FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED JANUARY 31, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to ____________
Commission file number 1-9389
C&D TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its Charter)
State or other jurisdiction of incorporation or organization: Delaware
I.R.S. Employer Identification Number: 13-3314599
Address of principal executive offices: 1400 Union Meeting Road
Blue Bell, Pennsylvania 19422
Registrant's telephone number, including area code: (215) 619-2700
Securities registered pursuant to Section 12(b) of
the Act:
Title of Class Name of each exchange
-------------- on which registered
COMMON STOCK -----------------------
PAR VALUE, $.01 PER SHARE NEW YORK STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
Yes ( x ) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ]
Aggregate market value of the voting stock held by nonaffiliates of the
Registrant, based on the closing price on April 14, 2000: $695,285,417
Number of shares outstanding of each of the Registrant's classes of common
stock as of April 14, 2000: 13,064,869 shares of Common Stock, par value $.01
per share.
DOCUMENTS INCORPORATED BY REFERENCE:
Registrant's Proxy Statement to be filed Part III
pursuant to Regulation 14A within 120 -----------------------------
days after the end of Registrant's fiscal (Part of Form 10-K into which
year covered by this Form 10-K Document is incorporated.)
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TABLE OF CONTENTS
Page
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PART I
Item 1 Business................................................ 1
Item 2 Properties.............................................. 13
Item 3 Legal Proceedings....................................... 14
Item 4 Submission of Matters to a Vote of
Security Holders...................................... 14
PART II
Item 5 Market for Registrant's Common Equity
and Related Stockholder Matters....................... 14
Item 6 Selected Financial Data................................. 16
Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 18
Item 7A Quantitative and Qualitative Disclosure
About Market Risk..................................... 26
Item 8 Financial Statements and Supplementary Data............. 27
Item 9 Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure................ 27
PART III
Item 10 Directors and Executive Officers of the Registrant...... 28
Item 11 Executive Compensation.................................. 28
Item 12 Security Ownership of Certain Beneficial
Owners and Management................................. 28
Item 13 Certain Relationships and Related Transactions.......... 28
PART IV
Item 14 Exhibits, Financial Statement Schedules and
Reports on Form 8-K................................... 29
SIGNATURES........................................................... 33
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE....... F-1
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C&D TECHNOLOGIES, INC.
PART I
Item 1. Business
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About Our Company
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C&D Technologies, Inc. (together with its operating subsidiaries, "we",
"our" or "C&D") is a leading North American producer of integrated reserve power
systems for telecommunications, electronic information and industrial
applications. We are also a leading producer of embedded high frequency
switching power supplies. Our power supplies are used in:
o telecommunications equipment;
o advanced office electronic machines, such as copiers; and
o motive power systems for electric industrial vehicles.
Our integrated reserve power systems are comprised of the following:
o industrial lead acid batteries;
o power rectifiers;
o power control equipment;
o power distribution equipment; and
o related accessories.
We sell both individual components and integrated power systems.
In June 1997, we changed our name from Charter Power Systems, Inc. to C&D
Technologies, Inc.
We were organized in November 1985 to acquire all the assets of the
eighty-year old C&D Power Systems Division (the "Division") of Allied
Corporation ("Allied"). The Division's business essentially was unchanged by the
acquisition, which was completed on January 28, 1986. Shares of our Common
Stock, par value $.01 per share ("Common Stock"), were first issued to the
public in February 1987.
In October 1992, we purchased substantially all of the assets and assumed
certain liabilities of the manufacturing division of Ratelco, Inc. ("Ratelco"),
a Seattle, Washington based manufacturer and distributor of power electronics
equipment used primarily in the regulated telecommunications power market.
Ratelco also marketed a nonregulated range of alarm and monitoring equipment for
use with telecommunications power systems.
In March 1994, we purchased substantially all of the assets and assumed
certain liabilities of the PowerSystems Division of ITT, a Tucson, Arizona based
company which designs and manufactures custom power supplies. The power supplies
are used in the telecommunications power market and the office equipment market
in such applications as telecommunication systems, office copiers, workstations,
and other applications.
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In January 1995, we purchased certain assets and assumed certain
liabilities of the switching power supply division of Basler Electric Company, a
Highland, Illinois based manufacturer of electrical components. These power
supplies are used for office electronics and communications applications.
In November 1995 we sold shares of Common Stock in a public offering.
In February 1996, we purchased certain equipment and inventory of LH
Research, Inc. ("LH"), a Costa Mesa, California based manufacturer of standard
power supply systems for the electronics industry. The power supplies are used
in telecommunications, computer, medical, process control and other industrial
applications.
In March 1996, we acquired from Burr-Brown Corporation its entire interest
in Power Convertibles Corporation ("PCC"), consisting of 1,044,418 shares of PCC
common stock and all outstanding preferred stock. In addition, we acquired or
repaid the indebtedness of PCC. In April 1996, we acquired 190,000 shares of PCC
common stock from the former chief executive officer of PCC, which together with
the shares previously acquired represented in excess of 99.6% of the outstanding
PCC common stock. In May 1996, we purchased all remaining shares of PCC common
stock and shares of PCC common stock issuable upon exercise of stock options.
Tucson, Arizona based PCC produced DC to DC converters used in communications,
computer, medical, industrial and instrumentation markets and also produced
battery chargers for cellular phones.
In January 1998, the acquired businesses of the PowerSystems Division of
ITT, the switching power supply division of Basler Electric Company, LH and PCC
were combined into the Power Electronics Division of C&D.
In July 1998 we completed a two-for-one stock split, effected in the form
of a 100% stock dividend.
In March 1999, we purchased substantially all of the assets of the
Specialty Battery Division of Johnson Controls, Inc. ("JCI"), a Milwaukee,
Wisconsin based designer, manufacturer, marketer and distributor of industrial
batteries. These assets included all of the ordinary shares of Johnson Controls
Battery (U.K.) Limited, an indirect wholly owned subsidiary of JCI. In addition,
in August 1999, we acquired JCI's 67 percent ownership interest in a joint
venture battery business in Shanghai, China. The joint venture manufactures,
markets and distributes both industrial and starting, lighting and ignition
batteries, the latter for the Chinese market only. For reporting purposes, the
acquisition of the Special Battery Division and JCI's 67 percent ownership
interest in the joint venture battery business in Shanghai, China have
collectively been re-named the Dynasty Division by C&D.
Fiscal Year
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Our fiscal year ends in January. Any references to a fiscal year mean the
12-month period ending January 31 of the year mentioned.
Forward-Looking Statements
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Except for the historical information contained herein, certain of the
statements and information contained in this Form 10-K are "forward-looking
statements" (within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934), and accordingly, are
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subject to risks and uncertainties. For such statements the Company claims the
protection of the safe-harbor for forward-looking statements contained in the
Private Securities Litigation Act of 1995. The factors that could cause actual
results to differ materially from anticipated results expressed or implied in
any forward-looking statement include those referenced in the forward-looking
statement, following the forward-looking statement, described in the notes to
the Consolidated Financial Statements and other factors discussed in this Form
10-K and the Company's other filings with the Securities and Exchange
Commission. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this Form 10-K.
The Company undertakes no obligation to publicly disclose any update to any of
these forward-looking statements to reflect events or circumstances occurring
after the date of this Form 10-K.
Reportable Segments
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We have adopted Statement of Financial Accounting Standards ("SFAS") No.
131, "Disclosures about Segments of an Enterprise and Related Information." This
statement establishes standards for the disclosure of segment results. It
requires that segments be determined using the "management approach," which
means the way management organizes the segments within the enterprise for making
operating decisions and assessing performance. In compliance with SFAS No. 131,
we have identified the following four reportable segments:
o Powercom Division
o Dynasty Division
o Motive Power Division
o Power Electronics Division
The financial information regarding our four business segments, which
includes net sales and operating income for each of the three years in the
period ended January 31, 2000, is provided in Note 15 to the Consolidated
Financial Statements. See Part II, Item 8.
The Market for Our Products
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We manufacture and market products in the following general categories by
business segment:
o POWERCOM DIVISION - fully integrated reserve power systems
and components for the standby power market, which includes
telecommunications, uninterruptible power supplies ("UPS")
and utilities and control;
o DYNASTY DIVISION - industrial batteries used in UPS
applications for computer systems and corporate data net-
works, telecommunications reserve power systems and broadband
cable television ("CATV") signal powering;
o MOTIVE POWER DIVISION - motive power systems for the material
handling equipment market; and
o POWER ELECTRONICS DIVISION - DC to DC converters and custom,
standard and modified standard embedded high frequency AC to
DC switching power supplies.
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We market our products through independent manufacturer's representatives,
distributors and our own sales personnel.
We sell some products to the U.S. Government. These sales accounted for
less than 5% of our total company sales during each of our last three fiscal
years.
Products and Customers By Business Segment
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Powercom Division - Reserve Power Systems
-----------------------------------------
We are a leading producer of fully integrated reserve power systems, which
monitor and regulate electric power flow and provide backup power in the event
of a primary power loss or interruption. We also produce the individual
components of these systems, including power rectifiers, system monitors, power
boards, chargers and reserve batteries.
We manufacture lead acid batteries for use in reserve power systems. We
sell these batteries in a wide range of sizes and configurations in two broad
categories:
o flooded batteries and
o valve-regulated (sealed) batteries.
Flooded batteries require periodic watering and maintenance.
Valve-regulated batteries require less maintenance and are often smaller.
To meet the needs of our customers, our reserve power systems include a
wide range of power electronics products consisting principally of power
rectifiers and distribution and monitoring equipment. Our power rectifiers
convert or "rectify" external AC power into DC power at the required level and
quality of voltage and apply the DC power to constantly charge the reserve
battery and operate the user's equipment. For installations with end
applications that require varied power levels, our power control and
distribution equipment distributes the rectified power at the appropriate power
level for each of the applications.
TELECOMMUNICATIONS CUSTOMERS. Our customers use the majority of our standby
power products in telecommunications applications such as central telephone
exchanges, microwave relay stations, private branch exchange ("PBX") systems and
cellular mobile telephone systems. Our major telecommunications customers
include national long distance companies, regional Bell operating companies,
cellular system operators, personal communications services providers, paging
systems and PBX telephone locations using fiber optic cable, microwave
transmission or traditional copper-wired systems.
MODULAR POWER PLANTS. We offer several modular power plants, which are a
type of integrated reserve power system. These products, which are referred to
as the Liberty AGM Series Power Plant(TM) and the Liberty ACM Series Power
Plant(TM), integrate advanced rectifiers with virtually maintenance-free
valve-regulated batteries.
ROUND CELL BATTERY. One of our historically important telecommunications
products has been the Round Cell reserve power battery, a flooded product which
was originally designed and patented by the
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Bell Laboratories of AT&T for use in AT&T's own facilities and customer
installations. AT&T spun off its equipment manufacturing operations into an
independent company named "Lucent Technologies, Inc.," which began operations on
October 1, 1996. Our company or its predecessor has manufactured Round Cells for
AT&T or Lucent Technologies, Inc. since 1972 and has been the exclusive
manufacturer since 1982. Both our Powercom and Power Electronics Divisions sell
products to Lucent Technologies, Inc., which accounted for 10.5% of our
consolidated net sales for the year ended January 31, 2000. No other customer
accounted for more than 10% of our consolidated net sales during fiscal 2000.
UNINTERRUPTIBLE POWER SUPPLIES. We produce batteries for UPS systems, which
provide instant battery backup in the event of primary power loss or
interruption of sensitive equipment, thereby permitting an orderly shutdown of
the equipment or continued operation for a limited period of time until the
primary source comes back on line. Large UPS systems are used principally for
mainframe computers, minicomputers, networks and computer-controlled equipment.
EQUIPMENT FOR ELECTRIC UTILITIES AND INDUSTRIAL CONTROL APPLICATIONS. We
produce rectifiers and batteries used in reserve power systems for switchgear
and instrumentation control systems used in electric utilities and industrial
control applications. These power systems provide auxiliary power that enables
fossil fuel, hydro and nuclear power generating stations, switching substations
and industrial control facilities to be shut down in an orderly fashion during
emergencies or power failures.
Dynasty Division - Reserve Power Batteries
------------------------------------------
Through our Dynasty Division we design, manufacture and distribute
valve-regulated (sealed) batteries for use in reserve power systems for a wide
variety of end use markets. Our product range focuses on batteries that provide
less than 200 ampere hours. These products are sold primarily to customers in
the UPS, telecommunications and cable markets. Major applications of these
products include wireless and wireline telephone infrastructure, CATV signal
powering, corporate data center powering and computer network backup for use
during power utility outages. Our customers include industry-leading original
equipment manufacturers ("OEMs") serving the UPS, broadband and
telecommunications markets.
UNINTERRUPTIBLE POWER SUPPLIES. Similar to our Powercom Division, the
Dynasty Division produces batteries for UPS systems, which provide instant
battery backup in the event of primary power loss or interruption of sensitive
equipment, thereby permitting an orderly shutdown of the equipment or continued
operation for a limited period of time until the primary source comes back on
line. Our Dynasty(R) High Rate Series batteries have been engineered
specifically for UPS applications and deliver extended life while complying with
rigorous industry standards. As a critical component to overall power backup
solutions, our Dynasty Division has worked closely with major global UPS OEMs to
design a cost effective, reliable product to meet customer expectations.
CATV SIGNAL POWERING AND BROADBAND. Dynasty(R) Broadband Series batteries
are designed for demanding standby float applications in abusive environments.
The Broadband Series batteries have been designed to offer the best combination
of run time and service life for CATV signal powering and broadband
applications. Our gelled electrolyte technology provides excellent heat transfer
properties which enable these batteries to perform in high temperature
environments. Unlike other competitive gel technologies, the Broadband Series
does not require cycling to meet electrical performance. Our Dynasty(R)
Broadband Series of batteries is considered the market leader for CATV powering
in North America.
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TELECOMMUNICATIONS. Our Long Duration Series batteries are designed to meet
the demanding requirements of telecommunications applications. These batteries
operate in a wide variety of environmental conditions, meet prolonged run time
needs so as to maintain operations during power loss and protect sophisticated
electronics equipment.
Motive Power Division - Motive Power Systems
--------------------------------------------
Our customers use the majority of our motive power products to provide the
primary power for material handling vehicles. A significant portion of our
motive power sales include products and systems to recharge motive power
batteries.
We produce complete systems and individual components (including power
electronics and batteries) to monitor, charge and test the batteries used in
powering electric industrial vehicles, including fork-lift trucks, automated
guided vehicles and airline ground support equipment. Our customers include end
users in a broad array of industries, dealers of material handling equipment
and, to a lesser extent, OEMs.
We offer a broad line of motive power equipment including the C-Line(TM),
which we believe is the industry standard for long life and the V-Line(TM) for
general material handling applications. We also offer a broad line of battery
charging equipment.
Power Electronics Division - DC to DC Converters and Power Supplies
-------------------------------------------------------------------
Through our Power Electronics Division we design, manufacture and
distribute custom, standard and modified standard electronic power supply
systems built for large OEMs of telecommunications equipment, office products,
computers and workstations. In addition, our Power Electronics Division
manufactures rectifiers for reserve power applications that are sold by our
Powercom Division.
We sell the majority of our power supply products to OEMs of electronic
products on either a custom, standard or modified standard basis. Power supplies
are embedded in almost all electronic products and are used to convert incoming
AC or DC voltage to the required level and quality of DC voltage.
Our power supplies incorporate advanced technology and are designed for
dependable operation of the host equipment. Our power supply products include DC
to DC converters, AC to DC power supplies and high voltage power supplies for
use in a large number of industrial applications, with outputs ranging from
several watts to several kilowatts. DC to DC converters convert one constant
voltage into another constant voltage. DC to DC converters are widely used in
distributed power systems where power is delivered within the equipment at a
high voltage and is converted to a lower voltage to permit the operation of
microelectronics components such as microprocessors. AC to DC power supplies
convert alternating current, the form in which virtually all power is delivered
by electric utilities to end users, into precisely controlled direct current of
the constant voltage required by sensitive electronic applications.
In the telecommunications industry, our power supplies are broadly used in
voice and data telecommunications. We also produce power supplies for office
copiers, workstations and other applications.
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Sales, Installation and Servicing
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The sales, installation and servicing of our Powercom and Motive Power
products are performed through several networks of independent manufacturer's
representatives located throughout the United States and Canada. Most of our
independent manufacturer's representatives operate under contracts providing for
compensation on a commission basis or as a distributor with product purchases
for independent resale. Dynasty and Power Electronics products are sold via a
network of independent manufacturer's representatives as well as independent
distributors located thoughout the United States.
In addition to these networks of independent manufacturer's representatives
and distributors, we employ internal sales management consisting of regional
sales managers and product/market specialists. The regional managers are each
responsible for managing a number of independent manufacturer's representatives
and for developing long-term relationships with large end users, OEMs and
national accounts. We also employ a separate sales force that works with the
independent manufacturer's representative network and certain large customers.
We have internal divisional marketing departments in each of our divisions.
These departments manage the development of new products from the initial
concept definition and management approval stage through the engineering,
production and sales processes. These departments are also responsible for
applications engineering and technical training of sales representatives.
We maintain branch sales and service facilities in the United States,
Canada, Europe and Asia, with the support of our headquarters and service
personnel, and have relationships with sales representatives or distributors
throughout the world.
We typically sell our products upon terms requiring payment in full within
30 to 60 days. We warrant our products to perform as rated for specified periods
of time, ranging from one to 20 years depending on the type of product and its
application, in an amount that decreases over the life of the product. The
longest warranties generally are applicable to standby power batteries sold by
our Powercom Division.
Backlog
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The level of unfilled orders at any given date during the year may be
materially affected by the timing and product mix of orders and, taking into
account considerations of manufacturing capacity and flexibility, the speed with
which we fill those orders. Accordingly, our backlog at any particular date only
indicates expected shipments in the near future. Period-to-period comparisons
may not be meaningful. Orders for certain of our products may be canceled by the
customer prior to shipment.
Our order backlog at March 31, 2000 was $145,998,000 and at March 31, 1999
was $75,508,000. The backlog as of March 31, 1999 does not include backlog
associated with the recently acquired 67 percent ownership interest in the
battery business based in Shanghai, China. We expect to fill virtually all of
the March 31, 2000 backlog during fiscal 2001.
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Manufacturing and Raw Materials
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We manufacture our products at eight domestic plants and also have one
plant each in Mexico, Ireland, and China. We manufacture most key product lines
at a single focused plant in order to optimize manufacturing efficiency, asset
management and quality control.
EXPANSION AND CONSOLIDATION. We are continuing the process of capacity
expansion at several of our plants. During fiscal 2000 we closed our Costa Mesa,
California and Agua Prieta, Mexico facilities. Production previously performed
at these facilities was primarily transferred to our Nogales, Mexico facility.
When we acquired the PowerSystems Division of ITT in fiscal 1995, we
entered into an agreement pursuant to which a third party "shelter company"
provided to us the Nogales, Mexico facility and employed Mexican staff and labor
to assemble our products. This agreement was terminated during fiscal 1998.
The principal raw materials used in the manufacture of our products include
lead, steel, copper, plastics and electronic components, all of which are
generally available from multiple suppliers. Other than the required use of one
supplier of lead and one supplier of lead oxide for the production of Round Cell
batteries for Lucent Technologies, Inc., we use a number of suppliers to satisfy
our raw materials needs.
ISO 9001 RECOGNITION. During fiscal 2000 we continued our program of ISO
recognition, which assures customers that our internal processes and systems
meet internationally recognized standards. We are ISO 9001 certified at our Blue
Bell, Pennsylvania Headquarters; Conshohocken, Pennsylvania R&D Battery
Laboratories; Conyers, Georgia; Leola, Pennsylvania and Dunlap, Tennessee
plants. Our Milwaukee, Wisconsin; Shanghai, China; Tucson, Arizona; Nogales,
Mexico and Shannon, Ireland facilities are also ISO 9001 certified.
Competition
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Our products compete on the basis of:
o our reputation;
o product quality and reliability;
o customer service;
o delivery capability; and
o technology.
We also offer competitive pricing, and we value our relationships with our
customers. In addition, we believe that we have certain competitive advantages
in specific product lines.
We are a producer of integrated reserve power systems and power electronics
equipment with manufacturing facilities located in the United States, Mexico,
Ireland and China. We believe that we are one of the four largest producers of
reserve power systems in North America. In motive power, we believe that one
competitor, Yuasa, Inc., has a significantly larger market share than we have.
Our company, along with two other manufacturers, occupies a second tier of the
motive power market in which we have a significantly larger market share than
our smaller competitors.
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For both reserve and motive power systems, we believe that the ability to
provide a single source for design, engineering, manufacturing and service is an
important element in our competitive position.
In reserve power systems, we believe we are the only major North American
company that manufactures complete, integrated reserve power systems consisting
of both electronics and batteries. Our other major competitors manufacture
either electronics or batteries, but not both. In motive power, all our major
competitors supply integrated power systems, but only our company and one
competitor manufacture both electronics and batteries.
With respect to power supplies, we believe that we are among a small group
of large competitors in this fragmented industry.
When lead prices rise, certain of our competitors that own smelting
operations may have lower lead costs than we have. However, when lead prices
decline, the high fixed costs associated with these operations may provide us
with a cost advantage.
Research and Development
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We maintain extensive technology departments concentrating on
electrochemical and electronics technologies. We focus on:
o the design and development of new products;
o the ongoing development and improvement of existing products;
o sustaining engineering;
o production engineering (including quality testing and
managing the expansion of production capacity); and
o the evaluation of competitive products.
Our research and development facilities in North America and Europe feature
advanced computer-aided design and testing equipment. Technology and engineering
personnel coordinate all activities closely with operations, sales and marketing
in order to better meet the needs of customers. We continue to develop new
products in all of our businesses. During fiscal 2000, our Power Electronics
Division successfully marketed the VKP Series(TM) and VSX Series(TM) of products
to meet the unique requirements of sophisticated customers.
International Operations
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In addition to our domestic manufacturing facilities, we have international
manufacturing facilities in Mexico, Ireland and China. Products produced by our
domestic, Mexican and Irish facilities are primarily shipped to the United
States, and to a lesser extent, to Canada and Europe. Our joint venture facility
in Shanghai, China manufactures industrial batteries that are sold primarily in
China and Europe. International sales accounted for 16.7%, 11.7% and 11.6% of
net sales for the years ended January 31, 2000, 1999 and 1998, respectively.
Additional financial information regarding our international sales is provided
in Note 15 to the Consolidated Financial Statements. See Part II, Item 8.
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Patents and Trademarks
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Our policy is to apply for patents on new inventions and designs and
actively pursue pending and future patent applications. We believe that the
growth of our business will depend primarily upon the quality of our products
and our relationships with our customers, rather than the extent of our patent
protection. While we believe that patents are important to our business
operations, the loss of any single or several patents would not have a material
adverse effect on our company.
We regard our trademarks C&D(R), C&D TECHNOLOGIES(R), C&D POWERCOM(R),
LIBERTY(R), LIBERTY SERIES(R) and DYNASTY(R) as being of substantial value in
the marketing of our products and have registered these trademarks in the United
States Patent and Trademark Office. Our registered trademarks also include
COMPUCHARGE(R), FERRO FIVE(R), GUARDIAN(R), GUARDSMAN(R), RANGER(R),
RANGERNET(R) and SCOUT(R).
Employees
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On March 31, 2000 we had approximately 3,400 employees. Of these employees,
approximately 2,800 were employed in manufacturing and almost 600 were employed
in field sales, technical, manufacturing support, sales support, marketing and
administrative activities.
Our management considers our employee relations to be satisfactory.
Employees in three domestic plants are represented by three different unions
under collective bargaining agreements.
Environmental Regulation
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Our operations are subject to extensive and evolving environmental laws and
regulations regarding the clean-up and protection of the environment, worker
health and safety and the protection of third parties. These laws and
regulations include, but are not limited to, the following:
o requirements relating to the handling, storage, use and
disposal of lead and other hazardous materials used in
manufacturing processes and solid wastes;
o record keeping and periodic reporting to governmental
entities regarding the use of hazardous substances and
disposal of hazardous wastes;
o monitoring and permitting of air and water emissions; and
o monitoring and protecting workers from unpermitted exposure
to hazardous substances, including lead used in our
manufacturing processes.
We operate under a comprehensive environmental, health and safety
compliance program, which is headed by an environmental vice-president and
staffed with trained environmental professionals. As part of our program, we:
o prepare written environmental and health and safety practice
manuals;
o conduct employee training seminars;
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o undertake periodic internal and external audits of our
operations and environmental and health and safety programs;
o practice and engage in routine sampling and monitoring of
employee chemical and physical exposure levels; and
o engage in sampling and monitoring of potential points of
environmental emissions.
In addition, we also have installed certain pollution abatement equipment
to reduce emissions of regulated pollutants into the environment. Our program
monitors and seeks to resolve potential environmental liabilities that result
from or may arise from current and historic hazardous materials handling and
waste disposal practices. We have instituted a spent product recapture and
recycling program for our facilities and our customers.
While we believe that we are in material compliance with the applicable
environmental requirements, we have received, and in the future may receive,
citations and notices from governmental regulatory authorities that certain of
our operations are not in compliance with our permits or applicable
environmental requirements. Occasionally we are required to pay a penalty or
fine, to install control technology or to make equipment or process changes (or
a combination thereof) as a result of the non-compliance or changing regulatory
requirements. When we receive a notice of a non-compliance, we immediately take
action to achieve compliance and work with the authorities to resolve
satisfactorily the issues raised. The associated costs have not had a material
effect on our business, financial condition or results of operations.
Notwithstanding our efforts to maintain compliance with applicable
environmental requirements, if damage to persons or the environment arises from
hazardous substances used, generated or disposed of in the conduct of our
business (or that of our predecessors to the extent we are not indemnified
therefor), we may be held liable for the damage and for the costs of the
environmental investigation and remediation, which could have a material adverse
effect on our business, financial condition or results of operations.
In view of the potential financial effect such environmental liabilities
could have, when we acquired the assets of our predecessor from Allied in
January 1986, we secured an obligation from Allied to indemnify us from
undisclosed environmental liabilities resulting from conditions existing as of
the closing date. With the exception of four sites disclosed by Allied at the
time of the acquisition, Allied has accepted indemnification responsibility for
our potential liabilities at those third party owned or operated sites with
respect to which we have been named as a potentially responsible party by the
United States Environmental Protection Agency ("EPA") or state environmental
agencies under the federal Superfund law or comparable state environmental laws.
In March 1999 we received notification of our potential involvement at an
additional site which occurred after the acquisition from Allied.
With respect to the four sites not covered by the Allied indemnity and the
site which occurred after the acquisition, based upon the most currently
available information, we believe that our share of liability at these sites
will not have a material adverse effect on our business, financial condition or
results of operations. Moreover, we accrue reserves for environmental
liabilities in our consolidated financial statements and periodically reevaluate
the reserved amounts for these liabilities in view of the most current
information available.
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We are also aware of the existence of potential contamination at two of our
properties which may require expenditures for further investigation and
remediation. At our Huguenot, New York facility, fluoride contamination in an
inactive lagoon exceeding the state's groundwater standards, which existed prior
to our acquisition of the site, has resulted in the site being listed on the
registry of inactive hazardous waste disposal sites maintained by the New York
State Department of Environmental Conservation. The prior owner of the site,
Avnet, Inc., ultimately may bear some, as yet undetermined, share of the costs
associated therewith.
Our Conyers, Georgia facility is listed on the Georgia State Hazardous
Sites Inventory. Soil at the site, which was likely contaminated from a leaking
underground acid neutralization tank and possibly storm water runoff, has been
excavated and disposed of. A hydrogeologic study was undertaken to assess the
impact to groundwater. That study did not reveal any groundwater impact, and
assessment and remediation of off-site contamination has been completed and the
full remediation report was submitted to the state on February 22, 1999.
Additional information was requested and submitted to the state in March 2000.
The state environmental agency may request further information and additional
investigation or remediation may be necessary before the site may be removed
from its Hazardous Sites Inventory.
Together with JCI, we are conducting an assessment and remediation of
contamination at our Milwaukee, Wisconsin facility, which we purchased as part
of our acquisition of the Speciality Battery Division from JCI. The majority of
this project is expected to be completed by the end of fiscal 2001. Under the
purchase agreement with JCI, we are responsible for (i) one-half of the cost of
the on-site assessment and remediation, with a cap of $1,750,000, (ii) any
environmental liabilities at the facility which are not remediated as part of
the current project and (iii) environmental liabilities for claims made after
the fifth anniversary of the closing that arise from migration from a
pre-closing condition at the facility to locations other than the facility, but
specifically excluding liabilities relating to pre-closing offsite disposal. JCI
has retained all other environmental liabilities, including off-site assessment
and remediation.
We have received notification from the EPA of alleged violations of permit
effluent and pretreatment discharge limits at our plant in Attica, Indiana. We
have submitted a compliance plan to the EPA. A penalty assessment could be made,
however detailed information necessary to estimate any potential liability has
not been determined.
With respect to each of the properties described in the preceding four
paragraphs, we have accrued a reserve in our consolidated financial statements
for our estimate of the potential costs and liabilities associated with the
potential contamination. The costs and potential liabilities for these matters,
in our opinion, are not likely to affect materially our business, financial
condition or results of operations.
We are taking steps to apply for ISO 14001 certification at our Blue Bell,
Pennsylvania headquarters, certain associated departments located in
Conshohocken, Pennsylvania and our Conyers, Georgia manufacturing facility. ISO
14001 is a voluntary, international standard which is intended to provide
organizations with the elements of an effective environmental management system
which can be integrated with other management requirements to assist the
achievement of other environmental and economic goals.
12
<PAGE>
Item 2. Properties
- -------------------
Set forth below is certain information, as of April 4, 2000, with respect
to our principal properties.
<TABLE>
<CAPTION>
Square Products Manufactured
Location Footage at or Use of Facility
-------- ------- ---------------------
<S> <C> <C>
United States Properties:
- -------------------------
Milwaukee, Wisconsin (1).................. 302,000 Small standby power batteries, headquarters
of Dynasty Division
Attica, Indiana (1)....................... 235,000 Large standby power batteries
Leola, Pennsylvania (1)................... 187,000 Large standby power batteries
Conyers, Georgia (1)...................... 161,000 Small standby power batteries
Huguenot, New York (1).................... 148,000 Motive power batteries and large standby
power batteries
Conshohocken, Pennsylvania (1)............ 136,000 Metal trays, metal racks and cabinets,
battery R&D laboratories, distribution center
Dunlap, Tennessee (2)..................... 72,000 Motive power and standby power electronics
products, cabinets and metal racks
Tucson, Arizona (3)....................... 57,000 DC to DC converters, power supplies,
headquarters of Power Electronics Division
and electronics R&D laboratories
Blue Bell, Pennsylvania (3)............... 39,000 World headquarters, Powercom and Motive
Power divisional headquarters
International Properties:
- -------------------------
Shanghai, China (4)...................... 314,000 Small standby power batteries
Nogales, Sonora, Mexico (3)............... 83,000 DC to DC converters and power supplies
Romsey, Hampshire, United Kingdom (3)..... 21,000 Distribution center
Mississauga, Ontario, Canada (3).......... 20,000 Canadian branch headquarters, sales office
and distribution center
Shannon, Ireland (3)..................... 19,000 DC to DC converters and electronics
R&D laboratory
</TABLE>
(1) Property is owned by C&D.
(2) The lease of the Dunlap property terminates in January 2004. We have an
option to purchase the Dunlap property for $1,160,000 during the lease
term.
(3) Property is leased by C&D.
(4) Building is owned by the joint venture; however, the land is leased under a
50 year agreement, of which 45 years remain.
13
<PAGE>
Item 3. Legal Proceedings
- --------------------------
We are involved in ordinary, routine litigation incidental to the conduct
of our business. None of this litigation, individually or in the aggregate, is
material to our financial condition or results of operations in any year. See
"Business - Environmental Regulation" for a description of certain
administrative proceedings in which we are involved. In addition, a former
customer has filed a lawsuit against C&D alleging that we breached a contract
and is seeking damages, costs, interest and attorney fees. We have not yet filed
our answer or conducted any discovery; accordingly, we are unable to determine
our liability, if any.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
- ------------------------------------------------------------------------------
Our Common Stock is traded on The New York Stock Exchange under the symbol
CHP. The approximate number of beneficial and registered record holders of our
Common Stock on April 14, 2000 was 3,300.
The following table sets forth, for the periods indicated, the high and low
sales prices for our Common Stock as reported by the New York Stock Exchange.
These prices represent actual transactions, but do not reflect adjustment for
retail markups, markdowns or commissions.
Year Ended
------------------
January 31, 2000 January 31, 1999
---------------- ----------------
Fiscal Quarter High Low High Low
-------------- ---- --- ---- ---
First Quarter............ $26 5/8 $20 3/16 $28 7/16 $23 15/32
Second Quarter........... 31 25 3/4 29 7/16 25 3/8
Third Quarter............ 38 3/4 30 1/8 27 1/8 19 7/8
Fourth Quarter........... 42 3/4 31 3/8 32 3/8 21 3/4
14
<PAGE>
DIVIDENDS. We began paying quarterly cash dividends on our Common Stock in
April 1987. For the years ended January 31, 2000 and 1999 we declared quarterly
dividends per share as follows:
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
----------- ----------- ----------- -----------
2000 $0.02750 $0.02750 $0.02750 $0.02750
1999* $0.01375 $0.01375 $0.02750 $0.02750
* Adjusted to reflect C&D's July 24, 1998 two-for-one stock split, effected
in the form of a 100% stock dividend, where appropriate.
Our bank loan agreement permits quarterly dividends to be paid on our
Common Stock so long as there is no default under that agreement. Subject to
that restriction and the provisions of Delaware law, our Board of Directors
currently intends to continue paying quarterly dividends. We cannot assure you
that we will continue to do so since future dividends will depend on our
earnings, financial condition and other factors.
On February 22, 2000, the Board of Directors of C&D declared a dividend of
one common stock purchase right (a "Right") for each share of Common Stock,
outstanding on March 3, 2000 to the stockholders of record on that date. Upon
the occurrence of certain events, each Right will entitle the registered holder
to purchase from C&D one one-hundredth of a share of Common Stock at a price of
$300 per one one-hundredth of a share, subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement between C&D and
ChaseMellon Shareholder Services, L.L.C., as rights agent. A summary of the
Rights Agreement is included in C&D's Form 8-K Current Report filed with the
Securities and Exchange Commission on February 28, 2000, which is incorporated
by reference into this Form 10-K.
15
<PAGE>
Item 6. Selected Financial Data
- --------------------------------
The following selected historical financial data for the periods indicated
have been derived from C&D's consolidated financial statements, which have been
audited by PricewaterhouseCoopers LLP, independent accountants. The information
below should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and C&D's consolidated
financial statements, which appear in Items 7 and 14 of this Form 10-K.
<TABLE>
<CAPTION>
Fiscal Year
(IN THOUSANDS, EXCEPT SHARE AND --------------------------------------------------------------
PER SHARE DATA)
2000(1) 1999 1998 1997(2) 1996
--------- ------ ------ --------- ------
<S> <C> <C> <C> <C> <C>
Statement of Income Data:
- -------------------------
Net sales............................... $465,570 $313,966 $308,054 $286,907 $242,422
Cost of sales........................... 341,190 227,796 226,880 219,819 185,808
------- ------- ------- ------- -------
Gross profit.......................... 124,380 86,170 81,174 67,088 56,614
Selling, general and
administrative expenses............... 59,315 40,344 39,333 34,499 27,781
Research and development
expenses.............................. 8,941 8,255 8,610 8,143 6,196
------- ------- ------- ------- -------
Operating income........................ 56,124 37,571 33,231 24,446 22,637
Interest expense, net................... 7,946 126 1,129 1,396 1,063
Other (income) expense, net............. (20) 211 1,058 (8) 423
------- ------- ------- ------- -------
Income before income taxes and
minority interest..................... 48,198 37,234 31,044 23,058 21,151
Provision for income taxes.............. 17,737 13,154 11,359 8,121 7,107
------- ------- ------- ------- -------
Net income before minority interest..... 30,461 24,080 19,685 14,937 14,044
Minority interest....................... 619 - - - -
------- ------- ------- ------- -------
Net income.............................. $ 29,842 $ 24,080 $ 19,685 $ 14,937 $ 14,044
======= ======= ======= ======= =======
Net income per common share (3)*........ $ 2.34 $ 1.95 $ 1.61 $ 1.19 $ 1.16
======= ======= ======= ======= =======
Net income per common share -
assuming dilution (4)*................ $ 2.29 $ 1.88 $ 1.56 $ 1.16 $ 1.09
======= ======= ======= ======= =======
Dividends per common share*............. $ .11 $ .08 $ .06 $ .06 $ .06
======= ======= ======= ======= =======
Balance Sheet Data:
Working capital......................... $ 65,079 $ 63,688 $ 47,342 $ 45,436 $ 50,302
Total assets............................ 354,115 185,642 166,498 159,973 130,827
Short-term debt......................... 20,393 532 321 476 200
Long-term debt.......................... 76,459 1,750 10,267 29,351 15,417
Stockholders' equity.................... 162,066 123,538 97,305 74,906 68,926
- ----------
</TABLE>
* Per share amounts have been adjusted to reflect C&D's July 24, 1998
two-for-one stock split, effected in the form of a 100% stock dividend,
where appropriate.
(footnotes begin on the following page)
16
<PAGE>
(1) Effective March 1, 1999, the Company acquired substantially all of the
assets of the Specialty Battery Division of JCI including, without limitation,
certain assets of Johnson Controls Technology Company, a wholly owned subsidiary
of JCI, and 100% of the ordinary shares of Johnson Controls Battery (U.K.)
Limited, an indirect wholly owned subsidiary of JCI. In addition, the Company
assumed certain liabilities of the seller. The Specialty Battery Division was
engaged in the business of designing, manufacturing, marketing and distributing
industrial batteries. The Company has continued using the assets acquired in
such business. On August 2, 1999 the Company completed the acquisition of JCI's
67 percent ownership interest in a joint venture battery business in Shanghai,
China. The joint venture manufactures, markets and distributes both industrial
and starting, lighting and ignition batteries, the latter products for the
Chinese market only. The Company has continued the joint venture operations in
such business. For reporting purposes, the acquisition of the Specialty Battery
Division and JCI's 67 percent ownership interest of the joint venture battery
business in Shanghai, China have collectively been re-named the Dynasty Division
by C&D. See notes to consolidated financial statements.
(2) In February 1996, we acquired substantially all the assets of LH, a
producer and marketer of standard power supply systems for the electronics
industry. Effective March 12, 1996, we acquired from Burr-Brown Corporation its
entire interest in PCC, consisting of 1,044,418 shares of PCC common stock and
all outstanding preferred stock. In addition, we acquired or repaid the
indebtedness of PCC. In April 1996, we acquired 190,000 shares of PCC common
stock from the former chief executive officer of PCC which together with the
shares previously acquired represented in excess of 99.6% of the outstanding PCC
common stock. In May 1996, we purchased all remaining shares of PCC common stock
and shares of PCC common stock issuable upon exercise of stock options. PCC
produced DC to DC converters used in communications, computer, medical,
industrial and instrumentation markets and also produced battery chargers for
cellular phones.
(3) Based on 12,764,889, 12,365,183, 12,221,370, 12,517,108 and 12,078,904
weighted average shares outstanding (as adjusted for the Company's July 24, 1998
two-for-one stock split effected in the form of a 100% stock dividend, where
appropriate), for fiscal 2000, 1999, 1998, 1997 and 1996, respectively.
(4) Based on 13,044,201, 12,835,862, 12,631,824, 12,878,330 and 12,902,578
weighted average shares outstanding (as adjusted for the Company's July 24, 1998
two-for-one stock split effected in the form of a 100% stock dividend, where
appropriate), and the effect of shares issuable under stock options based on the
treasury stock method for fiscal 2000, 1999, 1998, 1997 and 1996, respectively.
17
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
- --------------------------------------------------------------------------------
ALL DOLLAR AMOUNTS IN THIS ITEM 7 ARE IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS AND PER POUND LEAD AMOUNTS.
Impact of Economy and Shift in Customer Demand
- ----------------------------------------------
During fiscal 2000, primarily due to continued improved domestic economic
conditions, there was a higher demand for our standby power products sold by the
Powercom Division.
Raw Material Pricing and Productivity
- -------------------------------------
Lead, steel, copper, plastics and electronic components are the major raw
materials used in the manufacture of our industrial batteries and electronics
products and, accordingly, represent a significant portion of our materials
costs. During fiscal 2000, 1999 and 1998, the average North American producer
price of lead was $.45, $.47 and $.48 per pound, respectively.
We have a long-term cost containment program to maximize manufacturing
efficiency. Under the program, we continue to allocate a significant amount of
our normal annual capital expenditures to cost containment and productivity
improvement projects.
Inflation
- ---------
The cost to us of manufacturing materials and labor and most other
operating costs are affected by inflationary pressures. Our ability to pass
along inflationary cost increases through higher prices may be limited during
periods of stable or declining lead prices because of industry pricing practices
that tend to link product prices and lead prices. We believe that, over recent
years, we have been able to offset inflationary cost increases by:
o effective raw materials purchasing programs;
o price increases of our products;
o increases in labor productivity; and
o improvements in overall manufacturing efficiencies.
18
<PAGE>
Results of Operations
- ---------------------
The following table sets forth selected items in C&D's consolidated
statements of income as a percentage of sales for the periods indicated.
<TABLE>
<CAPTION>
Fiscal Year
------------------------------
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Net sales............................................ 100.0% 100.0% 100.0%
Cost of sales........................................ 73.3 72.6 73.6
----- ----- -----
Gross profit....................................... 26.7 27.4 26.4
Selling, general and administrative expenses......... 12.8 12.8 12.8
Research and development expenses.................... 1.9 2.6 2.8
----- ----- -----
Operating income................................... 12.0 12.0 10.8
Interest expense, net................................ 1.7 - 0.4
Other expense, net................................... - 0.1 0.3
----- ----- -----
Income before income taxes and minority interest... 10.3 11.9 10.1
Provision for income taxes........................... 3.8 4.2 3.7
----- ----- -----
Net income before minority interest................ 6.5 7.7 6.4
Minority interest.................................... 0.1 - -
----- ----- -----
Net income......................................... 6.4% 7.7% 6.4%
===== ===== =====
</TABLE>
Fiscal 2000 Compared to Fiscal 1999
- -----------------------------------
All comparisons are with the corresponding periods in the previous year,
unless otherwise stated.
Effective March 1, 1999, C&D purchased substantially all of the assets of
the Specialty Battery Division of JCI, a designer, manufacturer, marketer and
distributor of industrial batteries based in Milwaukee, Wisconsin. These assets
included certain assets of Johnson Controls Technology Company, a wholly owned
subsidiary of JCI and all of the ordinary shares of Johnson Controls Battery
(U.K.) Limited, an indirect wholly owned subsidiary of JCI. In addition, on
August 2, 1999 we completed the acquisition of JCI's 67 percent ownership
interest of a joint venture battery business in Shanghai, China. The joint
venture manufactures, markets and distributes both industrial and starting,
lighting and ignition batteries, the latter for the Chinese market only. For
reporting purposes, the acquisition of the Specialty Battery Division and JCI's
67 percent ownership interest in the joint venture battery business in Shanghai,
China have collectively been re-named the Dynasty Division by C&D.
19
<PAGE>
Net sales for fiscal 2000 increased $151,604 or 48 percent to $465,570 from
$313,966 in fiscal 1999. This increase was primarily due to sales of $109,753
recorded by the Dynasty Division (including the sales of the joint venture in
China), coupled with higher sales by the Powercom and Motive Power Divisions,
partially offset by lower Power Electronics divisional sales. Sales by the
Powercom Division increased $43,826 or 25 percent over the prior year primarily
due to higher sales to the telecommunications market. Motive Power divisional
sales increased $3,628 or five percent over fiscal 1999 mainly as a result of
higher sales of motive power chargers. Fiscal 2000 sales by the Power
Electronics Division decreased $5,603 or eight percent versus the prior year
primarily due to lower sales of custom power supplies and cellular phone battery
chargers, partially offset by higher DC to DC converter sales.
Gross profit for fiscal 2000 increased $38,210 or 44 percent to $124,380
from $86,170 in the prior year. The increase in gross profit during fiscal 2000
was primarily due to the gross profit generated by the Dynasty Division
(including gross profits of the joint venture in China), as well as increased
gross profits related to the higher sales volumes provided by the Powercom
Division, partially offset by lower gross profits from the Power Electronics
Division. Motive Power gross profit in fiscal 2000 increased slightly over the
prior year. The decrease in the gross profit of the Power Electronics Division
during fiscal 2000 versus the prior year was mainly due to: (i) lower sales
volumes; (ii) a $2,000 inventory charge for slow moving inventory; and (iii)
$376 related to a restructuring charge. This restructuring charge, which
occurred during the first quarter of fiscal 2000, consisted of a $1,627 pre-tax
charge (or $.08 per share after-tax), primarily related to the restructuring of
the Power Electronics Division (see "Restructuring Charge" below). The
restructuring charge included $376 related to inventory obsolescence that was
charged to cost of sales. The balance of the restructuring charge, or $1,251 was
charged to selling, general and administrative expenses.
Selling, general and administrative expenses for fiscal 2000 increased
$18,971 or 47 percent over the prior year. This increase was primarily due to
higher expenses (including amortization of goodwill and intangible assets)
related to the acquisition of the Dynasty Division and the aforementioned $1,251
restructuring charge. Also contributing to this increase was higher Motive Power
divisional fixed selling expenses due to warranty and sales branch expenses
coupled with higher selling expenses of the Powercom Division related to
increased sales volumes during fiscal 2000. These increases were partially
offset by lower selling expenses of the Power Electronics Division during fiscal
2000 compared to the prior year.
Research and development expenses increased $686 in fiscal 2000 over the
prior year, primarily as a result of costs incurred by the recently acquired
Dynasty Division and higher research and development expenses related to the
Powercom and Motive Power Divisions. These increases were partially offset by
lower research and development expense incurred by the Power Electronics
Division during fiscal 2000 versus the prior year.
Operating income increased $18,553 or 49 percent to $56,124 from $37,571 in
the prior year (after the aforementioned $1,627 restructuring charge and $2,000
inventory charge for slow moving inventory). This increase was primarily the
result of operating income generated by the Dynasty Division (including
operating income of the joint venture in China) of $19,222, coupled with higher
Powercom divisional operating income of $9,865, partially offset by lower Motive
Power operating income of $2,275 and an operating loss in the Power Electronics
Division, compared to operating income in the prior year.
20
<PAGE>
Interest expense, net, increased $7,820 in fiscal 2000 compared to the
prior year primarily due to higher debt balances outstanding used to finance the
current year acquisition of the Dynasty Division.
Other income, net, for fiscal 2000 was $20 versus other expense, net, of
$211 in fiscal 1999 mainly as a result of higher prompt payment discounts and
non-operating income in fiscal 2000, partially offset by higher foreign exchange
and financial services expenses.
Income tax expense for fiscal 2000 increased $4,583 from fiscal 1999,
primarily as a result of higher income before income taxes and an increase in
the effective tax rate. The effective tax rate consists of statutory rates
adjusted for the tax impacts of our foreign sales corporation, research and
development credits, and foreign operations. The effective tax rate for fiscal
2000 increased to 36.8 percent from 35.3 percent in the prior year mainly due to
less tax benefits associated with our foreign operations, research and
development tax credit and foreign sales corporation.
Minority interest of $619 in fiscal 2000 reflects the 33 percent ownership
of the joint venture battery business located in Shanghai, China that is not
owned by C&D.
As a result of the above, for fiscal 2000, net income increased $5,762 or
24 percent to $29,842 or $2.34 per common share - basic and $2.29 per common
share - assuming dilution.
21
<PAGE>
Restructuring Charge
- --------------------
During the first quarter of fiscal 2000, we recorded a pre-tax charge of
$1,627, or $.08 per share after tax, primarily relating to the restructuring of
the Power Electronics Division. $1,251 of this pre-tax charge is included in
selling, general and administrative expenses with the remaining $376 included in
cost of sales in the accompanying consolidated statement of income for the year
ended January 31, 2000. The primary purpose of the restructuring was to improve
the profitability of our Power Electronics Division by reducing labor costs,
overhead and improving logistics management. As a result, we expect the
restructuring to result in lower operating costs estimated to yield annual
savings of approximately $1,000. We began to realize these operational savings
during the fourth quarter of fiscal 2000. The restructuring charge consisted of
estimated costs to close our Costa Mesa, California power supply production
facility as well as contractual severance liabilities associated with the
non-renewal of the employment contracts of two of our former officers. With
respect to the closing of the Costa Mesa, California production facility, we
implemented a restructuring plan that consisted of transferring production
primarily to our existing facility in Nogales, Mexico. Major actions of the
restructuring plan consisted of: (i) disposition of inventory; (ii) write-off of
impaired property, plant and equipment that was not transferred to other
facilities; and (iii) termination of the Power Electronics' Costa Mesa,
California work force. Details of the restructuring charge are as follows:
Balance at
Cash Non-Cash January 31,
Provision Reductions Activity 2000
--------- ---------- -------- ----
Write-off of inventory... $ 376 - $ (376) -
Write-down of property,
plant and equipment.... 355 - (355) -
Employee severance....... 741 $ (485) - $ 256
Other.................... 155 (155) - -
----- ----- ----- -----
Total.................... $1,627 $ (640) $ (731) $ 256
===== ===== ===== =====
The $376 inventory write-off was determined based upon identification of
inventory associated with discontinued products. This inventory was disposed of
during the second quarter of fiscal 2000. The $355 write-down of impaired
property, plant and equipment was determined based upon the estimated cost to
completely write-down the net book value of assets not transferred to other
facilities. We completed the disposition of the impaired property, plant and
equipment during the third quarter of fiscal 2000. Employee severance of $741
was charged to selling, general and administrative expenses and provided for a
reduction of approximately 50 employees, consisting of production and
administrative employees related to the Power Electronics' Costa Mesa,
California facility, and two former officers of C&D. All employee terminations
were completed by the end of the third quarter of fiscal 2000, with payments
being made in accordance with contractual agreements through fiscal 2001.
22
<PAGE>
Fiscal 1999 Compared to Fiscal 1998
- -----------------------------------
Net sales for fiscal 1999 increased $5,912 or two percent to $313,966 from
$308,054 in fiscal 1998. This was a result of an increase in sales by the
Powercom and Motive Power Divisions, up nine percent and four percent,
respectively, partially offset by a 13 percent decrease in sales by the Power
Electronics Division. The increase in Powercom divisional sales was primarily
due to higher sales to the telecommunications and control markets in fiscal 1999
versus the prior year. Power Electronics divisional sales were lower in fiscal
1999 compared to fiscal 1998 due to lower power conversion sales to both the
telecommunications and non-telecommunications markets. Power Electronics
telecommunications sales were lower in fiscal 1999 due to lower sales of
cellular phone battery chargers. On a company-wide basis,
telecommunications-related sales were approximately 50 percent of total C&D
sales during fiscal 1999 versus 49 percent in fiscal 1998.
Gross profit for fiscal 1999 increased $4,996 or six percent to $86,170
from $81,174 in the prior year, resulting in a gross margin of 27.4 percent
versus 26.4 percent in the prior fiscal year. Gross margin increased as a result
of improved gross margin in the Powercom Division due to lower material costs
and improved operating efficiencies, as well as improved Motive Power divisional
gross margin related to lower material costs. Power Electronics divisional gross
margin decreased in fiscal 1999 versus the prior year primarily as a result of
lower sales volumes.
Selling, general and administrative expenses for fiscal 1999 increased
$1,011 or three percent over the prior year due to higher selling expenses,
partially offset by lower general and administrative expenses. Selling expenses
increased in fiscal 1999 over fiscal 1998 due to higher commission expenses and
higher payroll and new Motive Power divisional sales branch location related
costs. General and administrative expenses were lower in fiscal 1999 compared to
the prior year due to the absence in fiscal 1999 of costs related to the
accelerated write-off of goodwill and intangible assets associated with LH (due
to impairment) that occurred in fiscal 1998, lower costs associated with the
resolution of legal disputes and lower consulting costs. During fiscal 1998 we
determined that there was an impairment of certain assets arising from the LH
acquisition based on the undiscounted net cash flows of the underlying assets.
An impairment loss of $1,185 was recorded for the write-off of goodwill in the
amount of $588 and intangible assets in the amount of $567 which were determined
to have a fair value of zero. The write-off did not include any tangible assets.
Research and development expenses remained proportional to sales as a
relative percentage for both fiscal 1999 and 1998 at approximately three percent
of sales.
Operating income increased $4,340 to $37,571 in fiscal 1999 compared to
$33,231 in fiscal 1998 as a result of higher Powercom divisional operating
income, flat Motive Power divisional operating income and lower Power
Electronics divisional operating income. During the fourth quarter of fiscal
1999, our Power Electronics Division incurred an operating loss.
Interest expense, net, decreased to $126 in fiscal 1999 from $1,129 in
fiscal 1998 primarily due to lower outstanding debt balances during fiscal 1999.
Other expense, net, decreased $847 from fiscal 1998 to fiscal 1999
primarily due to the absence in the current year of amortization expense
associated with the write-off of capitalized debt acquisition costs in the
amount of $434 related both to our credit facility and the Development Authority
of Rockdale
23
<PAGE>
County Industrial Revenue Bonds which were written-off due to the renegotiation
of our credit facility and the early payment of the Development Authority of
Rockdale County Industrial Revenue Bonds, respectively. Also contributing to
this decrease was higher prompt payment discounts in fiscal 1999 versus the
prior year and a lower foreign exchange loss in fiscal 1999 compared to fiscal
1998.
Income tax expense increased $1,795 from fiscal 1998 to fiscal 1999,
primarily due to higher levels of income before income taxes, which was
partially offset by a decrease in the effective tax rate. The effective tax rate
consists of statutory rates adjusted for the tax impacts of our foreign sales
corporation, research and development credits, and foreign operations. The
effective tax rate for fiscal 1999 decreased to 35.3 percent from 36.6 percent
in the prior year mainly due to increased tax benefits associated with our
foreign operations and research and development tax credit, partially offset by
a reduced tax benefit from the foreign sales corporation.
As a result of the above, for fiscal 1999, net income rose 22 percent from
fiscal 1998 to $24,080 or $1.95 per common share - basic and $1.88 per common
share - assuming dilution.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities increased $35,128 or 133 percent
to $61,550 in fiscal 2000 compared to $26,422 in fiscal 1999. The increase in
net cash provided by operating activities during fiscal 2000 was primarily due
to: (i) an increase in net income; (ii) an increase in depreciation and
amortization (mainly associated with the acquisition of the Dynasty Division);
(iii) a decrease in inventory during the current year versus an increase in the
prior year; (iv) a larger increase in accounts payable; (v) a larger increase in
accrued liabilities (mainly due to increased accruals related to sales volume
rebates, commissions and accrued interest associated with the higher debt
levels); and (vi) an increase in income taxes payable during fiscal 2000
compared to a decrease in the same period of the prior year. These changes,
resulting in higher net cash provided by operating activities, were partially
offset by a larger increase in accounts receivable during fiscal 2000 compared
to the prior year primarily due to higher sales volumes in fiscal 2000.
Net cash used by investing activities totaling $149,491 for fiscal 2000
includes our purchase of the Specialty Battery Division of JCI and the
acquisition of JCI's 67 percent ownership interest in a joint venture battery
business in Shanghai, China.
Net cash provided by financing activities was $90,050 for fiscal 2000
versus net cash used of $6,896 in the prior year. Proceeds from new borrowings
in fiscal 2000 were used primarily for the funding of the aforementioned
acquisitions.
On March 1, 1999 we entered into a credit agreement in which the lenders
named therein, and Bank of America (formerly NationsBank, N.A.) as
administrative agent, provided a $220,000 credit facility consisting of a term
loan in the amount of $100,000 and a revolving loan not to exceed $120,000. The
funds borrowed under this credit agreement were used to finance the
aforementioned acquisitions, working capital and certain other expenditures and
to refinance existing debt. Our availability under the current loan agreement is
expected to be sufficient to meet our ongoing cash needs for working capital
requirements, debt service, capital expenditures and possible strategic
acquisitions. Capital expenditures during fiscal 2000 were incurred primarily to
fund capacity expansion, new product development, a continuing series
24
<PAGE>
of cost reduction programs, normal maintenance capital, and regulatory
compliance. Fiscal 2001 capital expenditures are expected to exceed $50,000 for
similar purposes.
Year 2000
- ---------
We recognized the need to ensure that our operations would not be adversely
affected by Year 2000 computer problems, and thus developed and implemented a
Year 2000 Readiness Plan. Our plan addressed the following four areas:
o information technology systems (consisting of computer hard-
ware and software related to our business systems as well as
our engineering and test equipment);
o non-information technology systems (including embedded
technology such as microcontrollers, which are typically
found in such things as telephone systems, security systems,
fax machines, etc.);
o products sold to customers; and
o third party issues (including significant suppliers and
customers).
Our Year 2000 Readiness Plan generally included the following phases for
each of the four areas noted above:
o identification and risk assessment;
o development and implementation of a remediation plan;
o acceptance testing; and
o contingency planning for high risk critical areas.
We believe that the Year 2000 problem was successfully addressed through
our Year 2000 initiatives. We did not experience any difficulties related to the
Year 2000 problem on January 1, 2000 and have not experienced any Year 2000
difficulties since that date. Our operations have not, to date, been adversely
affected by any difficulties experienced by any of our suppliers or customers in
connection with the Year 2000 problem. We will continue to monitor our systems
for potential Year 2000 difficulties through the remainder of calendar year
2000.
We believe the costs directly related to addressing our Year 2000 problem
were not material. These costs were paid from internal funds and were expensed.
To date, 100 percent of the total Year 2000 project costs have been incurred. We
have not tracked the internal costs incurred in connection with addressing the
Year 2000 problem, however we believe that such costs consist principally of the
related payroll costs for our information systems group and are not material. No
other significant information technology projects were deferred due to our Year
2000 efforts.
Conversion to the Euro Currency
- -------------------------------
On January 1, 1999, the Euro was adopted as the common legal currency, in
coexistence with the national currencies for European Union member nations until
January 1, 2002. We have made necessary adjustments to our processes to ensure
compliance during the three year transitional period that ends January 1, 2002.
After this transitional period, the Euro becomes the sole legal currency for the
European
25
<PAGE>
Union member nations and all of our records of the national currencies will be
converted to the Euro equivalent at that time. We do not expect the Euro
adoption to have a material adverse impact on our financial condition or results
of operations.
New Accounting Pronouncements Not Yet Adopted
- ---------------------------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement establishes new procedures for accounting for derivatives and hedging
activities and supersedes and amends a number of existing standards. In June
1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133."
SFAS No. 137 amends SFAS No. 133 by delaying its effective date by one year to
fiscal years beginning after June 15, 2000. We currently use derivatives such as
interest rate swap agreements, currency swaps and currency forwards to
effectively fix the interest rate on a portion of our floating rate debt and the
exchange rate on a portion of our foreign assets, liabilities and cash flows.
Under current accounting standards, no gain or loss is recognized on changes in
the fair value of these derivatives. Under these statements, gains or losses
will be recognized based on changes in the fair value of the derivatives which
generally occur as a result of changes in interest rates and foreign currency
exchange rates. We are currently evaluating the financial impact of adoption of
these statements. We believe that the adoption of these statements will not have
a material effect on our financial position or results of operations.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
- -------------------------------------------------------------------
ALL DOLLAR AMOUNTS IN THIS ITEM 7A ARE IN THOUSANDS.
Market Risk Factors
- -------------------
We are exposed to various market risks. The primary financial risks include
fluctuations in interest rates and changes in currency exchange rates. We manage
these risks by using derivative instruments. We do not invest in derivative
securities for trading purposes, but do enter into hedging arrangements in order
to reduce our exposure to fluctuations in interest rates as well as to
fluctuations in exchange rates. (See "Derivative Financial Instruments" in the
Summary of Significant Accounting Policies, Note 1, and Fair Value of Financial
Instruments, Note 12.)
Our financial instruments subject to interest rate risk consist of debt
instruments and interest rate swap contracts. The net market value of our debt
instruments was $96,852 and $2,282 at January 31, 2000 and 1999, respectively.
The debt instruments are subject to variable rate interest and therefore the
market value is not sensitive to interest rate movements.
The interest rate swap contracts are entered into in order to manage our
exposure to fluctuations in interest rates on our underlying variable rate debt
instruments. We employ separate swap transactions rather than fixed rate
obligations to take advantage of the lower borrowing costs associated with
floating rate debt while also eliminating possible risk related to refinancing
in the fixed rate market.
26
<PAGE>
The net market value of our interest rate swaps was $1,165 and $(114) at
January 31, 2000 and 1999, respectively. A 100-basis point increase in rates at
January 31, 2000 and 1999 would result in an $861 and a $231 increase in the
market value, respectively. A 100-basis point decrease in rates at January 31,
2000 and 1999 would result in an $878 and a $231 decrease in the market value,
respectively.
The above sensitivity analysis assumes an instantaneous 100-basis point
move in interest rates from their levels, with all other variables held
constant. We calculate the market value of the interest rate swaps by utilizing
a standard net present value model based on the market conditions as of the
valuation date.
We use currency forwards and swaps to hedge anticipated cash flows in
foreign currencies. The exposures currently hedged are the Canadian Dollar and
the Euro. These financial instruments represent a net market value of $49 and
$101 at January 31, 2000 and 1999, respectively.
To monitor our currency exchange rate risk, we use sensitivity analysis to
measure the impact on earnings in the case of a 10% devaluation of the Canadian
Dollar and Euro to the US Dollar.
The sensitivity analysis assumes an instantaneous 10% change in foreign
currency exchange rates from year-end levels, with all other variables being
held constant. At January 31, 2000 and 1999, a 10% strengthening of the US
Dollar versus the Canadian Dollar and the Euro would result in an increase of
the net market value of the forwards and swaps of $178 and $201, respectively.
At January 31, 2000 and 1999, a 10% weakening of the US Dollar versus the
Canadian Dollar and the Euro would result in a decrease in the net market value
of the forwards and swaps of $35 and $307, respectively.
The market value of the instruments was determined by taking into
consideration the contracted interest rates and foreign exchange rates versus
those available for similar maturities in the market at January 31, 2000 and
1999, respectively.
Foreign exchange forwards and swap contracts are used to hedge our firm and
anticipated foreign currency cash flows. There is either a balance sheet or cash
flow exposure related to all of the financial instruments in the above
sensitivity analysis for which the impact of a movement in exchange rates would
be in the opposite direction and substantially equal to the impact on the
instruments in the analysis.
Item 8. Financial Statements and Supplementary Data
- ----------------------------------------------------
The financial statements and supplementary data listed in Item 14(a)(1)
hereof are incorporated herein by reference and are filed as part of this
report.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
- --------------------------------------------------------------------------------
Not applicable.
27
<PAGE>
PART III
The information required by Part III (Items 10 through 13) is incorporated
herein by reference to the captions "Principal Stockholders," "Election of
Directors," "Management" and "Compliance with Section 16(a) of the Securities
Exchange Act of 1934" in our definitive Proxy Statement to be filed pursuant to
Regulation 14A within 120 days after the end of our fiscal year covered by this
report.
28
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- -------------------------------------------------------------------------
(a) DOCUMENTS FILED AS PART OF THIS REPORT:
(1) The following financial statements are included in this report on
Form 10-K:
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
Report of Independent Accountants
Consolidated Balance Sheets as of January 31, 2000 and 1999
Consolidated Statements of Income for the years ended January 31,
2000, 1999 and 1998
Consolidated Statements of Stockholders' Equity for the years
ended January 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the years ended January
31, 2000, 1999 and 1998
Consolidated Statements of Comprehensive Income for the years
ended January 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
(2) The following financial statement schedule is included in this
report on Form 10-K:
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES for the years ended
January 31, 2000, 1999 and 1998
II. Valuation and Qualifying Accounts
(3) Exhibits:
3.1 Restated Certificate of Incorporation of C&D, as amended
(incorporated by reference to Exhibits 3.1 and 3.2 to C&D's
Current Report on Form 8-K dated June 30, 1998).
3.2 Amended and Restated By-laws of C&D (filed herewith).
4.1 Rights Agreement dated as of February 22, 2000 between C&D
and ChaseMellon Shareholder Services, L.L.C., as rights
agent, which includes as Exhibit B thereto the form of
rights certificate (incorporated by reference to Exhibit 1
to C&D's Form 8-A Registration Statement filed on February
28, 2000).
10.1 Purchase Agreement dated November 27, 1985, among Allied,
Allied Canada Inc. and C&D; Amendments thereto dated January
28 and October 8, 1986 (incorporated by
29
<PAGE>
reference to Exhibit 10.1 to C&D's Registration Statement on
Form S-1, No. 33-10889).
10.2 Agreement dated December 15, 1986 between C&D and Allied
(incorporated by reference to Exhibit 10.2 to C&D's
Registration Statement on Form S-1, No. 33-10889).
10.3 Lease Agreement dated February 15, 1994 by and between
Sequatchie Associates, Incorporated and C&D Charter Power
Systems, Inc. (which has since been merged into C&D)
(incorporated by reference to Exhibit 10.1 to C&D's
Quarterly Report on Form 10-Q for the quarter ended April
30, 1999).
10.4 Purchase and Sale Agreement, dated as of November 23, 1998
among Johnson Controls, Inc. and its subsidiaries as Seller
and C&D and C&D Acquisition Corp. as Purchaser (incorporated
by reference to Exhibit 2.1 to C&D's Current Report on Form
8-K dated March 1, 1999).
10.5 Credit Agreement, dated as of March 1, 1999 among C&D, as
borrower, certain subsidiaries and affiliates of C&D, as
guarantors, the lenders named therein, and Bank of America
(formerly NationsBank, N.A.), as administrative agent
(incorporated by reference to Exhibit 2.2 to C&D's Current
Report on Form 8-K dated March 1, 1999); First Amendment
dated February 18, 2000 of our Credit Agreement dated as of
March 1, 1999 among C&D, as borrower, certain subsidiaries
and affiliates of C&D, as guarantors, the lenders named
therein, and Bank of America (formerly NationsBank, N.A.),
as administrative agent (filed herewith).
Management Contracts or Plans
- -----------------------------
10.6 Charter Power Systems, Inc. 1996 Stock Option Plan
(incorporated by reference to Exhibit 10.1 to C&D's
Quarterly Report on Form 10-Q for the quarter ended July 31,
1996), First Amendment to C&D Technologies, Inc. 1996 Stock
Option Plan (formerly known as the Charter Power Systems,
Inc. 1996 Stock Option Plan) dated April 27, 1999
(incorporated by reference to Exhibit 10.3 to C&D's
Quarterly Report on Form 10-Q for the quarter ended July 31,
1999).
10.7 C&D Technologies, Inc. Amended and Restated 1998 Stock
Option Plan (filed herewith). (This plan is being submitted
for stockholder approval at the 2000 annual meeting.)
10.8 C&D Technologies, Inc. Savings Plan (October 1, 1997
Restatement) (incorporated by reference to Exhibit 10.4 to
C&D's Annual Report on Form 10-K for the fiscal year ended
January 31, 1998), First Amendment to C&D Technologies, Inc.
Savings Plan (incorporated by reference to Exhibit 10.1 to
C&D's Quarterly Report on form 10-Q for the quarter ended
October 31, 1999), Second Amendment to C&D Technologies,
Inc. Savings Plan (incorporated by reference to Exhibit 10.2
to C&D's Quarterly Report on Form 10-Q for the quarter ended
October 31, 1999).
30
<PAGE>
10.9 C&D Technologies, Inc. Pension Plan for Salaried Employees
as restated and amended (incorporated by reference to
Exhibit 10.10 to C&D's Annual Report on Form 10-K for the
fiscal year ended January 31, 1995); First and Second
Amendments thereto dated December 20, 1995 (incorporated by
reference to Exhibit 10.5 to C&D's Annual Report on Form
10-K for the fiscal year ended January 31, 1996); Third
Amendment thereto dated February 18, 1997 (incorporated by
reference to Exhibit 10.5 to C&D's Annual Report on Form
10-K for the fiscal year ended January 31, 1998); Fourth
Amendment thereto dated January 27, 1998 (incorporated by
reference to Exhibit 10.5 to C&D's Annual Report on Form
10-K for the fiscal year ended January 31, 1998); Fifth
Amendment thereto dated January 28, 1999 (incorporated by
reference to Exhibit 10.5 to C&D's Annual Report on Form
10-K for the fiscal year ended January 31, 1999), Sixth
Amendment thereto dated April 27, 1999 (incorporated by
reference to Exhibit 10.2 to C&D's Quarterly Report on Form
10-Q for the quarter ended July 31, 1999).
10.10 Supplemental Executive Retirement Plan (amended and
restated) as of October 22, 1998 (incorporated by reference
to Exhibit 10.18 to C&D's Annual Report on Form 10-K for the
fiscal year ended January 31, 1999), Amendment to Appendix A
of the Supplemental Executive Retirement Plan Amended and
Restated as of November 22, 1999 (incorporated by reference
to Exhibit 10.3 to C&D's Quarterly Report on Form 10-Q for
the quarter ended October 31, 1999).
