PRELIMINARY PROXY
May , 1998
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
C&D TECHNOLOGIES, INC. to be held on Tuesday, June 30, 1998, at 10:00 A.M., at
The Union League of Philadelphia, 140 South Broad Street, Philadelphia,
Pennsylvania. Your Board of Directors and management look forward to personally
greeting those stockholders able to attend.
This year, in addition to electing directors and ratifying the appointment
of Coopers & Lybrand L.L.P. as independent accountants for the Company, you are
being asked to consider and approve (i) an amendment to the Company's Restated
Certificate of Incorporation to increase the number of shares of Common Stock
the Company is authorized to issue to 75,000,000 and (ii) the C&D TECHNOLOGIES,
INC. 1998 Stock Option Plan covering option grants and/or issuances of up to
300,000 shares of Common Stock to eligible participants. Your Board of Directors
recommends that you vote FOR these proposals. They are more fully described in
the accompanying Proxy Statement, which you are urged to read carefully.
Whether or not you plan to attend, you can assure that your shares are
represented and voted at the Annual Meeting by promptly completing, signing,
dating and returning the enclosed proxy card in the envelope provided.
Thank you for your cooperation and continued support.
Sincerely,
ALFRED WEBER
Chairman of the Board,
President and Chief Executive Officer
<PAGE>
C&D TECHNOLOGIES, INC.
1400 Union Meeting Road
Blue Bell, Pennsylvania 19422
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 30, 1998
The Annual Meeting of Stockholders of C&D TECHNOLOGIES, INC. (the
"Company") will be held at The Union League of Philadelphia, 140 South Broad
Street, Philadelphia, Pennsylvania, on Tuesday, June 30, 1998, at 10:00 A.M.,
for the following purposes:
1. To elect directors of the Company for the ensuing year.
2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of shares of Common Stock the Company
is authorized to issue to 75,000,000.
3. To approve the C&D TECHNOLOGIES, INC. 1998 Stock Option Plan covering
option grants and/or issuances of up to 300,000 shares of Common Stock to
eligible participants.
4. To ratify the appointment of Coopers & Lybrand L.L.P. as independent
accountants for the Company for the fiscal year ending January 31, 1999.
5. To transact such other business as may properly come before the meeting and
any adjournments thereof.
The Board of Directors has fixed the close of business on May 11, 1998 as
the record date for the determination of stockholders entitled to notice of and
to vote at the meeting and at any adjournments thereof.
IF YOU ARE UNABLE TO BE PRESENT PERSONALLY, PLEASE SIGN AND DATE THE
ENCLOSED PROXY, WHICH IS BEING SOLICITED BY THE BOARD OF DIRECTORS, AND RETURN
IT PROMPTLY IN THE ENCLOSED ENVELOPE.
BY ORDER OF THE BOARD OF DIRECTORS
GLENN M. FEIT
SECRETARY
MAY , 1998
<PAGE>
C&D TECHNOLOGIES, INC.
1400 UNION MEETING ROAD
BLUE BELL, PENNSYLVANIA 19422
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 30, 1998
GENERAL INFORMATION
The accompanying proxy is solicited by and on behalf of the Board of
Directors of C&D TECHNOLOGIES, INC. (the "Company") to be used at the Annual
Meeting of Stockholders to be held at The Union League of Philadelphia, 140
South Broad Street, Philadelphia, Pennsylvania, on Tuesday, June 30, 1998, at
10:00 A.M., and at any adjournments thereof.
When the accompanying proxy is properly executed and returned, the shares
of common stock of the Company, par value $.01 per share (the "Common Stock"),
it represents will be voted at the meeting in accordance with any directions
noted thereon and, if no direction is indicated, the shares it represents will
be voted: (i) FOR the election of the nominees for directors set forth below;
(ii) FOR the approval of an amendment to the Company's Restated Certificate of
Incorporation to increase the number of shares of Common Stock the Company is
authorized to issue to 75,000,000; (iii) FOR the approval of the C&D
TECHNOLOGIES, INC. 1998 Stock Option Plan (the "Plan") covering option grants
and/or issuances of up to 300,000 shares of Common Stock to eligible
participants; (iv) FOR the ratification of the appointment of Coopers & Lybrand
L.L.P. as independent public accountants for the Company for the fiscal year
ending January 31, 1999; and (v) in the discretion of the holders of the proxy
with respect to any other business that may properly come before the meeting.
Any stockholder signing and delivering a proxy may revoke it at any time before
it is voted by delivering to the Secretary of the Company a written revocation
or a duly executed proxy bearing a date later than the date of the proxy being
revoked. Any stockholder attending the meeting in person may withdraw his proxy
and vote his shares.
The cost of this solicitation of proxies will be borne by the Company.
Solicitations will be made initially by mail; however, officers and regular
employees of the Company may solicit proxies personally or by telephone or
telegram. Those persons will not be compensated specifically for such services.
The Company may reimburse brokers, banks, custodians, nominees, and fiduciaries
holding shares of Common Stock in their names or in the names of their nominees
for their reasonable charges and expenses in forwarding proxies and proxy
material to the beneficial owners of such shares.
The approximate date on which this Proxy Statement first will be mailed to
stockholders of the Company is May , 1998.
VOTING RIGHTS
Only holders of record of shares of Common Stock at the close of
business on May 11, 1998 will be entitled to vote at the Annual Meeting of
Stockholders. On that date, there were outstanding
shares of Common Stock, the holders of which are entitled to one vote per
share on each matter to come before the meeting. Voting rights are
non-cumulative.
<PAGE>
The presence, in person or by proxy, of stockholders holding a majority of
the outstanding shares of Common Stock entitled to vote will constitute a quorum
at the Annual Meeting. Directors will be elected at the Annual Meeting by a
plurality of the votes cast (i.e., the seven nominees receiving the greatest
number of votes will be elected as directors). The amendment of the Company's
Restated Certificate of Incorporation requires the affirmative vote of a
majority of the outstanding shares of Common Stock entitled to vote thereon. The
ratification of the independent accountants, the approval of the Plan and any
other business that may properly come before the meeting and adjournments
thereof, requires the affirmative vote of a majority of the shares present in
person or represented by proxy. Abstentions and broker non-votes (which occur
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner) are counted for purposes of determining the presence or absence of a
quorum at the meeting. Abstentions are counted in tabulations of the votes cast
on proposals presented to stockholders, but broker non-votes are not counted for
purposes of determining whether a proposal has been approved.
PRINCIPAL STOCKHOLDERS
As of April 30 , 1998, the persons listed in the following table were the
only persons known to the Company (based solely on information set forth in
Schedules 13D, 13G and 13G/A filed with the Securities and Exchange Commission
or otherwise provided to the Company by these persons) to be the beneficial
owners of more than five percent of the Company's outstanding shares of Common
Stock.
Shares of
Name and address of Common Stock Percent
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
Westport Asset Management, Inc. (1)....... 520,100 8.4%
253 Riverside Avenue
Westport, Connecticut 06880
Paradigm Capital Management, Inc. (2)..... 426,400 6.9%
9 Elk Street
Albany, New York 12207
Kennedy Capital Management, Inc. (3)...... 405,992 6.6%
10829 Olive Boulevard
St. Louis, Missouri 63141
Shell Pensions Trust Limited (4).......... 397,200 6.4%
Shell Centre
London SE1 7NA
- --------------------
(1) Based on the Schedule 13G/A, dated February 20, 1998, filed by Westport
Asset Management, Inc. This party has shared voting and dispositive power
with respect to all the shares listed opposite its name in the table.
(footnotes continue on following page)
2
<PAGE>
(2) Based on the Schedule 13G/A, dated March 6, 1998, filed by Paradigm Capital
Management, Inc. This party has no voting power and sole dispositive power
with respect to all the shares listed opposite its name in the table.
(3) Based on the Schedule 13G, dated February 10, 1998, filed by Kennedy
Capital Management, Inc. This party has sole voting power with respect to
342,792 of the shares and sole dispositive power with respect to 405,992 of
the shares listed opposite its name in the table.
(4) Based on the Schedule 13D, dated February 2, 1996, filed by Shell Pensions
Trust Limited as Trustee of the Shell Contributory Pension Fund. This party
has sole voting and dispositive power with respect to all the shares listed
opposite its name in the table.
ELECTION OF DIRECTORS
At the Annual Meeting of Stockholders, the entire Board of Directors is to
be elected. In the absence of instructions to the contrary, the shares of Common
Stock represented by a proxy delivered to the Board of Directors will be voted
FOR the seven nominees named under "Management" below, each of whom is a current
director of the Company other than Pamela S. Lewis (Warren A. Law, a current
director, is retiring effective with the 1998 Annual Meeting of Stockholders).
Each nominee has consented to being named as a nominee in this Proxy Statement
and to serve if elected. However, if any such nominee should become unable to
serve as a director for any reason, votes will be cast instead for a substitute
nominee designated by the Board of Directors or, if none is so designated, will
be cast according to the judgment of the person or persons voting the proxy.
MANAGEMENT
The table below and the paragraphs that follow it present certain
information concerning the nominees for directors and the executive officers of
the Company. Directors are elected annually to serve until the next annual
meeting of stockholders and until their successors have been elected. Officers
are elected by and serve at the discretion of the Board of Directors. There are
no family relationships among any of the directors and executive officers of the
Company.
<TABLE>
<CAPTION>
Shares of
Common Stock
Positions and Beneficially Percent
Offices with Owned as of of
Nominees for Director the Company Age April 30, 1998 Class(6)
---------------------- ----------- --- -------------- --------
<S> <C> <C> <C> <C>
Alfred Weber (1)........................ Chairman of the Board, 66 194,923 3.1%
President and Chief
Executive Officer
Kevin P. Dowd (2)(3)(4)................. Director 49 500 *
Glenn M. Feit (3)....................... Director and Secretary 68 1,000 *
William Harral, III (3)(4)(5)........... Director 58 2,500 *
Pamela S. Lewis (2)..................... Nominee for Director 41 -- *
Alan G. Lutz (5)........................ Director 52 500 *
John A. H. Shober (2)(5)................ Director 64 2,000 *
(table continues on following page)
3
<PAGE>
EXECUTIVE OFFICERS WHO
ARE NOT DIRECTORS
A. Gordon Goodyear (1).................. Vice President and General 49 26,167 *
Manager - Power
Electronics Division
Leslie S. Holden (1).................... Vice President - Battery 61 7,655 *
Technology
Apostolos T. Kambouroglou (1)........... Vice President Operations 55 18,166 *
Robert T. Marley ....................... Treasurer 45 - *
Stephen E. Markert, Jr. (1)............. Vice President - Finance and 46 9,867 *
Chief Financial Officer
Larry W. Moore (1)...................... Vice President and General 55 500 *
Manager - Powercom Division
John J. Murray, Jr...................... Vice President and General 54 -
Manager - Motive Power Division
Stephen J. Weglarz (1).................. Vice President - Corporate 52 4,000 *
Services and Corporate Counsel
All directors and
officers as a group (15 persons)...... 267,778 4.2%
- ---------------
</TABLE>
* Less than 1% of outstanding shares of Common Stock
(1) The figures for shares of Common Stock beneficially owned as of April 30,
1998 include fully vested and presently exercisable options to purchase (a)
121,333 shares for Mr. Weber, (b) 26,167 shares for Dr. Goodyear, (c) 2,667
shares for Dr. Holden, (d) 16,166 shares for Mr. Kambouroglou, (e) 5,833
shares for Mr. Markert and (f) 4,000 shares for Mr. Weglarz. The figures
for Percent of Class assume, as to each individual only, that all shares
issuable to such individual upon exercise of his options have been issued.
(2) Member, or to become a member, of the Audit Committee.
(3) Member of the Compensation Committee.
(4) Member of the Stock Option Subcommittee of the Compensation Committee.
(5) Member of the Corporate Governance and Nominating Committee.
(6) Based upon shares outstanding as of April 30, 1998, excluding Treasury
Stock.
Alfred Weber has been President since joining the Company in April 1989,
became Chief Executive Officer in December 1992 and became Chairman of the Board
on November 1, 1995. From 1964 to 1987, Mr. Weber held various managerial
positions with Uniroyal, Inc. and its subsidiaries, rising to the position of
President and Chief Executive Officer of Uniroyal Plastics Company, Inc. Mr.
