UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. [ ])
Filed by the Registrant [X ]
Filed by a Party other than the Registrant [ ]
Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e) (2))
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-12
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C&D TECHNOLOGIES, INC.
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(Name of Registrant as Specified in its Charter)
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which
transaction applies:
2) Aggregate number of securities to which
transaction applies:
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule
O-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule O-11(a)(2) and identify the filing
for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its
filing.
1) Amount Previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
C&D TECHNOLOGIES, INC. 1400 Union Meeting Road
POWER SOLUTIONS P.O. Box 3053
Blue Bell, PA 19422-0858
Telephone (215)619-2700
Fax (215)619-7840
May 25, 2000
Dear Stockholder:
We cordially invite you to attend the Annual Meeting of Stockholders of C&D
Technologies, Inc. to be held on Tuesday, June 27, 2000, at 10:00 A.M., at The
Union League of Philadelphia, 140 South Broad Street, Philadelphia,
Pennsylvania. Your Board of Directors and management look forward to personally
greeting you there.
Whether or not you plan to attend, your shares will be represented and
voted at the Annual Meeting if you promptly complete, sign, date and return the
enclosed proxy card in the envelope we have provided.
We thank you for your cooperation and continued support.
Sincerely,
/s/ William Harral, III
-----------------------
WILLIAM HARRAL, III
Chairman of the Board
<PAGE>
C&D TECHNOLOGIES, INC.
1400 Union Meeting Road
Blue Bell, Pennsylvania 19422
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 27, 2000
-------------
The Annual Meeting of Stockholders of C&D Technologies, Inc. ("C&D") will
be held at The Union League of Philadelphia, 140 South Broad Street,
Philadelphia, Pennsylvania, on Tuesday, June 27, 2000, at 10:00 A.M., for the
following purposes:
1. To elect directors of C&D for the ensuing year.
2. To approve the C&D Technologies, Inc. Amended and Restated 1998 Stock
Option Plan, including an increase in the number of shares of Common
Stock that C&D can issue pursuant to stock options and stock grants to
eligible participants from 600,000 shares to 1,500,000 shares of
Common Stock.
3. To approve the C&D Technologies, Inc. Executive Stock Purchase Loan
Program, authorizing the extension of loans to executive officers so
as to permit them to comply with the C&D executive stock ownership
guidelines.
4. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for C&D for the fiscal year ending January 31, 2001.
5. To transact such other business as may properly come before the
meeting and any adjournments of the meeting.
Stockholders of record at the close of business on May 9, 2000 will be
entitled to vote at the meeting.
If you are unable to be present personally, please sign and date the
enclosed proxy, which is being solicited by the Board of Directors, and return
it promptly in the enclosed envelope.
BY ORDER OF THE BOARD
OF DIRECTORS
/s/ Linda R. Hansen
-------------------
LINDA R. HANSEN
Secretary
May 25, 2000
<PAGE>
C&D TECHNOLOGIES, INC.
1400 Union Meeting Road
Blue Bell, Pennsylvania 19422
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JUNE 27, 2000
Your proxy is solicited by and on behalf of the Board of Directors of C&D
Technologies, Inc. ("C&D", "we" or "our") to be used at the Annual Meeting of
Stockholders to be held at The Union League of Philadelphia, 140 South Broad
Street, Philadelphia, Pennsylvania, on Tuesday, June 27, 2000 at 10:00 A.M., and
at any adjournment of the meeting. The following questions and answers provide
important information about the Annual Meeting and this Proxy Statement.
What am I voting on?
- --------------------
o Election of Directors
o Approval of the Amended and Restated 1998 Stock Option Plan, including
increasing the number of shares of Common Stock issuable under the
plan from 600,000 to 1,500,000
o Approval of the Executive Stock Purchase Loan Program
o Ratification of the appointment of PricewaterhouseCoopers LLP as C&D's
independent accountants for the fiscal year ending January 31, 2001
Who is entitled to vote?
- ------------------------
Stockholders as of the close of business on May 9, 2000 (the "Record Date")
are entitled to vote at the Annual Meeting. Each stockholder is entitled to one
vote for each share of Common Stock held on the Record Date.
How do I vote?
- --------------
You should sign and date each proxy you receive and return it in the
enclosed, self-addressed envelope. If you return your signed proxy but do not
indicate your voting preferences, we will vote on your behalf FOR the election
of the eight directors, FOR the approval of the Amended Restated 1998 Stock
Option Plan, FOR the approval of the Executive Stock Purchase Loan Program and
FOR the ratification of the independent accountants.
How are proxies solicited?
- --------------------------
C&D will bear the cost of the solicitation of proxies. We will make
solicitations initially by first class mail; however, officers and regular
employees of C&D may solicit proxies personally or by telephone or the internet.
We will not compensate those persons specifically for these services. C&D has
agreed to pay Georgeson Shareholder Communications Inc. $7,000 plus expenses to
assist in soliciting proxies from banks, brokers and nominees. C&D will
reimburse brokers, banks, custodians, nominees and fiduciaries holding shares of
Common Stock in their names or in the names of their nominees for their
reasonable charges and expenses in forwarding proxies and proxy material to the
beneficial owners of these shares.
We are mailing this Proxy Statement to stockholders on or about May 25,
2000.
<PAGE>
How should I sign the proxy?
- ----------------------------
You should sign your name exactly as it appears on the proxy. If you are
signing in a representative capacity (for example, as attorney, executor,
administrator, guardian, trustee, or the officer or agent of a company), you
should indicate your name and title or capacity. If you hold the stock in
custody for a minor (for example, under the Uniform Transfers to Minors Act),
you should sign your own name as custodian, not the name of the minor. If you
hold the stock in joint ownership with another person or persons, one owner may
sign on behalf of all the owners.
May I revoke my proxy?
- ----------------------
You have the right to revoke your proxy at any time before the meeting by
(1) delivering a written revocation to the Secretary of C&D or (2) returning a
later-dated proxy. You may also revoke your proxy by voting in person at the
meeting.
What does it mean if I receive more than one proxy card?
- --------------------------------------------------------
If you hold shares registered in more than one account, you will receive a
proxy card for each account. You should sign and return all proxies so that all
your shares will be voted.
Who will count the votes?
- -------------------------
Representatives of ChaseMellon Shareholder Services, L.L.C., C&D's transfer
agent, will tabulate the votes and act as independent inspectors for the
election.
What constitutes a quorum?
- --------------------------
We are required to have a quorum to hold the Annual Meeting. A quorum is a
majority of the outstanding shares, present or represented by proxy. As of the
Record Date, 13,095,652 shares of Common Stock were issued and outstanding.
Abstentions and broker non-votes (which we define below) are counted as if
stockholders were present for purposes of determining whether a quorum is
present at the meeting.
How many votes are needed for the approval of each item?
- --------------------------------------------------------
There are differing requirements for the approval of the proposals. Voting
in the election of directors is not cumulative; directors will be elected by a
plurality of the votes cast at the Annual Meeting, which means that the eight
nominees with the most votes will be elected directors. We will count only votes
cast for a nominee. Accordingly, abstentions and broker non-votes are not
counted for purposes of voting in the election of directors. Your proxy will be
voted FOR the eight nominees described in this proxy statement unless you
instruct us to the contrary in your proxy.