10.11 C&D Technologies, Inc. Incentive Compensation Plan for the
year ended January 31, 2000 (incorporated by reference to
Exhibit 10.1 to C&D's Quarterly Report on Form 10-Q for the
quarter ended April 30, 1999).
10.12 Employment Agreement dated March 1, 1994 between A. Gordon
Goodyear and C&D (incorporated by reference to Exhibit 10.2
to C&D's Quarterly Report on Form 10-Q for the quarter ended
April 30, 1994); Amendment thereto dated April 3, 1995
(incorporated by reference to Exhibit 10.4 to C&D's
Quarterly Report on Form 10-Q for the quarter ended April
30, 1995).
10.13 Employment Agreement dated March 31, 2000 between Wade H.
Roberts, Jr. and C&D (filed herewith).
10.14 Employment Agreement dated March 31, 2000 between Stephen
E. Markert, Jr. and C&D (filed herewith).
10.15 Employment Agreement dated March 31, 2000 between Linda R.
Hansen and C&D (filed herewith).
10.16 Employment Agreement dated March 31, 2000 between Mark Z.
Sappir and C&D (filed herewith).
10.17 Employment Agreement dated March 31, 2000 between Bernie
Radecki and C&D (filed herewith).
31
<PAGE>
10.18 Employment Agreement dated March 31, 2000 between Charles
Giesige, Sr. and C&D (filed herewith).
10.19 Employment Agreement dated March 31, 2000 between John J.
Murray, Jr. and C&D (filed herewith).
10.20 Employment Agreement dated March 31, 2000 between John Rich
and C&D (filed herewith).
10.21 Employment Agreement dated March 31, 2000 between Apostoles
T. Kambouroglou and C&D (filed herewith).
10.22 Employment Agreement dated March 31, 2000 between Kathryn
Bullock and C&D (filed herewith).
10.23 Separation Agreement dated March 2000 between Larry W.
Moore and C&D (filed herewith).
21 Subsidiaries of C&D (filed herewith).
23 Consent of Independent Accountants (filed herewith).
27 Financial Data Schedule (filed herewith).
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed by C&D during the last quarter of
the period covered by this report.
On February 28, 2000, C&D filed a Form 8-K current report under Item 5
to report the adoption of the Stockholder Rights Agreement between C&D
and ChaseMellon Shareholder Services, L.L.C., as rights agent.
32
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
C&D TECHNOLOGIES, INC.
April 27, 2000 By: /s/ Wade H. Roberts, Jr.
------------------------
Wade H. Roberts, Jr.
President, Chief Executive
Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Wade H. Roberts, Jr. President, Chief Executive April 27, 2000
- --------------------------- Officer and Director
Wade H. Roberts, Jr. (Principal Executive Officer)
/s/ Stephen E. Markert, Jr. Vice President Finance April 27, 2000
- --------------------------- (Principal Financial and
Stephen E. Markert, Jr. Accounting Officer)
/s/ William Harral, III Director, Chairman April 27, 2000
- ---------------------------
William Harral, III
/s/ Adrian A. Basora Director April 27, 2000
- ---------------------------
Adrian A. Basora
/s/ Peter R. Dachowski Director April 27, 2000
- ---------------------------
Peter R. Dachowski
/s/ Kevin P. Dowd Director April 27, 2000
- ---------------------------
Kevin P. Dowd
/s/ Glenn M. Feit Director April 27, 2000
- ---------------------------
Glenn M. Feit
/s/ Pamela S. Lewis Director April 27, 2000
- ---------------------------
Pamela S. Lewis
/s/ George MacKenzie Director April 27, 2000
- ---------------------------
George MacKenzie
/s/ John A. H. Shober Director April 27, 2000
- ---------------------------
John A. H. Shober
33
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
FINANCIAL STATEMENTS
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
Page
Report of Independent Accountants..................... F-2
Consolidated Balance Sheets as of
January 31, 2000 and 1999........................... F-3
Consolidated Statements of Income
for the years ended January 31, 2000, 1999
and 1998............................................ F-4
Consolidated Statements of
Stockholders' Equity for the years
ended January 31, 2000, 1999 and 1998............... F-5
Consolidated Statements of Cash Flows
for the years ended January 31, 2000, 1999
and 1998............................................ F-6
Consolidated Statements of Comprehensive
Income for the years ended January 31, 2000,
1999 and 1998....................................... F-8
Notes to Consolidated Financial Statements............ F-9
FINANCIAL STATEMENT SCHEDULE
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
For the years ended January 31, 2000, 1999 and 1998
Schedule II. Valuation and Qualifying Accounts....... S-1
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of C&D Technologies, Inc.:
In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) on page 29 present fairly, in all material
respects, the financial position of C&D Technologies, Inc. and subsidiaries (the
"Company") at January 31, 2000 and January 31, 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
January 31, 2000 in conformity with accounting principles generally accepted in
the United States. In addition, in our opinion, the financial statement schedule
listed in the index appearing under Item 14(a)(2) on page 29 presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 10, 2000
F-2
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31,
(Dollars in thousands)
2000 1999
---- ----
ASSETS
Current assets:
Cash and cash equivalents............................ $ 7,121 $ 5,003
Accounts receivable, less allowance for doubtful
accounts of $3,080 in 2000 and $1,635 in 1999.... 76,161 44,232
Inventories.......................................... 60,965 49,855
Deferred income taxes................................ 10,158 7,305
Other current assets................................. 1,256 2,318
------- -------
Total current assets............................. 155,661 108,713
Property, plant and equipment, net....................... 100,813 62,388
Deferred income taxes.................................... 803 -
Intangible and other assets, net......................... 22,692 4,393
Goodwill, net............................................ 74,146 10,148
------- -------
Total assets..................................... $354,115 $185,642
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt...................................... $ 20,393 $ 532
Accounts payable..................................... 36,680 23,997
Accrued liabilities.................................. 26,996 17,714
Income taxes......................................... 2,018 -
Other current liabilities............................ 4,495 2,782
------- -------
Total current liabilities........................ 90,582 45,025
Deferred income taxes.................................... - 2,887
Long-term debt........................................... 76,459 1,750
Other liabilities........................................ 20,663 12,442
------- -------
Total liabilities................................ 187,704 62,104
------- -------
Commitments and contingencies
Minority interest........................................ 4,345 -
Stockholders' equity:
Common stock, $.01 par value, 75,000,000
shares authorized; 13,933,740 and 13,368,719
shares issued in 2000 and 1999, respectively..... 139 134
Additional paid-in capital........................... 53,969 43,429
Treasury stock, at cost, 905,102 shares.............. (10,819) (10,819)
Accumulated other comprehensive loss................. (617) (169)
Retained earnings.................................... 119,394 90,963
------- -------
Total stockholders' equity....................... 162,066 123,538
------- -------
Total liabilities and stockholders' equity....... $354,115 $185,642
======= =======
See notes to consolidated financial statements.
F-3
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
for the years ended January 31,
(Dollars in thousands, except per share data)
2000 1999 1998
---- ---- ----
Net sales..................................... $465,570 $313,966 $308,054
Cost of sales................................. 341,190 227,796 226,880
------- ------- -------
Gross profit............................ 124,380 86,170 81,174
Selling, general and administrative
expenses................................ 59,315 40,344 39,333
Research and development expenses............. 8,941 8,255 8,610
------- ------- -------
Operating income........................ 56,124 37,571 33,231
Interest expense, net......................... 7,946 126 1,129
Other (income) expense, net................... (20) 211 1,058
------- ------- -------
Income before income taxes
and minority interest................. 48,198 37,234 31,044
Provision for income taxes.................... 17,737 13,154 11,359
------- ------- -------
Net income before minority
interest.............................. 30,461 24,080 19,685
Minority interest............................. 619 - -
------- ------- -------
Net income.............................. $ 29,842 $ 24,080 $ 19,685
======= ======= =======
Net income per common share*.................. $ 2.34 $ 1.95 $ 1.61
Net income per common share -
assuming dilution*...................... $ 2.29 $ 1.88 $ 1.56
* Per share amounts have been adjusted to reflect the Company's July 24, 1998
two-for-one stock split, effected in the form of a 100% stock dividend,
where appropriate.
See notes to consolidated financial statements.
F-4
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
for the years ended January 31, 2000, 1999 and 1998
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Notes Accumulated
Common Stock Additional Treasury Stock Receivable Other
------------------ Paid-In ----------------- From Comprehensive Retained
Shares* Amount* Capital* Shares* Amount Stockholders Loss Earnings
------- ------- -------- ------- ------ ------------ ---- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as of
January 31, 1997.......... 13,094,952 $130 $39,261 (941,102) $(11,232) $(1,636) $(510) $ 48,893
Net income.................. 19,685
Dividends to stockholders,
$.055 per share*.......... (673)
Principal payments on
stockholder notes......... 664
Amortization of discount on
stockholder notes......... (57)
Tax effect relating to stock
options exercised......... 564
Minimum pension liability
adjustment................ 136
Cumulative translation
adjustment................ 126
Issuance of common stock.... 434 36,000 413
Stock options exercised..... 133,946 2 1,105
---------- --- ------ -------- ------- ------ ---- -------
Balance as of
January 31, 1998......... 13,228,898 132 41,364 (905,102) (10,819) (1,029) (248) 67,905
Net income.................. 24,080
Dividends to stockholders,
$.0825 per share*......... (1,022)
Principal payments on
stockholder notes......... 1,057
Amortization of discount on
stockholder notes......... (28)
Tax effect relating to stock
options exercised......... 792
Cumulative translation
adjustment................ 79
Issuance of common stock.... 2,484 72
Stock options exercised..... 137,337 2 1,201
---------- --- ------ -------- ------- ------ ---- -------
Balance as of
January 31, 1999.......... 13,368,719 134 43,429 (905,102) (10,819) - (169) 90,963
Net income.................. 29,842
Dividends to stockholders,
$.11 per share............ (1,411)
Tax effect relating to stock
options exercised......... 3,736
Cumulative translation
adjustment................ (448)
Issuance of common stock.... 5,293 161
Stock options exercised..... 559,728 5 6,643
---------- --- ------ -------- ------- ------ ---- -------
Balance as of
January 31, 2000.......... 13,933,740 $139 $53,969 (905,102) $(10,819) $ - $(617) $119,394
========== === ====== ======== ======= ====== ==== =======
</TABLE>
* Adjusted to reflect the Company's July 24, 1998 two-for-one stock split,
effected in the form of a 100% stock dividend, where appropriate.
See notes to consolidated financial statements.
F-5
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended January 31,
(Dollars in thousands)
<TABLE>
<CAPTION>
2000 1999 1998
---- ---- ----
<S> <C> <C> <C>
Cash flows provided (used) by operating activities:
Net income ........................................ $ 29,842 $ 24,080 $ 19,685
Adjustments to reconcile net income to net
cash provided by operating activities:
Minority interest.................................... 619 - -
Depreciation and amortization........................ 21,671 11,289 11,824
Deferred income taxes................................ (3,047) 1 (2,338)
Loss on disposal of assets........................... 988 224 175
Changes in:
Accounts receivable............................ (12,100) (1,498) (1,182)
Inventories.................................... 1,466 (9,075) (1,856)
Other current assets........................... 486 (471) (450)
Accounts payable............................... 5,224 1,191 (933)
Accrued liabilities............................ 4,648 1,617 1,566
Income taxes payable........................... 6,059 (2,777) 3,447
Other current liabilities...................... 913 (464) (1,036)
Other liabilities.............................. 3,990 1,944 2,593
Other, net........................................... 791 361 477
-------- -------- --------
Net cash provided by operating activities.............. 61,550 26,422 31,972
-------- -------- --------
Cash flows provided (used) by investing activities:
Acquisition of businesses, net....................... (134,878) - -
Acquisition of property, plant and equipment......... (14,710) (15,761) (13,640)
Proceeds from disposal of property,
plant and equipment................................ 97 69 41
Change in restricted cash............................ - - 1
-------- -------- --------
Net cash used by investing activities.................. (149,491) (15,692) (13,598)
-------- -------- --------
Cash flows provided (used) by financing activities:
Repayment of debt.................................... (17,374) (8,308) (19,239)
Proceeds from new borrowings......................... 104,898 - -
Financing costs of long-term debt.................... (2,727) - -
Repayment of notes receivable from stockholders...... - 1,057 664
Proceeds from issuance of common stock, net.......... 6,648 1,203 1,107
Payment of common stock dividends.................... (1,395) (848) (671)
-------- -------- --------
Net cash provided (used) by financing activities....... 90,050 (6,896) (18,139)
-------- -------- --------
Effect of exchange rate changes on cash................ 9 2 (20)
-------- -------- --------
Increase in cash and cash equivalents.................. 2,118 3,836 215
Cash and cash equivalents at beginning of year......... 5,003 1,167 952
-------- -------- --------
Cash and cash equivalents at end of year............... $ 7,121 $ 5,003 $ 1,167
======== ======== ========
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
for the years ended January 31,
(Dollars in thousands)
2000 1999 1998
---- ---- ----
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the year for:
Interest paid, net........................ $ 7,417 $ 415 $ 1,599
Income taxes paid, net.................... $ 14,733 $15,927 $10,251
SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Acquired businesses:
Estimated fair value of assets acquired... $ 80,909 $ - $ -
Goodwill ................................ 67,637 - -
Identifiable intangible assets............ 17,840 - -
Cash paid, net of cash acquired........... (134,878) - -
-------- ------ ------
Liabilities assumed....................... $ 31,508 $ - $ -
======== ====== ======
Dividends declared but not paid................ $ 358 $ 343 $ 169
Fair market value of treasury stock
issued to pension plans...................... $ - $ - $ 847
Annual retainer to Board of Directors paid
by the issuance of common stock.............. $ 161 $ 72 $ -
See notes to consolidated financial statements.
F-7
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
for the years ended January 31,
(Dollars in thousands)
2000 1999 1998
---- ---- ----
Net Income........................................ $29,842 $24,080 $19,685
Other comprehensive (expense) income, net of tax:
Cumulative translation adjustments.............. (448) 79 126
Minimum pension liability adjustment............ - - 136
------ ------ ------
Total comprehensive income........................ $29,394 $24,159 $19,947
====== ====== ======
See notes to consolidated financial statements.
F-8
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share data)
--------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
----------------------------
C&D Technologies, Inc. was incorporated in November 1985. The Company
produces and markets systems for the conversion and storage of electrical power,
including industrial batteries and electronics for use in the North American and
export markets. On January 28, 1986, the Company purchased substantially all of
the assets of the C&D Power Systems division of Allied Corporation ("Allied")
(the "Acquisition").
The consolidated financial statements include the accounts of C&D
Technologies, Inc., its wholly owned subsidiaries and a joint venture
(collectively the "Company"). All significant intercompany accounts and
transactions have been eliminated.
Accounting Estimates:
---------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Foreign Currency Translation:
-----------------------------
Assets and liabilities in foreign currencies are translated into U.S.
dollars at the rate of exchange prevailing at the balance sheet date. Revenue
and expenses are translated at the average rate of exchange for the period.
Gains and losses on foreign currency transactions are included in non-operating
expenses.
Derivative Financial Instruments:
---------------------------------
Derivative financial instruments are utilized by the Company to reduce
foreign exchange and interest rate risks. The Company has established a control
environment which includes policies and procedures for risk assessment and the
approval, reporting and monitoring of derivative financial instrument
activities. The Company does not hold or issue financial instruments for trading
purposes and it prohibits the use of derivatives for speculative purposes.
Derivative financial instruments are accounted for on an accrual basis. Income
and expense are recorded in the same category as that arising from the related
asset or liability being hedged. (See Note 12.)
The Company selectively uses foreign currency forward and option contracts
to offset the effects of exchange rate changes on cash flows denominated in
foreign currencies, primarily the Canadian Dollar, the Euro and Mexican Peso.
F-9
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The Company uses interest rate swap agreements to reduce the impact of
interest rate changes on its debt. The interest rate swap agreements involve the
exchange of variable for fixed rate interest payments without the exchange of
the underlying notional amount.
Cash and Cash Equivalents:
--------------------------
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents. The Company's cash
management program utilizes zero balance accounts. Accordingly, all book
overdraft balances have been reclassified to accounts payable and amounted to
$11,410 and $8,789 at January 31, 2000 and 1999, respectively.
Revenue Recognition:
--------------------
Revenue is recognized when products are shipped and title is passed to the
customer.
Inventories:
------------
Inventories are stated at the lower of cost or net realizable value. Cost
is generally determined by the last-in, first-out method for financial statement
and federal income tax purposes.
Property, Plant and Equipment:
------------------------------
Property, plant and equipment acquired as of the Acquisition was recorded
at the then fair market value. Property, plant and equipment acquired subsequent
to the Acquisition is recorded at cost or fair market value if part of an
acquisition. Plant and equipment, including capital leases, are depreciated on
the straight-line method for financial reporting purposes over estimated useful
lives which generally range from three to 10 years for machinery and equipment,
and 10 to 40 years for buildings and improvements. The Company's policy is to
capitalize interest during the period of construction.
The cost of maintenance and repairs is charged to expense as incurred.
Renewals and betterments are capitalized. Upon retirement or other disposition
of items of plant and equipment, the cost of the item and related accumulated
depreciation are removed from the accounts and any gain or loss is included in
income.
The Company capitalizes purchased software, including certain costs
associated with its installation. The cost of software capitalized is amortized
over its estimated useful life, generally three to five years, using the
straight-line method.
F-10
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Intangible and Other Assets, Net:
---------------------------------
Intangible and other assets, net, includes assets acquired resulting from
business acquisitions (see Note 3) and are being amortized on the straight-line
method over their estimated periods of benefit, primarily five to 20 years.
Accumulated amortization as of January 31, 2000 and 1999 was $3,640 and $2,537,
respectively.
Goodwill, Net:
--------------
Goodwill represents the excess of cost over the fair value of net assets
acquired and is being amortized on the straight-line method over 20 to 40 years.
The recoverability of goodwill is periodically reviewed by the Company. In
assessing recoverability, many factors are considered, including operating
results and future undiscounted cash flows. The Company believes that no
impairment of goodwill existed at January 31, 2000. Accumulated amortization as
of January 31, 2000 and 1999 was $5,984 and $2,388, respectively.
Impairment of Assets:
---------------------
The Company follows Statement of Financial Accounting Standards ("SFAS")
No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," which requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying value of an asset may not be recoverable. In performing the review for
recoverability, the Company estimates the future cash flows expected to result
for the use of the asset and its eventual disposition. If the sum of the
expected future cash flows (undiscounted and without interest charges) is less
than the carrying amount of the asset, an impairment loss is recognized.
Accrued Liabilities:
--------------------
Included in accrued liabilities as of January 31, 2000 and 1999 are $3,595
and $2,940 of accrued vacation and $2,455 and $1,678 of accrued bonus,
respectively.
Other Liabilities:
------------------
The Company provides for estimated warranty costs at the time of sale.
Accrued warranty obligations of $3,128 and $2,228 are included in other current
liabilities and $9,554 and $6,730 are included in other liabilities as of
January 31, 2000 and 1999, respectively.
F-11
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Environmental Matters:
----------------------
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current or future
revenue generation, are also expensed. The Company records liabilities for
environmental costs when environmental assessments and/or remedial efforts are
probable and the costs can be reasonably estimated. The liability for future
environmental remediation costs is evaluated on a quarterly basis by management.
Income Taxes:
-------------
The Company follows SFAS No. 109, "Accounting for Income Taxes," which
requires recognition of deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns using tax rates in effect for the year in which the
differences are expected to reverse.
Net Income Per Share:
---------------------
Net income per common share for the years ended January 31, 2000, 1999 and
1998 is based on the weighted average number of shares of Common Stock
outstanding. Net income per common share - assuming dilution reflects the
potential dilution that could occur if stock options were exercised. Weighted
average common shares and common shares - assuming dilution were as follows:
January 31,
-----------------------------------
2000 1999 1998
---- ---- ----
Weighted average
shares of common stock
outstanding*.................. 12,764,889 12,365,183 12,221,370
Assumed conversion of
stock options, net of shares
assumed reacquired*........... 279,312 470,679 410,454
---------- ---------- ----------
Weighted average common
shares - assuming
dilution*..................... 13,044,201 12,835,862 12,631,824
* Share amounts have been adjusted to reflect the Company's July 24, 1998
two-for-one stock split, effected in the form of a 100% stock dividend,
where appropriate.
F-12
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
New Accounting Pronouncements Not Yet Adopted:
----------------------------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities." This
statement establishes new procedures for accounting for derivatives and hedging
activities and supersedes and amends a number of existing standards. In June
1999, the FASB issued SFAS No. 137, "Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB Statement No. 133."
SFAS No. 137 amends SFAS No. 133 by delaying its effective date by one year to
fiscal years beginning after June 15, 2000. The Company currently uses
derivatives such as interest rate swap agreements, currency swaps and currency
forwards to effectively fix the interest rate on a portion of the Company's
floating rate debt and the exchange rate on a portion of the Company's foreign
assets, liabilities and cash flows. Under current accounting standards, no gain
or loss is recognized on changes in the fair value of these derivatives. Under
these statements, gains or losses will be recognized based on changes in the
fair value of the derivatives which generally occur as a result of changes in
interest rates and foreign currency exchange rates. The Company is currently
evaluating the financial impact of adoption of these statements. The Company
believes that the adoption of these statements will not have a material effect
on its financial position or results of operations.
2. STOCK SPLIT
On July 24, 1998 the Company completed a two-for-one stock split, effected
in the form of a 100% stock dividend to stockholders of record on July 10, 1998.
This transaction resulted in a transfer on the Company's balance sheet of $66 to
common stock from additional paid-in capital. The accompanying financial
statements and related footnotes, including all share and per share amounts,
have been adjusted to reflect this transaction.
3. ACQUISITIONS
Effective March 1, 1999, the Company acquired substantially all of the
assets of the Specialty Battery Division of Johnson Controls, Inc. ("JCI"),
including, without limitation, certain assets of Johnson Controls Technology
Company, a wholly owned subsidiary of JCI, and 100% of the ordinary shares of
Johnson Controls Battery (U.K.) Limited, an indirect wholly owned subsidiary of
JCI. In consideration of the assets acquired, the Company paid approximately
$120,000 plus additional acquisition related costs, subject to certain
adjustments as set forth in the purchase agreement. In addition, the Company
assumed certain liabilities of the seller. The Specialty Battery Division was
engaged in the business of designing, manufacturing, marketing and distributing
industrial batteries. The Company continues to use the assets acquired in such
business. The source of the funds for the acquisition was advances under a
credit agreement consisting of a term loan in the amount of $100,000 and a
revolving loan not to exceed
F-13
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
3. ACQUISITIONS (continued)
$120,000 which includes a letter of credit facility not to exceed $30,000 and
swingline loans not to exceed $10,000.
On August 2, 1999 the Company completed the acquisition of JCI's 67 percent
ownership interest in a joint venture battery business in Shanghai, China for
$15,000 in cash. The joint venture manufactures, markets and distributes both
industrial and starting, lighting and ignition batteries. The Company has
continued the joint venture operations in such business. The cash portion of the
acquisition was financed by the Company's existing revolving credit facility.
For reporting purposes, the acquisition of the Specialty Battery Division and
JCI's 67 percent ownership interest in the joint venture battery business in
Shanghai, China have collectively been re-named the Dynasty Division. The
results of the joint venture have been consolidated in the financial statements
and related notes.
The Dynasty acquisition was accounted for using the purchase method of
accounting. The allocation of the purchase price resulted in goodwill of $67,637
and identifiable intangible assets (tradenames) of $17,840, which are being
amortized on a straight line basis over 20 years.
The following unaudited pro forma financial information combines the
consolidated results of operations as if the acquisition of the Specialty
Battery Division (including the interest in the joint venture in Shanghai, China
which was completed on August 2, 1999) had occurred as of the beginning of the
periods presented. Pro forma adjustments include only the effects of events
directly attributed to a transaction that are factually supportable and expected
to have a continuing impact. The pro forma adjustments contained in the table
below include amortization of intangibles and goodwill, depreciation adjustments
due to the write-up of property, plant and equipment to estimated fair market
value, amortization of deferred debt costs and interest expense on the
acquisition debt and working capital management fees, which will not continue,
and the related income tax effects.
(unaudited)
January 31,
-----------
2000 1999
---- ----
Net sales............................... $480,666 $415,590
Net income.............................. $ 29,685 $ 18,913
Net income per common share............. $ 2.33 $ 1.53
Net income per common share -
assuming dilution.................. $ 2.28 $ 1.47
F-14
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
3. ACQUISITIONS (continued)
The pro forma financial information does not necessarily reflect the
operating results that would have occurred had the acquisitions been consummated
as of the above dates, nor is such information indicative of future operating
results. In addition, the pro forma financial results contain estimates since
the acquired businesses did not maintain information on a period comparable with
the Company's fiscal year-end.
4. INVENTORIES
Inventories consisted of the following:
January 31,
-------------------
2000 1999
---- ----
Raw materials........................ $28,522 $20,013
Work-in-progress..................... 14,602 10,785
Finished goods....................... 17,841 19,057
------ ------
$60,965 $49,855
====== ======
If the first-in, first-out (FIFO) method of inventory accounting had been
used (which approximates current cost), inventories would have been $60,906 and
$51,009 as of January 31, 2000 and 1999, respectively.
5. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net, consisted of the following:
January 31,
-------------------
2000 1999
---- ----
Land................................. $ 902 $ 487
Buildings and improvements........... 34,280 22,507
Furniture, fixtures and equipment.... 147,029 102,099
Construction in progress............. 7,064 4,579
------- -------
189,275 129,672
Less:
Accumulated depreciation....... 88,462 67,284
------- -------
$100,813 $ 62,388
======= =======
For the years ended January 31, 2000, 1999 and 1998, depreciation charged
to operations amounted to $15,996, $10,137 and $8,831; maintenance and repair
costs expensed totaled $12,892, $8,290 and $7,399; and interest capitalized
amounted to $265, $211 and $166, respectively.
F-15
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
6. DEBT
Debt consisted of the following:
<TABLE>
<CAPTION>
January 31,
-------------------------
2000 1999
---- ----
<S> <C> <C>
Term loan - 1999 facility, $100,000 facility bearing interest at Prime or
LIBOR plus 1.25% (effective rate on a weighted average basis, 6.94% as of
January 31, 2000) net of unamortized debt acquisition costs of $2,102........... $82,898 -
Revolving credit facility - 1999 facility; maximum commitment of $120,000
at January 31, 2000 bearing interest of Prime or LIBOR plus 1.25% (effective
rate on a weighted average basis, 6.82% as of January 31, 2000)................. 4,800 -
Pennsylvania Economic Development Financing Authority ("PEDFA") Taxable
Development Revenue Bonds, 1991 Series B2, supported by a letter of credit,
bearing interest at a rate set on a weekly basis which approximates the
commercial paper rate (effective rate on a weighted average basis, 5.54% as of
January 31, 2000 and 5.47% as of January 31, 1999), principal payable in monthly
installments of $8 from December 1993 through November 1999 and of $108 from
December 1999 through November 2000............................................. 1,083 $1,384
PEDFA Economic Development Revenue Bonds, 1991 Series D6, supported by a
letter of credit, bearing interest at a rate set on a weekly basis which
approximates the commercial paper rate for high-grade tax-exempt borrowers
(effective rate on a weighted average basis, 3.81% as of January 31, 2000 and
3.86% as of January 31, 1999), principal payable in monthly installments of $8
from December 1993 through November 1999 and of $67 from December 1999 through
November 2000 .................................................................. 667 883
Borrowings by the Chinese joint venture in local currencies under
uncommitted facilities from various local banks with interest rates
ranging from 6.14% to 7.68% .................................................... 7,349 -
Other ..................................................................... 55 15
------ -----
96,852 2,282
Less current portion....................................................... 20,393 532
------ -----
$76,459 $1,750
====== =====
</TABLE>
F-16
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
6. DEBT (continued)
On January 30, 1998 the Company amended and restated its existing credit
facility. This was an unsecured revolving loan of $65,000 with a maturity date
of February 1, 2001. The lenders were Bank of America (formerly NationsBank
N.A.), Chase Manhattan Bank, First Union National Bank and PNC Bank. The
available interest rates under this agreement were LIBOR plus .52% to LIBOR plus
1.55% or Prime minus .5% to Prime plus .5%. The effective rate on a weighted
average basis was 6.54% for fiscal 1999.
In connection with the Dynasty acquisition, the above facility was replaced
in its entirety on March 1, 1999 by a fully syndicated unsecured agreement
comprised of a $100,000 term loan and a $120,000 revolving credit facility. The
lead institution was Bank of America and the co-agents were Chase Manhattan
Bank, First Union National Bank and PNC Bank. Seven other lenders participated.
The term loan is payable over five years. The revolver has a termination date of
March 1, 2004. The available interest rates on the agreement are between 1% to
1.75% over LIBOR or Prime to Prime plus .25%.
The revolving credit facility includes a letter of credit facility not to
exceed $30,000, of which $15,138 was available as of January 31, 2000, and
swingline loans not to exceed $10,000. The term loan is due in quarterly
installments that currently equal $3,750 per quarter increasing to $5,000 per
quarter on May 1, 2001, $6,250 per quarter on May 1, 2002, and $7,500 per
quarter on May 1, 2003. On January 31, 2000 an additional $5,000 was paid in
advance on the term loan. This payment was applied to the February 1, 2004
payment.
These credit agreements contain restrictive covenants that require the
Company to maintain minimum ratios such as fixed charge coverage and leverage
ratios, as well as minimum consolidated net worth. The purpose of the facility
was to fund the Dynasty acquisition, provide for normal working capital and fund
possible strategic acquisitions.
The maximum aggregate amounts of loans outstanding under the above 1998 and
1999 bank facilities including both term and revolving credit were $125,100,
$15,000 and $26,765 during the years ended January 31, 2000, 1999 and 1998,
respectively. For those years the outstanding loans under these credit
agreements computed on a monthly basis averaged $94,870, $6,941 and $19,024 at a
weighted average interest rate of 6.93%, 6.54% and 6.47%, respectively.
F-17
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
6. DEBT (continued)
The PEDFA Bonds are subject to mandatory redemption upon the occurrence of
certain events, including the early termination of the corresponding PEDFA
letter of credit issued under the Company's revolving credit facility. The tax
exempt bonds are subject to mandatory redemption if they lose their tax exempt
status.
The loans outstanding with various institutions denominated in Chinese
Renminbi are short term loans due on various dates including one loan due upon
demand. In support of these loans the Company has issued three letters of credit
under its revolving credit facility. In consideration of these letters of credit
the joint venture partner has issued a guaranty for 33% of the debt to the
Company. The Company expects the joint venture to continue financing its debt
requirements in local currency loans.
The Company was in compliance with its lending agreement covenants at
January 31, 2000 and 1999, respectively.
As of January 31, 2000, the required minimum annual principal reduction of
long-term debt and capital lease obligations for each of the next five fiscal
years is as follows:
2001......................... $20,393
2002......................... 17,398
2003......................... 23,068
2004......................... 28,693
2005......................... 7,300
Thereafter................... -
------
$96,852
======
7. STOCKHOLDERS' EQUITY
(A) Stock Option Plan:
-----------------------
SFAS No. 123, "Accounting for Stock-Based Compensation," permits the
continued use of accounting methods prescribed by Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," or use of
the fair value based method of accounting for employee stock options. Under APB
No. 25, no compensation expense is recognized when the exercise price of the
Company's employee stock options equals the market price of the underlying stock
at the date of grant. The Company has elected to continue using APB No. 25.
At January 31, 2000, the Company had options outstanding under its Stock
Option Plans. The 1996 Stock Option Plan was approved by the stockholders on
July 25, 1996 and replaced the previous plan which expired on January 28, 1996.
The 1998 Stock Option Plan was approved by the stockholders on June 30, 1998.
New options can be granted under the 1996 Plan, which reserved 1,000,000 shares
of Common Stock for such use (as adjusted for the Company's July 24, 1998
two-for-one stock split, effected
F-18
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
7. STOCKHOLDERS' EQUITY (continued)
in the form of a 100% stock dividend), or the 1998 Plan, which reserved 600,000
shares of Common Stock for such use (as adjusted for the Company's July 24, 1998
two-for-one stock split, effected in the form of a 100% stock dividend). In
addition, stock can be granted to the Company's non-employee directors in lieu
of their annual retainer or a portion thereof. Incentive stock options are to be
granted at no less than 100% of the fair market value on the date of grant with
a term of no more than ten years after the date of grant. Nonqualified stock
options are to be granted at such price as the Compensation Committee of the
Board of Directors deems appropriate with a term of no more than ten years after
the date of grant. The options are exercisable upon vesting as determined by the
Compensation Committee at the time the options are granted. The majority of the
stock options outstanding vest in equal annual installments over a three year
period commencing one year from the date of the grant.
A summary of stock option activity related to the Company's plans is as
follows:
<TABLE>
<CAPTION>
Beginning Granted Exercised Canceled Ending
Balance During During During Balance
Outstanding Year Year Year Outstanding Exercisable
----------- ---- ---- ---- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Year ended
January 31, 2000
Number of shares.............. 1,095,428 317,418 559,728 94,171 758,947 282,105
Weighted average option
price per share............. $16.02 $35.93 $11.87 $21.51 $26.73 $19.67
Year ended
January 31, 1999
Number of shares.............. 967,402 293,900 137,337 28,537 1,095,428 511,475
Weighted average option
price per share............ $12.79 $23.67 $8.76 $20.19 $16.02 $10.90
Year ended
January 31, 1998*
Number of shares.............. 863,000 283,050 133,946 44,702 967,402 396,342
Weighted average option
price per share............. $8.89 $22.52 $8.26 $12.66 $12.79 $6.50
</TABLE>
* Adjusted to reflect the Company's July 24, 1998 two-for-one stock split,
effected in the form of a 100% stock dividend.
F-19
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
7. STOCKHOLDERS' EQUITY (continued)
There were 383,265 and 611,805 (as adjusted for the Company's July 24, 1998
two-for-one stock split effected in the form of a 100% stock dividend) shares
available for future grants of options as of January 31, 2000 and 1999,
respectively. The following table summarizes information about the stock options
outstanding at January 31, 2000:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------------------------------ --------------------------------
Weighted-Average
Remaining
Range of Number Contractual Weighted-Average Number Weighted-Average
Exercise Prices Outstanding Life Exercise Price Exercisable Exercise Price
--------------- ----------- ---- -------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$6.00 - $12.00 111,144 6.6 years $11.68 111,144 $11.68
$17.25 - $26.06 337,985 8.3 years $23.17 135,593 $23.05
$29.00 - $39.25 309,818 9.6 years $36.01 35,368 $31.85
------- -------
$6.00 - $39.25 758,947 8.6 years $26.73 282,105 $19.67
======= =======
</TABLE>
Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of SFAS No.
123. The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted average
assumptions for 2000, 1999, and 1998:
2000 1999 1998
---- ---- ----
Risk-free interest rate.......... 5.60% 4.50% 6.44%
Expected dividend yield.......... .52% .58% .44%
Expected volatility factor....... 0.428 0.434 0.409
Weighted average expected life... 4.85 years 5.00 years 5.28 years
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.
F-20
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
7. STOCKHOLDERS' EQUITY (continued)
If the Company had elected, beginning in fiscal 1997, to recognize
compensation cost based on fair value of the options granted at grant date as
prescribed by SFAS No. 123, net income and net income per common share would
have approximated the pro forma amounts shown below:
2000 1999 1998*
---- ---- -----
Net income - as reported.................... $29,842 $24,080 $19,685
Net income - pro forma...................... 28,558 22,537 18,953
Net income per common share - as reported... 2.34 1.95 1.61
Net income per common share - pro forma..... 2.24 1.82 1.55
Net income per common share -
assuming dilution - as reported........... 2.29 1.88 1.56
Net income per common share -
assuming dilution - pro forma............. 2.19 1.76 1.50
Weighted average fair value of options
granted during the year................... 15.70 9.99 8.98
* Per share amounts have been adjusted to reflect the Company's July 24, 1998
two-for-one stock split, effected in the form of a 100% stock dividend.
The pro forma disclosures are not likely to be representative of the
effects on net income and net income per common share in future years, because
they do not take into consideration pro forma compensation expense related to
grants made prior to the Company's fiscal year 1997.
On February 22, 2000, the Board of Directors of the Company declared a
dividend of one common stock purchase right (a "Right") for each share of common
stock, outstanding on March 3, 2000 to the stockholders of record on that date.
Upon the occurrence of certain events, each Right will entitle the registered
holder to purchase from the Company one one-hundredth of a share of common stock
at a price of $300 per one one-hundredth of a share, subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement between
the Company and ChaseMellon Shareholder Services, L.L.C., as rights agent.
F-21
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
----------
8. INCOME TAXES
The provisions for income taxes as shown in the accompanying consolidated
statements of income consisted of the following:
January 31,
----------------------------
2000 1999 1998
---- ---- ----
Currently payable:
Federal...................... $18,102 $10,963 $11,579
Foreign...................... 34 97 59
State........................ 2,510 1,932 1,853
Foreign Sales Corporation.... 137 162 206
------ ------ ------
20,783 13,154 13,697
------ ------ ------
Deferred:
Federal...................... (2,748) 103 (2,039)
State........................ (298) (103) (299)
------ ------ ------
(3,046) - (2,338)
------ ------ ------
$17,737 $13,154 $11,359
====== ====== ======
The components of the deferred tax asset and liability as of January 31,
2000 and 1999 were as follows:
2000 1999
---- ----
Deferred tax asset:
Vacation and compensation accruals............ $ 4,080 $ 2,964
Postretirement benefits....................... 1,014 740
Warranty reserves............................. 5,039 3,600
Bad debt, inventory and return allowances..... 3,632 2,497
Environmental reserves........................ 738 541
Pension obligation............................ 2,338 477
Other accruals................................ 957 1,223
------ ------
Total deferred tax asset...................... 17,798 12,042
------ ------
Deferred tax liability:
Depreciation and amortization................. (6,837) (7,624)
------ ------
Total deferred tax liability.................. (6,837) (7,624)
------ ------
Net deferred tax asset........................ $10,961 $ 4,418
====== ======
F-22
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
8. INCOME TAXES (continued)
Reconciliations of the provisions for income taxes at the U.S. statutory
rate to the effective tax rates for the years ended January 31, 2000, 1999 and
1998, respectively, are as follows:
January 31,
------------------------------
2000 1999 1998
---- ---- ----
U.S. statutory income tax............ $16,869 $13,032 $10,865
Tax effect of foreign operations..... (86) (250) (35)
State tax, net of federal
income tax benefit................. 1,334 1,153 1,010
Research and development
tax credit benefit................. (234) (373) -
Foreign sales corporation............ (257) (304) (388)
Other................................ 111 (104) (93)
------ ------ ------
$17,737 $13,154 $11,359
====== ====== ======
9. COMMITMENTS AND CONTINGENCIES
(A) Operating Leases:
----------------------
The Company leases certain manufacturing and office facilities and certain
equipment under operating lease agreements. Certain leases contain renewal
options and some have purchase options, and generally provide that the Company
shall pay for insurance, taxes and maintenance. As of January 31, 2000, the
Company had future minimum annual lease obligations under leases with
noncancellable lease terms in excess of one year as follows:
Fiscal Year
-----------
2001........................ $ 2,385
2002........................ 2,013
2003........................ 1,768
2004........................ 1,324
2005........................ 872
Thereafter.................. 8,007
------
$16,369
======
Total rent expense for all operating leases for the years ended January 31,
2000, 1999 and 1998 was $4,024, $3,503 and $3,319, respectively.
F-23
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
-------
9. COMMITMENTS AND CONTINGENCIES (continued)
(B) Contingent Liabilities:
----------------------------
The Company is subject to numerous federal, state, local and international
laws and regulations that are designed to protect its employees, the
environment, and third parties.
These laws and regulations include requirements relating to the handling,
storage, use and disposal of lead and other hazardous materials used in its
processes, and solid wastes, recordkeeping and periodic reporting to
governmental entities regarding the use of hazardous substances and disposal of
hazardous wastes, monitoring and permitting of air and water emissions and
monitoring and protecting workers from exposure to hazardous substances,
including lead used in the Company's manufacturing processes. In the opinion of
the Company, the Company complies in all material respects with these laws and
regulations.
Notwithstanding such compliance, if damage to persons or the environment
has been or is caused by hazardous substances used, generated or disposed of in
the conduct of the Company's business (or that of a predecessor to the extent
the Company is not indemnified therefor), the Company may be held liable for the
damage and be required to pay the cost of investigating and remedying the same,
and the amount of any such liability could be material to the results of
operations or financial condition. However, under the terms of the Acquisition
Agreement, Allied is obligated to indemnify the Company for any liabilities of
this type resulting from conditions existing at January 28, 1986 that were not
disclosed by Allied to the Company in the schedules to the Acquisition
Agreement.
The Company, along with numerous other parties, has been requested to
provide information to the United States Environmental Protection Agency (the
"EPA") in connection with investigations of the source and extent of
contamination at several lead smelting facilities (the "Third Party Facilities")
to which the Company had made scrap lead shipments for reclamation prior to the
date of the Acquisition. As of January 16, 1989, the Company entered into an
agreement with other potentially responsible parties ("PRPs") relating to
remediation of a portion of one of the Third Party Facilities, the former NL
Industries ("NL") facility in Pedricktown, New Jersey (the "NL Site"), which
agreement provided for their joint funding on a proportionate basis of certain
remedial investigation and feasibility study activities with respect to that
site.
In fiscal 1993 in accordance with an EPA order, a group comprised of the
Company and 30 other parties commenced work on the cleanup of a portion of the
NL Site based on a specified remedial approach which was completed during fiscal
1999. The Company did not incur costs in excess of the amount previously
reserved.
F-24
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
-------
9. COMMITMENTS AND CONTINGENCIES (continued)
With regard to the remainder of the NL Site, the EPA is pursuing
negotiations with NL and the other PRPs, including the Company, regarding the
conduct and funding of the remedial work plan. The EPA has proposed a cost
allocation plan, however, the allocation percentages between parties and the
basis for allocation of cost are not defined in the plan or elsewhere.
Therefore, a reliable range of the potential cost to the Company of this phase
of the clean-up cannot currently be determined. Accordingly, the Company has not
established any reserve for this potential exposure.
The remedial investigation and feasibility study at a second Third Party
Facility, the former Tonolli Incorporated facility at Nesquehoning, Pennsylvania
(the "Tonolli Site"), was completed in fiscal 1993. The Company and the PRPs
initiated remedial action at the site in fiscal 1999 and the majority of the
action has been completed. Based on the estimated cost of the remedial approach
selected by the EPA, the Company believes that the potential cost of remedial
action at the Tonolli Site is likely to range between $16,000 and $17,000. The
Company's allocable share of this cost has not been finally determined, and will
depend on such variables as the financial capability of various other PRPs to
fund their respective allocable shares of the remedial cost. Based on currently
available information, however, the Company believes that its most likely
exposure with respect to the Tonolli Site will be less than the approximately
$579 previously reserved, the majority of which has been paid during fiscal
2000.
The Company has responded to requests for information from the EPA or state
environmental agencies with regard to four other Third Party Facilities, one in
September 1991, one (the "Chicago Site") in October 1991, one (the "ILCO Site")
in October 1993, and the fourth (the "M&J Site") in March 1999. Of the four
sites, the Company has been identified as a PRP at the ILCO, Chicago, and M&J
Sites only.
On October 31, 1995 the Company received confirmation from the EPA that it
was a de minimis PRP at the ILCO Site. In May 1998, the ILCO site was resolved
with a payment of an immaterial amount which was less than the amount previously
reserved.
Based on currently available information, the Company believes that the
potential cost of the remediation at the Chicago Site is likely to range between
$8,000 and $10,500 (based on the preliminary estimated costs of the remediation
approach negotiated with the EPA). Sufficient information is not available to
determine the Company's allocable share of this cost. Based on currently
available information, however, the Company believes that its most likely
exposure with respect to the Chicago Site will be the approximately $283
previously reserved, the majority of which is expected to be paid over the next
two to five years.
Sufficient information is not yet available for the M&J site to estimate
the Company's allocable share of liability. However, based on the information
currently available, the Company's liability exposure at this site appears to be
limited and is not expected to have a material adverse effect on the Company.
F-25
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
-------
9. COMMITMENTS AND CONTINGENCIES (continued)
Allied has accepted responsibility under the Acquisition Agreement for
potential liabilities relating to all Third Party Facilities other than the
aforementioned Sites.
The Company is also aware of the existence of potential contamination at
two of its properties which may require expenditures for further investigation
and remediation. At the Company's Huguenot, New York facility, fluoride
contamination in an inactive lagoon exceeding the state's groundwater standards,
which existed prior to the Company's acquisition of the site, has resulted in
the site being listed on the registry of inactive hazardous waste disposal sites
maintained by the New York State Department of Environmental Conservation. The
prior owner of the site ultimately may bear some, as yet undetermined, share of
the costs associated therewith.
The Company's Conyers, Georgia facility is listed on the Georgia State
Hazardous Sites Inventory. Soil at the site, which was likely contaminated from
a leaking underground acid neutralization tank and possibly storm water runoff,
has been excavated and disposed. A hydrogeologic study was undertaken to assess
the impact to groundwater. That study did not reveal any groundwater impact, and
assessment and remediation of off-site contamination has been completed and the
full remediation report was submitted to the state on February 22, 1999. The
state environmental agency may request further information and additional
investigation or remediation may be necessary before the site may be removed
from its Hazardous Sites Inventory.
The Company, together with JCI, is conducting an assessment and remediation
of contamination at the Dynasty Division facility in Milwaukee, Wisconsin. The
majority of this project is expected to be completed by the end of fiscal 2001.
Under the purchase agreement with JCI, the Company is responsible for (i)
one-half of the cost of the assessment and remediation, with a cap of $1,750,
(ii) any environmental liabilities at the facility which are not remediated as
part of the current project and (iii) environmental liabilities for claims made
after the fifth anniversary of the closing that arise from migration from a
pre-closing condition at the facility to locations other than the facility, but
specifically excluding liabilities relating to pre-closing offsite disposal. JCI
has retained all other environmental liabilities.
The Company has received notification from the EPA of alleged violations of
permit effluent and pretreatment discharge limits at its plant in Attica,
Indiana. The Company has submitted a compliance plan to the EPA. A penalty
assessment could be made, however detailed information necessary to estimate any
potential liability has not been determined.
A former customer has filed a lawsuit against the Company alleging that the
Company breached a contract and is seeking damages, costs, interest and attorney
fees. The Company has not yet filed its answer or conducted any discovery;
accordingly, it is unable to determine its liability, if any.
Based on currently available information, management of the Company
believes that the foregoing will not have a material adverse effect on Company's
business, financial condition or results of operations.
F-26
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
9. COMMITMENTS AND CONTINGENCIES (continued)
(C) Purchase Commitments:
--------------------------
The Company has purchase commitments pertaining to the purchase of certain
raw materials with various suppliers. These purchase commitments are not
expected to exceed usage requirements.
10. MAJOR CUSTOMER
A single customer of the Company's Powercom and Power Electronics Divisions
accounted for 10.5%, 13.1% and 13.5% of consolidated net sales for the years
ended January 31, 2000, 1999 and 1998.
11. CONCENTRATION OF CREDIT RISK
Financial instruments which subject the Company to potential concentration
of credit risk consist principally of trade receivables and temporary cash
investments. The Company places its temporary cash investments with various
financial institutions and, generally, limits the amount of credit exposure to
any one financial institution. Except as discussed in Note 10, concentrations of
credit risk with respect to trade receivables is limited by a large customer
base and its geographic dispersion. The Company performs ongoing credit
evaluations of its customers' financial condition and requires collateral, such
as letters of credit, in certain circumstances.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
Cash and cash equivalents - the carrying amount approximates fair value
because of the short maturity of these instruments.
Debt (excluding capital lease obligations) - the carrying value of the
Company's long-term debt, including the current portion, approximates fair
value based on the incremental borrowing rates currently available to the
Company for loans with similar terms, maturity and tax exempt status.
Hedging Instruments - The estimated fair value of the interest rate swaps
and foreign exchange contracts are based on market prices or current rates
offered for interest rate swaps and foreign exchange contracts with similar
terms and maturities. The ultimate amounts paid or received under these
interest rate swaps and foreign currency contracts, however, depend on
future interest rates and exchange rates.
F-27
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
12. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
The estimated fair values of the Company's financial instruments at January
31, 2000 and 1999 were as follows:
2000 1999
-------------------- ---------------------
Carrying Carrying
Amount Fair Value Amount Fair Value
------ ---------- ------ ----------
Cash and cash equivalents.... $ 7,121 $ 7,121 $5,003 $5,003
Debt (excluding capital
Lease obligations)........ $96,797 $96,797 $2,267 $2,267
The fair value of accounts receivable, accounts payable and accrued
liabilities consistently approximate the carrying value due to the relatively
short maturity of these instruments and are excluded from the above table.
2000 1999
---- ----
Fair Value Fair Value
---------- ----------
Hedging Instruments:
Interest rate swaps...... $ 1,165 $(114)
Forward contracts........ $ 49 $ 101
On December 20, 1995 the Company entered into an interest rate swap
agreement with a notional amount of $6,500. This swap agreement effectively
fixed the interest rate on a like amount of the Company's floating rate debt at
6.01% plus the Company's LIBOR spread in effect at any time. The effective rate
was 7.26% at January 31, 2000 and 6.53% on January 31, 1999. The swap expires on
December 20, 2002.
On June 24, 1997 the Company entered into a cross currency interest rate
swap agreement with a notional amount of US $1,293. This swap agreement
effectively exchanged US Dollar debt for Canadian Dollar debt and fixed the
interest rate at 4.72%. This instrument matured on June 24, 1999.
On June 24, 1997 the Company entered into a cross currency interest rate
swap agreement with a notional amount of US $1,221. The swap agreement
effectively exchanged US Dollar debt for Canadian Dollar debt and established
floating interest rates equivalent to three months Canadian Bankers Acceptances
plus .18%. At January 31, 1998 the effective rate was 5.13%. This instrument
matured on June 24, 1998.
On March 1, 1999 the Company entered into an interest rate swap agreement
with a notional amount of $30,000. This swap agreement effectively fixed the
interest rate on a like amount of the Company's floating rate debt at 5.48% plus
the Company's LIBOR spread in effect at any time. The effective rate was 6.73%
at January 31, 2000. The swap expires on March 1, 2001.
F-28
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
12. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
On March 11, 1999 the Company entered into an interest rate swap agreement
with a notional amount of $20,000. This swap agreement effectively fixed the
interest rate on a like amount of the Company's floating rate debt at 5.58% plus
the Company's LIBOR spread in effect at any time. The effective rate was 6.83%
at January 31, 2000. The swap expires on March 11, 2002.
The Company had a foreign exchange contract on hand at January 31, 1998
hedging Mexican Peso requirements in the amount of $2,739. This contract expired
on December 22, 1998.
The Company had a foreign exchange contract on hand at January 31, 1999
hedging Canadian Dollar exposure in the amount of $1,297. This contract expired
on April 29, 1999.
The Company had foreign exchange contracts on hand at January 31, 2000
hedging Canadian Dollar exposure in the amount of $1,359 and the Euro in the
amount of $469. All of these contracts expire before April 30, 2000.
13. EMPLOYEE BENEFIT PLANS
(A) The Company has various noncontributory defined benefit pension plans,
which cover certain employees.
The Company's funding policy is to contribute annually an amount that can
be deducted for federal income tax purposes using a different actuarial cost
method and different assumptions than those used for financial reporting
purposes. Pension benefits for the Company's defined benefit plans are generally
based on employees' years of service and qualifying compensation during the
years of employment. Plan assets are invested in commingled trust funds
consisting primarily of equity and U.S. Government securities.
The Company also provides certain health care and life insurance benefits
for retired employees who meet certain service requirements ("postretirement
benefits") through various plans.
F-29
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
13. EMPLOYEE BENEFIT PLANS (continued)
The tables that follow provide a reconciliation of the changes in the
plans' benefit obligations and fair value of assets for the years ended January
31, 2000 and 1999 and a statement of the funded status as of January 31, 2000
and 1999.
<TABLE>
<CAPTION>
Postretirement
Pension Benefits Benefits
---------------- --------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Change in benefit obligation:
Benefit obligation at beginning of year.......... $37,320 $34,815 $ 1,557 $ 1,634
Service cost................................. 2,408 1,575 108 65
Interest cost................................ 2,895 2,392 160 105
Plan amendments.............................. 179 - - -
Actuarial (gain)/loss........................ (5,454) 198 (152) (83)
Acquisition.................................. 3,732 - 746 -
Benefits paid................................ (1,811) (1,660) (301) (164)
------ ------ ------ ------
Benefit obligation at end of year................ $39,269 $37,320 $ 2,118 $ 1,557
====== ====== ====== ======
Change in plan assets:
Fair value of plan assets at beginning of year... $35,382 $33,901 - -
Actual return on plan assets................. 2,552 3,126 - -
Employer contributions....................... 52 15 $ 301 $ 164
Benefits paid................................ (1,811) (1,660) (301) (164)
------ ------ ------ ------
Fair value of plan assets at end of year......... $36,175 $35,382 $ - $ -
====== ====== ====== ======
Reconciliation of funded status:
Funded status.................................... $(3,094) $(1,938) $(2,118) $(1,557)
Unrecognized actuarial (gain)/loss............... (3,152) 1,820 (434) (284)
Unrecognized prior service cost.................. 162 (2) - -
------ ------ ------ ------
(Accrued)/prepaid benefit cost at
measurement date............................. $(6,084) $ (120) $(2,552) $(1,841)
Contributions made after measurement date
but before the end of the fiscal year........ - 12 - -
------ ------ ------ ------
(Accrued)/prepaid benefit cost at end of
fiscal year.................................. $(6,084) $ (108) $(2,552) $(1,841)
====== ====== ====== ======
Amounts recognized in the statement of financial
position consist of:
Prepaid pension cost............................. $ 1,195 $ 1,467 - -
Accrued pension liability........................ (7,279) (1,575) $(2,552) $(1,841)
------ ------ ------ ------
Accrued pension cost at end of year.............. $(6,084) $ (108) $(2,552) $(1,841)
====== ====== ====== ======
</TABLE>
F-30
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
13. EMPLOYEE BENEFIT PLANS (continued)
<TABLE>
<CAPTION>
Postretirement
Pension Benefits Benefits*
---------------- ---------
2000 1999 1998 2000 1999 1998
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Components of net periodic benefit cost:
Service cost............................ $ 2,408 $ 1,575 $ 1,176 $108 $ 65 $ 59
Interest cost........................... 2,895 2,392 2,246 160 105 109
Expected return on plan assets.......... (3,102) (2,975) (2,545) - - -
Amortization of prior service costs..... 15 - - - - -
Recognized actuarial loss/(gain)........ 68 59 53 (1) (17) (24)
------ ------ ------ --- --- ---
Net periodic benefit cost........... $ 2,284 $ 1,051 $ 930 $267 $153 $144
====== ====== ====== === === ===
Weighted-average assumptions
as of January 31:
Discount rate........................... 8.25% 7.00% 7.00% 8.25% 7.00% 7.00%
Expected long-term rate of
return on plan assets............... 9.00% 9.00% 9.00% N/A N/A N/A
Rate of compensation increase**......... 4.00 - 5.07% 5.11% 5.11% N/A N/A N/A
</TABLE>
* The Company sponsors two postretirement benefit plans. One plan covers
hourly Dynasty employees. The following information applies to this plan
only:
For measurement purposes, a 7.50% annual rate of increase in the
pre-65 per capita cost of covered health care benefits was assumed for
2000. The rate will gradually decrease to 5.00% for 2005 and remain at
that level thereafter.
Assumed health care cost trend rates have a significant effect on the
amounts reported for the postretirement benefit plan. A
one-percentage-point change in assumed health care cost trend rates
would have the following effects:
1% increase 1% decrease
----------- -----------
Effect on total of service and interest
cost components for fiscal 2000............. $1 -
Effect on year-end 2000 postretirement
benefit obligation.......................... $5 $(8)
The Company's contributions to the other postretirement benefit plan
are fixed so there is no medical trend rate assumption.
** Rate relates to hourly Dynasty employees and certain salaried employees.
All other covered employees have benefits unrelated to rate of pay. Fiscal
1999 and 1998 rates do not include hourly Dynasty employees.
F-31
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
13. EMPLOYEE BENEFIT PLANS (continued)
The projected benefit obligation, accumulated benefit obligation, and fair
value of plan assets for the pension plan with accumulated benefit obligations
in excess of plan assets were $3,511, $460, and $0, respectively, for fiscal
2000. This plan, which covers hourly Dynasty employees, was established March 1,
1999.
(B) Certain salaried employees are eligible to participate in various
defined contribution retirement plans. The Company's contributions under the
plans are based on specified percentages of employee contributions. The
Company's cost was $971, $859 and $725 for the years ended January 31, 2000,
1999, and 1998, respectively.
(C) During fiscal 2000, a new defined contribution retirement plan was
established for certain hourly employees. The Company's contributions under this
plan are based on specified percentages of the employees' earnings. The
Company's cost was $220 for the year ended January 31, 2000.
(D) The Company has Supplemental Executive Retirement Plans ("SERPs") that
cover certain executives. The SERPs are non-qualified, unfunded deferred benefit
compensation plans. Expenses related to these SERPs, which were actuarially
determined, were $518, $471 and $427 for the years ended January 31, 2000, 1999
and 1998, respectively. The liability for the Company's SERP was $1,344 and $898
as of January 31, 2000 and 1999, respectively, and was included in other
liabilities.
F-32
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
14. QUARTERLY FINANCIAL DATA (unaudited)
Quarterly financial data for the years ended January 31, 2000 and 1999
follow:
First Second Third Fourth
Quarter Quarter Quarter Quarter
------- ------- ------- -------
For the year ended
January 31, 2000:
Net sales........................ $99,611 $111,819 $126,843 $127,297
Gross profit..................... 26,539 29,693 33,272 34,876
Operating income................. 9,911 13,016 15,884 17,313
Net income....................... 5,335 7,045 8,206 9,256
Net income per common share...... .43 .55 .64 .71
Net income per common share-
assuming dilution.............. .42 .54 .63 .70
For the year ended
January 31, 1999:
Net sales........................ $78,909 $80,073 $81,598 $73,386
Gross profit..................... 20,688 21,739 23,855 19,888
Operating income................. 9,141 9,590 10,498 8,342
Net income....................... 5,756 6,000 6,772 5,552
Net income per common share*..... .47 .49 .55 .45
Net income per common share -
assuming dilution*............ .45 .47 .53 .43
Due to changes in the number of average shares outstanding, quarterly
earnings per share of common stock may not add to the totals for the years.
In fiscal 2000, the Company completed two acquisitions (see Note 3). The
first quarter of fiscal 2000 includes a $1,627 pre-tax charge primarily relating
to the restructuring of the Power Electronics Division. The fourth quarter of
fiscal 2000 includes a $2,000 pre-tax charge relating to slow moving inventory
in the Power Electronics Division.
* Per share amounts have been adjusted to reflect the Company's July 24, 1998
two-for-one stock split, effected in the form of 100% stock dividend, where
appropriate.
F-33
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
15. OPERATIONS BY INDUSTRY SEGMENT AND GEOGRAPHIC AREA
The Company has the following four reportable business segments:
The Powercom Division manufactures and markets integrated reserve power
systems and components for the standby power market which includes
telecommunications, uninterruptible power supplies and utilities. Integrated
reserve power systems monitor and regulate electric power flow and provide
backup power in the event of a primary power loss or interruption. The Powercom
Division also produces the individual components of these systems, including
reserve batteries, power rectifiers, system monitors, power boards and chargers.
The Dynasty Division manufactures and markets industrial batteries
primarily for the uninterruptible power supply, telecommunications and broadband
cable markets. Major applications of these products include wireless and
wireline telephone infrastructure, CATV signal powering, corporate data center
powering and computer network back up for use during power utility outages.
The Motive Power Division manufactures complete systems and individual
components (including power electronics and batteries) to power, monitor, charge
and test the batteries used in electric industrial vehicles, including fork-lift
trucks, automated guided vehicles and airline ground support equipment. These
products are marketed to end users in a broad array of industries, dealers of
fork-lift trucks and other material handling vehicles, and, to a lesser extent,
original equipment manufacturers ("OEMs").
The Power Electronics Division manufactures and markets custom, standard
and modified standard electronic power supply systems, including DC to DC
converters, for large OEMs of telecommunications equipment, office copiers,
workstations and other applications.
Summarized financial information related to the Company's business segments
for the years ended January 31, 2000, 1999 and 1998 is shown below:
<TABLE>
<CAPTION>
Motive Power
Powercom Dynasty Power Electronics
Division Division Division Division Consolidated
-------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Year ended January 31, 2000:
Net sales.................. $218,764 $109,753 $75,228 $61,825 $465,570
Operating income (loss).... $39,854 $19,222 $1,928 $(4,880) $56,124
Year ended January 31, 1999:
Net sales.................. $174,938 - $71,600 $67,428 $313,966
Operating income........... $29,989 - $4,203 $3,379 $37,571
Year ended January 31, 1998:
Net sales.................. $161,122 - $69,004 $77,928 $308,054
Operating income........... $24,146 - $4,210 $4,875 $33,231
</TABLE>
F-34
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
15. OPERATIONS BY INDUSTRY SEGMENT AND GEOGRAPHIC AREA (continued)
Many of our facilities manufacture products for more than one segment.
Therefore, it is not practicable to disclose asset information (assets,
expenditures for long lived assets, depreciation and amortization) on a segment
basis.
Summarized financial information related to the geographic areas in which
the Company operated at January 31, 2000, 1999 and 1998 and for each of the
years then ended is shown below:
United
States International Consolidated
------ ------------- ------------
Year ended January 31, 2000:
Net sales....................... $387,601 $77,969 $465,570
Long-lived assets............... $171,689 $26,765 $198,454
Year ended January 31, 1999:
Net sales....................... $277,125 $36,841 $313,966
Long-lived assets............... $73,604 $3,325 $76,929
Year ended January 31, 1998:
Net sales....................... $272,232 $35,822 $308,054
Long-lived assets............... $70,017 $3,081 $73,098
16. RESTRUCTURING CHARGE
During the first quarter of fiscal 2000, the Company recorded a pre-tax
charge of $1,627, or $.08 per share after tax, primarily relating to the
restructuring of the Power Electronics Division. $1,251 of this pre-tax charge
is included in selling, general and administrative expenses with the remaining
$376 included in cost of sales in the accompanying consolidated statement of
income for the year ended January 31, 2000. The restructuring charge consisted
of estimated costs to close the Company's Costa Mesa, California power supply
production facility as well as contractual severance liabilities associated with
the non-renewal of the employment contracts of two of the Company's former
officers. With respect to the closing of the Costa Mesa, California production
facility, the Company implemented a restructuring plan that consisted of
transferring production primarily to its existing facility in Nogales, Mexico.
Major actions of the restructuring plan consisted of: (i) disposition of
inventory; (ii) write-off of impaired property, plant and equipment that was not
transferred to other facilities; and (iii) termination of the Power Electronics'
Costa Mesa, California work force. Details of the restructuring charge are as
follows:
F-35
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands, except per share data)
--------
16. RESTRUCTURING CHARGE (continued)
Cash Non-Cash Balance at
Provision Reductions Activity January 31, 2000
--------- ---------- -------- ----------------
Write-off of inventory...... $ 376 - $(376) -
Write-down of property,
plant and equipment.... 355 - (355) -
Employee severance.......... 741 $(485) - $256
Other....................... 155 (155) - -
----- ---- ---- ---
Total....................... $1,627 $(640) $(731) $256
===== ==== ==== ===
The $376 inventory write-off was determined based upon identification of
inventory associated with discontinued products. This inventory was disposed of
during the second quarter of fiscal 2000. The $355 write-down of impaired
property, plant and equipment was determined based upon the estimated cost to
completely write-down the net book value of assets not transferred to other
facilities. The Company completed the disposition of the impaired property,
plant and equipment during the third quarter of fiscal 2000. Employee severance
of $741 was charged to selling, general and administrative expenses and provided
for a reduction of approximately 50 employees, consisting of production and
administrative employees related to the Power Electronics' Costa Mesa,
California facility, and two former officers of the Company. All Power
Electronics employee terminations were completed by the end of the third quarter
of fiscal 2000, with payments being made in accordance with contractual
agreements through fiscal 2001.
F-36
<PAGE>
C&D TECHNOLOGIES, INC. AND SUBSIDIARIES
SCHEDULE II.
VALUATION AND QUALIFYING ACCOUNTS
for the years ended January 31, 2000, 1999 and 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
Additions Additions Balance
Balance at Charged Charged at
Beginning to Costs & to Other End of
of Period Expenses Accounts(a) Deductions(b) Period
--------- -------- ----------- ------------- ------
<S> <C> <C> <C> <C> <C>
Deducted From Assets
- --------------------
Allowance for Doubtful Accounts:
Year ended January 31, 2000....... $1,635 $823 $1,633 $1,011 $3,080
Year ended January 31, 1999....... 1,701 232 - 298 1,635
Year ended January 31, 1998....... 1,414 401 - 114 1,701
</TABLE>
- ---------
(a) Additions related to business acquisitions.
(b) Amounts written-off, net of recoveries.
S-1
Exhibit 3.2
AMENDED AND RESTATED
BY-LAWS
OF
C&D TECHNOLOGIES, INC.
(a Delaware corporation, the "Corporation")
ARTICLE I
OFFICES
SECTION 1. OFFICES. The Corporation shall maintain its registered
office in the State of Delaware, which may but need not be the same as its place
of business. The Corporation may also have offices in such other places in the
United States or elsewhere as the Board of Directors may, from time to time,
appoint or as the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the
election of directors and for such other business as properly may be conducted
at such meeting shall be held at such place, either within or without the State
of Delaware, and at such time and date as may be designated by the Board of
Directors and set forth in the notice of the meeting or in a duly executed
waiver thereof.
SECTION 2. SPECIAL MEETINGS. Special meetings of the stockholders for
any purpose may be called by the Board of Directors, the Chairman of the Board
or the President of the Corporation and shall be called by the President upon
written request of the holders of at least 40% of all of the issued and
outstanding stock of the Corporation entitled to vote. Notice of each special
meeting shall be given according to Section 3 of this Article II.
SECTION 3. NOTICE OF MEETINGS. Written notice of each meeting of the
stockholders of the Corporation, in which the place, date and time of the
meeting and, in the event of a special meeting, the purpose or purposes for
which it is called are set forth, shall be mailed to or delivered to each
stockholder of record entitled to vote thereat. Such notice shall be given not
less than ten days nor more than 60 days before the date of any such meeting.
Such notice shall state the purpose or purposes of the proposed meeting.
Business transacted at all special meetings shall be confined to the objects
stated in the notice thereof.
<PAGE>
SECTION 4. QUORUM. At any meeting of the stockholders, the holders of a
majority of all of the issued and outstanding shares of stock of the Corporation
entitled to vote at the meeting, present in person or by proxy, shall constitute
a quorum for all purposes, except to the extent that the presence of a larger
number of stockholders may be required by law, by the Certificate of
Incorporation of the Corporation or by these By-laws.
SECTION 5. VOTING. Except as may be otherwise provided by law or by the
Certificate of Incorporation, at every meeting of the stockholders, every
stockholder entitled to vote thereat shall have the right to one vote for every
share having voting power standing in his name on the stock transfer books of
the Corporation on the record date fixed for the meeting. Upon the demand of any
stockholder entitled to vote at any meeting, the vote upon any question before
such meeting shall be by written ballot. All elections of directors shall be
decided by plurality vote. When a quorum exists at any meeting, the vote of the
holders of a majority of the shares having voting power present in person or by
proxy shall decide any matter brought before such meeting, unless a different
vote is otherwise required by these By-laws, the Corporation's Certificate of
Incorporation or law.
SECTION 6. VOTING LISTS. A complete list of the stockholders entitled
to vote at any meeting of stockholders, arranged in alphabetical order, with the
address of each, and the number of shares held by each, shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or, if not so specified, at the
place where the meeting is to be held. The list shall also be produced and kept
at the time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
SECTION 7. INSPECTORS. In advance of any meeting of the stockholders,
the Corporation shall appoint inspectors of election, who need not be
stockholders, to act at such meeting or any adjournment, postponement or
continuation thereof. If no inspector of election is able to act at a meeting of
stockholders, the chairman of any such meeting shall make such appointment at
the meeting. The number of inspectors of election shall be one or three. No
person who is a candidate for office shall act as an inspector of election. If
there are three inspectors of election, the decision, act or certificate of a
majority shall be the decision, act or certificate of all.
SECTION 8. CHAIRMAN OF MEETINGS. The Chairman of the Board of Directors
of the Corporation shall preside at all meetings of stockholders and of the
Board of Directors, at which he is present. In the event of his absence or
disability, the Vice Chairman, if any be elected, or, in the event of the
absence or disability of the Vice Chairman, the President of the Corporation
shall preside at any such meetings.