Weber is also a director of Microwave Power Devices, Inc. ("MPD"), a
manufacturer of power amplifiers and related subsystems for the wireless
telecommunications market, and a director and President of Battery Council
International, a worldwide manufacturers' association.
4
<PAGE>
Kevin P. Dowd has been a director of the Company since January 1997. He has
been President and Chief Executive Officer of Checkpoint Systems, Inc., a
manufacturer and supplier of electronic security systems for retail and
commercial customers, since January 1995. Mr. Dowd was President and Chief
Operating Officer from 1993 to 1995 and prior to that he served as the Executive
Vice President.
Glenn M. Feit has been a director and the Secretary of the Company since
January 1986. He is a member of the law firm of Proskauer Rose LLP, general
counsel to the Company. Mr. Feit has been engaged in the practice of law in New
York since 1957.
William Harral, III has been a director of the Company since July 1996. He
is currently Senior Counselor for The Tierney Group, a strategic communications
company. He was President and Chief Executive Officer of Bell Atlantic -
Pennsylvania, Inc. (formerly Bell of Pennsylvania) from 1994 to March 1997.
Prior to 1994 he held the position of Vice President - External Affairs and
Chief Financial Officer of Bell of Pennsylvania. Mr. Harral also served as a
director of Bell Atlantic - Pennsylvania, Inc. and serves on the board of The
Bryn Mawr Trust Company, a commercial bank.
Pamela S. Lewis, Ph.D., is a nominee for director at the Annual Meeting of
Stockholders. Dr. Lewis has been a Professor of Management and Dean of the
College of Business and Administration at Drexel University in Philadelphia,
Pennsylvania since June, 1997. From 1987 to 1997, she served on the faculty of
the College of Business at the University of Central Florida. During that time,
she also served as the Chair of the Department of Management and Director of the
Executive Education Center. In addition, Dr. Lewis currently serves on the Board
of Directors for the Pennsylvania Economy League.
Alan G. Lutz has been a director of the Company since July 1996. He is a
Senior Vice President and Group General Manager of the Communications Products
Group of Compaq Computer Corporation in Houston, Texas. He was Executive Vice
President and President of the Computer Systems Group at Unisys Corporation, an
information management company, from 1994 to 1996. From 1993 to 1994, he was a
consultant affiliated with the Kassandra Group. Prior to 1993, he was Senior
Vice President and President of the Public Networks Group of Northern Telecom,
Ltd., a manufacturer and distributor of telecommunications equipment.
John A. H. Shober has been a director of the Company since July 1996. He
has been a director of Penn Virginia Corporation, a natural resources company,
since 1989, Vice Chairman of the board of directors from 1992 to 1996, and
President and Chief Executive Officer from 1989 to 1992. Mr. Shober is Chairman
and a director of the Anker Coal Group and is also a director of Airgas, Inc., a
distributor of industrial gases and related products, BetzDearborn Inc., a
specialty chemical company, and is Vice Chairman and a director of MIBRAG mbH, a
German company principally involved in coal mining and electric power
production.
A. Gordon Goodyear, Ph.D., was, in April 1994, appointed Vice President and
General Manager International Power Systems, Inc., recently renamed the Power
Electronics Division. He joined the Company in March 1991 as Vice President and
General Manager - Power Electronics. Prior to joining the Company, Dr. Goodyear
was President of IRD Mechanalysis (Canada).
Leslie S. Holden, F.R.I.C., Ph.D., was appointed Vice President - Battery
Technology of the Company when he joined the Company in September 1989. Prior to
joining the Company, Dr. Holden was Director - Technology of Altus Corp., a
manufacturer of sealed recombinant calcium lead acid batteries primarily for the
uninterruptible power systems market.
Apostolos T. Kambouroglou was appointed Vice President Operations effective
November 1997. Prior to that he held the title of Vice President and General
Manager - Motive Power Systems from February 1995 until November 1997. He joined
the Company in March 1991 as Plant Manager of the Conyers, Georgia
5
<PAGE>
plant, and subsequently held the positions of Senior Director - Standby
Operations and Vice President - Operations, C&D Powercom. Prior to joining the
Company, Mr. Kambouroglou was President of Enicon Engineered Containers, Inc.
Robert T. Marley was appointed Treasurer of the Company in August 1995. He
joined the Company in 1991 as Manager of Treasury Services and later held the
position of Treasurer of the Company's subsidiaries. Prior to joining the
Company, Mr. Marley was the Treasury Manager with Kulicke & Soffa Industries,
Inc.
Stephen E. Markert, Jr. was appointed Vice President - Finance and Chief
Financial Officer in February 1995. He joined the Company in May 1989 as
Corporate Controller. Prior to that time, Mr. Markert was a divisional
controller of Decision Data Computer Corporation.
Larry W. Moore was appointed Vice President and General Manager - Powercom
Division in January 1997. He joined the Company in December 1996 as Vice
President of Marketing for C&D Powercom and Ratelco Electronics. From 1995 to
1996, he was President of MooreCom, a communications consulting firm he founded.
Prior to that time, through 1995, Mr. Moore spent over 30 years with AT&T where
he held various sales and marketing positions rising to Associate Vice
President, CATV Global Business Unit of Network Systems.
John J. Murray, Jr. was appointed Vice President and General Manager -
Motive Power Division in October 1997. Mr. Murray served in a variety of sales,
marketing and business management roles with E. I. DuPont de Nemours & Co. from
1965 to 1993. He was the Principal of a marketing and management consultancy
serving Fortune 500 clients from 1993 to 1995, Vice President of Marketing and
Sales for a national executive search company from 1995 to 1996 and Senior
Consultant for a global management consulting firm from 1996 to 1997.
Stephen J. Weglarz was appointed Vice President - Corporate Services and
Corporate Counsel in August 1995. He joined the Company in April 1990 as Manager
of Human Resources/Labor Counsel and subsequently held the position of Internal
General Counsel/Director of Labor Relations. Prior to joining the Company, Mr.
Weglarz was a partner in the law firm of Peckner, Dorfman, Wolffe, Rounick &
Cabot.
The Board of Directors has established a Compensation Committee (including
a Stock Option Subcommittee), an Audit Committee and a Corporate Governance and
Nominating Committee. The Compensation Committee reviews the compensation of
executives (including awards pursuant to the Company's Incentive Compensation
Plan) and through its Stock Option Subcommittee administers the Company's Stock
Option Plan. The Audit Committee, which is comprised of directors who are not
officers or employees of the Company, reviews the scope of the independent
audit, the Company's year-end financial statements and such other matters
relating to the Company's financial affairs as its members deem appropriate. The
Corporate Governance and Nominating Committee identifies and evaluates
candidates for election as members of the Board of Directors and reviews
corporate policies, it will consider nominees recommended by the stockholders of
the Company in writing to the Chairman of the Board.
The Board of Directors held four regular meetings and two special meetings
during the year ended January 31, 1998. The Compensation Committee and Audit
Committee each held two meetings and the Stock Option Subcommittee and Corporate
Governance and Nominating Committee each held one meeting. Each of the directors
attended 75% or more of the meetings of the Board of Directors and 50% or more
of the Special and Committee meetings of which he was a member in the year ended
January 31, 1998.
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information concerning annual and long-term
compensation paid by the Company for each of the last three fiscal years to its
Chairman of the Board, President and Chief Executive Officer and four other most
highly compensated executive officers as of January 31, 1998 whose total annual
salary and bonus from the Company for the year then ended exceeded $100,000.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Other Underlying All
Name Annual Options Other
& Principal Fiscal Salary Bonus Compensation Granted Compensation
Position Year ($) (1) ($) (2) ($) (3) (#) ($) (4)
- -------- ---- -------- -------- -------- ----- --------
<S> <C> <C> <C> <C> <C> <C>
Alfred Weber 1998 $430,161 $294,800 -- 12,000 $107,035 (5)
Chairman of 1997 392,312 191,500 $2,360,600 34,000 4,905
the Board, 1996 351,987 221,000 -- -- 4,680
President and
Chief Executive
Officer
A. Gordon Goodyear 1998 177,917 66,900 -- 6,000 4,783
Vice President 1997 165,833 60,000 -- 14,000 4,652
and General 1996 142,500 50,000 -- -- 8,740 (6)
Manager - Power
Electronics Division
Leslie S. Holden 1998 158,499 60,800 285,625 4,200 4,242
Vice President - 1997 151,684 34,000 -- 8,000 4,288
Battery Technology 1996 139,181 55,000 197,500 -- 4,454
Apostolos T. Kambouroglou 1998 166,441 60,600 -- 6,700 4,125
Vice President 1997 136,682 40,000 -- 10,000 3,634
Operations 1996 120,012 45,000 -- -- 3,040
Stephen E. Markert, Jr. 1998 145,921 66,000 50,625 4,500 4,773
Vice President - 1997 136,682 45,500 -- 10,000 4,877
Finance and Chief 1996 120,012 53,000 -- -- 1,967
Financial Officer
---------------
</TABLE>
(1) Does not include the value of certain personal benefits. The estimated
value of such personal benefits for each listed officer did not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus paid to that
officer for the relevant fiscal year.
(footnotes continue on following page)
7
<PAGE>
(2) Represents incentive compensation under the Company's Incentive
Compensation Plan. Also includes payments to Mr. Weber and Dr. Goodyear of
$20,000 each, and to Mr. Markert of $7,500 related to the acquisition of
Power Convertibles Corporation and LH Research, Inc. in fiscal 1997.
(3) Represents amounts earned relating to the exercise of stock options.
(4) Represents employer matching contributions under the Company's Savings
Plan.
(5) Includes $102,168 paid to Mr. Weber in fiscal 1998 to reimburse him, on an
after tax basis, for interest on a Promissory Note (see: Certain
Relationships and Related Transactions).
(6) Includes $4,560 relocation and tax gross-up reimbursement in fiscal 1996 .
- ---------------
The Company has entered into an employment agreement with Mr. Weber as of
April 1, 1996 providing for a base salary of $400,000 per year, increasing by
$35,000 per year in each of the next three years. The agreement has a term of
three years, and is thereafter renewable automatically for successive one-year
terms unless terminated by either party on three months advance notice. Mr.
Weber is subject to certain restrictions on competition with the Company for a
period of one year following termination of employment. If Mr. Weber's
employment is terminated without cause or as a result of nonrenewal of the
agreement, the Company is obligated to pay Mr. Weber his base salary in effect
at the date of the termination for a one-year period and continues certain
benefits for that period. If, after a Change in Control of the Company (as
defined in the employment agreement), Mr. Weber's employment is either
terminated by the Company (other than for death, disability or for cause) or not
renewed by the Company or is terminated by Mr. Weber for Good Reason (as defined
in the employment agreement), Mr. Weber will be entitled to receive a lump sum
severance payment. This payment generally will consist of two years of base
salary, plus two times the average annual bonus based on the past two fiscal
years. Under these circumstances, the Company will also continue medical and
certain other benefits for up to two years and accelerate the vesting of stock
options.
The Company has also entered into employment agreements with Drs. Goodyear
and Holden and Messrs. Kambouroglou and Markert. Their annual base salaries
under these agreements are subject to increase during the course of the year by
the Compensation Committee of the Board of Directors. Upon such review,
effective April 1998, the base salaries of Drs. Goodyear and Holden and Messrs.
Kambouroglou and Markert are $191,000, $165,000, $140,000 and $165,000,
respectively. Each of these agreements are renewable automatically for
successive terms of one month each, unless terminated by either party upon 60
days written notice. The agreements restrict each of Drs. Goodyear and Holden
and Messrs. Kambouroglou and Markert from competing with the Company for a
period of one year following the termination of his employment. Each of the
agreements also provide that if employment is terminated by the Company without
cause or as a result of the nonrenewal of the agreement, the Company is
obligated to pay the employee his base salary in effect at the date of
termination for a one-year period.