The proposal to approve the Amended and Restated 1998 Stock Option Plan,
the proposal to approve the Executive Stock Purchase Loan Program, the proposal
to ratify the appointment of the independent accountants and any other business
that may properly come before the meeting and adjournments of the meeting
requires the affirmative vote of the holders of a majority of the shares
represented in person or by proxy and entitled to vote on the item. Shares
represented by a properly executed proxy marked "abstain" with respect to any
such item will not be voted for such item, although they will be counted for
purposes of determining whether there is a quorum. Accordingly, an abstention
will have the effect of a negative vote. Broker non-votes are not counted for
purposes of determining whether a proposal has been approved. For purposes of
the requirements of the New York Stock Exchange, the total vote cast on the
proposal to approve the Amended and Restated 1998 Stock Option Plan and the
proposal to approve the Executive Stock Purchase Loan Program must represent
over 50% in interest of the outstanding shares of Common Stock.
2
<PAGE>
Votes cast for, against or abstain will be counted, and broker non-votes will
not be counted, for purposes of determining whether this requirement is
satisfied.
What is a "broker non-vote"?
- ----------------------------
A "broker non-vote" occurs when a stockbroker submits a proxy that does not
indicate a vote for a proposal because the stockbroker has not received
instructions from the beneficial owners on how to vote on the proposal and does
not have the authority to vote without instructions.
What percentage of C&D Common Stock do directors and executive officers own?
- ----------------------------------------------------------------------------
Together, our directors and executive officers owned approximately 1.3% of
our Common Stock on March 31, 2000. We have provided you with details on pages 6
and 7.
Who are the largest stockholders?
- ---------------------------------
As of March 31, 2000, Westport Asset Management, Inc. owned 1,455,000
shares (or 11.1%); FMR Corp. owned 925,400 shares (or 7.1%); Paradigm Capital
Management, Inc. owned 841,375 shares (or 6.4%); and J. L. Kaplan Associates,
LLC owned 734,945 shares (or 5.6%). See page 5 for details.
What is the deadline for submitting stockholder proposals at our 2001 annual
- --------------------------------------------------------------------------------
meeting?
- --------
Any stockholder who, in accordance with and subject to the provisions of
Rule 14a-8 of the proxy rules of the Securities and Exchange Commission ("SEC"),
wishes to submit a proposal for inclusion in C&D's proxy statement for its 2001
annual meeting of stockholders must deliver such proposal in writing to C&D's
Secretary at C&D's principal executive offices at the address at the front of
this proxy statement no later than January 25, 2001.
Pursuant to Section 11(a) of C&D's By-laws, as amended in February 2000, if
a stockholder wishes to present at C&D's 2001 annual meeting of stockholders (i)
a proposal relating to nominations for and election of directors or (ii) a
proposal relating to a matter other than nominations for and election of
directors, otherwise than pursuant to Rule 14a-8 of the proxy rules of the SEC,
the stockholder must comply with the provisions relating to stockholder
proposals set forth in C&D's By-laws, which are summarized below. Written notice
of any such proposal containing the information required under C&D's By-laws, as
described herein, must be delivered in person, by first class, United States
mail, postage prepaid or by reputable overnight delivery service to C&D's
Secretary at C&D's principal executive offices at the address at the front of
this proxy statement during the period commencing on January 25, 2001 and ending
on February 26, 2001.
A written proposal of nomination for a director must 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 C&D beneficially owned within the meaning of SEC Rule
13d-3 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 Nominating Stockholder with respect to
such person's proposal for nomination and election as a director and actions to
be proposed or taken by such person as 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 SEC if proxies were to be
solicited for the election as a director of each person so proposed. The
candidates nominated by stockholders for election as a member of C&D's Board of
Directors who will be eligible to be considered or acted upon for election at
the 2001 annual meeting will be those nominated in
3
<PAGE>
accordance with the By-law provisions summarized in this section, and any
stockholder nominee not nominated in accordance with such provisions will not be
considered or acted upon for election as a director at such meeting of
stockholders.
A stockholder proposal relating to a matter other than a nomination for
election as a director must set forth information regarding the matter
equivalent to the information that would be required under the proxy
solicitation rules of the SEC if proxies were solicited for stockholder
consideration of the matter at a meeting of stockholders. Only stockholder
proposals submitted in writing in accordance with the By-law provisions
summarized above will be eligible for presentation at the 2001 annual meeting of
stockholders, and any matter not submitted to C&D's Board of Directors in
accordance with such provisions will not be considered or acted upon at such
meeting.
4
<PAGE>
PRINCIPAL STOCKHOLDERS
----------------------
As of March 31, 2000, the persons listed in the following table were the
only persons known to us (based on information set forth in Schedules 13G and
13G/A filed with the SEC and written notification) to be the beneficial owners
of more than five percent of our outstanding shares of Common Stock.
Shares of
Name and address of Common Stock Percent
Beneficial Owner Beneficially Owned of Class
- ------------------------------------ ------------------ --------
Westport Asset Management, Inc. (1)........ 1,455,000 11.1%
253 Riverside Avenue
Westport, Connecticut 06880
FMR Corp. (2).............................. 925,400 7.1%
82 Devonshire Street
Boston, Massachusetts 02109
Paradigm Capital Management, Inc. (3)...... 841,375 6.4%
9 Elk Street
Albany, New York 12207
J. L. Kaplan Associates, LLC (4)........... 734,945 5.6%
222 Berkeley Street
Suite 2010
Boston, Massachusetts 02116
- --------------------
(1) Based on the Schedule 13G/A, dated February 16, 2000, filed by Westport
Asset Management, Inc. This party has sole voting and dispositive power
with respect to 145,400 shares, shared voting power with respect to
1,092,600 shares and shared dispositive power with respect to 1,309,600
shares listed opposite its name in the table.
(2) Based on written notification from FMR Corp. dated April 18, 2000. This
party has sole voting power with respect to 398,900 shares and sole
dispositive power with respect to all the shares listed opposite its
name in the table.
(3) Based on the Schedule 13G/A, dated February 2, 2000, filed by Paradigm
Capital Management, Inc. This party has sole voting power with respect
to 122,900 shares and sole dispositive power with respect to all the
shares listed opposite its name in the table.
(4) Based on the Schedule 13G, dated January 26, 2000, filed by J. L.
Kaplan Associates, LLC. This party has sole voting power with respect
to 548,300 shares and sole dispositive power with respect to all the
shares listed opposite its name in the table.
5
<PAGE>
ELECTION OF DIRECTORS
---------------------
At the Annual Meeting of Stockholders, you will be electing the entire
Board of Directors. Each nominee has consented to being named as a nominee in
this Proxy Statement and to serve if elected. However, if any nominee should
become unable to serve as a director for any reason, the named proxies will vote
for a substitute nominee designated by the Board of Directors or, if none is so
designated, will vote according to their judgment.
MANAGEMENT
----------
Directors are elected annually to serve until the next annual meeting of
stockholders and until their successors have been elected or until their
retirement at age 70 pursuant to the provisions of the charter of the Corporate
Governance Committee. Officers are elected by and serve at the discretion of the
Board of Directors. There are no family relationships among any of our directors
and executive officers. The following table sets forth, as of March 31, 2000,
information regarding nominees for directors and executive officers of C&D,
including their beneficial ownership of Common Stock of C&D.