SECTION 9. ACTION WITHOUT A MEETING. Subject to the provisions of
Section 11 of this Article II, unless otherwise provided by the Certificate of
Incorporation, any action required to be taken at any annual or special meeting
of stockholders, or any action which may be taken at any annual or special
meeting, may be taken without a meeting, without prior notice, and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote were
<PAGE>
present and voted. Prompt notice of corporate action taken without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
SECTION 10. ADJOURNMENT. At any meeting of stockholders of the Corpora
tion, if less than a quorum shall be present, a majority of the stockholders
entitled to vote at the meeting, present in person or by proxy, shall have the
power to adjourn the meeting to another time, place and date without notice
other than by announcement at the meeting so adjourned. Any business may be
transacted at any adjourned meeting that could have been transacted at the
meeting originally noticed, but only those stockholders entitled to vote at the
meeting originally noticed shall be entitled to vote at any adjourned meeting.
If the adjournment is for more than 30 days from the date of the meeting
originally noticed, or if after the adjournment a new record date, as provided
for in Section 5 of Article V of these By-laws is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the adjourned meeting.
SECTION 11. STOCKHOLDER PROPOSALS.
(a) Stockholder Proposals Relating to Nominations for and
Election of Directors.
(i) Nominations by a stockholder of candidates for
election to the Board of Directors by stockholders at a meeting of stockholders
or upon written consent without a meeting may be made only if the stockholder
complies with the procedures set forth in this Section 11(a), and any candidate
proposed by a stockholder not nominated in accordance with such provisions shall
not be considered or acted upon for execution at such meeting of stockholders.
(ii) A proposal by a stockholder for the nomination of
a candidate for election by stockholders as a director at any meeting of
stockholders at which directors are to be elected or upon written consent
without a meeting may be made only by notice in writing, delivered in person or
by first class United States mail postage prepaid or by reputable overnight
delivery service, to the Board of Directors of the Corporation to the attention
of the Secretary of the Corporation at the principal office of the Corporation,
within the time limits specified herein.
(iii) In the case of an annual meeting of stockholders,
any such written proposal of nomination must be received by the Board of
Directors not less than 90 calendar days nor more than 120 calendar days before
the first anniversary of the date on which the Corporation first mailed its
proxy statement to stockholders for the annual meeting of stockholders in the
immediately preceding year; provided, however, that in the case of an annual
meeting of stockholders that is called for a date that is not within 30 calendar
days before or after the first anniversary date of the annual meeting of
stockholders in the immediately preceding year, any such written proposal of
nomination must be received by the Board of Directors not less than five
business days after the date the Corporation shall have mailed notice to its
stockholders that an annual meeting of stockholders will be held or shall have
issued a press release, filed a periodic report with the Securities and Exchange
Commission or otherwise publicly disseminated notice that an annual meeting of
stockholders will be held.
<PAGE>
(iv) In the case of a special meeting of stockholders,
any such written proposal of nomination must be received by the Board of
Directors not less than five business days after the earlier of the date that
the Corporation shall have mailed notice to its stockholders that a special
meeting of stockholders will be held or shall have issued a press release, filed
a periodic report with the Securities and Exchange Commission or otherwise
publicly disseminated notice that a special meeting of stockholders will be
held.
(v) In the case of stockholder action by written
consent with respect to the election by stockholders of a candidate as director,
the stockholder seeking to have the stockholders elect such candidate by written
consent shall, by written notice to the Board of Directors, set forth the
information prescribed in clause (vi) of this Section 11(a) and request the
Board of Directors to fix a record date for determining stockholders entitled to
consent to corporate action in writing without a meeting. The Board of Directors
shall promptly, but in no event later than the tenth day after the date on which
such notice is received, adopt a resolution fixing such record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which date shall not be
more than ten days after the date upon which the resolution fixing the record
date is adopted by the Board of Directors. If no record date is fixed by the
Board of Directors within such time period, such record date shall be determined
in accordance with the provisions of Section 213(b) of the Delaware General
Corporation Law, or any successor provision.
(vi) Such written proposal of nomination shall set
forth: (A) the name and address of the stockholder who intends to make the
nomination (the "Nominating Stockholder"), (B) the name, age, business address
and, if known, residence address of each person so proposed, (C) the principal
occupation or employment of each person so proposed for the past five years, (D)
the number of shares of capital stock of the Corporation beneficially owned
within the meaning of Securities and Exchange Commission Rule 13d-1 by each
person so proposed and the earliest date of acquisition of any such capital
stock, (E) a description of any arrangement or understanding between each person
so proposed and the stockholder(s) making such nomination with respect to such
person's proposal for nomination and election as a director and actions to be
proposed or taken by such person if elected a director, (F) the written consent
of each person so proposed to serve as a director if nominated and elected as a
director and (G) such other information regarding each such person as would be
required under the proxy solicitation rules of the Securities and Exchange
Commission if proxies were to be solicited for the election as a director of
each person so proposed.
(vii) If a written proposal of nomination submitted to
the Board of Directors fails, in the reasonable judgment of the Board of
Directors or a nominating committee established by it, to contain the
information specified in clause (vi) of this Section 11(a) or is otherwise
deficient, the Board of Directors shall, as promptly as is practicable under the
circumstances, provide written notice to the stockholder(s) making such
nomination of such failure or deficiency in the written proposal of nomination
and such nominating stockholder shall have five business days from receipt of
such notice to submit a revised written proposal of nomination that corrects
such failure or deficiency in all material respects.
(b) Stockholder Proposals Relating to Matters Other Than
Nominations for and Elections of Directors.
<PAGE>
(i) A stockholder of the Corporation may bring a matter
(other than a nomination of a candidate for election as a director, which is
covered by Section 11(a)) (a "Stockholder Matter") before a meeting of
stockholders or for action by written consent without a meeting only if such
Stockholder Matter is a proper matter for stockholder action and such
stockholder shall have provided notice in writing, delivered in person or by
first class United States mail postage prepaid or by reputable overnight
delivery service, to the Board of Directors of the Corporation to the attention
of the Secretary of the Corporation at the principal office of the Corporation,
within the time limits specified in this Section 11(b); provided, however, that
a proposal submitted by a stockholder for inclusion in the Corporation's proxy
statement for an annual meeting that is appropriate for inclusion therein and
otherwise complies with the provisions of Rule 14a-8 under the Securities
Exchange Act of 1934 (including timeliness) shall be deemed to have also been
submitted on a timely basis pursuant to this Section 11(b).
(ii) In the case of an annual meeting of stockholders,
any such written notice of a proposal of a Stockholder Matter must be received
by the Board of Directors not less than 90 calendar days nor more than 120
calendar days before the first anniversary of the date on which the Corporation
first mailed its proxy statement to stockholders for the annual meeting of
stockholders in the immediately preceding year; provided, however, that in the
case of an annual meeting of stockholders that is called for a date which is not
within 30 calendar days before or after the first anniversary date of the annual
meeting of stockholders in the immediately preceding year, any such written
notice of a proposal of a Stockholder Matter must be received by the Board of
Directors not less than five business days after the date the Corporation shall
have mailed notice to its stockholders that an annual meeting of stockholders
will be held, issued a press release, filed a periodic report with the
Securities and Exchange Commission or otherwise publicly disseminated notice
that an annual meeting of stockholders will be held.
(iii) In the case of a special meeting of stockholders,
any such written notice of a proposal of a Stockholder Matter must be received
by the Board of Directors not less than five business days after the earlier of
the date the Corporation shall have mailed notice to its stockholders that a
special meeting of stockholders will be held, issued a press release, filed a
periodic report with the Securities and Exchange Commission or otherwise
publicly disseminated notice that a special meeting of stockholders will be
held.
(iv) In the case of stockholder action by written
consent, the stockholder seeking to have the stockholders authorize or take
corporate action by written consent shall, by written notice to the Board of
Directors, set forth the written proposal and request the Board of Directors to
fix a record date for determining stockholders entitled to consent to corporate
action in writing without a meeting. The Board of Directors shall promptly, but
in no event later than the tenth day after the date on which such notice is
received, adopt a resolution fixing such record date, which record date shall
not precede the date upon which the resolution fixing the record date is adopted
by the Board of Directors, and which date shall not be more than ten days after
the date upon which the resolution fixing the record date is adopted by the
Board of Directors. If no record date is fixed by the Board of Directors within
such time period, such record date shall be determined in accordance with the
provisions of Section 213(b) of the Delaware General Corporation Law, or any
successor provision.
(v) Such written notice of a proposal of a Stockholder
Matter shall set forth information regarding such Stockholder Matter equivalent
to the information regarding
<PAGE>
such Stockholder Matter that would be required under the proxy solicitation
rules of the Securities and Exchange Commission if proxies were solicited for
stockholder consideration of such Stockholder Matter at a meeting of
stockholders.
(vi) If a written notice of a proposal of a Stockholder
Matter submitted to the Board of Directors fails, in the reasonable judgment of
the Board of Directors, to contain the information specified in clause (v)
hereof or is otherwise deficient, the Board of Directors shall, as promptly as
is practicable under the circum stances, provide written notice to the
stockholder who submitted the written notice of presentation of a Stockholder
Matter of such failure or deficiency in the written notice of presentation of a
Stockholder Matter and such stockholder shall have five business days from
receipt of such notice to submit a revised written notice of presentation of a
matter that corrects such failure or deficiency in all material respects.
(vii) Only Stockholder Matters submitted in accordance
with the foregoing provisions of this Section 11(b) shall be eligible for
presentation at such meeting of stockholders or for action by written consent
without a meeting, and any Stockholder Matter not submitted to the Board of
Directors in accordance with such provisions shall not be considered or acted
upon at such meeting of stockholders or by written consent without a meeting.
ARTICLE III
BOARD OF DIRECTORS
SECTION 1. POWERS. The property, business and affairs of the
Corporation shall be managed and controlled by its Board of Directors. The Board
shall exercise all of the powers of the Corporation except as are by law, the
Corporation's Certificate of Incorporation or these By-laws conferred upon or
reserved to the stockholders.
SECTION 2. NUMBER AND TERM. The number of directors shall be at least
three. Within the limits specified above, the number of directors shall be
designated from time to time by the Board. The Board of Directors shall be
elected by the stockholders at the annual meeting of stockholders, and each
director shall be elected to serve for the term of one year and until his
successor shall be elected and qualified or until his earlier death, resignation
or removal.
SECTION 3. RESIGNATIONS. Any director or member of a committee of the
Board may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 4. REMOVAL. Any director or the entire Board of Directors may
be removed either for or without cause at any time by the affirmative vote of
the holders of a majority of all the shares of stock outstanding and entitled to
vote for the election of directors at any annual or special meeting of the
stockholders called for that purpose. Vacancies thus created may be filled by a
majority vote of the directors then in office, although less than a quorum, or
by a sole remaining director.
<PAGE>
SECTION 5. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Vacancies in the
office of any director or member of a committee of the Board of Directors and
newly created directorships may be filled by a majority vote of the remaining
directors in office, although less than a quorum or by a remaining sole
director. Any director so chosen shall hold office for the unexpired term of his
predecessor and until his successor shall be elected and qualified or until his
earlier death, resignation or removal. However, the directors may not fill the
vacancy created by removal of a director by electing the director so removed.
SECTION 6. MEETINGS. Regular meetings of the directors may be held
without notice at such places and times as shall be determined from time to time
by resolution of the directors. Special meetings of the board may be called by
Chairman of the Board, the President and shall be called by the Secretary on the
written request of any two directors with at least one day's notice to each
director. A special meeting shall be held at such place or places as may be
determined by the directors or as shall be stated in the notice of the meeting.
SECTION 7. QUORUM, VOTING AND ADJOURNMENT. The presence of at least a
majority of the total number of directors or of any committee of the Board shall
constitute a quorum for the transaction of business at any meeting of the Board
of Directors or committee of the Board, as the case may be. At any meeting of
the Board or any committee of the Board, if less than a quorum be present, a
majority of the directors or committee members present may adjourn the meeting
from time to time until a quorum is present. No notice of such adjourned meeting
need be given other than the announcement at the meeting so adjourned. The vote
of a majority of the directors or committee members present at the meeting at
which a quorum is present shall be the act of the Board or any committee of the
Board as the case may be.
SECTION 8. COMMITTEES. The Board of Directors may, by resolution or
resolutions passed by a majority of the entire Board, designate one or more
committees, including but not limited to an Executive Committee and an Audit
Committee, each such committee to consist of one or more of the directors of the
Corporation. The Board may designate one or more directors as alternate members
of any committee, to replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent specified by the resolution of
the Board, may have and exercise the powers of the Board of Directors in the
management of the business and affairs of the Corporation and may authorize the
seal of the Corporation to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to amending the
Certificate of Incorporation of the Corporation, adopting an agreement of merger
or consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending these By-laws; and, unless the enabling
resolution of the Board expressly so provides, no such committee shall have the
power or authority to declare a dividend or to authorize the issuance of stock
of the Corporation. All committees of the Board shall report their proceedings
to the Board when required.
SECTION 9. ACTION WITHOUT A MEETING. Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee of the
Board may be taken without notice and without a meeting if all members of the
Board or committee, as the case may be, consent to the action in writing.
Members of the Board of Directors or of any committee of the Board, may
participate in a meeting of the Board or committee by means of a conference
<PAGE>
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in a meeting
pursuant to this section shall constitute presence in person at such meeting.
SECTION 10. COMPENSATION. The Board of Directors may from time to time,
in its discretion, fix the amounts which shall be payable to directors and to
members of any committee of the Board for attendance at the meetings of the
Board of Directors or of such committee and for services rendered to the
Corporation. Any director may serve the Corporation in any other capacity as an
officer, agent or otherwise, and receive compensation therefor.
SECTION 11. CORPORATE BOOKS. The books of the Corporation, except such
as are required by law to be kept within the state, may be maintained outside
the State of Delaware, at such places as the Board of Directors may from time to
time determine.
ARTICLE IV
OFFICERS
SECTION 1. The officers of the Corporation shall be a Chairman of the
Board, a President, one or more Vice Presidents, a Treasurer and a Secretary. In
addition, the Board of Directors may elect a Vice Chairman of the Board and
additional Vice Presidents, including an Executive Vice President, one or more
Assistant Treasurers and one or more Assistant Secretaries. Each officer of the
Corporation shall hold office for such term, have such authority and perform
such duties as set forth in these By-Laws or as may be prescribed from time to
time by the Board of Directors. Any number of offices may be held by the same
person.
SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may
appoint such other officers and agents as it deems advisable, who shall hold
their office for such terms and shall exercise such powers and perform such
duties as shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. The Chairman of the Board of Directors must be a
director of the Corporation. The Chairman shall preside at all meetings of the
Board of Directors and of the stockholders and shall have such powers and
perform such other duties as from time to time may be assigned to him by the
Board of Directors.
SECTION 4. VICE CHAIRMAN. The Vice Chairman of the Board of Directors,
if any be elected, shall generally aid and assist the Chairman of the Board and
shall have such powers and shall perform such duties of the Chairman of the
Board, in the absence or disability of such officer. In addition, the Vice
Chairman of the Board shall have such powers and perform such other duties as
from time to time may be assigned to him by the Board of Directors.
SECTION 5. PRESIDENT. The President shall be the Chief Executive
Officer of the Corporation and shall, in connection with the performance of his
duties, report directly to the Board of Directors. He shall perform such other
duties as may be prescribed from time to time by the Board or these By-laws. In
the absence, disability or failure of the Chairman of the Board or Vice Chairman
of the Board, if any shall be elected, to act, or a vacancy in such offices, the
President shall preside at all meetings of the stockholders and of the Board of
Directors.
<PAGE>
SECTION 6. VICE PRESIDENTS. Each Vice President (of whom one or more
may be designated an Executive Vice President) shall generally aid and assist
the President in such manner as the President shall direct. Each Vice President
shall have such powers and shall perform such duties as shall be assigned to him
by the President or the Board of Directors.
SECTION 7. TREASURER. The Treasurer shall have the custody of the corpo
rate funds, securities, evidences of indebtedness and other valuables of the
Corporation and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He shall deposit all moneys
and other valuables in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. The Treasurer shall
disburse the funds of the Corporation as may be ordered by the Board of
Directors or the President. He shall render to the President and Board of
Directors, upon their request, a report of the financial condition of the
Corporation. If required by the Board of Directors, he shall give the
Corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the board shall prescribe.
SECTION 8. SECRETARY. The Secretary will cause minutes of all meetings
of the stockholders and directors to be recorded and kept; cause all notices
required by these By-Laws or otherwise to be given properly and see that the
minute books, stock books, and other non-financial books of the Corporation are
kept properly. In addition, the Secretary shall have such powers and shall
perform such duties as shall be assigned to him by the Board of Directors.
SECTION 9. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Each
Assistant Treasurer and each Assistant Secretary, if any shall be elected, shall
be vested with all the powers and shall perform all the duties of the Treasurer
and Secretary, respectively, in the absence or disability of such officer,
unless or until the Board of Directors shall otherwise determine. In addition,
Assistant Treasurers and Assistant Secretaries shall have such powers and shall
perform such duties as shall be assigned to them by the Board of Directors.
SECTION 10. CORPORATE FUNDS AND CHECKS. The funds of the Corporation
shall be kept in such depositories as shall from time to time be prescribed by
the Board of Directors. All checks or other orders for the payment of money
shall be signed by such officers, employees or agents as may from time to time
be authorized by the Board of Directors, with such countersignature, if any, as
may be required by the Board of Directors.
SECTION 11. CONTRACTS AND OTHER DOCUMENTS. The Chairman of the Board,
the President, any Vice President or the Treasurer, or such other officer or
officers as may from time to time be authorized by the Board of Directors, shall
have the power to sign and execute on behalf of the Corporation deeds, bonds,
mortgages/ conveyances and contracts, and any and all other documents requiring
execution by the Corporation and shall cause the seal to be affixed to any
instrument requiring it and, when so affixed, the seal shall be attested by the
signature of the Secretary or the Treasurer or an Assistant Secretary or an
Assistant Treasurer.
SECTION 12. OWNERSHIP OF STOCK OF ANOTHER CORPORATION. The Chairman of
the Board, the President, any Vice President, the Treasurer, the Secretary, or
such other officer or person as shall be authorized by the Board of Directors,
shall have power and authority on behalf of the Corporation to attend and to
vote at any meeting of the stockholders of any corporation in
<PAGE>
which this Corporation may hold stock; may exercise on behalf of this
Corporation any and all of the rights and powers incident to the ownership of
such stock at any such meeting; and shall have power and authority to execute
and deliver proxies and consents on behalf of this Corporation in connection
with the exercise by this Corporation of the rights and powers incident to the
ownership of such stock.
SECTION 13. DELEGATION OF DUTIES. The Board of Directors may delegate
to another officer or director, the powers or duties of any officer, in case of
such officer's absence, disability or refusal to exercise such powers or perform
such duties.
SECTION 14. RESIGNATION AND REMOVAL. Any officer of the Corporation may
be removed from office for or without cause at any time by the Board of
Directors. Any officer may resign at any time in the same manner prescribed for
the resignation of directors of the Corporation and as set forth in Section 3 of
Article III of these By-laws.
SECTION 15. VACANCIES. In case any office shall become vacant, the
Board of Directors shall have power to fill such vacancy.
ARTICLE V
STOCK
SECTION 1. CERTIFICATES OF STOCK. Certificates for stock of the
Corporation shall be numbered and shall be in such form as the Board of
Directors may, from time to time, prescribe; shall be signed by the Chairman of
the Board, the President or a Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary (or shall bear
the facsimile signatures of such officers); and shall be issued to each
stockholder to evidence the number and class of shares of stock in the
Corporation owned by him. The Board of Directors shall have power to appoint one
or more transfer agents and/or registrars for the transfer and/or registration
of certificates of stock of any class, and may require that stock certificates
shall be countersigned and/or registered by one or more of such transfer agents
and/or registrars.
SECTION 2. TRANSFER OF SHARES. The shares of stock of the Corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the Corporation by the delivery
thereof to the person in charge of the stock and transfer books and ledgers, or
to such person as the Board of Directors may designate, by whom they shall be
canceled, and new certificates shall thereupon be issued. A record shall be made
of each transfer and whenever a transfer shall be made for collateral security,
and not absolutely, it shall be so expressed in the entry of the transfer. The
Board of Directors shall have power and authority to make all such rules and
regulations as it may deem necessary or proper concerning the issue, transfer
and registration of all or any certificates for shares of stock of the
Corporation.
SECTION 3. LOST CERTIFICATES. A new certificate of stock may be issued
in the place of any certificate previously issued by the Corporation, alleged to
have been lost, stolen, destroyed or mutilated, and the Board of Directors may,
in its discretion, require the owner of the lost, stolen, destroyed or mutilated
certificate, or his legal representatives, to give the
<PAGE>
Corporation a bond, in such sum as it may direct, not exceeding double the value
of the stock, to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss or mutilation of any such certificate,
or the issuance of any such new certificate.
SECTION 4. STOCKHOLDERS OF RECORD. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder
thereof, in fact, and shall not be bound to recognize any equitable or other
claim to or interest in such shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise expressly
provided by law.
SECTION 5. STOCKHOLDERS RECORD DATE. In order that the Corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or, subject to the relevant provisions
of Section 11 of Article II, to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix a record date, which shall
not be more than 60 nor less than ten days before the date of the holding of
such meeting or the date of the taking of any of the aforementioned actions, nor
more than 60 days prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 6. DIVIDENDS. Subject to the provisions of the Certificate of
Incorpo ration, the Board of Directors may at any regular or special meeting,
out of funds legally available therefor, declare dividends upon the stock of the
Corporation as and when it deems appropriate. Before declaring any dividend
there may be set apart, out of any funds of the Corporation available for
dividends, such sum or sums as the Board of Directors from time to time in its
discretion deems proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
Board shall deem conducive to the interests of the Corporation.
ARTICLE VI
NOTICE AND WAIVER OF NOTICE
SECTION 1. NOTICE. Whenever notice is required to be given to any
director, committee member, officer, stockholder, employee or agent, whether
pursuant to law, the Certificate of Incorporation of the Corporation or these
By-laws, it shall not be construed to mean personal notice, but such notice may
be given, in the case of stockholders, in writing, by depositing the same in the
mail, postage prepaid, or by overnight carrier addressed to such stockholders at
his last known address as the same appears on the books of the Corporation, and,
in the case of directors, committee members, officers, employees and agents, by
telephone, or by mail, postage prepaid, or by prepaid telegram at his last known
address as the same appears on the books of the Corporation. All notices shall
be deemed to be given when mailed, telegraphed or telephoned.
<PAGE>
SECTION 2. WAIVER OF NOTICE. Whenever any notice is required to be
given by law, the Certificate of Incorporation of the Corporation or these
By-laws, a written waiver of notice signed by the person entitled to notice,
whether before or after the time stated in the notice, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, unless prior to the end of the meeting the
person objects to the transaction of any business because the meeting is not
lawfully noticed or convened. Neither the business to be transacted at, nor the
purpose of, any meeting of the stockholders, directors, or members of a
committee of the Board need be specified in any written waiver of notice.
ARTICLE VII
AMENDMENT OF BY-LAWS
SECTION 1. AMENDMENTS. These By-laws may be altered, amended or
repealed (i) by the affirmative vote of the holders of a majority of all of the
issued and outstanding shares of stock of the Corporation entitled to vote
thereon at any annual or special meeting duly convened after notice to the
stockholders of that purpose or (ii) by a majority vote of the members of the
Board of Directors at any regular or special meeting of the Board of Directors
duly convened after notice to the Board of Directors of that purpose, subject
always to the power of the stockholders to change such action of the Board of
Directors by the vote of the stockholders required in clause (i) of this Article
VII.
ARTICLE VIII
MISCELLANEOUS
SECTION 1. SEAL. The seal of the Corporation shall be circular in form
and shall have the name of the Corporation "C&D Technologies, Inc." on the
circumference and the words and numerals "Delaware 1985" in the center.
SECTION 2. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.
SECTION 3. INDEMNIFICATION. To the fullest extent permitted by the laws
of the State of Delaware:
(a) The Corporation shall indemnify any person, his heirs,
executors or administrators, who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding
(brought by or in the right of the Corporation or otherwise), whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was a director or officer of the corporation, or is or was serving at the
request of the Corporation as a director, officer, partner, trustee, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against all expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by such person
or such heirs, executors or administrators in connection with such action, suit
or proceeding.
<PAGE>
(b) The Corporation may indemnify any person, his heirs,
executors or administrators, who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding
(brought by or in the right of the Corporation or otherwise), whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was an employee or agent of the Corporation, or is or was serving at the request
of the Corporation as a director, officer, partner, trustee, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against all expenses (including attorneys' fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person or such
heirs, executors or administrators in connection with such action, suit or
proceeding.
(c) The Corporation may, in the discretion of the Board of
Directors, pay expenses incurred in defending any action, suit or proceeding
described in subsection (a) or (b) of this Section 3 in advance of the final
disposition of such action, suit or proceeding.
(d) The Corporation may purchase and maintain insurance on
behalf of any person described in subsection (a) or (b) of this Section 3
against any liability asserted against him, whether or not the Corporation would
have the power to indemnify him against such liability by law.
The indemnification provided by this Section 3 shall not be
deemed exclusive of any other rights to indemnification to which those seeking
indemnification may be entitled under any By-law, agreement, vote of
stockholders or disinterested directors or otherwise.
As amended on February 22, 2000.
EXHIBIT 10.5
FIRST AMENDMENT
THIS FIRST AMENDMENT dated as of February 18, 2000 (this "Amendment"),
relating to the Credit Agreement referenced below, is by and among C&D
TECHNOLOGIES, INC., a Delaware corporation (the "Borrower"), the Subsidiaries of
the Borrower identified on the signature pages hereto, the Lenders identified on
the signature pages hereto and Bank of America, N.A., a national banking
association formerly known as NationsBank, N.A., as Administrative Agent (in
such capacity, the "Administrative Agent"). Terms used herein but not otherwise
defined herein shall have the meanings provided to such terms in the Credit
Agreement.
W I T N E S S E T H
WHEREAS, a $220 million credit facility has been extended to the
Borrower pursuant to the terms of that certain Credit Agreement dated as of
March 1, 1999 (as amended, modified and supplemented from time to time, the
"Credit Agreement") among the Borrower, the Subsidiaries of the Borrower
identified therein, Lenders identified therein and the Administrative Agent;
WHEREAS, the Borrower has requested certain modifications to the Credit
Agreement;
WHEREAS, the requested modifications require the consent of the
Required Lenders; and
WHEREAS, the Required Lenders have consented to the requested
modifications on the terms and conditions set forth herein;
NOW, THEREFORE, IN CONSIDERATION of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Credit Agreement is amended in the following respects:
1.1 The following definitions in Section 1.1 of the Credit Agreement
are hereby amended to read as follows:
"Consolidated Fixed Charge Coverage Ratio" means, for any
period, the ratio of Consolidated EBITDA to Consolidated Fixed
Charges.
"Consolidated Fixed Charges" means, for any period for the
Consolidated Group, the sum of the cash portion of
Consolidated Interest Expense paid during the four consecutive
fiscal quarters ending as of the date of determination plus
scheduled maturities of Funded Debt (including, for purposes
hereof, mandatory commitment reductions, sinking fund payments
and the like relating thereto, but excluding for purposes
hereof Funded Debt of Shanghai permitted to be incurred under
Section 8.1(h)) paid during the four consecutive fiscal
quarters ending as of the date of determination, in each case
on a consolidated basis determined in accordance with GAAP
applied on an consistent basis.
1.2 Clause (b) of Section 7.9 of the Credit Agreement is amended
to read as follows:
<PAGE>
(b) Consolidated Fixed Charge Coverage Ratio. As of the end of
each fiscal quarter, the Consolidated Fixed Charge Coverage
Ratio shall not be less than 2.5:1.0.
2. Each of the Borrower and the Guarantors hereby represents and
warrants that as of the date of this Amendment (i) the representations and
warranties set forth in Section 6 of the Credit Agreement and in the other
Credit Documents are true and correct in all material respects (except those
which expressly relate to an earlier date), and (ii) no Default or Event of
Default presently exists.
3. Each of the Guarantors (i) acknowledges and consents to all of the
terms and conditions of this Amendment, (ii) affirms all of its obligations
under the Credit Documents and (iii) agrees that this Amendment and all
documents executed in connection herewith do not operate to reduce or discharge
such Guarantor's obligations under the Credit Agreement or the other Credit
Documents.
4. Except as expressly modified hereby, all of the terms and provisions
of the Credit Agreement (including Schedules and Exhibits thereto) remain in
full force and effect.
5. This Amendment shall be effective upon the execution hereof by the
Borrower, the Guarantors and the Required Lenders.
6. The Borrower agrees to pay all reasonable costs and expenses of the
Administrative Agent in connection with the preparation, execution and delivery
of this Amendment, including the reasonable fees and expenses of the
Administrative Agent's legal counsel.
7. This Amendment may be executed in any number of counterparts, each
of which when so executed and delivered shall be deemed an original. It shall
not be necessary in making proof of this Amendment to produce or account for
more than one such counterpart.
8. This Amendment shall be deemed to be a contract under, and shall for
all purposes be construed in accordance with, the laws of the State of New York.
[Remainder of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date first above
written.
BORROWER: C&D TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ Stephen E. Markert, Jr.
---------------------------
Name: Stephen E. Markert, Jr.
Title: Chief Financial Officer
GUARANTORS: C&D/CHARTER HOLDINGS, INC.,
a Delaware corporation
PCC MEXICAN HOLDINGS, INC.,
a Delaware corporation
By: /s/ Stephen E. Markert, Jr.
---------------------------
Name: Stephen E. Markert, Jr.
Title: Chief Financial Officer
[Signature Pages Continue]
<PAGE>
LENDERS: BANK OF AMERICA, N.A., a national banking
institution formerly known as NationsBank, N.A.,
in its capacity as Administrative Agent and as a Lender
By: /s/ Patrick M. Moore
----------------------------
Name: Patrick M. Moore
Title:Vice President
COMERICA BANK
By:
Name:
Title:
BANK ONE NA (formerly known as
THE FIRST NATIONAL BANK OF CHICAGO)
By:/s/ Andrea S. Kantor
---------------------------
Name: Andrea S. Kantor
Title: Vice President
FIRSTAR BANK MILWAUKEE N.A.
By: /s/ Jason Hickey
---------------------------
Name: Jason Hickey
Title: Assistant Vice President
THE BANK OF NEW YORK
By:/s/ Vito M. Ferrone
--------------------------
Name: Vito M. Ferrone
Title: Vice President
MELLON BANK, N.A.
By: /s/ Mark Torie
--------------------------
Name: Mark Torie
Title: Vice President
LASALLE NATIONAL BANK
By: /s/ Grant Chromy
--------------------------
Name: Grant Chromy
Title: Assistant Vice President
[Signature Pages Continue]
<PAGE>
FIRST UNION NATIONAL BANK
By:/s/ Linda Douglas
--------------------------
Name: Linda Douglas
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ Frank Pugliese
--------------------------
Name: Frank Pugliese
Title: Assistant Vice President
THE CHASE MANHATTAN BANK
By: /s/ Thomas Conroy, Jr.
-------------------------
Name: Thomas F. Conroy, Jr.
Title: Vice President
FLEET BANK, N.A.
By:
Name:
Title:
Exhibit 10.7
As Amended through February 22, 2000
C&D TECHNOLOGIES, INC.
AMENDED AND RESTATED
1998 STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I - PURPOSE ..................................... 1
ARTICLE II - DEFINITIONS ................................ 1
ARTICLE III - ADMINISTRATION ............................ 3
ARTICLE IV - SHARE AND OTHER LIMITATIONS ................ 5
ARTICLE V - STOCK OPTIONS ............................... 7
ARTICLE VI - NON-EMPLOYEE DIRECTOR STOCK OPTIONS ........ 9
ARTICLE VII - GRANT OF SHARES OF COMMON STOCK
TO NON-EMPLOYEE DIRECTORS ............................. 11
ARTICLE VIII - NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT/CONSULTANCY PROVISIONS ....................... 12
ARTICLE IX - TERMINATION OR AMENDMENT OF PLAN ........... 13
ARTICLE X - UNFUNDED PLAN ............................... 13
ARTICLE XI - GENERAL PROVISIONS ......................... 14
ARTICLE XII - EFFECTIVE DATE OF PLAN .................... 15
ARTICLE XIII - TERM OF PLAN ............................. 15
ARTICLE XIV - NAME OF PLAN .............................. 16
<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 to offer Non-Employee Directors shares of Common
Stock. The intent of such offering is 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 them and the Company's stockholders.
ARTICLE II.
DEFINITIONS
For purposes of this Plan, the following terms shall have the following
meanings:
"Affiliate" shall mean (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
1
<PAGE>
exists which has the authority to administer this Plan, the functions of the
Committee shall be exercised by the Board and the term "Committee" as used in
this Plan shall refer to 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 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 or (ii) if not traded on any such
national securities exchange or the Nasdaq Stock Market, 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, 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.
2
<PAGE>
"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.
"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 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 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 the Committee 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
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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.
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 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 shall establish and communicate to
the Participant at the time such offer is made;
provided, however, that subsequent to its grant, except with respect to
adjustments under Section 4.2 of this Plan, no Stock Option shall be repriced,
regranted or amended so as to effect a decrease in the exercise price of the
Stock Option without approval of the Company's stockholders.
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 this Plan. Expenses incurred in the
engagement of any such counsel, consultant or agent shall be paid by the
Company.
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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.
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 1,500,000 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 200,000 shares (subject to any
increase or decrease pursuant to 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.
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(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 if the
Committee 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. Any such
adjustment shall be consistent with such change and be made in a manner that the
Committee deems 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. Any such adjustment determined by the
Committee 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 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.
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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 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 a 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 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 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 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 at
the time of grant. If the Committee 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 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 shall determine in its sole discretion. Notwithstanding
anything to the contrary under Article VIII, unless the Committee shall specify
otherwise, a Stock Option shall become fully (100%) exercisable upon the
Termination of Employment or the Termination of Consultancy for reasons of
death, disability or retirement. The Committee shall, in its sole discretion,
determine whether or not disability or retirement has occurred. Notwithstanding
the foregoing, the Committee at any time may in its sole discretion limit the
number of Stock Options that can be exercised in any taxable year of the
Company, to the extent necessary to prevent the application of Section
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162(m) of the Code (or any similar or successor provision), provided that the
Committee may not postpone the earliest date on which Stock Options can be
exercised beyond the last day of the stated term of such Stock Options.
(d) Subject to whatever installment exercise and waiting period
provisions apply under Section 5.3(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 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 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
Non-Qualified 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 and the Committee 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 reload grants
of Stock Options upon exercise of Stock Options such that the same number of
Stock Options are granted as the number of shares used to pay for the exercise
price of Stock Options or shares used to pay withholding taxes with respect to
Stock Options exercised ("Reloads"). With respect to Reloads, the exercise price
of the new Stock
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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.
(h) With respect to Stock Options granted to certain Participants
designated by the Committee based upon the nature of their duties or exposure to
confidential and proprietary information, as a condition to such grant, the
Committee may require that the Participant enter into an agreement not to
compete with the Company during the terms of the Participant's employment and
for a period of time thereafter, and the Committee shall have the authority to
suspend, cancel or terminate such Participant's Stock Option or require the
Participant to return, or (if not received) to forfeit, to the Company the
economic value of the Stock Options granted that the Participant has realized or
obtained as a result of the Participant's exercise by reason of a violation of
such agreement not to compete, as shall be provided in the respective Stock
Option agreements.
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 2,000 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.
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 Committee 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.
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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 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.
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ARTICLE VII.
GRANT OF SHARES OF COMMON STOCK
TO NON-EMPLOYEE DIRECTORS
7.1. STOCK GRANTS.
(a) On the date of the Annual Meeting of Stockholders of the Company
held in 1998, 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 a Non-Employee Director made in writing to the
Chief Financial Officer of the Company within 30 days prior to the date of
grant, the Non-Employee 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).
(b) (i) Subject to clause (ii) below, on the date of the Annual Meeting
of Stockholders of the Company held in 2000, and 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 $18,000; except that a Non-Employee
Director serving as Chairman of the Board shall automatically be granted shares
of Common Stock having a Fair Market Value on such date of $60,000. The Board of
Directors shall also conduct an annual review of the compensation of the
Non-Employee Director serving as Chairman of the Board and the other
Non-Employee Directors and, as a result of such review, may grant additional
shares of Common Stock having a Fair Market Value on the date of grant
determined by the Board of Directors but which may not exceed 1.25 times their
current compensation for the respective annual period. Any such grant shall be
made by the Board of Directors based on the time and effort spent by the
Chairman of the Board and the Non-Employee Directors in performing their duties
and such other factors as the Board may consider relevant.
(ii) Notwithstanding clause (i) above, at the election of a Non-
Employee Director made in writing to the Chief Financial Officer of the Company
prior to the grant, the Non-Employee Director may choose to receive a
combination of (x) a number of shares of Common Stock having a Fair Market Value
equal to 2/3 of the Fair Market Value determined pursuant to clause (i), and (y)
an amount of cash equal to 1/3 of the Fair Market Value determined pursuant to
clause (i).
(c) Any Non-Employee 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 is expected to serve in such capacity.
(d) The Committee hereby approves each election to receive cash or
stock hereunder.
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7.2. RESTRICTIONS. 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. NON-TRANSFERABILITY OF STOCK OPTIONS. 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 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
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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 (i) for cause, or (ii) a voluntary termination on the part of the
Participant, any Stock Option held by such Participant shall thereupon terminate
and expire as of the date of termination, unless otherwise permitted by the
Committee in its discretion.
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, 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, that 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, Section 162(m) of the Code, (with
respect to Incentive Stock Options) Section 422 of the Code or the rules of the
New York Stock Exchange, 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 under Section 5.3(a); (e) extend the maximum option
term under Section 5.3(b); or (f) reprice, regrant or amend so as to effect a
decrease in the exercise price of any Stock Option after its initial grant date
under Section 3.2.
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.
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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.
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.
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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 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 deems necessary to establish the validity of the
Transfer of a Stock Option. The Committee 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") and was approved by the stockholders of the Company on
that date. This Plan, as amended and restated, has been adopted by the Board
effective as of February 22, 2000, subject to and conditioned upon the approval
of the Plan, as amended and restated with respect to the additional 900,000
shares authorized under the Plan and the modifications to Article VII, 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.
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ARTICLE XIV.
NAME OF PLAN
This Plan shall be known as the C&D Technologies, Inc. 1998 Stock
Option Plan.
16
Exhibit 10.13
March 31, 2000
Mr. Wade H. Roberts, Jr.
1385 Eaves Spring Road
Malvern, Pennsylvania 19355
Dear Mr. Roberts:
You are presently employed by C&D Technologies, Inc., a Delaware
corporation (the "Company"), in an executive capacity and the Company desires to
encourage such continued employment by providing certain protections for you by
entering into this Agreement with you, in return for which you agree to continue
to be employed by the Company on the terms set forth herein, to refrain from
certain competitive activity and to provide the Company with certain assurances
upon your departure. In consideration of same, the Company agrees to employ you,
and you agree to accept such employment, under the following terms and
conditions:
1. TERM OF EMPLOYMENT. Except for earlier termination as provided in
Section 9 below, your employment under this Agreement, and the term of this
Agreement, shall be for an initial period commencing on the date hereof (the
"Effective Date") and terminating on October 21, 2000 (the "Initial Term").
After the Initial Term, this Agreement and your employment hereunder shall be
renewed automatically for successive terms of one year each (each, a "Renewal
Term"), unless prior to the end of the Initial Term or any Renewal Term either
party shall have given to the other party at least 90 days' prior written notice
(a "Termination Notice"), of termination of this Agreement. If a Termination
Notice is given by either party, (a) the Company shall, without any liability to
you, have the right, exercisable at any time after the Termination Notice is
given, to elect any other person to the office or offices in which you are then
serving and to remove you from such office or offices, but (b) except for the
obligations set forth in Section 3 and 4, all other obligations each of you and
the Company have to the other, including the Company's obligation to pay your
compensation and make available the benefits to which you are entitled
hereunder, shall continue until the end of the Initial Term or any Renewal Term,
as the case may be, or thereafter, to the extent such obligations survive
pursuant to the terms of this Agreement.
2. COMPENSATION AND BENEFITS.
(a) From and after the Effective Date, you shall be compensated for
performance of your obligations under this Agreement at a rate of not less than
$350,000 per annum (such salary, as adjusted from time to time, is hereinafter
referred to as the "Base Salary"), payable in such manner as is consistent with
the Company's payroll practices for executive employees. The Board of
<PAGE>
Directors may from time to time thereafter consider future increases in Base
Salary in its sole discretion.
(b) You shall have the benefit of and be entitled to participate in
such employee benefit plans and programs, including life, disability and medical
insurance, pension, savings, retirement and other similar plans, as the Company
now has or hereafter may establish from time to time, and in which you would be
entitled to participate pursuant to the terms thereof, including without
limitation the Company's existing Supplemental Executive Retirement Plan
("SERP"). The foregoing, however, shall not be construed to require the Company
to establish any such plans or to prevent the Company from modifying or
terminating any such plans, and no such action or failure thereof shall affect
this Agreement.
(c) You shall be entitled (i) to participate in the Company's Incentive
Compensation Plan each year in accordance with criteria and for amounts approved
by the Compensation Committee, and (ii) to be granted options, to the extent (if
any) approved by the Compensation Committee or the relevant Option Committee,
under the Company's stock option plans in effect from time to time, in addition
to those granted to you prior to the date of this Agreement (the "Original
Grant"). Without limiting the foregoing, you shall have a targeted bonus for the
fiscal year ending January 31, 2000 of 40% of the Base Salary paid to you during
the portion of the fiscal year prior to the time you became Chief Executive
Officer and increasing to 50% of your Base Salary for the portion of such year
following your promotion to Chief Executive Officer (with the actual payment of
any bonus described herein being dependent on your achievement of targeted
objectives).
(d) In the event of a Change of Control Termination (as defined in
Exhibit A hereto), you shall be entitled to certain payments and benefits as
provided in Exhibit A hereto, which payments and benefits shall be in
substitution for, not in addition to, the payments and benefits otherwise
payable under this Agreement in the event of termination.
(e) You shall be entitled to four weeks of vacation each year.
(f) The Company shall reimburse you annually for up to $5,000 of fees
and expenses incurred by you for personal tax and financial planning advice,
upon presentation by you of appropriate substantiation of such fees and
expenses.
(g) The Company shall provide you with a leased automobile of
reasonable size and quality suitable to your position and shall pay or reimburse
you for insurance, repairs, maintenance and fuel expenses with regard to such
automobile. You acknowledge that some or all of the benefits provided under this
Section 2(g) may constitute taxable income for which you are responsible for
payment of income taxes.
3. DUTIES. (a) During the term of your employment hereunder, including
any Renewal Term hereof, you shall serve and the Company shall employ you as the
President and Chief Executive Officer of the Company, with such executive duties
and responsibilities consistent with such positions and stature as the Board of
Directors from time to time may determine. You shall
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report to, and act under the general direction of, the Board of Directors. You
shall use your best efforts to carry out the instructions of the Board of
Directors. You shall be nominated, on an annual basis as long as you continue to
be employed under this Agreement, for election by the stockholders as a director
of the Company and, if elected, you shall serve as a director, without
additional compensation. In addition, at the request of the Board of Directors,
you shall serve as an officer and/or director of any of the Company's
subsidiaries, in all cases in conformity with the organizational documents and
the policies of the Board of Directors of each such subsidiary, without
additional compensation.
(b) You shall devote your entire business time and energies during
normal business hours to the business and affairs of the Company and its
subsidiaries. Nothing in this Section 3 shall be construed as prohibiting you
from investing your personal assets in businesses in which your participation is
solely that of a passive investor in such form or manner as will not violate
Section 5 hereof or require any services on your part in the operation or
affairs of those businesses. You may also participate in philanthropic or civic
activities as long as they do not materially interfere with your performance of
your duties hereunder.
(c) You shall be subject to the Company's rules, practices and policies
applicable to the Company's senior executive employees.
4. EXPENSES. The Company shall reimburse you for all reasonable
expenses incurred by you in connection with your employment upon presentation of
appropriate documentation therefor in accordance with the Company's expense
reimbursement practices. In the event the Company's principal executive offices
are located to a location more than 50 miles from their current location, the
Company shall reimburse your moving expenses (including reasonable costs
relating to interim living accommodations).
5. RESTRICTIVE COVENANTS.
(a) During such time as you shall be employed by the Company, and for
the applicable Restricted Period (as defined below) thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in, represent, advise or
otherwise participate as an officer, employee, director, stockholder, partner or
agent of, or as a consultant for, any business anywhere in the world that, at
the time your employment with the Company ceases, is competitive with the
business in which the Company is engaged or in which the Company has taken
affirmative steps to engage (a "Competitive Business"); provided, however, that
(i) nothing herein shall prevent you from investing in up to 5% of the
securities of any company listed on a national securities exchange or quoted on
the Nasdaq quotation system, as long as your involvement with any such company
is solely that of a stockholder, and (ii) nothing herein is intended to prevent
you from being employed following the termination of your employment with the
Company by any business other than a Competitive Business. With respect to any
termination of your employment other than upon a Change of Control pursuant to
Exhibit A, the applicable Restricted Period shall be the one-year period
following the date your employment terminates, and with respect to a termination
of your employment upon a Change of Control pursuant
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to Exhibit A, the applicable Restricted Period shall be the two-year period
following the date your employment terminates. You acknowledge that the
provisions of this Section 5 are reasonable in light of the Company's worldwide
business operations and the position in which you will serve at the Company and
that they will not prevent you from obtaining employment after the termination
of this Agreement.
(b) The parties hereto intend that the covenant contained in this
Section 5 shall be deemed a series of separate covenants for each appropriate
jurisdiction. If, in any judicial proceeding, a court shall refuse to enforce
all of the separate covenants deemed included in this Section 5 on grounds that,
taken together, they cover too extensive a geographic area, the parties intend
that those covenants (taken in order of the least populous jurisdictions) which,
if eliminated, would permit the remaining separate covenants to be enforced in
that proceeding, shall, for the purpose of such proceeding, be deemed eliminated
from the provisions of this Section 5.
6. CONFIDENTIALITY, NONINTERFERENCE AND PROPRIETARY INFORMATION.
(a) In the course of (i) your employment by the Company hereunder, and
(ii) any prior employment with the Company, you will have access to Confidential
or Proprietary Data or Information of the Company. You shall not at any time
divulge or communicate to any person, nor shall you direct any Company employee
to divulge or communicate to any person (other than to a person bound by
confidentiality obligations similar to those contained herein and other than as
necessary in performing your duties hereunder) or use to the detriment of the
Company or for the benefit of any other person, any of such Confidential or
Proprietary Data or Information, except to the extent the same (i) becomes
publicly known other than through a breach of this Agreement by you, (ii) was
known to you prior to the disclosure thereof by the Company to you from a source
that was entitled to disclose it or (iii) is subsequently disclosed to you by a
third party who shall not have received it under any obligation of
confidentiality to the Company. For purposes of this Agreement, the term
"Confidential or Proprietary Data or Information" shall mean data or information
not generally available to the public, including personnel information,
financial information, customer lists, supplier lists, product and tooling
specifications, trade secrets, information concerning product composition and
formulas, tools and dies, drawings and schematics, manufacturing processes,
information regarding operations, systems and services, knowhow, computer and
any other electronic, processed or collated data, computer programs, and
pricing, marketing, sales and advertising data.
(b) You shall not, during the term of this Agreement and for the
applicable Restricted Period after the termination of your employment by the
Company, for your own account or for the account of any other person, (i)
solicit or divert to any Competitive Business any individual or entity who is a
customer of the Company or any subsidiary or affiliate of the Company or who was
a customer of the Company or any subsidiary or affiliate during the preceding
twelve-month period, (ii) employ, retain as a consultant, attempt to employ or
retain as a consultant, solicit or assist any Competitive Business in employing
or retaining as a consultant any current employee of the Company or any
subsidiary or affiliate or any person who was employed by the Company or any
subsidiary or affiliate during the preceding twelve-month period or (iii)
otherwise interfere in any
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<PAGE>
material respect with the Company's relationship with any of its suppliers,
customers, employees or consultants; provided, however, that you shall not be
prohibited from contacting suppliers or customers after termination of your
employment with regard to matters that do not violate your noncompetition or
confidentiality obligations contained in Sections 5(a) and 6(a) or interfere in
any material respect with the Company's relationship with such parties.
(c) You shall at all times promptly disclose to the Company, in such
form and manner as the Company reasonably may require, any inventions,
improvements or procedural or methodological innovations, programs, methods,
forms, systems, services, designs, marketing ideas, products or processes
(whether or not capable of being trademarked, copyrighted or patented) conceived
or developed or created by you during and in connection with your employment
hereunder and which relate to the business of the Company ("Intellectual
Property"). All such Intellectual Property shall be the sole property of the
Company. You shall execute such instruments and perform such acts as reasonably
may be requested by the Company to transfer to and perfect in the Company all
legally protectable rights in such Intellectual Property. If the Company is
unable for any reason to secure your signature on such instruments, you hereby
irrevocably appoint the Company and its officers and agents as your agents and
attorneys-in-fact to execute such instruments and to do such things with the
same legal force and effect as if executed or done by you.
(d) All written, electronic and other tangible materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon the request of the Company during your
employment, you shall deliver the same to the Company. In addition, upon
termination of your employment, or upon request of the Company during your
employment, you shall deliver to the Company all other Company property in your
possession or under your control, including confidential or proprietary data or
information and all Company credit cards and computer and telephone equipment.
7. EQUITABLE RELIEF. With respect to the covenants contained in
Sections 5 and 6 of this Agreement, you acknowledge that any remedy at law for
any breach of said covenants may be inadequate and that the Company, in addition
to its rights at law, shall be entitled to specific performance or any other
mode of injunctive or other equitable relief to enforce its rights hereunder.
8. TERMINATION; ADDITIONAL COMPENSATION. This Agreement, and your
employment hereunder, shall terminate prior to the end of the Initial Term or
any Renewal Term, upon the following terms and conditions:
(a) This Agreement shall terminate automatically on the date of your
death. Notwithstanding the foregoing, if you die during the term of this
Agreement, the Company shall (i) continue to make payments to your estate of
your Base Salary as then in effect pursuant to this Agreement for 180 days after
the date of your death, and (ii) pay your estate any reimbursable expenses which
otherwise would have been paid to you to the date of your death.
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<PAGE>
(b) This Agreement shall be terminated, at the option of the Company,
if you are unable to perform a substantial portion of your duties hereunder for
any 180 days (whether or not consecutive) during any period of 365 consecutive
days by reason of physical or mental disability. Notwithstanding the foregoing,
the Company shall continue to pay to you, until 180 days after termination of
your employment due to such disability, your Base Salary at the rate in effect
on the date of termination. After such six-month period, you shall be entitled
to receive any amounts due and owing pursuant to any disability policy sponsored
by or made available through the Company to the extent you qualify therefor
under the terms of such disability policy. For purposes of this Agreement,
"physical or mental disability" shall mean your inability, due to health
reasons, to discharge properly your duties of employment, supported by the
opinion of a physician reasonably satisfactory to both you and the Company. If
the parties do not agree on a mutually satisfactory physician within ten days
after written demand by one or the other, a physician shall be selected by the
president of the Pennsylvania Medical Association, and the physician shall,
within 30 days thereafter, make a determination as to whether disability exists
and certify the same in writing. The services of the physician shall be paid for
by the Company. You shall fully cooperate with the examining physician,
including submitting yourself to such examinations as may be requested by the
physician for the purpose of determining whether you are disabled.
(c) This Agreement shall terminate immediately if your employment is
terminated hereunder for Cause. For purposes of this Agreement, "Cause" shall
exist upon a finding by the Board of Directors of any of the following: (i) an
act or acts of willful material misrepresentation, fraud or dishonesty by you
that results in the personal enrichment of you or another person or entity at
the expense of the Company; (ii) your admission, confession or conviction of any
felony or any other crime or offense involving misuse or misappropriation of
money or other property; (iii) any act involving gross moral turpitude by you
that adversely affects the Company; (iv) your continued material breach of any
obligations under this Agreement 30 days after the Company has given you notice
thereof in reasonable detail, if such breach has not been cured by you during
such period; or (v) your gross negligence or willful misconduct with respect to
your duties or gross misfeasance of office. Notwithstanding the foregoing and
Section 1(d)(ii) of the SERP, the definition of "Cause" solely for purposes of
the SERP shall be the definition of "Cause" contained in Section l(d)(i) of the
SERP.
(d) Upon termination of this Agreement for any reason other than
pursuant to a Change of Control, in addition to any other rights or benefits to
which you may be entitled under this Agreement, you shall be paid all Accrued
Obligations through the date of termination. The term "Accrued Obligations"
shall mean (i) your Base Salary through the date of termination; (ii) any bonus
earned pursuant to the terms of any applicable incentive compensation or bonus
plan of the Company but not yet paid with respect to any fiscal year completed
prior to termination; (iii) a prorated bonus for the fiscal year in which
termination occurs equal to the product of (x) any bonus paid to you for the
prior fiscal year of the Company multiplied by (y) a fraction, the numerator of
which is the number of days in the current fiscal year during which you were
employed by the Company, and the denominator of which is 365; and (iv) any
accrued vacation pay not yet paid by the Company; provided, that if termination
is by the Company for Cause or by you voluntarily, the
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"Accrued Obligations" will not include the amounts referred to in clause (iii)
above. Upon termination of this Agreement (other than by the Company for Cause
or pursuant to a Change of Control or by you in violation of this Agreement),
(A) you shall also be entitled to all rights and benefits under benefit and
incentive plans (other than those relating to bonuses) in accordance with
respective terms of those plans; (B) you shall be reimbursed for all your
business expenses incurred prior to termination in accordance with Section 4
above; (C) the Company shall, at your request within 15 days after termination
and at your expense, assign to you the lease and any related purchase option for
the automobile provided to you pursuant to Section 2(g), provided such lease and
purchase option is assignable; and (D) to the extent the Company's life
insurance plan has a conversion option available upon termination of employment,
the Company shall make such option available to you. Upon termination by the
Company for Cause, you shall be reimbursed for all your business expenses
incurred prior to termination in accordance with Section 4. For purposes of
clause (ii) above, a bonus shall be deemed to be earned upon completion of the
fiscal year to which it relates regardless of whether the Board of Directors or
its Compensation Committee has approved bonuses for such year as of the date of
termination.
(e) Except upon the occurrence of a Change of Control Termination (as
defined in Exhibit A), if your employment hereunder shall be terminated by the
Company (i) without Cause, other than pursuant to Section 8(a) or (b), or (ii)
as a result of nonrenewal pursuant to a Termination Notice given by the Company
under Section l, then in addition to any other rights or benefits to which you
may be entitled, the Company shall, for a period of one year after termination,
(x) continue to pay you your Base Salary at the rate in effect on the date of
termination; (y) continue to provide you with a leased automobile pursuant to
Section 2(g); and (z) continue all other benefits provided to you prior to
termination (except not including any bonus with respect to the period after
termination); provided, however, that to the extent the Company's benefit plans
do not permit such continued participation or such participation would have an
adverse tax impact on such plans or on the other participants in such plans or
is otherwise prohibited by applicable law, the Company may instead provide
materially equivalent benefits to you outside such plans (which, in the case of
medical insurance benefits, may be provided by the Company paying any premiums
for continuation of your medical benefits pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"), COBRA coverage in any
event to be measured from the date of termination of employment).
(f) In the event of a Change of Control Termination, this Agreement
shall terminate in accordance with the terms of Exhibit A, and the payments and
benefits to which you shall be entitled shall be governed solely by Exhibit A.
(g) In the event this Agreement is terminated for any reason by the
Company (other than due to death, disability, for Cause or upon a Change of
Control), or the Company provides a Termination Notice as forth in Section 1,
upon termination of your employment under this Agreement, any unvested options
from the Original Grant that you may own that would otherwise have vested within
one year from the date of termination shall be deemed to vest effective upon the
date of termination and become exercisable for a period of 90 days following the
date of termination. All other unvested options from the Original Grant shall
terminate.
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(h) The payment by the Company of any compensation or benefits pursuant
to this Section 8 other than the Accrued Obligations shall be conditioned on
your execution of a Release (a "Release") in a form provided by and acceptable
to the Company. Such Release shall be substantially in the form of Exhibit B
hereto but may be modified by the Company in its sole discretion as it deems
appropriate to reflect changes in law or circumstances arising after the date of
this Agreement; provided, however, that no such modification shall increase any
of your obligations to the Company over those contemplated in this Agreement,
including the Exhibits hereto.
9. REPRESENTATIONS. You hereby represent and warrant that you are not
subject to any employment agreement, non-competition or confidentiality
agreement or other commitment that either would be violated by your entering
into or performing your obligations under this Agreement or that would restrict
in any manner or interfere with the performance of your obligation under this
Agreement. You hereby further represent and warrant that you have not revealed
to the Company or any employee of the Company any confidential information of
any former employer, and you agree that you will not do so in the future.
10. ENTIRE AGREEMENT; MODIFICATION; CONSTRUCTION. This Agreement,
together with the Exhibits hereto and all of your rights under the SERP and all
other employee benefit plans in which you participate, constitutes the full and
complete understanding of the parties, and supersedes all prior agreements and
understandings, oral or written, between the parties, with respect to the
subject matter hereof, except for the Agreement Relating to Intellectual
Property and Confidential Information dated October 23, 1998 between you and the
Company ("Confidentiality Agreement"); provided, however, that if the terms of
any such employee benefit plan or such Confidentiality Agreement shall be
inconsistent with the provisions to this Agreement, the provisions of this
Agreement shall prevail. Exhibit A and Exhibit B are hereby incorporated by
reference and made a part of this Agreement. Each party to this Agreement
acknowledges that no representations, inducements, promises or agreements, oral
or otherwise, have been made by either party, or anyone acting on behalf of
either party, that are not set forth or referred to herein. This Agreement may
not be modified or amended except by an instrument in writing signed by the
party against which enforcement thereof may be sought.
11. SEVERABILITY. Any term or provision of this Agreement that is held
to be invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent that invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and provisions of
this Agreement or affecting the validity or enforceability of any of the terms
or provisions of this Agreement in any other jurisdiction.
12. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement, which waiver must be in writing to be effective,
shall not operate as or be construed as a waiver of any subsequent breach.
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13. NOTICES. All notices hereunder shall be in writing and shall be
sent by messenger or by certified or registered mail, postage prepaid, return
receipt requested, if to you, to your residence set forth above, and if to the
Company, to the Vice President-Human Resources, at the Company's address set
forth above, or to such other address as either party to this Agreement shall
specify to the other.
14. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be
assignable by either party, except that it may be assigned by the Company to an
acquiror of all or substantially all of the assets of the Company or other
successor to the Company, subject to your rights arising from a Change of
Control as provided in Exhibit A. This Agreement shall be binding upon and inure
to the benefit of you, your legal representatives, heirs and distributees, and
shall be binding upon and inure to the benefit of the Company, its successors
and assigns.
15. NO MITIGATION REQUIRED. Upon a termination of your employment by
the Company without Cause pursuant to Section 8(g) or upon a Change of Control
pursuant to Exhibit A, you shall have no obligation to seek other employment but
shall not be prohibited from doing so, and no compensation paid to you as the
result of any other employment shall reduce any payment required to be made by
the Company hereunder.
16. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
17. NONDISPARAGEMENT. You agree not to publicly or privately disparage
the Company, its personnel, products or services either during or upon
termination of your employment by the Company.
18. SURVIVAL. All of the provisions of this Agreement that by their
terms are to be performed or that otherwise are to endure after the termination
of your employment by the Company shall survive the termination of your
employment and shall continue in effect for the respective periods therein
provided or contemplated.
19. HEADINGS. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
20. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
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<PAGE>
If you are in agreement with the foregoing, please sign the duplicate
original in the space provided below and return it to the Company.
C&D TECHNOLOGIES, INC.
By:/s/ William Harral, III
----------------------------
Title: Chairman of the Board
of Directors
----------------------------
Agreed as of the date
above written:
/s/ Wade H. Roberts, Jr.
- -------------------------------
Wade H. Roberts, Jr.
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<PAGE>
EXHIBIT A
TO EMPLOYMENT AGREEMENT (THE "AGREEMENT")
OF WADE H. ROBERTS, JR. ("EXECUTIVE")
-----------------------------------------
(Capitalized terms used herein and not otherwise defined have the meanings given
to them in the Agreement.)
I. SPECIAL TERMINATION PROVISIONS. In the event a Change of Control (as defined
below) occurs, and within 24 months after such Change of Control: (a) the
Executive's employment with the Company is terminated by the Executive pursuant
to a Termination for Good Reason (as defined below); or (b) the Executive's
employment with the Company is terminated by the Company for any reason other
than death, disability or for Cause pursuant to Sections 8(a), (b) or (c) of the
Agreement; or (c) the Agreement is not renewed due to a Termination Notice given
by the Company, as provided in Section 1 of the Agreement (the events under
clauses (a), (b) and (c) herein collectively called a "Change of Control
Termination"), the Executive shall be entitled to receive the payments and
benefits set forth in Section III below in consideration of the Executive's
agreements under the Agreement, including but not limited to the Executive's
agreement not to compete with the Company for a period of two years after a
Change of Control pursuant to Section 5(a) of the Agreement and the Executive's
execution of the Release contemplated by Section 8(h) of the Agreement.
II. DEFINITIONS.
(a) CHANGE OF CONTROL. For purposes of the Agreement, a "Change of
Control" shall be deemed to have occurred if: (i) any person (as defined in
Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and as used in Sections 13(d) and 14(d) thereof)), excluding the
Company, any "Subsidiary" and any employee benefit plan sponsored or maintained
by the Company or any Subsidiary (including any trustee of any such plan acting
in his capacity as trustee), but including a "group" as defined in Section
13(d)(3) of the Exchange Act, becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act) of shares of the Company having at least 30% of
the total number of votes that may be cast for the election of directors of the
Company; (ii) the stockholders of the Company shall approve any merger or other
business combination of the Company, sale of all or substantially all of the
Company's assets or combination of the foregoing transactions (a "Transaction"),
other than a Transaction involving only the Company and one or more of its
Subsidiaries, or a Transaction immediately following which the stockholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
stockholder of the Company owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction) and no person is the
beneficial owner of at least 30% of the shares of the resulting entity as
contemplated by Section II(a)(i) above; or (iii) within any 24-month period
beginning on or after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
as of the date hereof
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shall be deemed to be an Incumbent Director if such director was elected to the
Board by, or on the recommendation of or with the approval of, at least
two-thirds of the directors who then qualified as Incumbent Directors either
actually or by prior operation of this Section II(a)(iii), unless such election,
recommendation or approval was the result of an actual or threatened election
contest of the type contemplated by Regulation 14a-11 promulgated under the
Exchange Act or any successor provision. Notwithstanding the foregoing, no
Change of Control of the Company shall be deemed to have occurred for purposes
of this Agreement by reason of any actions or events in which the Executive
participates in a capacity other than in his capacity as an executive or
director of the Company.
(b) TERMINATION FOR GOOD REASON. For purposes of the Agreement, a
"Termination for Good Reason" means a termination by the Executive by written
notice given within 90 days after the occurrence of the Good Reason event. A
notice of Termination for Good Reason shall indicate the specific termination
provision in Section II(c) relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for Termination for Good
Reason. The failure by the Executive to set forth in such notice any facts or
circumstances which contribute to the showing of Good Reason shall not waive any
right of Executive hereunder or preclude the Executive from asserting such fact
or circumstance in enforcing his rights hereunder. The notice of Termination for
Good Reason shall provide for a date of termination not less than 10 nor more
than 60 days after the date such Notice of Termination for Good Reason is given.
(c) GOOD REASON. For purposes of the Agreement, "Good Reason" shall
mean the occurrence, without the Executive's express written consent, of any of
the following circumstances, unless such circumstances are fully corrected prior
to the date of termination specified in the notice of Termination for Good
Reason as contemplated in Section II(b) above: (i) any material diminution of
the Executive's positions, duties or responsibilities hereunder (except in each
case in connection with the termination of the Executive's employment for Cause
pursuant to Section 8(c) of the Agreement or due to disability or death pursuant
to Sections 8(a) or 8(b) of the Agreement, or temporarily as a result of
Executive's illness or other absence), or the assignment to the Executive of
duties or responsibilities that are inconsistent with the Executive's position
under the Agreement at the time of a Change of Control; (ii) removal of the
Executive from, or the nonreelection of the Executive to, the officer positions
with the Company specified in the Agreement; (iii) relocation of the Company's
principal executive offices to a location more than 25 miles from its location
at the time of the Change of Control; (iv) failure by the Company, after a
Change of Control, (A) to continue any bonus plan, program or arrangement in
which the Executive is entitled to participate immediately prior to the Change
of Control (the "Bonus Plans"), provided that any such Bonus Plans may be
modified at the Company's discretion from time to time but shall be deemed
terminated if (x) any such plan does not remain substantially in the form in
effect prior to such modification and (y) if plans providing the Executive with
substantially similar benefits are not substituted therefor ("Substitute
Plans"), or (B) to continue the Executive as a participant in the Bonus Plans
and Substitute Plans on at least the same basis as to potential amount of the
bonus and substantially the same level of criteria for achievability thereof as
the Executive participated in immediately prior to any change in such plans or
awards, in accordance with the Bonus Plans and the Substitute Plans; (v) any
material breach by the Company of any provisions of the Agreement; (vi) if the
Executive
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is on the Board of Directors at the time of a Change of Control, the Executive's
removal from or failure to be reelected to the Board of Directors thereafter; or
(vii) failure of any successor to the Company to promptly acknowledge in writing
the obligations of the Company hereunder.
III. PAYMENTS AND BENEFITS. Upon a Change of Control Termination, as provided in
Section I above, the Company shall pay or provide the Executive the following
payments and benefits:
(a) The Company shall pay to the Executive all Accrued Obligations in a
lump sum within five business days after the date of termination.
(b) The Company shall pay to the Executive as severance pay, not later
than the tenth day following the date of the Executive's execution and delivery
of the Release required pursuant to Section 8(h) of this Agreement:
(i) a lump sum in an amount equal to three years of the
Executive's Base Salary; and
(ii) a lump sum payment in an amount equal to three of the
Executive's annual incentive bonuses, such payment to be equal to the greater of
(i) the amount of all incentive bonuses paid to the Executive with respect to
each of the three most recently completed fiscal years of the Company for which
a bonus has been paid or (ii) the incentive bonus paid to the Executive with
respect to the two most recently completed fiscal years of the Company for which
a bonus has been paid plus an amount equal to the Executive's Target Bonus (as
hereinafter defined); provided, however, that if the Executive has been employed
by the Company for less than three years, such payment shall be equal to the
greater of (x) the amount of the incentive bonuses paid to the Executive with
respect to the two most recently completed fiscal years of the Company for which
a bonus has been paid plus the Executive's Target Bonus or (y) the amount of the
Executive's Target Bonus multiplied by three. The term "Target Bonus" shall mean
the incentive bonus that would have been payable for the fiscal year that
includes the date on which the Executive's employment terminates under the
incentive bonus program in effect as of the date of the Change of Control,
assuming that the Executive had been entitled to receive an amount in respect of
such bonus based solely upon his Base Salary and the applicable target
percentage as of the date of termination (or if greater, the Executive's Base
Salary as of the date on which occurred an event giving rise to a Change of
Control Termination), and without regard to actual performance.
(c) The Company shall continue the participation of the Executive and
the Executive's dependents for a period of three years after the date of
termination in all health, medical and accident, life and other welfare plans
(as defined in Section 3(l) of ERISA), in which the Executive was participating
immediately prior to the date of termination, except for any disability plans,
and shall provide the Executive with a leased automobile pursuant to Section
2(g) of the Agreement for such period; provided, however, that to the extent the
Company's plans do not permit such continued participation or such participation
would have an adverse tax impact on such plans or on the other participants in
such plans, the Company may instead provide materially equivalent benefits to
the Executive outside of such plans; provided, further, that under such
circumstances, (i) medical
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<PAGE>
insurance benefits may be provided by the Company paying any COBRA premiums
(COBRA coverage, in any event, to be measured from the date of termination of
employment) and (ii) if the Company is unable to continue the Executive's life
insurance coverage, it shall pay the Executive an amount equal to three times
the premium paid during the year prior to termination or if the Executive
converts the insurance to an individual policy, the Company shall pay the
premium for such insurance for three years. The Executive shall complete such
forms and take such physical examinations as reasonably requested by the
Company. To the extent the Executive incurs any tax obligation as a result of
the provisions of this paragraph (c) that the Executive would not have incurred
if the Executive remained an employee of the Company and had continued to
participate in the benefit plans as an employee, the Company shall pay to the
Executive, at the time the tax is due, an amount to cover such taxes and the
taxes on the amount paid to cover such taxes.
(d) All outstanding stock options and restricted stock awards that have
been granted to the Executive by the Company at any time but have not yet vested
and upon which vesting depends solely upon the passage of time, shall
immediately vest or become nonforfeitable, as the case may be. In the event the
foregoing sentence becomes applicable, the Company agrees to cause the Board of
Directors to take all steps necessary to implement the foregoing sentence.
(e) All amounts payable to the Executive upon a Change of Control under
the SERP and the Company's Deferred Compensation Plan shall be paid to the
Executive in accordance with the terms of those plans.