PENSION PLAN
The C&D TECHNOLOGIES, INC. Pension Plan for Salaried Employees (the
"Pension Plan") covers certain nonunion salaried employees of the Company who
either have participated in its predecessor company's pension plan or have
completed one year of service with the Company. The Pension Plan was amended
during 1994, 1995 and 1998 to provide participation to salaried employees of
certain of the Company's subsidiaries. The Pension Plan was amended in 1997 to
eliminate the one-year of service eligibility requirement for covered employees.
The Pension Plan is a qualified plan under Section 401(a) of the Internal
Revenue Code of 1986,
8
<PAGE>
as amended. The Pension Plan is a noncontributory defined benefit plan that
provides for normal retirement benefits beginning at age 65 but permits early
retirement benefits in certain cases, subject to a reduction of benefits for
employees who retire earlier than age 62. Under the Pension Plan, the pension
payable at normal or late retirement equals 2.1% of a participant's "average
pay" (as defined below) during the highest paid five consecutive years of the
participant's last ten years of employment multiplied by the number of years of
credited service up to 15 (including service with the Company's predecessor
company), plus 1.6% of such average pay for each year in excess of 15 years up
to a maximum of 15 additional years, reduced by .5% (the "Offset") of Covered
Compensation (35-year average of the Social Security wage base ending the year
prior to Social Security Normal Retirement Age) multiplied by the participant's
years of credited service up to 30 years. The term "average pay" as used in the
Pension Plan was amended January 1, 1994 to include salary, overtime, executive
incentive compensation, sales bonuses, 30% of sales commissions, and any tax
deferred contributions to the Company's savings plan. An unreduced disability
benefit is provided after ten years of eligibility service, and a death benefit
to a surviving spouse equal to approximately 50% of the value of the
participant's pension benefit at the time of death is provided after five years
of eligibility service or age 65. The Code places certain maximum limitations on
the amount of benefit which may be payable under a qualified pension plan such
as the Pension Plan. The current limitation on an employee's annual benefit is
the lesser of $125,000 or the employee's average compensation for the three
years that he was most highly compensated.
The following table illustrates the total estimated annual pension benefits
that would be provided upon retirement under the benefit formula described above
to salaried employees for the specified remuneration and years of credited
service classifications set forth below. Benefit amounts shown are computed on a
straight life basis, prior to the Offset described above.
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE (1)(2)(3)
-----------------------------------
Average Pay 5 10 20 30 40
----------- --- ---- ---- ---- ---
<S> <C> <C> <C> <C> <C>
$125,000.................. $13,125 $26,250 $49,375 $69,375 $69,375
150,000 ................ 15,750 31,500 59,250 83,250 83,250
160,000 or greater (4)... 16,800 33,600 63,200 88,800 88,800
- ---------------
</TABLE>
(1) It is expected that Mr. Weber, Dr. Goodyear, Dr. Holden, Mr. Kambouroglou
and Mr. Markert will have 10, 22, 13, 17 and 27 years of credited service,
respectively, at normal retirement.
(2) For the plan year ended December 31, 1997, the amount of remuneration, for
purposes of calculations under the Pension Plan, for Messrs. Weber,
Kambouroglou and Markert and Drs. Goodyear and Holden was $160,000.
(3) The maximum annual benefit of $125,000 will be reduced for pension benefits
which begin before, and increased for pension benefits which begin after,
the participant's Social Security Normal Retirement Age.
(4) Effective January 1, 1997, the maximum compensation limit is $160,000. The
limit was $150,000 from January 1, 1994 through December 31, 1996 and for
years prior to January 1, 1994 the limit was $235,840. After reflecting
these limits, Mr. Weber's projected retirement benefit is $40,535 prior to
the Offset.
9
<PAGE>
The Company has adopted two Supplemental Executive Retirement Plans
("SERPs"), one covering Mr. Weber and the other covering executives specified
from time to time by the Board of Directors (presently including each of the
named executive officers). The SERPs are non-qualified, unfunded defined benefit
compensation plans whose purpose is to provide additional retirement benefits to
participants whose benefits under the Pension Plan have been restricted by
federal law. The normal form of benefit under the SERPs for an unmarried
participant is a monthly annuity ceasing on the participant's death and for
married persons is a joint and survivor annuity, but other optional benefit
forms are available. The maximum annual benefit is $150,000 for Mr. Weber and
$100,000 for the other participants, in each case indexed annually by 4%
beginning September 30, 1998, and less (i) the annual accrued benefit as of the
retirement or other qualifying event (based on a monthly single life annuity)
payable with respect to Mr. Weber at age 66 and with respect to all other
participants at normal retirement age (as defined in the Pension Plan); (ii)
one-half of the participant's social security benefit as of the retirement or
other qualifying event; and (iii) the annual single life annuity payable at age
66 to Mr. Weber and at age 65 to all other participants based on the Actuarial
Equivalent (as defined in the SERPs) of the participant's account under the
Company's Savings Plan as of the retirement or other qualifying event solely
attributable to matching contributions made by the Company. The actual benefits
payable are the percentages set forth below of the maximum annual benefit, based
on the number of years of employment prior to retirement or other qualifying
event:
Years of Employment
PRIOR TO QUALIFYING EVENT PERCENTAGE BENEFIT
less than 7.5 0%
7.5 50%
8 53.3%
9 60%
10 66.7%
11 73.3%
12 80%
13 86.7%
14 93.3%
15 or more 100%
For Mr. Weber, if the qualifying event is a change of control or the
expiration of his employment agreement, the actual benefit is determined by
multiplying the maximum annual benefit by 100%. For other participants who have
been continuously employed by the Company or an affiliate for at least five
years, if the qualifying event is a change of control, the actual benefit is
determined by multiplying the maximum annual benefit by a fraction (not to
exceed 1), the numerator of which is the number of years the participant would
have been employed if he were continuously employed by the Company or an
affiliate through age 65, and the denominator of which is 15. For other
participants who have been continuously employed by the Company or an affiliate
for less than five years, the actual benefit is 50% of the amount referred to in
the previous sentence. A participant's SERP benefit may be forfeited in certain
circumstances including where the participant is terminated for cause or
violates a covenant not to compete.
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<PAGE>
OPTION GRANTS IN FISCAL 1998
The following table presents certain information concerning the stock
options granted by the Company to its Chairman of the Board, President and Chief
Executive Officer and four named executive officers pursuant to the Company's
Stock Option Plan in the year ended January 31, 1998.
<TABLE>
<CAPTION>
Individual Grants
-----------------
Number of % of Total Grant
Securities Options Exercise Date
Underlying Granted to Price Present
Options Granted Employees in per Expiration Value
Name (#) Fiscal Year Share Date (3) ($)(4)
- ---- ------------------------- --------------- --------- ---------- -------
<S> <C> <C> <C> <C> <C>
Alfred Weber 12,000 (1) 8.5% $45.875 09/30/07 $219,480
A. Gordon Goodyear 6,000 (1) 4.2% $45.875 09/30/07 109,740
Leslie S. Holden 4,200 (1) 3.0% $45.875 09/30/07 76,818
Apostolos T. Kambouroglou 4,200 (1) 3.0% $45.875 09/30/07 76,818
Apostolos T. Kambouroglou 2,500 (2) 1.8% $34.500 02/01/07 34,625
Stephen E. Markert, Jr. 4,500 (1) 3.2% $45.875 09/30/07 82,305
- ---------------
</TABLE>
(1) The first 33 1/3% of the shares covered by the Option shall vest on
September 30, 1998. The second 33 1/3% of the shares covered by the Option
shall vest on September 30, 1999 and the remaining 33 1/3% of the shares
covered by the Option shall vest on September 30, 2000.
(2) The first 33 1/3% of the shares covered by the Option vested on February 1,
1998. The second 33 1/3% of the shares covered by the Option shall vest on
February 1, 1999. The remaining 33 1/3% of the shares covered by the Option
shall vest on February 1, 2000.
(3) Each option is subject to earlier termination if the officer's employment
with the Company is terminated.
(4) The stock options were valued using the Black-Scholes pricing model.
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<PAGE>
OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL 1998 YEAR-END OPTION VALUES
The following table presents certain information concerning the amount and
value of all unexercised stock options held by the Company's Chairman of the
Board, President and Chief Executive Officer and four named executive officers
as of January 31, 1998.
<TABLE>
<CAPTION>
Value of Unexercised In-
Number of Securities the-Money Options at 1/31/98
Underlying Unexercised ----------------------------
Shares Options at 1/31/98 Exercisable Unexercisable
Acquired ------------------ ----------- -------------
on Value
Exercise Realized Exercisable Unexercisable Shares Value (1) Shares Value (1)
Name (#) ($) (#) (#) (#) ($) (#) ($)
- ---- -------- -------- ----------- ------------- ------ -------- ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Alfred Weber -- -- 121,333 34,667 121,333 $4,653,158 34,667 $599,842
A. Gordon Goodyear -- -- 26,167 15,333 26,167 946,405 15,333 250,158
Leslie S. Holden 13,000 $285,625 2,667 9,533 2,667 66,342 9,533 145,258
Apostolos T. -- -- 15,333 13,367 15,333 546,033 13,367 214,380
Kambouroglou
Stephen E. Markert, Jr. 1,500 50,625 5,833 11,167 5,833 175,096 11,167 179,342
- --------------------
</TABLE>
(1) Represents the excess of (i) the number of shares covered by the option
multiplied by the closing price for shares of Common Stock ($48.875 a
share) on January 31, 1998 over (ii) the aggregate exercise price of the
option.
COMPENSATION OF DIRECTORS
For periods prior to the 1998 Annual Meeting of Stockholders, the Company
paid non-employee directors an annual retainer of $10,000, plus $1,000 for each
meeting of the Board of Directors or any of its committees or subcommittees
attended. Commencing with the 1998 Annual Meeting of Stockholders, the Company
has agreed to pay non-employee directors (i) an annual retainer of $12,000
(payable in stock or in a combination of stock and a sufficient amount of cash
to pay income taxes owing on that amount), (ii) $1,000 for each in-person
meeting and $500 for each telephonic meeting of the Board of Directors attended
and (iii) each chairperson of a committee of the Board of Directors shall be
paid at the rate of $1,500 for each in-person meeting or $500 for each
telephonic meeting of any committees of subcommittees attended; and, in
addition, subject to the approval by the stockholders of the Company of the C&D
TECHNOLOGIES, INC. 1998 Stock Option Plan, to grant annually to each
non-employee director options to purchase 1,000 shares of common stock. The
Company believes that the new non-employee director compensation structure is
more typical of similarly situated companies than the old structure.
COMPOSITION OF COMPENSATION COMMITTEE
During fiscal 1998 the Compensation Committee consisted of Messrs. Dowd,
Feit, Harral and Law. The Stock Option Subcommittee thereof consisted of Messrs.
Dowd, Harral and Law.
12
<PAGE>
COMPENSATION COMMITTEE REPORT
COMPENSATION PHILOSOPHY. The principal goal of the Company's compensation
program as administered by the Compensation Committee is to help the Company
attract, motivate and retain the executive talent required to develop and
achieve the Company's strategic and operating goals with a view to maximizing
shareholder value. The key elements of this program and the objectives of each
element are as follows:
BASE SALARY
o Establish base salaries that are competitive with those payable to
executives holding comparable positions at similar-sized
industrial companies.
o Provide periodic base salary increases as appropriate, consistent
with the Company's overall operating and financial performance,
with a view to rewarding successful individual performance and
keeping pace with competitive compensation practices.
ANNUAL INCENTIVE
o Encourage both superlative individual effort and effective "team
play" by creating potential for earning annual incentive awards
based in part on Company achievement of budgeted earnings
objectives and in part on achievement of individual performance
objectives measuring the individual executive's contribution to
the key performance targets of the internal business unit within
which the executive functions or for which he is responsible.
o Set potential awards at levels that offer covered executives the
opportunity to earn incentive amounts equal to a significant
percentage (ordinarily at least 35% for the most senior
executives) of their base salaries for full achievement of all
Company and individual objectives, with the opportunity to
selectively grant even larger awards to recognize outstanding
individual performance.
LONG-TERM INCENTIVE
o Facilitate the alignment of executives' interests with those of
the Company's shareholders by providing opportunities for
meaningful stock ownership.