<TABLE>
<CAPTION>
Shares of Common
Stock Beneficially Percent
Positions and Offices Owned as of of Class
Nominees for Directors with C&D Age March 31, 2000 (6)
- -------------------------------- -------------------------------- --- ------------------ --------
<S> <C> <C> <C> <C>
William Harral, III (1)(2)(3)(4).... Chairman of the Board 60 16,423 *
Wade H. Roberts, Jr. (1)(4)......... President, Chief Executive 53 19,337 *
Officer and Director
Adrian A. Basora (1)(5)............. Director 61 1,436 *
Peter R. Dachowski (1)(2)........... Director 51 851
Kevin P. Dowd (1)(2)(3)............. Director 51 6,290
Pamela S. Lewis (1)(5).............. Director 43 5,017 *
George MacKenzie (1)(5)............. Director 51 3,003
John A. H. Shober (1)(4)(5)......... Director 66 9,017 *
Executive Officers who
are not Directors
- --------------------------------
Kathryn R. Bullock.................. Vice President - Technology 54 48 *
Charles R. Giesige, Sr. (1)......... Vice President and General 44 1,667 *
Manager - Dynasty Division
Linda R. Hansen..................... Vice President, General Counsel 52 1,400 *
and Corporate Secretary
Apostolos T. Kambouroglou (1)....... Vice President - Operations 57 50,267 *
Stephen E. Markert, Jr. (1)......... Vice President - Finance and 48 40,401 *
Chief Financial Officer
Robert T. Marley (1)................ Treasurer 47 3,667 *
John J. Murray, Jr.................. Vice President and General 56 1,050 *
Manager - Motive Power Division
Bernie Radecki (1).................. Vice President and General 61 3,867 *
Manager - Powercom Division
John C. Rich........................ Vice President and General 62 4 *
Manager - Power Electronics
Division
Mark Z. Sappir (1).................. Vice President - Human Resources 47 2,716 *
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Shares of Common
Stock Beneficially Percent
Positions and Offices Owned as of of Class
Nominees for Directors with C&D Age March 31, 2000 (6)
- -------------------------------- -------------------------------- --- ------------------ --------
<S> <C> <C> <C> <C>
John A. Velker...................... Vice President - Corporate 47 133 *
Development
All directors and executive
officers as a group (19 persons)... 166,594 1.3%
- --------------------
</TABLE>
* Less than 1% of outstanding shares of Common Stock
(1) The figures for shares of Common Stock beneficially owned as of March
31, 2000 include fully vested and presently exercisable options, and
options that will vest within 60 days after such date, to purchase (a)
4,000 shares for each of Messrs. Harral, Dowd and Shober and Dr.
Lewis; 1,167 shares for Mr. Basora; 708 shares for Mr. Dachowski; and
2,000 shares for Mr. MacKenzie, (b) 8,333 shares for Mr. Roberts, (c)
1,667 shares for Mr. Giesige, (d) 32,267 shares for Mr. Kambouroglou,
(e) 32,333 shares for Mr. Markert, (f) 3,667 shares for Mr. Marley,
(g) 3,867 shares for Mr. Radecki and (h) 1,667 shares for Mr. Sappir.
Glenn M. Feit was a director of C&D until his May 23, 2000 retirement
at C&D's normal retirement age for board members. Mr. Feit
beneficially owned, as of March 31, 2000, 7,017 shares of Common
Stock, of which 4,000 shares represented exercisable options to
purchase such shares.
(2) Member of the Compensation Committee.
(3) Member of the Stock Option Subcommittee of the Compensation Committee.
(4) Member of the Corporate Governance Committee.
(5) Member of the Audit Committee.
(6) Based upon shares outstanding as of March 31, 2000. In determining
Percent of Class, the number of shares outstanding includes shares
issuable to the specific director, officer or group identified in the
table, on exercise of stock options within 60 days of the calculation
date, but no other shares issuable on exercise of stock options.
William Harral, III has been a director of C&D since July 1996 and Chairman
of the Board since April 1999. He is currently Executive-In-Residence at LeBow
College of Business, Drexel University in Philadelphia, Pennsylvania. From June
1997 to December 1999, Mr. Harral served as Senior Counselor for The Tierney
Group, a strategic communications company. He was President and Chief Executive
Officer of Bell Atlantic - Pennsylvania, Inc. (formerly Bell of Pennsylvania)
from 1994 to March 1997. Mr. Harral also served as a director of Bell Atlantic -
Pennsylvania, Inc. and serves on the board of The Bryn Mawr Trust Company, a
commercial bank.
Wade H. Roberts, Jr. has been President and Chief Operating Officer since
joining C&D in October 1998 and became Chief Executive Officer in April 1999.
Prior to joining C&D, Mr. Roberts was Vice President and Group Executive of IDEX
Corporation and President of its Hale Products, Inc. subsidiary, a manufacturer
of vehicle mounted fire pumps and the "Jaws of Life (TM)," from 1994 to 1998.
7
<PAGE>
Adrian A. Basora has been a director of C&D since November 1999. He has
been President of the Eisenhower Exchange Fellowships, an international
leadership organization, since June 1996. From 1992 to 1995 he was a U.S.
Ambassador to the Czech Republic, and served as National Security Council
Director for European Affairs at the White House from 1989 to 1991. Mr. Basora
is a Governor of the Philadelphia Stock Exchange and is affiliated with the
Foundation for a Civil Society, the Foreign Policy Research Institute and the
Council on Foreign Relations.
Peter R. Dachowski has been a director of C&D since February 2000. He has
been President of Isover, the worldwide Insulation Division of Compagnie de
Saint-Gobain ("Saint-Gobain") since 1996. He was, from 1994 to 1996, Executive
Vice President of Saint-Gobain's subsidiary, CertainTeed Corporation,
responsible for both exterior building products and insulation activities,
following a series of financial and operating positions with CertainTeed,
including Vice President and Treasurer, Division President and Group Vice
President. He currently serves as Chairman or member of a number of supervisory
boards of various European and South American affiliates of Saint-Gobain, two of
which had shares traded on the Frankfurt and Mexico City exchanges. He is an
international trustee of International House of Philadelphia.
Kevin P. Dowd has been a director of C&D since January 1997. He has been a
director, President and Chief Executive Officer of Checkpoint Systems, Inc.
("Checkpoint"), a manufacturer and supplier of electronic security systems for
retail and commercial customers, since January 1995. Mr. Dowd was President and
Chief Operating Officer of Checkpoint from 1993 to 1995 and prior to that he
served as the Executive Vice President of Checkpoint. Mr. Dowd is also a
director of Holy Redeemer Health System and MAB Paints, Inc.
Pamela S. Lewis has been a director of C&D since June 1998. Dr. Lewis
recently accepted a position as Dean of the McColl School of Business at Queen's
College located in Charlotte, North Carolina, which will commence on June 1,
2000. Since June 1997, she was a Professor of Management and Dean of the LeBow
College of Business, Drexel University in Philadephia, Pennsylvania. Prior to
her association with Drexel University, Dr. Lewis served as Chair of the
Department of Management at the University of Central Florida from 1987 to 1997.