(f) The Company, at its expense, shall provide the Executive with
outplacement services at a level appropriate for the most senior level of
executive employees through an outplacement firm of the Executive's choice for a
period of up to one year after the date of the Change of Control Termination.
(g) (i) In the event that any payment, coverage or benefit
(collectively, the "Covered Benefits") provided to you by the Company or an
Affiliate (as defined below) is or becomes subject to the excise tax imposed
under Section 4999 or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code"), or you incur interest or penalties with respect
to that excise tax (that excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the Company shall
pay you an additional amount (a "Gross-Up Bonus") at the time or times specified
in Section III(g)(iii)(z) below. The amount of the Gross-Up Bonus shall equal
the quotient determined by dividing (x) the Excise Tax attributable to the
Covered Benefits by (y) one minus the highest marginal income tax rate, where
the term "highest marginal income tax rate" means the sum of the highest
combined local, state and federal personal income tax rates (including any state
unemployment compensation tax rate, any surtax rate as well as the Medicare
hospital insurance tax rate imposed on employees under the Federal Insurance
Contributions Act) as in effect for the calendar year to which the Excise Tax
attributable to the Covered Benefits relates, provided that in determining the
highest tax rate for federal purposes both the deductibility of state and local
income tax payments and the reduction in the deductibility of itemized
deductions shall be taken into account; it being the intention of the parties
hereto that your net after tax position (after taking into account any interest
or penalties imposed with respect to such taxes) upon receipt of the
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<PAGE>
Covered Benefits is no less advantageous to you than the net after tax position
you would have had if Section 4999 of the Code had not been applicable to any
portion of the Covered Benefits.
(ii) All determinations to be made under this Section III(g),
including the determination of whether an Excise Tax is payable and the amount
thereof, shall be made by a law firm practicing in the Philadelphia,
Pennsylvania metropolitan area that is knowledgeable in tax law matters, which
firm shall be selected and paid for by the Company and acceptable to the
Executive. If tax counsel's determinations are not finally accepted by the
Internal Revenue Service upon audit, then appropriate adjustments shall be
computed (with a Gross Up Bonus, if applicable) by that tax counsel based upon
the final amount of the Excise Tax so determined.
(iii) For purposes of this Section III(g):
(x) An "Affiliate" shall mean any successor to the
Company, any member of an affiliated group including the Company (determining
using the definition in Section 1504 of the Code) or any entity that becomes
a member of such an affiliated group as a result of the transaction causing the
Change of Control.
(y) When determining the amount of the Gross-Up Bonus,
you will be deemed to have otherwise allowable deductions for federal, state
and local tax purposes at least equal to those disallowed because of the
inclusion of the Gross-Up Bonus in your adjusted gross income.
(z) The portion of the Gross-Up Bonus attributable to
a Covered Benefit shall be paid to you within 10 business days following the
provision to you of the Covered Benefit. In the event that the amount of Excise
Tax due exceeds the amount of Excise Tax determined by tax counsel, the Company
shall pay you an additional Gross-Up Bonus in respect of that excess at the time
that the amount of the excess is determined under Section III(g)(ii). In the
event the amount of Excise Tax due is less than the amount of Excise Tax
determined by tax counsel, you shall repay the Company the portion of the Gross-
Up Bonus attributable thereto at the time that the amount of the reduction in
Excise Tax is determined under Section III(g)(ii); provided, however, that if
any portion of the amount you must repay to the Company has been paid to any
federal, state or local tax authority, your repayment of that portion shall
be postponed until the tax authority has actually refunded or credited that
amount to you.
(h) Upon the occurrence of a Change of Control, if the Company fails to
perform any of its obligations under this Agreement or the Company or any other
person asserts the invalidity of any provision of this Agreement and the
Executive incurs any costs in successfully enforcing or defending any of the
provisions of this Agreement, including legal fees and expenses and court costs,
the Company shall reimburse the Executive for all such costs incurred by him.
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<PAGE>
EXHIBIT B
RELEASE
This Release is made this _____ day of _______________, ____ by and
between C&D Technologies, Inc. ("Employer") and _________________ ("Employee").
Recitals:
WHEREAS, the parties are parties to an Employment Agreement (the
"Employment Agreement") dated __________, pursuant to which Employee was
employed by Employer; and
WHEREAS, the Employment Agreement has terminated; and
WHEREAS, your execution and delivery of this Release is a condition to
the Employer's obligations to pay certain compensation and benefits to you under
the Employment Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1. As of _____________________, ____, Employee's employment with
Employer shall terminate, and Employee shall have no further job
responsibilities to perform for Employer; provided, however, that Employee shall
cooperate with Employer in transitioning Employee's job responsibilities as
Employer shall reasonably request, provided that Employee shall be entitled to
receive reasonable compensation for any services rendered prior to such date and
shall not be obligated to take any action that would interfere with any
subsequent employment of Employee or otherwise result in economic hardship to
Employee.
2. Employer shall pay to the Employee the amounts contemplated pursuant
to Section __ of the Employment Agreement, less applicable deductions; provided
however, the first payment shall not be due and payable until ten days after the
execution by Employee and delivery to Employer of this Release.
3. For and in consideration of the monies and benefits paid to Employee
by Employer, as more fully described in Section 2 above, and for other good and
valuable consideration, Employee hereby waives, releases and forever discharges
Employer, its assigns, predecessors, successors, and affiliated entities, and
its current or former stockholders, officers, directors, administrators, agents,
servants and employees, individually and as representatives of the corporate
entity (hereinafter collectively referred to as "Releasees"), from any and all
claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, bonuses, controversies, agreements, promises, charges,
complaints, damages, sums of money, interest, attorney's fees and costs, or
causes of action of any kind or nature whatsoever whether in law or equity,
including, but not limited to, all claims arising out of his/her employment or
termination of employment with Employer, such as
B-1
<PAGE>
all claims for wrongful discharge, breach of contract, either express or
implied, interference with contract, emotional distress, fraud,
misrepresentation, defamation, claims arising under the Civil Rights Acts of
1964 and 1991 as amended, the Americans With Disabilities Act, the Age
Discrimination in Employment Act (ADEA), the National Labor Relations Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974
(ERISA), the Family and Medical Leave Act, the Pennsylvania Human Relations Act,
the Pennsylvania Wage Payment & Collection Law, the Pennsylvania Minimum Wage
Act of 1968, the Pennsylvania Equal Pay Law, and any and all other claims
arising under federal, state or local law, rule, regulation, constitution,
ordinance or public policy whether known or unknown, arising up to and including
the date of execution of this Release; provided, however that the parties do not
release each other from any claim of breach of the terms of this Release. This
release of rights does not extend to claims that may arise after the date of
this Release. Employee agrees that Employee will not initiate any charge or
complaint or institute any claim or lawsuit against Releasees or any of them
based on any fact or circumstance occurring up to and including the date of the
execution by Employee of this Release.
4 Employee agrees that the payments made and other consideration
received pursuant to this Release are not to be construed as an admission of
legal liability by Releasees or any of them and that no person or entity shall
utilize this Release or the consideration received pursuant to this Release as
evidence of any admission of liability since Releasees expressly deny liability.
5 Employee affirms that the only consideration for the signing of this
Release are the terms stated herein and in the Employment Agreement and that no
other promise or agreement of any kind has been made to Employee by any person
or entity whatsoever to cause Employee to sign this Release.
6 Employee and Employer affirm that the Employment Agreement and this
Release set forth the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior or contemporaneous
agreements or understandings between the parties with respect to the subject
matter contained herein. Further, there are no representations, arrangements or
understandings, either oral or written, between the parties, which are not fully
expressed herein. Finally, no alteration or other modification of this Release
shall be effective unless made in writing and signed by both parties.
7 Employee acknowledges that Employee has been given a period of at
least 21 days within which to consider this Release.
8 Following the execution of this Release, the Employee has a period of
7 days from the date of execution to revoke this Release, and this Release shall
not become effective or enforceable until the revocation period has expired.
9 Employee certifies that Employee has returned to Employer all keys,
identification cards, credit cards, computer and telephone equipment and other
property or information of Employer in Employee's possession, custody, or
control including, but not limited to, any information contained in any computer
files maintained by Employee during Employee's employ-
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<PAGE>
ment with Employer. Employee certifies that Employee has not kept the originals
or copies of any documents, files, or other property of Employer which Employee
obtained or received during Employee's employment with Employer.
10 Employee acknowledges that Employer advised Employee to consult with
an attorney prior to executing this Release.
11 Employee affirms that Employee has carefully read this Release, that
Employee fully understands the meaning and intent of this document, that
Employee has signed this Release voluntarily and knowingly, and that Employee
intends to be bound by the promises contained in this Release for the aforesaid
consideration.
IN WITNESS WHEREOF, Employee and the authorized representative of
Employer have executed this Release on the dates indicated below:
C&D TECHNOLOGIES, INC.
Dated:_____________________ By:______________________________
Title:__________________________
Dated:_____________________ ______________________________
(Name of Employee)
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<PAGE>
ENDORSEMENT
I, ___________________________________, hereby acknowledge that I was
given 21 days to consider the foregoing Release and voluntarily chose to sign
the Release prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the Commonwealth
of Pennsylvania that the foregoing is true and correct.
EXECUTED this ________ day of __________________, ____, at
_______________________________________, Pennsylvania.
---------------------------------
(Name of Employee)
B-4
Exhibit 10.14
March 31, 2000
Mr. Stephen E. Markert, Jr.
487 Deep Run Road
Perkasie, PA 18944
Dear Steve:
You are presently employed by C&D Technologies, Inc., a Delaware
corporation (the "Company"), in an executive capacity and the Company desires to
encourage such continued employment by providing certain protections for you by
entering into this Agreement with you, in return for which you agree to continue
to be employed by the Company on the terms set forth herein, to refrain from
certain competitive activity and to provide the Company with certain assurances
upon your departure. In consideration of same, the Company agrees to employ you,
and you agree to accept such employment, under the following terms and
conditions:
1. TERM OF EMPLOYMENT.
(a) Except for earlier termination as is provided in Section 9 or 10
below, your employment under this Agreement shall be automatically renewed for
successive terms of one month each, unless either party shall have given to the
other party at least 30 days' prior written notice of the termination of this
Agreement (a "Termination Notice"). If such 30 days' prior written notice is
given by either party, (i) the Company shall, without any liability to you, have
the right, exercisable at any time after such notice is sent, to elect any other
person to the office or offices in which you are then serving and to remove you
from such office or offices, but (ii) all other obligations each of you and the
Company have to the other, including the Company's obligation to pay your
compensation and make available the medical and dental insurance to which you
are entitled hereunder, shall continue until the date your employment terminates
as specified in such notice.
2. COMPENSATION.
(a) You shall be compensated for all services rendered by you under
this Agreement at the rate of $175,000 per annum (such salary, as it is from
time to time adjusted, is herein referred to as the ("Base Salary"). Such Base
Salary shall be payable in periodic installments twice monthly in accordance
with the Company's payroll practices for salaried employees. The Compensation
Committee of the Board of Directors shall review such Base Salary prior to April
1, 2000 and each
<PAGE>
year thereafter during the term of this Agreement, including any renewal term,
and shall make such adjustments, if any, as the Compensation Committee shall
determine; provided, however, that no adjustment shall reduce the Base Salary
below $175,000.
(b) If your employment hereunder shall be terminated (i) by the Company
without notice of Cause (as defined in Section 9(c)) therefor having been given
to you (other than pursuant to Section 9(a) or 9(b)), or (ii) as a result of the
non-renewal of this Agreement pursuant to a Termination Notice given by the
Company under Section 1(a) then, in addition to paying you the Accrued
Obligations (as hereinafter defined), for a one-year period after the effective
date of such termination, the Company shall pay you at the rate of your Base
Salary in effect at the time of such termination in periodic payments in
accordance with the Company's payroll practices for salaried employees;
provided, however, that your right to receive such payments, other than the
Accrued Obligations, shall be conditioned upon your execution of a Release (the
"Release"). Such Release shall be substantially in the form of Exhibit A hereto
but may be modified by the Company in its sole discretion as it deems
appropriate to reflect changes in law or circumstances arising after the date of
this Agreement; provided, however, that no such modification shall increase any
of your obligations to the Company over those contemplated by this Agreement,
including Exhibit A hereto. The term "Accrued Obligations" shall mean (i) your
Base Salary through the date of termination and (ii) all benefits that have
accrued to you under the terms of all employee benefits plans of the Company in
which you are entitled to participate.
3. DUTIES.
(a) During the term of your employment hereunder, including any renewal
thereof, you agree to serve as the Vice President Finance/Chief Financial
Officer or in such other capacity with duties and responsibilities of a similar
nature as those initially undertaken by you hereunder as the President of the
Company may from time to time determine. Your duties may be changed at any time
and from time to time hereafter, upon mutual agreement, consistent with office
or offices in which you serve as deemed necessary by the President of the
Company. You also agree to perform such other services and duties consistent
with the office or offices in which you are serving and its responsibilities as
may from time to time be prescribed by the Board of Directors, and you also
agree to serve, if elected, as an officer and/or director of the Company and/or
any of the Company's other direct or indirect subsidiaries without additional
compensation, in all cases in conformity to the by-laws of each such
corporation. Unless you otherwise agree, you shall not be required to relocate
your place of business to a location that would increase your commuting distance
by greater than 25 miles.
(b) You shall devote your full employment energies, interest,
abilities, time and attention during normal business hours (excluding the
vacation periods provided in Section 4(b) below) exclusively to the business and
affairs of the Company, its parent corporation and subsidiaries, if any, and
shall not engage in any activity that conflicts or interferes with the
performance of duties hereunder.
(c) You agree to cooperate with the Company, including taking such
reasonable medical examinations as may be necessary, in the event the Company
shall desire or be required (such as
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pursuant to the terms of any bank loan or any other agreement) to obtain life
insurance insuring your life.
(d) You shall, except as otherwise provided herein, be subject to the
Company's rules, practices and policies applicable to the Company's senior
executive employees. Without limiting the generality of the foregoing, you
shall, with respect to the Company and its parents, subsidiaries, assets and
stockholders, act in a manner consistent with your fiduciary responsibilities as
an executive of the Company.
4. BENEFITS.
(a) You shall have the benefit of such life and medical insurance,
bonus, stock option and other similar plans as the Company may have or may
establish from time to time, and in which you would be entitled to participate
by reason of your position with the Company, pursuant to the terms thereof.
Also, to the extent you have met the qualifications required, you may
participate in the Company's savings and retirement plans. The foregoing,
however, shall not be construed to require the Company to establish any such
plans or to prevent the Company from modifying or terminating any such plans,
and no such action or failure thereof shall affect this Agreement.
(b) You shall be entitled to a vacation of four weeks each year.
(c) The Company will provide you with an annual physical examination.
5. EXPENSES. The Company will reimburse you for reasonable expenses
(consistent with Company policy), including traveling expenses, incurred by you
in connection with the business of the Company, upon the presentation by you of
appropriate substantiation for such expenses.
6. RESTRICTIVE COVENANTS.
(a) During such time as you shall be employed by the Company, and for
the applicable Restricted Period (as defined below) thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in, represent, advise or
otherwise participate as an officer, employee, director, stockholder, partner,
agent of or consultant for, any business that, at the time your employment with
the Company ceases, is competitive with the business in which the Company is
engaged or in which the Company has taken affirmative steps to engage (a
"Competitive Business"); provided, however, that nothing herein (i) shall
prevent you from investing without limit in the securities of any company listed
on a national securities exchange, provided that your involvement with any such
company is solely that of a stockholder, and (ii) is intended to prevent you
from being employed during the applicable Restricted Period by any business
other than a Competitive Business. With respect to any termination of your
employment other than upon a Change of Control pursuant to Section 10, the
applicable Restricted Period shall be the one-year period following the date
your employment terminates, and with respect to a termination of your employment
upon a Change of Control pursuant
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to Section 10, the applicable Restricted Period shall be the two-year period
following the date your employment terminates.
(b) The parties hereto intend that the covenant contained in this
Section 6 shall be deemed a series of separate covenants for each state, county
and city. If, in any judicial proceeding, a court shall refuse to enforce all
the separate covenants deemed included in this Section 6, because, taken
together, they cover too extensive a geographic area, the parties intend that
those of such covenants (taken in order of the states, counties and cities
therein which are least populous), which, if eliminated, would permit the
remaining separate covenants to be enforced in such proceeding, shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 6.
7. CONFIDENTIALITY, NON-INTERFERENCE, INVENTIONS AND PROPRIETARY
INFORMATION.
(a) In the course of (i) your employment with the Company hereunder,
and (ii) any prior employment with the Company, you will have and have had
access to Confidential or Proprietary Data or Information of the Company. You
shall not at any time divulge or communicate to any person nor shall you direct
any Company employee to divulge or communicate to any person (other than to a
person bound by confidentiality obligations similar to those contained herein
and other than as necessary in performing your duties hereunder) or use to the
detriment of the Company any of such Confidential or Proprietary Data or
Information, except to the extent the same (i) becomes publicly known other than
through a breach of this Agreement by you, (ii) was known to you prior to the
disclosure thereof by the Company to you from a source that was entitled to
disclose it or (iii) is subsequently disclosed to you by a third party who shall
not have receive it under any obligation of confidentiality to the Company. The
term "Confidential or Proprietary Data or Information" as used in this
Agreement, shall mean data or information not generally available to the public,
including personnel information, financial information, customer lists, supplier
lists, product and tooling specifications, trade secrets, information concerning
product composition and formulas, tools and dies, drawings and schematics,
manufacturing processes, information regarding operations, systems and services,
knowhow, computer and any other electronic, processed or collated data, computer
programs, and pricing, marketing, sales and advertising data.
(b) You shall not, during the term of this Agreement and for the
applicable Restricted Period after the termination of your employment by the
Company, for your own account or for the account of any other person, (i)
solicit or divert to any Competitive Business any individual or entity who is a
customer of the Company or any subsidiary or affiliate of the Company or who was
a customer of the Company or any subsidiary or affiliate during the preceding
twelve-month period, (ii) employ, retain as a consultant, attempt to employ or
retain as a consultant, solicit or assist any Competitive Business in employing
or retaining as a consultant any current employee of the Company or any
subsidiary or affiliate or any person who was employed by the Company or any
subsidiary or affiliate during the preceding twelve-month period or (iii)
otherwise interfere with the Company's relationship with any of its suppliers,
customers, employees or consultants; provided, however, that you shall not be
prohibited from contacting suppliers or customers after termination of your
employment with regard to matters that do not violate your noncompetition or
confidentiality
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<PAGE>
obligations contained in Sections 6(a) and 7(a) or interfere with the Company's
relationship with such parties.
(c) It is understood that you may, during your employment, conceive or
develop certain inventions, innovations or discoveries related to any business
in which the Company may be engaged, either solely or jointly with others. In
connection with the conception or development thereof, you agree to disclose
promptly to the Company all such inventions, innovations and discoveries, to
assign, and hereby do assign, to the Company all of your right, title and
interest in and to said inventions, innovations and discoveries, and to do all
things and sign all documents deemed by the Company to be necessary or
appropriate to vest in the Company, its successors and assigns, all of your
right, title and interest in and to such inventions, innovations or discoveries,
and to procure for the Company, at the Company's expense, patents, copyrights
and/or trademarks covering such inventions, innovations or discoveries in the
United States and its possessions and in foreign countries, at the discretion
and under the direction of the Company. In the event the Company is unable for
any reason to assure your signature on such documents, you irrevocably appoint
the Company and its duly authorized officers and agents as your agents and
attorneys-in-fact to execute such documents and to do such things with the same
legal force and effect as if executed or done by you.
(d) All written, electronic and other tangible materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company, or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon request of the Company during your
employment, you shall promptly deliver the same to the Company. In addition,
upon termination of your employment, or upon request of the Company during your
employment, you will deliver to the Company all other Company property in your
possession or under your control, including, but not limited to, financial
statements, marketing and sales data, patent applications, drawings and other
documents, and all Company keys, credit cards, computer and telephone equipment
and automobiles.
8. EQUITABLE RELIEF. With respect to the covenants contained in
Sections 6 and 7 of this Agreement, you agree that any remedy at law for any
breach of said covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of injunctive and/or other
equitable relief to enforce its rights hereunder or any other relief a court
might award.
9. EARLIER TERMINATION. Your employment hereunder shall terminate prior
to the Initial Term (or any renewal term, in the event of renewal) on the
following terms and conditions:
(a) This Agreement shall terminate automatically on the date of your
death. Notwithstanding the foregoing, if you die during the term of this
Agreement, the Company shall (i) continue to make payments to your estate of
your Base Salary as then in effect pursuant to this Agreement for 180 days after
the date of your death, and (ii) pay your estate any reimbursable expenses which
otherwise would have been paid to you to the date of your death.
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(b) This Agreement shall be terminated if you are unable to perform
your duties hereunder for a period of any 180 days in any 365 consecutive day
period by reason of physical or mental disability. Notwithstanding the
foregoing, if this Agreement is terminated pursuant to this Section 9(b), the
Company shall pay any accrued but unpaid Base Salary through the date of
termination and any reimbursable expenses due to you hereunder. For purposes of
this Agreement "physical or mental disability" shall mean your inability, due to
health reasons, to discharge properly your duties of employment, supported by
the opinion of a physician satisfactory to both you and the Company. If the
parties do not agree on a physician mutually satisfactory to both of you and the
Company within ten days of written demand by one or the other, a physician shall
be selected by the president of the Pennsylvania Medical Association, and the
physician shall, within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. Services of the physician
shall be paid for by the Company. You shall fully cooperate with the examining
physician including submitting yourself to such examinations as may be requested
by the physician for the purpose of determining whether you are disabled.
(c) This Agreement shall terminate immediately upon the Company's
sending you written notice terminating your employment hereunder for Cause. The
Company may terminate this Agreement for Cause, but only after written notice
specifying the Cause of such action shall have been rendered to you by the
President of the Company. "Cause" shall mean any of the following:
(i) Breach of this Agreement.
(ii) Refusal or inability (other than pursuant to Section 9(a)
or 9(b)) to perform duties assigned to you in accordance with the terms of this
Agreement or overt and willful disobedience of orders or directives issued to
you by the Company and within the scope of your duties to the Company.
(iii) Willful misconduct in the performance of your duties,
functions and responsibilities.
(iv) Commission of acts that are illegal in connection with
the performance of your duties, functions and responsibilities under this
Agreement.
(v) Commission of acts that would constitute a felony offense
during the term of this Agreement.
(vi) Violation of Company rules and regulations concerning
conflict of interest.
(vii) Gross mismanagement of the assets of the Company.
(viii) Gross incompetence, gross insubordination or gross
neglect in the performance of your duties hereunder or being under the habitual
influence of alcohol while on duty or possession, use, manufacture,
distribution, dispensation or sale of illegal drugs while on or off duty.
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(ix) Any act or omission, whether or not included in the
foregoing, that a court of competent jurisdiction would determine to constitute
cause for termination.
Existence of Cause shall be conclusively determined for all purposes hereunder
by the President of the Company. Such advice and consultation shall be utilized
as such officer regards as appropriate, and no obligation or duty with respect
to any procedure or formality is created by this Agreement. If the Company
terminates this Agreement for Cause under this Section 9(c), the Company shall
not be obligated to make any further payments under this Agreement except for
the Accrued Obligations.
(d) Except as set forth in Section 10, your coverage under the benefits
program provided by the Company will cease effective on your termination date.
You will be entitled to elect continuation of your medical and dental benefits
at the same cost the Company pays, pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Details with regard to
COBRA continuation coverage will be provided to you shortly after your
termination date.
(e) Except as set forth in Section 10, life insurance coverage will
cease upon your termination date. You may, however, apply to General American
Life Insurance Company (or such other insurance company as may provide group
life insurance to the Company's employees at the time) for an individual
converted life policy, with such application and payment of the first premium
required to be accomplished within 31 days after your termination date. Details
regarding this conversion option will be provided to you shortly after your
termination date.
(f) Accidental death and dismemberment and long term disability
coverages cease with your termination date and may not be extended or converted.
10. TERMINATION UPON A CHANGE OF CONTROL.
(a) In the event a Change of Control (as defined below) occurs, and
within 24 months after such Change of Control: (i) your employment with the
Company is terminated by you pursuant to a Termination for Good Reason (as
defined below); or (ii) your employment with the Company is terminated by the
Company for any reason other than death, disability or for Cause pursuant to
Sections 9(a), (b) or (c); or (iii) this Agreement is not renewed due to a
Termination Notice given by the Company, as provided in Section 1(a), (the
events under clauses (i), (ii) and (iii) herein collectively called a "Change of
Control Termination"), you shall be entitled to receive the payments and
benefits set forth in Section 10(e) and (f) below, which payments and benefits
shall be in substitution for, and not in addition to, the payments and benefits
otherwise payable under Section 2(a) or 2(b) of this Agreement in the event of
termination. Your right to receive such payments and benefits, other than the
Accrued Obligations, shall be in consideration of your agreements under this
Agreement, including but not limited to your agreement not to compete with the
Company for two years after a Change of Control pursuant to Section 6, and shall
be conditioned upon your execution of a Release. Such Release shall be
substantially in the form of Exhibit A but may be modified by the Company as it
deems appropriate to reflect changes in law or circumstances arising after the
date of this Agreement; provided that no such modification shall increase any of
your obligations to the Company over those contemplated by this Agreement,
including Exhibit A hereto.
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(b) For purposes of the Agreement, a "Change of Control" shall be
deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof)), excluding the Company, any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of any such plan acting in his capacity as
trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange
Act, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of shares of the Company having at least 30% of the total number of votes
that may be cast for the election of directors of the Company; (ii) the
shareholders of the Company shall approve any merger or other business
combination of the Company, sale of all or substantially all of the Company's
assets or combination of the foregoing transactions (a "Transaction"), other
than a Transaction involving only the Company and one or more of its
subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
shareholder of the Company owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction) and no person is the
beneficial owner of at least 30% of the shares of the resulting entity as
contemplated by Section 10(b)(i) above; or (iii) within any 24-month period
beginning on or after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
as of the date hereof shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
10(b)(iii), unless such election, recommendation or approval was the result of
an actual or threatened election contest of the type contemplated by Regulation
14a-11 under the Exchange Act or any successor provision. Notwithstanding the
foregoing, no Change of Control of the Company shall be deemed to have occurred
for purposes of this Agreement by reason of any actions or events in which you
participate in a capacity other than in your capacity as an executive or
director of the Company.
(c) For purposes of the Agreement, a "Termination for Good Reason"
means a termination by you by written notice given within 90 days after the
occurrence of the Good Reason event. A notice of Termination for Good Reason
shall indicate the specific termination provision in Section 10(d) relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for Termination for Good Reason. Your failure to set forth in
such notice any facts or circumstances that contribute to the showing of Good
Reason shall not waive any of your rights hereunder or preclude you from
asserting such fact or circumstance in enforcing your rights hereunder. The
notice of Termination for Good Reason shall provide for a date of termination
not less than 10 nor more than 60 days after the date such Notice of Termination
for Good Reason is given.
(d) For purposes of the Agreement, "Good Reason" shall mean the
occurrence, without your express written consent, of any of the following
circumstances, unless such circumstances are fully corrected prior to the date
of termination specified in the notice of Termination for Good Reason as
contemplated in Section 10(c) above: (i) any material diminution of your
positions, duties
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<PAGE>
or responsibilities hereunder (except in each case in connection with the
termination of your employment for Cause pursuant to Section 9(c) or due to
disability or death pursuant to Section 9(a) or 9(b) or temporarily as a result
of your illness or other absence), or the assignment to you of duties or
responsibilities that are inconsistent with your position under the Agreement at
the time of a Change of Control; (ii) your removal from, or your nonreelection
to, the officer positions with the Company specified in this Agreement; (iii)
relocation of the Company's principal executive offices to a location more than
25 miles from its location at the time of the Change of Control; (iv) failure by
the Company, after a Change of Control, (A) to continue any bonus plan, program
or arrangement in which you are entitled to participate immediately prior to the
Change of Control (the "Bonus Plans"), provided that any such Bonus Plans may be
modified at the Company's discretion from time to time but shall be deemed
terminated if (x) any such plan does not remain substantially in the form in
effect prior to such modification and (y) if plans providing you with
substantially similar benefits are not substituted therefor ("Substitute
Plans"), or (B) to continue you as a participant in the Bonus Plans and
Substitute Plans on at least the same basis as to potential amount of the bonus
and substantially the same level of criteria for achievability thereof as you
participated in immediately prior to any change in such plans or awards, in
accordance with the Bonus Plans and the Substitute Plans; (v) any material
breach by the Company of any provisions of this Agreement; or (vi) failure of
any successor to the Company to promptly acknowledge in writing the obligations
of the Company hereunder.
(e) Upon a Change of Control Termination, as provided in Section 10(a),
the Company shall pay or provide you the following payments and benefits:
(i) The Company shall pay to you the Accrued Obligations in a
lump sum within five business days after the date of termination.
(ii) The Company shall pay to you as severance pay, not later
than the tenth day following the date of your execution and delivery of the
Release required pursuant to Section 10(a) of this Agreement:
(A) a lump sum payment in an amount equal to two
years of your Base Salary;and
(B) a lump sum payment in an amount equal to two of
your annual incentive bonuses, such payment to be equal to the greater of (i)
the amount of all incentive bonuses paid to you with respect to each of the two
most recently completed fiscal years of the Company for which a bonus has been
paid or (ii) the incentive bonus paid to you with respect to the most recently
completed fiscal year of the Company for which a bonus has been paid plus an
amount equal to your Target Bonus (as hereinafter defined); provided, however,
that if you have been employed by the Company for less than two years, such
payment shall be equal to the greater of (x) the amount of the incentive bonus
paid to you with respect to the most recently completed fiscal year of the
Company for which a bonus has been paid plus your Target Bonus or (y) the amount
of your Target Bonus multiplied by two. The term "Target Bonus" shall mean the
incentive bonus that would have been payable for the fiscal year that includes
the date on which your employment terminates under the incentive bonus program
in effect as of the date of the Change of Control, assuming that you had been
entitled to receive an amount in respect of such bonus based solely upon the
target percentage
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applicable to employees in the same employment grade as you and your Base Salary
as of the date of termination (or if greater, your Base Salary as of the date on
which occurred an event giving rise to a Change of Control Termination), and
without regard to actual performance.
(iii) The Company shall continue the participation of you and
your dependents for a period of two years after the date of termination in all
health, medical and accident, life and other welfare plans (as defined in
Section 3(l) of ERISA), in which you were participating immediately prior to the
date of termination, except for any disability plans; provided, however, that to
the extent the Company's plans do not permit such continued participation or
such participation would have an adverse tax impact on such plans or on the
other participants in such plans, the Company may instead provide materially
equivalent benefits to you outside of such plans; provided, further, that under
such circumstances, (i) medical insurance benefits may be provided by the
Company paying any COBRA premiums (COBRA coverage, in any event, to be measured
from the date of termination of employment) and (ii) if the Company is unable to
continue your life insurance coverage, the Company shall pay you an amount equal
to twice the premium paid during the year prior to termination or if you convert
the insurance to an individual policy, the Company shall pay the premium for
such insurance for two years. You shall complete such forms and take such
physical examinations as reasonably requested by the Company. To the extent you
incur any tax obligation as a result of the provisions of this Section 10(e)
that you would not have incurred if you remained an employee of the Company and
had continued to participate in the benefit plans as an employee, the Company
shall pay to you, at the time the tax is due, an amount to cover such taxes and
the taxes on the amount paid to cover such taxes.
(iv) All outstanding stock options and restricted stock awards
that have been granted to you by the Company at any time but have not yet vested
and upon which vesting depends solely upon the passage of time, shall
immediately vest or become nonforfeitable, as the case may be. In the event the
foregoing sentence becomes applicable, the Company agrees to cause the Board of
Directors to take all steps necessary to implement the foregoing sentence.
(v) All amounts payable to you upon a Change of Control under
the Company's Supplemental Executive Retirement Plan and Deferred Compensation
Plan shall be paid to you in accordance with the respective terms of those
plans.
(vi) The Company, at its expense, shall provide you with
outplacement services at a level appropriate for the most senior executive
employees through an outplacement firm of your choice for a period of up to one
year after the date of the Change of Control Termination.
(f) (i) In the event that any payment, coverage or benefit
(collectively, the "Covered Benefits") provided to you by the Company or an
Affiliate (as defined below) is or becomes subject to the excise tax imposed
under Section 4999 or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code"), or you incur interest or penalties with respect
to that excise tax (that excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the Company shall
pay you an additional amount (a "Gross-Up Bonus") at the time or times specified
in Section 10(f)(iii)(z) below. The amount of the Gross-Up Bonus shall equal the
quotient determined by dividing (x) the Excise Tax attributable to the Covered
Benefits
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by (y) one minus the highest marginal income tax rate, where the term "highest
marginal income tax rate" means the sum of the highest combined local, state and
federal personal income tax rates (including any state unemployment compensation
tax rate, any surtax rate as well as the Medicare hospital insurance tax rate
imposed on employees under the Federal Insurance Contributions Act) as in effect
for the calendar year to which the Excise Tax attributable to the Covered
Benefits relates, provided that in determining the highest tax rate for federal
purposes both the deductibility of state and local income tax payments and the
reduction in the deductibility of itemized deductions shall be taken into
account; it being the intention of the parties hereto that your net after tax
position (after taking into account any interest or penalties imposed with
respect to such taxes) upon receipt of the Covered Benefits is no less
advantageous to you than the net after tax position you would have had if
Section 4999 of the Code had not been applicable to any portion of the Covered
Benefits.
(ii) All determinations to be made under this Section 10(f),
including the determination of whether an Excise Tax is payable and the amount
thereof, shall be made by a law firm practicing in the Philadelphia,
Pennsylvania metropolitan area that is knowledgeable in tax law matters, which
firm shall be selected and paid for by the Company and acceptable to you. If tax
counsel's determinations are not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be computed (with a
Gross-Up Bonus, if applicable) by that tax counsel based upon the final amount
of the Excise Tax so determined.
(iii) For purposes of this Section 10(f):
(x) An "Affiliate" shall mean any successor to
the Company, any member of an affiliated group including the Company
(determining using the definition in Section 1504 of the Code) or any entity
that becomes a member of such an affiliated group as a result of the transaction
causing the Change of Control.
(y) When determining the amount of the Gross-Up
Bonus, you will be deemed to have otherwise allowable deductions for federal,
state and local tax purposes at least equal to those disallowed because of the
inclusion of the Gross-Up Bonus in your adjusted gross income.
(z) The portion of the Gross-Up Bonus attributable
to a Covered Benefit shall be paid to you within 10 business days following the
provision to you of the Covered Benefit. In the event that the amount of Excise
Tax due exceeds the amount of Excise Tax determined by tax counsel, the Company
shall pay you an additional Gross-Up Bonus in respect of that excess at the time
that the amount of the excess is determined under Section 10(f)(ii). In the
event the amount of Excise Tax due is less than the amount of Excise Tax
determined by tax counsel, you shall repay the Company the portion of the
Gross-Up Bonus attributable thereto at the time that the amount of the reduction
in Excise Tax is determined under Section 10(f)(ii); provided, however, that if
any portion of the amount you must repay to the Company has been paid to any
federal, state or local tax authority, your repayment of that portion shall be
postponed until the tax authority has actually refunded or credited that amount
to you.
(g) Upon the occurrence of a Change of Control, if the Company fails to
perform any of its obligations under this Agreement or the Company or any other
person asserts the invalidity of
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any provision of this Agreement and you incur any costs in successfully
enforcing or defending any of the provisions of this Agreement, including legal
fees and expenses and court costs, the Company shall reimburse you for all such
costs incurred by you.
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with
Exhibit A hereto and all rights to which you are entitled under all employee
benefit plans in which you participate, constitutes the full and complete
understanding of the parties, and supersedes all prior agreements and
understandings, oral or written, between the parties, except for the Agreement
Relating to Intellectual Property and Confidential Information dated May 2, 1989
between you and the Company ("Confidentiality Agreement"); provided, however,
that if the terms of any of such employee benefit plan or such Confidentiality
Agreement shall be inconsistent with the provisions of this Agreement, the
provisions of this Agreement shall control. This Agreement may not be modified
or amended except by an instrument in writing signed by the party against which
enforcement thereof may be sought. Each party to this Agreement, acknowledges
that no representations, inducements, promises or agreements, oral or written,
have been made by either party or anyone acting on behalf of either party, which
are not embodied herein and that no other agreement, statement or promise not
set forth or referred to in this Agreement shall be valid or binding.
12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
13. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach.
14. NO MITIGATION REQUIRED. Upon a termination of your employment by
the Company without Cause pursuant to Section 2(b) or upon a Change of Control
pursuant to Section 10, you shall have no obligation to seek other employment
but shall not be prohibited from doing so, and no compensation paid to you as
the result of any other employment shall reduce any payment required to be made
by the Company hereunder.
15. NOTICES. All notices hereunder shall be in writing and shall be
sent by express mail or by certified or registered mail, postage prepaid, return
receipt requested: if to you, to your residence as listed in the Company's
records; and if to the Company, to the address set forth above with copies to
the President.
16. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be assigned
by either party, except that it may be assigned by the Company to an acquirer of
all or substantially all of the assets of the Company or other successor to the
Company, subject to your rights arising from a change of control as provided in
Section 10. This Agreement shall be binding upon and inure to the benefit of
you, your legal representatives, heirs and distributees, and shall be binding
upon and inure to the benefit of the Company, its successors and assigns.
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17. NONDISPARAGEMENT. You agree not to publicly or privately disparage
the Company, its personnel, products or services either during or upon
termination of your employment with the Company.
18. SURVIVAL. All of the provisions of this Agreement that by their
terms are to be performed or that otherwise are to endure after the termination
of your employment by the Company shall survive the termination of your
employment and shall continue in effect for the respective periods therein
provided or contemplated.
19. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
20. HEADINGS. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
If this Agreement correctly sets forth our understanding, please sign
the duplicate original in the space provided below and return it to the Company,
whereupon this shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
C&D TECHNOLOGIES, INC.
By:/s/ Wade H. Roberts, Jr.
-----------------------------
Title: President and CEO
Agreed as of the date first above written:
/s/ Stephen E. Markert, Jr.
- -----------------------------
Stephen E. Markert, Jr.
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EXHIBIT A
RELEASE
This Release is made this _____ day of _______________, ____ by and
between C&D Technologies, Inc. ("Employer") and _________________ ("Employee").
RECITALS:
WHEREAS, the parties are parties to an Employment Agreement (the
"Employment Agreement") dated __________, pursuant to which Employee was
employed by Employer; and
WHEREAS, the Employment Agreement has terminated; and
WHEREAS, your execution and delivery of this Release is a condition to
the Employer's obligations to pay certain compensation and benefits to you under
the Employment Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1. As of _____________________, ____, Employee's employment with
Employer shall terminate, and Employee shall have no further job
responsibilities to perform for Employer; provided, however, that Employee shall
cooperate with Employer in transitioning Employee's job responsibilities as
Employer shall reasonably request, provided that Employee shall be entitled to
receive reasonable compensation for any services rendered after such date and
shall not be obligated to take any action that would interfere with any
subsequent employment of Employee or otherwise result in economic hardship to
Employee.
2. Employer shall pay to the Employee the amounts contemplated pursuant
to Section __ of the Employment Agreement, less applicable deductions; provided
however, the first payment shall not be due and payable until ten days after the
execution by Employee and delivery to Employer of this Release.
3. For and in consideration of the monies and benefits paid to Employee
by Employer, as more fully described in Section 2 above, and for other good and
valuable consideration, Employee hereby waives, releases and forever discharges
Employer, its assigns, predecessors, successors, and affiliated entities, and
its current or former stockholders, officers, directors, administrators, agents,
servants and employees, individually and as representatives of the corporate
entity (hereinafter collectively referred to as "Releasees"), from any and all
claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, bonuses, controversies, agreements, promises, charges,
complaints, damages, sums of money, interest, attorney's fees and costs, or
causes of action of any kind or nature whatsoever whether in law or equity,
including, but not limited to, all claims arising out of his/her employment or
termination of employment with Employer, such as
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all claims for wrongful discharge, breach of contract, either express or
implied, interference with contract, emotional distress, fraud,
misrepresentation, defamation, claims arising under the Civil Rights Acts of
1964 and 1991 as amended, the Americans With Disabilities Act, the Age
Discrimination in Employment Act (ADEA), the National Labor Relations Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974
(ERISA), the Family and Medical Leave Act, the Pennsylvania Human Relations Act,
the Pennsylvania Wage Payment & Collection Law, the Pennsylvania Minimum Wage
Act of 1968, the Pennsylvania Equal Pay Law, and any and all other claims
arising under federal, state or local law, rule, regulation, constitution,
ordinance or public policy whether known or unknown, arising up to and including
the date of execution of this Release; provided, however that the parties do not
release each other from any claim of breach of the terms of this Release. This
release of rights does not extend to claims that may arise after the date of
this Release. Employee agrees that Employee will not initiate any charge or
complaint or institute any claim or lawsuit against Releasees or any of them
based on any fact or circumstance occurring up to and including the date of the
execution by Employee of this Release.
4 Employee agrees that the payments made and other consideration
received pursuant to this Release are not to be construed as an admission of
legal liability by Releasees or any of them and that no person or entity shall
utilize this Release or the consideration received pursuant to this Release as
evidence of any admission of liability since Releasees expressly deny liability.
5 Employee affirms that the only consideration for the signing of this
Release are the terms stated herein and in the Employment Agreement and that no
other promise or agreement of any kind has been made to Employee by any person
or entity whatsoever to cause Employee to sign this Release.
6 Employee and Employer affirm that the Employment Agreement and this
Release set forth the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior or contemporaneous
agreements or understandings between the parties with respect to the subject
matter contained herein. Further, there are no representations, arrangements or
understandings, either oral or written, between the parties, which are not fully
expressed herein. Finally, no alteration or other modification of this Release
shall be effective unless made in writing and signed by both parties.
7 Employee acknowledges that Employee has been given a period of at
least 21 days within which to consider this Release.
8 Following the execution of this Release, the Employee has a period of
7 days from the date of execution to revoke this Release, and this Release shall
not become effective or enforceable until the revocation period has expired.
9 Employee certifies that Employee has returned to Employer all keys,
identification cards, credit cards, computer and telephone equipment and other
property or information of Employer in Employee's possession, custody, or
control including, but not limited to, any information contained in any computer
files maintained by Employee during Employee's employment with Employer.
Employee certifies that Employee has not kept the originals or copies
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of any documents, files, or other property of Employer which Employee obtained
or received during Employee's employment with Employer.
10 Employee acknowledges that Employer advised Employee to consult with
an attorney prior to executing this Release.
11 Employee affirms that Employee has carefully read this Release, that
Employee fully understands the meaning and intent of this document, that
Employee has signed this Release voluntarily and knowingly, and that Employee
intends to be bound by the promises contained in this Release for the
consideration described in Section 2 above.
IN WITNESS WHEREOF, Employee and the authorized representative of
Employer have executed this Release on the dates indicated below:
C&D TECHNOLOGIES, INC.
Dated:_____________________ By:______________________________
Title:__________________________
Dated:_____________________ ______________________________
Stephen E. Markert, Jr.
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ENDORSEMENT
I, ___________________________________, hereby acknowledge that I was
given 21 days to consider the foregoing Release and voluntarily chose to sign
the Release prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the Commonwealth
of Pennsylvania that the foregoing is true and correct.
EXECUTED this ________ day of ______________, ____, at
_______________________________________, Pennsylvania.
---------------------------------
Stephen E. Markert, Jr.
A-4
Exhibit 10.15
March 31, 2000
Ms. Linda R. Hansen
1220 Bridgetown Pike
Langhorne, PA 19053
Dear Linda:
You are presently employed by C&D Technologies, Inc., a Delaware
corporation (the "Company"), in an executive capacity and the Company desires to
encourage such continued employment by providing certain protections for you by
entering into this Agreement with you, in return for which you agree to continue
to be employed by the Company on the terms set forth herein, to refrain from
certain competitive activity and to provide the Company with certain assurances
upon your departure. In consideration of same, the Company agrees to employ you,
and you agree to accept such employment, under the following terms and
conditions:
1. TERM OF EMPLOYMENT.
(a) Except for earlier termination as is provided in Section 9 or 10
below, your employment under this Agreement shall be for the period commencing
on the date hereof (the "Effective Date") and terminating on June 27, 2000 (the
"Initial Term").
(b) This Agreement shall be automatically renewed for successive terms
of one month each, unless either party shall have given to the other party at
least 30 days' prior written notice of the termination of this Agreement (a
"Termination Notice"). If such 30 days' prior written notice is given by either
party, (i) the Company shall, without any liability to you, have the right,
exercisable at any time after such notice is sent, to elect any other person to
the office or offices in which you are then serving and to remove you from such
office or offices, but (ii) all other obligations each of you and the Company
have to the other, including the Company's obligation to pay your compensation
and make available the medical and dental insurance to which you are entitled
hereunder, shall continue until the date your employment terminates as specified
in such notice.
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2. COMPENSATION.
(a) You shall be compensated for all services rendered by you under
this Agreement at the rate of $175,000 per annum (such salary, as it is from
time to time adjusted, is herein referred to as the ("Base Salary"). Such Base
Salary shall be payable in periodic installments twice monthly in accordance
with the Company's payroll practices for salaried employees. The Compensation
Committee of the Board of Directors shall review such Base Salary prior to April
1, 2000 and each year thereafter during the term of this Agreement, including
any renewal term, and shall make such adjustments, if any, as the Compensation
Committee shall determine; provided, however, that no adjustment shall reduce
the Base Salary below $175,000.
(b) If your employment hereunder shall be terminated (i) by the Company
without notice of Cause (as defined in Section 9(c)) therefor having been given
to you (other than pursuant to Section 9(a) or 9(b) and notwithstanding the
provisions of Section 1(a)), or (ii) as a result of the non-renewal of this
Agreement pursuant to a Termination Notice given by the Company under Section
1(b) then, in addition to paying you the Accrued Obligations (as hereinafter
defined), for a one-year period after the effective date of such termination,
the Company shall pay you at the rate of your Base Salary in effect at the time
of such termination in periodic payments in accordance with the Company's
payroll practices for salaried employees; provided, however, that your right to
receive such payments, other than the Accrued Obligations, shall be conditioned
upon your execution of a Release (the "Release"). Such Release shall be
substantially in the form of Exhibit A hereto but may be modified by the Company
in its sole discretion as it deems appropriate to reflect changes in law or
circumstances arising after the date of this Agreement; provided, however, that
no such modification shall increase any of your obligations to the Company over
those contemplated by this Agreement, including Exhibit A hereto. The term
"Accrued Obligations" shall mean (i) your Base Salary through the date of
termination and (ii) all benefits that have accrued to you under the terms of
all employee benefits plans of the Company in which you are entitled to
participate.
3. DUTIES.
(a) During the term of your employment hereunder, including any renewal
thereof, you agree to serve as the Vice President, General Counsel and Corporate
Secretary of the Company or in such other capacity with duties and
responsibilities of a similar nature as those initially undertaken by you
hereunder as the President of the Company may from time to time determine. Your
duties may be changed at any time and from time to time hereafter, upon mutual
agreement, consistent with office or offices in which you serve as deemed
necessary by the President of the Company. You also agree to perform such other
services and duties consistent with the office or offices in which you are
serving and its responsibilities as may from time to time be prescribed by the
Board of Directors, and you also agree to serve, if elected, as an officer
and/or director of the Company and/or any of the Company's other direct or
indirect subsidiaries without additional compensation, in all cases in
conformity to the by-laws of each such corporation. Unless you otherwise agree,
you shall not be required to relocate your place of business to a location that
would increase your commuting distance by greater than 25 miles.
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(b) You shall devote your full employment energies, interest,
abilities, time and attention during normal business hours (excluding the
vacation period provided in Section 4(b) below) exclusively to the business and
affairs of the Company, its parent corporation and subsidiaries, if any, and
shall not engage in any activity that conflicts or interferes with the
performance of duties hereunder.
(c) You agree to cooperate with the Company, including taking such
reasonable medical examinations as may be necessary, in the event the Company
shall desire or be required (such as pursuant to the terms of any bank loan or
any other agreement) to obtain life insurance insuring your life.
(d) You shall, except as otherwise provided herein, be subject to the
Company's rules, practices and policies applicable to the Company's senior
executive employees. Without limiting the generality of the foregoing, you
shall, with respect to the Company and its parents, subsidiaries, assets and
stockholders, act in a manner consistent with your fiduciary responsibilities as
an executive of the Company.
4. BENEFITS.
(a) You shall have the benefit of such life and medical insurance,
bonus, stock option and other similar plans as the Company may have or may
establish from time to time, and in which you would be entitled to participate
by reason of your position with the Company, pursuant to the terms thereof.
Also, to the extent you have met the qualifications required, you may
participate in the Company's savings and retirement plans. The foregoing,
however, shall not be construed to require the Company to establish any such
plans or to prevent the Company from modifying or terminating any such plans,
and no such action or failure thereof shall affect this Agreement.
(b) You shall be entitled to a vacation of four weeks each year.
(c) The Company will provide you with an annual physical examination.
5. EXPENSES. The Company will reimburse you for reasonable expenses
(consistent with Company policy), including traveling expenses, incurred by you
in connection with the business of the Company, upon the presentation by you of
appropriate substantiation for such expenses.
6. RESTRICTIVE COVENANTS.
(a) During such time as you shall be employed by the Company, and for
the applicable Restricted Period (as defined below) thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in, represent, advise or
otherwise participate as an officer, employee, director, stockholder, partner,
agent of or consultant for, any business that, at the time your employment with
the Company ceases, is competitive with the business in which the Company is
engaged or in which the Company has
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taken affirmative steps to engage (a "Competitive Business"); provided, however,
that nothing herein (i) shall prevent you from investing without limit in the
securities of any company listed on a national securities exchange, provided
that your involvement with any such company is solely that of a stockholder, and
(ii) is intended to prevent you from being employed during the applicable
Restricted Period by any business other than a Competitive Business. With
respect to any termination of your employment other than upon a Change of
Control pursuant to Section 10, the applicable Restricted Period shall be the
one-year period following the date your employment terminates, and with respect
to a termination of your employment upon a Change of Control pursuant to Section
10, the applicable Restricted Period shall be the two-year period following the
date your employment terminates.
(b) The parties hereto intend that the covenant contained in this
Section 6 shall be deemed a series of separate covenants for each state, county
and city. If, in any judicial proceeding, a court shall refuse to enforce all
the separate covenants deemed included in this Section 6, because, taken
together, they cover too extensive a geographic area, the parties intend that
those of such covenants (taken in order of the states, counties and cities
therein which are least populous), which, if eliminated, would permit the
remaining separate covenants to be enforced in such proceeding, shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 6.
7. CONFIDENTIALITY, NON-INTERFERENCE, INVENTIONS AND PROPRIETARY
INFORMATION.
(a) In the course of (i) your employment with the Company hereunder,
and (ii) any prior employment with the Company, you will have and have had
access to Confidential or Proprietary Data or Information of the Company. You
shall not at any time divulge or communicate to any person nor shall you direct
any Company employee to divulge or communicate to any person (other than to a
person bound by confidentiality obligations similar to those contained herein
and other than as necessary in performing your duties hereunder) or use to the
detriment of the Company any of such Confidential or Proprietary Data or
Information, except to the extent the same (i) becomes publicly known other than
through a breach of this Agreement by you, (ii) was known to you prior to the
disclosure thereof by the Company to you from a source that was entitled to
disclose it or (iii) is subsequently disclosed to you by a third party who shall
not have receive it under any obligation of confidentiality to the Company. The
term "Confidential or Proprietary Data or Information" as used in this
Agreement, shall mean data or information not generally available to the public,
including personnel information, financial information, customer lists, supplier
lists, product and tooling specifications, trade secrets, information concerning
product composition and formulas, tools and dies, drawings and schematics,
manufacturing processes, information regarding operations, systems and services,
knowhow, computer and any other electronic, processed or collated data, computer
programs, and pricing, marketing, sales and advertising data.
(b) You shall not, during the term of this Agreement and for the
applicable Restricted Period after the termination of your employment by the
Company, for your own account or for the account of any other person, (i)
solicit or divert to any Competitive Business any individual or entity who is a
customer of the Company or any subsidiary or affiliate of the Company or who was
a
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customer of the Company or any subsidiary or affiliate during the preceding
twelve-month period, (ii) employ, retain as a consultant, attempt to employ or
retain as a consultant, solicit or assist any Competitive Business in employing
or retaining as a consultant any current employee of the Company or any
subsidiary or affiliate or any person who was employed by the Company or any
subsidiary or affiliate during the preceding twelve-month period or (iii)
otherwise interfere with the Company's relationship with any of its suppliers,
customers, employees or consultants; provided, however, that you shall not be
prohibited from contacting suppliers or customers after termination of your
employment with regard to matters that do not violate your noncompetition or
confidentiality obligations contained in Sections 6(a) and 7(a) or interfere
with the Company's relationship with such parties.
(c) It is understood that you may, during your employment, conceive or
develop certain inventions, innovations or discoveries related to any business
in which the Company may be engaged, either solely or jointly with others. In
connection with the conception or development thereof, you agree to disclose
promptly to the Company all such inventions, innovations and discoveries, to
assign, and hereby do assign, to the Company all of your right, title and
interest in and to said inventions, innovations and discoveries, and to do all
things and sign all documents deemed by the Company to be necessary or
appropriate to vest in the Company, its successors and assigns, all of your
right, title and interest in and to such inventions, innovations or discoveries,
and to procure for the Company, at the Company's expense, patents, copyrights
and/or trademarks covering such inventions, innovations or discoveries in the
United States and its possessions and in foreign countries, at the discretion
and under the direction of the Company. In the event the Company is unable for
any reason to assure your signature on such documents, you irrevocably appoint
the Company and its duly authorized officers and agents as your agents and
attorneys-in-fact to execute such documents and to do such things with the same
legal force and effect as if executed or done by you.
(d) All written, electronic and other tangible materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company, or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon request of the Company during your
employment, you shall promptly deliver the same to the Company. In addition,
upon termination of your employment, or upon request of the Company during your
employment, you will deliver to the Company all other Company property in your
possession or under your control, including, but not limited to, financial
statements, marketing and sales data, patent applications, drawings and other
documents, and all Company keys, credit cards, computer and telephone equipment
and automobiles.
8. EQUITABLE RELIEF. With respect to the covenants contained in
Sections 6 and 7 of this Agreement, you agree that any remedy at law for any
breach of said covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of injunctive and/or other
equitable relief to enforce its rights hereunder or any other relief a court
might award.
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<PAGE>
9. EARLIER TERMINATION. Your employment hereunder shall terminate prior
to the Initial Term (or any renewal term, in the event of renewal) on the
following terms and conditions:
(a) This Agreement shall terminate automatically on the date of your
death. Notwithstanding the foregoing, if you die during the term of this
Agreement, the Company shall (i) continue to make payments to your estate of
your Base Salary as then in effect pursuant to this Agreement for 180 days after
the date of your death, and (ii) pay your estate any reimbursable expenses which
otherwise would have been paid to you to the date of your death.
(b) This Agreement shall be terminated if you are unable to perform
your duties hereunder for a period of any 180 days in any 365 consecutive day
period by reason of physical or mental disability. Notwithstanding the
foregoing, if this Agreement is terminated pursuant to this Section 9(b), the
Company shall pay any accrued but unpaid Base Salary through the date of
termination and any reimbursable expenses due to you hereunder. For purposes of
this Agreement "physical or mental disability" shall mean your inability, due to
health reasons, to discharge properly your duties of employment, supported by
the opinion of a physician satisfactory to both you and the Company. If the
parties do not agree on a physician mutually satisfactory to both of you and the
Company within ten days of written demand by one or the other, a physician shall
be selected by the president of the Pennsylvania Medical Association, and the
physician shall, within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. Services of the physician
shall be paid for by the Company. You shall fully cooperate with the examining
physician including submitting yourself to such examinations as may be requested
by the physician for the purpose of determining whether you are disabled.
(c) This Agreement shall terminate immediately upon the Company's
sending you written notice terminating your employment hereunder for Cause. The
Company may terminate this Agreement for Cause, but only after written notice
specifying the Cause of such action shall have been rendered to you by the
President of the Company. "Cause" shall mean any of the following:
(i) Breach of this Agreement.
(ii) Refusal or inability (other than pursuant to Section 9(a)
or 9(b)) to perform duties assigned to you in accordance with the terms of this
Agreement or overt and willful disobedience of orders or directives issued to
you by the Company and within the scope of your duties to the Company.
(iii) Willful misconduct in the performance of your duties,
functions and responsibilities.
(iv) Commission of acts that are illegal in connection with
the performance of your duties, functions and responsibilities under this
Agreement.
(v) Commission of acts that would constitute a felony offense
during the term of this Agreement.
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(vi) Violation of Company rules and regulations concerning
conflict of interest.
(vii) Gross mismanagement of the assets of the Company.
(viii) Gross incompetence, gross insubordination or gross
neglect in the performance of your duties hereunder or being under the habitual
influence of alcohol while on duty or possession, use, manufacture,
distribution, dispensation or sale of illegal drugs while on or off duty.
(ix) Any act or omission, whether or not included in the
foregoing, that a court of competent jurisdiction would determine to constitute
cause for termination.
Existence of Cause shall be conclusively determined for all purposes hereunder
by the President of the Company. Such advice and consultation shall be utilized
as such officer regards as appropriate, and no obligation or duty with respect
to any procedure or formality is created by this Agreement. If the Company
terminates this Agreement for Cause under this Section 9(c), the Company shall
not be obligated to make any further payments under this Agreement except for
the Accrued Obligations.
(d) Except as set forth in Section 10, your coverage under the benefits
program provided by the Company will cease effective on your termination date.
You will be entitled to elect continuation of your medical and dental benefits
at the same cost the Company pays, pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Details with regard to
COBRA continuation coverage will be provided to you shortly after your
termination date.
(e) Except as set forth in Section 10, life insurance coverage will
cease upon your termination date. You may, however, apply to General American
Life Insurance Company (or such other insurance company as may provide group
life insurance to the Company's employees at the time) for an individual
converted life policy, with such application and payment of the first premium
required to be accomplished within 31 days after your termination date. Details
regarding this conversion option will be provided to you shortly after your
termination date.
(f) Accidental death and dismemberment and long term disability
coverages cease with your termination date and may not be extended or converted.
10. TERMINATION UPON A CHANGE OF CONTROL.
(a) In the event a Change of Control (as defined below) occurs, and
within 24 months after such Change of Control: (i) your employment with the
Company is terminated by you pursuant to a Termination for Good Reason (as
defined below); or (ii) your employment with the Company is terminated by the
Company for any reason other than death, disability or for Cause pursuant to
Sections 9(a), (b) or (c); or (iii) this Agreement is not renewed due to a
Termination Notice given by the Company, as provided in Section 1(b), (the
events under clauses (i), (ii) and (iii) herein collectively called a "Change of
Control Termination"), you shall be entitled to receive the payments and
benefits set forth in Section 10(e) and (f) below, which payments and benefits
shall be in substitution for, and not in addition to, the payments and benefits
otherwise payable under Section
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2(a) or 2(b) of this Agreement in the event of termination. Your right to
receive such payments and benefits, other than the Accrued Obligations, shall be
in consideration of your agreements under this Agreement, including but not
limited to your agreement not to compete with the Company for two years after a
Change of Control pursuant to Section 6, and shall be conditioned upon your
execution of a Release. Such Release shall be substantially in the form of
Exhibit A but may be modified by the Company as it deems appropriate to reflect
changes in law or circumstances arising after the date of this Agreement;
provided that no such modification shall increase any of your obligations to the
Company over those contemplated by this Agreement, including Exhibit A hereto.
(b) For purposes of the Agreement, a "Change of Control" shall be
deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof)), excluding the Company, any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of any such plan acting in his capacity as
trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange
Act, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of shares of the Company having at least 30% of the total number of votes
that may be cast for the election of directors of the Company; (ii) the
shareholders of the Company shall approve any merger or other business
combination of the Company, sale of all or substantially all of the Company's
assets or combination of the foregoing transactions (a "Transaction"), other
than a Transaction involving only the Company and one or more of its
subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
shareholder of the Company owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction) and no person is the
beneficial owner of at least 30% of the shares of the resulting entity as
contemplated by Section 10(b)(i) above; or (iii) within any 24-month period
beginning on or after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
as of the date hereof shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
10(b)(iii), unless such election, recommendation or approval was the result of
an actual or threatened election contest of the type contemplated by Regulation
14a-11 under the Exchange Act or any successor provision. Notwithstanding the
foregoing, no Change of Control of the Company shall be deemed to have occurred
for purposes of this Agreement by reason of any actions or events in which you
participate in a capacity other than in your capacity as an executive or
director of the Company.
(c) For purposes of the Agreement, a "Termination for Good Reason"
means a termination by you by written notice given within 90 days after the
occurrence of the Good Reason event. A notice of Termination for Good Reason
shall indicate the specific termination provision in Section 10(d) relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for Termination for Good Reason. Your failure to set forth in
such notice
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any facts or circumstances that contribute to the showing of Good Reason shall
not waive any of your rights hereunder or preclude you from asserting such fact
or circumstance in enforcing your rights hereunder. The notice of Termination
for Good Reason shall provide for a date of termination not less than 10 nor
more than 60 days after the date such Notice of Termination for Good Reason is
given.
(d) For purposes of the Agreement, "Good Reason" shall mean the
occurrence, without your express written consent, of any of the following
circumstances, unless such circumstances are fully corrected prior to the date
of termination specified in the notice of Termination for Good Reason as
contemplated in Section 10(c) above: (i) any material diminution of your
positions, duties or responsibilities hereunder (except in each case in
connection with the termination of your employment for Cause pursuant to Section
9(c) or due to disability or death pursuant to Section 9(a) or 9(b) or
temporarily as a result of your illness or other absence), or the assignment to
you of duties or responsibilities that are inconsistent with your position under
the Agreement at the time of a Change of Control; (ii) your removal from, or
your nonreelection to, the officer positions with the Company specified in this
Agreement; (iii) relocation of the Company's principal executive offices to a
location more than 25 miles from its location at the time of the Change of
Control; (iv) failure by the Company, after a Change of Control, (A) to continue
any bonus plan, program or arrangement in which you are entitled to participate
immediately prior to the Change of Control (the "Bonus Plans"), provided that
any such Bonus Plans may be modified at the Company's discretion from time to
time but shall be deemed terminated if (x) any such plan does not remain
substantially in the form in effect prior to such modification and (y) if plans
providing you with substantially similar benefits are not substituted therefor
("Substitute Plans"), or (B) to continue you as a participant in the Bonus Plans
and Substitute Plans on at least the same basis as to potential amount of the
bonus and substantially the same level of criteria for achievability thereof as
you participated in immediately prior to any change in such plans or awards, in
accordance with the Bonus Plans and the Substitute Plans; (v) any material
breach by the Company of any provisions of this Agreement; or (vi) failure of
any successor to the Company to promptly acknowledge in writing the obligations
of the Company hereunder.
(e) Upon a Change of Control Termination, as provided in Section 10(a),
the Company shall pay or provide you the following payments and benefits:
(i) The Company shall pay to you the Accrued Obligations in a
lump sum within five business days after the date of termination.
(ii) The Company shall pay to you as severance pay, not later
than the tenth day following the date of your execution and delivery of the
Release required pursuant to Section 10(a) of this Agreement:
(A) a lump sum payment in an amount equal to two years
of your Base Salary; and
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(B) a lump sum payment in an amount equal to two of
your annual incentive bonuses, such payment to be equal to the greater of (i)
the amount of all incentive bonuses paid to you with respect to each of the two
most recently completed fiscal years of the Company for which a bonus has been
paid or (ii) the incentive bonus paid to you with respect to the most recently
completed fiscal year of the Company for which a bonus has been paid plus an
amount equal to your Target Bonus (as hereinafter defined); provided, however,
that if you have been employed by the Company for less than two years, such
payment shall be equal to the greater of (x) the amount of the incentive bonus
paid to you with respect to the most recently completed fiscal year of the
Company for which a bonus has been paid plus your Target Bonus or (y) the amount
of your Target Bonus multiplied by two. The term "Target Bonus" shall mean the
incentive bonus that would have been payable for the fiscal year that includes
the date on which your employment terminates under the incentive bonus program
in effect as of the date of the Change of Control, assuming that you had been
entitled to receive an amount in respect of such bonus based solely upon the
target percentage applicable to employees in the same employment grade as you
and your Base Salary as of the date of termination (or if greater, your Base
Salary as of the date on which occurred an event giving rise to a Change of
Control Termination), and without regard to actual performance.
(iii) The Company shall continue the participation of you and
your dependents for a period of two years after the date of termination in all
health, medical and accident, life and other welfare plans (as defined in
Section 3(l) of ERISA), in which you were participating immediately prior to the
date of termination, except for any disability plans; provided, however, that to
the extent the Company's plans do not permit such continued participation or
such participation would have an adverse tax impact on such plans or on the
other participants in such plans, the Company may instead provide materially
equivalent benefits to you outside of such plans; provided, further, that under
such circumstances, (i) medical insurance benefits may be provided by the
Company paying any COBRA premiums (COBRA coverage, in any event, to be measured
from the date of termination of employment) and (ii) if the Company is unable to
continue your life insurance coverage, the Company shall pay you an amount equal
to twice the premium paid during the year prior to termination or if you convert
the insurance to an individual policy, the Company shall pay the premium for
such insurance for two years. You shall complete such forms and take such
physical examinations as reasonably requested by the Company. To the extent you
incur any tax obligation as a result of the provisions of this Section 10(e)
that you would not have incurred if you remained an employee of the Company and
had continued to participate in the benefit plans as an employee, the Company
shall pay to you, at the time the tax is due, an amount to cover such taxes and
the taxes on the amount paid to cover such taxes.
(iv) All outstanding stock options and restricted stock awards
that have been granted to you by the Company at any time but have not yet vested
and upon which vesting depends solely upon the passage of time, shall
immediately vest or become nonforfeitable, as the case may be. In the event the
foregoing sentence becomes applicable, the Company agrees to cause the Board of
Directors to take all steps necessary to implement the foregoing sentence.
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(v) All amounts payable to you upon a Change of Control under
the Company's Supplemental Executive Retirement Plan and Deferred Compensation
Plan shall be paid to you in accordance with the respective terms of those
plans.
(vi) The Company, at its expense, shall provide you with
outplacement services at a level appropriate for the most senior executive
employees through an outplacement firm of your choice for a period of up to one
year after the date of the Change of Control Termination.
(f) (i) In the event that any payment, coverage or benefit
(collectively, the "Covered Benefits") provided to you by the Company or an
Affiliate (as defined below) is or becomes subject to the excise tax imposed
under Section 4999 or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code"), or you incur interest or penalties with respect
to that excise tax (that excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the Company shall
pay you an additional amount (a "Gross-Up Bonus") at the time or times specified
in Section 10(f)(iii)(z) below. The amount of the Gross-Up Bonus shall equal the
quotient determined by dividing (x) the Excise Tax attributable to the Covered
Benefits by (y) one minus the highest marginal income tax rate, where the term
"highest marginal income tax rate" means the sum of the highest combined local,
state and federal personal income tax rates (including any state unemployment
compensation tax rate, any surtax rate as well as the Medicare hospital
insurance tax rate imposed on employees under the Federal Insurance
Contributions Act) as in effect for the calendar year to which the Excise Tax
attributable to the Covered Benefits relates, provided that in determining the
highest tax rate for federal purposes both the deductibility of state and local
income tax payments and the reduction in the deductibility of itemized
deductions shall be taken into account; it being the intention of the parties
hereto that your net after tax position (after taking into account any interest
or penalties imposed with respect to such taxes) upon receipt of the Covered
Benefits is no less advantageous to you than the net after tax position you
would have had if Section 4999 of the Code had not been applicable to any
portion of the Covered Benefits.
(ii) All determinations to be made under this Section 10(f),
including the determination of whether an Excise Tax is payable and the amount
thereof, shall be made by a law firm practicing in the Philadelphia,
Pennsylvania metropolitan area that is knowledgeable in tax law matters, which
firm shall be selected and paid for by the Company and acceptable to you. If tax
counsel's determinations are not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be computed (with a
Gross-Up Bonus, if applicable) by that tax counsel based upon the final amount
of the Excise Tax so determined.
(iii) For purposes of this Section 10(f):
(x) An "Affiliate" shall mean any successor to
the Company, any member of an affiliated group including the Company
(determining using the definition in Section 1504 of the Code) or any entity
that becomes a member of such an affiliated group as a result of the transaction
causing the Change of Control.
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<PAGE>
(y) When determining the amount of the Gross-Up
Bonus, you will be deemed to have otherwise allowable deductions for federal,
state and local tax purposes at least equal to those disallowed because of the
inclusion of the Gross-Up Bonus in your adjusted gross income.