SUMMARY OF ACTIONS TAKEN WITH RESPECT TO THE CHIEF EXECUTIVE OFFICER
At least once a year, and at more frequent periodic intervals when
deemed necessary in individual cases, the Compensation Committee
reviews the performance of the Company's executive officers with Mr.
Weber, the Chairman of the Board. The Compensation Committee also
reviews the performance of Mr. Weber at least once a year. The actions
taken by the Compensation Committee for the year ended January 31, 1998
with respect to the named executive officers are described and
discussed below.
BASE SALARY. The Company has employment agreements with its
principal executive officers that provide for annual reviews of their
base salary. Pursuant to the agreement with Mr. Weber, at the end of
fiscal year 1998, his base salary was $435,000.
13
<PAGE>
ANNUAL INCENTIVE. Criteria for earning incentive awards pursuant
to the Company's Incentive Compensation Plan for the fiscal year ended
January 31, 1998 were established for the principal executive officers
by the Compensation Committee early in the fiscal year, based in part
on substantial achievement of the Company's budgeted earnings per share
and in part on achievement of specified individual performance
objectives.
Based on Company and individual performance and the report of an
independent consultant who examined the Company's compensation
policies, the Compensation Committee granted a bonus award to Mr. Weber
in the amount of $294,800.
STOCK OPTIONS. Based on the report of an independent consultant
who examined the Company's compensation policies, the Stock Option
Subcommittee of the Compensation Committee granted Mr. Weber options to
purchase 12,000 shares of the Company's common stock in September 1997.
Kevin P. Dowd
Glenn M. Feit
William Harral, III
Warren A. Law
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Feit, Harral and Law served on the Compensation Committee for the
entire fiscal year ended January 31, 1998 and Mr. Dowd has served on the
Compensation Committee since June 1997.
Mr. Feit is a member of the law firm of Proskauer Rose LLP, which provides
legal services to the Company, and also owns 1,000 shares of Common Stock. Mr.
Dowd owns 500 shares of Common Stock, Mr. Harral owns 2,500 shares of Common
Stock and Professor Law owns 1,500 shares of Common Stock.
14
<PAGE>
STOCK PRICE PERFORMANCE GRAPH
The following graph compares on a cumulative basis the yearly percentage
change, assuming quarterly dividend reinvestment over the last five fiscal
years, in the total shareholder return on the Common Stock, with the total
return on the New York Stock Exchange Market Value Index (the "NYSE Market Value
Index"), a broad entity market index and (b) the total return on a selected peer
group index (the "SIC Code Peer Group Index"). The SIC Code Peer Group is based
on the standard industrial classification codes ("SIC Codes") established by the
government. The index chosen was "Miscellaneous Electrical Equipment and
Supplies" and is comprised of all publicly traded companies having the same
3-digit SIC Code (369) as the Company. The price of each unit has been set at
$100 on January 31, 1993 for the purpose of preparation of the graph.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
Among C&D TECHNOLOGIES, INC., NYSE Market Value
Index and SIC Code Peer Group Index
Performance Results through January 31, 1998
Fiscal Year Company NYSE Peer Group
----------- ------- ---- ----------
1993 100.0 100.0 100.0
1994 219.1 117.5 145.5
1995 386.3 112.0 159.2
1996 495.7 151.8 193.6
1997 648.2 186.0 231.7
1998 921.1 233.2 326.4
15
<PAGE>
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers, and beneficial owners of more than 10% of the
Company's Common Stock to file with the Securities and Exchange Commission
initial reports of ownership and periodic reports of changes in ownership of the
Company's Common Stock and to provide copies of such filings to the Company.
Based upon a review of such copies and written representations, the Company
believes that for the year ended January 31, 1998, none of the persons required
to file forms under Section 16(a) failed to file them on time, except that one
Form 5 for Stephen J. Weglarz was filed after the due date.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On April 30, 1996, Mr. Weber exercised an option to purchase 110,000 shares
of Common Stock at $6.04 per share, pursuant to an Option Agreement dated May
30, 1989, as amended. The options would have expired on April 30, 1996 had they
not been exercised. Under the terms of the Option Agreement, Mr. Weber paid the
exercise price with an interest-free promissory note in the original principal
amount of $664,400 that was secured by the shares received on exercise. The note
matured on October 31, 1997, and was repaid. The Company loaned Mr. Weber
$1,057,138 to pay the tax withholding on the exercise of such option, evidenced
by a promissory note (the "Weber Tax Note"), bearing interest at 5.33% per annum
payable annually, and due on April 29, 1997, subject to extension until April
29, 1999 at the option of Mr. Weber. Mr. Weber extended the note on April 29,
1997 until April 29, 1999, but repaid it in full on April 29, 1998. The Weber
Tax Note was secured by 90,000 of the shares received on exercise of such
option. The Company further agreed to make payments to Mr. Weber in an amount
sufficient to reimburse him, on an after-tax basis, for all interest on the
Weber Tax Note incurred through the earlier of April 29, 1997 or the prepayment
of the Weber Tax Note.
PROPOSAL TO APPROVE AMENDMENT TO
RESTATED CERTIFICATE OF INCORPORATION TO
INCREASE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has approved a proposed amendment to the Company's
Restated Certificate of Incorporation which would increase the number of shares
of Common Stock the Company is authorized to issue to seventy-five million
(75,000,000).
The Company is currently authorized to issue ten million (10,000,000)
shares of Common Stock. The proposed increase in authorized shares is being made
primarily to provide the Company with the flexibility to issue additional shares
as consideration in future mergers and/or acquisitions, to declare stock
dividends or effect stock splits, to raise additional capital and to issue
additional shares for other general corporate purposes. Although there are, at
present, no plans, understandings, agreements or arrangements concerning the
issuance of additional shares of the Company's Common Stock except for those
shares presently reserved for issuance, the Board of Directors believes that it
is in the best interest of the Company to have a sufficient number of shares
available to take advantage of opportunities as they arise.
Authorized but unissued shares of the Company's Common Stock may be issued
for such consideration as the Board of Directors determines to be adequate. The
stockholders may or may not be given the opportunity to vote thereon, depending
upon the nature of any such transactions, applicable law, the rules
16
<PAGE>
and policies of The New York Stock Exchange and the judgement of the Board of
Directors. Stockholders have no preemptive rights to subscribe to newly issued
shares of Common Stock.
The Board of Directors recommends that shareholders vote FOR approval of
the amendment to the Restated Certificate of Incorporation to increase the
number of shares of Common Stock the Company is authorized to issue.
APPROVAL OF THE C&D TECHNOLOGIES, INC.
1998 STOCK OPTION PLAN
The Board of Directors has adopted the Plan and directed that it be
submitted to the stockholders for approval. The following description is
qualified in its entirety by the provisions of the Plan, a copy of which is
annexed hereto as Exhibit A.
PURPOSE. The purpose of the Plan is to enhance the profitability and value
of the Company for the benefit of the Company's stockholders by enabling the
Company to offer employees and consultants of the Company or its Affiliates, as
well as directors of the Company who are not employees of the Company
("Non-Employee Directors"), options ("Stock Options") to purchase Common Stock
and to offer Non-Employee Directors shares of Common Stock. The intent of such
offering is to create a means to raise the level of stock ownership by these
persons in order to attract, retain and reward them and strengthen the mutuality
of interests between them and the Company's stockholders.
TERM. The Plan has been adopted by the Board of Directors effective as of
June 30, 1998 (the "Effective Date"), subject to and conditioned upon
stockholder approval at the Annual Meeting of Stockholders.
ADMINISTRATION. The Plan will be administered by a committee or
subcommittee of the Board of Directors appointed from time to time by the Board
(the "Committee"), consisting of two or more directors qualified as
"non-employee directors" under Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 ("Rule 16b-3"), as amended, and "outside directors" under
Section 162(m) of the Code ("Section 162(m)"). All questions of interpretation
and application of the Plan will be determined by the Committee.
PARTICIPATION. All employees and consultants of the Company and its
Affiliates, and all Non-Employee Directors (collectively, the "Participants"),
are eligible to receive Stock Options, and the actual recipients who are
employees (including executive officers) and consultants will be determined by
the Committee; the actual Participants, number of shares and exercise price of
Stock Options to be granted in any year, or which would have been granted in the
last fiscal year if the Plan had been in effect, are not determinable at this
time. All Non-Employee Directors will receive both shares of Common Stock and
Stock Options; the value of the shares of Common Stock and, if applicable, cash,
is $12,000 per director per year, as described below (an aggregate of $72,000 of
such shares and cash, or 2,014 shares if no cash payments were elected, would
have been granted if the Plan had been in effect in the last fiscal year), and
the number of Stock Options will be 1,000 per director per year, at an exercise
price that is not determinable at this time (an aggregate of 6,000 Stock Options
would have been granted to Non-Employee Directors, at an exercise price of
$35.75 per share, if the Plan had been in effect in the last fiscal year).
SHARES OF STOCK AVAILABLE FOR GRANT. The number of Stock Options that may
be granted to any person under the Plan is subject to two limitations: (i) the
aggregate number of shares of Common Stock which may be issued and with respect
to which Stock Options may be granted may not exceed 300,000 shares, which may
be either authorized and unissued Common Stock or Common Stock held in or
acquired
17
<PAGE>
for the treasury of the Company and (ii) the maximum number of shares of Common
Stock with respect to which Stock Options may be granted during any calendar
year of the Company to any employee is 100,000 shares (both limitations being
subject to adjustment by the Committee, in the event of stock dividend, stock
split or any other change in capital structure or business of the Company). If
any stock option expires, terminates or is canceled for any reason without
having been exercised in full, the number of shares of Common Stock underlying
any unexercised option will again be available under the Plan. To the extent
that shares of Common Stock for which Stock Options are permitted may be granted
to a Participant during a calendar year of the Company are not covered by a
grant of a Stock Option in the Company's calendar year, such shares of Common
Stock will be available for grant or issuance to the Participant in any
subsequent calendar year during the term of the Plan.
STOCK OPTIONS. The Plan provides for the grant of incentive stock options
("ISOs") and nonqualified stock options ("NQSOs"). The Committee will have the
full authority to grant to any employee of the Company or a majority-owned
subsidiary one or more ISOs, NQSOs or both types of Stock Options. The Committee
will also have the full authority to grant to any employee of another Affiliate
of the Company or a Consultant one or more NQSOs.
The exercise price per share of Common Stock subject to a Stock Option
granted to an employee or consultant will be determined by the Committee, at the
time of grant but may not be less than 100% of the fair market value of a share
of Common Stock at the time of grant; PROVIDED, HOWEVER, that if an ISO is
granted to a ten percent stockholder of the Company or its subsidiaries ("Ten
Percent Stockholder"), the exercise price per share may be no less than 110% of
the fair market value of the Common Stock. The term of such Stock Option will be
fixed by the Committee, but no Stock Option will be exercisable more than 10
years after the date the Stock Option is granted; PROVIDED, HOWEVER, that the
term of an ISO granted to a Ten Percent Stockholder may not exceed five years.
On the date of the Annual Meeting of Stockholders of the Company held in
1998 and in each year thereafter while shares of Common Stock remain available
for the grant of Stock Options hereunder, each Non-Employee Director will be
automatically granted, as part of his annual retainer, NQSOs to purchase 1,000
shares of Common Stock. A Non-Employee Director who is first elected or
appointed to the Board after the Annual Meeting of Stockholders in any year will
upon such election or appointment automatically be granted a PRO RATA portion of
the NQSOs referred to in the preceding sentence, based upon the portion of the
period between Annual Meetings of Stockholders that such Non-Employee Director
is expected to serve in such capacity. The option exercise price per share of
Common Stock subject to such NQSO grant will be equal to 100% of the fair market
value of Common Stock at the time of grant, exercisable immediately upon grant.
Except as otherwise provided in the Plan, if not previously exercised each such
NQSO will expire upon the tenth anniversary of the date of the grant thereof.