Her professional specialization is in the field of strategic planning, with a
particular emphasis on competitive and marketing strategy. Dr. Lewis is also a
director of Charming Shoppes, Inc. and the Nobel Learning Communities.
George MacKenzie has been a director of C&D since April 1999. He has been
Executive Vice President and Chief Financial Officer of Hercules, Incorporated,
a specialty chemical company, since 1999, having previously served as its Senior
Vice President and Chief Financial Officer from 1996 to 1999, its Vice President
and Chief Financial Officer from 1995 to 1996 and its Vice President and
Treasurer from 1991 to 1995. Previously, Mr. MacKenzie held various corporate
accounting positions at Hercules, Incorporated. He serves on the Board of
Trustees of the Medical Center of Delaware and OperaDelaware and is a member of
the Investment Committee and Accounting Advisory Board at the University of
Delaware. Mr. MacKenzie is also a member of both the American and the
Pennsylvania Institutes of Certified Public Accountants. He is a director of
Hercules Incorporated.
John A. H. Shober has been a director of C&D since July 1996. He has been a
director of Penn Virginia Corporation, a natural resources company, since 1989,
and was Vice Chairman of its board of directors from 1992 to 1996, and President
and Chief Executive Officer from 1989 to 1992. Mr. Shober is also a director of
Airgas, Inc., Anker Coal Group, Inc., Ensign-Bickford Industries, Inc., First
Reserve Corporation, Hercules, Inc., MIBRA GmbH, and several other organizations
including The Eisenhower Exchange Fellowships.
8
<PAGE>
Kathryn R. Bullock was appointed Vice President - Technology in December
1999. Prior to joining C&D, Dr. Bullock was employed by Medtronic, Inc., a
manufacturer of medical devices, as a Product Development Manager from 1996 to
1999. Dr. Bullock held the position of Technical Manager at AT&T Bell
Laboratories, a telecommunications services and equipment manufacturer, from
1991 to 1996. Prior to 1991, she was Manager, Chemical Research for Johnson
Controls, Inc.
Charles R. Giesige, Sr. was appointed Vice President and General Manager -
Dynasty Division in March 1999. Prior to joining C&D, Mr. Giesige spent 15 years
with Johnson Controls, Inc., a Fortune 200 global company and a leading supplier
of automotive seating, interiors, batteries and facility management and control
systems. In that time he held numerous financial and senior level management
positions, including General Manager of the Specialty Battery Division.
Linda R. Hansen was appointed Vice President, General Counsel and Corporate
Secretary in June 1999. Prior to joining C&D, Ms. Hansen held the positions of
Vice President, General Counsel and Secretary of BetzDearborn, Inc., a supplier
of advanced engineered chemical treatment programs for water, wastewater and
process systems, from July 1997 through October 1998. Ms. Hansen previously held
the position of Senior Vice President, General Counsel of Fisher Scientific
Company, the successor in interest of Curtin Matheson Scientific, Inc., from
1995 through 1997, and Vice President, General Counsel and Secretary of Curtin
Matheson Scientific, Inc., a manufacturer and distributor of laboratory
chemicals, supplies and equipment, from 1987 through 1995.
Apostolos T. Kambouroglou was appointed Vice President - Operations
effective November 1997. He held the title of Vice President and General Manager
- - Motive Power Systems from February 1995 until November 1997. He joined C&D in
March 1991 as Plant Manager of the Conyers, Georgia plant, and subsequently held
the positions of Senior Director - Standby Operations and Vice President -
Operations, C&D Powercom.
Stephen E. Markert, Jr. was appointed Vice President - Finance and Chief
Financial Officer in February 1995. He joined C&D in May 1989 as Corporate
Controller.
Robert T. Marley was appointed Treasurer of C&D in August 1995. He joined
C&D in 1991 as Manager of Treasury Services.
John J. Murray, Jr. was appointed Vice President and General Manager -
Motive Power Division in October 1997. Mr. Murray was the Principal of J. J.
Murray Associates, a marketing and management consultancy serving Fortune 500
clients, from 1993 to 1995, Vice President of Marketing and Sales for Gordon
Wahls Company, a national executive search company, from 1995 to 1996 and Senior
Consultant for Right Management Consultants, a global management consulting
firm, from 1996 to 1997.
Bernie Radecki was appointed Vice President and General Manager - Powercom
Division in June 1999. Prior to that assignment, he was Vice President - Sales
for the Powercom Division from October 1998 to June 1999. He joined C&D in
August 1994 as the Leola Plant manager and has subsequently held the positions
of Vice President Combined Operations of the Power Electronics Division from
December 1996 to October 1998 and Vice President of Business Development for the
Powercom Division.
John C. Rich was appointed Vice President and General Manager - Power
Electronics Division in February 2000. Prior to joining C&D, Dr. Rich was
employed by the Raytheon Systems Company, a manufacturer of defense electronics,
where he served as Director of Directed Energy Programs from January 1999 to
January 2000. Dr. Rich served in the capacity of President of Hughes Danbury
Optical Systems, Inc. (renamed Raytheon Optical Systems, Inc. in December 1997),
a subsidiary of the Raytheon Systems Company, from 1989 to 1999.
9
<PAGE>
Mark Z. Sappir was appointed Vice President - Human Resources in July 1998.
From 1988 through 1998, he held a series of senior level human resources
positions within both operating units and the corporate headquarters of Bayer
Corporation, a multinational chemical, healthcare product and imaging technology
company.
John A. Velker was appointed Vice President - Corporate Development in
November 1999. From 1996 to 1998, Mr. Velker was with Dominion Group Limited, an
investment banking and merchant banking firm focusing on telecommunications,
first as Vice President, and later as Senior Vice President. From 1992 to 1995,
he served as Vice President of Penn Hudson Financial Group, an investment
banking and corporate restructuring firm and was Assistant Vice President with
the regional investment banking firm of Legg Mason Wood Walker from 1988 to
1992.
The Board of Directors has established a Compensation Committee (including
a Stock Option Subcommittee), an Audit Committee and a Corporate Governance
Committee. The Compensation Committee reviews the compensation of executives
(including awards pursuant to our Incentive Compensation Plan) and through its
Stock Option Subcommittee administers our Stock Option Plans. The Audit
Committee, which is comprised of directors who are not officers or employees of
C&D, reviews the scope of the independent audit, our year-end financial
statements and such other matters relating to our financial affairs as its
members deem appropriate. The Corporate Governance Committee identifies and
evaluates candidates for election as members of the Board of Directors. It will
consider nominees recommended by stockholders in writing in accordance with the
Company's By-laws. See page 3 for details.
The Board of Directors held four regular meetings and two special meetings
during the year ended January 31, 2000. The Compensation Committee held four
meetings, the Audit Committee and Corporate Governance Committee each held three
meetings and the Stock Option Subcommittee held two meetings. During the last
fiscal year, none of the directors attended fewer than 75% of the aggregate of
the total number of meetings of the Board of Directors plus the total number of
meetings of all committees of the Board of Directors on which such director
served during such year.