(z) The portion of the Gross-Up Bonus attributable
to a Covered Benefit shall be paid to you within 10 business days following the
provision to you of the Covered Benefit. In the event that the amount of Excise
Tax due exceeds the amount of Excise Tax determined by tax counsel, the Company
shall pay you an additional Gross-Up Bonus in respect of that excess at the time
that the amount of the excess is determined under Section 10(f)(ii). In the
event the amount of Excise Tax due is less than the amount of Excise Tax
determined by tax counsel, you shall repay the Company the portion of the
Gross-Up Bonus attributable thereto at the time that the amount of the reduction
in Excise Tax is determined under Section 10(f)(ii); provided, however, that if
any portion of the amount you must repay to the Company has been paid to any
federal, state or local tax authority, your repayment of that portion shall be
postponed until the tax authority has actually refunded or credited that amount
to you.
(g) Upon the occurrence of a Change of Control, if the Company fails to
perform any of its obligations under this Agreement or the Company or any other
person asserts the invalidity of any provision of this Agreement and you incur
any costs in successfully enforcing or defending any of the provisions of this
Agreement, including legal fees and expenses and court costs, the Company shall
reimburse you for all such costs incurred by you.
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with
Exhibit A hereto and all rights to which you are entitled under all employee
benefit plans in which you participate, constitutes the full and complete
understanding of the parties, and will, on the Effective Date, supersede all
prior agreements and understandings, oral or written, between the parties,
except for the employment offer letter dated June 28, 1999 between you and the
Company ("Offer Letter") and the Agreement Relating to Intellectual Property &
Confidential Information dated June 28,1999 between you and the Company
("Confidentiality Agreement"); provided, however, that if the terms of any of
such employee benefit plan or such Confidentiality Agreement shall be
inconsistent with the provisions of this Agreement, the provisions of this
Agreement shall control and if the terms of the Offer Letter are inconsistent
with the provision of the Agreement, the terms of the Offer Letter shall
control. This Agreement may not be modified or amended except by an instrument
in writing signed by the party against which enforcement thereof may be sought.
Each party to this Agreement, acknowledges that no representations, inducements,
promises or agreements, oral or written, have been made by either party or
anyone acting on behalf of either party, which are not embodied herein and that
no other agreement, statement or promise not set forth or referred to in this
Agreement shall be valid or binding.
12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
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13. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach.
14. NO MITIGATION REQUIRED. Upon a termination of your employment by
the Company without Cause pursuant to Section 2(b) or upon a Change of Control
pursuant to Section 10, you shall have no obligation to seek other employment
but shall not be prohibited from doing so, and no compensation paid to you as
the result of any other employment shall reduce any payment required to be made
by the Company hereunder.
15. NOTICES. All notices hereunder shall be in writing and shall be
sent by express mail or by certified or registered mail, postage prepaid, return
receipt requested: if to you, to your residence as listed in the Company's
records; and if to the Company, to the address set forth above with copies to
the President.
16. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be assigned
by either party, except that it may be assigned by the Company to an acquirer of
all or substantially all of the assets of the Company or other successor to the
Company, subject to your rights arising from a change of control as provided in
Section 10. This Agreement shall be binding upon and inure to the benefit of
you, your legal representatives, heirs and distributees, and shall be binding
upon and inure to the benefit of the Company, its successors and assigns.
17. NONDISPARAGEMENT. You agree not to publicly or privately disparage
the Company, its personnel, products or services either during or upon
termination of your employment with the Company.
18. SURVIVAL. All of the provisions of this Agreement that by their
terms are to be performed or that otherwise are to endure after the termination
of your employment by the Company shall survive the termination of your
employment and shall continue in effect for the respective periods therein
provided or contemplated.
19. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
20. HEADINGS. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
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21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
If this Agreement correctly sets forth our understanding, please sign
the duplicate original in the space provided below and return it to the Company,
whereupon this shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
C&D TECHNOLOGIES, INC.
By:/s/ Wade H. Roberts, Jr.
----------------------------
Title: President and CEO
Agreed as of the date first above written:
/s/ Linda R. Hansen
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Linda R. Hansen
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<PAGE>
EXHIBIT A
RELEASE
This Release is made this _____ day of _______________, ____ by and
between C&D Technologies, Inc. ("Employer") and _________________ ("Employee").
RECITALS:
WHEREAS, the parties are parties to an Employment Agreement (the
"Employment Agreement") dated __________, pursuant to which Employee was
employed by Employer; and
WHEREAS, the Employment Agreement has terminated; and
WHEREAS, your execution and delivery of this Release is a condition to
the Employer's obligations to pay certain compensation and benefits to you under
the Employment Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1. As of _____________________, ____, Employee's employment with
Employer shall terminate, and Employee shall have no further job
responsibilities to perform for Employer; provided, however, that Employee shall
cooperate with Employer in transitioning Employee's job responsibilities as
Employer shall reasonably request, provided that Employee shall be entitled to
receive reasonable compensation for any services rendered after such date and
shall not be obligated to take any action that would interfere with any
subsequent employment of Employee or otherwise result in economic hardship to
Employee.
2. Employer shall pay to the Employee the amounts contemplated pursuant
to Section __ of the Employment Agreement, less applicable deductions; provided
however, the first payment shall not be due and payable until ten days after the
execution by Employee and delivery to Employer of this Release.
3. For and in consideration of the monies and benefits paid to Employee
by Employer, as more fully described in Section 2 above, and for other good and
valuable consideration, Employee hereby waives, releases and forever discharges
Employer, its assigns, predecessors, successors, and affiliated entities, and
its current or former stockholders, officers, directors, administrators, agents,
servants and employees, individually and as representatives of the corporate
entity (hereinafter collectively referred to as "Releasees"), from any and all
claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, bonuses, controversies, agreements, promises, charges,
complaints, damages, sums of money, interest, attorney's fees and costs, or
causes of action of any kind or nature whatsoever whether in law or equity,
including, but not limited to, all claims arising out of his/her employment or
termination of employment with Employer, such as
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all claims for wrongful discharge, breach of contract, either express or
implied, interference with contract, emotional distress, fraud,
misrepresentation, defamation, claims arising under the Civil Rights Acts of
1964 and 1991 as amended, the Americans With Disabilities Act, the Age
Discrimination in Employment Act (ADEA), the National Labor Relations Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974
(ERISA), the Family and Medical Leave Act, the Pennsylvania Human Relations Act,
the Pennsylvania Wage Payment & Collection Law, the Pennsylvania Minimum Wage
Act of 1968, the Pennsylvania Equal Pay Law, and any and all other claims
arising under federal, state or local law, rule, regulation, constitution,
ordinance or public policy whether known or unknown, arising up to and including
the date of execution of this Release; provided, however that the parties do not
release each other from any claim of breach of the terms of this Release. This
release of rights does not extend to claims that may arise after the date of
this Release. Employee agrees that Employee will not initiate any charge or
complaint or institute any claim or lawsuit against Releasees or any of them
based on any fact or circumstance occurring up to and including the date of the
execution by Employee of this Release.
4 Employee agrees that the payments made and other consideration
received pursuant to this Release are not to be construed as an admission of
legal liability by Releasees or any of them and that no person or entity shall
utilize this Release or the consideration received pursuant to this Release as
evidence of any admission of liability since Releasees expressly deny liability.
5 Employee affirms that the only consideration for the signing of this
Release are the terms stated herein and in the Employment Agreement and that no
other promise or agreement of any kind has been made to Employee by any person
or entity whatsoever to cause Employee to sign this Release.
6 Employee and Employer affirm that the Employment Agreement and this
Release set forth the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior or contemporaneous
agreements or understandings between the parties with respect to the subject
matter contained herein. Further, there are no representations, arrangements or
understandings, either oral or written, between the parties, which are not fully
expressed herein. Finally, no alteration or other modification of this Release
shall be effective unless made in writing and signed by both parties.
7 Employee acknowledges that Employee has been given a period of at
least 21 days within which to consider this Release.
8 Following the execution of this Release, the Employee has a period of
7 days from the date of execution to revoke this Release, and this Release shall
not become effective or enforceable until the revocation period has expired.
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9 Employee certifies that Employee has returned to Employer all keys,
identification cards, credit cards, computer and telephone equipment and other
property or information of Employer in Employee's possession, custody, or
control including, but not limited to, any information contained in any computer
files maintained by Employee during Employee's employment with Employer.
Employee certifies that Employee has not kept the originals or copies of any
documents, files, or other property of Employer which Employee obtained or
received during Employee's employment with Employer.
10 Employee acknowledges that Employer advised Employee to consult with
an attorney prior to executing this Release.
11 Employee affirms that Employee has carefully read this Release, that
Employee fully understands the meaning and intent of this document, that
Employee has signed this Release voluntarily and knowingly, and that Employee
intends to be bound by the promises contained in this Release for the
consideration described in Section 2 above.
IN WITNESS WHEREOF, Employee and the authorized representative of
Employer have executed this Release on the dates indicated below:
C&D TECHNOLOGIES, INC.
Dated:_____________________ By:______________________________
Title:__________________________
Dated:_____________________ ______________________________
Linda R. Hansen
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ENDORSEMENT
I, ___________________________________, hereby acknowledge that I was
given 21 days to consider the foregoing Release and voluntarily chose to sign
the Release prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the Commonwealth
of Pennsylvania that the foregoing is true and correct.
EXECUTED this ________ day of ______________, ____, at
_______________________________________, Pennsylvania.
-------------------------------
Linda R. Hansen
Exhibit 10.16
March 31, 2000
Mr. Mark Z. Sappir
840 Foxfield Road
Lower Gwynedd, PA 19002
Dear Mark:
You are presently employed by C&D Technologies, Inc., a Delaware
corporation (the "Company"), in an executive capacity and the Company desires to
encourage such continued employment by providing certain protections for you by
entering into this Agreement with you, in return for which you agree to continue
to be employed by the Company on the terms set forth herein, to refrain from
certain competitive activity and to provide the Company with certain assurances
upon your departure. In consideration of same, the Company agrees to employ you,
and you agree to accept such employment, under the following terms and
conditions:
1. TERM OF EMPLOYMENT.
(a) Except for earlier termination as is provided in Section 9 or 10
below, your employment under this Agreement shall be automatically renewed for
successive terms of one month each, unless either party shall have given to the
other party at least 30 days' prior written notice of the termination of this
Agreement (a "Termination Notice"). If such 30 days' prior written notice is
given by either party, (i) the Company shall, without any liability to you, have
the right, exercisable at any time after such notice is sent, to elect any other
person to the office or offices in which you are then serving and to remove you
from such office or offices, but (ii) all other obligations each of you and the
Company have to the other, including the Company's obligation to pay your
compensation and make available the medical and dental insurance to which you
are entitled hereunder, shall continue until the date your employment terminates
as specified in such notice.
2. COMPENSATION.
(a) You shall be compensated for all services rendered by you under
this Agreement at the rate of $142,000 per annum (such salary, as it is from
time to time adjusted, is herein referred to as the ("Base Salary"). Such Base
Salary shall be payable in periodic installments twice monthly in accordance
with the Company's payroll practices for salaried employees. The Compensation
<PAGE>
Committee of the Board of Directors shall review such Base Salary prior to April
1, 2000 and each year thereafter during the term of this Agreement, including
any renewal term, and shall make such adjustments, if any, as the Compensation
Committee shall determine; provided, however, that no adjustment shall reduce
the Base Salary below $142,000.
(b) If your employment hereunder shall be terminated (i) by the Company
without notice of Cause (as defined in Section 9(c)) therefor having been given
to you (other than pursuant to Section 9(a) or 9(b)), or (ii) as a result of the
non-renewal of this Agreement pursuant to a Termination Notice given by the
Company under Section 1(a) then, in addition to paying you the Accrued
Obligations (as hereinafter defined), for a one-year period after the effective
date of such termination, the Company shall pay you at the rate of your Base
Salary in effect at the time of such termination in periodic payments in
accordance with the Company's payroll practices for salaried employees;
provided, however, that your right to receive such payments, other than the
Accrued Obligations, shall be conditioned upon your execution of a Release (the
"Release"). Such Release shall be substantially in the form of Exhibit A hereto
but may be modified by the Company in its sole discretion as it deems
appropriate to reflect changes in law or circumstances arising after the date of
this Agreement; provided, however, that no such modification shall increase any
of your obligations to the Company over those contemplated by this Agreement,
including Exhibit A hereto. The term "Accrued Obligations" shall mean (i) your
Base Salary through the date of termination and (ii) all benefits that have
accrued to you under the terms of all employee benefits plans of the Company in
which you are entitled to participate.
3. DUTIES.
(a) During the term of your employment hereunder, including any renewal
thereof, you agree to serve as the Vice President Human Resources or in such
other capacity with duties and responsibilities of a similar nature as those
initially undertaken by you hereunder as the President of the Company may from
time to time determine. Your duties may be changed at any time and from time to
time hereafter, upon mutual agreement, consistent with office or offices in
which you serve as deemed necessary by the President of the Company. You also
agree to perform such other services and duties consistent with the office or
offices in which you are serving and its responsibilities as may from time to
time be prescribed by the Board of Directors, and you also agree to serve, if
elected, as an officer and/or director of the Company and/or any of the
Company's other direct or indirect subsidiaries without additional compensation,
in all cases in conformity to the by-laws of each such corporation. Unless you
otherwise agree, you shall not be required to relocate your place of business to
a location that would increase your commuting distance by greater than 25 miles.
(b) You shall devote your full employment energies, interest,
abilities, time and attention during normal business hours (excluding the
vacation periods provided in Section 4(b) below) exclusively to the business and
affairs of the Company, its parent corporation and subsidiaries, if any, and
shall not engage in any activity that conflicts or interferes with the
performance of duties hereunder.
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<PAGE>
(c) You agree to cooperate with the Company, including taking such
reasonable medical examinations as may be necessary, in the event the Company
shall desire or be required (such as pursuant to the terms of any bank loan or
any other agreement) to obtain life insurance insuring your life.
(d) You shall, except as otherwise provided herein, be subject to the
Company's rules, practices and policies applicable to the Company's senior
executive employees. Without limiting the generality of the foregoing, you
shall, with respect to the Company and its parents, subsidiaries, assets and
stockholders, act in a manner consistent with your fiduciary responsibilities as
an executive of the Company.
4. BENEFITS.
(a) You shall have the benefit of such life and medical insurance,
bonus, stock option and other similar plans as the Company may have or may
establish from time to time, and in which you would be entitled to participate
by reason of your position with the Company, pursuant to the terms thereof.
Also, to the extent you have met the qualifications required, you may
participate in the Company's savings and retirement plans. The foregoing,
however, shall not be construed to require the Company to establish any such
plans or to prevent the Company from modifying or terminating any such plans,
and no such action or failure thereof shall affect this Agreement.
(b) You shall be entitled to a vacation of four weeks each year.
(c) The Company will provide you with an annual physical examination.
5. EXPENSES. The Company will reimburse you for reasonable expenses
(consistent with Company policy), including traveling expenses, incurred by you
in connection with the business of the Company, upon the presentation by you of
appropriate substantiation for such expenses.
6. RESTRICTIVE COVENANTS.
(a) During such time as you shall be employed by the Company, and for
the applicable Restricted Period (as defined below) thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in, represent, advise or
otherwise participate as an officer, employee, director, stockholder, partner,
agent of or consultant for, any business that, at the time your employment with
the Company ceases, is competitive with the business in which the Company is
engaged or in which the Company has taken affirmative steps to engage (a
"Competitive Business"); provided, however, that nothing herein (i) shall
prevent you from investing without limit in the securities of any company listed
on a national securities exchange, provided that your involvement with any such
company is solely that of a stockholder, and (ii) is intended to prevent you
from being employed during the applicable Restricted Period by any business
other than a Competitive Business. With respect to any termination of your
employment other than upon a Change of Control pursuant to Section 10, the
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applicable Restricted Period shall be the one-year period following the date
your employment terminates, and with respect to a termination of your employment
upon a Change of Control pursuant to Section 10, the applicable Restricted
Period shall be the two-year period following the date your employment
terminates.
(b) The parties hereto intend that the covenant contained in this
Section 6 shall be deemed a series of separate covenants for each state, county
and city. If, in any judicial proceeding, a court shall refuse to enforce all
the separate covenants deemed included in this Section 6, because, taken
together, they cover too extensive a geographic area, the parties intend that
those of such covenants (taken in order of the states, counties and cities
therein which are least populous), which, if eliminated, would permit the
remaining separate covenants to be enforced in such proceeding, shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 6.
7. CONFIDENTIALITY, NON-INTERFERENCE, INVENTIONS AND PROPRIETARY
INFORMATION.
(a) In the course of (i) your employment with the Company hereunder,
and (ii) any prior employment with the Company, you will have and have had
access to Confidential or Proprietary Data or Information of the Company. You
shall not at any time divulge or communicate to any person nor shall you direct
any Company employee to divulge or communicate to any person (other than to a
person bound by confidentiality obligations similar to those contained herein
and other than as necessary in performing your duties hereunder) or use to the
detriment of the Company any of such Confidential or Proprietary Data or
Information, except to the extent the same (i) becomes publicly known other than
through a breach of this Agreement by you, (ii) was known to you prior to the
disclosure thereof by the Company to you from a source that was entitled to
disclose it or (iii) is subsequently disclosed to you by a third party who shall
not have receive it under any obligation of confidentiality to the Company. The
term "Confidential or Proprietary Data or Information" as used in this
Agreement, shall mean data or information not generally available to the public,
including personnel information, financial information, customer lists, supplier
lists, product and tooling specifications, trade secrets, information concerning
product composition and formulas, tools and dies, drawings and schematics,
manufacturing processes, information regarding operations, systems and services,
knowhow, computer and any other electronic, processed or collated data, computer
programs, and pricing, marketing, sales and advertising data.
(b) You shall not, during the term of this Agreement and for the
applicable Restricted Period after the termination of your employment by the
Company, for your own account or for the account of any other person, (i)
solicit or divert to any Competitive Business any individual or entity who is a
customer of the Company or any subsidiary or affiliate of the Company or who was
a customer of the Company or any subsidiary or affiliate during the preceding
twelve-month period, (ii) employ, retain as a consultant, attempt to employ or
retain as a consultant, solicit or assist any Competitive Business in employing
or retaining as a consultant any current employee of the Company or any
subsidiary or affiliate or any person who was employed by the Company or any
subsidiary or affiliate during the preceding twelve-month period or (iii)
otherwise interfere with the Company's relationship with any of its suppliers,
customers, employees or consultants; provided,
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however, that you shall not be prohibited from contacting suppliers or customers
after termination of your employment with regard to matters that do not violate
your noncompetition or confidentiality obligations contained in Sections 6(a)
and 7(a) or interfere with the Company's relationship with such parties.
(c) It is understood that you may, during your employment, conceive or
develop certain inventions, innovations or discoveries related to any business
in which the Company may be engaged, either solely or jointly with others. In
connection with the conception or development thereof, you agree to disclose
promptly to the Company all such inventions, innovations and discoveries, to
assign, and hereby do assign, to the Company all of your right, title and
interest in and to said inventions, innovations and discoveries, and to do all
things and sign all documents deemed by the Company to be necessary or
appropriate to vest in the Company, its successors and assigns, all of your
right, title and interest in and to such inventions, innovations or discoveries,
and to procure for the Company, at the Company's expense, patents, copyrights
and/or trademarks covering such inventions, innovations or discoveries in the
United States and its possessions and in foreign countries, at the discretion
and under the direction of the Company. In the event the Company is unable for
any reason to assure your signature on such documents, you irrevocably appoint
the Company and its duly authorized officers and agents as your agents and
attorneys-in-fact to execute such documents and to do such things with the same
legal force and effect as if executed or done by you.
(d) All written, electronic and other tangible materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company, or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon request of the Company during your
employment, you shall promptly deliver the same to the Company. In addition,
upon termination of your employment, or upon request of the Company during your
employment, you will deliver to the Company all other Company property in your
possession or under your control, including, but not limited to, financial
statements, marketing and sales data, patent applications, drawings and other
documents, and all Company keys, credit cards, computer and telephone equipment
and automobiles.
8. EQUITABLE RELIEF. With respect to the covenants contained in
Sections 6 and 7 of this Agreement, you agree that any remedy at law for any
breach of said covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of injunctive and/or other
equitable relief to enforce its rights hereunder or any other relief a court
might award.
9. EARLIER TERMINATION. Your employment hereunder shall terminate prior
to the Initial Term (or any renewal term, in the event of renewal) on the
following terms and conditions:
(a) This Agreement shall terminate automatically on the date of your
death. Notwithstanding the foregoing, if you die during the term of this
Agreement, the Company shall (i) continue to make payments to your estate of
your Base Salary as then in effect pursuant to this Agreement for
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180 days after the date of your death, and (ii) pay your estate any reimbursable
expenses which otherwise would have been paid to you to the date of your death.
(b) This Agreement shall be terminated if you are unable to perform
your duties hereunder for a period of any 180 days in any 365 consecutive day
period by reason of physical or mental disability. Notwithstanding the
foregoing, if this Agreement is terminated pursuant to this Section 9(b), the
Company shall pay any accrued but unpaid Base Salary through the date of
termination and any reimbursable expenses due to you hereunder. For purposes of
this Agreement "physical or mental disability" shall mean your inability, due to
health reasons, to discharge properly your duties of employment, supported by
the opinion of a physician satisfactory to both you and the Company. If the
parties do not agree on a physician mutually satisfactory to both of you and the
Company within ten days of written demand by one or the other, a physician shall
be selected by the president of the Pennsylvania Medical Association, and the
physician shall, within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. Services of the physician
shall be paid for by the Company. You shall fully cooperate with the examining
physician including submitting yourself to such examinations as may be requested
by the physician for the purpose of determining whether you are disabled.
(c) This Agreement shall terminate immediately upon the Company's
sending you written notice terminating your employment hereunder for Cause. The
Company may terminate this Agreement for Cause, but only after written notice
specifying the Cause of such action shall have been rendered to you by the
President of the Company. "Cause" shall mean any of the following:
(i) Breach of this Agreement.
(ii) Refusal or inability (other than pursuant to Section 9(a)
or 9(b)) to perform duties assigned to you in accordance with the terms of this
Agreement or overt and willful disobedience of orders or directives issued to
you by the Company and within the scope of your duties to the Company.
(iii) Willful misconduct in the performance of your duties,
functions and responsibilities.
(iv) Commission of acts that are illegal in connection with
the performance of your duties, functions and responsibilities under this
Agreement.
(v) Commission of acts that would constitute a felony offense
during the term of this Agreement.
(vi) Violation of Company rules and regulations concerning
conflict of interest.
(vii) Gross mismanagement of the assets of the Company.
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(viii) Gross incompetence, gross insubordination or gross
neglect in the performance of your duties hereunder or being under the habitual
influence of alcohol while on duty or possession, use, manufacture,
distribution, dispensation or sale of illegal drugs while on or off duty.
(ix) Any act or omission, whether or not included in the
foregoing, that a court of competent jurisdiction would determine to constitute
cause for termination.
Existence of Cause shall be conclusively determined for all purposes hereunder
by the President of the Company. Such advice and consultation shall be utilized
as such officer regards as appropriate, and no obligation or duty with respect
to any procedure or formality is created by this Agreement. If the Company
terminates this Agreement for Cause under this Section 9(c), the Company shall
not be obligated to make any further payments under this Agreement except for
the Accrued Obligations.
(d) Except as set forth in Section 10, your coverage under the benefits
program provided by the Company will cease effective on your termination date.
You will be entitled to elect continuation of your medical and dental benefits
at the same cost the Company pays, pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Details with regard to
COBRA continuation coverage will be provided to you shortly after your
termination date.
(e) Except as set forth in Section 10, life insurance coverage will
cease upon your termination date. You may, however, apply to General American
Life Insurance Company (or such other insurance company as may provide group
life insurance to the Company's employees at the time) for an individual
converted life policy, with such application and payment of the first premium
required to be accomplished within 31 days after your termination date. Details
regarding this conversion option will be provided to you shortly after your
termination date.
(f) Accidental death and dismemberment and long term disability
coverages cease with your termination date and may not be extended or converted.
10. TERMINATION UPON A CHANGE OF CONTROL.
(a) In the event a Change of Control (as defined below) occurs, and
within 24 months after such Change of Control: (i) your employment with the
Company is terminated by you pursuant to a Termination for Good Reason (as
defined below); or (ii) your employment with the Company is terminated by the
Company for any reason other than death, disability or for Cause pursuant to
Sections 9(a), (b) or (c); or (iii) this Agreement is not renewed due to a
Termination Notice given by the Company, as provided in Section 1(a), (the
events under clauses (i), (ii) and (iii) herein collectively called a "Change of
Control Termination"), you shall be entitled to receive the payments and
benefits set forth in Section 10(e) and (f) below, which payments and benefits
shall be in substitution for, and not in addition to, the payments and benefits
otherwise payable under Section 2(a) or 2(b) of this Agreement in the event of
termination. Your right to receive such payments and benefits, other than the
Accrued Obligations, shall be in consideration of your agreements under this
Agreement, including but not limited to your agreement not to compete with the
Company for two years after a Change of Control pursuant to Section 6, and shall
be conditioned upon your execution
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<PAGE>
of a Release. Such Release shall be substantially in the form of Exhibit A but
may be modified by the Company as it deems appropriate to reflect changes in law
or circumstances arising after the date of this Agreement; provided that no such
modification shall increase any of your obligations to the Company over those
contemplated by this Agreement, including Exhibit A hereto.
(b) For purposes of the Agreement, a "Change of Control" shall be
deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof)), excluding the Company, any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of any such plan acting in his capacity as
trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange
Act, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of shares of the Company having at least 30% of the total number of votes
that may be cast for the election of directors of the Company; (ii) the
shareholders of the Company shall approve any merger or other business
combination of the Company, sale of all or substantially all of the Company's
assets or combination of the foregoing transactions (a "Transaction"), other
than a Transaction involving only the Company and one or more of its
subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
shareholder of the Company owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction) and no person is the
beneficial owner of at least 30% of the shares of the resulting entity as
contemplated by Section 10(b)(i) above; or (iii) within any 24-month period
beginning on or after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
as of the date hereof shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
10(b)(iii), unless such election, recommendation or approval was the result of
an actual or threatened election contest of the type contemplated by Regulation
14a-11 under the Exchange Act or any successor provision. Notwithstanding the
foregoing, no Change of Control of the Company shall be deemed to have occurred
for purposes of this Agreement by reason of any actions or events in which you
participate in a capacity other than in your capacity as an executive or
director of the Company.
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<PAGE>
(c) For purposes of the Agreement, a "Termination for Good Reason"
means a termination by you by written notice given within 90 days after the
occurrence of the Good Reason event. A notice of Termination for Good Reason
shall indicate the specific termination provision in Section 10(d) relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for Termination for Good Reason. Your failure to set forth in
such notice any facts or circumstances that contribute to the showing of Good
Reason shall not waive any of your rights hereunder or preclude you from
asserting such fact or circumstance in enforcing your rights hereunder. The
notice of Termination for Good Reason shall provide for a date of termination
not less than 10 nor more than 60 days after the date such Notice of Termination
for Good Reason is given.
(d) For purposes of the Agreement, "Good Reason" shall mean the
occurrence, without your express written consent, of any of the following
circumstances, unless such circumstances are fully corrected prior to the date
of termination specified in the notice of Termination for Good Reason as
contemplated in Section 10(c) above: (i) any material diminution of your
positions, duties or responsibilities hereunder (except in each case in
connection with the termination of your employment for Cause pursuant to Section
9(c) or due to disability or death pursuant to Section 9(a) or 9(b) or
temporarily as a result of your illness or other absence), or the assignment to
you of duties or responsibilities that are inconsistent with your position under
the Agreement at the time of a Change of Control; (ii) your removal from, or
your nonreelection to, the officer positions with the Company specified in this
Agreement; (iii) relocation of the Company's principal executive offices to a
location more than 25 miles from its location at the time of the Change of
Control; (iv) failure by the Company, after a Change of Control, (A) to continue
any bonus plan, program or arrangement in which you are entitled to participate
immediately prior to the Change of Control (the "Bonus Plans"), provided that
any such Bonus Plans may be modified at the Company's discretion from time to
time but shall be deemed terminated if (x) any such plan does not remain
substantially in the form in effect prior to such modification and (y) if plans
providing you with substantially similar benefits are not substituted therefor
("Substitute Plans"), or (B) to continue you as a participant in the Bonus Plans
and Substitute Plans on at least the same basis as to potential amount of the
bonus and substantially the same level of criteria for achievability thereof as
you participated in immediately prior to any change in such plans or awards, in
accordance with the Bonus Plans and the Substitute Plans; (v) any material
breach by the Company of any provisions of this Agreement; or (vi) failure of
any successor to the Company to promptly acknowledge in writing the obligations
of the Company hereunder.
(e) Upon a Change of Control Termination, as provided in Section 10(a),
the Company shall pay or provide you the following payments and benefits:
(i) The Company shall pay to you the Accrued Obligations in a
lump sum within five business days after the date of termination.
(ii) The Company shall pay to you as severance pay, not later
than the tenth day following the date of your execution and delivery of the
Release required pursuant to Section 10(a) of this Agreement:
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(A) a lump sum payment in an amount equal to two years
of your Base Salary; and
(B) a lump sum payment in an amount equal to two of
your annual incentive bonuses, such payment to be equal to the greater of (i)
the amount of all incentive bonuses paid to you with respect to each of the two
most recently completed fiscal years of the Company for which a bonus has been
paid or (ii) the incentive bonus paid to you with respect to the most recently
completed fiscal year of the Company for which a bonus has been paid plus an
amount equal to your Target Bonus (as hereinafter defined); provided, however,
that if you have been employed by the Company for less than two years, such
payment shall be equal to the greater of (x) the amount of the incentive bonus
paid to you with respect to the most recently completed fiscal year of the
Company for which a bonus has been paid plus your Target Bonus or (y) the amount
of your Target Bonus multiplied by two. The term "Target Bonus" shall mean the
incentive bonus that would have been payable for the fiscal year that includes
the date on which your employment terminates under the incentive bonus program
in effect as of the date of the Change of Control, assuming that you had been
entitled to receive an amount in respect of such bonus based solely upon the
target percentage applicable to employees in the same employment grade as you
and your Base Salary as of the date of termination (or if greater, your Base
Salary as of the date on which occurred an event giving rise to a Change of
Control Termination), and without regard to actual performance.
(iii) The Company shall continue the participation of you and
your dependents for a period of two years after the date of termination in all
health, medical and accident, life and other welfare plans (as defined in
Section 3(l) of ERISA), in which you were participating immediately prior to the
date of termination, except for any disability plans; provided, however, that to
the extent the Company's plans do not permit such continued participation or
such participation would have an adverse tax impact on such plans or on the
other participants in such plans, the Company may instead provide materially
equivalent benefits to you outside of such plans; provided, further, that under
such circumstances, (i) medical insurance benefits may be provided by the
Company paying any COBRA premiums (COBRA coverage, in any event, to be measured
from the date of termination of employment) and (ii) if the Company is unable to
continue your life insurance coverage, the Company shall pay you an amount equal
to twice the premium paid during the year prior to termination or if you convert
the insurance to an individual policy, the Company shall pay the premium for
such insurance for two years. You shall complete such forms and take such
physical examinations as reasonably requested by the Company. To the extent you
incur any tax obligation as a result of the provisions of this Section 10(e)
that you would not have incurred if you remained an employee of the Company and
had continued to participate in the benefit plans as an employee, the Company
shall pay to you, at the time the tax is due, an amount to cover such taxes and
the taxes on the amount paid to cover such taxes.
(iv) All outstanding stock options and restricted stock awards
that have been granted to you by the Company at any time but have not yet vested
and upon which vesting depends solely upon the passage of time, shall
immediately vest or become nonforfeitable, as the case may
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be. In the event the foregoing sentence becomes applicable, the Company agrees
to cause the Board of Directors to take all steps necessary to implement the
foregoing sentence.
(v) All amounts payable to you upon a Change of Control under
the Company's Supplemental Executive Retirement Plan and Deferred Compensation
Plan shall be paid to you in accordance with the respective terms of those
plans.
(vi) The Company, at its expense, shall provide you with
outplacement services at a level appropriate for the most senior executive
employees through an outplacement firm of your choice for a period of up to one
year after the date of the Change of Control Termination.
(f) (i) In the event that any payment, coverage or benefit
(collectively, the "Covered Benefits") provided to you by the Company or an
Affiliate (as defined below) is or becomes subject to the excise tax imposed
under Section 4999 or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code"), or you incur interest or penalties with respect
to that excise tax (that excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the Company shall
pay you an additional amount (a "Gross-Up Bonus") at the time or times specified
in Section 10(f)(iii)(z) below. The amount of the Gross-Up Bonus shall equal the
quotient determined by dividing (x) the Excise Tax attributable to the Covered
Benefits by (y) one minus the highest marginal income tax rate, where the term
"highest marginal income tax rate" means the sum of the highest combined local,
state and federal personal income tax rates (including any state unemployment
compensation tax rate, any surtax rate as well as the Medicare hospital
insurance tax rate imposed on employees under the Federal Insurance
Contributions Act) as in effect for the calendar year to which the Excise Tax
attributable to the Covered Benefits relates, provided that in determining the
highest tax rate for federal purposes both the deductibility of state and local
income tax payments and the reduction in the deductibility of itemized
deductions shall be taken into account; it being the intention of the parties
hereto that your net after tax position (after taking into account any interest
or penalties imposed with respect to such taxes) upon receipt of the Covered
Benefits is no less advantageous to you than the net after tax position you
would have had if Section 4999 of the Code had not been applicable to any
portion of the Covered Benefits.
(ii) All determinations to be made under this Section 10(f),
including the determination of whether an Excise Tax is payable and the amount
thereof, shall be made by a law firm practicing in the Philadelphia,
Pennsylvania metropolitan area that is knowledgeable in tax law matters, which
firm shall be selected and paid for by the Company and acceptable to you. If tax
counsel's determinations are not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be computed (with a
Gross-Up Bonus, if applicable) by that tax counsel based upon the final amount
of the Excise Tax so determined.
(iii) For purposes of this Section 10(f):
(x) An "Affiliate" shall mean any successor
to the Company, any member of an affiliated group including the Company
(determining using the definition in Section 1504 of
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the Code) or any entity that becomes a member of such an affiliated group as a
result of the transaction causing the Change of Control.
(y) When determining the amount of the Gross-Up
Bonus, you will be deemed to have otherwise allowable deductions for federal,
state and local tax purposes at least equal to those disallowed because of the
inclusion of the Gross-Up Bonus in your adjusted gross income.
(z) The portion of the Gross-Up Bonus attributable
to a Covered Benefit shall be paid to you within 10 business days following the
provision to you of the Covered Benefit. In the event that the amount of Excise
Tax due exceeds the amount of Excise Tax determined by tax counsel, the Company
shall pay you an additional Gross-Up Bonus in respect of that excess at the time
that the amount of the excess is determined under Section 10(f)(ii). In the
event the amount of Excise Tax due is less than the amount of Excise Tax
determined by tax counsel, you shall repay the Company the portion of the
Gross-Up Bonus attributable thereto at the time that the amount of the reduction
in Excise Tax is determined under Section 10(f)(ii); provided, however, that if
any portion of the amount you must repay to the Company has been paid to any
federal, state or local tax authority, your repayment of that portion shall be
postponed until the tax authority has actually refunded or credited that amount
to you.
(g) Upon the occurrence of a Change of Control, if the Company fails to
perform any of its obligations under this Agreement or the Company or any other
person asserts the invalidity of any provision of this Agreement and you incur
any costs in successfully enforcing or defending any of the provisions of this
Agreement, including legal fees and expenses and court costs, the Company shall
reimburse you for all such costs incurred by you.
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with
Exhibit A hereto and all rights to which you are entitled under all employee
benefit plans in which you participate, constitutes the full and complete
understanding of the parties, and supersedes all prior agreements and
understandings, oral or written, between the parties, except for the Agreement
Relating to Intellectual Property and Confidential Information dated July 7,
1998 between you and the Company ("Confidentiality Agreement"); provided,
however, that if the terms of any of such employee benefit plan or such
Confidentiality Agreement shall be inconsistent with the provisions of this
Agreement, the provisions of this Agreement shall prevail. This Agreement may
not be modified or amended except by an instrument in writing signed by the
party against which enforcement thereof may be sought. Each party to this
Agreement, acknowledges that no representations, inducements, promises or
agreements, oral or written, have been made by either party or anyone acting on
behalf of either party, which are not embodied herein and that no other
agreement, statement or promise not set forth or referred to in this Agreement
shall be valid or binding.
12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
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13. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach.
14. NO MITIGATION REQUIRED. Upon a termination of your employment by
the Company without Cause pursuant to Section 2(b) or upon a Change of Control
pursuant to Section 10, you shall have no obligation to seek other employment
but shall not be prohibited from doing so, and no compensation paid to you as
the result of any other employment shall reduce any payment required to be made
by the Company hereunder.
15. NOTICES. All notices hereunder shall be in writing and shall be
sent by express mail or by certified or registered mail, postage prepaid, return
receipt requested: if to you, to your residence as listed in the Company's
records; and if to the Company, to the address set forth above with copies to
the President.
16. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be assigned
by either party, except that it may be assigned by the Company to an acquirer of
all or substantially all of the assets of the Company or other successor to the
Company, subject to your rights arising from a change of control as provided in
Section 10. This Agreement shall be binding upon and inure to the benefit of
you, your legal representatives, heirs and distributees, and shall be binding
upon and inure to the benefit of the Company, its successors and assigns.
17. NONDISPARAGEMENT. You agree not to publicly or privately disparage
the Company, its personnel, products or services either during or upon
termination of your employment with the Company.
18. SURVIVAL. All of the provisions of this Agreement that by their
terms are to be performed or that otherwise are to endure after the termination
of your employment by the Company shall survive the termination of your
employment and shall continue in effect for the respective periods therein
provided or contemplated.
19. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
20. HEADINGS. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
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If this Agreement correctly sets forth our understanding, please sign
the duplicate original in the space provided below and return it to the Company,
whereupon this shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
C&D TECHNOLOGIES, INC.
By:/s/ Wade H. Roberts, Jr.
--------------------------------
Title: President and CEO
Agreed as of the date first above written:
/s/ Mark Z. Sappir
- -----------------------------
Mark Z. Sappir
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EXHIBIT A
RELEASE
This Release is made this _____ day of _______________, ____ by and
between C&D Technologies, Inc. ("Employer") and _________________ ("Employee").
RECITALS:
WHEREAS, the parties are parties to an Employment Agreement (the
"Employment Agreement") dated __________, pursuant to which Employee was
employed by Employer; and
WHEREAS, the Employment Agreement has terminated; and
WHEREAS, your execution and delivery of this Release is a condition to
the Employer's obligations to pay certain compensation and benefits to you under
the Employment Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1. As of _____________________, ____, Employee's employment with
Employer shall terminate, and Employee shall have no further job
responsibilities to perform for Employer; provided, however, that Employee shall
cooperate with Employer in transitioning Employee's job responsibilities as
Employer shall reasonably request, provided that Employee shall be entitled to
receive reasonable compensation for any services rendered after such date and
shall not be obligated to take any action that would interfere with any
subsequent employment of Employee or otherwise result in economic hardship to
Employee.
2. Employer shall pay to the Employee the amounts contemplated pursuant
to Section __ of the Employment Agreement, less applicable deductions; provided
however, the first payment shall not be due and payable until ten days after the
execution by Employee and delivery to Employer of this Release.
3. For and in consideration of the monies and benefits paid to Employee
by Employer, as more fully described in Section 2 above, and for other good and
valuable consideration, Employee hereby waives, releases and forever discharges
Employer, its assigns, predecessors, successors, and affiliated entities, and
its current or former stockholders, officers, directors, administrators, agents,
servants and employees, individually and as representatives of the corporate
entity (hereinafter collectively referred to as "Releasees"), from any and all
claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, bonuses, controversies, agreements, promises, charges,
complaints, damages, sums of money, interest, attorney's fees and costs, or
causes
A-1
<PAGE>
of action of any kind or nature whatsoever whether in law or equity, including,
but not limited to, all claims arising out of his/her employment or termination
of employment with Employer, such as all claims for wrongful discharge, breach
of contract, either express or implied, interference with contract, emotional
distress, fraud, misrepresentation, defamation, claims arising under the Civil
Rights Acts of 1964 and 1991 as amended, the Americans With Disabilities Act,
the Age Discrimination in Employment Act (ADEA), the National Labor Relations
Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act
of 1974 (ERISA), the Family and Medical Leave Act, the Pennsylvania Human
Relations Act, the Pennsylvania Wage Payment & Collection Law, the Pennsylvania
Minimum Wage Act of 1968, the Pennsylvania Equal Pay Law, and any and all other
claims arising under federal, state or local law, rule, regulation,
constitution, ordinance or public policy whether known or unknown, arising up to
and including the date of execution of this Release; provided, however that the
parties do not release each other from any claim of breach of the terms of this
Release. This release of rights does not extend to claims that may arise after
the date of this Release. Employee agrees that Employee will not initiate any
charge or complaint or institute any claim or lawsuit against Releasees or any
of them based on any fact or circumstance occurring up to and including the date
of the execution by Employee of this Release.
4 Employee agrees that the payments made and other consideration
received pursuant to this Release are not to be construed as an admission of
legal liability by Releasees or any of them and that no person or entity shall
utilize this Release or the consideration received pursuant to this Release as
evidence of any admission of liability since Releasees expressly deny liability.
5 Employee affirms that the only consideration for the signing of this
Release are the terms stated herein and in the Employment Agreement and that no
other promise or agreement of any kind has been made to Employee by any person
or entity whatsoever to cause Employee to sign this Release.
6 Employee and Employer affirm that the Employment Agreement and this
Release set forth the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior or contemporaneous
agreements or understandings between the parties with respect to the subject
matter contained herein. Further, there are no representations, arrangements or
understandings, either oral or written, between the parties, which are not fully
expressed herein. Finally, no alteration or other modification of this Release
shall be effective unless made in writing and signed by both parties.
7 Employee acknowledges that Employee has been given a period of at
least 21 days within which to consider this Release.
8 Following the execution of this Release, the Employee has a period of
7 days from the date of execution to revoke this Release, and this Release shall
not become effective or enforceable until the revocation period has expired.
9 Employee certifies that Employee has returned to Employer all keys,
identification cards, credit cards, computer and telephone equipment and other
property or information
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of Employer in Employee's possession, custody, or control including, but not
limited to, any information contained in any computer files maintained by
Employee during Employee's employment with Employer. Employee certifies that
Employee has not kept the originals or copies of any documents, files, or other
property of Employer which Employee obtained or received during Employee's
employment with Employer.
10 Employee acknowledges that Employer advised Employee to consult with
an attorney prior to executing this Release.
11 Employee affirms that Employee has carefully read this Release, that
Employee fully understands the meaning and intent of this document, that
Employee has signed this Release voluntarily and knowingly, and that Employee
intends to be bound by the promises contained in this Release for the
consideration described in Section 2 above.
IN WITNESS WHEREOF, Employee and the authorized representative of
Employer have executed this Release on the dates indicated below:
C&D TECHNOLOGIES, INC.
Dated:_____________________ By:______________________________
Title:__________________________
Dated:_____________________ ______________________________
Mark Z. Sappir
A-4
<PAGE>
ENDORSEMENT
I, ___________________________________, hereby acknowledge that I was
given 21 days to consider the foregoing Release and voluntarily chose to sign
the Release prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the Commonwealth
of Pennsylvania that the foregoing is true and correct.
EXECUTED this ________ day of ______________, ____, at
_______________________________________, Pennsylvania.
---------------------------------
Mark Z. Sappir
A-4
Exhibit 10.17
March 31, 2000
Mr. Bernie Radecki
302 Captain Robinson Drive
Avondale, PA 19311
Dear Bernie:
You are presently employed by C&D Technologies, Inc., a Delaware
corporation (the "Company"), in an executive capacity and the Company desires to
encourage such continued employment by providing certain protections for you by
entering into this Agreement with you, in return for which you agree to continue
to be employed by the Company on the terms set forth herein, to refrain from
certain competitive activity and to provide the Company with certain assurances
upon your departure. In consideration of same, the Company agrees to employ you,
and you agree to accept such employment, under the following terms and
conditions:
1. TERM OF EMPLOYMENT.
(a) Except for earlier termination as is provided in Section 9 or 10
below, your employment under this Agreement shall be for the period commencing
on the date hereof (the "Effective Date") and terminating on May 31, 2000 (the
"Initial Term").
(b) This Agreement shall be automatically renewed for successive terms
of one month each, unless either party shall have given to the other party at
least 30 days' prior written notice of the termination of this Agreement (a
"Termination Notice"). If such 30 days' prior written notice is given by either
party, (i) the Company shall, without any liability to you, have the right,
exercisable at any time after such notice is sent, to elect any other person to
the office or offices in which you are then serving and to remove you from such
office or offices, but (ii) all other obligations each of you and the Company
have to the other, including the Company's obligation to pay your compensation
and make available the medical and dental insurance to which you are entitled
hereunder, shall continue until the date your employment terminates as specified
in such notice.
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2. COMPENSATION.
(a) You shall be compensated for all services rendered by you under
this Agreement at the rate of $142,000 per annum (such salary, as it is from
time to time adjusted, is herein referred to as the ("Base Salary"). Such Base
Salary shall be payable in periodic installments twice monthly in accordance
with the Company's payroll practices for salaried employees. The Compensation
Committee of the Board of Directors shall review such Base Salary prior to April
1, 2000 and each year thereafter during the term of this Agreement, including
any renewal term, and shall make such adjustments, if any, as the Compensation
Committee shall determine; provided, however, that no adjustment shall reduce
the Base Salary below $142,000.
(b) If your employment hereunder shall be terminated (i) by the Company
without notice of Cause (as defined in Section 9(c)) therefor having been given
to you (other than pursuant to Section 9(a) or 9(b) and notwithstanding the
provisions of Section 1(a)), or (ii) as a result of the non-renewal of this
Agreement pursuant to a Termination Notice given by the Company under Section
1(b) then, in addition to paying you the Accrued Obligations (as hereinafter
defined), for a one-year period after the effective date of such termination,
the Company shall pay you at the rate of your Base Salary in effect at the time
of such termination in periodic payments in accordance with the Company's
payroll practices for salaried employees; provided, however, that your right to
receive such payments, other than the Accrued Obligations, shall be conditioned
upon your execution of a Release (the "Release"). Such Release shall be
substantially in the form of Exhibit A hereto but may be modified by the Company
in its sole discretion as it deems appropriate to reflect changes in law or
circumstances arising after the date of this Agreement; provided, however, that
no such modification shall increase any of your obligations to the Company over
those contemplated by this Agreement, including Exhibit A hereto. The term
"Accrued Obligations" shall mean (i) your Base Salary through the date of
termination and (ii) all benefits that have accrued to you under the terms of
all employee benefits plans of the Company in which you are entitled to
participate.
3. DUTIES.
(a) During the term of your employment hereunder, including any renewal
thereof, you agree to serve as the Vice President, General Manager of the
Powercom Division (the "Division") or in such other capacity with duties and
responsibilities of a similar nature as those initially undertaken by you
hereunder as the President of the Company may from time to time determine. Your
duties may be changed at any time and from time to time hereafter, upon mutual
agreement, consistent with office or offices in which you serve as deemed
necessary by the President of the Company. You also agree to perform such other
services and duties consistent with the office or offices in which you are
serving and its responsibilities as may from time to time be prescribed by the
Board of Directors, and you also agree to serve, if elected, as an officer
and/or director of the Company and/or any of the Company's other direct or
indirect subsidiaries without additional compensation, in all cases in
conformity to the by-laws of each such corporation. Unless you otherwise agree,
you shall not be required to relocate your place of business to a location that
would increase your commuting distance by greater than 25 miles.
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(b) You shall devote your full employment energies, interest,
abilities, time and attention during normal business hours (excluding the
vacation periods provided in Section 4(b) below) exclusively to the business and
affairs of the Company, its parent corporation and subsidiaries, if any, and
shall not engage in any activity that conflicts or interferes with the
performance of duties hereunder.
(c) You agree to cooperate with the Company, including taking such
reasonable medical examinations as may be necessary, in the event the Company
shall desire or be required (such as pursuant to the terms of any bank loan or
any other agreement) to obtain life insurance insuring your life.
(d) You shall, except as otherwise provided herein, be subject to the
Company's rules, practices and policies applicable to the Company's senior
executive employees. Without limiting the generality of the foregoing, you
shall, with respect to the Company and its parents, subsidiaries, assets and
stockholders, act in a manner consistent with your fiduciary responsibilities as
an executive of the Company.
4. BENEFITS.
(a) You shall have the benefit of such life and medical insurance,
bonus, stock option and other similar plans as the Company may have or may
establish from time to time, and in which you would be entitled to participate
by reason of your position with the Company, pursuant to the terms thereof.
Also, to the extent you have met the qualifications required, you may
participate in the Company's savings and retirement plans. The foregoing,
however, shall not be construed to require the Company to establish any such
plans or to prevent the Company from modifying or terminating any such plans,
and no such action or failure thereof shall affect this Agreement.
(b) You shall be entitled to a vacation of four weeks each year.
(c) The Company will provide you with an annual physical examination.
5. EXPENSES. The Company will reimburse you for reasonable expenses
(consistent with Company policy), including traveling expenses, incurred by you
in connection with the business of the Company, upon the presentation by you of
appropriate substantiation for such expenses.
6. RESTRICTIVE COVENANTS.
(a) During such time as you shall be employed by the Company, and for
the applicable Restricted Period (as defined below) thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in, represent, advise or
otherwise participate as an officer, employee, director, stockholder, partner,
agent of or consultant for, any business that, at the time your employment with
the Company ceases,
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is competitive with the business in which the Company is engaged or in which the
Company has taken affirmative steps to engage (a "Competitive Business");
provided, however, that nothing herein (i) shall prevent you from investing
without limit in the securities of any company listed on a national securities
exchange, provided that your involvement with any such company is solely that of
a stockholder, and (ii) is intended to prevent you from being employed during
the applicable Restricted Period by any business other than a Competitive
Business. With respect to any termination of your employment other than upon a
Change of Control pursuant to Section 10, the applicable Restricted Period shall
be the one-year period following the date your employment terminates, and with
respect to a termination of your employment upon a Change of Control pursuant to
Section 10, the applicable Restricted Period shall be the two-year period
following the date your employment terminates.
(b) The parties hereto intend that the covenant contained in this
Section 6 shall be deemed a series of separate covenants for each state, county
and city. If, in any judicial proceeding, a court shall refuse to enforce all
the separate covenants deemed included in this Section 6, because, taken
together, they cover too extensive a geographic area, the parties intend that
those of such covenants (taken in order of the states, counties and cities
therein which are least populous), which, if eliminated, would permit the
remaining separate covenants to be enforced in such proceeding, shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 6.
7. CONFIDENTIALITY, NON-INTERFERENCE, INVENTIONS AND PROPRIETARY
INFORMATION.
(a) In the course of (i) your employment with the Company hereunder,
and (ii) any prior employment with the Company, you will have and have had
access to Confidential or Proprietary Data or Information of the Company. You
shall not at any time divulge or communicate to any person nor shall you direct
any Company employee to divulge or communicate to any person (other than to a
person bound by confidentiality obligations similar to those contained herein
and other than as necessary in performing your duties hereunder) or use to the
detriment of the Company any of such Confidential or Proprietary Data or
Information, except to the extent the same (i) becomes publicly known other than
through a breach of this Agreement by you, (ii) was known to you prior to the
disclosure thereof by the Company to you from a source that was entitled to
disclose it or (iii) is subsequently disclosed to you by a third party who shall
not have receive it under any obligation of confidentiality to the Company. The
term "Confidential or Proprietary Data or Information" as used in this
Agreement, shall mean data or information not generally available to the public,
including personnel information, financial information, customer lists, supplier
lists, product and tooling specifications, trade secrets, information concerning
product composition and formulas, tools and dies, drawings and schematics,
manufacturing processes, information regarding operations, systems and services,
knowhow, computer and any other electronic, processed or collated data, computer
programs, and pricing, marketing, sales and advertising data.
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(b) You shall not, during the term of this Agreement and for the
applicable Restricted Period after the termination of your employment by the
Company, for your own account or for the account of any other person, (i)
solicit or divert to any Competitive Business any individual or entity who is a
customer of the Company or any subsidiary or affiliate of the Company or who was
a customer of the Company or any subsidiary or affiliate during the preceding
twelve-month period, (ii) employ, retain as a consultant, attempt to employ or
retain as a consultant, solicit or assist any Competitive Business in employing
or retaining as a consultant any current employee of the Company or any
subsidiary or affiliate or any person who was employed by the Company or any
subsidiary or affiliate during the preceding twelve-month period or (iii)
otherwise interfere with the Company's relationship with any of its suppliers,
customers, employees or consultants; provided, however, that you shall not be
prohibited from contacting suppliers or customers after termination of your
employment with regard to matters that do not violate your noncompetition or
confidentiality obligations contained in Sections 6(a) and 7(a) or interfere
with the Company's relationship with such parties.
(c) It is understood that you may, during your employment, conceive or
develop certain inventions, innovations or discoveries related to any business
in which the Company may be engaged, either solely or jointly with others. In
connection with the conception or development thereof, you agree to disclose
promptly to the Company all such inventions, innovations and discoveries, to
assign, and hereby do assign, to the Company all of your right, title and
interest in and to said inventions, innovations and discoveries, and to do all
things and sign all documents deemed by the Company to be necessary or
appropriate to vest in the Company, its successors and assigns, all of your
right, title and interest in and to such inventions, innovations or discoveries,
and to procure for the Company, at the Company's expense, patents, copyrights
and/or trademarks covering such inventions, innovations or discoveries in the
United States and its possessions and in foreign countries, at the discretion
and under the direction of the Company. In the event the Company is unable for
any reason to assure your signature on such documents, you irrevocably appoint
the Company and its duly authorized officers and agents as your agents and
attorneys-in-fact to execute such documents and to do such things with the same
legal force and effect as if executed or done by you.
(d) All written, electronic and other tangible materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company, or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon request of the Company during your
employment, you shall promptly deliver the same to the Company. In addition,
upon termination of your employment, or upon request of the Company during your
employment, you will deliver to the Company all other Company property in your
possession or under your control, including, but not limited to, financial
statements, marketing and sales data, patent applications, drawings and other
documents, and all Company keys, credit cards, computer and telephone equipment
and automobiles.
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8. EQUITABLE RELIEF. With respect to the covenants contained in
Sections 6 and 7 of this Agreement, you agree that any remedy at law for any
breach of said covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of injunctive and/or other
equitable relief to enforce its rights hereunder or any other relief a court
might award.
9. EARLIER TERMINATION. Your employment hereunder shall terminate prior
to the Initial Term (or any renewal term, in the event of renewal) on the
following terms and conditions:
(a) This Agreement shall terminate automatically on the date of your
death. Notwithstanding the foregoing, if you die during the term of this
Agreement, the Company shall (i) continue to make payments to your estate of
your Base Salary as then in effect pursuant to this Agreement for 180 days after
the date of your death, and (ii) pay your estate any reimbursable expenses which
otherwise would have been paid to you to the date of your death.
(b) This Agreement shall be terminated if you are unable to perform
your duties hereunder for a period of any 180 days in any 365 consecutive day
period by reason of physical or mental disability. Notwithstanding the
foregoing, if this Agreement is terminated pursuant to this Section 9(b), the
Company shall pay any accrued but unpaid Base Salary through the date of
termination and any reimbursable expenses due to you hereunder. For purposes of
this Agreement "physical or mental disability" shall mean your inability, due to
health reasons, to discharge properly your duties of employment, supported by
the opinion of a physician satisfactory to both you and the Company. If the
parties do not agree on a physician mutually satisfactory to both of you and the
Company within ten days of written demand by one or the other, a physician shall
be selected by the president of the Pennsylvania Medical Association, and the
physician shall, within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. Services of the physician
shall be paid for by the Company. You shall fully cooperate with the examining
physician including submitting yourself to such examinations as may be requested
by the physician for the purpose of determining whether you are disabled.
(c) This Agreement shall terminate immediately upon the Company's
sending you written notice terminating your employment hereunder for Cause. The
Company may terminate this Agreement for Cause, but only after written notice
specifying the Cause of such action shall have been rendered to you by the
President of the Company. "Cause" shall mean any of the following:
(i) Breach of this Agreement.
(ii) Refusal or inability (other than pursuant to Section 9(a)
or 9(b)) to perform duties assigned to you in accordance with the terms of this
Agreement or overt and willful disobedience of orders or directives issued to
you by the Company and within the scope of your duties to the Company.
(iii) Willful misconduct in the performance of your duties,
functions and responsibilities.
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(iv) Commission of acts that are illegal in connection with
the performance of your duties, functions and responsibilities under this
Agreement.
(v) Commission of acts that would constitute a felony offense
during the term of this Agreement.
(vi) Violation of Company rules and regulations concerning
conflict of interest.
(vii) Gross mismanagement of the assets of the Company.
(viii) Gross incompetence, gross insubordination or gross
neglect in the performance of your duties hereunder or being under the habitual
influence of alcohol while on duty or possession, use, manufacture,
distribution, dispensation or sale of illegal drugs while on or off duty.
(ix) Any act or omission, whether or not included in the
foregoing, that a court of competent jurisdiction would determine to constitute
cause for termination.
Existence of Cause shall be conclusively determined for all purposes hereunder
by the President of the Company. Such advice and consultation shall be utilized
as such officer regards as appropriate, and no obligation or duty with respect
to any procedure or formality is created by this Agreement. If the Company
terminates this Agreement for Cause under this Section 9(c), the Company shall
not be obligated to make any further payments under this Agreement except for
the Accrued Obligations.
(d) Except as set forth in Section 10, your coverage under the benefits
program provided by the Company will cease effective on your termination date.
You will be entitled to elect continuation of your medical and dental benefits
at the same cost the Company pays, pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Details with regard to
COBRA continuation coverage will be provided to you shortly after your
termination date.
(e) Except as set forth in Section 10, life insurance coverage will
cease upon your termination date. You may, however, apply to General American
Life Insurance Company (or such other insurance company as may provide group
life insurance to the Company's employees at the time) for an individual
converted life policy, with such application and payment of the first premium
required to be accomplished within 31 days after your termination date. Details
regarding this conversion option will be provided to you shortly after your
termination date.
(f) Accidental death and dismemberment and long term disability
coverages cease with your termination date and may not be extended or converted.
10. TERMINATION UPON A CHANGE OF CONTROL.
(a) In the event a Change of Control (as defined below) occurs, and
within 24 months after such Change of Control: (i) your employment with the
Company is terminated by you pursuant to a Termination for Good Reason (as
defined below); or (ii) your employment with the Company
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is terminated by the Company for any reason other than death, disability or for
Cause pursuant to Sections 9(a), (b) or (c); or (iii) this Agreement is not
renewed due to a Termination Notice given by the Company, as provided in Section
1(b), (the events under clauses (i), (ii) and (iii) herein collectively called a
"Change of Control Termination"), you shall be entitled to receive the payments
and benefits set forth in Section 10(e) and (f) below, which payments and
benefits shall be in substitution for, and not in addition to, the payments and
benefits otherwise payable under Section 2(a) or 2(b) of this Agreement in the
event of termination. Your right to receive such payments and benefits, other
than the Accrued Obligations, shall be in consideration of your agreements under
this Agreement, including but not limited to your agreement not to compete with
the Company for two years after a Change of Control pursuant to Section 6, and
shall be conditioned upon your execution of a Release. Such Release shall be
substantially in the form of Exhibit A but may be modified by the Company as it
deems appropriate to reflect changes in law or circumstances arising after the
date of this Agreement; provided that no such modification shall increase any of
your obligations to the Company over those contemplated by this Agreement,
including Exhibit A hereto.
(b) For purposes of the Agreement, a "Change of Control" shall be
deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof)), excluding the Company, any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of any such plan acting in his capacity as
trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange
Act, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of shares of the Company having at least 30% of the total number of votes
that may be cast for the election of directors of the Company; (ii) the
shareholders of the Company shall approve any merger or other business
combination of the Company, sale of all or substantially all of the Company's
assets or combination of the foregoing transactions (a "Transaction"), other
than a Transaction involving only the Company and one or more of its
subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
shareholder of the Company owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction) and no person is the
beneficial owner of at least 30% of the shares of the resulting entity as
contemplated by Section 10(b)(i) above; or (iii) within any 24-month period
beginning on or after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
as of the date hereof shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
10(b)(iii), unless such election, recommendation or approval was the result of
an actual or threatened election contest of the type contemplated by Regulation
14a-11 under the Exchange Act or any successor provision. Notwithstanding the
foregoing, no Change of Control of the Company shall be deemed to have occurred
for purposes of this Agreement by reason of any actions or events in which you
participate in a capacity other than in your capacity as an executive or
director of the Company.
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(c) For purposes of the Agreement, a "Termination for Good Reason"
means a termination by you by written notice given within 90 days after the
occurrence of the Good Reason event. A notice of Termination for Good Reason
shall indicate the specific termination provision in Section 10(d) relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for Termination for Good Reason. Your failure to set forth in
such notice any facts or circumstances that contribute to the showing of Good
Reason shall not waive any of your rights hereunder or preclude you from
asserting such fact or circumstance in enforcing your rights hereunder. The
notice of Termination for Good Reason shall provide for a date of termination
not less than 10 nor more than 60 days after the date such Notice of Termination
for Good Reason is given.
(d) For purposes of the Agreement, "Good Reason" shall mean the
occurrence, without your express written consent, of any of the following
circumstances, unless such circumstances are fully corrected prior to the date
of termination specified in the notice of Termination for Good Reason as
contemplated in Section 10(c) above: (i) any material diminution of your
positions, duties or responsibilities hereunder (except in each case in
connection with the termination of your employment for Cause pursuant to Section
9(c) or due to disability or death pursuant to Section 9(a) or 9(b) or
temporarily as a result of your illness or other absence), or the assignment to
you of duties or responsibilities that are inconsistent with your position under
the Agreement at the time of a Change of Control; (ii) your removal from, or
your nonreelection to, the officer positions with the Company specified in this
Agreement; (iii) relocation of the Division's principal executive offices to a
location more than 25 miles from its location at the time of the Change of
Control; (iv) failure by the Company, after a Change of Control, (A) to continue
any bonus plan, program or arrangement in which you are entitled to participate
immediately prior to the Change of Control (the "Bonus Plans"), provided that
any such Bonus Plans may be modified at the Company's discretion from time to
time but shall be deemed terminated if (x) any such plan does not remain
substantially in the form in effect prior to such modification and (y) if plans
providing you with substantially similar benefits are not substituted therefor
("Substitute Plans"), or (B) to continue you as a participant in the Bonus Plans
and Substitute Plans on at least the same basis as to potential amount of the
bonus and substantially the same level of criteria for achievability thereof as
you participated in immediately prior to any change in such plans or awards, in
accordance with the Bonus Plans and the Substitute Plans; (v) any material
breach by the Company of any provisions of this Agreement; or (vi) failure of
any successor to the Company to promptly acknowledge in writing the obligations
of the Company hereunder.
(e) Upon a Change of Control Termination, as provided in Section 10(a),
the Company shall pay or provide you the following payments and benefits:
(i) The Company shall pay to you the Accrued Obligations in a
lump sum within five business days after the date of termination.
(ii) The Company shall pay to you as severance pay, not later
than the tenth day following the date of your execution and delivery of the
Release required pursuant to Section 10(a) of this Agreement:
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(A) a lump sum payment in an amount equal to two years
of your Base Salary; and
(B) a lump sum payment in an amount equal to two of
your annual incentive bonuses, such payment to be equal to the greater of (i)
the amount of all incentive bonuses paid to you with respect to each of the two
most recently completed fiscal years of the Company for which a bonus has been
paid or (ii) the incentive bonus paid to you with respect to the most recently
completed fiscal year of the Company for which a bonus has been paid plus an
amount equal to your Target Bonus (as hereinafter defined); provided, however,
that if you have been employed by the Company for less than two years, such
payment shall be equal to the greater of (x) the amount of the incentive bonus
paid to you with respect to the most recently completed fiscal year of the
Company for which a bonus has been paid plus your Target Bonus or (y) the amount
of your Target Bonus multiplied by two. The term "Target Bonus" shall mean the
incentive bonus that would have been payable for the fiscal year that includes
the date on which your employment terminates under the incentive bonus program
in effect as of the date of the Change of Control, assuming that you had been
entitled to receive an amount in respect of such bonus based solely upon the
target percentage applicable to employees in the same employment grade as you
and your Base Salary as of the date of termination (or if greater, your Base
Salary as of the date on which occurred an event giving rise to a Change of
Control Termination), and without regard to actual performance.
(iii) The Company shall continue the participation of you and
your dependents for a period of two years after the date of termination in all
health, medical and accident, life and other welfare plans (as defined in
Section 3(l) of ERISA), in which you were participating immediately prior to the
date of termination, except for any disability plans; provided, however, that to
the extent the Company's plans do not permit such continued participation or
such participation would have an adverse tax impact on such plans or on the
other participants in such plans, the Company may instead provide materially
equivalent benefits to you outside of such plans; provided, further, that under
such circumstances, (i) medical insurance benefits may be provided by the
Company paying any COBRA premiums (COBRA coverage, in any event, to be measured
from the date of termination of employment) and (ii) if the Company is unable to
continue your life insurance coverage, the Company shall pay you an amount equal
to twice the premium paid during the year prior to termination or if you convert
the insurance to an individual policy, the Company shall pay the premium for
such insurance for two years. You shall complete such forms and take such
physical examinations as reasonably requested by the Company. To the extent you
incur any tax obligation as a result of the provisions of this Section 10(e)
that you would not have incurred if you remained an employee of the Company and
had continued to participate in the benefit plans as an employee, the Company
shall pay to you, at the time the tax is due, an amount to cover such taxes and
the taxes on the amount paid to cover such taxes.
(iv) All outstanding stock options and restricted stock awards
that have been granted to you by the Company at any time but have not yet vested
and upon which vesting depends solely upon the passage of time, shall
immediately vest or become nonforfeitable, as the case may be. In the event the
foregoing sentence becomes applicable, the Company agrees to cause the Board of
Directors to take all steps necessary to implement the foregoing sentence.
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(v) All amounts payable to you upon a Change of Control under
the Company's Supplemental Executive Retirement Plan and Deferred Compensation
Plan shall be paid to you in accordance with the respective terms of those
plans.
(vi) The Company, at its expense, shall provide you with
outplacement services at a level appropriate for the most senior executive
employees through an outplacement firm of your choice for a period of up to one
year after the date of the Change of Control Termination.
(f) (i) In the event that any payment, coverage or benefit
(collectively, the "Covered Benefits") provided to you by the Company or an
Affiliate (as defined below) is or becomes subject to the excise tax imposed
under Section 4999 or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code"), or you incur interest or penalties with respect
to that excise tax (that excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the Company shall
pay you an additional amount (a "Gross-Up Bonus") at the time or times specified
in Section 10(f)(iii)(z) below. The amount of the Gross-Up Bonus shall equal the
quotient determined by dividing (x) the Excise Tax attributable to the Covered
Benefits by (y) one minus the highest marginal income tax rate, where the term
"highest marginal income tax rate" means the sum of the highest combined local,
state and federal personal income tax rates (including any state unemployment
compensation tax rate, any surtax rate as well as the Medicare hospital
insurance tax rate imposed on employees under the Federal Insurance
Contributions Act) as in effect for the calendar year to which the Excise Tax
attributable to the Covered Benefits relates, provided that in determining the
highest tax rate for federal purposes both the deductibility of state and local
income tax payments and the reduction in the deductibility of itemized
deductions shall be taken into account; it being the intention of the parties
hereto that your net after tax position (after taking into account any interest
or penalties imposed with respect to such taxes) upon receipt of the Covered
Benefits is no less advantageous to you than the net after tax position you
would have had if Section 4999 of the Code had not been applicable to any
portion of the Covered Benefits.
(ii) All determinations to be made under this Section 10(f),
including the determination of whether an Excise Tax is payable and the amount
thereof, shall be made by a law firm practicing in the Philadelphia,
Pennsylvania metropolitan area that is knowledgeable in tax law matters, which
firm shall be selected and paid for by the Company and acceptable to you. If tax
counsel's determinations are not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be computed (with a
Gross-Up Bonus, if applicable) by that tax counsel based upon the final amount
of the Excise Tax so determined.
(iii) For purposes of this Section 10(f):
(x) An "Affiliate" shall mean any successor
to the Company, any member of an affiliated group including the Company
(determining using the definition in Section 1504 of the Code) or any entity
that becomes a member of such an affiliated group as a result of the transaction
causing the Change of Control.
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(y) When determining the amount of the Gross-Up
Bonus, you will be deemed to have otherwise allowable deductions for federal,
state and local tax purposes at least equal to those disallowed because of the
inclusion of the Gross-Up Bonus in your adjusted gross income.
(z) The portion of the Gross-Up Bonus attributable
to a Covered Benefit shall be paid to you within 10 business days following the
provision to you of the Covered Benefit. In the event that the amount of Excise
Tax due exceeds the amount of Excise Tax determined by tax counsel, the Company
shall pay you an additional Gross-Up Bonus in respect of that excess at the time
that the amount of the excess is determined under Section 10(f)(ii). In the
event the amount of Excise Tax due is less than the amount of Excise Tax
determined by tax counsel, you shall repay the Company the portion of the
Gross-Up Bonus attributable thereto at the time that the amount of the reduction
in Excise Tax is determined under Section 10(f)(ii); provided, however, that if
any portion of the amount you must repay to the Company has been paid to any
federal, state or local tax authority, your repayment of that portion shall be
postponed until the tax authority has actually refunded or credited that amount
to you.