GRANT OF SHARES OF COMMON STOCK TO NON-EMPLOYEE DIRECTORS. In addition to
Stock Options, Non-Employee Directors will be automatically granted, on the date
of the Annual Meeting of Stockholders of the Company held in 1998 and on the
date of the Annual Meeting of Stockholders of the Company held in each year
thereafter in which shares of Common Stock remain available for grant under the
Plan, shares of Common Stock having fair market value of $12,000 or, at election
of each Non-Employee Director made in writing to the Chief Financial Officer of
the Company within 30 days prior to the date of grant, a combination of such
shares and an amount of cash sufficient for such Non-Employee Director to pay
the federal, state and local income taxes he or she may reasonably be expected
to owe as a result of the receipt of such shares of Common Stock (as determined
by the Committee). Any Non-Employee Director who is first elected or appointed
to the Board after the grant of shares of Common Stock under the Plan in any
year, will upon such election or appointment be automatically granted a PRO RATA
portion of the shares of Common Stock and cash referred to in the preceding
sentence, based upon the portion of the period between Annual Meetings of
Stockholders that such Non-Employee Director is expected to serve in such
capacity.
18
<PAGE>
FEDERAL TAX CONSEQUENCES. The rules concerning the federal income tax
consequences with respect to Stock Options are highly technical. In addition,
the applicable statutory provisions are subject to change and their application
may vary in individual circumstances. Therefore, the following is designed to
provide a general understanding of the federal income tax consequences; it does
not set forth any state or local income tax or estate tax consequences that may
be applicable.
INCENTIVE STOCK OPTIONS. Stock Options granted under the Plan may be
"incentive stock options" as defined in the Code, provided that such Stock
Options satisfy the requirements under the Code therefor. In general, neither
the grant nor the exercise of an ISO will result in taxable income to the
Participant or a deduction to the Company. The sale of Common Stock received
pursuant to the exercise of a Stock Option which satisfied all the requirements
of an ISO, as well as the holding period requirement described below, will
result in a long-term capital gain or loss to the optionee equal to the
difference between the amount realized on the sale and the exercise price and
will not result in a tax deduction to the Company. To receive ISO treatment, the
Participant must not dispose of the Common Stock purchased pursuant to the
exercise of a Stock Option either (i) within two years after the Stock Option is
granted or (ii) within one year after the date of exercise. If the Common Stock
is held for more than eighteen months after the date of exercise the Participant
will be taxed at a lower rate applicable to capital gains for such Participant.
Capital gains rates may be further reduced in the case of a longer holding
period.
If all requirements for ISO treatment other than the holding period rules
are satisfied, the recognition of income by the Participant is deferred until
disposition of the Common Stock, but, in general, any gain (in an amount equal
to the lesser of (i) the fair market value of the Common Stock on the date of
exercise (or, with respect to officers, the date that sale of such stock would
not create liability ("Section 16(b) liability") under Section 16(b) of the
Exchange Act) minus the exercise price or (ii) the amount realized on the
disposition minus the exercise price) is treated as ordinary income. Any
remaining gain is treated as long-term or short-term capital gain depending on
the Participant's holding period for the stock disposed of. The Company
generally will be entitled to a deduction at that time equal to the amount of
ordinary income realized by the Participant.
The Plan provides that a Participant may pay for Common Stock received upon
the exercise of a Stock Option (including an ISO) with other shares of Common
Stock held for at least six months. In general a Participant's transfer of stock
acquired pursuant to the exercise of an ISO, to acquire other stock in
connection with the exercise of an ISO may result in ordinary income if the
transferred stock has not met the minimum statutory holding period necessary for
favorable tax treatment as an ISO. For example, if a Participant exercises an
ISO and uses the stock so acquired to exercise another ISO within the two-year
or one-year holding periods discussed above, the Participant may realize
ordinary income under the rules summarized above.
NON-QUALIFIED STOCK OPTIONS. A Participant will realize no taxable income
at the time he or she is granted a NQSO. Such conclusion is predicated on the
assumption that, under existing Treasury Department regulations, a NQSO, at the
time of its grant, has no readily ascertainable fair market value. Ordinary
income will be realized when a NQSO is exercised. The amount of such income will
be equal to the excess of the fair market value on the exercise date of the
shares of Common Stock issued to a Participant over the exercise price. The
Participant's holding period with respect to the shares acquired will begin on
the date of exercise.
The tax basis of the Common Stock acquired upon the exercise of any NQSO
will be equal to the sum of (i) the exercise price of such NQSO and (ii) the
amount included in income with respect to such NQSO. Any gain or loss on a
subsequent sale of the Common Stock will be either a long-term or short-term
capital gain or loss, depending on the Participant's holding period for the
Common Stock disposed of. Subject to the limitation under Sections 162(m) and
280G of the Code (as described below), the Company
19
<PAGE>
generally will be entitled to a deduction for federal income tax purposes at the
same time and in the same amount as the Participant is considered to have
realized ordinary income in connection with the exercise of the NQSO.
CERTAIN OTHER TAX ISSUES. In addition, (i) officers of the Company subject
to Section 16(b) liability may be subject to special rules regarding the income
tax consequences concerning their awards; (ii) any entitlement to a tax
deduction on the part of the corporation is subject to the applicable federal
tax rules (including, without limitation, Section 162(m) of the Code regarding
the $1,000,000 limitation on deductible compensation); (iii) in the event that
the exercisability or vesting of any award is accelerated because of an
Extraordinary Transaction, payments relating to the awards (or a portion
thereof), either alone or together with certain other payments, may constitute
parachute payments under Section 280G of the Code, which excess amounts may be
subject to excise taxes and may be nondeductible by the Company; and (iv) the
exercise of an ISO may have implications in the computation of alternative
minimum taxable income.
In general, Section 162(m) of the Code denies a publicly held corporation a
deduction for federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its chief executive officer and the four other
officers whose compensation is disclosed in its proxy statement, subject to
certain exceptions. Stock Options will generally qualify under one of these
exceptions if they are granted under a plan that states the maximum number of
shares with respect to which options may be granted to any employee during a
specified period and the plan under which the options are granted is approved by
stockholders and is administered by a compensation committee comprised of
outside directors. The Plan is intended to satisfy these requirements with
respect to Stock Options.
The Plan is not subject to any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended. The Plan is not, nor is it
intended to be, qualified under Section 401(a) of the Code.
TERMINATION OR AMENDMENT OF PLAN. Notwithstanding any other provision of
the Plan, the Committee may at any time, and from time to time, amend,
prospectively or retroactively, in whole or in part, any or all of the
provisions of the Plan, or suspend or terminate it entirely, retroactively or
otherwise; PROVIDED, HOWEVER, that, unless otherwise required by law or
specifically provided in the Plan, the rights of a Participant with respect to
Stock Options granted prior to such amendment, suspension or termination, may
not be impaired without the consent of such Participant; and PROVIDED FURTHER,
without the approval of the stockholders of the Company in accordance with the
laws of the State of Delaware, to the extent required by the applicable
provisions of Rule 16b-3 or Section 162(m), or with respect to ISOs, Section 422
of the Code, no amendment may be made which would: (a) increase the aggregate
number of shares of Common Stock that may be issued under the Plan; (b) increase
the maximum individual Participant limitations for a fiscal year under the Plan;
(c) change the classification of employees and Consultants eligible to receive
awards under the Plan; (d) decrease the minimum exercise price of any Stock
Option; or (e) extend the maximum option term under the Plan.
EXTRAORDINARY TRANSACTION. In the event of an Extraordinary Transaction (as
defined in the Plan), the Committee may, in its sole discretion, terminate all
outstanding Stock Options, effective as of the date of the Extraordinary
Transaction, by delivering notice of termination to each such Participant at
least 30 days prior to the date of consummation of the Extraordinary
Transaction; PROVIDED, that during the period from the date on which such notice
of termination is delivered to the consummation of the Extraordinary
Transaction, each such Participant shall have the right to exercise in full all
his or her Stock Options that are then outstanding (whether vested or not
vested) but contingent on the occurrence of the Extraordinary Transaction;
PROVIDED, FURTHER, that, if the Extraordinary Transaction does not take place
within a specified period after giving such notice for any reason whatsoever,
the notice and exercise shall be null and void.
RECOMMENDATION. The Board of Directors recommends a vote FOR the approval
of the C&D TECHNOLOGIES, INC. 1998 Stock Option Plan.
20
<PAGE>
RATIFICATION OF INDEPENDENT ACCOUNTANTS
Based upon the recommendation of the Audit Committee, the Board of
Directors has reappointed Coopers & Lybrand L.L.P. as the Company's independent
accountants for the fiscal year ending January 31, 1999. In the absence of
instructions to the contrary, the shares of Common Stock represented by a proxy
delivered to the Board of Directors will be voted FOR the ratification of the
appointment of Coopers & Lybrand L.L.P. A representative of Coopers & Lybrand
L.L.P. is expected to be present at the Annual Meeting of Stockholders and will
be available to respond to appropriate questions and make such statements as he
may desire.
The Board of Directors recommends a vote FOR the ratification of Coopers &
Lybrand L.L.P. as the Company's independent accountants for the fiscal year
ending January 31, 1999.
STOCKHOLDER PROPOSALS
Stockholders of the Company who intend to submit proposals at the 1999
Annual Meeting of Stockholders must submit such proposals to the Company no
later than January 21, 1999. Stockholder proposals should be submitted to C&D
TECHNOLOGIES, INC., 1400 Union Meeting Road, Blue Bell, Pennsylvania 19422
Attention: Vice President - Finance and Chief Financial Officer.
ANNUAL REPORT
The Company's Annual Report for the fiscal year ended January 31, 1998 is
being mailed together with this Proxy Statement to those persons who were
stockholders of record of the Company at the close of business on May 11, 1998.
This Proxy Statement incorporates by reference to the Company's Annual Report on
Form 10-K filed with the Securities and Exchange Commission (which is included
within the Annual Report accompanying this Proxy Statement) the financial
statements, supplementary financial information and management's discussion and
analysis of financial condition and results of operations contained therein.
OTHER BUSINESS
The Board of Directors does not know of any other business to be presented
to the meeting and does not intend to bring any other matters before the
meeting. However, if any other matters properly come before the meeting or any
adjournments thereof, it is intended that the persons named in the accompanying
proxy will vote thereon according to their best judgment in the interests of the
Company.
BY ORDER OF THE BOARD OF DIRECTORS
GLENN M. FEIT
SECTRETARY
STOCKHOLDERS ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED, SELF-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN
THE UNITED STATES. YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION
WILL BE APPRECIATED.
21
<PAGE>
PROXY
C&D TECHNOLOGIES, INC.
1400 UNION MEETING ROAD, BLUE BELL, PENNSYLVANIA 19422
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS ON JUNE 30, 1998.
The undersigned hereby appoints ALFRED WEBER, STEPHEN E. MARKERT, JR. and
GLENN M. FEIT, or any of them, with the power of substitution, as proxies and
hereby authorizes them to represent and to vote, as designated below, all shares
of Common Stock of C&D TECHNOLOGIES, INC. (the "Company") held of record by the
undersigned at the close of business on May 11, 1998, at the Annual Meeting of
Stockholders to be held on Tuesday, June 30, 1998, and at any adjournments
thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 AND 4.
1. ELECTION OF DIRECTORS:
o FOR ALL NOMINEES LISTED BELOW (EXCEPT AS MARKED TO THE CONTRARY BELOW):
Alfred Weber Kevin P. Dowd Glenn M. Feit Pamela S. Lewis
Alan G. Lutz William Harral, III John A. H. Shober
o WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED ABOVE.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. APPROVAL OF AN AMENDMENT TO THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK THE COMPANY
IS AUTHORIZED TO ISSUE TO 75,000,000:
o FOR o AGAINST o ABSTAIN
3. APPROVAL OF THE C&D TECHNOLOGIES, INC. 1998 STOCK OPTION PLAN:
o FOR o AGAINST o ABSTAIN
4. RATIFICATION OF THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT
ACCOUNTANTS FOR THE FISCAL YEAR ENDING JANUARY 31, 1999:
o FOR o AGAINST o ABSTAIN
(Continued and to be SIGNED on other side)
<PAGE>
(Continued from other side)
5. In their discretion, the Proxies are authorized to vote upon any other
business that may properly come before the meeting and any adjournments
thereof.
WHEN PROPERLY EXECUTED THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4. PLEASE SIGN EXACTLY
AS NAME APPEARS BELOW.
