________________________
_____________________________________________________
17. Assignability; Binding Effect. This Agreement shall
not be assigned by you without the written consent of
the Board of Directors of the Company. This Agreement
shall be binding upon and inure to the benefit of you,
your legal representatives, heirs and distributees, and
shall be binding upon and inure to the benefit of the
Company, its successors and assigns.
18. Governing Law. All questions pertaining to the
validity, construction, execution and performance of
this Agreement shall be construed and governed in
accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to the conflicts or
choice of law provisions thereof.
<PAGE>
Leslie Holden
Page 11
19. Headings. The headings of this Agreement are intended
solely for convenience of reference and shall be given
no effect in the construction or interpretation of this
Agreement.
If this Agreement correctly sets forth our understanding,
please sign the duplicate original in the space provided
below and return it to the Company, whereupon this shall
constitute the employment agreement between you and the
Company effective and for the term as stated herein.
EXHIBIT 11
CHARTER POWER SYSTEMS, INC. AND SUBSIDIARIES
EARNINGS PER SHARE COMPUTATIONS
(Dollars and shares in thousands)
(Unaudited) (Unaudited)
Three months ended Six Months ended
July 31, July 31,
1995 1994 1995 1994
----- ----- ----- -----
NET INCOME $3,930 $2,170 $7,105 $4,178
===== ===== ===== =====
Weighted average number of
common shares outstanding 5,979 5,887 5,973 5,863
Effect of shares issuable
under stock option plan 455 282 441 253
------ ------ ----- -----
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING
(PRIMARY) 6,434 6,169 6,414 6,116
====== ====== ===== =====
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
(PRIMARY) $ .61 $ .35 $ 1.11 $ .68
====== ====== ===== =====
Weighted average number of
common shares outstanding 5,979 5,887 5,973 5,863
Effect of shares issuable
under stock option plan 468 313 448 294
------ ------ ------ ------
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING
(FULLY DILUTED) 6,447 6,200 6,421 6,157
====== ====== ====== ======
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
(FULLY DILUTED) $ .61 $ .35 $ 1.11 $ .68
====== ====== ===== =====
EXHIBIT 15
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
re: Charter Power Systems, Inc. and Subsidiaries
Registration on Forms S-8 (Registration No. 33-31978,
No. 33-71390 and No. 33-86672)
We are aware that our report dated August 21, 1995 on our review
of interim financial information of Charter Power Systems, Inc.
and Subsidiaries for the period ended July 31, 1995 and included
in the Company's quarterly report on Form 10-Q for the quarter
then ended is incorporated by reference in the registration
statements of Charter Power Systems, Inc. and Subsidiaries on
Forms S-8 (Registration No. 33-31978, No. 33-71390 and No.
33-86672). Pursuant to Rule 436(c) under the Securities Act of
1933, this report should not be considered a part of the
registration statement prepared or certified by us within the
meaning of Sections 7 and 11 of that Act.
\s\ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
September 11, 1995
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THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF 7/31/95 AND STATEMENT OF INCOME FOR THE
PERIOD ENDED 7/31/95 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 6-MOS
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<INVENTORY> 33312
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0
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