(g) Upon the occurrence of a Change of Control, if the Company fails to
perform any of its obligations under this Agreement or the Company or any other
person asserts the invalidity of any provision of this Agreement and you incur
any costs in successfully enforcing or defending any of the provisions of this
Agreement, including legal fees and expenses and court costs, the Company shall
reimburse you for all such costs incurred by you.
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with
Exhibit A hereto and all rights to which you are entitled under all employee
benefit plans in which you participate, constitutes the full and complete
understanding of the parties, and will, on the Effective Date, supersede all
prior agreements and understandings, oral or written, between the parties,
except for the employment offer letter dated June 4, 1999 between you and the
Company ("Offer Letter) and the Agreement Relating to Intellectual Property and
Confidential Information signed by you on August 1, 1994 ("Confidentiality
Agreement") between you and the Company; provided, however, that if the terms of
any of such employee benefit plan, such Offer Letter or such Confidentiality
Agreement shall be inconsistent with the provisions of this Agreement, the
provisions of this Agreement shall control. This Agreement may not be modified
or amended except by an instrument in writing signed by the party against which
enforcement thereof may be sought. Each party to this Agreement, acknowledges
that no representations, inducements, promises or agreements, oral or written,
have been made by either party or anyone acting on behalf of either party, which
are not embodied herein and that no other agreement, statement or promise not
set forth or referred to in this Agreement shall be valid or binding.
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<PAGE>
12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
13. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach.
14. NO MITIGATION REQUIRED. Upon a termination of your employment by
the Company without Cause pursuant to Section 2(b) or upon a Change of Control
pursuant to Section 10, you shall have no obligation to seek other employment
but shall not be prohibited from doing so, and no compensation paid to you as
the result of any other employment shall reduce any payment required to be made
by the Company hereunder.
15. NOTICES. All notices hereunder shall be in writing and shall be
sent by express mail or by certified or registered mail, postage prepaid, return
receipt requested: if to you, to your residence as listed in the Company's
records; and if to the Company, to the address set forth above with copies to
the President.
16. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be assigned
by either party, except that it may be assigned by the Company to an acquirer of
all or substantially all of the assets of the Company or other successor to the
Company, subject to your rights arising from a change of control as provided in
Section 10. This Agreement shall be binding upon and inure to the benefit of
you, your legal representatives, heirs and distributees, and shall be binding
upon and inure to the benefit of the Company, its successors and assigns.
17. NONDISPARAGEMENT. You agree not to publicly or privately disparage
the Company, its personnel, products or services either during or upon
termination of your employment with the Company.
18. SURVIVAL. All of the provisions of this Agreement that by their
terms are to be performed or that otherwise are to endure after the termination
of your employment by the Company shall survive the termination of your
employment and shall continue in effect for the respective periods therein
provided or contemplated.
19. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
20. HEADINGS. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
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21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
If this Agreement correctly sets forth our understanding, please sign
the duplicate original in the space provided below and return it to the Company,
whereupon this shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
C&D TECHNOLOGIES, INC.
By:/s/ Wade H. Roberts, Jr.
------------------------------
Title: President and CEO
Agreed as of the date first above written:
/s/ Bernie Radecki
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Bernie Radecki
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<PAGE>
EXHIBIT A
RELEASE
This Release is made this _____ day of _______________, ____ by and
between C&D Technologies, Inc. ("Employer") and _________________ ("Employee").
RECITALS:
WHEREAS, the parties are parties to an Employment Agreement (the
"Employment Agreement") dated __________, pursuant to which Employee was
employed by Employer; and
WHEREAS, the Employment Agreement has terminated; and
WHEREAS, your execution and delivery of this Release is a condition to
the Employer's obligations to pay certain compensation and benefits to you under
the Employment Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1. As of _____________________, ____, Employee's employment with
Employer shall terminate, and Employee shall have no further job
responsibilities to perform for Employer; provided, however, that Employee shall
cooperate with Employer in transitioning Employee's job responsibilities as
Employer shall reasonably request, provided that Employee shall be entitled to
receive reasonable compensation for any services rendered after such date and
shall not be obligated to take any action that would interfere with any
subsequent employment of Employee or otherwise result in economic hardship to
Employee.
2. Employer shall pay to the Employee the amounts contemplated pursuant
to Section __ of the Employment Agreement, less applicable deductions; provided
however, the first payment shall not be due and payable until ten days after the
execution by Employee and delivery to Employer of this Release.
3. For and in consideration of the monies and benefits paid to Employee
by Employer, as more fully described in Section 2 above, and for other good and
valuable consideration, Employee hereby waives, releases and forever discharges
Employer, its assigns, predecessors, successors, and affiliated entities, and
its current or former stockholders, officers, directors, administrators, agents,
servants and employees, individually and as representatives of the corporate
entity (hereinafter collectively referred to as "Releasees"), from any and all
claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, bonuses, controversies, agreements, promises, charges,
complaints, damages, sums of money, interest, attorney's fees and costs, or
causes of action of any kind or nature whatsoever whether in law or equity,
including, but not limited to, all claims arising out of his/her employment or
termination of employment with Employer, such as
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all claims for wrongful discharge, breach of contract, either express or
implied, interference with contract, emotional distress, fraud,
misrepresentation, defamation, claims arising under the Civil Rights Acts of
1964 and 1991 as amended, the Americans With Disabilities Act, the Age
Discrimination in Employment Act (ADEA), the National Labor Relations Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974
(ERISA), the Family and Medical Leave Act, the Pennsylvania Human Relations Act,
the Pennsylvania Wage Payment & Collection Law, the Pennsylvania Minimum Wage
Act of 1968, the Pennsylvania Equal Pay Law, and any and all other claims
arising under federal, state or local law, rule, regulation, constitution,
ordinance or public policy whether known or unknown, arising up to and including
the date of execution of this Release; provided, however that the parties do not
release each other from any claim of breach of the terms of this Release. This
release of rights does not extend to claims that may arise after the date of
this Release. Employee agrees that Employee will not initiate any charge or
complaint or institute any claim or lawsuit against Releasees or any of them
based on any fact or circumstance occurring up to and including the date of the
execution by Employee of this Release.
4 Employee agrees that the payments made and other consideration
received pursuant to this Release are not to be construed as an admission of
legal liability by Releasees or any of them and that no person or entity shall
utilize this Release or the consideration received pursuant to this Release as
evidence of any admission of liability since Releasees expressly deny liability.
5 Employee affirms that the only consideration for the signing of this
Release are the terms stated herein and in the Employment Agreement and that no
other promise or agreement of any kind has been made to Employee by any person
or entity whatsoever to cause Employee to sign this Release.
6 Employee and Employer affirm that the Employment Agreement and this
Release set forth the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior or contemporaneous
agreements or understandings between the parties with respect to the subject
matter contained herein. Further, there are no representations, arrangements or
understandings, either oral or written, between the parties, which are not fully
expressed herein. Finally, no alteration or other modification of this Release
shall be effective unless made in writing and signed by both parties.
7 Employee acknowledges that Employee has been given a period of at
least 21 days within which to consider this Release.
8 Following the execution of this Release, the Employee has a period of
7 days from the date of execution to revoke this Release, and this Release shall
not become effective or enforceable until the revocation period has expired.
9 Employee certifies that Employee has returned to Employer all keys,
identification cards, credit cards, computer and telephone equipment and other
property or information of Employer in Employee's possession, custody, or
control including, but not limited to, any information contained in any computer
files maintained by Employee during Employee's
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employment with Employer. Employee certifies that Employee has not kept the
originals or copies of any documents, files, or other property of Employer which
Employee obtained or received during Employee's employment with Employer.
10 Employee acknowledges that Employer advised Employee to consult with
an attorney prior to executing this Release.
11 Employee affirms that Employee has carefully read this Release, that
Employee fully understands the meaning and intent of this document, that
Employee has signed this Release voluntarily and knowingly, and that Employee
intends to be bound by the promises contained in this Release for the
consideration described in Section 2 above.
IN WITNESS WHEREOF, Employee and the authorized representative of
Employer have executed this Release on the dates indicated below:
C&D TECHNOLOGIES, INC.
Dated:_____________________ By:______________________________
Title:__________________________
Dated:_____________________ ______________________________
Bernie Radecki
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ENDORSEMENT
I, ___________________________________, hereby acknowledge that I was
given 21 days to consider the foregoing Release and voluntarily chose to sign
the Release prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the Commonwealth
of Pennsylvania that the foregoing is true and correct.
EXECUTED this ________ day of ______________, ____, at
_______________________________________, Pennsylvania.
-------------------------------
Bernie Radecki
Exhibit 10.18
March 31, 2000
Mr. Charles Giesige, Sr.
5741 Gladstone Lane
Greendale, WI 53129
Dear Chuck:
You are presently employed by C&D Technologies, Inc., a Delaware
corporation (the "Company"), in an executive capacity and the Company desires to
encourage such continued employment by providing certain protections for you by
entering into this Agreement with you, in return for which you agree to continue
to be employed by the Company on the terms set forth herein, to refrain from
certain competitive activity and to provide the Company with certain assurances
upon your departure. In consideration of same, the Company agrees to employ you,
and you agree to accept such employment, under the following terms and
conditions:
1. TERM OF EMPLOYMENT.
(a) Except for earlier termination as is provided in Section 9 or 10
below, your employment under this Agreement shall be for the period commencing
on the date hereof (the "Effective Date") and terminating on March 1, 2001 (the
"Initial Term").
(b) This Agreement shall be automatically renewed for successive terms
of one month each, unless either party shall have given to the other party at
least 30 days' prior written notice of the termination of this Agreement (a
"Termination Notice"). If such 30 days' prior written notice is given by either
party, (i) the Company shall, without any liability to you, have the right,
exercisable at any time after such notice is sent, to elect any other person to
the office or offices in which you are then serving and to remove you from such
office or offices, but (ii) all other obligations each of you and the Company
have to the other, including the Company's obligation to pay your compensation
and make available the medical and dental insurance to which you are entitled
hereunder, shall continue until the date your employment terminates as specified
in such notice.
<PAGE>
2. COMPENSATION.
(a) You shall be compensated for all services rendered by you under
this Agreement at the rate of $140,000 per annum (such salary, as it is from
time to time adjusted, is herein referred to as the ("Base Salary"). Such Base
Salary shall be payable in periodic installments twice monthly in accordance
with the Company's payroll practices for salaried employees. The Compensation
Committee of the Board of Directors shall review such Base Salary prior to April
1, 2000 and each year thereafter during the term of this Agreement, including
any renewal term, and shall make such adjustments, if any, as the Compensation
Committee shall determine; provided, however, that no adjustment shall reduce
the Base Salary below $140,000.
(b) If your employment hereunder shall be terminated (i) by the Company
without notice of Cause (as defined in Section 9(c)) therefor having been given
to you (other than pursuant to Section 9(a) or 9(b) and notwithstanding the
provisions of Section 1(a)), or (ii) as a result of the non-renewal of this
Agreement pursuant to a Termination Notice given by the Company under Section
1(b) then, in addition to paying you the Accrued Obligations (as hereinafter
defined), for a one-year period after the effective date of such termination,
the Company shall pay you at the rate of your Base Salary in effect at the time
of such termination in periodic payments in accordance with the Company's
payroll practices for salaried employees; provided, however, that your right to
receive such payments, other than the Accrued Obligations, shall be conditioned
upon your execution of a Release (the "Release"). Such Release shall be
substantially in the form of Exhibit A hereto but may be modified by the Company
in its sole discretion as it deems appropriate to reflect changes in law or
circumstances arising after the date of this Agreement; provided, however, that
no such modification shall increase any of your obligations to the Company over
those contemplated by this Agreement, including Exhibit A hereto. The term
"Accrued Obligations" shall mean (i) your Base Salary through the date of
termination and (ii) all benefits that have accrued to you under the terms of
all employee benefits plans of the Company in which you are entitled to
participate.
3. DUTIES.
(a) During the term of your employment hereunder, including any renewal
thereof, you agree to serve as the Vice President, General Manager of the
Dynasty Division (the "Division") or in such other capacity with duties and
responsibilities of a similar nature as those initially undertaken by you
hereunder as the President of the Company may from time to time determine. Your
duties may be changed at any time and from time to time hereafter, upon mutual
agreement, consistent with office or offices in which you serve as deemed
necessary by the President of the Company. You also agree to perform such other
services and duties consistent with the office or offices in which you are
serving and its responsibilities as may from time to time be prescribed by the
Board of Directors, and you also agree to serve, if elected, as an officer
and/or director of the Company and/or any of the Company's other direct or
indirect subsidiaries without additional compensation, in all cases in
conformity to the by-laws of each such corporation. Unless you otherwise agree,
you shall not be required to relocate your place of business to a location that
would increase your commuting distance by greater than 25 miles.
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(b) You shall devote your full employment energies, interest,
abilities, time and attention during normal business hours (excluding the
vacation periods provided in Section 4(b) below) exclusively to the business and
affairs of the Company, its parent corporation and subsidiaries, if any, and
shall not engage in any activity that conflicts or interferes with the
performance of duties hereunder.
(c) You agree to cooperate with the Company, including taking such
reasonable medical examinations as may be necessary, in the event the Company
shall desire or be required (such as pursuant to the terms of any bank loan or
any other agreement) to obtain life insurance insuring your life.
(d) You shall, except as otherwise provided herein, be subject to the
Company's rules, practices and policies applicable to the Company's senior
executive employees. Without limiting the generality of the foregoing, you
shall, with respect to the Company and its parents, subsidiaries, assets and
stockholders, act in a manner consistent with your fiduciary responsibilities as
an executive of the Company.
4. BENEFITS.
(a) You shall have the benefit of such life and medical insurance,
bonus, stock option and other similar plans as the Company may have or may
establish from time to time, and in which you would be entitled to participate
by reason of your position with the Company, pursuant to the terms thereof.
Also, to the extent you have met the qualifications required, you may
participate in the Company's savings and retirement plans. The foregoing,
however, shall not be construed to require the Company to establish any such
plans or to prevent the Company from modifying or terminating any such plans,
and no such action or failure thereof shall affect this Agreement.
(b) You shall be entitled to a vacation of four weeks each year.
(c) The Company will provide you with an annual physical examination.
5. EXPENSES.
The Company will reimburse you for reasonable expenses (consistent with
Company policy), including traveling expenses, incurred by you in connection
with the business of the Company, upon the presentation by you of appropriate
substantiation for such expenses.
6. RESTRICTIVE COVENANTS.
(a) During such time as you shall be employed by the Company, and for
the applicable Restricted Period (as defined below) thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in, represent, advise or
otherwise participate as an officer, employee, director, stockholder, partner,
agent of or consultant for, any business that, at the time your employment with
the Company ceases,
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is competitive with the business in which the Company is engaged or in which the
Company has taken affirmative steps to engage (a "Competitive Business");
provided, however, that nothing herein (i) shall prevent you from investing
without limit in the securities of any company listed on a national securities
exchange, provided that your involvement with any such company is solely that of
a stockholder, and (ii) is intended to prevent you from being employed during
the applicable Restricted Period by any business other than a Competitive
Business. With respect to any termination of your employment other than upon a
Change of Control pursuant to Section 10, the applicable Restricted Period shall
be the one-year period following the date your employment terminates, and with
respect to a termination of your employment upon a Change of Control pursuant to
Section 10, the applicable Restricted Period shall be the two-year period
following the date your employment terminates.
(b) The parties hereto intend that the covenant contained in this
Section 6 shall be deemed a series of separate covenants for each state, county
and city. If, in any judicial proceeding, a court shall refuse to enforce all
the separate covenants deemed included in this Section 6, because, taken
together, they cover too extensive a geographic area, the parties intend that
those of such covenants (taken in order of the states, counties and cities
therein which are least populous), which, if eliminated, would permit the
remaining separate covenants to be enforced in such proceeding, shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 6.
7. CONFIDENTIALITY, NON-INTERFERENCE, INVENTIONS AND PROPRIETARY
INFORMATION.
(a) In the course of (i) your employment with the Company hereunder,
and (ii) any prior employment with the Company, you will have and have had
access to Confidential or Proprietary Data or Information of the Company. You
shall not at any time divulge or communicate to any person nor shall you direct
any Company employee to divulge or communicate to any person (other than to a
person bound by confidentiality obligations similar to those contained herein
and other than as necessary in performing your duties hereunder) or use to the
detriment of the Company any of such Confidential or Proprietary Data or
Information, except to the extent the same (i) becomes publicly known other than
through a breach of this Agreement by you, (ii) was known to you prior to the
disclosure thereof by the Company to you from a source that was entitled to
disclose it or (iii) is subsequently disclosed to you by a third party who shall
not have receive it under any obligation of confidentiality to the Company. The
term "Confidential or Proprietary Data or Information" as used in this
Agreement, shall mean data or information not generally available to the public,
including personnel information, financial information, customer lists, supplier
lists, product and tooling specifications, trade secrets, information concerning
product composition and formulas, tools and dies, drawings and schematics,
manufacturing processes, information regarding operations, systems and services,
knowhow, computer and any other electronic, processed or collated data, computer
programs, and pricing, marketing, sales and advertising data.
(b) You shall not, during the term of this Agreement and for the
applicable Restricted Period after the termination of your employment by the
Company, for your own account or for the account of any other person, (i)
solicit or divert to any Competitive Business any individual or entity
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who is a customer of the Company or any subsidiary or affiliate of the Company
or who was a customer of the Company or any subsidiary or affiliate during the
preceding twelve-month period, (ii) employ, retain as a consultant, attempt to
employ or retain as a consultant, solicit or assist any Competitive Business in
employing or retaining as a consultant any current employee of the Company or
any subsidiary or affiliate or any person who was employed by the Company or any
subsidiary or affiliate during the preceding twelve-month period or (iii)
otherwise interfere with the Company's relationship with any of its suppliers,
customers, employees or consultants; provided, however, that you shall not be
prohibited from contacting suppliers or customers after termination of your
employment with regard to matters that do not violate your noncompetition or
confidentiality obligations contained in Sections 6(a) and 7(a) or interfere
with the Company's relationship with such parties.
(c) It is understood that you may, during your employment, conceive or
develop certain inventions, innovations or discoveries related to any business
in which the Company may be engaged, either solely or jointly with others. In
connection with the conception or development thereof, you agree to disclose
promptly to the Company all such inventions, innovations and discoveries, to
assign, and hereby do assign, to the Company all of your right, title and
interest in and to said inventions, innovations and discoveries, and to do all
things and sign all documents deemed by the Company to be necessary or
appropriate to vest in the Company, its successors and assigns, all of your
right, title and interest in and to such inventions, innovations or discoveries,
and to procure for the Company, at the Company's expense, patents, copyrights
and/or trademarks covering such inventions, innovations or discoveries in the
United States and its possessions and in foreign countries, at the discretion
and under the direction of the Company. In the event the Company is unable for
any reason to assure your signature on such documents, you irrevocably appoint
the Company and its duly authorized officers and agents as your agents and
attorneys-in-fact to execute such documents and to do such things with the same
legal force and effect as if executed or done by you.
(d) All written, electronic and other tangible materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company, or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon request of the Company during your
employment, you shall promptly deliver the same to the Company. In addition,
upon termination of your employment, or upon request of the Company during your
employment, you will deliver to the Company all other Company property in your
possession or under your control, including, but not limited to, financial
statements, marketing and sales data, patent applications, drawings and other
documents, and all Company keys, credit cards, computer and telephone equipment
and automobiles.
8. EQUITABLE RELIEF. With respect to the covenants contained in
Sections 6 and 7 of this Agreement, you agree that any remedy at law for any
breach of said covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of injunctive and/or other
equitable relief to enforce its rights hereunder or any other relief a court
might award.
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9. EARLIER TERMINATION. Your employment hereunder shall terminate prior
to the Initial Term (or any renewal term, in the event of renewal) on the
following terms and conditions:
(a) This Agreement shall terminate automatically on the date of your
death. Notwithstanding the foregoing, if you die during the term of this
Agreement, the Company shall (i) continue to make payments to your estate of
your Base Salary as then in effect pursuant to this Agreement for 180 days after
the date of your death, and (ii) pay your estate any reimbursable expenses which
otherwise would have been paid to you to the date of your death.
(b) This Agreement shall be terminated if you are unable to perform
your duties hereunder for a period of any 180 days in any 365 consecutive day
period by reason of physical or mental disability. Notwithstanding the
foregoing, if this Agreement is terminated pursuant to this Section 9(b), the
Company shall pay any accrued but unpaid Base Salary through the date of
termination and any reimbursable expenses due to you hereunder. For purposes of
this Agreement "physical or mental disability" shall mean your inability, due to
health reasons, to discharge properly your duties of employment, supported by
the opinion of a physician satisfactory to both you and the Company. If the
parties do not agree on a physician mutually satisfactory to both of you and the
Company within ten days of written demand by one or the other, a physician shall
be selected by the president of the Pennsylvania Medical Association, and the
physician shall, within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. Services of the physician
shall be paid for by the Company. You shall fully cooperate with the examining
physician including submitting yourself to such examinations as may be requested
by the physician for the purpose of determining whether you are disabled.
(c) This Agreement shall terminate immediately upon the Company's
sending you written notice terminating your employment hereunder for Cause. The
Company may terminate this Agreement for Cause, but only after written notice
specifying the Cause of such action shall have been rendered to you by the
President of the Company. "Cause" shall mean any of the following:
(i) Breach of this Agreement.
(ii) Refusal or inability (other than pursuant to Section 9(a)
or 9(b)) to perform duties assigned to you in accordance with the terms of this
Agreement or overt and willful disobedience of orders or directives issued to
you by the Company and within the scope of your duties to the Company.
(iii) Willful misconduct in the performance of your duties,
functions and responsibilities.
(iv) Commission of acts that are illegal in connection with
the performance of your duties, functions and responsibilities under this
Agreement.
(v) Commission of acts that would constitute a felony offense
during the term of this Agreement.
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(vi) Violation of Company rules and regulations concerning
conflict of interest.
(vii) Gross mismanagement of the assets of the Company.
(viii) Gross incompetence, gross insubordination or gross
neglect in the performance of your duties hereunder or being under the habitual
influence of alcohol while on duty or possession, use, manufacture,
distribution, dispensation or sale of illegal drugs while on or off duty.
(ix) Any act or omission, whether or not included in the
foregoing, that a court of competent jurisdiction would determine to constitute
cause for termination.
Existence of Cause shall be conclusively determined for all purposes hereunder
by the President of the Company. Such advice and consultation shall be utilized
as such officer regards as appropriate, and no obligation or duty with respect
to any procedure or formality is created by this Agreement. If the Company
terminates this Agreement for Cause under this Section 9(c), the Company shall
not be obligated to make any further payments under this Agreement except for
the Accrued Obligations.
(d) Except as set forth in Section 10, your coverage under the benefits
program provided by the Company will cease effective on your termination date.
You will be entitled to elect continuation of your medical and dental benefits
at the same cost the Company pays, pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Details with regard to
COBRA continuation coverage will be provided to you shortly after your
termination date.
(e) Except as set forth in Section 10, life insurance coverage will
cease upon your termination date. You may, however, apply to General American
Life Insurance Company (or such other insurance company as may provide group
life insurance to the Company's employees at the time) for an individual
converted life policy, with such application and payment of the first premium
required to be accomplished within 31 days after your termination date. Details
regarding this conversion option will be provided to you shortly after your
termination date.
(f) Accidental death and dismemberment and long term disability
coverages cease with your termination date and may not be extended or converted.
10. TERMINATION UPON A CHANGE OF CONTROL.
(a) In the event a Change of Control (as defined below) occurs, and
within 24 months after such Change of Control: (i) your employment with the
Company is terminated by you pursuant to a Termination for Good Reason (as
defined below); or (ii) your employment with the Company is terminated by the
Company for any reason other than death, disability or for Cause pursuant to
Sections 9(a), (b) or (c); or (iii) this Agreement is not renewed due to a
Termination Notice given by the Company, as provided in Section 1(b), (the
events under clauses (i), (ii) and (iii) herein collectively called a "Change of
Control Termination"), you shall be entitled to receive the payments and
benefits set forth in Section 10(e) and (f) below, which payments and benefits
shall be in
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substitution for, and not in addition to, the payments and benefits otherwise
payable under Section 2(a) or 2(b) of this Agreement in the event of
termination. Your right to receive such payments and benefits, other than the
Accrued Obligations, shall be in consideration of your agreements under this
Agreement, including but not limited to your agreement not to compete with the
Company for two years after a Change of Control pursuant to Section 6, and shall
be conditioned upon your execution of a Release. Such Release shall be
substantially in the form of Exhibit A but may be modified by the Company as it
deems appropriate to reflect changes in law or circumstances arising after the
date of this Agreement; provided that no such modification shall increase any of
your obligations to the Company over those contemplated by this Agreement,
including Exhibit A hereto.
(b) For purposes of the Agreement, a "Change of Control" shall be
deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof)), excluding the Company, any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of any such plan acting in his capacity as
trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange
Act, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of shares of the Company having at least 30% of the total number of votes
that may be cast for the election of directors of the Company; (ii) the
shareholders of the Company shall approve any merger or other business
combination of the Company, sale of all or substantially all of the Company's
assets or combination of the foregoing transactions (a "Transaction"), other
than a Transaction involving only the Company and one or more of its
subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
shareholder of the Company owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction) and no person is the
beneficial owner of at least 30% of the shares of the resulting entity as
contemplated by Section 10(b)(i) above; or (iii) within any 24-month period
beginning on or after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
as of the date hereof shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
10(b)(iii), unless such election, recommendation or approval was the result of
an actual or threatened election contest of the type contemplated by Regulation
14a-11 under the Exchange Act or any successor provision. Notwithstanding the
foregoing, no Change of Control of the Company shall be deemed to have occurred
for purposes of this Agreement by reason of any actions or events in which you
participate in a capacity other than in your capacity as an executive or
director of the Company.
(c) For purposes of the Agreement, a "Termination for Good Reason"
means a termination by you by written notice given within 90 days after the
occurrence of the Good Reason event. A notice of Termination for Good Reason
shall indicate the specific termination provision in Section 10(d) relied upon
and shall set forth in reasonable detail the facts and circumstances
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claimed to provide a basis for Termination for Good Reason. Your failure to set
forth in such notice any facts or circumstances that contribute to the showing
of Good Reason shall not waive any of your rights hereunder or preclude you from
asserting such fact or circumstance in enforcing your rights hereunder. The
notice of Termination for Good Reason shall provide for a date of termination
not less than 10 nor more than 60 days after the date such Notice of Termination
for Good Reason is given.
(d) For purposes of the Agreement, "Good Reason" shall mean the
occurrence, without your express written consent, of any of the following
circumstances, unless such circumstances are fully corrected prior to the date
of termination specified in the notice of Termination for Good Reason as
contemplated in Section 10(c) above: (i) any material diminution of your
positions, duties or responsibilities hereunder (except in each case in
connection with the termination of your employment for Cause pursuant to Section
9(c) or due to disability or death pursuant to Section 9(a) or 9(b) or
temporarily as a result of your illness or other absence), or the assignment to
you of duties or responsibilities that are inconsistent with your position under
the Agreement at the time of a Change of Control; (ii) your removal from, or
your nonreelection to, the officer positions with the Company specified in this
Agreement; (iii) relocation of the Division's principal executive offices to a
location more than 25 miles from its location at the time of the Change of
Control; (iv) failure by the Company, after a Change of Control, (A) to continue
any bonus plan, program or arrangement in which you are entitled to participate
immediately prior to the Change of Control (the "Bonus Plans"), provided that
any such Bonus Plans may be modified at the Company's discretion from time to
time but shall be deemed terminated if (x) any such plan does not remain
substantially in the form in effect prior to such modification and (y) if plans
providing you with substantially similar benefits are not substituted therefor
("Substitute Plans"), or (B) to continue you as a participant in the Bonus Plans
and Substitute Plans on at least the same basis as to potential amount of the
bonus and substantially the same level of criteria for achievability thereof as
you participated in immediately prior to any change in such plans or awards, in
accordance with the Bonus Plans and the Substitute Plans; (v) any material
breach by the Company of any provisions of this Agreement; or (vi) failure of
any successor to the Company to promptly acknowledge in writing the obligations
of the Company hereunder.
(e) Upon a Change of Control Termination, as provided in Section 10(a),
the Company shall pay or provide you the following payments and benefits:
(i) The Company shall pay to you the Accrued Obligations in a
lump sum within five business days after the date of termination.
(ii) The Company shall pay to you as severance pay, not later
than the tenth day following the date of your execution and delivery of the
Release required pursuant to Section 10(a) of this Agreement:
(A) a lump sum payment in an amount equal to two years
of your Base Salary; and
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(B) a lump sum payment in an amount equal to two of
your annual incentive bonuses, such payment to be equal to the greater of (i)
the amount of all incentive bonuses paid to you with respect to each of the two
most recently completed fiscal years of the Company for which a bonus has been
paid or (ii) the incentive bonus paid to you with respect to the most recently
completed fiscal year of the Company for which a bonus has been paid plus an
amount equal to your Target Bonus (as hereinafter defined); provided, however,
that if you have been employed by the Company for less than two years, such
payment shall be equal to the greater of (x) the amount of the incentive bonus
paid to you with respect to the most recently completed fiscal year of the
Company for which a bonus has been paid plus your Target Bonus or (y) the amount
of your Target Bonus multiplied by two. The term "Target Bonus" shall mean the
incentive bonus that would have been payable for the fiscal year that includes
the date on which your employment terminates under the incentive bonus program
in effect as of the date of the Change of Control, assuming that you had been
entitled to receive an amount in respect of such bonus based solely upon the
target percentage applicable to employees in the same employment grade as you
and your Base Salary as of the date of termination (or if greater, your Base
Salary as of the date on which occurred an event giving rise to a Change of
Control Termination), and without regard to actual performance.
(iii) The Company shall continue the participation of you and
your dependents for a period of two years after the date of termination in all
health, medical and accident, life and other welfare plans (as defined in
Section 3(l) of ERISA), in which you were participating immediately prior to the
date of termination, except for any disability plans; provided, however, that to
the extent the Company's plans do not permit such continued participation or
such participation would have an adverse tax impact on such plans or on the
other participants in such plans, the Company may instead provide materially
equivalent benefits to you outside of such plans; provided, further, that under
such circumstances, (i) medical insurance benefits may be provided by the
Company paying any COBRA premiums (COBRA coverage, in any event, to be measured
from the date of termination of employment) and (ii) if the Company is unable to
continue your life insurance coverage, the Company shall pay you an amount equal
to twice the premium paid during the year prior to termination or if you convert
the insurance to an individual policy, the Company shall pay the premium for
such insurance for two years. You shall complete such forms and take such
physical examinations as reasonably requested by the Company. To the extent you
incur any tax obligation as a result of the provisions of this Section 10(e)
that you would not have incurred if you remained an employee of the Company and
had continued to participate in the benefit plans as an employee, the Company
shall pay to you, at the time the tax is due, an amount to cover such taxes and
the taxes on the amount paid to cover such taxes.
(iv) All outstanding stock options and restricted stock awards
that have been granted to you by the Company at any time but have not yet vested
and upon which vesting depends solely upon the passage of time, shall
immediately vest or become nonforfeitable, as the case may be. In the event the
foregoing sentence becomes applicable, the Company agrees to cause the Board of
Directors to take all steps necessary to implement the foregoing sentence.
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(v) All amounts payable to you upon a Change of Control under
the Company's Supplemental Executive Retirement Plan and Deferred Compensation
Plan shall be paid to you in accordance with the respective terms of those
plans.
(vi) The Company, at its expense, shall provide you with
outplacement services at a level appropriate for the most senior executive
employees through an outplacement firm of your choice for a period of up to one
year after the date of the Change of Control Termination.
(f) (i) In the event that any payment, coverage or benefit
(collectively, the "Covered Benefits") provided to you by the Company or an
Affiliate (as defined below) is or becomes subject to the excise tax imposed
under Section 4999 or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code"), or you incur interest or penalties with respect
to that excise tax (that excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the Company shall
pay you an additional amount (a "Gross-Up Bonus") at the time or times specified
in Section 10(f)(iii)(z) below. The amount of the Gross-Up Bonus shall equal the
quotient determined by dividing (x) the Excise Tax attributable to the Covered
Benefits by (y) one minus the highest marginal income tax rate, where the term
"highest marginal income tax rate" means the sum of the highest combined local,
state and federal personal income tax rates (including any state unemployment
compensation tax rate, any surtax rate as well as the Medicare hospital
insurance tax rate imposed on employees under the Federal Insurance
Contributions Act) as in effect for the calendar year to which the Excise Tax
attributable to the Covered Benefits relates, provided that in determining the
highest tax rate for federal purposes both the deductibility of state and local
income tax payments and the reduction in the deductibility of itemized
deductions shall be taken into account; it being the intention of the parties
hereto that your net after tax position (after taking into account any interest
or penalties imposed with respect to such taxes) upon receipt of the Covered
Benefits is no less advantageous to you than the net after tax position you
would have had if Section 4999 of the Code had not been applicable to any
portion of the Covered Benefits.
(ii) All determinations to be made under this Section 10(f),
including the determination of whether an Excise Tax is payable and the amount
thereof, shall be made by a law firm practicing in the Philadelphia,
Pennsylvania metropolitan area that is knowledgeable in tax law matters, which
firm shall be selected and paid for by the Company and acceptable to you. If tax
counsel's determinations are not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be computed (with a
Gross-Up Bonus, if applicable) by that tax counsel based upon the final amount
of the Excise Tax so determined.
(iii) For purposes of this Section 10(f):
(x) An "Affiliate" shall mean any successor
to the Company, any member of an affiliated group including the Company
(determining using the definition in Section 1504 of the Code) or any entity
that becomes a member of such an affiliated group as a result of the transaction
causing the Change of Control.
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(y) When determining the amount of the Gross-Up
Bonus, you will be deemed to have otherwise allowable deductions for federal,
state and local tax purposes at least equal to those disallowed because of the
inclusion of the Gross-Up Bonus in your adjusted gross income.
(z) The portion of the Gross-Up Bonus attributable
to a Covered Benefit shall be paid to you within 10 business days following the
provision to you of the Covered Benefit. In the event that the amount of Excise
Tax due exceeds the amount of Excise Tax determined by tax counsel, the Company
shall pay you an additional Gross-Up Bonus in respect of that excess at the time
that the amount of the excess is determined under Section 10(f)(ii). In the
event the amount of Excise Tax due is less than the amount of Excise Tax
determined by tax counsel, you shall repay the Company the portion of the
Gross-Up Bonus attributable thereto at the time that the amount of the reduction
in Excise Tax is determined under Section 10(f)(ii); provided, however, that if
any portion of the amount you must repay to the Company has been paid to any
federal, state or local tax authority, your repayment of that portion shall be
postponed until the tax authority has actually refunded or credited that amount
to you.
(g) Upon the occurrence of a Change of Control, if the Company fails to
perform any of its obligations under this Agreement or the Company or any other
person asserts the invalidity of any provision of this Agreement and you incur
any costs in successfully enforcing or defending any of the provisions of this
Agreement, including legal fees and expenses and court costs, the Company shall
reimburse you for all such costs incurred by you.
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with
Exhibit A hereto and all rights to which you are entitled under all employee
benefit plans in which you participate, constitutes the full and complete
understanding of the parties, and will, on the Effective Date, supersede all
prior agreements and understandings, oral or written, between the parties;
provided, however, that if the terms of any of such employee benefit plan shall
be inconsistent with the provisions of the Agreement, the provisions of this
Agreement shall control. This Agreement may not be modified or amended except by
an instrument in writing signed by the party against which enforcement thereof
may be sought. Each party to this Agreement, acknowledges that no
representations, inducements, promises or agreements, oral or written, have been
made by either party or anyone acting on behalf of either party, which are not
embodied herein and that no other agreement, statement or promise not set forth
or referred to in this Agreement shall be valid or binding.
12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
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<PAGE>
13. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach.
14. NO MITIGATION REQUIRED. Upon a termination of your employment by
the Company without Cause pursuant to Section 2(b) or upon a Change of Control
pursuant to Section 10, you shall have no obligation to seek other employment
but shall not be prohibited from doing so, and no compensation paid to you as
the result of any other employment shall reduce any payment required to be made
by the Company hereunder.
15. NOTICES. All notices hereunder shall be in writing and shall be
sent by express mail or by certified or registered mail, postage prepaid, return
receipt requested: if to you, to your residence as listed in the Company's
records; and if to the Company, to the address set forth above with copies to
the President.
16. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be assigned
by either party, except that it may be assigned by the Company to an acquirer of
all or substantially all of the assets of the Company or other successor to the
Company, subject to your rights arising from a change of control as provided in
Section 10. This Agreement shall be binding upon and inure to the benefit of
you, your legal representatives, heirs and distributees, and shall be binding
upon and inure to the benefit of the Company, its successors and assigns.
17. NONDISPARAGEMENT. You agree not to publicly or privately disparage
the Company, its personnel, products or services either during or upon
termination of your employment with the Company.
18. SURVIVAL. All of the provisions of this Agreement that by their
terms are to be performed or that otherwise are to endure after the termination
of your employment by the Company shall survive the termination of your
employment and shall continue in effect for the respective periods therein
provided or contemplated.
19. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
20. HEADINGS. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
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21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
If this Agreement correctly sets forth our understanding, please sign
the duplicate original in the space provided below and return it to the Company,
whereupon this shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
C&D TECHNOLOGIES, INC.
By: /s/ Wade H. Roberts, Jr.
---------------------------
Title: President and CEO
Agreed as of the date first above written:
/s/ Charles R Giesige, Sr.
- --------------------------------
Charles R Giesige, Sr.
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EXHIBIT A
RELEASE
This Release is made this _____ day of _______________, ____ by and
between C&D Technologies, Inc. ("Employer") and _________________ ("Employee").
Recitals:
WHEREAS, the parties are parties to an Employment Agreement (the
"Employment Agreement") dated __________, pursuant to which Employee was
employed by Employer; and
WHEREAS, the Employment Agreement has terminated; and
WHEREAS, your execution and delivery of this Release is a condition to
the Employer's obligations to pay certain compensation and benefits to you under
the Employment Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1. As of _____________________, ____, Employee's employment with
Employer shall terminate, and Employee shall have no further job
responsibilities to perform for Employer; provided, however, that Employee shall
cooperate with Employer in transitioning Employee's job responsibilities as
Employer shall reasonably request, provided that Employee shall be entitled to
receive reasonable compensation for any services rendered after such date and
shall not be obligated to take any action that would interfere with any
subsequent employment of Employee or otherwise result in economic hardship to
Employee.
2. Employer shall pay to the Employee the amounts contemplated pursuant
to Section __ of the Employment Agreement, less applicable deductions; provided
however, the first payment shall not be due and payable until ten days after the
execution by Employee and delivery to Employer of this Release.
3. For and in consideration of the monies and benefits paid to Employee
by Employer, as more fully described in Section 2 above, and for other good and
valuable consideration, Employee hereby waives, releases and forever discharges
Employer, its assigns, predecessors, successors, and affiliated entities, and
its current or former stockholders, officers, directors, administrators, agents,
servants and employees, individually and as representatives of the corporate
entity (hereinafter collectively referred to as "Releasees"), from any and all
claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, bonuses, controversies, agreements, promises, charges,
complaints, damages, sums of money, interest, attorney's fees and costs, or
causes of action of any kind or nature whatsoever whether in law or equity,
including, but not limited to, all claims arising out of his/her employment or
termination of employment with Employer, such as
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all claims for wrongful discharge, breach of contract, either express or
implied, interference with contract, emotional distress, fraud,
misrepresentation, defamation, claims arising under the Civil Rights Acts of
1964 and 1991 as amended, the Americans With Disabilities Act, the Age
Discrimination in Employment Act (ADEA), the National Labor Relations Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974
(ERISA), the Family and Medical Leave Act, the Pennsylvania Human Relations Act,
the Pennsylvania Wage Payment & Collection Law, the Pennsylvania Minimum Wage
Act of 1968, the Pennsylvania Equal Pay Law, and any and all other claims
arising under federal, state or local law, rule, regulation, constitution,
ordinance or public policy whether known or unknown, arising up to and including
the date of execution of this Release; provided, however that the parties do not
release each other from any claim of breach of the terms of this Release. This
release of rights does not extend to claims that may arise after the date of
this Release. Employee agrees that Employee will not initiate any charge or
complaint or institute any claim or lawsuit against Releasees or any of them
based on any fact or circumstance occurring up to and including the date of the
execution by Employee of this Release.
4 Employee agrees that the payments made and other consideration
received pursuant to this Release are not to be construed as an admission of
legal liability by Releasees or any of them and that no person or entity shall
utilize this Release or the consideration received pursuant to this Release as
evidence of any admission of liability since Releasees expressly deny liability.
5 Employee affirms that the only consideration for the signing of this
Release are the terms stated herein and in the Employment Agreement and that no
other promise or agreement of any kind has been made to Employee by any person
or entity whatsoever to cause Employee to sign this Release.
6 Employee and Employer affirm that the Employment Agreement and this
Release set forth the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior or contemporaneous
agreements or understandings between the parties with respect to the subject
matter contained herein. Further, there are no representations, arrangements or
understandings, either oral or written, between the parties, which are not fully
expressed herein. Finally, no alteration or other modification of this Release
shall be effective unless made in writing and signed by both parties.
7 Employee acknowledges that Employee has been given a period of at
least 21 days within which to consider this Release.
8 Following the execution of this Release, the Employee has a period of
7 days from the date of execution to revoke this Release, and this Release shall
not become effective or enforceable until the revocation period has expired.
9 Employee certifies that Employee has returned to Employer all keys,
identification cards, credit cards, computer and telephone equipment and other
property or information of Employer in Employee's possession, custody, or
control including, but not limited to, any information contained in any computer
files maintained by Employee during Employee's
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employment with Employer. Employee certifies that Employee has not kept the
originals or copies of any documents, files, or other property of Employer which
Employee obtained or received during Employee's employment with Employer.
10 Employee acknowledges that Employer advised Employee to consult with
an attorney prior to executing this Release.
11 Employee affirms that Employee has carefully read this Release, that
Employee fully understands the meaning and intent of this document, that
Employee has signed this Release voluntarily and knowingly, and that Employee
intends to be bound by the promises contained in this Release for the
consideration described in Section 2 above.
IN WITNESS WHEREOF, Employee and the authorized representative of
Employer have executed this Release on the dates indicated below:
C&D TECHNOLOGIES, INC.
Dated:_____________________ By:______________________________
Title:__________________________
Dated:_____________________ ______________________________
Charles R Giesige, Sr.
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ENDORSEMENT
I, ___________________________________, hereby acknowledge that I was
given 21 days to consider the foregoing Release and voluntarily chose to sign
the Release prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the Commonwealth
of Pennsylvania that the foregoing is true and correct.
EXECUTED this ________ day of ______________, ____, at
_______________________________________, Pennsylvania.
-------------------------------
Charles R. Giesige, Sr.
A-4
Exhibit 10.19
March 31, 2000
Mr. John J. Murray, Jr.
4100 Meadow Lane
Newtown Square, PA 19073
Dear John:
You are presently employed by C&D Technologies, Inc., a Delaware
corporation (the "Company"), in an executive capacity and the Company desires to
encourage such continued employment by providing certain protections for you by
entering into this Agreement with you, in return for which you agree to continue
to be employed by the Company on the terms set forth herein, to refrain from
certain competitive activity and to provide the Company with certain assurances
upon your departure. In consideration of same, the Company agrees to employ you,
and you agree to accept such employment, under the following terms and
conditions:
1. TERM OF EMPLOYMENT.
(a) Except for earlier termination as is provided in Section 9 or 10
below, your employment under this Agreement shall be automatically renewed for
successive terms of one month each, unless either party shall have given to the
other party at least 30 days' prior written notice of the termination of this
Agreement (a "Termination Notice"). If such 30 days' prior written notice is
given by either party, (i) the Company shall, without any liability to you, have
the right, exercisable at any time after such notice is sent, to elect any other
person to the office or offices in which you are then serving and to remove you
from such office or offices, but (ii) all other obligations each of you and the
Company have to the other, including the Company's obligation to pay your
compensation and make available the medical and dental insurance to which you
are entitled hereunder, shall continue until the date your employment terminates
as specified in such notice.
2. COMPENSATION.
(a) You shall be compensated for all services rendered by you under
this Agreement at the rate of $142,000 per annum (such salary, as it is from
time to time adjusted, is herein referred to as the ("Base Salary"). Such Base
Salary shall be payable in periodic installments twice monthly in accordance
with the Company's payroll practices for salaried employees. The Compensation
<PAGE>
Committee of the Board of Directors shall review such Base Salary prior to April
1, 2000 and each year thereafter during the term of this Agreement, including
any renewal term, and shall make such adjustments, if any, as the Compensation
Committee shall determine; provided, however, that no adjustment shall reduce
the Base Salary below $142,000.
(b) If your employment hereunder shall be terminated (i) by the Company
without notice of Cause (as defined in Section 9(c)) therefor having been given
to you (other than pursuant to Section 9(a) or 9(b)), or (ii) as a result of the
non-renewal of this Agreement pursuant to a Termination Notice given by the
Company under Section 1(a) then, in addition to paying you the Accrued
Obligations (as hereinafter defined), for a one-year period after the effective
date of such termination, the Company shall pay you at the rate of your Base
Salary in effect at the time of such termination in periodic payments in
accordance with the Company's payroll practices for salaried employees;
provided, however, that your right to receive such payments, other than the
Accrued Obligations, shall be conditioned upon your execution of a Release (the
"Release"). Such Release shall be substantially in the form of Exhibit A hereto
but may be modified by the Company in its sole discretion as it deems
appropriate to reflect changes in law or circumstances arising after the date of
this Agreement; provided, however, that no such modification shall increase any
of your obligations to the Company over those contemplated by this Agreement,
including Exhibit A hereto. The term "Accrued Obligations" shall mean (i) your
Base Salary through the date of termination and (ii) all benefits that have
accrued to you under the terms of all employee benefits plans of the Company in
which you are entitled to participate.
3. DUTIES.
(a) During the term of your employment hereunder, including any renewal
thereof, you agree to serve as the Vice President & General Manager Motive Power
Division (the "Division") or in such other capacity with duties and
responsibilities of a similar nature as those initially undertaken by you
hereunder as the President of the Company may from time to time determine. Your
duties may be changed at any time and from time to time hereafter, upon mutual
agreement, consistent with office or offices in which you serve as deemed
necessary by the President of the Company. You also agree to perform such other
services and duties consistent with the office or offices in which you are
serving and its responsibilities as may from time to time be prescribed by the
Board of Directors, and you also agree to serve, if elected, as an officer
and/or director of the Company and/or any of the Company's other direct or
indirect subsidiaries without additional compensation, in all cases in
conformity to the by-laws of each such corporation. Unless you otherwise agree,
you shall not be required to relocate your place of business to a location that
would increase your commuting distance by greater than 25 miles.
(b) You shall devote your full employment energies, interest,
abilities, time and attention during normal business hours (excluding the
vacation periods provided in Section 4(b) below) exclusively to the business and
affairs of the Company, its parent corporation and subsidiaries, if any, and
shall not engage in any activity that conflicts or interferes with the
performance of duties hereunder.
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(c) You agree to cooperate with the Company, including taking such
reasonable medical examinations as may be necessary, in the event the Company
shall desire or be required (such as pursuant to the terms of any bank loan or
any other agreement) to obtain life insurance insuring your life.
(d) You shall, except as otherwise provided herein, be subject to the
Company's rules, practices and policies applicable to the Company's senior
executive employees. Without limiting the generality of the foregoing, you
shall, with respect to the Company and its parents, subsidiaries, assets and
stockholders, act in a manner consistent with your fiduciary responsibilities as
an executive of the Company.
4. BENEFITS.
(a) You shall have the benefit of such life and medical insurance,
bonus, stock option and other similar plans as the Company may have or may
establish from time to time, and in which you would be entitled to participate
by reason of your position with the Company, pursuant to the terms thereof.
Also, to the extent you have met the qualifications required, you may
participate in the Company's savings and retirement plans. The foregoing,
however, shall not be construed to require the Company to establish any such
plans or to prevent the Company from modifying or terminating any such plans,
and no such action or failure thereof shall affect this Agreement.
(b) You shall be entitled to a vacation of four weeks each year.
(c) The Company will provide you with an annual physical examination.
5. EXPENSES. The Company will reimburse you for reasonable expenses
(consistent with Company policy), including traveling expenses, incurred by you
in connection with the business of the Company, upon the presentation by you of
appropriate substantiation for such expenses.
6. RESTRICTIVE COVENANTS.
(a) During such time as you shall be employed by the Company, and for
the applicable Restricted Period (as defined below) thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in, represent, advise or
otherwise participate as an officer, employee, director, stockholder, partner,
agent of or consultant for, any business that, at the time your employment with
the Company ceases, is competitive with the business in which the Company is
engaged or in which the Company has taken affirmative steps to engage (a
"Competitive Business"); provided, however, that nothing herein (i) shall
prevent you from investing without limit in the securities of any company listed
on a national securities exchange, provided that your involvement with any such
company is solely that of a stockholder, and (ii) is intended to prevent you
from being employed during the applicable Restricted Period by any business
other than a Competitive Business. With respect to any termination of your
employment other than upon a Change of Control pursuant to Section 10, the
applicable Restricted Period shall be the one-year period following the date
your employment
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terminates, and with respect to a termination of your employment upon a Change
of Control pursuant to Section 10, the applicable Restricted Period shall be the
two-year period following the date your employment terminates.
(b) The parties hereto intend that the covenant contained in this
Section 6 shall be deemed a series of separate covenants for each state, county
and city. If, in any judicial proceeding, a court shall refuse to enforce all
the separate covenants deemed included in this Section 6, because, taken
together, they cover too extensive a geographic area, the parties intend that
those of such covenants (taken in order of the states, counties and cities
therein which are least populous), which, if eliminated, would permit the
remaining separate covenants to be enforced in such proceeding, shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 6.
7. CONFIDENTIALITY, NON-INTERFERENCE, INVENTIONS AND PROPRIETARY
INFORMATION.
(a) In the course of (i) your employment with the Company hereunder,
and (ii) any prior employment with the Company, you will have and have had
access to Confidential or Proprietary Data or Information of the Company. You
shall not at any time divulge or communicate to any person nor shall you direct
any Company employee to divulge or communicate to any person (other than to a
person bound by confidentiality obligations similar to those contained herein
and other than as necessary in performing your duties hereunder) or use to the
detriment of the Company any of such Confidential or Proprietary Data or
Information, except to the extent the same (i) becomes publicly known other than
through a breach of this Agreement by you, (ii) was known to you prior to the
disclosure thereof by the Company to you from a source that was entitled to
disclose it or (iii) is subsequently disclosed to you by a third party who shall
not have receive it under any obligation of confidentiality to the Company. The
term "Confidential or Proprietary Data or Information" as used in this
Agreement, shall mean data or information not generally available to the public,
including personnel information, financial information, customer lists, supplier
lists, product and tooling specifications, trade secrets, information concerning
product composition and formulas, tools and dies, drawings and schematics,
manufacturing processes, information regarding operations, systems and services,
knowhow, computer and any other electronic, processed or collated data, computer
programs, and pricing, marketing, sales and advertising data.
(b) You shall not, during the term of this Agreement and for the
applicable Restricted Period after the termination of your employment by the
Company, for your own account or for the account of any other person, (i)
solicit or divert to any Competitive Business any individual or entity who is a
customer of the Company or any subsidiary or affiliate of the Company or who was
a customer of the Company or any subsidiary or affiliate during the preceding
twelve-month period, (ii) employ, retain as a consultant, attempt to employ or
retain as a consultant, solicit or assist any Competitive Business in employing
or retaining as a consultant any current employee of the Company or any
subsidiary or affiliate or any person who was employed by the Company or any
subsidiary or affiliate during the preceding twelve-month period or (iii)
otherwise interfere with the Company's relationship with any of its suppliers,
customers, employees or consultants; provided, however, that you shall not be
prohibited from contacting suppliers or customers after termination of your
employment with regard to matters that do not violate your noncompetition or
confidentiality
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obligations contained in Sections 6(a) and 7(a) or interfere with the Company's
relationship with such parties.
(c) It is understood that you may, during your employment, conceive or
develop certain inventions, innovations or discoveries related to any business
in which the Company may be engaged, either solely or jointly with others. In
connection with the conception or development thereof, you agree to disclose
promptly to the Company all such inventions, innovations and discoveries, to
assign, and hereby do assign, to the Company all of your right, title and
interest in and to said inventions, innovations and discoveries, and to do all
things and sign all documents deemed by the Company to be necessary or
appropriate to vest in the Company, its successors and assigns, all of your
right, title and interest in and to such inventions, innovations or discoveries,
and to procure for the Company, at the Company's expense, patents, copyrights
and/or trademarks covering such inventions, innovations or discoveries in the
United States and its possessions and in foreign countries, at the discretion
and under the direction of the Company. In the event the Company is unable for
any reason to assure your signature on such documents, you irrevocably appoint
the Company and its duly authorized officers and agents as your agents and
attorneys-in-fact to execute such documents and to do such things with the same
legal force and effect as if executed or done by you.
(d) All written, electronic and other tangible materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company, or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon request of the Company during your
employment, you shall promptly deliver the same to the Company. In addition,
upon termination of your employment, or upon request of the Company during your
employment, you will deliver to the Company all other Company property in your
possession or under your control, including, but not limited to, financial
statements, marketing and sales data, patent applications, drawings and other
documents, and all Company keys, credit cards, computer and telephone equipment
and automobiles.
8. EQUITABLE RELIEF. With respect to the covenants contained in
Sections 6 and 7 of this Agreement, you agree that any remedy at law for any
breach of said covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of injunctive and/or other
equitable relief to enforce its rights hereunder or any other relief a court
might award.
9. EARLIER TERMINATION. Your employment hereunder shall terminate prior
to the Initial Term (or any renewal term, in the event of renewal) on the
following terms and conditions:
(a) This Agreement shall terminate automatically on the date of your
death. Notwithstanding the foregoing, if you die during the term of this
Agreement, the Company shall (i) continue to make payments to your estate of
your Base Salary as then in effect pursuant to this Agreement for 180 days after
the date of your death, and (ii) pay your estate any reimbursable expenses which
otherwise would have been paid to you to the date of your death.
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(b) This Agreement shall be terminated if you are unable to perform
your duties hereunder for a period of any 180 days in any 365 consecutive day
period by reason of physical or mental disability. Notwithstanding the
foregoing, if this Agreement is terminated pursuant to this Section 9(b), the
Company shall pay any accrued but unpaid Base Salary through the date of
termination and any reimbursable expenses due to you hereunder. For purposes of
this Agreement "physical or mental disability" shall mean your inability, due to
health reasons, to discharge properly your duties of employment, supported by
the opinion of a physician satisfactory to both you and the Company. If the
parties do not agree on a physician mutually satisfactory to both of you and the
Company within ten days of written demand by one or the other, a physician shall
be selected by the president of the Pennsylvania Medical Association, and the
physician shall, within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. Services of the physician
shall be paid for by the Company. You shall fully cooperate with the examining
physician including submitting yourself to such examinations as may be requested
by the physician for the purpose of determining whether you are disabled.
(c) This Agreement shall terminate immediately upon the Company's
sending you written notice terminating your employment hereunder for Cause. The
Company may terminate this Agreement for Cause, but only after written notice
specifying the Cause of such action shall have been rendered to you by the
President of the Company. "Cause" shall mean any of the following:
(i) Breach of this Agreement.
(ii) Refusal or inability (other than pursuant to Section 9(a)
or 9(b)) to perform duties assigned to you in accordance with the terms of this
Agreement or overt and willful disobedience of orders or directives issued to
you by the Company and within the scope of your duties to the Company.
(iii) Willful misconduct in the performance of your duties,
functions and responsibilities.
(iv) Commission of acts that are illegal in connection with
the performance of your duties, functions and responsibilities under this
Agreement.
(v) Commission of acts that would constitute a felony offense
during the term of this Agreement.
(vi) Violation of Company rules and regulations concerning
conflict of interest.
(vii) Gross mismanagement of the assets of the Company.
(viii) Gross incompetence, gross insubordination or gross
neglect in the performance of your duties hereunder or being under the habitual
influence of alcohol while on duty or possession, use, manufacture,
distribution, dispensation or sale of illegal drugs while on or off duty.
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(ix) Any act or omission, whether or not included in the
foregoing, that a court of competent jurisdiction would determine to constitute
cause for termination.
Existence of Cause shall be conclusively determined for all purposes hereunder
by the President of the Company. Such advice and consultation shall be utilized
as such officer regards as appropriate, and no obligation or duty with respect
to any procedure or formality is created by this Agreement. If the Company
terminates this Agreement for Cause under this Section 9(c), the Company shall
not be obligated to make any further payments under this Agreement except for
the Accrued Obligations.
(d) Except as set forth in Section 10, your coverage under the benefits
program provided by the Company will cease effective on your termination date.
You will be entitled to elect continuation of your medical and dental benefits
at the same cost the Company pays, pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Details with regard to
COBRA continuation coverage will be provided to you shortly after your
termination date.
(e) Except as set forth in Section 10, life insurance coverage will
cease upon your termination date. You may, however, apply to General American
Life Insurance Company (or such other insurance company as may provide group
life insurance to the Company's employees at the time) for an individual
converted life policy, with such application and payment of the first premium
required to be accomplished within 31 days after your termination date. Details
regarding this conversion option will be provided to you shortly after your
termination date.
(f) Accidental death and dismemberment and long term disability
coverages cease with your termination date and may not be extended or converted.
10. TERMINATION UPON A CHANGE OF CONTROL.
(a) In the event a Change of Control (as defined below) occurs, and
within 24 months after such Change of Control: (i) your employment with the
Company is terminated by you pursuant to a Termination for Good Reason (as
defined below); or (ii) your employment with the Company is terminated by the
Company for any reason other than death, disability or for Cause pursuant to
Sections 9(a), (b) or (c); or (iii) this Agreement is not renewed due to a
Termination Notice given by the Company, as provided in Section 1(a), (the
events under clauses (i), (ii) and (iii) herein collectively called a "Change of
Control Termination"), you shall be entitled to receive the payments and
benefits set forth in Section 10(e) and (f) below, which payments and benefits
shall be in substitution for, and not in addition to, the payments and benefits
otherwise payable under Section 2(a) or 2(b) of this Agreement in the event of
termination. Your right to receive such payments and benefits, other than the
Accrued Obligations, shall be in consideration of your agreements under this
Agreement, including but not limited to your agreement not to compete with the
Company for two years after a Change of Control pursuant to Section 6, and shall
be conditioned upon your execution of a Release. Such Release shall be
substantially in the form of Exhibit A but may be modified by the Company as it
deems appropriate to reflect changes in law or circumstances arising after the
date of this Agreement; provided that no such modification shall increase any of
your obligations to the Company over those contemplated by this Agreement,
including Exhibit A hereto.
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(b) For purposes of the Agreement, a "Change of Control" shall be
deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof)), excluding the Company, any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of any such plan acting in his capacity as
trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange
Act, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of shares of the Company having at least 30% of the total number of votes
that may be cast for the election of directors of the Company; (ii) the
shareholders of the Company shall approve any merger or other business
combination of the Company, sale of all or substantially all of the Company's
assets or combination of the foregoing transactions (a "Transaction"), other
than a Transaction involving only the Company and one or more of its
subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
shareholder of the Company owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction) and no person is the
beneficial owner of at least 30% of the shares of the resulting entity as
contemplated by Section 10(b)(i) above; or (iii) within any 24-month period
beginning on or after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
as of the date hereof shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
10(b)(iii), unless such election, recommendation or approval was the result of
an actual or threatened election contest of the type contemplated by Regulation
14a-11 under the Exchange Act or any successor provision. Notwithstanding the
foregoing, no Change of Control of the Company shall be deemed to have occurred
for purposes of this Agreement by reason of any actions or events in which you
participate in a capacity other than in your capacity as an executive or
director of the Company.
(c) For purposes of the Agreement, a "Termination for Good Reason"
means a termination by you by written notice given within 90 days after the
occurrence of the Good Reason event. A notice of Termination for Good Reason
shall indicate the specific termination provision in Section 10(d) relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for Termination for Good Reason. Your failure to set forth in
such notice any facts or circumstances that contribute to the showing of Good
Reason shall not waive any of your rights hereunder or preclude you from
asserting such fact or circumstance in enforcing your rights hereunder. The
notice of Termination for Good Reason shall provide for a date of termination
not less than 10 nor more than 60 days after the date such Notice of Termination
for Good Reason is given.
(d) For purposes of the Agreement, "Good Reason" shall mean the
occurrence, without your express written consent, of any of the following
circumstances, unless such circumstances are fully corrected prior to the date
of termination specified in the notice of Termination for Good Reason as
contemplated in Section 10(c) above: (i) any material diminution of your
positions, duties
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or responsibilities hereunder (except in each case in connection with the
termination of your employment for Cause pursuant to Section 9(c) or due to
disability or death pursuant to Section 9(a) or 9(b) or temporarily as a result
of your illness or other absence), or the assignment to you of duties or
responsibilities that are inconsistent with your position under the Agreement at
the time of a Change of Control; (ii) your removal from, or your nonreelection
to, the officer positions with the Company specified in this Agreement; (iii)
relocation of the Division's principal executive offices to a location more than
25 miles from its location at the time of the Change of Control; (iv) failure by
the Company, after a Change of Control, (A) to continue any bonus plan, program
or arrangement in which you are entitled to participate immediately prior to the
Change of Control (the "Bonus Plans"), provided that any such Bonus Plans may be
modified at the Company's discretion from time to time but shall be deemed
terminated if (x) any such plan does not remain substantially in the form in
effect prior to such modification and (y) if plans providing you with
substantially similar benefits are not substituted therefor ("Substitute
Plans"), or (B) to continue you as a participant in the Bonus Plans and
Substitute Plans on at least the same basis as to potential amount of the bonus
and substantially the same level of criteria for achievability thereof as you
participated in immediately prior to any change in such plans or awards, in
accordance with the Bonus Plans and the Substitute Plans; (v) any material
breach by the Company of any provisions of this Agreement; or (vi) failure of
any successor to the Company to promptly acknowledge in writing the obligations
of the Company hereunder.
(e) Upon a Change of Control Termination, as provided in Section 10(a),
the Company shall pay or provide you the following payments and benefits:
(i) The Company shall pay to you the Accrued Obligations in a
lump sum within five business days after the date of termination.
(ii) The Company shall pay to you as severance pay, not later
than the tenth day following the date of your execution and delivery of the
Release required pursuant to Section 10(a) of this Agreement:
(A) a lump sum payment in an amount equal to two years
of your Base Salary;and
B) a lump sum payment in an amount equal to two of
your annual incentive bonuses, such payment to be equal to the greater of (i)
the amount of all incentive bonuses paid to you with respect to each of the two
most recently completed fiscal years of the Company for which a bonus has been
paid or (ii) the incentive bonus paid to you with respect to the most recently
completed fiscal year of the Company for which a bonus has been paid plus an
amount equal to your Target Bonus (as hereinafter defined); provided, however,
that if you have been employed by the Company for less than two years, such
payment shall be equal to the greater of (x) the amount of the incentive bonus
paid to you with respect to the most recently completed fiscal year of the
Company for which a bonus has been paid plus your Target Bonus or (y) the amount
of your Target Bonus multiplied by two. The term "Target Bonus" shall mean the
incentive bonus that would have been payable for the fiscal year that includes
the date on which your employment terminates under the incentive bonus program
in effect as of the date of the Change of Control, assuming that you had been
entitled to receive an amount in respect of such bonus based solely upon the
target percentage applicable to employees in the same employment grade as you
and your Base Salary as of the date
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of termination (or if greater, your Base Salary as of the date on which occurred
an event giving rise to a Change of Control Termination), and without regard to
actual performance.
(iii) The Company shall continue the participation of you and
your dependents for a period of two years after the date of termination in all
health, medical and accident, life and other welfare plans (as defined in
Section 3(l) of ERISA), in which you were participating immediately prior to the
date of termination, except for any disability plans; provided, however, that to
the extent the Company's plans do not permit such continued participation or
such participation would have an adverse tax impact on such plans or on the
other participants in such plans, the Company may instead provide materially
equivalent benefits to you outside of such plans; provided, further, that under
such circumstances, (i) medical insurance benefits may be provided by the
Company paying any COBRA premiums (COBRA coverage, in any event, to be measured
from the date of termination of employment) and (ii) if the Company is unable to
continue your life insurance coverage, the Company shall pay you an amount equal
to twice the premium paid during the year prior to termination or if you convert
the insurance to an individual policy, the Company shall pay the premium for
such insurance for two years. You shall complete such forms and take such
physical examinations as reasonably requested by the Company. To the extent you
incur any tax obligation as a result of the provisions of this Section 10(e)
that you would not have incurred if you remained an employee of the Company and
had continued to participate in the benefit plans as an employee, the Company
shall pay to you, at the time the tax is due, an amount to cover such taxes and
the taxes on the amount paid to cover such taxes.
(iv) All outstanding stock options and restricted stock awards
that have been granted to you by the Company at any time but have not yet vested
and upon which vesting depends solely upon the passage of time, shall
immediately vest or become nonforfeitable, as the case may be. In the event the
foregoing sentence becomes applicable, the Company agrees to cause the Board of
Directors to take all steps necessary to implement the foregoing sentence.
(v) All amounts payable to you upon a Change of Control under
the Company's Supplemental Executive Retirement Plan and Deferred Compensation
Plan shall be paid to you in accordance with the respective terms of those
plans.
(vi) The Company, at its expense, shall provide you with
outplacement services at a level appropriate for the most senior executive
employees through an outplacement firm of your choice for a period of up to one
year after the date of the Change of Control Termination.
(f) (i) In the event that any payment, coverage or benefit
(collectively, the "Covered Benefits") provided to you by the Company or an
Affiliate (as defined below) is or becomes subject to the excise tax imposed
under Section 4999 or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code"), or you incur interest or penalties with respect
to that excise tax (that excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the Company shall
pay you an additional amount (a "Gross-Up Bonus") at the time or times specified
in Section 10(f)(iii)(z) below. The amount of the Gross-Up Bonus shall equal the
quotient determined by dividing (x) the Excise Tax attributable to the Covered
Benefits by (y) one minus the highest marginal income tax rate, where the term
"highest marginal income tax
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rate" means the sum of the highest combined local, state and federal personal
income tax rates (including any state unemployment compensation tax rate, any
surtax rate as well as the Medicare hospital insurance tax rate imposed on
employees under the Federal Insurance Contributions Act) as in effect for the
calendar year to which the Excise Tax attributable to the Covered Benefits
relates, provided that in determining the highest tax rate for federal purposes
both the deductibility of state and local income tax payments and the reduction
in the deductibility of itemized deductions shall be taken into account; it
being the intention of the parties hereto that your net after tax position
(after taking into account any interest or penalties imposed with respect to
such taxes) upon receipt of the Covered Benefits is no less advantageous to you
than the net after tax position you would have had if Section 4999 of the Code
had not been applicable to any portion of the Covered Benefits.
(ii) All determinations to be made under this Section 10(f),
including the determination of whether an Excise Tax is payable and the amount
thereof, shall be made by a law firm practicing in the Philadelphia,
Pennsylvania metropolitan area that is knowledgeable in tax law matters, which
firm shall be selected and paid for by the Company and acceptable to you. If tax
counsel's determinations are not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be computed (with a
Gross-Up Bonus, if applicable) by that tax counsel based upon the final amount
of the Excise Tax so determined.
(iii) For purposes of this Section 10(f):
(x) An "Affiliate" shall mean any successor to
the Company, any member of an affiliated group including the Company
(determining using the definition in Section 1504 of the Code) or any entity
that becomes a member of such an affiliated group as a result of the transaction
causing the Change of Control.
(y) When determining the amount of the Gross-Up
Bonus, you will be deemed to have otherwise allowable deductions for federal,
state and local tax purposes at least equal to those disallowed because of the
inclusion of the Gross-Up Bonus in your adjusted gross income.
(z) The portion of the Gross-Up Bonus attributable
to a Covered Benefit shall be paid to you within 10 business days following the
provision to you of the Covered Benefit. In the event that the amount of Excise
Tax due exceeds the amount of Excise Tax determined by tax counsel, the Company
shall pay you an additional Gross-Up Bonus in respect of that excess at the time
that the amount of the excess is determined under Section 10(f)(ii). In the
event the amount of Excise Tax due is less than the amount of Excise Tax
determined by tax counsel, you shall repay the Company the portion of the
Gross-Up Bonus attributable thereto at the time that the amount of the reduction
in Excise Tax is determined under Section 10(f)(ii); provided, however, that if
any portion of the amount you must repay to the Company has been paid to any
federal, state or local tax authority, your repayment of that portion shall be
postponed until the tax authority has actually refunded or credited that amount
to you.
(g) Upon the occurrence of a Change of Control, if the Company fails to
perform any of its obligations under this Agreement or the Company or any other
person asserts the invalidity of any provision of this Agreement and you incur
any costs in successfully enforcing or defending any
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of the provisions of this Agreement, including legal fees and expenses and court
costs, the Company shall reimburse you for all such costs incurred by you.