10
<PAGE>
EXECUTIVE COMPENSATION
----------------------
Summary Compensation Table
--------------------------
The following table sets forth information concerning annual and long-term
compensation we paid for each of the last three fiscal years to our President
and Chief Executive Officer, our former Chairman of the Board/Chief Executive
Officer, and our four other most highly compensated executive officers as of
January 31, 2000, whose total annual salary and bonus from C&D for the year then
ended exceeded $100,000.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Underlying All
Options Other
Name and Fiscal Salary (1) Bonus (2) Granted (3) Compensation (4)
Principal Position Year ($) ($) (#) ($)
- ------------------------------ ------ ---------- --------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Wade H. Roberts, Jr. 2000 $337,539 $164,588 25,000 $ 583
President and Chief 1999 76,320 110,000 25,000 --
Executive Officer 1998 -- -- -- --
Alfred Weber 2000 178,321 42,027 -- 545,558 (6)
Former Chairman of the Board 1999 464,220 260,000 30,000 5,117
and Former Chief 1998 430,161 294,800 24,000 107,035 (7)
Executive Officer (5)
Linda R. Hansen 2000 104,115 96,200 10,000 --
Vice President, General 1999 -- -- -- --
Counsel and Corporate 1998 -- -- -- --
Secretary
Leslie S. Holden 2000 199,679 (9) 58,594 7,200 4,483
Former Vice President - 1999 164,033 59,200 6,500 4,484
Battery Technology (8) 1998 158,499 60,800 8,400 4,242
Stephen E. Markert, Jr. 2000 173,353 67,645 10,000 5,033
Vice President - 1999 162,029 59,000 10,000 5,060
Finance and Chief 1998 145,921 66,000 9,000 4,773
Financial Officer
Larry W. Moore 2000 154,184 49,088 3,000 5,033
Former Vice President, Strategic 1999 148,366 53,300 12,000 5,033
Business Alliances (10) 1998 140,188 60,500 28,000 15,249 (11)
-------------------
</TABLE>
(1) Does not include the value of certain personal benefits. The estimated
value of those personal benefits for each listed officer did not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus paid to that
officer for the relevant fiscal year.
(2) Represents incentive compensation under our Incentive Compensation Plan,
plus a $50,000 signing bonus received by Ms. Hansen in fiscal 2000.
(footnotes continue on following page)
11
<PAGE>
(3) All share data has been adjusted to reflect C&D's two-for-one stock split,
effected in the form of a 100% stock dividend on July 24, 1998, where
appropriate.
(4) Represents employer matching contributions under our Savings Plan.
(5) Chairman of the Board and Chief Executive Officer through March 31, 1999.
(6) Includes $470,054 related to severance payments paid during the period of
April 1999 through March 2000 and $72,071 of payments under the
Supplemental Executive Retirement Plan paid during fiscal 2000.
(7) Includes $102,168 paid to Mr. Weber in fiscal 1998 to reimburse him, on an
after tax basis, for interest on a promissory note. On April 30, 1996, Mr.
Weber exercised an option to purchase 110,000 (220,000 after adjustment for
stock split) shares of Common Stock at $6.04 per share, pursuant to an
Option Agreement dated May 30, 1989, as amended. We loaned Mr. Weber
$1,057,138 to pay the tax withholding on the exercise of that option,
evidenced by a secured promissory note, bearing interest at 5.33% per annum
payable annually, and due on April 29, 1997, subject to extension until
April 29, 1999 at the option of Mr. Weber. Mr. Weber extended the note on
April 29, 1997 until April 29, 1999, but repaid it in full on April 29,
1998.
(8) Vice President - Battery Technology through his retirement on February 1,
2000 (See Other Executive Employment Agreements).
(9) Includes $30,975 of accrued vacation payments to Dr. Holden in fiscal 2000.
(10) Vice President, Strategic Business Alliances through February 29, 2000 (See
Other Executive Employment Agreements).
(11) Includes $14,782 relocation and tax gross-up reimbursement in fiscal 1998.
- ---------------
Employment Agreements
- ---------------------
Wade H. Roberts, Jr.
--------------------
We entered into an employment agreement with Mr. Roberts as of October 22,
1998, which was amended and restated as of March 31, 2000. The agreement
provides for a current base salary of not less than $400,000 per year, as may be
adjusted from time to time by the Board of Directors. The initial term of the
employment agreement terminates October 21, 2000, but the term is renewed
automatically for successive terms of one year each unless either we or Mr.
Roberts provides at least 90 days' prior written notice to the other of
termination. In addition to base salary, the agreement provides that Mr. Roberts
may participate in our employee benefit plans and programs, including our
Supplemental Executive Retirement Plan, our stock option plans and our Incentive
Compensation Plan. The agreement provides that Mr. Roberts' targeted bonus for
the fiscal year ended January 31, 2000 is 40% of his base salary paid for the
portion of the year prior to the time he became our chief executive officer and
50% of his base salary for the portion of the year after his promotion, subject
to achievement of targeted objectives. Mr. Roberts is subject to covenants under
the agreement relating to non-competition, confidentiality and proprietary
information.
12
<PAGE>
The employment agreement provides the following in the event of
termination:
o In the event of termination by reason of death or disability, we have
agreed to continue paying his base salary for 180 days after the
termination date. In the case of disability, after this period Mr.
Roberts would be entitled to any amounts due and owing pursuant to any
disability policy sponsored or made available by us to the extent he
qualifies under the terms of the policy.
o Upon termination for any reason other than pursuant to a change of
control, Mr. Roberts will be entitled to his base salary through the
date of termination, any bonus earned pursuant to any applicable
incentive compensation or bonus plan but not yet paid for the fiscal
year ended prior to termination, a prorated bonus for the fiscal year
in which termination occurs equal to the bonus of the prior year times
the percentage of the year completed, and accrued vacation pay, except
that in the event of termination for cause, as defined in the
agreement, Mr. Roberts would not be entitled to receive a prorated
bonus.
o If we terminate Mr. Roberts' employment for any reason other than
cause, in addition to the benefits described in the previous
paragraph, we will pay Mr. Roberts his base salary for a period of one
year after termination and other benefits stated in the agreement.
Also, upon a termination of this type as well as a termination by us
pursuant to a non-renewal notice, any unvested stock options that
would otherwise have vested within one year from the date of
termination will vest immediately on the termination date and become
exercisable for 90 days after the date of termination.
Upon termination by us after a "change of control" or by Mr. Roberts for
"good reason," as those terms are defined in the employment agreement, Mr.
Roberts will receive the following:
o a lump-sum payment equal to all accrued obligations, consisting of his
base salary through the date of termination, any bonus earned pursuant
to any applicable incentive compensation or bonus plan but not yet
paid for the fiscal year ended prior to termination, a prorated bonus
for the fiscal year in which termination occurs equal to the bonus of
the prior year times the percentage of the year completed, and accrued
vacation pay;
o a lump-sum payment of an amount equal to three years of his base
salary;
o a lump-sum payment of an amount equal to three of his annual incentive
bonuses, as described in the agreement;
o continued participation for three years after the termination date in
all health, medical and similar benefit plans in which he was
participating immediately prior to the date of termination, except for
any disability plans;
o immediate vesting of all unvested stock options;
o amounts payable under our Supplement Executive Retirement Plan upon a
change of control;
o outplacement services;
o in the event any of these payments cause Mr. Roberts to be subject to
an excise tax under the Internal Revenue Code (the "Code"), a
grossed-up bonus payment of such amount.