Dated: _____________________________________________, 1998
---------------------------------------------------------
Signature
---------------------------------------------------------
Signature, if held jointly
Please sign exactly as your name appears on this Proxy. If
shares are registered in more than one name, the signatures
of all such persons are required. A corporation should sign
in its full corporate name by a duly authorized officer,
stating such officer's title. Trustees, guardians, executors
and administrators should sign in their official capacity
giving their full title as such. A partnership should sign
in the partnership name by an authorized person, stating
such person's title and relationship to the partnership.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.
<PAGE>
EXHIBIT INDEX
Exhibit A - C&D TECHNOLOGIES, INC. 1998 Stock Option Plan.
<PAGE>
EXHIBIT A
C&D TECHNOLOGIES, INC.
1998 STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I. PURPOSE..............................................A-1
ARTICLE II. DEFINITIONS..........................................A-1
ARTICLE III. ADMINISTRATION.......................................A-3
ARTICLE IV. SHARE AND OTHER LIMITATIONS..........................A-5
ARTICLE V. STOCK OPTIONS........................................A-6
ARTICLE VI. NON-EMPLOYEE DIRECTOR STOCK OPTIONS..................A-8
ARTICLE VII. GRANT OF SHARES OF COMMON STOCK
TO NON-EMPLOYEE DIRECTORS............................A-10
ARTICLE VIII. NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT/CONSULTANCY PROVISIONS....................A-10
ARTICLE IX. TERMINATION OR AMENDMENT OF PLAN.....................A-12
ARTICLE X. UNFUNDED PLAN........................................A-12
ARTICLE XI. GENERAL PROVISIONS...................................A-12
ARTICLE XII. EFFECTIVE DATE OF PLAN...............................A-14
ARTICLE XIII. TERM OF PLAN.........................................A-14
ARTICLE XIV. NAME OF PLAN.........................................A-14
(i)
<PAGE>
C&D TECHNOLOGIES, INC.
1998 STOCK OPTION PLAN
ARTICLE I.
PURPOSE
The purpose of the C&D TECHNOLOGIES, INC. 1998 Stock Option Plan (the
"PLAN") is to enhance the profitability and value of C&D TECHNOLOGIES, INC. (the
"COMPANY") and its Affiliates for the benefit of the Company's stockholders by
enabling the Company to offer Eligible Employees and Consultants of the Company
and its Affiliates, as well as Non-Employee Directors of the Company, Stock
Options in the Company (and, in the case of Non-Employee Directors, shares of
Common Stock), thereby creating a means to raise the level of stock ownership by
Eligible Employees, Consultants and Non-Employee Directors in order to attract,
retain and reward such individuals and strengthen the mutuality of interests
between such individuals and the Company's stockholders.
ARTICLE II.
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
"AFFILIATE" shall mean other than the Company, (i) any Subsidiary; or (ii)
any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is controlled 50% or more
(whether by ownership of stock, assets or an equivalent ownership interest
or voting interest) by the Company or one of its Affiliates.
"BOARD" shall mean the Board of Directors of the Company.
"CAUSE" shall mean (i) if the Participant is a party to an employment
agreement with the Company or an Affiliate, the grounds for termination for
cause thereunder and (ii) in all other cases, whatever a court of competent
jurisdiction would consider grounds for termination for cause under the
circumstances.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, including
the rules and regulations thereunder. Any reference to any section of the
Code shall also be a reference to any successor provision.
"COMMITTEE" shall mean a committee or subcommittee of the Board appointed
from time to time by the Board, which committee or subcommittee shall
consist of two or more non-employee directors, each of whom is intended to
be, to the extent required by Rule 16b-3 and Section 162(m) of the Code, a
"non-employee director" as defined in Rule 16b-3 and an "outside director"
as defined under Section 162(m) of the Code. To the extent that no
Committee exists which has the authority to administer this Plan, the
functions of the Committee shall be exercised by the Board. If for any
reason the appointed Committee does not meet the requirements of Rule 16b-3
or Section 162(m) of the Code, such noncompliance with the requirements of
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<PAGE>
Rule 16b-3 and Section 162(m) of the Code shall not affect the validity of
awards, grants, interpretations or other actions of the Committee.
"COMMON STOCK" shall mean the common stock, $.01 par value, of the Company.
"COMPANY" shall mean C&D TECHNOLOGIES, INC., a Delaware corporation.
"CONSULTANT" shall mean any natural person who is an adviser or consultant
to the Company or its Affiliates.
"DISABILITY" shall mean total and permanent disability, as defined in
Section 22(e)(3) of the Code.
"EFFECTIVE DATE" shall mean the effective date of this Plan as defined in
ARTICLE XII.
"ELIGIBLE EMPLOYEE" shall mean any employee of the Company or its
Affiliates. Notwithstanding the foregoing, with respect to the grant of
Incentive Stock Options, Eligible Employee shall mean any employee of the
Company or any Subsidiary.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended.
"EXTRAORDINARY TRANSACTION" shall have the meaning set forth in SECTION
4.2(d).
"FAIR MARKET VALUE", unless otherwise required by any applicable provision
of the Code or any regulations issued thereunder, shall mean, as of any
date, the last sales price reported for the Common Stock on the applicable
date: (i) as reported on the principal national securities exchange on
which it is then traded or the Nasdaq Stock Market, Inc. or (ii) if not
traded on any such national securities exchange or the Nasdaq Stock Market,
Inc., as quoted on an automated quotation system sponsored by the National
Association of Securities Dealers. If the Common Stock is not readily
tradable on a national securities exchange, the Nasdaq Stock Market, Inc.,
or any automated quotation system sponsored by the National Association of
Securities Dealers, its Fair Market Value shall be set in good faith by the
Committee.
"INCENTIVE STOCK OPTION" shall mean any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422
of the Code.
"NON-EMPLOYEE DIRECTOR" shall mean any director of the Company who is not
an employee of the Company or any Affiliate.
"NON-QUALIFIED STOCK OPTION" shall mean any Stock Option that is not an
Incentive Stock Option.
"PARTICIPANT" shall mean any Eligible Employee, Consultant or Non-Employee
Director to whom a Stock Option has been granted.
"RULE 16b-3" shall mean Rule 16b-3 under Section 16(b) of the Exchange Act
as then in effect or any successor provisions.
"SECTION 162(m) OF THE CODE" shall mean the exception for performance-based
compensation under Section 162(m) of the Code.
A-2
<PAGE>
"STOCK OPTION" shall mean any option to purchase shares of Common Stock
granted to Eligible Employees or Consultants pursuant to ARTICLE V or
granted to Non-Employee Directors pursuant to ARTICLE VI.
"SUBSIDIARY" shall mean any subsidiary corporation of the Company within
the meaning of Section 424(f) of the Code.
"TEN PERCENT STOCKHOLDER" shall mean a person owning stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company, any Subsidiary or any parent corporation, as defined in Section
424(e) of the Code.
"TERMINATION OF CONSULTANCY" shall mean, with respect to a Consultant, that
the Consultant is no longer acting as a Consultant to the Company and its
Affiliates. In the event an entity shall cease to be an Affiliate, there
shall be deemed a Termination of Consultancy of any individual who is a
consultant of that entity and is not otherwise a Consultant of the Company
or another Affiliate at the time the entity ceases to be an Affiliate.
"TERMINATION OF DIRECTORSHIP" shall mean, with respect to a Non-Employee
Director, that the Non-Employee Director has ceased to be a director of the
Company.
"TERMINATION OF EMPLOYMENT" shall mean: (i) a termination of service of a
Participant from the Company and its Affiliates; or (ii) when an entity
which is employing a Participant ceases to be an Affiliate, unless the
Participant thereupon becomes employed by the Company or another Affiliate.
"TRANSFER" OR "TRANSFERRED" shall mean anticipate, alienate, attach, sell,
assign, pledge, encumber, charge or otherwise transfer.
ARTICLE III.
ADMINISTRATION
3.1. THE COMMITTEE. This Plan shall be administered and interpreted by the
Committee. Subject to the other provisions of this Plan, the Committee or the
Board, as applicable, shall have the authority to adopt, alter and repeal such
administrative rules governing this Plan and perform all acts, including the
delegation of its administrative responsibilities, as it shall, from time to
time, deem advisable; to construe and interpret this Plan and any Stock Option
granted hereunder (and any agreements relating thereto). The Committee may
correct any defect, supply any omission or reconcile any inconsistency in this
Plan or in any agreement relating thereto in the manner and to the extent it
shall deem necessary to carry this Plan into effect, but only to the extent any
such action would be permitted under the applicable provisions of both Rule
16b-3 and Section 162(m) of the Code. The Committee may adopt rules for persons
who are residing in, or subject to, the taxes of, countries other than the
United States to comply with applicable tax and securities laws. To the extent
applicable, this Plan is intended to comply with the applicable requirements of
Rule 16b-3 and Section 162(m) of the Code and shall be limited, construed and
interpreted in a manner so as to comply therewith. The Board, its directors, the
Committee, its members and any person to whom authority is delegated pursuant to
this SECTION 3.1 shall not be liable for any action or determination made in
good faith with respect to this Plan.
A-3
<PAGE>
3.2. AWARDS. The Committee shall have full authority to grant Stock Options
to Eligible Employees and Consultants and to otherwise administer this Plan. In
particular, the Committee or the Board, as applicable, shall have the authority:
(a) to select Eligible Employees and Consultants to whom Stock Options
may from time to time be granted hereunder;
(b) to determine the number of shares of Common Stock to be covered by
each Stock Option granted to an Eligible Employee or Consultant, and the
terms and conditions of the Stock Option (including, but not limited to,
the exercise or purchase price (if any), any restriction or limitation, any
vesting schedule or acceleration thereof or any forfeiture restrictions or
waiver thereof, regarding any Stock Option, and the shares of Common Stock
relating thereto, based on such factors, if any, as the Committee shall
determine in its sole discretion);
(c) to modify or extend a Stock Option, subject to SECTION 9.1 herein;
and
(d) to offer to buy out a Stock Option previously granted, based on
such terms and conditions as the Committee or the Board, as applicable,
shall establish and communicate to the Participant at the time such offer
is made.
3.3. DECISIONS FINAL. Any decision, interpretation or other action made or
taken in good faith by or at the direction of the Company, the Board or the
Committee (or any of its members) arising out of or in connection with this Plan
shall be within the absolute discretion of the Company, the Board or the
Committee, as the case may be, and shall be final, binding and conclusive on the
Company and its Affiliates and all employees and Participants and their
respective heirs, executors, administrators, successors and assigns.
3.4. RELIANCE ON COUNSEL. The Company, the Board or the Committee may
consult with legal counsel, who may be counsel for the Company or other counsel,
with respect to its obligations or duties hereunder, or with respect to any
action or proceeding or any question of law, and shall not be liable with
respect to any action taken or omitted by it in good faith pursuant to the
advice of such counsel. The Company, the Board or the Committee may also engage
consultants or agents with regard to the plan. Expenses incurred by the
Committee or Board in the engagement of any such counsel, consultant or agent
shall be paid by the Company.
3.5. PROCEDURES. If the Committee is appointed, the Board shall designate
one of the members of the Committee as chairman and the Committee shall hold
meetings, subject to the By-Laws of the Company, at such times and places as the
Committee shall deem advisable. A majority of the Committee members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all the Committee members in accordance with the By-Laws of the
Company shall be fully as effective as if it had been made by a vote at a
meeting duly called and held.
A-4
<PAGE>
ARTICLE IV.
SHARE AND OTHER LIMITATIONS
4.1. SHARES.
(a) The aggregate number of shares of Common Stock which may be
issued and with respect to which Stock Options may be granted under
this Plan shall not exceed 300,000 shares (subject to any increase or
decrease pursuant to SECTION 4.2) which may be either authorized and
unissued Common Stock or Common Stock held in or acquired for the
treasury of the Company. If any Stock Option expires, terminates or is
canceled for any reason without having been exercised in full, the
number of shares of Common Stock underlying any unexercised Stock
Option shall again be available under this Plan. In addition, in
determining the number of shares of Common Stock available under the
Plan other than for the granting of Incentive Stock Options, if Common
Stock has been exchanged by a Participant as full or partial payment
to the Company in connection with the exercise of a Stock Option, the
number of shares of Common Stock exchanged as payment in connection
with the exercise shall again be available under this Plan.