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with
Exhibit A hereto and all rights to which you are entitled under all employee
benefit plans in which you participate, constitutes the full and complete
understanding of the parties, and supersedes all prior agreements and
understandings, oral or written, between the parties, except for the Agreement
Relating to Intellectual Property & Confidential Information dated September 27,
1997 between you and the Company ("Confidentiality Agreement"); provided,
however, that if the terms of any of such employee benefit plan or such
Confidentiality Agreement shall be inconsistent with the provisions of this
Agreement, the provisions of this Agreement shall control. This Agreement may
not be modified or amended except by an instrument in writing signed by the
party against which enforcement thereof may be sought. Each party to this
Agreement, acknowledges that no representations, inducements, promises or
agreements, oral or written, have been made by either party or anyone acting on
behalf of either party, which are not embodied herein and that no other
agreement, statement or promise not set forth or referred to in this Agreement
shall be valid or binding.
12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
13. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach.
14. NO MITIGATION REQUIRED. Upon a termination of your employment by
the Company without Cause pursuant to Section 2(b) or upon a Change of Control
pursuant to Section 10, you shall have no obligation to seek other employment
but shall not be prohibited from doing so, and no compensation paid to you as
the result of any other employment shall reduce any payment required to be made
by the Company hereunder.
15. NOTICES. All notices hereunder shall be in writing and shall be
sent by express mail or by certified or registered mail, postage prepaid, return
receipt requested: if to you, to your residence as listed in the Company's
records; and if to the Company, to the address set forth above with copies to
the President.
16. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be assigned
by either party, except that it may be assigned by the Company to an acquirer of
all or substantially all of the assets of the Company or other successor to the
Company, subject to your rights arising from a change of control as provided in
Section 10. This Agreement shall be binding upon and inure to the benefit of
you, your legal representatives, heirs and distributees, and shall be binding
upon and inure to the benefit of the Company, its successors and assigns.
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17. NONDISPARAGEMENT. You agree not to publicly or privately disparage
the Company, its personnel, products or services either during or upon
termination of your employment with the Company.
18. SURVIVAL. All of the provisions of this Agreement that by their
terms are to be performed or that otherwise are to endure after the termination
of your employment by the Company shall survive the termination of your
employment and shall continue in effect for the respective periods therein
provided or contemplated.
19. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
20. HEADINGS. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
If this Agreement correctly sets forth our understanding, please sign
the duplicate original in the space provided below and return it to the Company,
whereupon this shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
C&D TECHNOLOGIES, INC.
By:/s/Wade H. Roberts, Jr.
------------------------------
Title: President and CEO
Agreed as of the date first above written:
/s/ John J. Murray, Jr.
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John J. Murray, Jr.
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EXHIBIT A
RELEASE
This Release is made this _____ day of _______________, ____ by and
between C&D Technologies, Inc. ("Employer") and _________________ ("Employee").
RECITALS:
WHEREAS, the parties are parties to an Employment Agreement (the
"Employment Agreement") dated __________, pursuant to which Employee was
employed by Employer; and
WHEREAS, the Employment Agreement has terminated; and
WHEREAS, your execution and delivery of this Release is a condition to
the Employer's obligations to pay certain compensation and benefits to you under
the Employment Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1. As of _____________________, ____, Employee's employment with
Employer shall terminate, and Employee shall have no further job
responsibilities to perform for Employer; provided, however, that Employee shall
cooperate with Employer in transitioning Employee's job responsibilities as
Employer shall reasonably request, provided that Employee shall be entitled to
receive reasonable compensation for any services rendered after such date and
shall not be obligated to take any action that would interfere with any
subsequent employment of Employee or otherwise result in economic hardship to
Employee.
2. Employer shall pay to the Employee the amounts contemplated pursuant
to Section __ of the Employment Agreement, less applicable deductions; provided
however, the first payment shall not be due and payable until ten days after the
execution by Employee and delivery to Employer of this Release.
3. For and in consideration of the monies and benefits paid to Employee
by Employer, as more fully described in Section 2 above, and for other good and
valuable consideration, Employee hereby waives, releases and forever discharges
Employer, its assigns, predecessors, successors, and affiliated entities, and
its current or former stockholders, officers, directors, administrators, agents,
servants and employees, individually and as representatives of the corporate
entity (hereinafter collectively referred to as "Releasees"), from any and all
claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, bonuses, controversies, agreements, promises, charges,
complaints, damages, sums of money, interest, attorney's fees and costs, or
causes of action of any kind or nature whatsoever whether in law or equity,
including, but not limited to, all claims arising out of his/her employment or
termination of employment with Employer, such as
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all claims for wrongful discharge, breach of contract, either express or
implied, interference with contract, emotional distress, fraud,
misrepresentation, defamation, claims arising under the Civil Rights Acts of
1964 and 1991 as amended, the Americans With Disabilities Act, the Age
Discrimination in Employment Act (ADEA), the National Labor Relations Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974
(ERISA), the Family and Medical Leave Act, the Pennsylvania Human Relations Act,
the Pennsylvania Wage Payment & Collection Law, the Pennsylvania Minimum Wage
Act of 1968, the Pennsylvania Equal Pay Law, and any and all other claims
arising under federal, state or local law, rule, regulation, constitution,
ordinance or public policy whether known or unknown, arising up to and including
the date of execution of this Release; provided, however that the parties do not
release each other from any claim of breach of the terms of this Release. This
release of rights does not extend to claims that may arise after the date of
this Release. Employee agrees that Employee will not initiate any charge or
complaint or institute any claim or lawsuit against Releasees or any of them
based on any fact or circumstance occurring up to and including the date of the
execution by Employee of this Release.
4 Employee agrees that the payments made and other consideration
received pursuant to this Release are not to be construed as an admission of
legal liability by Releasees or any of them and that no person or entity shall
utilize this Release or the consideration received pursuant to this Release as
evidence of any admission of liability since Releasees expressly deny liability.
5 Employee affirms that the only consideration for the signing of this
Release are the terms stated herein and in the Employment Agreement and that no
other promise or agreement of any kind has been made to Employee by any person
or entity whatsoever to cause Employee to sign this Release.
6 Employee and Employer affirm that the Employment Agreement and this
Release set forth the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior or contemporaneous
agreements or understandings between the parties with respect to the subject
matter contained herein. Further, there are no representations, arrangements or
understandings, either oral or written, between the parties, which are not fully
expressed herein. Finally, no alteration or other modification of this Release
shall be effective unless made in writing and signed by both parties.
7 Employee acknowledges that Employee has been given a period
of at least 21 days within which to consider this Release.
8 Following the execution of this Release, the Employee has a period of
7 days from the date of execution to revoke this Release, and this Release shall
not become effective or enforceable until the revocation period has expired.
9 Employee certifies that Employee has returned to Employer all keys,
identification cards, credit cards, computer and telephone equipment and other
property or information of Employer in Employee's possession, custody, or
control including, but not limited to, any information contained in any computer
files maintained by Employee during Employee's employment with Employer.
Employee certifies that Employee has not kept the originals or copies
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of any documents, files, or other property of Employer which Employee obtained
or received during Employee's employment with Employer.
10 Employee acknowledges that Employer advised Employee to consult with
an attorney prior to executing this Release.
11 Employee affirms that Employee has carefully read this Release, that
Employee fully understands the meaning and intent of this document, that
Employee has signed this Release voluntarily and knowingly, and that Employee
intends to be bound by the promises contained in this Release for the
consideration described in Section 2 above.
IN WITNESS WHEREOF, Employee and the authorized representative of
Employer have executed this Release on the dates indicated below:
C&D TECHNOLOGIES, INC.
Dated:_____________________ By:______________________________
Title:__________________________
Dated:_____________________ ______________________________
John J. Murray, Jr.
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ENDORSEMENT
I, ___________________________________, hereby acknowledge that I was
given 21 days to consider the foregoing Release and voluntarily chose to sign
the Release prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the Commonwealth
of Pennsylvania that the foregoing is true and correct.
EXECUTED this ________ day of ______________, ____, at
_______________________________________, Pennsylvania.
---------------------------------
John J. Murray, Jr.
A-4
Exhibit 10.20
March 31, 2000
Dr. John Rich
C&D Technologies, Inc.
Power Electronics Division
3400 E. Brittannia Drive
Suite 122
Tucson, AZ 85706-7600
Dear John:
You are presently employed by C&D Technologies, Inc., a Delaware
corporation (the "Company"), in an executive capacity and the Company desires to
encourage such continued employment by providing certain protections for you by
entering into this Agreement with you, in return for which you agree to continue
to be employed by the Company on the terms set forth herein, to refrain from
certain competitive activity and to provide the Company with certain assurances
upon your departure. In consideration of same, the Company agrees to employ you,
and you agree to accept such employment, under the following terms and
conditions:
1. TERM OF EMPLOYMENT.
(a) Except for earlier termination as is provided in Section 9 or 10
below, your employment under this Agreement shall be for the period commencing
on the date hereof (the "Effective Date") and terminating on February 27, 2001
(the "Initial Term" ).
(b) This Agreement shall be automatically renewed for successive terms
of one month each, unless either party shall have given to the other party at
least 30 days' prior written notice of the termination of this Agreement (a
"Termination Notice"). If such 30 days' prior written notice is given by either
party, (i) the Company shall, without any liability to you, have the right,
exercisable at any time after such notice is sent, to elect any other person to
the office or offices in which you are then serving and to remove you from such
office or offices, but (ii) all other obligations each of you and the Company
have to the other, including the Company's obligation to pay your compensation
and make available the medical and dental insurance to which you are entitled
hereunder, shall continue until the date your employment terminates as specified
in such notice.
<PAGE>
2. COMPENSATION.
(a) You shall be compensated for all services rendered by you under
this Agreement at the rate of $210,000 per annum (such salary, as it is from
time to time adjusted, is herein referred to as the ("Base Salary"). Such Base
Salary shall be payable in periodic installments twice monthly in accordance
with the Company's payroll practices for salaried employees. The Compensation
Committee of the Board of Directors shall review such Base Salary prior to April
1, 2001 and each year thereafter during the term of this Agreement, including
any renewal term, and shall make such adjustments, if any, as the Compensation
Committee shall determine; provided, however, that no adjustment shall reduce
the Base Salary below $210,000.
(b) If your employment hereunder shall be terminated (i) by the Company
without notice of Cause (as defined in Section 9(c)) therefor having been given
to you (other than pursuant to Section 9(a) or 9(b) and notwithstanding the
provisions of Section 1(a)), or (ii) as a result of the non-renewal of this
Agreement pursuant to a Termination Notice given by the Company under Section
1(b) then, in addition to paying you the Accrued Obligations (as hereinafter
defined), for a 180 day period after the effective date of such termination (if
such termination occurs after the expiration of the Initial Term) or for the
greater of the remaining number of days of the Initial Term and 180 days (if
such termination occurs during the Initial Term) the Company shall pay you at
the rate of your Base Salary in effect at the time of such termination in
periodic payments in accordance with the Company's payroll practices for
salaried employees; provided, however, that your right to receive such payments,
other than the Accrued Obligations, shall be conditioned upon your execution of
a Release (the "Release"). Such Release shall be substantially in the form of
Exhibit A hereto but may be modified by the Company in its sole discretion as it
deems appropriate to reflect changes in law or circumstances arising after the
date of this Agreement; provided, however, that no such modification shall
increase any of your obligations to the Company over those contemplated by this
Agreement, including Exhibit A hereto. The term "Accrued Obligations" shall mean
(i) your Base Salary through the date of termination and (ii) all benefits that
have accrued to you under the terms of all employee benefits plans of the
Company in which you are entitled to participate.
3. DUTIES.
(a) During the term of your employment hereunder, including any renewal
thereof, you agree to serve as the Vice President-General Manager, Power
Electronics Division (the "Division") or in such other capacity with duties and
responsibilities of a similar nature as those initially undertaken by you
hereunder as the President of the Company may from time to time determine. Your
duties may be changed at any time and from time to time hereafter, upon mutual
agreement, consistent with office or offices in which you serve as deemed
necessary by the President of the Company. You also agree to perform such other
services and duties consistent with the office or offices in which you are
serving and its responsibilities as may from time to time be prescribed by the
Board of Directors, and you also agree to serve, if elected, as an officer
and/or director of the Company and/or any of the Company's other direct or
indirect subsidiaries without additional compensation, in all cases in
conformity to the by-laws of each such corporation. Unless you
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otherwise agree, you shall not be required to relocate your place of business to
a location that would increase your commuting distance by greater than 25 miles.
(b) You shall devote your full employment energies, interest,
abilities, time and attention during normal business hours (excluding the
vacation periods provided in Section 4(b) below) exclusively to the business and
affairs of the Company, its parent corporation and subsidiaries, if any, and
shall not engage in any activity that conflicts or interferes with the
performance of duties hereunder.
(c) You agree to cooperate with the Company, including taking such
reasonable medical examinations as may be necessary, in the event the Company
shall desire or be required (such as pursuant to the terms of any bank loan or
any other agreement) to obtain life insurance insuring your life.
(d) You shall, except as otherwise provided herein, be subject to the
Company's rules, practices and policies applicable to the Company's senior
executive employees. Without limiting the generality of the foregoing, you
shall, with respect to the Company and its parents, subsidiaries, assets and
stockholders, act in a manner consistent with your fiduciary responsibilities as
an executive of the Company.
4. BENEFITS.
(a) You shall have the benefit of such life and medical insurance,
bonus, stock option and other similar plans as the Company may have or may
establish from time to time, and in which you would be entitled to participate
by reason of your position with the Company, pursuant to the terms thereof.
Also, to the extent you have met the qualifications required, you may
participate in the Company's savings and retirement plans. The foregoing,
however, shall not be construed to require the Company to establish any such
plans or to prevent the Company from modifying or terminating any such plans,
and no such action or failure thereof shall affect this Agreement.
(b) You shall be entitled to a vacation of four weeks each year.
(c) The Company will provide you with an annual physical examination.
5. EXPENSES. The Company will reimburse you for reasonable expenses
(consistent with Company policy), including traveling expenses, incurred by you
in connection with the business of the Company, upon the presentation by you of
appropriate substantiation for such expenses.
6. RESTRICTIVE COVENANTS.
(a) During such time as you shall be employed by the Company, and for
the applicable Restricted Period (as defined below) thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in,
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<PAGE>
represent, advise or otherwise participate as an officer, employee, director,
stockholder, partner, agent of or consultant for, any business that, at the time
your employment with the Company ceases, is competitive with the business in
which the Company is engaged or in which the Company has taken affirmative steps
to engage (a "Competitive Business"); provided, however, that nothing herein (i)
shall prevent you from investing without limit in the securities of any company
listed on a national securities exchange, provided that your involvement with
any such company is solely that of a stockholder, and (ii) is intended to
prevent you from being employed during the applicable Restricted Period by any
business other than a Competitive Business. With respect to any termination of
your employment other than upon a Change of Control pursuant to Section 10, the
applicable Restricted Period shall be the period following the date your
employment terminates during which you are receiving the payments described in
Section 2(b) hereof, and with respect to a termination of your employment upon a
Change of Control pursuant to Section 10, the applicable Restricted Period shall
be the two-year period following the date your employment terminates.
(b) The parties hereto intend that the covenant contained in this
Section 6 shall be deemed a series of separate covenants for each state, county
and city. If, in any judicial proceeding, a court shall refuse to enforce all
the separate covenants deemed included in this Section 6, because, taken
together, they cover too extensive a geographic area, the parties intend that
those of such covenants (taken in order of the states, counties and cities
therein which are least populous), which, if eliminated, would permit the
remaining separate covenants to be enforced in such proceeding, shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 6.
7. CONFIDENTIALITY, NON-INTERFERENCE, INVENTIONS AND PROPRIETARY
INFORMATION.
(a) In the course of (i) your employment with the Company hereunder,
and (ii) any prior employment with the Company, you will have and have had
access to Confidential or Proprietary Data or Information of the Company. You
shall not at any time divulge or communicate to any person nor shall you direct
any Company employee to divulge or communicate to any person (other than to a
person bound by confidentiality obligations similar to those contained herein
and other than as necessary in performing your duties hereunder) or use to the
detriment of the Company any of such Confidential or Proprietary Data or
Information, except to the extent the same (i) becomes publicly known other than
through a breach of this Agreement by you, (ii) was known to you prior to the
disclosure thereof by the Company to you from a source that was entitled to
disclose it or (iii) is subsequently disclosed to you by a third party who shall
not have receive it under any obligation of confidentiality to the Company. The
term "Confidential or Proprietary Data or Information" as used in this
Agreement, shall mean data or information not generally available to the public,
including personnel information, financial information, customer lists, supplier
lists, product and tooling specifications, trade secrets, information concerning
product composition and formulas, tools and dies, drawings and schematics,
manufacturing processes, information regarding operations, systems and services,
knowhow, computer and any other electronic, processed or collated data, computer
programs, and pricing, marketing, sales and advertising data.
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<PAGE>
(b) You shall not, during the term of this Agreement and for the
applicable Restricted Period after the termination of your employment by the
Company, for your own account or for the account of any other person, (i)
solicit or divert to any Competitive Business any individual or entity who is a
customer of the Company or any subsidiary or affiliate of the Company or who was
a customer of the Company or any subsidiary or affiliate during the preceding
twelve-month period, (ii) employ, retain as a consultant, attempt to employ or
retain as a consultant, solicit or assist any Competitive Business in employing
or retaining as a consultant any current employee of the Company or any
subsidiary or affiliate or any person who was employed by the Company or any
subsidiary or affiliate during the preceding twelve-month period or (iii)
otherwise interfere with the Company's relationship with any of its suppliers,
customers, employees or consultants; provided, however, that you shall not be
prohibited from contacting suppliers or customers after termination of your
employment with regard to matters that do not violate your noncompetition or
confidentiality obligations contained in Sections 6(a) and 7(a) or interfere
with the Company's relationship with such parties.
(c) It is understood that you may, during your employment, conceive or
develop certain inventions, innovations or discoveries related to any business
in which the Company may be engaged, either solely or jointly with others. In
connection with the conception or development thereof, you agree to disclose
promptly to the Company all such inventions, innovations and discoveries, to
assign, and hereby do assign, to the Company all of your right, title and
interest in and to said inventions, innovations and discoveries, and to do all
things and sign all documents deemed by the Company to be necessary or
appropriate to vest in the Company, its successors and assigns, all of your
right, title and interest in and to such inventions, innovations or discoveries,
and to procure for the Company, at the Company's expense, patents, copyrights
and/or trademarks covering such inventions, innovations or discoveries in the
United States and its possessions and in foreign countries, at the discretion
and under the direction of the Company. In the event the Company is unable for
any reason to assure your signature on such documents, you irrevocably appoint
the Company and its duly authorized officers and agents as your agents and
attorneys-in-fact to execute such documents and to do such things with the same
legal force and effect as if executed or done by you.
(d) All written, electronic and other tangible materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company, or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon request of the Company during your
employment, you shall promptly deliver the same to the Company. In addition,
upon termination of your employment, or upon request of the Company during your
employment, you will deliver to the Company all other Company property in your
possession or under your control, including, but not limited to, financial
statements, marketing and sales data, patent applications, drawings and other
documents, and all Company keys, credit cards, computer and telephone equipment
and automobiles.
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<PAGE>
8. EQUITABLE RELIEF. With respect to the covenants contained in
Sections 6 and 7 of this Agreement, you agree that any remedy at law for any
breach of said covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of injunctive and/or other
equitable relief to enforce its rights hereunder or any other relief a court
might award.
9. EARLIER TERMINATION. Your employment hereunder shall terminate prior
to the Initial Term (or any renewal term, in the event of renewal) on the
following terms and conditions:
(a) This Agreement shall terminate automatically on the date of your
death. Notwithstanding the foregoing, if you die during the term of this
Agreement, the Company shall (i) continue to make payments to your estate of
your Base Salary as then in effect pursuant to this Agreement for 180 days after
the date of your death, and (ii) pay your estate any reimbursable expenses which
otherwise would have been paid to you to the date of your death.
(b) This Agreement shall be terminated if you are unable to perform
your duties hereunder for a period of any 180 days in any 365 consecutive day
period by reason of physical or mental disability. Notwithstanding the
foregoing, if this Agreement is terminated pursuant to this Section 9(b), the
Company shall pay any accrued but unpaid Base Salary through the date of
termination and any reimbursable expenses due to you hereunder. For purposes of
this Agreement "physical or mental disability" shall mean your inability, due to
health reasons, to discharge properly your duties of employment, supported by
the opinion of a physician satisfactory to both you and the Company. If the
parties do not agree on a physician mutually satisfactory to both of you and the
Company within ten days of written demand by one or the other, a physician shall
be selected by the president of the Pennsylvania Medical Association, and the
physician shall, within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. Services of the physician
shall be paid for by the Company. You shall fully cooperate with the examining
physician including submitting yourself to such examinations as may be requested
by the physician for the purpose of determining whether you are disabled.
(c) This Agreement shall terminate immediately upon the Company's
sending you written notice terminating your employment hereunder for Cause. The
Company may terminate this Agreement for Cause, but only after written notice
specifying the Cause of such action shall have been rendered to you by the
President of the Company. "Cause" shall mean any of the following:
(i) Breach of this Agreement.
(ii) Refusal or inability (other than pursuant to Section 9(a)
or 9(b)) to perform duties assigned to you in accordance with the terms of this
Agreement or overt and willful disobedience of orders or directives issued to
you by the Company and within the scope of your duties to the Company.
(iii) Willful misconduct in the performance of your duties,
functions and responsibilities.
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(iv) Commission of acts that are illegal in connection with
the performance of your duties, functions and responsibilities under this
Agreement.
(v) Commission of acts that would constitute a felony offense
during the term of this Agreement.
(vi) Violation of Company rules and regulations concerning
conflict of interest.
(vii) Gross mismanagement of the assets of the Company.
(viii) Gross incompetence, gross insubordination or gross
neglect in the performance of your duties hereunder or being under the habitual
influence of alcohol while on duty or possession, use, manufacture,
distribution, dispensation or sale of illegal drugs while on or off duty.
(ix) Any act or omission, whether or not included in the
foregoing, that a court of competent jurisdiction would determine to constitute
cause for termination.
Existence of Cause shall be conclusively determined for all purposes hereunder
by the President of the Company. Such advice and consultation shall be utilized
as such officer regards as appropriate, and no obligation or duty with respect
to any procedure or formality is created by this Agreement. If the Company
terminates this Agreement for Cause under this Section 9(c), the Company shall
not be obligated to make any further payments under this Agreement except for
the Accrued Obligations.
(d) Except as set forth in Section 10, your coverage under the benefits
program provided by the Company will cease effective on your termination date.
You will be entitled to elect continuation of your medical and dental benefits
at the same cost the Company pays, pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Details with regard to
COBRA continuation coverage will be provided to you shortly after your
termination date.
(e) Except as set forth in Section 10, life insurance coverage will
cease upon your termination date. You may, however, apply to General American
Life Insurance Company (or such other insurance company as may provide group
life insurance to the Company's employees at the time) for an individual
converted life policy, with such application and payment of the first premium
required to be accomplished within 31 days after your termination date. Details
regarding this conversion option will be provided to you shortly after your
termination date.
(f) Accidental death and dismemberment and long term disability
coverages cease with your termination date and may not be extended or converted.
10. TERMINATION UPON A CHANGE OF CONTROL.
(a) In the event a Change of Control (as defined below) occurs, and
within 24 months after such Change of Control: (i) your employment with the
Company is terminated by you pursuant to a Termination for Good Reason (as
defined below); or (ii) your employment with the Company
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is terminated by the Company for any reason other than death, disability or for
Cause pursuant to Sections 9(a), (b) or (c); or (iii) this Agreement is not
renewed due to a Termination Notice given by the Company, as provided in Section
1(b), (the events under clauses (i), (ii) and (iii) herein collectively called a
"Change of Control Termination"), you shall be entitled to receive the payments
and benefits set forth in Section 10(e) and (f) below, which payments and
benefits shall be in substitution for, and not in addition to, the payments and
benefits otherwise payable under Section 2(a) or 2(b) of this Agreement in the
event of termination. Your right to receive such payments and benefits, other
than the Accrued Obligations, shall be in consideration of your agreements under
this Agreement, including but not limited to your agreement not to compete with
the Company for two years after a Change of Control pursuant to Section 6, and
shall be conditioned upon your execution of a Release. Such Release shall be
substantially in the form of Exhibit A but may be modified by the Company as it
deems appropriate to reflect changes in law or circumstances arising after the
date of this Agreement; provided that no such modification shall increase any of
your obligations to the Company over those contemplated by this Agreement,
including Exhibit A hereto.
(b) For purposes of the Agreement, a "Change of Control" shall be
deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof)), excluding the Company, any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of any such plan acting in his capacity as
trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange
Act, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of shares of the Company having at least 30% of the total number of votes
that may be cast for the election of directors of the Company; (ii) the
shareholders of the Company shall approve any merger or other business
combination of the Company, sale of all or substantially all of the Company's
assets or combination of the foregoing transactions (a "Transaction"), other
than a Transaction involving only the Company and one or more of its
subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
shareholder of the Company owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction) and no person is the
beneficial owner of at least 30% of the shares of the resulting entity as
contemplated by Section 10(b)(i) above; or (iii) within any 24-month period
beginning on or after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
as of the date hereof shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
10(b)(iii), unless such election, recommendation or approval was the result of
an actual or threatened election contest of the type contemplated by Regulation
14a-11 under the Exchange Act or any successor provision. Notwithstanding the
foregoing, no Change of Control of the Company shall be deemed to have occurred
for purposes of this Agreement by reason of any actions or events in which you
participate in a capacity other than in your capacity as an executive or
director of the Company.
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(c) For purposes of the Agreement, a "Termination for Good Reason"
means a termination by you by written notice given within 90 days after the
occurrence of the Good Reason event. A notice of Termination for Good Reason
shall indicate the specific termination provision in Section 10(d) relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for Termination for Good Reason. Your failure to set forth in
such notice any facts or circumstances that contribute to the showing of Good
Reason shall not waive any of your rights hereunder or preclude you from
asserting such fact or circumstance in enforcing your rights hereunder. The
notice of Termination for Good Reason shall provide for a date of termination
not less than 10 nor more than 60 days after the date such Notice of Termination
for Good Reason is given.
(d) For purposes of the Agreement, "Good Reason" shall mean the
occurrence, without your express written consent, of any of the following
circumstances, unless such circumstances are fully corrected prior to the date
of termination specified in the notice of Termination for Good Reason as
contemplated in Section 10(c) above: (i) any material diminution of your
positions, duties or responsibilities hereunder (except in each case in
connection with the termination of your employment for Cause pursuant to Section
9(c) or due to disability or death pursuant to Section 9(a) or 9(b) or
temporarily as a result of your illness or other absence), or the assignment to
you of duties or responsibilities that are inconsistent with your position under
the Agreement at the time of a Change of Control; (ii) your removal from, or
your nonreelection to, the officer positions with the Company specified in this
Agreement; (iii) relocation of the Division's principal executive offices to a
location more than 25 miles from its location at the time of the Change of
Control; (iv) failure by the Company, after a Change of Control, (A) to continue
any bonus plan, program or arrangement in which you are entitled to participate
immediately prior to the Change of Control (the "Bonus Plans"), provided that
any such Bonus Plans may be modified at the Company's discretion from time to
time but shall be deemed terminated if (x) any such plan does not remain
substantially in the form in effect prior to such modification and (y) if plans
providing you with substantially similar benefits are not substituted therefor
("Substitute Plans"), or (B) to continue you as a participant in the Bonus Plans
and Substitute Plans on at least the same basis as to potential amount of the
bonus and substantially the same level of criteria for achievability thereof as
you participated in immediately prior to any change in such plans or awards, in
accordance with the Bonus Plans and the Substitute Plans; (v) any material
breach by the Company of any provisions of this Agreement; or (vi) failure of
any successor to the Company to promptly acknowledge in writing the obligations
of the Company hereunder.
(e) Upon a Change of Control Termination, as provided in Section 10(a),
the Company shall pay or provide you the following payments and benefits:
(i) The Company shall pay to you the Accrued Obligations in a
lump sum within five business days after the date of termination.
(ii) The Company shall pay to you as severance pay, not later
than the tenth day following the date of your execution and delivery of the
Release required pursuant to Section 10(a) of this Agreement:
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(A) a lump sum payment in an amount equal to two
years of your Base Salary; and
(B) a lump sum payment in an amount equal to two of
your annual incentive bonuses, such payment to be equal to the greater of (i)
the amount of all incentive bonuses paid to you with respect to each of the two
most recently completed fiscal years of the Company for which a bonus has been
paid or (ii) the incentive bonus paid to you with respect to the most recently
completed fiscal year of the Company for which a bonus has been paid plus an
amount equal to your Target Bonus (as hereinafter defined); provided, however,
that if you have been employed by the Company for less than two years, such
payment shall be equal to the greater of (x) the amount of the incentive bonus
paid to you with respect to the most recently completed fiscal year of the
Company for which a bonus has been paid plus your Target Bonus or (y) the amount
of your Target Bonus multiplied by two. The term "Target Bonus" shall mean the
incentive bonus that would have been payable for the fiscal year that includes
the date on which your employment terminates under the incentive bonus program
in effect as of the date of the Change of Control, assuming that you had been
entitled to receive an amount in respect of such bonus based solely upon the
target percentage applicable to employees in the same employment grade as you
and your Base Salary as of the date of termination (or if greater, your Base
Salary as of the date on which occurred an event giving rise to a Change of
Control Termination), and without regard to actual performance.
(iii) The Company shall continue the participation of you and
your dependents for a period of two years after the date of termination in all
health, medical and accident, life and other welfare plans (as defined in
Section 3(l) of ERISA), in which you were participating immediately prior to the
date of termination, except for any disability plans; provided, however, that to
the extent the Company's plans do not permit such continued participation or
such participation would have an adverse tax impact on such plans or on the
other participants in such plans, the Company may instead provide materially
equivalent benefits to you outside of such plans; provided, further, that under
such circumstances, (i) medical insurance benefits may be provided by the
Company paying any COBRA premiums (COBRA coverage, in any event, to be measured
from the date of termination of employment) and (ii) if the Company is unable to
continue your life insurance coverage, the Company shall pay you an amount equal
to twice the premium paid during the year prior to termination or if you convert
the insurance to an individual policy, the Company shall pay the premium for
such insurance for two years. You shall complete such forms and take such
physical examinations as reasonably requested by the Company. To the extent you
incur any tax obligation as a result of the provisions of this Section 10(e)
that you would not have incurred if you remained an employee of the Company and
had continued to participate in the benefit plans as an employee, the Company
shall pay to you, at the time the tax is due, an amount to cover such taxes and
the taxes on the amount paid to cover such taxes.
(iv) All outstanding stock options and restricted stock awards
that have been granted to you by the Company at any time but have not yet vested
and upon which vesting depends solely upon the passage of time, shall
immediately vest or become nonforfeitable, as the case may be. In the event the
foregoing sentence becomes applicable, the Company agrees to cause the Board of
Directors to take all steps necessary to implement the foregoing sentence.
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(v) All amounts payable to you upon a Change of Control under
the Company's Supplemental Executive Retirement Plan and Deferred Compensation
Plan shall be paid to you in accordance with the respective terms of those
plans.
(vi) The Company, at its expense, shall provide you with
outplacement services at a level appropriate for the most senior executive
employees through an outplacement firm of your choice for a period of up to one
year after the date of the Change of Control Termination.
(f) (i) In the event that any payment, coverage or benefit
(collectively, the "Covered Benefits") provided to you by the Company or an
Affiliate (as defined below) is or becomes subject to the excise tax imposed
under Section 4999 or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code"), or you incur interest or penalties with respect
to that excise tax (that excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the Company shall
pay you an additional amount (a "Gross-Up Bonus") at the time or times specified
in Section 10(f)(iii)(z) below. The amount of the Gross-Up Bonus shall equal the
quotient determined by dividing (x) the Excise Tax attributable to the Covered
Benefits by (y) one minus the highest marginal income tax rate, where the term
"highest marginal income tax rate" means the sum of the highest combined local,
state and federal personal income tax rates (including any state unemployment
compensation tax rate, any surtax rate as well as the Medicare hospital
insurance tax rate imposed on employees under the Federal Insurance
Contributions Act) as in effect for the calendar year to which the Excise Tax
attributable to the Covered Benefits relates, provided that in determining the
highest tax rate for federal purposes both the deductibility of state and local
income tax payments and the reduction in the deductibility of itemized
deductions shall be taken into account; it being the intention of the parties
hereto that your net after tax position (after taking into account any interest
or penalties imposed with respect to such taxes) upon receipt of the Covered
Benefits is no less advantageous to you than the net after tax position you
would have had if Section 4999 of the Code had not been applicable to any
portion of the Covered Benefits.
(ii) All determinations to be made under this Section 10(f),
including the determination of whether an Excise Tax is payable and the amount
thereof, shall be made by a law firm practicing in the Philadelphia,
Pennsylvania metropolitan area that is knowledgeable in tax law matters, which
firm shall be selected and paid for by the Company and acceptable to you. If tax
counsel's determinations are not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be computed (with a
Gross-Up Bonus, if applicable) by that tax counsel based upon the final amount
of the Excise Tax so determined.
(iii) For purposes of this Section 10(f):
(x) An "Affiliate" shall mean any successor to the
Company, any member of an affiliated group including the Company (determining
using the definition in Section 1504 of the Code) or any entity that becomes a
member of such an affiliated group as a result of the transaction causing the
Change of Control.
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(y) When determining the amount of the Gross-Up
Bonus, you will be deemed to have otherwise allowable deductions for federal,
state and local tax purposes at least equal to those disallowed because of the
inclusion of the Gross-Up Bonus in your adjusted gross income.
(z) The portion of the Gross-Up Bonus attributable
to a Covered Benefit shall be paid to you within 10 business days following the
provision to you of the Covered Benefit. In the event that the amount of Excise
Tax due exceeds the amount of Excise Tax determined by tax counsel, the Company
shall pay you an additional Gross-Up Bonus in respect of that excess at the time
that the amount of the excess is determined under Section 10(f)(ii). In the
event the amount of Excise Tax due is less than the amount of Excise Tax
determined by tax counsel, you shall repay the Company the portion of the
Gross-Up Bonus attributable thereto at the time that the amount of the reduction
in Excise Tax is determined under Section 10(f)(ii); provided, however, that if
any portion of the amount you must repay to the Company has been paid to any
federal, state or local tax authority, your repayment of that portion shall be
postponed until the tax authority has actually refunded or credited that amount
to you.
(g) Upon the occurrence of a Change of Control, if the Company fails to
perform any of its obligations under this Agreement or the Company or any other
person asserts the invalidity of any provision of this Agreement and you incur
any costs in successfully enforcing or defending any of the provisions of this
Agreement, including legal fees and expenses and court costs, the Company shall
reimburse you for all such costs incurred by you.
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with
Exhibit A hereto and all rights to which you are entitled under all employee
benefit plans in which you participate, constitutes the full and complete
understanding of the parties, and will, on the Effective Date, supersede all
prior agreements and understandings, oral or written, between the parties,
except for the employment offer letter dated February 3, 2000 between you and
the Company ("Offer Letter") and the Agreement Relating to Intellectual Property
and Confidential Information dated February 11, 2000 between you and the Company
("Confidentiality Agreement"); provided, however, that if the terms of any of
such employee benefit plan, or such Confidentiality Agreement shall be
inconsistent with the provisions of the Agreement, the provisions of this
Agreement shall control, and if the terms of the Offer Letter are inconsistent
with the provisions of this Agreement, the terms of the Offer Letter shall
control. This Agreement may not be modified or amended except by an instrument
in writing signed by the party against which enforcement thereof may be sought.
Each party to this Agreement, acknowledges that no representations, inducements,
promises or agreements, oral or written, have been made by either party or
anyone acting on behalf of either party, which are not embodied herein and that
no other agreement, statement or promise not set forth or referred to in this
Agreement shall be valid or binding.
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<PAGE>
12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
13. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach.
14. NO MITIGATION REQUIRED. Upon a termination of your employment by
the Company without Cause pursuant to Section 2(b) or upon a Change of Control
pursuant to Section 10, you shall have no obligation to seek other employment
but shall not be prohibited from doing so, and no compensation paid to you as
the result of any other employment shall reduce any payment required to be made
by the Company hereunder.
15. NOTICES. All notices hereunder shall be in writing and shall be
sent by express mail or by certified or registered mail, postage prepaid, return
receipt requested: if to you, to your residence as listed in the Company's
records; and if to the Company, to the address set forth above with copies to
the President.
16. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be assigned
by either party, except that it may be assigned by the Company to an acquirer of
all or substantially all of the assets of the Company or other successor to the
Company, subject to your rights arising from a change of control as provided in
Section 10. This Agreement shall be binding upon and inure to the benefit of
you, your legal representatives, heirs and distributees, and shall be binding
upon and inure to the benefit of the Company, its successors and assigns.
17. NONDISPARAGEMENT. You agree not to publicly or privately disparage
the Company, its personnel, products or services either during or upon
termination of your employment with the Company.
18. SURVIVAL. All of the provisions of this Agreement that by their
terms are to be performed or that otherwise are to endure after the termination
of your employment by the Company shall survive the termination of your
employment and shall continue in effect for the respective periods therein
provided or contemplated.
19. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
20. HEADINGS. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
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21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
If this Agreement correctly sets forth our understanding, please sign
the duplicate original in the space provided below and return it to the Company,
whereupon this shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
C&D TECHNOLOGIES, INC.
By:/s/ Wade H. Roberts, Jr.
----------------------------
Title: President and CEO
Agreed as of the date first above written:
/s/ John Rich
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John Rich
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<PAGE>
EXHIBIT A
RELEASE
This Release is made this _____ day of _______________, ____ by and
between C&D Technologies, Inc. ("Employer") and _________________ ("Employee").
Recitals:
WHEREAS, the parties are parties to an Employment Agreement (the
"Employment Agreement") dated __________, pursuant to which Employee was
employed by Employer; and
WHEREAS, the Employment Agreement has terminated; and
WHEREAS, your execution and delivery of this Release is a condition to
the Employer's obligations to pay certain compensation and benefits to you under
the Employment Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1. As of _____________________, ____, Employee's employment with
Employer shall terminate, and Employee shall have no further job
responsibilities to perform for Employer; provided, however, that Employee shall
cooperate with Employer in transitioning Employee's job responsibilities as
Employer shall reasonably request, provided that Employee shall be entitled to
receive reasonable compensation for any services rendered after such date and
shall not be obligated to take any action that would interfere with any
subsequent employment of Employee or otherwise result in economic hardship to
Employee.
2. Employer shall pay to the Employee the amounts contemplated pursuant
to Section __ of the Employment Agreement, less applicable deductions; provided
however, the first payment shall not be due and payable until ten days after the
execution by Employee and delivery to Employer of this Release.
3. For and in consideration of the monies and benefits paid to Employee
by Employer, as more fully described in Section 2 above, and for other good and
valuable consideration, Employee hereby waives, releases and forever discharges
Employer, its assigns, predecessors, successors, and affiliated entities, and
its current or former stockholders, officers, directors, administrators, agents,
servants and employees, individually and as representatives of the corporate
entity (hereinafter collectively referred to as "Releasees"), from any and all
claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, bonuses, controversies, agreements, promises, charges,
complaints, damages, sums of money, interest, attorney's fees and costs, or
causes of action of any kind or nature whatsoever whether in law or equity,
including, but not limited to, all claims arising out of his/her employment or
termination of employment with Employer, such as
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all claims for wrongful discharge, breach of contract, either express or
implied, interference with contract, emotional distress, fraud,
misrepresentation, defamation, claims arising under the Civil Rights Acts of
1964 and 1991 as amended, the Americans With Disabilities Act, the Age
Discrimination in Employment Act (ADEA), the National Labor Relations Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974
(ERISA), the Family and Medical Leave Act, the Pennsylvania Human Relations Act,
the Pennsylvania Wage Payment & Collection Law, the Pennsylvania Minimum Wage
Act of 1968, the Pennsylvania Equal Pay Law, and any and all other claims
arising under federal, state or local law, rule, regulation, constitution,
ordinance or public policy whether known or unknown, arising up to and including
the date of execution of this Release; provided, however that the parties do not
release each other from any claim of breach of the terms of this Release. This
release of rights does not extend to claims that may arise after the date of
this Release. Employee agrees that Employee will not initiate any charge or
complaint or institute any claim or lawsuit against Releasees or any of them
based on any fact or circumstance occurring up to and including the date of the
execution by Employee of this Release.
4 Employee agrees that the payments made and other consideration
received pursuant to this Release are not to be construed as an admission of
legal liability by Releasees or any of them and that no person or entity shall
utilize this Release or the consideration received pursuant to this Release as
evidence of any admission of liability since Releasees expressly deny liability.
5 Employee affirms that the only consideration for the signing of this
Release are the terms stated herein and in the Employment Agreement and that no
other promise or agreement of any kind has been made to Employee by any person
or entity whatsoever to cause Employee to sign this Release.
6 Employee and Employer affirm that the Employment Agreement and this
Release set forth the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior or contemporaneous
agreements or understandings between the parties with respect to the subject
matter contained herein. Further, there are no representations, arrangements or
understandings, either oral or written, between the parties, which are not fully
expressed herein. Finally, no alteration or other modification of this Release
shall be effective unless made in writing and signed by both parties.
7 Employee acknowledges that Employee has been given a period of at
least 21 days within which to consider this Release.
8 Following the execution of this Release, the Employee has a period of
7 days from the date of execution to revoke this Release, and this Release shall
not become effective or enforceable until the revocation period has expired.
9 Employee certifies that Employee has returned to Employer all keys,
identification cards, credit cards, computer and telephone equipment and other
property or information of Employer in Employee's possession, custody, or
control including, but not limited to, any information contained in any computer
files maintained by Employee during Employee's
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employment with Employer. Employee certifies that Employee has not kept the
originals or copies of any documents, files, or other property of Employer which
Employee obtained or received during Employee's employment with Employer.
10 Employee acknowledges that Employer advised Employee to consult with
an attorney prior to executing this Release.
11 Employee affirms that Employee has carefully read this Release, that
Employee fully understands the meaning and intent of this document, that
Employee has signed this Release voluntarily and knowingly, and that Employee
intends to be bound by the promises contained in this Release for the
consideration described in Section 2 above.
IN WITNESS WHEREOF, Employee and the authorized representative of
Employer have executed this Release on the dates indicated below:
C&D TECHNOLOGIES, INC.
Dated:_____________________ By:______________________________
Title:__________________________
Dated:_____________________ ______________________________
John Rich
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ENDORSEMENT
I, ___________________________________, hereby acknowledge that I was
given 21 days to consider the foregoing Release and voluntarily chose to sign
the Release prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the Commonwealth
of Pennsylvania that the foregoing is true and correct.
EXECUTED this ________ day of ______________, ____, at
_______________________________________, Pennsylvania.
-------------------------------
John Rich
A-4
Exhibit 10.21
March 31, 2000
Mr. Apostolos T. Kambouroglou
712 Woodland Avenue
Norristown, PA 19403
Dear Paul:
You are presently employed by C&D Technologies, Inc., a Delaware
corporation (the "Company"), in an executive capacity and the Company desires to
encourage such continued employment by providing certain protections for you by
entering into this Agreement with you, in return for which you agree to continue
to be employed by the Company on the terms set forth herein, to refrain from
certain competitive activity and to provide the Company with certain assurances
upon your departure. In consideration of same, the Company agrees to employ you,
and you agree to accept such employment, under the following terms and
conditions:
1. TERM OF EMPLOYMENT.
(a) Except for earlier termination as is provided in Section 9 or 10
below, your employment under this Agreement shall be automatically renewed for
successive terms of one month each, unless either party shall have given to the
other party at least 30 days' prior written notice of the termination of this
Agreement (a "Termination Notice"). If such 30 days' prior written notice is
given by either party, (i) the Company shall, without any liability to you, have
the right, exercisable at any time after such notice is sent, to elect any other
person to the office or offices in which you are then serving and to remove you
from such office or offices, but (ii) all other obligations each of you and the
Company have to the other, including the Company's obligation to pay your
compensation and make available the medical and dental insurance to which you
are entitled hereunder, shall continue until the date your employment terminates
as specified in such notice.
2. COMPENSATION.
(a) You shall be compensated for all services rendered by you under
this Agreement at the rate of $147,000 per annum (such salary, as it is from
time to time adjusted, is herein referred to as the ("Base Salary"). Such Base
Salary shall be payable in periodic installments twice monthly in accordance
with the Company's payroll practices for salaried employees. The Compensation
<PAGE>
Committee of the Board of Directors shall review such Base Salary prior to April
1, 2000 and each year thereafter during the term of this Agreement, including
any renewal term, and shall make such adjustments, if any, as the Compensation
Committee shall determine; provided, however, that no adjustment shall reduce
the Base Salary below $147,000.
(b) If your employment hereunder shall be terminated (i) by the Company
without notice of Cause (as defined in Section 9(c)) therefor having been given
to you (other than pursuant to Section 9(a) or 9(b)), or (ii) as a result of the
non-renewal of this Agreement pursuant to a Termination Notice given by the
Company under Section 1(a) then, in addition to paying you the Accrued
Obligations (as hereinafter defined), for a one-year period after the effective
date of such termination, the Company shall pay you at the rate of your Base
Salary in effect at the time of such termination in periodic payments in
accordance with the Company's payroll practices for salaried employees;
provided, however, that your right to receive such payments, other than the
Accrued Obligations, shall be conditioned upon your execution of a Release (the
"Release"). Such Release shall be substantially in the form of Exhibit A hereto
but may be modified by the Company in its sole discretion as it deems
appropriate to reflect changes in law or circumstances arising after the date of
this Agreement; provided, however, that no such modification shall increase any
of your obligations to the Company over those contemplated by this Agreement,
including Exhibit A hereto. The term "Accrued Obligations" shall mean (i) your
Base Salary through the date of termination and (ii) all benefits that have
accrued to you under the terms of all employee benefits plans of the Company in
which you are entitled to participate.
3. DUTIES.
(a) During the term of your employment hereunder, including any renewal
thereof, you agree to serve as the Vice President Operations or in such other
capacity with duties and responsibilities of a similar nature as those initially
undertaken by you hereunder as the President of the Company may from time to
time determine. Your duties may be changed at any time and from time to time
hereafter, upon mutual agreement, consistent with office or offices in which you
serve as deemed necessary by the President of the Company. You also agree to
perform such other services and duties consistent with the office or offices in
which you are serving and its responsibilities as may from time to time be
prescribed by the Board of Directors, and you also agree to serve, if elected,
as an officer and/or director of the Company and/or any of the Company's other
direct or indirect subsidiaries without additional compensation, in all cases in
conformity to the by-laws of each such corporation. Unless you otherwise agree,
you shall not be required to relocate your place of business to a location that
would increase your commuting distance by greater than 25 miles.
(b) You shall devote your full employment energies, interest,
abilities, time and attention during normal business hours (excluding the
vacation periods provided in Section 4(b) below) exclusively to the business and
affairs of the Company, its parent corporation and subsidiaries, if any, and
shall not engage in any activity that conflicts or interferes with the
performance of duties hereunder.
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(c) You agree to cooperate with the Company, including taking such
reasonable medical examinations as may be necessary, in the event the Company
shall desire or be required (such as pursuant to the terms of any bank loan or
any other agreement) to obtain life insurance insuring your life.
(d) You shall, except as otherwise provided herein, be subject to the
Company's rules, practices and policies applicable to the Company's senior
executive employees. Without limiting the generality of the foregoing, you
shall, with respect to the Company and its parents, subsidiaries, assets and
stockholders, act in a manner consistent with your fiduciary responsibilities as
an executive of the Company.
4. BENEFITS.
(a) You shall have the benefit of such life and medical insurance,
bonus, stock option and other similar plans as the Company may have or may
establish from time to time, and in which you would be entitled to participate
by reason of your position with the Company, pursuant to the terms thereof.
Also, to the extent you have met the qualifications required, you may
participate in the Company's savings and retirement plans. The foregoing,
however, shall not be construed to require the Company to establish any such
plans or to prevent the Company from modifying or terminating any such plans,
and no such action or failure thereof shall affect this Agreement.
(b) You shall be entitled to a vacation of four weeks each year.
(c) The Company will provide you with an annual physical examination.
5. EXPENSES. The Company will reimburse you for reasonable expenses
(consistent with Company policy), including traveling expenses, incurred by you
in connection with the business of the Company, upon the presentation by you of
appropriate substantiation for such expenses.
6. RESTRICTIVE COVENANTS.
(a) During such time as you shall be employed by the Company, and for
the applicable Restricted Period (as defined below) thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in, represent, advise or
otherwise participate as an officer, employee, director, stockholder, partner,
agent of or consultant for, any business that, at the time your employment with
the Company ceases, is competitive with the business in which the Company is
engaged or in which the Company has taken affirmative steps to engage (a
"Competitive Business"); provided, however, that nothing herein (i) shall
prevent you from investing without limit in the securities of any company listed
on a national securities exchange, provided that your involvement with any such
company is solely that of a stockholder, and (ii) is intended to prevent you
from being employed during the applicable Restricted Period by any business
other than a Competitive Business. With respect to any termination of your
employment other than upon a Change of Control pursuant to Section 10, the
applicable Restricted Period shall be the one-year period following the date
your employment
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terminates, and with respect to a termination of your employment upon a Change
of Control pursuant to Section 10, the applicable Restricted Period shall be the
two-year period following the date your employment terminates.
(b) The parties hereto intend that the covenant contained in this
Section 6 shall be deemed a series of separate covenants for each state, county
and city. If, in any judicial proceeding, a court shall refuse to enforce all
the separate covenants deemed included in this Section 6, because, taken
together, they cover too extensive a geographic area, the parties intend that
those of such covenants (taken in order of the states, counties and cities
therein which are least populous), which, if eliminated, would permit the
remaining separate covenants to be enforced in such proceeding, shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 6.
7. CONFIDENTIALITY, NON-INTERFERENCE, INVENTIONS AND PROPRIETARY
INFORMATION.
(a) In the course of (i) your employment with the Company hereunder,
and (ii) any prior employment with the Company, you will have and have had
access to Confidential or Proprietary Data or Information of the Company. You
shall not at any time divulge or communicate to any person nor shall you direct
any Company employee to divulge or communicate to any person (other than to a
person bound by confidentiality obligations similar to those contained herein
and other than as necessary in performing your duties hereunder) or use to the
detriment of the Company any of such Confidential or Proprietary Data or
Information, except to the extent the same (i) becomes publicly known other than
through a breach of this Agreement by you, (ii) was known to you prior to the
disclosure thereof by the Company to you from a source that was entitled to
disclose it or (iii) is subsequently disclosed to you by a third party who shall
not have receive it under any obligation of confidentiality to the Company. The
term "Confidential or Proprietary Data or Information" as used in this
Agreement, shall mean data or information not generally available to the public,
including personnel information, financial information, customer lists, supplier
lists, product and tooling specifications, trade secrets, information concerning
product composition and formulas, tools and dies, drawings and schematics,
manufacturing processes, information regarding operations, systems and services,
knowhow, computer and any other electronic, processed or collated data, computer
programs, and pricing, marketing, sales and advertising data.
(b) You shall not, during the term of this Agreement and for the
applicable Restricted Period after the termination of your employment by the
Company, for your own account or for the account of any other person, (i)
solicit or divert to any Competitive Business any individual or entity who is a
customer of the Company or any subsidiary or affiliate of the Company or who was
a customer of the Company or any subsidiary or affiliate during the preceding
twelve-month period, (ii) employ, retain as a consultant, attempt to employ or
retain as a consultant, solicit or assist any Competitive Business in employing
or retaining as a consultant any current employee of the Company or any
subsidiary or affiliate or any person who was employed by the Company or any
subsidiary or affiliate during the preceding twelve-month period or (iii)
otherwise interfere with the Company's relationship with any of its suppliers,
customers, employees or consultants; provided, however, that you shall not be
prohibited from contacting suppliers or customers after termination of your
employment with regard to matters that do not violate your noncompetition or
confidentiality
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obligations contained in Sections 6(a) and 7(a) or interfere with the Company's
relationship with such parties.
(c) It is understood that you may, during your employment, conceive or
develop certain inventions, innovations or discoveries related to any business
in which the Company may be engaged, either solely or jointly with others. In
connection with the conception or development thereof, you agree to disclose
promptly to the Company all such inventions, innovations and discoveries, to
assign, and hereby do assign, to the Company all of your right, title and
interest in and to said inventions, innovations and discoveries, and to do all
things and sign all documents deemed by the Company to be necessary or
appropriate to vest in the Company, its successors and assigns, all of your
right, title and interest in and to such inventions, innovations or discoveries,
and to procure for the Company, at the Company's expense, patents, copyrights
and/or trademarks covering such inventions, innovations or discoveries in the
United States and its possessions and in foreign countries, at the discretion
and under the direction of the Company. In the event the Company is unable for
any reason to assure your signature on such documents, you irrevocably appoint
the Company and its duly authorized officers and agents as your agents and
attorneys-in-fact to execute such documents and to do such things with the same
legal force and effect as if executed or done by you.
(d) All written, electronic and other tangible materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company, or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon request of the Company during your
employment, you shall promptly deliver the same to the Company. In addition,
upon termination of your employment, or upon request of the Company during your
employment, you will deliver to the Company all other Company property in your
possession or under your control, including, but not limited to, financial
statements, marketing and sales data, patent applications, drawings and other
documents, and all Company keys, credit cards, computer and telephone equipment
and automobiles.
8. EQUITABLE RELIEF. With respect to the covenants contained in
Sections 6 and 7 of this Agreement, you agree that any remedy at law for any
breach of said covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of injunctive and/or other
equitable relief to enforce its rights hereunder or any other relief a court
might award.
9. EARLIER TERMINATION. Your employment hereunder shall terminate prior
to the Initial Term (or any renewal term, in the event of renewal) on the
following terms and conditions:
(a) This Agreement shall terminate automatically on the date of your
death. Notwithstanding the foregoing, if you die during the term of this
Agreement, the Company shall (i) continue to make payments to your estate of
your Base Salary as then in effect pursuant to this Agreement for 180 days after
the date of your death, and (ii) pay your estate any reimbursable expenses which
otherwise would have been paid to you to the date of your death.
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(b) This Agreement shall be terminated if you are unable to perform
your duties hereunder for a period of any 180 days in any 365 consecutive day
period by reason of physical or mental disability. Notwithstanding the
foregoing, if this Agreement is terminated pursuant to this Section 9(b), the
Company shall pay any accrued but unpaid Base Salary through the date of
termination and any reimbursable expenses due to you hereunder. For purposes of
this Agreement "physical or mental disability" shall mean your inability, due to
health reasons, to discharge properly your duties of employment, supported by
the opinion of a physician satisfactory to both you and the Company. If the
parties do not agree on a physician mutually satisfactory to both of you and the
Company within ten days of written demand by one or the other, a physician shall
be selected by the president of the Pennsylvania Medical Association, and the
physician shall, within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. Services of the physician
shall be paid for by the Company. You shall fully cooperate with the examining
physician including submitting yourself to such examinations as may be requested
by the physician for the purpose of determining whether you are disabled.
(c) This Agreement shall terminate immediately upon the Company's
sending you written notice terminating your employment hereunder for Cause. The
Company may terminate this Agreement for Cause, but only after written notice
specifying the Cause of such action shall have been rendered to you by the
President of the Company. "Cause" shall mean any of the following:
(i) Breach of this Agreement.
(ii) Refusal or inability (other than pursuant to Section 9(a)
or 9(b)) to perform duties assigned to you in accordance with the terms of this
Agreement or overt and willful disobedience of orders or directives issued to
you by the Company and within the scope of your duties to the Company.
(iii) Willful misconduct in the performance of your duties,
functions and responsibilities.
(iv) Commission of acts that are illegal in connection with
the performance of your duties, functions and responsibilities under this
Agreement.
(v) Commission of acts that would constitute a felony offense
during the term of this Agreement.
(vi) Violation of Company rules and regulations concerning
conflict of interest.
(vii) Gross mismanagement of the assets of the Company.
(viii) Gross incompetence, gross insubordination or gross
neglect in the performance of your duties hereunder or being under the habitual
influence of alcohol while on duty or possession, use, manufacture,
distribution, dispensation or sale of illegal drugs while on or off duty.
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(ix) Any act or omission, whether or not included in the
foregoing, that a court of competent jurisdiction would determine to constitute
cause for termination.
Existence of Cause shall be conclusively determined for all purposes hereunder
by the President of the Company. Such advice and consultation shall be utilized
as such officer regards as appropriate, and no obligation or duty with respect
to any procedure or formality is created by this Agreement. If the Company
terminates this Agreement for Cause under this Section 9(c), the Company shall
not be obligated to make any further payments under this Agreement except for
the Accrued Obligations.
(d) Except as set forth in Section 10, your coverage under the benefits
program provided by the Company will cease effective on your termination date.
You will be entitled to elect continuation of your medical and dental benefits
at the same cost the Company pays, pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Details with regard to
COBRA continuation coverage will be provided to you shortly after your
termination date.
(e) Except as set forth in Section 10, life insurance coverage will
cease upon your termination date. You may, however, apply to General American
Life Insurance Company (or such other insurance company as may provide group
life insurance to the Company's employees at the time) for an individual
converted life policy, with such application and payment of the first premium
required to be accomplished within 31 days after your termination date. Details
regarding this conversion option will be provided to you shortly after your
termination date.
(f) Accidental death and dismemberment and long term disability
coverages cease with your termination date and may not be extended or converted.
10. TERMINATION UPON A CHANGE OF CONTROL.
(a) In the event a Change of Control (as defined below) occurs, and
within 24 months after such Change of Control: (i) your employment with the
Company is terminated by you pursuant to a Termination for Good Reason (as
defined below); or (ii) your employment with the Company is terminated by the
Company for any reason other than death, disability or for Cause pursuant to
Sections 9(a), (b) or (c); or (iii) this Agreement is not renewed due to a
Termination Notice given by the Company, as provided in Section 1(a), (the
events under clauses (i), (ii) and (iii) herein collectively called a "Change of
Control Termination"), you shall be entitled to receive the payments and
benefits set forth in Section 10(e) and (f) below, which payments and benefits
shall be in substitution for, and not in addition to, the payments and benefits
otherwise payable under Section 2(a) or 2(b) of this Agreement in the event of
termination. Your right to receive such payments and benefits, other than the
Accrued Obligations, shall be in consideration of your agreements under this
Agreement, including but not limited to your agreement not to compete with the
Company for two years after a Change of Control pursuant to Section 6, and shall
be conditioned upon your execution of a Release. Such Release shall be
substantially in the form of Exhibit A but may be modified by the Company as it
deems appropriate to reflect changes in law or circumstances arising after the
date of this Agreement; provided that no such modification shall increase any of
your obligations to the Company over those contemplated by this Agreement,
including Exhibit A hereto.
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(b) For purposes of the Agreement, a "Change of Control" shall be
deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof)), excluding the Company, any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of any such plan acting in his capacity as
trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange
Act, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of shares of the Company having at least 30% of the total number of votes
that may be cast for the election of directors of the Company; (ii) the
shareholders of the Company shall approve any merger or other business
combination of the Company, sale of all or substantially all of the Company's
assets or combination of the foregoing transactions (a "Transaction"), other
than a Transaction involving only the Company and one or more of its
subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
shareholder of the Company owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction) and no person is the
beneficial owner of at least 30% of the shares of the resulting entity as
contemplated by Section 10(b)(i) above; or (iii) within any 24-month period
beginning on or after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
as of the date hereof shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
10(b)(iii), unless such election, recommendation or approval was the result of
an actual or threatened election contest of the type contemplated by Regulation
14a-11 under the Exchange Act or any successor provision. Notwithstanding the
foregoing, no Change of Control of the Company shall be deemed to have occurred
for purposes of this Agreement by reason of any actions or events in which you
participate in a capacity other than in your capacity as an executive or
director of the Company.
(c) For purposes of the Agreement, a "Termination for Good Reason"
means a termination by you by written notice given within 90 days after the
occurrence of the Good Reason event. A notice of Termination for Good Reason
shall indicate the specific termination provision in Section 10(d) relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for Termination for Good Reason. Your failure to set forth in
such notice any facts or circumstances that contribute to the showing of Good
Reason shall not waive any of your rights hereunder or preclude you from
asserting such fact or circumstance in enforcing your rights hereunder. The
notice of Termination for Good Reason shall provide for a date of termination
not less than 10 nor more than 60 days after the date such Notice of Termination
for Good Reason is given.
(d) For purposes of the Agreement, "Good Reason" shall mean the
occurrence, without your express written consent, of any of the following
circumstances, unless such circumstances are fully corrected prior to the date
of termination specified in the notice of Termination for Good Reason as
contemplated in Section 10(c) above: (i) any material diminution of your
positions, duties
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or responsibilities hereunder (except in each case in connection with the
termination of your employment for Cause pursuant to Section 9(c) or due to
disability or death pursuant to Section 9(a) or 9(b) or temporarily as a result
of your illness or other absence), or the assignment to you of duties or
responsibilities that are inconsistent with your position under the Agreement at
the time of a Change of Control; (ii) your removal from, or your nonreelection
to, the officer positions with the Company specified in this Agreement; (iii)
relocation of the Company's principal executive offices to a location more than
25 miles from its location at the time of the Change of Control; (iv) failure by
the Company, after a Change of Control, (A) to continue any bonus plan, program
or arrangement in which you are entitled to participate immediately prior to the
Change of Control (the "Bonus Plans"), provided that any such Bonus Plans may be
modified at the Company's discretion from time to time but shall be deemed
terminated if (x) any such plan does not remain substantially in the form in
effect prior to such modification and (y) if plans providing you with
substantially similar benefits are not substituted therefor ("Substitute
Plans"), or (B) to continue you as a participant in the Bonus Plans and
Substitute Plans on at least the same basis as to potential amount of the bonus
and substantially the same level of criteria for achievability thereof as you
participated in immediately prior to any change in such plans or awards, in
accordance with the Bonus Plans and the Substitute Plans; (v) any material
breach by the Company of any provisions of this Agreement; or (vi) failure of
any successor to the Company to promptly acknowledge in writing the obligations
of the Company hereunder.
(e) Upon a Change of Control Termination, as provided in Section 10(a),
the Company shall pay or provide you the following payments and benefits:
(i) The Company shall pay to you the Accrued Obligations in a
lump sum within five business days after the date of termination.
(ii) The Company shall pay to you as severance pay, not later
than the tenth day following the date of your execution and delivery of the
Release required pursuant to Section 10(a) of this Agreement:
(A) a lump sum payment in an amount equal to two years
of your Base Salary; and
(B) a lump sum payment in an amount equal to two of
your annual incentive bonuses, such payment to be equal to the greater of (i)
the amount of all incentive bonuses paid to you with respect to each of the two
most recently completed fiscal years of the Company for which a bonus has been
paid or (ii) the incentive bonus paid to you with respect to the most recently
completed fiscal year of the Company for which a bonus has been paid plus an
amount equal to your Target Bonus (as hereinafter defined); provided, however,
that if you have been employed by the Company for less than two years, such
payment shall be equal to the greater of (x) the amount of the incentive bonus
paid to you with respect to the most recently completed fiscal year of the
Company for which a bonus has been paid plus your Target Bonus or (y) the amount
of your Target Bonus multiplied by two. The term "Target Bonus" shall mean the
incentive bonus that would have been payable for the fiscal year that includes
the date on which your employment terminates under the incentive bonus program
in effect as of the date of the Change of Control, assuming that you had
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been entitled to receive an amount in respect of such bonus based solely upon
the target percentage applicable to employees in the same employment grade as
you and your Base Salary as of the date of termination (or if greater, your Base
Salary as of the date on which occurred an event giving rise to a Change of
Control Termination), and without regard to actual performance.
(iii) The Company shall continue the participation of you and
your dependents for a period of two years after the date of termination in all
health, medical and accident, life and other welfare plans (as defined in
Section 3(l) of ERISA), in which you were participating immediately prior to the
date of termination, except for any disability plans; provided, however, that to
the extent the Company's plans do not permit such continued participation or
such participation would have an adverse tax impact on such plans or on the
other participants in such plans, the Company may instead provide materially
equivalent benefits to you outside of such plans; provided, further, that under
such circumstances, (i) medical insurance benefits may be provided by the
Company paying any COBRA premiums (COBRA coverage, in any event, to be measured
from the date of termination of employment) and (ii) if the Company is unable to
continue your life insurance coverage, the Company shall pay you an amount equal
to twice the premium paid during the year prior to termination or if you convert
the insurance to an individual policy, the Company shall pay the premium for
such insurance for two years. You shall complete such forms and take such
physical examinations as reasonably requested by the Company. To the extent you
incur any tax obligation as a result of the provisions of this Section 10(e)
that you would not have incurred if you remained an employee of the Company and
had continued to participate in the benefit plans as an employee, the Company
shall pay to you, at the time the tax is due, an amount to cover such taxes and
the taxes on the amount paid to cover such taxes.
(iv) All outstanding stock options and restricted stock awards
that have been granted to you by the Company at any time but have not yet vested
and upon which vesting depends solely upon the passage of time, shall
immediately vest or become nonforfeitable, as the case may be. In the event the
foregoing sentence becomes applicable, the Company agrees to cause the Board of
Directors to take all steps necessary to implement the foregoing sentence.
(v) All amounts payable to you upon a Change of Control under
the Company's Supplemental Executive Retirement Plan and Deferred Compensation
Plan shall be paid to you in accordance with the respective terms of those
plans.
(vi) The Company, at its expense, shall provide you with
outplacement services at a level appropriate for the most senior executive
employees through an outplacement firm of your choice for a period of up to one
year after the date of the Change of Control Termination.
(f) (i) In the event that any payment, coverage or benefit
(collectively, the "Covered Benefits") provided to you by the Company or an
Affiliate (as defined below) is or becomes subject to the excise tax imposed
under Section 4999 or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code"), or you incur interest or penalties with respect
to that excise tax (that excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the Company shall
pay you an additional amount (a "Gross-Up Bonus") at the
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time or times specified in Section 10(f)(iii)(z) below. The amount of the
Gross-Up Bonus shall equal the quotient determined by dividing (x) the Excise
Tax attributable to the Covered Benefits by (y) one minus the highest marginal
income tax rate, where the term "highest marginal income tax rate" means the sum
of the highest combined local, state and federal personal income tax rates
(including any state unemployment compensation tax rate, any surtax rate as well
as the Medicare hospital insurance tax rate imposed on employees under the
Federal Insurance Contributions Act) as in effect for the calendar year to which
the Excise Tax attributable to the Covered Benefits relates, provided that in
determining the highest tax rate for federal purposes both the deductibility of
state and local income tax payments and the reduction in the deductibility of
itemized deductions shall be taken into account; it being the intention of the
parties hereto that your net after tax position (after taking into account any
interest or penalties imposed with respect to such taxes) upon receipt of the
Covered Benefits is no less advantageous to you than the net after tax position
you would have had if Section 4999 of the Code had not been applicable to any
portion of the Covered Benefits.
(ii) All determinations to be made under this Section 10(f),
including the determination of whether an Excise Tax is payable and the amount
thereof, shall be made by a law firm practicing in the Philadelphia,
Pennsylvania metropolitan area that is knowledgeable in tax law matters, which
firm shall be selected and paid for by the Company and acceptable to you. If tax
counsel's determinations are not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be computed (with a
Gross-Up Bonus, if applicable) by that tax counsel based upon the final amount
of the Excise Tax so determined.
(iii) For purposes of this Section 10(f):
(x) An "Affiliate" shall mean any successor to
the Company, any member of an affiliated group including the Company
(determining using the definition in Section 1504 of the Code) or any entity
that becomes a member of such an affiliated group as a result of the transaction
causing the Change of Control.
(y) When determining the amount of the Gross-Up
Bonus, you will be deemed to have otherwise allowable deductions for federal,
state and local tax purposes at least equal to those disallowed because of the
inclusion of the Gross-Up Bonus in your adjusted gross income.
(z) The portion of the Gross-Up Bonus attributable
to a Covered Benefit shall be paid to you within 10 business days following the
provision to you of the Covered Benefit. In the event that the amount of Excise
Tax due exceeds the amount of Excise Tax determined by tax counsel, the Company
shall pay you an additional Gross-Up Bonus in respect of that excess at the time
that the amount of the excess is determined under Section 10(f)(ii). In the
event the amount of Excise Tax due is less than the amount of Excise Tax
determined by tax counsel, you shall repay the Company the portion of the
Gross-Up Bonus attributable thereto at the time that the amount of the reduction
in Excise Tax is determined under Section 10(f)(ii); provided, however, that if
any portion of the amount you must repay to the Company has been paid to any
federal, state or local tax authority, your repayment of that portion shall be
postponed until the tax authority has actually refunded or credited that amount
to you.
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(g) Upon the occurrence of a Change of Control, if the Company fails to
perform any of its obligations under this Agreement or the Company or any other
person asserts the invalidity of any provision of this Agreement and you incur
any costs in successfully enforcing or defending any of the provisions of this
Agreement, including legal fees and expenses and court costs, the Company shall
reimburse you for all such costs incurred by you.