13
<PAGE>
Other Executive Employment Agreements
-------------------------------------
We have also entered into employment agreements with Ms. Hansen and Mr.
Markert. Their annual base salaries under these agreements are subject to
increase during the course of the year by the Compensation Committee of the
Board of Directors. Upon that review, effective April 1, 2000, the base salary
of each of Ms. Hansen and Mr. Markert was $200,000 and $187,500. Dr. Holden
retired on February 1, 2000. In March 2000, we entered into an employee
separation agreement with Mr. Moore, as described below.
The initial term of Ms. Hansen's employment agreement ends on June 27, 2000
and the agreement thereafter continues on a month-to-month basis unless
terminated by the other party on 30 days' prior written notice. Mr. Markert's
employment agreement continues on a month-to-month basis, unless terminated by
either party on 30 days' prior written notice. The agreements restrict each of
Ms. Hansen and Mr. Markert from competing with us during their respective terms
and for a period of one year following the person's termination of employment.
Each of the agreements also provides that if employment is terminated by us
without cause or as a result of the non-renewal of the agreement, we must pay
the employee his/her base salary in effect at the date of termination for a
one-year period. In the event of termination by reason of death, we have agreed
to continue paying the person's base salary for 180 days after the termination
date. In the event of termination due to disability, as defined in the
agreement, we will pay any accrued but unpaid base salary through the date of
termination.
Upon termination by us after a "change of control" or by the executive for
"good reason," as those terms are defined in the employment agreements, the
executive will receive the following:
o a lump-sum payment equal to the executive's base salary through the
date of termination and all benefits that have accrued to the
executive under the terms of all employee benefits plans in which the
executive participates;
o a lump-sum payment of an amount equal to two years of the executive's
base salary;
o a lump-sum payment of an amount equal to two of the executive's annual
incentive bonuses, as described in the agreement;
o continued participation for two years after the termination date of
all health, medical and similar benefit plans in which he or she was
participating immediately prior to the date of termination, except for
any disability plans;
o immediate vesting of all unvested stock options and other restricted
stock awards that have been granted to the executive;
o amounts payable under our Supplement Executive Retirement Plan upon a
change of control;
o outplacement services;
o in the event any of these payments cause the executive to be subject
to an excise tax under the Code, a grossed-up bonus payment of such
amount.
In March 2000, we entered into an employee separation agreement with Mr.
Moore that provides for the termination of his employment agreement as of March
1, 2000 and his continued service as Vice President-Telecommunications
Consulting of C&D. Under this agreement, we have agreed to pay Mr. Moore his
current base salary through October 1, 2000, the termination date, and a
severance payment of $50,000. Mr. Moore has agreed not to compete or an engage
in a competitive business with C&D during his remaining employment period and
for a period of one year after the termination date of his employment.
14
<PAGE>
Pension Plans
- -------------
Pension Plan for Salaried Employees
-----------------------------------
The C&D Technologies, Inc. Pension Plan for Salaried Employees (the
"Pension Plan") covers certain nonunion salaried employees of C&D who either
have participated in its predecessor company's pension plan or have completed
one year of service with C&D. The Pension Plan was amended during 1994, 1995 and
1998 to provide participation to salaried employees of certain of our
subsidiaries. The Pension Plan was amended in 1997 to eliminate the one year of
service eligibility requirement for covered employees. The Pension Plan is a
qualified plan under Section 401(a) of the Code of 1986, as amended. The Pension
Plan is a noncontributory defined benefit plan that provides for normal
retirement benefits beginning at age 65 but permits early retirement benefits in
certain cases, subject to a reduction of benefits for employees who retire
earlier than age 62.
Under the Pension Plan, the pension payable at normal or late retirement
equals 2.1% of a participant's "average pay" (as defined below) during the
highest paid five consecutive years of the participant's last ten years of
employment multiplied by the number of years of credited service up to 15
(including service with our predecessor company), plus 1.6% of that average pay
for each year in excess of 15 years up to a maximum of 15 additional years,
reduced by .5% (the "Offset") of Covered Compensation (35-year average of the
Social Security wage base ending the year prior to Social Security Normal
Retirement Age) multiplied by the participant's years of credited service up to
30 years. The term "average pay" as used in the Pension Plan was amended January
1, 1994 to include salary, overtime, executive incentive compensation, sales
bonuses, 30% of sales commissions and any tax deferred contributions to C&D's
savings plan. An unreduced disability benefit is provided after ten years of
eligibility service, and a death benefit to a surviving spouse equal to
approximately 50% of the value of the participant's pension benefit at the time
of death is provided after five years of eligibility service or age 65. The Code
places certain maximum limitations on the amount of benefit that may be paid
under a qualified pension plan such as the Pension Plan. The current limitation
on an employee's annual benefit is the lesser of $135,000 or the employee's
average compensation for the three years that he/she was most highly
compensated.
The following table illustrates the total estimated annual pension benefits
that would be provided upon retirement under the benefit formula described above
to salaried employees for the specified remuneration and years of credited
service classifications set forth below. Benefit amounts shown are computed on a
straight life basis, prior to the Offset described above.
Years of Credited Service (1)(2)(3)
------------------------------------------
Average Pay 5 10 20 30 40
- ----------------------- ------ ------ ------ ------ ------
$170,000 or greater (4)....... 17,850 35,700 67,150 94,350 94,350
- ------------------
(1) We expect that Messrs. Roberts and Markert and Ms. Hansen will have 13, 27,
and 13 years of credited service, respectively, at normal retirement. Mr.
Weber and Dr. Holden each had 10 years of credited service upon their
retirement.
(2) For the plan year ended December 31, 1999, the amount of remuneration, for
purposes of calculations under the Pension Plan was $160,000 for each of
Messrs. Roberts and Markert and Dr. Holden and $139,530 for Ms. Hansen.
(footnotes continue on following page)
15
<PAGE>
(3) The maximum annual benefit of $135,000 will be reduced for pension benefits
which begin before, and increased for pension benefits which begin after,
the participant's Social Security Normal Retirement Age.
(4) Effective January 1, 2000, the maximum compensation limit is $170,000. The
limit from January 1, 1997 through December 31, 1999 was $160,000. The
limit was $150,000 from January 1, 1994 through December 31, 1996 and for
years prior to January 1, 1994 the limit ranged from $200,000 to $235,840.
After reflecting these limits, Mr. Weber's and Dr. Holden's annual
retirement benefits are $40,559 and $34,209, respectively, prior to the
Offset.
Supplemental Executive Retirement Plan
--------------------------------------
We have adopted a Supplemental Executive Retirement Plan (the "SERP"),
covering executives specified from time to time by the Board of Directors
(presently including, among others, Messrs. Roberts and Markert and Ms. Hansen
as of January 31, 2000). The SERP is a nonqualified, unfunded defined benefit
compensation plan whose purpose is to provide upon retirement or other
qualifying event additional benefits to participants whose benefits under the
Pension Plan have been restricted by federal law. The normal form of benefit
under the SERP for an unmarried participant is a monthly annuity ceasing on the
participant's death and for a married participant is a joint and 60% survivor
annuity, although a married participant may elect to have benefits paid in a
monthly annuity, subject to spousal consent. Participants become vested in their
benefits under the SERP upon the earlier of the completion of 7 1/2 years of
continuous employment with C&D or an affiliate or upon a change in control. Mr.