(b) The maximum number of shares of Common Stock with respect to
which Stock Options may be granted under this Plan during any calendar
year of the Company to each Eligible Employee shall be 100,000 shares
(subject to any increase or decrease pursuant to this SECTION 4.2). To
the extent that shares of Common Stock for which Stock Options are
permitted to be granted to a Participant pursuant to SECTION 4.1(b)
during a calendar year of the Company are not covered by a grant of a
Stock Option in the Company's calendar year, such shares of Common
Stock shall be available for grant or issuance to the Participant in
any subsequent calendar year during the term of this Plan.
4.2. CHANGES.
(a) The existence of this Plan and the shares of Common Stock and
Stock Options granted hereunder shall not affect in any way the right
or power of the Board or the stockholders of the Company to make or
authorize any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business, any merger
or consolidation of the Company or Affiliates, any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting
Common Stock, the authorization or issuance of additional shares of
Common Stock, the dissolution or liquidation of the Company or
Affiliates, any sale or transfer of all or part of its assets or
business or any other corporate act or proceeding.
(b) In the event of any change in the capital structure or
business of the Company by reason of any stock dividend, stock split
or reverse stock split, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares,
distribution with respect to its outstanding Common Stock or capital
stock other than Common Stock, reclassification of its capital stock,
any sale or transfer of all or part of the Company's assets or
business, or any similar change affecting the Company's capital
structure or business, and the Committee or the Board, as applicable,
determines an adjustment is appropriate under this Plan, then the
aggregate number and kind of shares which thereafter may be issued
under this Plan, the number and kind of shares or other property
(including cash) to be issued upon exercise of an outstanding Stock
Option granted under this Plan and the purchase or exercise price
thereof shall be appropriately adjusted consistent with such change in
A-5
<PAGE>
such manner as the Committee or the Board, as applicable, may deem
equitable to prevent substantial dilution or enlargement of the rights
granted to, or available for, Participants under this Plan or as
otherwise necessary to reflect the change, and any such adjustment
determined by the Committee or the Board, as applicable, in good faith
shall be binding and conclusive on the Company and all Participants
and employees and their respective heirs, executors, administrators,
successors and assigns.
(c) Fractional shares of Common Stock resulting from any
adjustment in Stock Options pursuant to SECTION 4.2(a) OR (b) shall be
aggregated until, and eliminated at, the time of exercise by
rounding-down for fractions less than one-half and rounding-up for
fractions equal to or greater than one-half. No cash settlements shall
be made with respect to fractional shares eliminated by rounding.
Notice of any adjustment shall be given by the Committee or the Board,
as applicable, to each Participant whose Stock Option has been
adjusted and such adjustment (whether or not such notice is given)
shall be effective and binding for all purposes of this Plan.
(d) In the event of (i) a merger or consolidation in which the
Company is not the surviving entity or in which the Company is the
surviving entity but the holders of the Common Stock outstanding
immediately prior to the consummation of the transaction are not the
holders of a majority of the Common Stock outstanding immediately
subsequent to the transaction, or (ii) in the event of any transaction
that results in the acquisition of all or substantially all of the
Company's outstanding Common Stock by a single person or entity or by
a group of persons and/or entities acting in concert, or in the event
of the sale or transfer of all or substantially all of the Company's
assets (all of the foregoing being referred to as "EXTRAORDINARY
TRANSACTIONS"), then in any such event the Committee may, in its sole
discretion, terminate all outstanding Stock Options, effective as of
the date of the Extraordinary Transaction by delivering notice of
termination to each such Participant at least 30 days prior to the
date of consummation of the Extraordinary Transaction; PROVIDED, that
during the period from the date on which such notice of termination is
delivered to the consummation of the Extraordinary Transaction, each
such Participant shall have the right to exercise in full all of his
or her Stock Options that are then outstanding (whether vested or not
vested) but contingent on the occurrence of the Extraordinary
Transaction; PROVIDED, FURTHER, that, if the Extraordinary Transaction
does not take place within a specified period after giving such notice
for any reason whatsoever, the notice and exercise shall be null and
void. If an Extraordinary Transaction occurs, to the extent the
Committee does not terminate the outstanding Stock Options pursuant to
this SECTION 4.2(d), then the provisions of SECTION 4.2(b) shall
apply.
ARTICLE V.
STOCK OPTIONS
5.1. STOCK OPTIONS. Each Stock Option granted hereunder shall be one of two
types: (i) an Incentive Stock Option intended to satisfy the requirements of
Section 422 of the Code, or (ii) a Non- Qualified Stock Option.
5.2. GRANTS. The Committee shall have the authority to grant to any
Eligible Employee one or more Incentive Stock Options, Non-Qualified Stock
Options, or both types of Stock Options. To the extent that any Stock Option
does not qualify as an Incentive Stock Option (whether because of its provisions
or the time or manner of its exercise or otherwise), such Stock Option or the
portion thereof which does not so qualify, shall constitute a separate
Non-Qualified Stock Option. The Committee shall
A-6
<PAGE>
have the authority to grant to any Consultant one or more Non-Qualified Stock
Options. Notwithstanding any other provision of this Plan to the contrary or any
provision in an agreement evidencing the grant of an Stock Option to the
contrary, any Stock Option granted to an Employee of an Affiliate (other than a
Subsidiary), a Non-Employee Director or a Consultant shall be a Non-Qualified
Stock Option.
5.3. TERMS OF STOCK OPTIONS. Stock Options shall be subject to the
following terms and conditions, and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee or the Board, as applicable, shall deem desirable:
(a) The exercise price per share of Common Stock subject to a
Stock Option granted under this ARTICLE V shall be determined by the
Committee or the Board, as applicable, at the time of grant but shall
not be less than 100% of the Fair Market Value of a share of Common
Stock at the time of grant; provided, however, that if an Incentive
Stock Option is granted to a Ten Percent Stockholder, the exercise
price per share shall be no less than 110% of the Fair Market Value of
the Common Stock.
(b) The term of each Stock Option shall be fixed by the Committee
or the Board, as applicable, but no Stock Option shall be exercisable
more than 10 years after the date the Stock Option is granted;
PROVIDED, HOWEVER, the term of an Incentive Stock Option granted to a
Ten Percent Stockholder may not exceed five years.
(c) Stock Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the
Committee or the Board, as applicable, at the time of grant. If the
Committee or the Board provides, in its discretion, that any Stock
Option is exercisable subject to certain limitations (including,
without limitation, that it is exercisable only in installments or
within certain time periods), the Committee or the Board, as
applicable, may waive such limitations on the exercisability at any
time at or after the time of grant in whole or in part, based on such
factors, if any, as the Committee or the Board shall determine in its
sole discretion.
(d) Subject to whatever installment exercise and waiting period
provisions apply under SECTION 6.3(c), Stock Options may be exercised
in whole or in part at any time during the Stock Option term, by
giving written notice of exercise to the Company specifying the number
of shares to be purchased. Common Stock purchased pursuant to the
exercise of a Stock Option shall be paid for at the time of exercise
as follows: (i) in cash or by check, bank draft or money order payable
to the order of Company; (ii) if the Common Stock is traded on a
national securities exchange, the Nasdaq Stock Market, Inc. or quoted
on a national quotation system sponsored by the National Association
of Securities Dealers, through the delivery of irrevocable
instructions to a broker to deliver promptly to the Company an amount
equal to the purchase price; or (iii) on such other terms and
conditions as may be acceptable to the Committee or the Board, as
applicable (which may include payment in full or part in the form of
Common Stock owned by the Participant (and for which the Participant
has good title free and clear of any liens and encumbrances) based on
the Fair Market Value of the Common Stock on the payment date as
determined by the Committee or the Board or the surrender of vested
Stock Options owned by the Participant). No shares of Common Stock
shall be issued until payment therefor, as provided herein, has been
made or provided for.
(e) To the extent that the aggregate Fair Market Value
(determined as of the time of grant) of the Common Stock with respect
to which Incentive Stock Options are exercisable for the
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<PAGE>
first time by an Eligible Employee during any calendar year under this
Plan and/or any other stock option plan of the Company, any Subsidiary
or any parent corporation (within the meaning of Section 424(e) of the
Code) exceeds $100,000, such Stock Options shall be treated as
NonQualified Stock Options. In addition, if an Eligible Employee's
employment by the Company, a Subsidiary or a parent corporation
(within the meaning of Section 424(e) of the Code) terminates more
than three months prior to the date of exercise (or such other period
as required by applicable law), such Stock Option shall be treated as
a Non-Qualified Stock Option. Should the foregoing provision not be
necessary in order for the Stock Options to qualify as Incentive Stock
Options, or should any additional provisions be required, the
Committee may amend this Plan accordingly, without the necessity of
obtaining the approval of the stockholders of the Company.
(f) Subject to the terms and conditions of this Plan, a Stock
Option shall be evidenced by such form of agreement or grant as is
approved by the Committee or the Board, as applicable, and the
Committee or the Board may modify, extend or renew outstanding Stock
Options granted under this Plan (provided that the rights of a
Participant are not reduced without his consent), or accept the
surrender of outstanding Stock Options (up to the extent not
theretofore exercised) and authorize the granting of new Stock Options
in substitution therefor (to the extent not theretofore exercised).
(g) Stock Options may contain such other provisions, which shall
not be inconsistent with any of the foregoing terms of this Plan, as
the Committee shall deem appropriate including, without limitation,
permitting "reloads" such that the same number of Stock Options are
granted as the number of Stock Options exercised, shares used to pay
for the exercise price of Stock Options or shares used to pay
withholding taxes ("RELOADS"). With respect to Reloads, the exercise
price of the new Stock Option shall be the Fair Market Value on the
date of the "reload" and the term of the Stock Option shall be the
same as the remaining term of the Stock Options that are exercised, if
applicable, or such other exercise price and term as determined by the
Committee.
ARTICLE VI.
NON-EMPLOYEE DIRECTOR STOCK OPTIONS
6.1. STOCK OPTIONS. The terms of this ARTICLE VI shall apply only to Stock
Options granted to Non-Employee Directors.
6.2. GRANTS. On the date of the Annual Meeting of Stockholders of the
Company held in 1998, and on the date of the Annual Meeting of Stockholders of
the Company in each year thereafter while shares of Common Stock remain
available for the grant of Stock Options hereunder, each Non-Employee Director
shall be automatically granted Stock Options to purchase 1,000 shares of Common
Stock. A Non-Employee Director who is first elected or appointed to the Board
after the Annual Meeting of Stockholders in any year shall upon such election or
appointment automatically be granted a PRO RATA portion of the Stock Options
referred to in the preceding sentence, based upon the portion of the period
between Annual Meetings of Stockholders that such Non-Employee Director is
expected to serve in such capacity.
6.3. NON-QUALIFIED STOCK OPTIONS. Stock Options granted under this ARTICLE
VI shall be Non- Qualified Stock Options.
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6.4. TERMS OF OPTIONS. Stock Options granted under this ARTICLE VI shall be
subject to the following terms and conditions and shall be in such form and
contain such additional terms and conditions, not inconsistent with terms of
this Plan, as the Board shall deem desirable:
(a) The exercise price per share of Common Stock subject to a Stock
Option granted pursuant to SECTION 6.2 shall be equal to 100% of the Fair
Market Value of Common Stock at the time of grant.
(b) Stock Options granted under this ARTICLE VI shall be exercisable
immediately upon grant.
(c) A Non-Employee Director electing to exercise one or more Stock
Options shall give written notice of exercise to the Company specifying the
number of shares to be purchased. Common Stock purchased pursuant to the
exercise of a Stock Option shall be paid for as provided in SECTION 5.3(d).
No shares of Common Stock shall be issued until payment therefore, as
provided herein, has been made or provided for.
(d) Except as otherwise provided herein, if not previously exercised
each Stock Option shall expire upon the tenth anniversary of the date of
the grant thereof.
(e) Stock Options granted to a Non-Employee Director under this
ARTICLE VI shall be subject to SECTION 4.2.