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with
Exhibit A hereto and all rights to which you are entitled under all employee
benefit plans in which you participate, constitutes the full and complete
understanding of the parties, and supersedes all prior agreements and
understandings, oral or written, between the parties, except for the Agreement
Relating to Intellectual Property & Confidential Information dated April 12,
1991 between you and the Company ("Confidentiality Agreement"); provided,
however, that if the terms of any of such employee benefit plan or such
Confidentiality Agreement shall be inconsistent with the provisions of this
Agreement, the provisions of this Agreement shall control. This Agreement may
not be modified or amended except by an instrument in writing signed by the
party against which enforcement thereof may be sought. Each party to this
Agreement, acknowledges that no representations, inducements, promises or
agreements, oral or written, have been made by either party or anyone acting on
behalf of either party, which are not embodied herein and that no other
agreement, statement or promise not set forth or referred to in this Agreement
shall be valid or binding.
12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
13. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach.
14. NO MITIGATION REQUIRED. Upon a termination of your employment by
the Company without Cause pursuant to Section 2(b) or upon a Change of Control
pursuant to Section 10, you shall have no obligation to seek other employment
but shall not be prohibited from doing so, and no compensation paid to you as
the result of any other employment shall reduce any payment required to be made
by the Company hereunder.
15. NOTICES. All notices hereunder shall be in writing and shall be
sent by express mail or by certified or registered mail, postage prepaid, return
receipt requested: if to you, to your residence as listed in the Company's
records; and if to the Company, to the address set forth above with copies to
the President.
16. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be assigned
by either party, except that it may be assigned by the Company to an acquirer of
all or substantially all of the assets of the Company or other successor to the
Company, subject to your rights arising from a
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change of control as provided in Section 10. This Agreement shall be binding
upon and inure to the benefit of you, your legal representatives, heirs and
distributees, and shall be binding upon and inure to the benefit of the Company,
its successors and assigns.
17. NONDISPARAGEMENT. You agree not to publicly or privately disparage
the Company, its personnel, products or services either during or upon
termination of your employment with the Company.
18. SURVIVAL. All of the provisions of this Agreement that by their
terms are to be performed or that otherwise are to endure after the termination
of your employment by the Company shall survive the termination of your
employment and shall continue in effect for the respective periods therein
provided or contemplated.
19. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
20. HEADINGS. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
If this Agreement correctly sets forth our understanding, please sign
the duplicate original in the space provided below and return it to the Company,
whereupon this shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
C&D TECHNOLOGIES, INC.
By: /s/ Wade H. Roberts, Jr.
------------------------------
Title: President and CEO
Agreed as of the date first above written:
/s/ Apostolos T. kambouroglou
- -----------------------------
Apostolos T. Kambouroglou
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EXHIBIT A
RELEASE
This Release is made this _____ day of _______________, ____ by and
between C&D Technologies, Inc. ("Employer") and _________________ ("Employee").
RECITALS:
WHEREAS, the parties are parties to an Employment Agreement (the
"Employment Agreement") dated __________, pursuant to which Employee was
employed by Employer; and
WHEREAS, the Employment Agreement has terminated; and
WHEREAS, your execution and delivery of this Release is a condition to
the Employer's obligations to pay certain compensation and benefits to you under
the Employment Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1. As of _____________________, ____, Employee's employment with
Employer shall terminate, and Employee shall have no further job
responsibilities to perform for Employer; provided, however, that Employee shall
cooperate with Employer in transitioning Employee's job responsibilities as
Employer shall reasonably request, provided that Employee shall be entitled to
receive reasonable compensation for any services rendered after such date and
shall not be obligated to take any action that would interfere with any
subsequent employment of Employee or otherwise result in economic hardship to
Employee.
2. Employer shall pay to the Employee the amounts contemplated pursuant
to Section __ of the Employment Agreement, less applicable deductions; provided
however, the first payment shall not be due and payable until ten days after the
execution by Employee and delivery to Employer of this Release.
3. For and in consideration of the monies and benefits paid to Employee
by Employer, as more fully described in Section 2 above, and for other good and
valuable consideration, Employee hereby waives, releases and forever discharges
Employer, its assigns, predecessors, successors, and affiliated entities, and
its current or former stockholders, officers, directors, administrators, agents,
servants and employees, individually and as representatives of the corporate
entity (hereinafter collectively referred to as "Releasees"), from any and all
claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, bonuses, controversies, agreements, promises, charges,
complaints, damages, sums of money, interest, attorney's fees and costs, or
causes of action of any kind or nature whatsoever whether in law or equity,
including, but not limited to, all claims arising out of his/her employment or
termination of employment with Employer, such as
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all claims for wrongful discharge, breach of contract, either express or
implied, interference with contract, emotional distress, fraud,
misrepresentation, defamation, claims arising under the Civil Rights Acts of
1964 and 1991 as amended, the Americans With Disabilities Act, the Age
Discrimination in Employment Act (ADEA), the National Labor Relations Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974
(ERISA), the Family and Medical Leave Act, the Pennsylvania Human Relations Act,
the Pennsylvania Wage Payment & Collection Law, the Pennsylvania Minimum Wage
Act of 1968, the Pennsylvania Equal Pay Law, and any and all other claims
arising under federal, state or local law, rule, regulation, constitution,
ordinance or public policy whether known or unknown, arising up to and including
the date of execution of this Release; provided, however that the parties do not
release each other from any claim of breach of the terms of this Release. This
release of rights does not extend to claims that may arise after the date of
this Release. Employee agrees that Employee will not initiate any charge or
complaint or institute any claim or lawsuit against Releasees or any of them
based on any fact or circumstance occurring up to and including the date of the
execution by Employee of this Release.
4 Employee agrees that the payments made and other consideration
received pursuant to this Release are not to be construed as an admission of
legal liability by Releasees or any of them and that no person or entity shall
utilize this Release or the consideration received pursuant to this Release as
evidence of any admission of liability since Releasees expressly deny liability.
5 Employee affirms that the only consideration for the signing of this
Release are the terms stated herein and in the Employment Agreement and that no
other promise or agreement of any kind has been made to Employee by any person
or entity whatsoever to cause Employee to sign this Release.
6 Employee and Employer affirm that the Employment Agreement and this
Release set forth the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior or contemporaneous
agreements or understandings between the parties with respect to the subject
matter contained herein. Further, there are no representations, arrangements or
understandings, either oral or written, between the parties, which are not fully
expressed herein. Finally, no alteration or other modification of this Release
shall be effective unless made in writing and signed by both parties.
7 Employee acknowledges that Employee has been given a period of
at least 21 days within which to consider this Release.
8 Following the execution of this Release, the Employee has a period of
7 days from the date of execution to revoke this Release, and this Release shall
not become effective or enforceable until the revocation period has expired.
9 Employee certifies that Employee has returned to Employer all keys,
identification cards, credit cards, computer and telephone equipment and other
property or information of Employer in Employee's possession, custody, or
control including, but not limited to, any information contained in any computer
files maintained by Employee during Employee's employment with Employer.
Employee certifies that Employee has not kept the originals or copies
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of any documents, files, or other property of Employer which Employee obtained
or received during Employee's employment with Employer.
10 Employee acknowledges that Employer advised Employee to consult with
an attorney prior to executing this Release.
11 Employee affirms that Employee has carefully read this Release, that
Employee fully understands the meaning and intent of this document, that
Employee has signed this Release voluntarily and knowingly, and that Employee
intends to be bound by the promises contained in this Release for the
consideration described in Section 2 above.
IN WITNESS WHEREOF, Employee and the authorized representative of
Employer have executed this Release on the dates indicated below:
C&D TECHNOLOGIES, INC.
Dated:_____________________ By:______________________________
Title:__________________________
Dated:_____________________ ______________________________
Apostolos T. Kambouroglou
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ENDORSEMENT
I, ___________________________________, hereby acknowledge that I was
given 21 days to consider the foregoing Release and voluntarily chose to sign
the Release prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the Commonwealth
of Pennsylvania that the foregoing is true and correct.
EXECUTED this ________ day of ______________, ____, at
_______________________________________, Pennsylvania.
---------------------------------
Apostolos T. Kambouroglou
A-4
Exhibit 10.22
March 31, 2000
Dr. Kathryn Bullock
980 Clover Court
Blue Bell, PA 19422
Dear Kathryn:
You are presently employed by C&D Technologies, Inc., a Delaware
corporation (the "Company"), in an executive capacity and the Company desires to
encourage such continued employment by providing certain protections for you by
entering into this Agreement with you, in return for which you agree to continue
to be employed by the Company on the terms set forth herein, to refrain from
certain competitive activity and to provide the Company with certain assurances
upon your departure. In consideration of same, the Company agrees to employ you,
and you agree to accept such employment, under the following terms and
conditions:
1. TERM OF EMPLOYMENT.
(a) Except for earlier termination as is provided in Section 9 or 10
below, your employment under this Agreement shall be for the period commencing
on the date hereof (the "Effective Date") and terminating on December 5, 2000
(the "Initial Term").
(b) This Agreement shall be automatically renewed for successive terms
of one month each, unless either party shall have given to the other party at
least 30 days' prior written notice of the termination of this Agreement (a
"Termination Notice"). If such 30 days' prior written notice is given by either
party, (i) the Company shall, without any liability to you, have the right,
exercisable at any time after such notice is sent, to elect any other person to
the office or offices in which you are then serving and to remove you from such
office or offices, but (ii) all other obligations each of you and the Company
have to the other, including the Company's obligation to pay your compensation
and make available the medical and dental insurance to which you are entitled
hereunder, shall continue until the date your employment terminates as specified
in such notice.
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2. COMPENSATION.
(a) You shall be compensated for all services rendered by you under
this Agreement at the rate of $135,000 per annum (such salary, as it is from
time to time adjusted, is herein referred to as the ("Base Salary"). Such Base
Salary shall be payable in periodic installments twice monthly in accordance
with the Company's payroll practices for salaried employees. The Compensation
Committee of the Board of Directors shall review such Base Salary prior to April
1, 2000 and each year thereafter during the term of this Agreement, including
any renewal term, and shall make such adjustments, if any, as the Compensation
Committee shall determine; provided, however, that no adjustment shall reduce
the Base Salary below $135,000.
(b) If your employment hereunder shall be terminated (i) by the Company
without notice of Cause (as defined in Section 9(c)) therefor having been given
to you (other than pursuant to Section 9(a) or 9(b) and notwithstanding the
provisions of Section 1(a)), or (ii) as a result of the non-renewal of this
Agreement pursuant to a Termination Notice given by the Company under Section
1(b) then, in addition to paying you the Accrued Obligations (as hereinafter
defined), for a 180 day period after the effective date of such termination (if
such termination occurs after the expiration of the Initial Term) or for the
greater of the remaining number of days of the Initial Term and 180 days (if
such termination occurs during the Initial Term), the Company shall pay you at
the rate of your Base Salary in effect at the time of such termination in
periodic payments in accordance with the Company's payroll practices for
salaried employees; provided, however, that your right to receive such payments,
other than the Accrued Obligations, shall be conditioned upon your execution of
a Release (the "Release"). Such Release shall be substantially in the form of
Exhibit A hereto but may be modified by the Company in its sole discretion as it
deems appropriate to reflect changes in law or circumstances arising after the
date of this Agreement; provided, however, that no such modification shall
increase any of your obligations to the Company over those contemplated by this
Agreement, including Exhibit A hereto. The term "Accrued Obligations" shall mean
(i) your Base Salary through the date of termination and (ii) all benefits that
have accrued to you under the terms of all employee benefits plans of the
Company in which you are entitled to participate.
3. DUTIES.
(a) During the term of your employment hereunder, including any renewal
thereof, you agree to serve as the Vice President, Technology or in such other
capacity with duties and responsibilities of a similar nature as those initially
undertaken by you hereunder as the President of the Company may from time to
time determine. Your duties may be changed at any time and from time to time
hereafter, upon mutual agreement, consistent with office or offices in which you
serve as deemed necessary by the President of the Company. You also agree to
perform such other services and duties consistent with the office or offices in
which you are serving and its responsibilities as may from time to time be
prescribed by the Board of Directors, and you also agree to serve, if elected,
as an officer and/or director of the Company and/or any of the Company's other
direct or indirect subsidiaries without additional compensation, in all cases in
conformity to the by-laws of each such corporation. Unless you otherwise agree,
you shall not be required to relocate your
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place of business to a location that would increase your commuting distance by
greater than 25 miles
(b) You shall devote your full employment energies, interest,
abilities, time and attention during normal business hours (excluding the
vacation periods provided in Section 4(b) below) exclusively to the business and
affairs of the Company, its parent corporation and subsidiaries, if any, and
shall not engage in any activity that conflicts or interferes with the
performance of duties hereunder.
(c) You agree to cooperate with the Company, including taking such
reasonable medical examinations as may be necessary, in the event the Company
shall desire or be required (such as pursuant to the terms of any bank loan or
any other agreement) to obtain life insurance insuring your life.
(d) You shall, except as otherwise provided herein, be subject to the
Company's rules, practices and policies applicable to the Company's senior
executive employees. Without limiting the generality of the foregoing, you
shall, with respect to the Company and its parents, subsidiaries, assets and
stockholders, act in a manner consistent with your fiduciary responsibilities as
an executive of the Company.
4. BENEFITS.
(a) You shall have the benefit of such life and medical insurance,
bonus, stock option and other similar plans as the Company may have or may
establish from time to time, and in which you would be entitled to participate
by reason of your position with the Company, pursuant to the terms thereof.
Also, to the extent you have met the qualifications required, you may
participate in the Company's savings and retirement plans. The foregoing,
however, shall not be construed to require the Company to establish any such
plans or to prevent the Company from modifying or terminating any such plans,
and no such action or failure thereof shall affect this Agreement.
(b) You shall be entitled to a vacation of four weeks each year.
(c) The Company will provide you with an annual physical examination.
5. EXPENSES. The Company will reimburse you for reasonable expenses
(consistent with Company policy), including traveling expenses, incurred by you
in connection with the business of the Company, upon the presentation by you of
appropriate substantiation for such expenses.
6. RESTRICTIVE COVENANTS.
(a) During such time as you shall be employed by the Company, and for
the applicable Restricted Period (as defined below) thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in,
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represent, advise or otherwise participate as an officer, employee, director,
stockholder, partner, agent of or consultant for, any business that, at the time
your employment with the Company ceases, is competitive with the business in
which the Company is engaged or in which the Company has taken affirmative steps
to engage (a "Competitive Business"); provided, however, that nothing herein (i)
shall prevent you from investing without limit in the securities of any company
listed on a national securities exchange, provided that your involvement with
any such company is solely that of a stockholder, and (ii) is intended to
prevent you from being employed during the applicable Restricted Period by any
business other than a Competitive Business. With respect to any termination of
your employment other than upon a Change of Control pursuant to Section 10, the
applicable Restricted Period shall be the period following the date your
employment terminates during which you are receiving the payments described in
Section 2(b) hereof, and with respect to a termination of your employment upon a
Change of Control pursuant to Section 10, the applicable Restricted Period shall
be the two-year period following the date your employment terminates.
(b) The parties hereto intend that the covenant contained in this
Section 6 shall be deemed a series of separate covenants for each state, county
and city. If, in any judicial proceeding, a court shall refuse to enforce all
the separate covenants deemed included in this Section 6, because, taken
together, they cover too extensive a geographic area, the parties intend that
those of such covenants (taken in order of the states, counties and cities
therein which are least populous), which, if eliminated, would permit the
remaining separate covenants to be enforced in such proceeding, shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 6.
7. CONFIDENTIALITY, NON-INTERFERENCE, INVENTIONS AND PROPRIETARY
INFORMATION.
(a) In the course of (i) your employment with the Company hereunder,
and (ii) any prior employment with the Company, you will have and have had
access to Confidential or Proprietary Data or Information of the Company. You
shall not at any time divulge or communicate to any person nor shall you direct
any Company employee to divulge or communicate to any person (other than to a
person bound by confidentiality obligations similar to those contained herein
and other than as necessary in performing your duties hereunder) or use to the
detriment of the Company any of such Confidential or Proprietary Data or
Information, except to the extent the same (i) becomes publicly known other than
through a breach of this Agreement by you, (ii) was known to you prior to the
disclosure thereof by the Company to you from a source that was entitled to
disclose it or (iii) is subsequently disclosed to you by a third party who shall
not have receive it under any obligation of confidentiality to the Company. The
term "Confidential or Proprietary Data or Information" as used in this
Agreement, shall mean data or information not generally available to the public,
including personnel information, financial information, customer lists, supplier
lists, product and tooling specifications, trade secrets, information concerning
product composition and formulas, tools and dies, drawings and schematics,
manufacturing processes, information regarding operations, systems and services,
knowhow, computer and any other electronic, processed or collated data, computer
programs, and pricing, marketing, sales and advertising data.
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<PAGE>
(b) You shall not, during the term of this Agreement and for the
applicable Restricted Period after the termination of your employment by the
Company, for your own account or for the account of any other person, (i)
solicit or divert to any Competitive Business any individual or entity who is a
customer of the Company or any subsidiary or affiliate of the Company or who was
a customer of the Company or any subsidiary or affiliate during the preceding
twelve-month period, (ii) employ, retain as a consultant, attempt to employ or
retain as a consultant, solicit or assist any Competitive Business in employing
or retaining as a consultant any current employee of the Company or any
subsidiary or affiliate or any person who was employed by the Company or any
subsidiary or affiliate during the preceding twelve-month period or (iii)
otherwise interfere with the Company's relationship with any of its suppliers,
customers, employees or consultants; provided, however, that you shall not be
prohibited from contacting suppliers or customers after termination of your
employment with regard to matters that do not violate your noncompetition or
confidentiality obligations contained in Sections 6(a) and 7(a) or interfere
with the Company's relationship with such parties.
(c) It is understood that you may, during your employment, conceive or
develop certain inventions, innovations or discoveries related to any business
in which the Company may be engaged, either solely or jointly with others. In
connection with the conception or development thereof, you agree to disclose
promptly to the Company all such inventions, innovations and discoveries, to
assign, and hereby do assign, to the Company all of your right, title and
interest in and to said inventions, innovations and discoveries, and to do all
things and sign all documents deemed by the Company to be necessary or
appropriate to vest in the Company, its successors and assigns, all of your
right, title and interest in and to such inventions, innovations or discoveries,
and to procure for the Company, at the Company's expense, patents, copyrights
and/or trademarks covering such inventions, innovations or discoveries in the
United States and its possessions and in foreign countries, at the discretion
and under the direction of the Company. In the event the Company is unable for
any reason to assure your signature on such documents, you irrevocably appoint
the Company and its duly authorized officers and agents as your agents and
attorneys-in-fact to execute such documents and to do such things with the same
legal force and effect as if executed or done by you.
(d) All written, electronic and other tangible materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company, or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon request of the Company during your
employment, you shall promptly deliver the same to the Company. In addition,
upon termination of your employment, or upon request of the Company during your
employment, you will deliver to the Company all other Company property in your
possession or under your control, including, but not limited to, financial
statements, marketing and sales data, patent applications, drawings and other
documents, and all Company keys, credit cards, computer and telephone equipment
and automobiles.
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<PAGE>
8. EQUITABLE RELIEF. With respect to the covenants contained in
Sections 6 and 7 of this Agreement, you agree that any remedy at law for any
breach of said covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of injunctive and/or other
equitable relief to enforce its rights hereunder or any other relief a court
might award.
9. EARLIER TERMINATION. Your employment hereunder shall terminate prior
to the Initial Term (or any renewal term, in the event of renewal) on the
following terms and conditions:
(a) This Agreement shall terminate automatically on the date of your
death. Notwithstanding the foregoing, if you die during the term of this
Agreement, the Company shall (i) continue to make payments to your estate of
your Base Salary as then in effect pursuant to this Agreement for 180 days after
the date of your death, and (ii) pay your estate any reimbursable expenses which
otherwise would have been paid to you to the date of your death.
(b) This Agreement shall be terminated if you are unable to perform
your duties hereunder for a period of any 180 days in any 365 consecutive day
period by reason of physical or mental disability. Notwithstanding the
foregoing, if this Agreement is terminated pursuant to this Section 9(b), the
Company shall pay any accrued but unpaid Base Salary through the date of
termination and any reimbursable expenses due to you hereunder. For purposes of
this Agreement "physical or mental disability" shall mean your inability, due to
health reasons, to discharge properly your duties of employment, supported by
the opinion of a physician satisfactory to both you and the Company. If the
parties do not agree on a physician mutually satisfactory to both of you and the
Company within ten days of written demand by one or the other, a physician shall
be selected by the president of the Pennsylvania Medical Association, and the
physician shall, within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. Services of the physician
shall be paid for by the Company. You shall fully cooperate with the examining
physician including submitting yourself to such examinations as may be requested
by the physician for the purpose of determining whether you are disabled.
(c) This Agreement shall terminate immediately upon the Company's
sending you written notice terminating your employment hereunder for Cause. The
Company may terminate this Agreement for Cause, but only after written notice
specifying the Cause of such action shall have been rendered to you by the
President of the Company. "Cause" shall mean any of the following:
(i) Breach of this Agreement.
(ii) Refusal or inability (other than pursuant to Section 9(a)
or 9(b)) to perform duties assigned to you in accordance with the terms of this
Agreement or overt and willful disobedience of orders or directives issued to
you by the Company and within the scope of your duties to the Company.
(iii) Willful misconduct in the performance of your duties,
functions and responsibilities.
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(iv) Commission of acts that are illegal in connection with
the performance of your duties, functions and responsibilities under this
Agreement.
(v) Commission of acts that would constitute a felony offense
during the term of this Agreement.
(vi) Violation of Company rules and regulations concerning
conflict of interest.
(vii) Gross mismanagement of the assets of the Company.
(viii) Gross incompetence, gross insubordination or gross
neglect in the performance of your duties hereunder or being under the habitual
influence of alcohol while on duty or possession, use, manufacture,
distribution, dispensation or sale of illegal drugs while on or off duty.
(ix) Any act or omission, whether or not included in the
foregoing, that a court of competent jurisdiction would determine to constitute
cause for termination.
Existence of Cause shall be conclusively determined for all purposes hereunder
by the President of the Company. Such advice and consultation shall be utilized
as such officer regards as appropriate, and no obligation or duty with respect
to any procedure or formality is created by this Agreement. If the Company
terminates this Agreement for Cause under this Section 9(c), the Company shall
not be obligated to make any further payments under this Agreement except for
the Accrued Obligations.
(d) Except as set forth in Section 10, your coverage under the benefits
program provided by the Company will cease effective on your termination date.
You will be entitled to elect continuation of your medical and dental benefits
at the same cost the Company pays, pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Details with regard to
COBRA continuation coverage will be provided to you shortly after your
termination date.
(e) Except as set forth in Section 10, life insurance coverage will
cease upon your termination date. You may, however, apply to General American
Life Insurance Company (or such other insurance company as may provide group
life insurance to the Company's employees at the time) for an individual
converted life policy, with such application and payment of the first premium
required to be accomplished within 31 days after your termination date. Details
regarding this conversion option will be provided to you shortly after your
termination date.
(f) Accidental death and dismemberment and long term disability
coverages cease with your termination date and may not be extended or converted.
10. TERMINATION UPON A CHANGE OF CONTROL.
(a) In the event a Change of Control (as defined below) occurs, and
within 24 months after such Change of Control: (i) your employment with the
Company is terminated by you pursuant
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to a Termination for Good Reason (as defined below); or (ii) your employment
with the Company is terminated by the Company for any reason other than death,
disability or for Cause pursuant to Sections 9(a), (b) or (c); or (iii) this
Agreement is not renewed due to a Termination Notice given by the Company, as
provided in Section 1(b), (the events under clauses (i), (ii) and (iii) herein
collectively called a "Change of Control Termination"), you shall be entitled to
receive the payments and benefits set forth in Section 10(e) and (f) below,
which payments and benefits shall be in substitution for, and not in addition
to, the payments and benefits otherwise payable under Section 2(a) or 2(b) of
this Agreement in the event of termination. Your right to receive such payments
and benefits, other than the Accrued Obligations, shall be in consideration of
your agreements under this Agreement, including but not limited to your
agreement not to compete with the Company for two years after a Change of
Control pursuant to Section 6, and shall be conditioned upon your execution of a
Release. Such Release shall be substantially in the form of Exhibit A but may be
modified by the Company as it deems appropriate to reflect changes in law or
circumstances arising after the date of this Agreement; provided that no such
modification shall increase any of your obligations to the Company over those
contemplated by this Agreement, including Exhibit A hereto.
(b) For purposes of the Agreement, a "Change of Control" shall be
deemed to have occurred if: (i) any person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof)), excluding the Company, any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of any such plan acting in his capacity as
trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange
Act, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of shares of the Company having at least 30% of the total number of votes
that may be cast for the election of directors of the Company; (ii) the
shareholders of the Company shall approve any merger or other business
combination of the Company, sale of all or substantially all of the Company's
assets or combination of the foregoing transactions (a "Transaction"), other
than a Transaction involving only the Company and one or more of its
subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
shareholder of the Company owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction) and no person is the
beneficial owner of at least 30% of the shares of the resulting entity as
contemplated by Section 10(b)(i) above; or (iii) within any 24-month period
beginning on or after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
as of the date hereof shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
10(b)(iii), unless such election, recommendation or approval was the result of
an actual or threatened election contest of the type contemplated by Regulation
14a-11 under the Exchange Act or any successor provision. Notwithstanding the
foregoing, no Change of Control of the Company shall be deemed to have
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occurred for purposes of this Agreement by reason of any actions or events in
which you participate in a capacity other than in your capacity as an executive
or director of the Company.
(c) For purposes of the Agreement, a "Termination for Good Reason"
means a termination by you by written notice given within 90 days after the
occurrence of the Good Reason event. A notice of Termination for Good Reason
shall indicate the specific termination provision in Section 10(d) relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for Termination for Good Reason. Your failure to set forth in
such notice any facts or circumstances that contribute to the showing of Good
Reason shall not waive any of your rights hereunder or preclude you from
asserting such fact or circumstance in enforcing your rights hereunder. The
notice of Termination for Good Reason shall provide for a date of termination
not less than 10 nor more than 60 days after the date such Notice of Termination
for Good Reason is given.
(d) For purposes of the Agreement, "Good Reason" shall mean the
occurrence, without your express written consent, of any of the following
circumstances, unless such circumstances are fully corrected prior to the date
of termination specified in the notice of Termination for Good Reason as
contemplated in Section 10(c) above: (i) any material diminution of your
positions, duties or responsibilities hereunder (except in each case in
connection with the termination of your employment for Cause pursuant to Section
9(c) or due to disability or death pursuant to Section 9(a) or 9(b) or
temporarily as a result of your illness or other absence), or the assignment to
you of duties or responsibilities that are inconsistent with your position under
the Agreement at the time of a Change of Control; (ii) your removal from, or
your nonreelection to, the officer positions with the Company specified in this
Agreement; (iii) relocation of the Company's principal executive offices to a
location more than 25 miles from its location at the time of the Change of
Control; (iv) failure by the Company, after a Change of Control, (A) to continue
any bonus plan, program or arrangement in which you are entitled to participate
immediately prior to the Change of Control (the "Bonus Plans"), provided that
any such Bonus Plans may be modified at the Company's discretion from time to
time but shall be deemed terminated if (x) any such plan does not remain
substantially in the form in effect prior to such modification and (y) if plans
providing you with substantially similar benefits are not substituted therefor
("Substitute Plans"), or (B) to continue you as a participant in the Bonus Plans
and Substitute Plans on at least the same basis as to potential amount of the
bonus and substantially the same level of criteria for achievability thereof as
you participated in immediately prior to any change in such plans or awards, in
accordance with the Bonus Plans and the Substitute Plans; (v) any material
breach by the Company of any provisions of this Agreement; or (vi) failure of
any successor to the Company to promptly acknowledge in writing the obligations
of the Company hereunder.
(e) Upon a Change of Control Termination, as provided in Section 10(a),
the Company shall pay or provide you the following payments and benefits:
(i) The Company shall pay to you the Accrued Obligations in a
lump sum within five business days after the date of termination.
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(ii) The Company shall pay to you as severance pay, not later
than the tenth day following the date of your execution and delivery of the
Release required pursuant to Section 10(a) of this Agreement:
(A) a lump sum payment in an amount equal to two years
of your Base Salary; and
(B) a lump sum payment in an amount equal to two of
your annual incentive bonuses, such payment to be equal to the greater of (i)
the amount of all incentive bonuses paid to you with respect to each of the two
most recently completed fiscal years of the Company for which a bonus has been
paid or (ii) the incentive bonus paid to you with respect to the most recently
completed fiscal year of the Company for which a bonus has been paid plus an
amount equal to your Target Bonus (as hereinafter defined); provided, however,
that if you have been employed by the Company for less than two years, such
payment shall be equal to the greater of (x) the amount of the incentive bonus
paid to you with respect to the most recently completed fiscal year of the
Company for which a bonus has been paid plus your Target Bonus or (y) the amount
of your Target Bonus multiplied by two. The term "Target Bonus" shall mean the
incentive bonus that would have been payable for the fiscal year that includes
the date on which your employment terminates under the incentive bonus program
in effect as of the date of the Change of Control, assuming that you had been
entitled to receive an amount in respect of such bonus based solely upon the
target percentage applicable to employees in the same employment grade as you
and your Base Salary as of the date of termination (or if greater, your Base
Salary as of the date on which occurred an event giving rise to a Change of
Control Termination), and without regard to actual performance.
(iii) The Company shall continue the participation of you and
your dependents for a period of two years after the date of termination in all
health, medical and accident, life and other welfare plans (as defined in
Section 3(l) of ERISA), in which you were participating immediately prior to the
date of termination, except for any disability plans; provided, however, that to
the extent the Company's plans do not permit such continued participation or
such participation would have an adverse tax impact on such plans or on the
other participants in such plans, the Company may instead provide materially
equivalent benefits to you outside of such plans; provided, further, that under
such circumstances, (i) medical insurance benefits may be provided by the
Company paying any COBRA premiums (COBRA coverage, in any event, to be measured
from the date of termination of employment) and (ii) if the Company is unable to
continue your life insurance coverage, the Company shall pay you an amount equal
to twice the premium paid during the year prior to termination or if you convert
the insurance to an individual policy, the Company shall pay the premium for
such insurance for two years. You shall complete such forms and take such
physical examinations as reasonably requested by the Company. To the extent you
incur any tax obligation as a result of the provisions of this Section 10(e)
that you would not have incurred if you remained an employee of the Company and
had continued to participate in the benefit plans as an employee, the Company
shall pay to you, at the time the tax is due, an amount to cover such taxes and
the taxes on the amount paid to cover such taxes.
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(iv) All outstanding stock options and restricted stock awards
that have been granted to you by the Company at any time but have not yet vested
and upon which vesting depends solely upon the passage of time, shall
immediately vest or become nonforfeitable, as the case may be. In the event the
foregoing sentence becomes applicable, the Company agrees to cause the Board of
Directors to take all steps necessary to implement the foregoing sentence.
(v) All amounts payable to you upon a Change of Control under
the Company's Supplemental Executive Retirement Plan and Deferred Compensation
Plan shall be paid to you in accordance with the respective terms of those
plans.
(vi) The Company, at its expense, shall provide you with
outplacement services at a level appropriate for the most senior executive
employees through an outplacement firm of your choice for a period of up to one
year after the date of the Change of Control Termination.
(f) (i) In the event that any payment, coverage or benefit
(collectively, the "Covered Benefits") provided to you by the Company or an
Affiliate (as defined below) is or becomes subject to the excise tax imposed
under Section 4999 or any successor provision of the Internal Revenue Code of
1986, as amended (the "Code"), or you incur interest or penalties with respect
to that excise tax (that excise tax, together with any interest and penalties,
are hereinafter collectively referred to as the "Excise Tax"), the Company shall
pay you an additional amount (a "Gross-Up Bonus") at the time or times specified
in Section 10(f)(iii)(z) below. The amount of the Gross-Up Bonus shall equal the
quotient determined by dividing (x) the Excise Tax attributable to the Covered
Benefits by (y) one minus the highest marginal income tax rate, where the term
"highest marginal income tax rate" means the sum of the highest combined local,
state and federal personal income tax rates (including any state unemployment
compensation tax rate, any surtax rate as well as the Medicare hospital
insurance tax rate imposed on employees under the Federal Insurance
Contributions Act) as in effect for the calendar year to which the Excise Tax
attributable to the Covered Benefits relates, provided that in determining the
highest tax rate for federal purposes both the deductibility of state and local
income tax payments and the reduction in the deductibility of itemized
deductions shall be taken into account; it being the intention of the parties
hereto that your net after tax position (after taking into account any interest
or penalties imposed with respect to such taxes) upon receipt of the Covered
Benefits is no less advantageous to you than the net after tax position you
would have had if Section 4999 of the Code had not been applicable to any
portion of the Covered Benefits.
(ii) All determinations to be made under this Section 10(f),
including the determination of whether an Excise Tax is payable and the amount
thereof, shall be made by a law firm practicing in the Philadelphia,
Pennsylvania metropolitan area that is knowledgeable in tax law matters, which
firm shall be selected and paid for by the Company and acceptable to you. If tax
counsel's determinations are not finally accepted by the Internal Revenue
Service upon audit, then appropriate adjustments shall be computed (with a
Gross-Up Bonus, if applicable) by that tax counsel based upon the final amount
of the Excise Tax so determined.
(iii) For purposes of this Section 10(f):
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(x) An "Affiliate" shall mean any successor to
the Company, any member of an affiliated group including the Company
(determining using the definition in Section 1504 of the Code) or any entity
that becomes a member of such an affiliated group as a result of the transaction
causing the Change of Control.
(y) When determining the amount of the Gross-Up
Bonus, you will be deemed to have otherwise allowable deductions for federal,
state and local tax purposes at least equal to those disallowed because of the
inclusion of the Gross-Up Bonus in your adjusted gross income.
(z) The portion of the Gross-Up Bonus attributable
to a Covered Benefit shall be paid to you within 10 business days following the
provision to you of the Covered Benefit. In the event that the amount of Excise
Tax due exceeds the amount of Excise Tax determined by tax counsel, the Company
shall pay you an additional Gross-Up Bonus in respect of that excess at the time
that the amount of the excess is determined under Section 10(f)(ii). In the
event the amount of Excise Tax due is less than the amount of Excise Tax
determined by tax counsel, you shall repay the Company the portion of the
Gross-Up Bonus attributable thereto at the time that the amount of the reduction
in Excise Tax is determined under Section 10(f)(ii); provided, however, that if
any portion of the amount you must repay to the Company has been paid to any
federal, state or local tax authority, your repayment of that portion shall be
postponed until the tax authority has actually refunded or credited that amount
to you.
(g) Upon the occurrence of a Change of Control, if the Company fails to
perform any of its obligations under this Agreement or the Company or any other
person asserts the invalidity of any provision of this Agreement and you incur
any costs in successfully enforcing or defending any of the provisions of this
Agreement, including legal fees and expenses and court costs, the Company shall
reimburse you for all such costs incurred by you.
11. ENTIRE AGREEMENT; MODIFICATION. This Agreement, together with
Exhibit A hereto and all rights to which you are entitled under all employee
benefit plans in which you participate, constitutes the full and complete
understanding of the parties, and will, on the Effective Date, supersede all
prior agreements and understandings, oral or written, between the parties,
except for the employment offer letter dated November 1, 1999 between you and
the Company ("Offer Letter"); provided, however, that if the terms of any of
such employee benefit plan, shall be inconsistent with the provisions of the
Agreement, the provisions of this Agreement shall control and if the terms of
the Offer Letter are inconsistent with the provision of this Agreement, the
terms of the Offer Letter shall control. This Agreement may not be modified or
amended except by an instrument in writing signed by the party against which
enforcement thereof may be sought. Each party to this Agreement, acknowledges
that no representations, inducements, promises or agreements, oral or written,
have been made by either party or anyone acting on behalf of either party, which
are not embodied herein and that no other agreement, statement or promise not
set forth or referred to in this Agreement shall be valid or binding.
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12. SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
13. WAIVER OF BREACH. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach.
14. NO MITIGATION REQUIRED. Upon a termination of your employment by
the Company without Cause pursuant to Section 2(b) or upon a Change of Control
pursuant to Section 10, you shall have no obligation to seek other employment
but shall not be prohibited from doing so, and no compensation paid to you as
the result of any other employment shall reduce any payment required to be made
by the Company hereunder.
15. NOTICES. All notices hereunder shall be in writing and shall be
sent by express mail or by certified or registered mail, postage prepaid, return
receipt requested: if to you, to your residence as listed in the Company's
records; and if to the Company, to the address set forth above with copies to
the President.
16. ASSIGNABILITY; BINDING EFFECT. This Agreement shall not be assigned
by either party, except that it may be assigned by the Company to an acquirer of
all or substantially all of the assets of the Company or other successor to the
Company, subject to your rights arising from a change of control as provided in
Section 10. This Agreement shall be binding upon and inure to the benefit of
you, your legal representatives, heirs and distributees, and shall be binding
upon and inure to the benefit of the Company, its successors and assigns.
17. NONDISPARAGEMENT. You agree not to publicly or privately disparage
the Company, its personnel, products or services either during or upon
termination of your employment with the Company.
18. SURVIVAL. All of the provisions of this Agreement that by their
terms are to be performed or that otherwise are to endure after the termination
of your employment by the Company shall survive the termination of your
employment and shall continue in effect for the respective periods therein
provided or contemplated.
19. GOVERNING LAW. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
20. HEADINGS. The headings of this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
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21. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
If this Agreement correctly sets forth our understanding, please sign
the duplicate original in the space provided below and return it to the Company,
whereupon this shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
C&D TECHNOLOGIES, INC.
By: /s/ Wade H. Roberts, Jr.
----------------------------------
Title: President and CEO
Agreed as of the date first above written:
/s/ Kathryn Bullock
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Kathryn Bullock
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<PAGE>
EXHIBIT A
RELEASE
This Release is made this _____ day of _______________, ____ by and
between C&D Technologies, Inc. ("Employer") and _________________ ("Employee").
RECITALS:
WHEREAS, the parties are parties to an Employment Agreement (the
"Employment Agreement") dated __________, pursuant to which Employee was
employed by Employer; and
WHEREAS, the Employment Agreement has terminated; and
WHEREAS, your execution and delivery of this Release is a condition to
the Employer's obligations to pay certain compensation and benefits to you under
the Employment Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1 As of _____________________, ____, Employee's employment with
Employer shall terminate, and Employee shall have no further job
responsibilities to perform for Employer; provided, however, that Employee shall
cooperate with Employer in transitioning Employee's job responsibilities as
Employer shall reasonably request, provided that Employee shall be entitled to
receive reasonable compensation for any services rendered after such date and
shall not be obligated to take any action that would interfere with any
subsequent employment of Employee or otherwise result in economic hardship to
Employee.
2 Employer shall pay to the Employee the amounts contemplated pursuant
to Section __ of the Employment Agreement, less applicable deductions; provided
however, the first payment shall not be due and payable until ten days after the
execution by Employee and delivery to Employer of this Release.
3 For and in consideration of the monies and benefits paid to Employee
by Employer, as more fully described in Section 2 above, and for other good and
valuable consideration, Employee hereby waives, releases and forever discharges
Employer, its assigns, predecessors, successors, and affiliated entities, and
its current or former stockholders, officers, directors, administrators, agents,
servants and employees, individually and as representatives of the corporate
entity (hereinafter collectively referred to as "Releasees"), from any and all
claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, bonuses, controversies, agreements, promises, charges,
complaints, damages, sums of money, interest, attorney's fees and costs, or
causes of action of any kind or nature whatsoever whether in law or equity,
including, but not limited to,
A-1
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all claims arising out of his/her employment or termination of employment with
Employer, such as all claims for wrongful discharge, breach of contract, either
express or implied, interference with contract, emotional distress, fraud,
misrepresentation, defamation, claims arising under the Civil Rights Acts of
1964 and 1991 as amended, the Americans With Disabilities Act, the Age
Discrimination in Employment Act (ADEA), the National Labor Relations Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974
(ERISA), the Family and Medical Leave Act, the Pennsylvania Human Relations Act,
the Pennsylvania Wage Payment & Collection Law, the Pennsylvania Minimum Wage
Act of 1968, the Pennsylvania Equal Pay Law, and any and all other claims
arising under federal, state or local law, rule, regulation, constitution,
ordinance or public policy whether known or unknown, arising up to and including
the date of execution of this Release; provided, however that the parties do not
release each other from any claim of breach of the terms of this Release. This
release of rights does not extend to claims that may arise after the date of
this Release. Employee agrees that Employee will not initiate any charge or
complaint or institute any claim or lawsuit against Releasees or any of them
based on any fact or circumstance occurring up to and including the date of the
execution by Employee of this Release.
4 Employee agrees that the payments made and other consideration
received pursuant to this Release are not to be construed as an admission of
legal liability by Releasees or any of them and that no person or entity shall
utilize this Release or the consideration received pursuant to this Release as
evidence of any admission of liability since Releasees expressly deny liability.
5 Employee affirms that the only consideration for the signing of this
Release are the terms stated herein and in the Employment Agreement and that no
other promise or agreement of any kind has been made to Employee by any person
or entity whatsoever to cause Employee to sign this Release.
6 Employee and Employer affirm that the Employment Agreement and this
Release set forth the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior or contemporaneous
agreements or understandings between the parties with respect to the subject
matter contained herein. Further, there are no representations, arrangements or
understandings, either oral or written, between the parties, which are not fully
expressed herein. Finally, no alteration or other modification of this Release
shall be effective unless made in writing and signed by both parties.
7 Employee acknowledges that Employee has been given a period of at
least 21 days within which to consider this Release.
8 Following the execution of this Release, the Employee has a period of
7 days from the date of execution to revoke this Release, and this Release shall
not become effective or enforceable until the revocation period has expired.
9 Employee certifies that Employee has returned to Employer all keys,
identification cards, credit cards, computer and telephone equipment and other
property or information of
A-2
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Employer in Employee's possession, custody, or control including, but not
limited to, any information contained in any computer files maintained by
Employee during Employee's employment with Employer. Employee certifies that
Employee has not kept the originals or copies of any documents, files, or other
property of Employer which Employee obtained or received during Employee's
employment with Employer.
10 Employee acknowledges that Employer advised Employee to consult with
an attorney prior to executing this Release.
11 Employee affirms that Employee has carefully read this Release, that
Employee fully understands the meaning and intent of this document, that
Employee has signed this Release voluntarily and knowingly, and that Employee
intends to be bound by the promises contained in this Release for the
consideration described in Section 2 above.
IN WITNESS WHEREOF, Employee and the authorized representative of
Employer have executed this Release on the dates indicated below:
C&D TECHNOLOGIES, INC.
Dated:_____________________ By:______________________________
Title:__________________________
Dated:_____________________ ______________________________
Kathryn Bullock
A-3
<PAGE>
ENDORSEMENT
I, ___________________________________, hereby acknowledge that I was
given 21 days to consider the foregoing Release and voluntarily chose to sign
the Release prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the Commonwealth
of Pennsylvania that the foregoing is true and correct.
EXECUTED this ________ day of ______________, ____, at
_______________________________________, Pennsylvania.
-------------------------------
Kathryn Bullock
A-4
Exhibit 10.23
EMPLOYEE SEPARATION AGREEMENT
This is an Employee Separation Agreement ("Agreement") between Larry
W. Moore ("Mr. Moore") and C & D Technologies, Inc. (referred to herein as "C &
D" or "Company") setting forth the terms of separation from employment of Mr.
Moore as an officer of C & D.
WITNESSETH
WHEREAS, Mr. Moore is the Vice President, Strategic Business Alliances
for the Powercom Division of C & D;
WHEREAS, Mr. Moore and C&D are parties to that certain employment
agreement dated August 1, 1997 (the "Employment Agreement"); and
WHEREAS, C&D advised Mr. Moore that it had elected not to renew the
Employment Agreement;
WHEREAS, Mr. Moore requested from C&D and C&D has agreed to grant Mr.
Moore certain accommodations, set forth herein, which Mr. Moore acknowledges
that C&D is not required to grant; and
WHEREAS, C & D and Mr. Moore desire to settle and resolve the terms of
the separation from employment of Mr. Moore as an officer of C & D and to fully
and finally settle all differences between them.
NOW, THEREFORE, Mr. Moore and C & D, intending to be legally bound and
in consideration of the mutual promises set forth below, hereby agree as
follows.
1. TERMS OF CONTINUATION AND TERMINATION OF EMPLOYMENT.
a. Mr. Moore's employment by C & D will terminate on the earlier
of (i) the date that Mr. Moore becomes self-employed; (ii) the date on which Mr.
Moore commences employment for any third party; or (iii) October 1, 2000
(hereinafter the "Effective Date"). C & D will characterize Mr. Moore's
termination as a mutual separation on the basis of a position elimination for
purposes of communications with third parties.
b. Mr. Moore will be paid his regular salary through the Effective
Date. Mr. Moore shall not be eligible to participate in the Management Incentive
Bonus Program for the Company's fiscal year 2001. Mr. Moore shall receive an
award under the Management Incentive Bonus Program for the Company's fiscal year
2000 in the gross amount of $49,088, net of standard payroll and tax deductions,
at the same time as bonus awards are paid to program participants, generally.
Mr. Moore shall not be eligible to receive any additional awards of stock
options under any of C&D's stock option plans.
c. Until the Effective Date, Mr. Moore's title shall be "Vice
President - Telecommunications Consulting." Mr. Moore shall perform only such
job duties as may be communicated to him, in writing, by either of Wade H.
Roberts, Jr., Bernie Radecki or the Board of Directors of C&D. Mr. Moore shall
refrain from discussion with any employee, customer, supplier or any other party
with whom C&D has a commercial relationship regarding his employment or the
anticipated cessation thereof or the subject matter of this agreement without
<PAGE>
the prior written consent of Wade H. Roberts, Jr., Bernie Radecki or the C&D
Board of Directors, other than to say that the relationship between Mr. Moore
and C&D is being terminated due to a position elimination.
2. TERMINATION OF EMPLOYMENT AGREEMENT.
The parties mutually agree that the Employment Agreement shall, as
of March 1, 2000, be null and void and of no force and effect.
3. PAYMENTS BY C & D.
C & D shall pay Mr. Moore the sum of $50,000, less applicable
federal, state, and local payroll and other taxes ("Severance Pay") on or about
January 15, 2001, provided that Mr. Moore complies with this Agreement, and
further provided that he executes a Release in the form attached hereto as
Exhibit A within thirty (30) days of the Effective Date.
4. FRINGE BENEFITS.
a. Mr. Moore may continue to participate in the Company's medical,
dental, and life insurance programs through the Effective Date. Thereafter, Mr.
Moore may continue, at his expense, his medical and dental insurance benefits to
the extent permitted by the Consolidated Omnibus Budget Reconciliation Act
("COBRA").
b. Mr. Moore shall be paid for three (3) weeks vacation time banked
prior to December 31, 1999. Mr. Moore will not receive pay in lieu of vacation
time that he would have been entitled to take from January 1, 2000 through the
Effective Date, and no additional vacation time shall accrue from January 1,
2000 through the Effective Date.
c. Until the Effective Date, Mr. Moore may continue to participate
in the C & D Savings Plan and Pension Plan for salaried employees and the
Supplemental Executive Retirement Program in accordance with the terms of the
respective Plans.
d. Notwithstanding the terms of any stock option award agreements
or other agreement(s) between Mr. Moore and the Company, Mr. Moore may exercise,
in accordance with the terms of the applicable Stock Option Plan(s), only such
stock options which have vested or vest, in accordance with their terms, prior
to the Effective Date.
e. All other employee benefits not specifically continued by this
Agreement shall terminate on the Effective Date.
5. GENERAL RELEASE.
After having had a reasonable opportunity to review this Agreement and
an opportunity to consult with an advisor or an attorney of his choice, Mr.
Moore, his heirs, administrators, and assigns, knowingly and voluntarily
releases, remises and forever discharges C & D, its subsidiary and related
companies, and each of their respective officers, directors, employees, agents
and attorneys and all those charged or chargeable with liability on their behalf
(collectively "Releasees"), from any and all rights or claims, of any nature
whatsoever which he has or may have against Releasees, including, but not
limited to those rights or claims arising out of or in any way connected with
Mr. Moore's employment by C & D or his separation from employment by C & D,
including, but not limited to claims for wrongful discharge, breach of
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contract, breach of the covenant of good faith, intentional or negligent
infliction of emotional distress, defamation, negligence, misrepresentation,
fraud, discrimination on the basis of race, color, religion, marital status,
national origin, handicap or disability, or veteran's status, including, but not
limited to all rights or claims under Title VII of the Civil Rights Act of 1964,
as amended, 42 U.S.C. ss. 2000e-1, et seq., the Americans With Disabilities Act,
42 U.S.C. ss. 12101, et seq., and the Pennsylvania Human Relations Act, 43 P.S.
ss. 951 et seq., as well as any other claim arising under any other federal,
state, or local statute, ordinance, regulation, or common law that Mr. Moore now
has or ever had against Releasees from the beginning of time to the date of this
Agreement. It is expressly understood and agreed that the foregoing is a general
release.
6. RELEASE OF AGE DISCRIMINATION CLAIMS.
After having had a reasonable opportunity to review this Agreement and
an opportunity to consult with an attorney or adviser of his choice, Mr. Moore,
his heirs, administrators, and assigns, knowingly and voluntarily releases,
remises and forever discharges C & D Technologies, Inc., its subsidiary and
related companies, and each of their respective officers, directors, employees
and agents and all those charged or chargeable with liability on their behalf,
of and from any and all rights or claims which he may have against any of them
under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C.
ss. 621 et. seq. or under any other federal or state law prohibiting
discrimination based upon age, from the beginning of time to the date of this
Agreement.
7. COMPLIANCE WITH OLDER WORKERS BENEFIT PROTECTION ACT.
This Agreement is intended to comply with Section 201 of the Older
Workers Benefit Protection Act of 1990, 29 U.S.C. ss. 626(f). Accordingly, Mr.
Moore acknowledges and represents as follows:
a. he waives all rights or claims against C & D under the Age
Discrimination in Employment Act of 1967, as amended, 29 U.S.C. ss. 621, et seq.
("ADEA") knowingly and voluntarily in exchange for consideration of value to
which he is not otherwise entitled;
b. he has been advised in writing by C & D to consult with an
attorney in connection with this Agreement and his decision to waive his rights
or claims under the ADEA;
c. he has been given a period of at least twenty-one (21) days
within which to consider this Agreement and his decision to waive his rights or
claims under the ADEA; and
d. he has been informed by C & D and understands that he may
revoke this Agreement for a period of seven (7) days after signing it and that
this Agreement will not become effective or enforceable until after this seven
(7) day period has expired.
8. REVOCATION OF THIS AGREEMENT.
In the event that Mr. Moore chooses to revoke his acceptance of this
Agreement, he will provide C & D with written notice of the revocation, which
shall be sent by United States mail, certified, return receipt requested,
post-marked within seven (7) days of the date that he signs this Agreement.
Notice to C & D shall be given to Mark Sappir, Vice President - Human Resources.
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9. COVENANT NOT TO SUE.
Mr. Moore agrees and covenants that he has not and will not bring any
action, or file any claims against C & D and its subsidiary and related
companies, or any of their respective officers, directors, employees or agents,
past and present, individually or collectively, which relates in any way to his
employment or his separation from employment by C & D.
10. NONDISCLOSURE OF INFORMATION.
Mr. Moore acknowledges that he signed an "Agreement Relating to
Intellectual Property and Confidential Information" with C & D on December 16,
1996 ("Confidentiality Agreement"). A copy is attached to this Agreement as
Exhibit "1." Mr. Moore reaffirms the obligations and duties he assumed under the
Confidentiality Agreement and agrees that he shall continue to abide by the
terms of the Confidentiality Agreement after the termination of his employment.
11. RETURN OF PROPERTY.
Mr. Moore represents that he has returned to C & D or will return
prior to the Effective Date all materials in his possession or within his
control which relate to the business of C & D, including, but not limited to,
data, documents, reports, programs, diskettes, computer printouts, program
listings, computer hardware and/or software, memoranda, notes, records, reports,
plans, studies, price lists, customer lists, customer contact and other
information, and any and all similar information without regard to the form in
which it is maintained. Mr. Moore acknowledges that all such materials are the
sole property of C & D and that he has no right, title, or other interest in or
to such materials. Mr. Moore further agrees to return all Company credit cards,
computers, printers, telephones and any similar or dissimilar items.
12. NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS.
a. Mr. Moore agrees that beginning on the date hereof and for a
period of one (1) year from The Effective Date, he shall not, either directly or
indirectly, induce, suggest, encourage, entice, or solicit any employee of C & D
to leave the employ of C & D.
b. Mr. Moore agrees that beginning on the date hereof and for a
period of one (1) year from the date of this Agreement, he will not, either
directly or indirectly or by acting in concert with others, solicit, influence,
or attempt to solicit or influence, any customers of C & D or any customer
prospects of C & D with whom Mr. Moore had any contact during the two (2) year
period prior to his separation from employment by C & D to purchase from any
other person, partnership, corporation or other entity any products which are
the same, similar to or marketed as competitive with products sold by C & D.
13. NON-COMPETITION.
a. Mr. Moore agrees that during such time as he shall be employed
by the Company, and for the applicable Restricted Period (as defined below)
thereafter, he shall not, without the written consent of the Board of Directors,
directly or indirectly, become associated with, render services to, invest in,
represent, advise or otherwise participate as an officer, employee, director,
stockholder, partner, agent of or consultant for, any business that, at the time
his employment with the Company ceases, is competitive with the business in
which the
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Company is engaged or in which the Company has taken affirmative steps to engage
(a "Competitive Business"); provided, however, that nothing herein (i) shall
prevent Mr. Moore from investing without limit in the securities of any company
listed on a national securities exchange, provided that his involvement with any
such company is solely that of a stockholder, and (ii) is intended to prevent
him from being employed during the applicable Restricted Period by any business
other than a Competitive Business. The applicable Restricted Period shall be the
one-year period following the Effective Date.
b. The parties hereto intend that the covenant contained in
this Section 13 shall be deemed a series of separate covenants for each state,
county and city. If, in any judicial proceeding, a court shall refuse to enforce
all the separate covenants deemed included in this Section 13, because, taken
together, they cover too extensive a geographic area, the parties intend that
those of such covenants (taken in order of the states, counties and cities
therein which are least populous), which, if eliminated, would permit the
remaining separate covenants to be enforced in such proceeding, shall, for the
purpose of such proceeding, be deemed eliminated from the provisions of this
Section 13.
14. NO DISPARAGEMENT.
Mr. Moore shall not at any time make any disparaging remarks about C &
D, its products, officers, directors or employees, nor shall C&D's officers or
directors at any time make disparaging remarks about Mr. Moore.
15. ENFORCEMENT.
Mr. Moore acknowledges that he has received sufficient consideration
for the covenants and restrictions contained in this Agreement including,
without limitation, those set forth in Sections 10, 12 and 13 of this Agreement;
that such restrictions are reasonable in time and scope, and are necessary for
the reasonable protection of the business of C & D. Mr. Moore also acknowledges
that monetary damages would be an inadequate remedy for a breach by Mr. Moore of
the promises contained in Sections 10, 12 and 13 of this Agreement and, if found
by a court of competent jurisdiction to have breached any of these restrictions,
consents to the entry of an order granting injunctive relief to prevent further
violations of those restrictions by Mr. Moore. Mr. Moore agrees that the time
period of the obligations set forth in Sections 10, 12 and 13 of this Agreement
shall be extended by any amount of time during which he is in violation of the
obligations set forth therein. Mr. Moore also agrees that any award of
injunctive relief shall be in addition to, and in no way shall serve as, a
limitation on any and all other remedies C & D may have for enforcement of the
obligations set forth in Sections 10, 12 and 13 of this Agreement.
16. COOPERATION WITH C & D.
Mr. Moore will fully cooperate with and assist C & D or any other
company affiliated with C & D in connection with its defense or prosecution of
any civil action or other legal proceeding involving C & D, of which C & D
believes Mr. Moore has knowledge or information. This cooperation shall include,
but it is not limited to, being reasonably available to participate in
depositions, providing accurate and truthful information about C & D, complying
with requests by C & D to meet with its attorneys for the purpose of providing
information to them, and providing any other form of reasonable assistance
requested.
5
<PAGE>
17. TERMS CONFIDENTIAL.
Mr. Moore agrees to keep confidential and not disclose the financial
terms of this Agreement except to his immediate family (who agree to comply with
this obligation of confidentiality) and tax and legal advisers.
18. ENTIRE AGREEMENT.
This Agreement replaces and supercedes all prior agreements between
the parties including, without limitation the Employment Agreement, and
constitutes the entire agreement between the parties. No modification to this
Agreement shall be effective unless it is in writing and signed by an officer of
C & D and Mr. Moore.
19. CHOICE OF LAW AND SELECTION OF FORUM.
This Agreement shall be interpreted, enforced, and governed under the
laws of the Commonwealth of Pennsylvania. All disputes arising under this
Agreement shall be brought exclusively in either the federal or state courts of
the Commonwealth of Pennsylvania. Mr. Moore consents to the exercise of personal
jurisdiction by the federal and/or state courts of the Commonwealth of
Pennsylvania.
20. AGREEMENT ENTERED KNOWINGLY AND VOLUNTARILY.
Mr. Moore acknowledges that he has been given a reasonable opportunity
to discuss this Agreement with an attorney or advisor of his choice; that he has
carefully read and fully understands all of the provisions of this Agreement;
and that he is entering into this Agreement knowingly, voluntarily and of his
own free will.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement on
the dates indicated next to their respective signature.
March 24, 2000 /s/ Larry W. Moore (SEAL)
- ----------------- -------------------------------
Date Larry W. Moore
C & D TECHNOLOGIES, INC.
March 28, 2000 By:/s/ Mark Z. Sappir
- ----------------- -----------------------------
Date
Title: Vice President -
Human Resources
6
<PAGE>
EXHIBIT A
RELEASE
This Release is made this _____ day of _______________, 2000 by and between
C&D Technologies, Inc. ("C&D") and Larry W. Moore ("Mr. Moore").
RECITALS:
WHEREAS, the parties are parties to an Employee Separation Agreement (the
"Separation Agreement") dated___________:
WHEREAS, Mr. Moore's execution and delivery of this Release is a condition
to the C&D's obligations to pay certain compensation to him under the Separation
Agreement;
NOW THEREFORE, the parties hereto, intending to be legally bound, in
consideration of the mutual promises and undertakings set forth herein, do
hereby agree as follows:
1. EFFECTIVE DATE AND TRANSITION.
As of _____________________, 2000, (the "Effective Date") Mr. Moore's
employment with C&D terminated, and Mr. Moore has no further job
responsibilities to perform for C&D; provided, however, that Mr. Moore shall
cooperate with C&D in transitioning Mr. Moore's job responsibilities as C&D
shall reasonably request, provided that Mr. Moore shall be entitled to receive
reasonable compensation for any services rendered after such date and shall not
be obligated to take any action that would interfere with any subsequent
employment of Mr. Moore or otherwise result in economic hardship to Mr. Moore.
2. CONSIDERATION.
C&D shall pay to the Mr. Moore the amounts contemplated pursuant to
Section 3 of the Separation Agreement, less applicable payroll and tax
deductions.
3. GENERAL RELEASE.
After having had a reasonable opportunity to review this Agreement and
an opportunity to consult with an advisor or an attorney of his choice, Mr.
Moore, his heirs, administrators, and assigns, knowingly and voluntarily
releases, remises and forever discharges C & D, its subsidiary and related
companies, and each of their respective officers, directors, employees, agents
and attorneys and all those charged or chargeable with liability on their behalf
(collectively "Releasees"), from any and all rights or claims, of any nature
whatsoever which he has or may have against Releasees, including, but not
limited to those rights or claims arising out of or in any way connected with
Mr. Moore's employment by C & D or his separation from employment by C & D,
including, but not limited to claims for wrongful discharge, breach of contract,
breach of the covenant of good faith, intentional or negligent infliction of
emotional distress, defamation, negligence, misrepresentation, fraud,
discrimination on the basis of race, color, religion, marital status, national
origin, handicap or disability, or veteran's status, including, but not limited
to all rights or claims under Title VII of the Civil Rights Act of 1964, as
amended, 42 U.S.C. ss. 2000e-1, et seq., the Americans With Disabilities Act, 42
U.S.C. ss.
7
<PAGE>
12101, et seq., and the Pennsylvania Human Relations Act, 43 P.S. ss. 951 et
seq., as well as any other claim arising under any other federal, state, or
local statute, ordinance, regulation, or common law that Mr. Moore now has or
ever had against Releasees from the beginning of time to the date of this
Agreement. It is expressly understood and agreed that the foregoing is a general
release.
4. RELEASE OF AGE DISCRIMINATION CLAIMS.
After having had a reasonable opportunity to review this Agreement and
an opportunity to consult with an attorney or adviser of his choice, Mr. Moore,
his heirs, administrators, and assigns, knowingly and voluntarily releases,
remises and forever discharges C & D Technologies, Inc., its subsidiary and
related companies, and each of their respective officers, directors, employees
and agents and all those charged or chargeable with liability on their behalf,
of and from any and all rights or claims which he may have against any of them
under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C.
ss. 621 et. seq. or under any other federal or state law prohibiting
discrimination based upon age, from the beginning of time to the date of this
Agreement.
5. COMPLIANCE WITH OLDER WORKERS BENEFIT PROTECTION ACT.
This Agreement is intended to comply with Section 201 of the Older
Workers Benefit Protection Act of 1990, 29 U.S.C. ss. 626(f). Accordingly, Mr.
Moore acknowledges and represents as follows:
a. he waives all rights or claims against C & D under the Age
Discrimination in Employment Act of 1967, as amended, 29 U.S.C. ss. 621, et seq.
("ADEA") knowingly and voluntarily in exchange for consideration of value to
which he is not otherwise entitled;
b. he has been advised in writing by C & D to consult with an
attorney in connection with this Agreement and his decision to waive his rights
or claims under the ADEA;
c. he has been given a period of at least twenty-one (21) days
within which to consider this Agreement and his decision to waive his rights or
claims under the ADEA; and
d. he has been informed by C & D and understands that he may revoke
this Agreement for a period of seven (7) days after signing it and that this
Agreement will not become effective or enforceable until after this seven (7)
day period has expired.
6. REVOCATION OF THIS AGREEMENT.
In the event that Mr. Moore chooses to revoke his acceptance of this
Agreement, he will provide C & D with written notice of the revocation, which
shall be sent by United States mail, certified, return receipt requested,
post-marked within seven (7) days of the date that he signs this Agreement.
Notice to C & D shall be given to Mark Sappir, Vice President - Human Resources.
7. COVENANT NOT TO SUE.
Mr. Moore agrees and covenants that he has not and will not bring any
action, or file any claims against C & D and its subsidiary and related
companies, or any of their
8
<PAGE>
respective officers, directors, employees or agents, past and present,
individually or collectively, which relates in any way to his employment or his
separation from employment by C & D.
8. NO ADMISSION OF LIABILITY.
Mr. Moore agrees that the payments made and other consideration
received pursuant to this Release are not to be construed as an admission of
legal liability by Releasees or any of them and that no person or entity shall
utilize this Release or the consideration received pursuant to this Release as
evidence of any admission of liability since Releasees expressly deny liability.
9. NO OTHER INDUCEMENTS.
Mr. Moore affirms that the only consideration for the signing of this
Release are the terms stated herein and in the Separation Agreement and that no
other promise or agreement of any kind has been made to Mr. Moore by any person
or entity whatsoever to cause Mr. Moore to sign this Release.
10. NO OTHER AGREEMENTS.
Mr. Moore and C&D affirm that the Separation Agreement and this
Release set forth the entire agreement between the parties with respect to the
subject matter contained herein and supersede all prior or contemporaneous
agreements or understandings between the parties with respect to the subject
matter contained herein. Further, there are no representations, arrangements or
understandings, either oral or written, between the parties, which are not fully
expressed herein. Finally, no alteration or other modification of this Release
shall be effective unless made in writing and signed by both parties. All of the
provisions of the Separation Agreement that by their terms are to be performed
or that otherwise are to endure after Effective Date shall survive and continue
in effect for the respective periods therein provided or contemplated.
11. RETURN OF MATERIALS.
Mr. Moore represents that he has returned to C&D all materials in his
possession or within his control which relate to the business of C & D,
including, but not limited to, data, documents, reports, programs, diskettes,
computer printouts, program listings, computer hardware and/or software,
memoranda, notes, records, reports, plans, studies, price lists, customer lists,
customer contact and other information, and any and all similar information
without regard to the form in which it is maintained. Mr. Moore acknowledges
that all such materials are the sole property of C & D and that he has no right,
title, or other interest in or to such materials. Mr. Moore further certifies
that he has returned all Company credit cards, computers, printers, telephones
and any similar or dissimilar items.
12. CONSULTATION WITH COUNSEL.
Mr. Moore acknowledges that C&D advised Mr. Moore to consult with an
attorney prior to executing this Release.
9
<PAGE>
13. CONFIRMATION OF UNDERSTANDING.
Mr. Moore affirms that he has carefully read this Release, that he
fully understands the meaning and intent of this document, that he has signed
this Release voluntarily and knowingly, and that he intends to be bound by the
promises contained in this Release for the consideration described in Section 2
above.
14. CHOICE OF LAW AND SELECTION OF FORUM.
This Agreement shall be interpreted, enforced, and governed under the
laws of the Commonwealth of Pennsylvania. All disputes arising under this
Agreement shall be brought exclusively in either the federal or state courts of
the Commonwealth of Pennsylvania. Mr. Moore consents to the exercise of personal
jurisdiction by the federal and/or state courts of the Commonwealth of
Pennsylvania.
IN WITNESS WHEREOF, Mr. Moore and the authorized representative of C&D
have executed this Release on the dates indicated below:
C&D TECHNOLOGIES, INC.
Dated:___________________________
By:______________________________
Title:_____________________________
Dated:_____________________________
- ----------------------------------
Larry W. Moore
10
<PAGE>
ENDORSEMENT
I, ___________________________________, hereby acknowledge that I was
given 21 days to consider the foregoing Release and voluntarily chose to sign
the Release prior to the expiration of the 21-day period.
I declare under penalty of perjury under the laws of the Commonwealth
of Pennsylvania that the foregoing is true and correct.
EXECUTED this ________ day of ______________, ____, at
_______________________________________, Pennsylvania.
---------------------------------
Larry W. Moore
11
EXHIBIT 21
SUBSIDIARIES OF C&D TECHNOLOGIES, INC.
C&D Charter Holdings, Inc., incorporated under the laws of the State of Delaware
Charter Power F.S. Ltd., incorporated in the Islands of Bermuda
Power Convertibles Corporation Ireland Ltd., organized under the laws of Ireland
PCC Mexican Holdings, Inc., incorporated under the laws of the State of Delaware
PCC de Mexico, S.A. de C.V., organized under the laws of Sonora, Mexico
C&D Technologies de Mexico, S.A., de C.V., organized under the laws of Sonora,
Mexico
C&D Acquisition Corp., incorporated under the laws of the State of Delaware
C&D Technologies (U.K.) Ltd., organized under the laws of the United Kingdom
C&D Technologies (HK) Ltd., organized under the laws of Hong Kong, China
C&D Technologies (Italia), S.r.l., organized under the laws of Italy
C&D Batteries Ltee, organized under the laws of Quebec, Canada
Shanghai C&D Battery Company, Ltd., joint venture organized under the laws of
China
<PAGE>
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Forms S-8 (Registration Nos. 33-31978, 33-71390, 33-86672,
333-17979, 333-38891 and 333-59177) and Form S-3 (Registration No. 333-38893) of
our report dated March 10, 2000 relating to the financial statements and
financial statement schedule, which appears in this Form 10-K. We also consent
to the reference to us under the heading "Selected Financial Data" in this Form
10-K.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
April 27, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF 1/31/00 AND STATEMENT OF INCOME FOR THE YEAR
ENDED 1/31/00 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-31-2000
<PERIOD-END> JAN-31-2000
<CASH> 7121
<SECURITIES> 0
<RECEIVABLES> 79241
<ALLOWANCES> 3080
<INVENTORY> 60965
<CURRENT-ASSETS> 155661
<PP&E> 189275
<DEPRECIATION> 88462
<TOTAL-ASSETS> 354115
<CURRENT-LIABILITIES> 90582
<BONDS> 76459
0
0
<COMMON> 139
<OTHER-SE> 161927
<TOTAL-LIABILITY-AND-EQUITY> 354115
<SALES> 465570
<TOTAL-REVENUES> 465570
<CGS> 341190
<TOTAL-COSTS> 341190
<OTHER-EXPENSES> 8941
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7946
<INCOME-PRETAX> 48198<F1>
<INCOME-TAX> 17737
<INCOME-CONTINUING> 29842
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29842
<EPS-BASIC> 2.34
<EPS-DILUTED> 2.29
<FN>
<F1>Income-Pretax represents income before taxes and minority interest. Minority
interest for the year ended 1/31/00 was $619.
</FN>
</TABLE>