Roberts' maximum annual benefit will be $150,000. The maximum annual benefit for
other participants is $100,000, in each case indexed annually by 4% beginning
September 30, 1998 (except for Charles Giesige, who became a participant as of
March 1, 1999 and whose vesting calculations are based on that date), reduced by
(i) the annual accrued benefit as of the retirement or other qualifying event
(based on a monthly single life annuity) payable at normal retirement age (as
defined in the Pension Plan); (ii) one-half of the participant's social security
benefit (as defined in the SERP) that would be payable as of the retirement or
other qualifying event; and (iii) the annual single life annuity payable at age
65 based on the Actuarial Equivalent (as defined in the SERP) of the
participant's account under our Savings Plan as of the retirement or other
qualifying event solely attributable to matching contributions made by C&D. The
actual annual benefits payable are the percentages set forth below of the
maximum annual benefit, based on the number of years of employment prior to
retirement or other qualifying event:
Years of Employment
Prior to Qualifying Event Percentage Benefit
------------------------- ------------------
less than 7.5 0.0
7.5 50.0
8 53.3
9 60.0
10 66.7
11 73.3
12 80.0
13 86.7
14 93.3
15 or more 100.0
16
<PAGE>
Participants who retire from C&D or an affiliate before age 65 and after
age 62 will receive the actual annual benefit calculated above reduced by 7% per
year for each year prior to age 65.
For participants who have been continuously employed by C&D or an affiliate
for at least five years, if the qualifying event is a change of control, the
actual annual benefit is determined by multiplying the maximum annual benefit by
a fraction (not to exceed 1), the numerator of which is the number of years the
participant would have been employed if he/she were continuously employed by C&D
or an affiliate through age 65, and the denominator of which is 15. For
participants who have been continuously employed by C&D or an affiliate for less
than five years, the actual annual benefit is 50% of the amount referred to in
the previous sentence. Benefits paid on account of a change of control are made
in a single lump sum. A participant's SERP benefit may be forfeited in certain
circumstances, including where the participant is terminated for cause or
violates a covenant not to compete.
We also had adopted a separate SERP covering Mr. Weber, who retired March
31, 1999. Pursuant to Mr. Weber's SERP, as of April 1, 1999, we are making
monthly payments of $8,007.84 for the remainder of Mr. Weber's life.
Nonqualified Deferred Compensation Plan
- ---------------------------------------
We have adopted a Nonqualified Deferred Compensation Plan by which certain
employees and directors may elect to defer receipt of a designated percentage or
amount of their compensation.
Option Grants in Fiscal 2000
----------------------------
The following table presents certain information concerning the stock
options we granted to our President and Chief Executive Officer and our four
other most highly compensated executive officers in the year ended January 31,
2000.
<TABLE>
<CAPTION>
Individual Grants
-------------------------------------------------------------------
Number of % of Total Grant
Securities Options Exercise Date
Underlying Granted to Price Expiration Present
Options Granted Employees in per Date Value
Name (#) Fiscal Year Share (3) (4)
- ----------------------- --------------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Wade H. Roberts, Jr. 25,000 (1) 8.2 $36.6875 9/24/09 $402,250
Linda R. Hansen 2,500 (2) 0.8 29.8750 6/29/09 32,900
Linda R. Hansen 7,500 (1) 2.5 36.6875 9/24/09 120,675
Leslie S. Holden 7,200 (1) 2.4 36.6875 9/24/09 115,848
Stephen E. Markert, Jr. 10,000 (1) 3.3 36.6875 9/24/09 160,900
Larry W. Moore 3,000 (1) 1.0 36.6875 9/24/09 48,270
- -------------------
</TABLE>
(1) The first 33 1/3% of the shares covered by these options will vest on
September 24, 2000, the second 33 1/3% of the shares covered by these
options will vest on September 24, 2001 and the remaining 33 1/3% of the
shares covered by these options will vest on September 24, 2002. All of a
participant's options vest in full upon the participant's retirement,
disability or death. Dr. Holden's options vested in full upon his
retirement on February 1, 2000.
(footnotes continue on following page)
17
<PAGE>
(2) The first 33 1/3% of the shares covered by these options will vest on June
29, 2000, the second 33 1/3% of the shares covered by these options will
vest on June 29, 2001 and the remaining 33 1/3% of the shares covered by
these options will vest on June 29, 2002. All of the participant's options
vest in full upon the participant's retirement, disability or death.
(3) Each option is subject to earlier termination if the officer's employment
with C&D terminates. As a result of Dr. Holden's retirement on February 1,
2000, the options granted to Dr. Holden during the last fiscal year will
expire on February 1, 2001.
(4) The options were valued using the Black-Scholes pricing model.
18
<PAGE>
Option Exercises in Last Fiscal Year and Fiscal 2000 Year-End Option Values
---------------------------------------------------------------------------
The following table presents certain information concerning the amount and
value of all unexercised stock options held by our President and Chief Executive
Officer and our four most highly compensated executive officers as of January
31, 2000.
<TABLE>
<CAPTION>
Value of Unexercised In-
the-Money Options at 1/31/00
Number of Securities ----------------------------
Underlying Unexercised
Options at 1/31/00 Exercisable Unexercisable
Shares ---------------------- ------------------- ------------------
Acquired
on Value
Exercise Realized Exercisable Unexercisable Shares Value Shares Value
Name (#)(1) ($) (#)(1) (#)(1) (#)(1) ($)(2) (#)(1) ($)(2)
- ---------------------- --------- -------- ----------- ------------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wade H. Roberts, Jr. -- -- 8,333 41,667 8,333 $134,370 41,667 $373,443
Linda R. Hansen -- -- -- 10,000 -- -- 10,000 58,906
Leslie S. Holden 10,000 $197,500 13,767 14,333 (3) 13,767 311,758 14,333 156,473
Stephen E. Markert, Jr. -- -- 32,333 19,667 32,333 848,286 19,667 212,777
Larry W. Moore 13,334 162,341 5,334 15,000 5,334 126,016 15,000 224,813
- --------------------
</TABLE>
(1) All share data has been adjusted to reflect C&D's two-for-one stock
split, effected in the form of a 100% stock dividend on July 24, 1998,
where appropriate.
(2) Represents the number of shares covered by the option multiplied by
the excess of (i) the closing price for shares of Common Stock
($40.875 per share) on January 31, 2000 over (ii) the aggregate
exercise price of the option.
(3) Dr. Holden's options vested in full upon his retirement on February 1,
2000 and will expire on February 1, 2001.