6.5. TERMINATION OF DIRECTORSHIP. The following rules apply with regard to
Stock Options granted under this ARTICLE VI upon a Termination of Directorship:
(a) Except as otherwise provided herein, upon a Termination of
Directorship on account of death or Disability, all then outstanding Stock
Options shall remain exercisable by the Participant or, in the case of
death, by the Participant's estate or by the person given authority to
exercise such Stock Options by his or her will or by operation of law, at
any time within a period of one year from the date of such Termination of
Directorship, but in no event beyond the expiration of the stated term of
such Stock Option.
(b) Except as otherwise provided herein, upon a Termination of
Directorship, on account of retirement, resignation, failure to stand for
reelection or failure to be reelected or otherwise other than as set forth
in (c) below, all then outstanding Stock Options shall remain exercisable
at any time within a period of one year from the date of such Termination
of Directorship, but in no event beyond the expiration of the stated term
of such Stock Option; PROVIDED, HOWEVER, that, if the Participant dies
within such exercise period, any unexercised Stock Option held by such
Participant shall thereafter be exercisable by the Participant's estate or
by the person given authority to exercise such Stock Options by his or her
will or by operation of law, to the extent to which it was exercisable at
the time of death, for a period of one year (or such other period as the
Committee may specify at grant or, if no rights of the Participant's estate
are reduced, thereafter) from the date of such death, but in no event
beyond the expiration of the stated term of such Stock Option.
(c) Upon removal, failure to stand for reelection or failure to be
renominated for any reason that would constitute grounds for removal of a
director for cause under Delaware law, or if the Company obtains or
discovers information after Termination of Directorship that such
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Participant had engaged in conduct that would have justified removal for
cause during his or her directorship, all outstanding Stock Options of such
Participant shall immediately terminate and shall be null and void.
ARTICLE VII.
GRANT OF SHARES OF COMMON STOCK
TO NON-EMPLOYEE DIRECTORS
7.1. On the date of the Annual Meeting of Stockholders of the Company held
in 1998, and on the date of the Annual Meeting of Stockholders of the Company
held in each year thereafter in which shares of Common Stock remain available
for grant hereunder, each Non-Employee Director shall be automatically granted
shares of Common Stock having a Fair Market Value on such date of $12,000.
Alternatively, at the election of an Eligible Director made in writing to the
Chief Financial Officer of the Company within 30 days prior to the date of
grant, the Eligible Director may choose to receive a combination of (i) a number
of shares of Common Stock having a Fair Market Value equal to the excess of
$12,000 over the amount of cash referred to in CLAUSE (II) of this sentence, and
(ii) an amount of cash sufficient for such Non-Employee Director to pay the
federal, state and local income taxes he or she may reasonably be expected to
owe as a result of the receipt of such shares of Common Stock (as determined by
the Committee). Any Eligible Director who is first elected or appointed to the
Board after the grant of shares of Common Stock hereunder in any year, shall
upon such election or appointment be automatically granted a PRO RATA portion of
the shares of Common Stock or cash referred to in the preceding sentence, based
upon the portion of the period between Annual Meetings of Stockholders that such
Non-Employee Director serves in such capacity. The Committee hereby approves
each election to receive cash or stock hereunder.
7.2. Shares of Common Stock granted hereunder shall not be subject to any
restrictions under this Plan except as provided in ARTICLE XI.
ARTICLE VIII.
NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT/CONSULTANCY PROVISIONS
8.1. Except as otherwise provided in this SECTION 8.1, no Stock Option
shall be Transferred by the Participant otherwise than by will or by the laws of
descent and distribution. All Stock Options shall be exercisable, during the
Participant's lifetime, only by the Participant. Any attempt to Transfer any
Stock Option shall be void, and no such Stock Option shall in any manner be used
for the payment of, subject to, or otherwise encumbered by or hypothecated for
the debts, contracts, liabilities, engagements or torts of any person who shall
be entitled to such Stock Option, nor shall it be subject to attachment or legal
process for or against such person. Notwithstanding the foregoing, the Committee
may determine at the time of grant that a Non-Qualified Stock Option granted
pursuant to ARTICLE V or ARTICLE VI that is otherwise not transferable pursuant
to this ARTICLE VIII is transferable in whole or part and in such circumstances,
and under such conditions, as specified by the Committee.
8.2. TERMINATION OF EMPLOYMENT OR TERMINATION OF CONSULTANCY. The following
rules apply with regard to Stock Options upon the Termination of Employment or
Termination of Consultancy of a
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Participant, unless otherwise determined by the Committee at grant or, if no
rights of the Participant (or his estate in the event of death) are reduced,
thereafter:
(a) If a Participant's Termination of Employment or Termination of
Consultancy is by reason of his death, any Stock Option held by such
Participant may be exercised, to the extent exercisable at the
Participant's Termination of Employment or Termination of Consultancy, by
the Participant's estate or by the person given authority to exercise such
Stock Options by his or her will or by operation of law, at any time within
a period of one year from the date of such death, but in no event beyond
the expiration of the stated term of such Stock Option.
(b) If a Participant's Termination of Employment or Termination of
Consultancy is by reason of his Disability or retirement, any Stock Option
held by such Participant may be exercised, to the extent exercisable at the
Participant's Termination of Employment or Termination of Consultancy, by
the Participant, at any time within a period of one year from the date of
such Termination of Employment or Termination of Consultancy, but in no
event beyond the expiration of the stated term of such Stock Option;
PROVIDED, HOWEVER, that, if the Participant dies within such exercise
period, any unexercised Stock Option held by such Participant shall
thereafter be exercisable by the Participant's estate or by the person
given authority to exercise such Stock Options by his or her will or by
operation of law, to the extent to which it was exercisable at the time of
death, for a period of one year (or such other period as the Committee may
specify at grant or, if no rights of the Participant's estate are reduced,
thereafter) from the date of such death, but in no event beyond the
expiration of the stated term of such Stock Option.
(c) If a Participant's Termination of Employment or Termination of
Consultancy is by the Company without cause, any Stock Option held by such
Participant may be exercised, to the extent exercisable at termination, by
the Participant at any time within a period of 90 days from the date of
such termination, but in no event beyond the expiration of the stated term
of such Stock Option.
(d) If a Participant's Termination of Employment or Termination of
Consultancy is a voluntary termination by the Participant and occurs prior
to, or more than 90 days after, the occurrence of an event which would be
grounds for Termination of Employment or Termination of Consultancy for
cause (without regard to any notice or cure period requirements), any Stock
Option held by such Participant may be exercised, to the extent exercisable
at termination, by the Participant at any time within a period of 30 days
from the date of such termination, but in no event beyond the expiration of
the stated term of such Stock Option.
(e) If a Participant's Termination of Employment or Termination of
Consultancy is: (i) for cause, or (ii) a voluntary termination (as provided
in SUBSECTION (d) above) within 90 days after an event which would be
grounds for a Termination of Employment or Termination of Consultancy for
cause, any Stock Option held by such Participant shall thereupon terminate
and expire as of the date of termination.
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ARTICLE IX.
TERMINATION OR AMENDMENT OF PLAN
9.1. TERMINATION OR AMENDMENT. Notwithstanding any other provision of this
Plan, the Board or the Committee may at any time, and from time to time, amend,
in whole or in part, any or all of the provisions of this Plan (including any
amendment deemed necessary to ensure that the Company may comply with any
regulatory requirement referred to in this ARTICLE IX), or suspend or terminate
it entirely, retroactively or otherwise; PROVIDED, HOWEVER, that, unless
otherwise required by law or specifically provided herein, the rights of a
Participant with respect to Stock Options granted prior to such amendment,
suspension or termination, may not be impaired without the consent of such
Participant; and PROVIDED FURTHER, without the approval of the stockholders of
the Company in accordance with the laws of the State of Delaware, to the extent
required by the applicable provisions of Rule 16b-3 or Section 162(m) of the
Code, or with respect to Incentive Stock Options, Section 422 of the Code, no
amendment may be made which would: (a) increase the aggregate number of shares
of Common Stock that may be issued under this Plan; (b) increase the maximum
individual Participant limitations for a fiscal year under SECTION 4.1(b); (c)
change the classification of employees and Consultants eligible to receive
Awards under this Plan; (d) decrease the minimum exercise price of any Stock
Option; or (e) extend the maximum option term under SECTION 5.3(b).
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to ARTICLE IV or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall impair the rights of any Participant without the Participant's consent.
ARTICLE X.
UNFUNDED PLAN
10.1. UNFUNDED STATUS OF PLAN. This Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any rights that are greater than those of a general
creditor of the Company.
ARTICLE XI.
GENERAL PROVISIONS
11.1. LEGEND. All certificates for shares of Common Stock delivered under
this Plan shall be subject to such stock transfer orders and other restrictions
as the Committee or the Board, as applicable, may deem advisable under the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Common Stock is then listed or any
national securities association system upon whose system the Common Stock is
then quoted, any applicable Federal or state securities law, and any applicable
corporate law, and the Committee or the Board, as applicable, may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.
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11.2. OTHER PLANS. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
11.3. NO RIGHT TO EMPLOYMENT/CONSULTANCY/DIRECTORSHIP. Neither this Plan
nor the grant of any Stock Options hereunder shall give any Participant or other
employee or Consultant any right with respect to continuance of employment or
consultancy by the Company or any Affiliate, nor shall they be a limitation in
any way on the right of the Company or any Affiliate by which an employee is
employed or consultant retained to terminate his employment or consultancy, as
applicable, at any time. Neither this Plan nor the grant of any Stock Options or
shares of Common Stock hereunder shall impose any obligations on the Company to
retain any Participant as a director nor shall it impose on the part of any
Participant any obligation to remain as a director of the Company.
11.4. WITHHOLDING OF TAXES. The Company shall deduct from any payment to be
made to a Participant, or shall otherwise require, prior to the issuance or
delivery of any shares of Common Stock or the payment of any cash hereunder,
payment by the Participant of any Federal, state or local taxes required by law
to be withheld; and such withholding is hereby approved by the Committee.
11.5. GOVERNING LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).
11.6. CONSTRUCTION. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply. To the
extent applicable, this Plan shall be limited, construed and interpreted in a
manner so as to comply with Section 162(m) of the Code and the applicable
requirements of Rule 16b-3; PROVIDED, HOWEVER, that noncompliance with Section
162(m) of the Code and Rule 16b-3 shall have no impact on the effectiveness of a
Stock Option under this Plan.
11.7. OTHER BENEFITS. No Stock Option under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries or affiliates nor affect any benefits under any
other benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation.
11.8. COSTS. The Company shall bear all expenses included in administering
this Plan, including expenses of issuing shares of Common Stock pursuant to this
Plan or any Stock Options granted hereunder.
11.9. NO RIGHT TO SAME BENEFITS. The provisions of Stock Options need not
be the same with respect to each Participant, and such Stock Options to
individual Participants need not be the same in subsequent years.
11.10. DEATH/DISABILITY. The Committee or the Board, as applicable, may in
its discretion require the transferee of a Participant's Stock Option to supply
the Company with written notice of the Participant's death or Disability and to
supply the Company with a copy of the will (in the case of the Participant's
death) or such other evidence as the Committee or the Board, as applicable,
deems necessary to establish
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the validity of the Transfer of a Stock Option. The Committee or the Board, as
applicable, may also require that the transferee agree in writing to be bound by
all of the terms and conditions of this Plan.
11.11. SEVERABILITY OF PROVISIONS. If any provision of this Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and this Plan shall be construed and
enforced as if such provisions had not been included.
11.12. HEADINGS AND CAPTIONS. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of this Plan,
and shall not be employed in the construction of this Plan.
ARTICLE XII.
EFFECTIVE DATE OF PLAN
This Plan has been adopted by the Board effective as of June 30, 1998 (the
"EFFECTIVE DATE"), subject to and conditioned upon the approval of this Plan by
the stockholders of the Company in accordance with the requirements of the laws
of the State of Delaware and any applicable exchange requirements.
ARTICLE XIII.
TERM OF PLAN
No Stock Option shall be granted pursuant to this Plan on or after the
tenth anniversary of the Effective Date, but Stock Options granted prior to such
tenth anniversary may extend beyond that date.
ARTICLE XIV.
NAME OF PLAN
This Plan shall be known as the C&D TECHNOLOGIES, INC. 1998 Stock Option
Plan.
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