Compensation of Directors
- -------------------------
We pay (i) our Chairman of the Board an annual retainer of $60,000 in
grants of Common Stock (of which he may elect to receive one-third of such value
in cash to permit him to pay a portion of the federal, state and local income
taxes he will incur as a result of the receipt of the shares of Common Stock)
and our non-employee directors, an annual retainer of $18,000 in grants of
Common Stock (of which they may elect to receive one-third of such value in cash
to permit them to pay a portion of the federal, state and local income taxes
they will incur as a result of the receipt of the shares of Common Stock), (ii)
for members of a committee of the Board of Directors other than the chairperson,
$1,000 for each in-person meeting and $500 for each telephonic meeting of a
committee attended and (iii) for the chairperson of a committee of the Board of
Directors, $1,500 for each in-person meeting or $750 for each telephonic meeting
of a committee attended; and, in addition, we grant annually to each
non-employee director options to purchase 2,000 shares of Common Stock at the
closing price of the Common Stock on the date of grant. Under the C&D 1998 Stock
Option Plan, as proposed to be amended and restated, the Board of Directors has
the authority to make additional yearly grants of shares of Common Stock to each
non-employee director having a fair market value on the date of the grant that
may not exceed 1.25 times the non-employee director's compensation for the
applicable annual period.
19
<PAGE>
Composition of Compensation Committee
- -------------------------------------
During fiscal 2000 the Compensation Committee consisted of Messrs. Harral,
Dowd and Feit. The Stock Option Subcommittee of the Compensation Committee
consisted of Messrs. Harral and Dowd.
Compensation Committee Report
- -----------------------------
The Committee's Responsibilities.
---------------------------------
The Compensation Committee is responsible for establishing C&D's basic
compensation philosophy, reviewing and monitoring the development and operation
of compensation programs to ensure fidelity with the core principles of C&D's
compensation philosophy as well as their alignment with C&D's strategic
objectives and stockholder interests, and reviewing, modifying and approving
recommendations concerning management compensation. The Committee is composed
entirely of outside directors. The Committee's actions and decisions are
reported to the full Board.
Compensation Philosophy.
------------------------
The members of C&D's executive management team have primary responsibility
for the stewardship of C&D on a day-to-day basis in the best interest of the
stockholders. The basic purpose of C&D's executive compensation program is to
facilitate the recruitment, recognition, motivation and retention of capable
individuals who have consistently demonstrated their ability to meet and exceed
the expectation of C&D's stockholders.
The executive compensation program consists of various components, each
intended to address specific issues, objectives and time horizons. The elements
of the executive compensation program include:
o BASE SALARIES. The basic compensation paid to executives as a fixed
dollar amount each payday, typically subject to change only on an
annual basis or concurrent with a significant change in
responsibilities.
o MANAGEMENT INCENTIVE COMPENSATION PLAN. The primary form of variable
compensation, which is intended to link overall levels of remuneration
with the attainment of annually established individual and corporate
objectives.
o STOCK OPTION AWARD PROGRAM. The component of the program intended to
enable executives to create personal wealth on a long-term basis by
steadily increasing stockholder value.
o EXECUTIVE STOCK OWNERSHIP GUIDELINES. The portion of the program
designed to help C&D attract and retain only executives who have a
strong belief in C&D's long-term growth potential, and who are willing
to assume the same downside risks as C&D's stockholders, in order to
benefit from the expected growth.
o SUPPLEMENTAL EXECUTIVE RETIREMENT PROGRAM (SERP). A nonqualified
retirement income program designed to overcome the statutorily based
limitations of C&D's qualified defined benefit and defined
contribution retirement plans.
20
<PAGE>
Section 162(m) of the Code precludes tax deductions for compensation paid
in excess of $1 million to certain executive officers unless specified
conditions are met. Based on current pay levels and the design of existing
compensation plans, the Committee believes that any tax deductions that may be
lost by reason of Section 162(m) for such compensation would not be material for
the foreseeable future. No tax deductions were lost in the 2000 fiscal year due
to Section 162(m). C&D's stock option plans conform to Section 162(m) conditions
that permit tax deductions.
Executive Officer Compensation.
-------------------------------
The Compensation Committee reviews the performance of our executive
officers once a year.
BASE SALARY. C&D has employment agreements with its principal executive
officers that provide for annual reviews of their base salary. During this
review the Compensation Committee considers adjustment to the executive
officer's base salary, based on individual performance and to assure that the
base salary is competitive with that of executives in peer companies with
comparable roles and responsibilities.
ANNUAL INCENTIVE BONUS. Under the Incentive Compensation Plan, each
executive officer has an established target bonus amount, which is a percentage
of the executive's base salary as in effect on April 1st of each year. The Board
of Directors establishes overall corporate financial objectives for each fiscal
year, and each executive officer and his/her direct supervisor develops a series
of individual objectives for each executive officer, which reflect activities
for which the executive officer either has direct personal responsibility or
over which he/she can exert significant influence. The annual bonus payment
involves a two-step process that occurs after the fiscal year-end performance
results have become available: (i) for each level of attainment of the corporate
and individual financial goals actually reached, a corresponding achievement
factor is established and (ii) an assessment of the executive's performance
against his/her individual objectives is made.
STOCK OPTION AWARD PROGRAM. C&D's stock option program is governed by the
terms of formal stock option plans that have been adopted by the Board of
Directors and submitted to the stockholders for approval. Authority for
administering the program has been delegated to the Stock Option Subcommittee of
the Board. Stock option grants are typically considered annually and are awarded
at the sole discretion of the Stock Option Subcommittee; however, stock options
may be granted at any time in the discretion of the Subcommittee. The number of
shares included in the stock option grant are typically linked to two factors:
(i) an executive's position level and (ii) an assessment of the executive's past
performance and expected prospective contribution to the success of C&D.
EXECUTIVE STOCK OWNERSHIP GUIDELINES. Each of our executive officers is
expected to own a reasonable number of shares of C&D's Common Stock. In
furtherance of this policy, the Board of Directors has established stock
ownership guidelines and procedures. The amount of stock an executive officer is
expected to own is based on his/her base salary. Executive officers other than
the Chief Executive Officer are generally expected to own shares of C&D's Common
Stock equal in value to 100% of the executive's base salary. Each executive has
approximately four years to attain the expected level of ownership. During each
of these four years, the executive will be expected to acquire enough shares to
bring his/her total holdings to an amount equal to 25% of the final goal for the
year. Stock option awards and shares owned through C&D's pension plan do not
constitute shares owned for purpose of the guidelines.
21
<PAGE>
Chief Executive Officer Compensation.
-------------------------------------
The principles guiding compensation for the Chief Executive Officer are
substantially the same as those described above for the other executive
officers. The Compensation Committee reviews the performance of our Chief
Executive Officer at least once a year. For the fiscal year ended January 31,
2000, the Compensation Committee took the actions with respect to Mr. Roberts
described below.
BASE SALARY. Pursuant to the employment agreement between C&D and Mr.
Roberts, Mr. Roberts base salary was $275,000 at the beginning of the year and
was increased to $350,000 on April 1, 1999, when he was promoted to Chief
Executive Officer. Mr. Roberts' base salary was subsequently reviewed and was
increased effective April 1, 2000.
ANNUAL INCENTIVE BONUS. Criteria for earning incentive awards pursuant to
the Incentive Compensation Plan for the fiscal year ended January 31, 2000 were
established for Mr. Roberts by the Compensation Committee early in the fiscal
year, based in part on substantial achievement of earnings per share and cash
flow objectives and in part on achievement of specified individual performance
objectives. Under Mr. Roberts' employment agreement, his targeted bonus was 40%
of base salary during the period prior to his promotion to Chief Executive
Officer and 50% of his base salary for the portion of the year after his
promotion, with the actual payment of the bonus dependent on the achievement of
targeted objectives. Based on Company and individual performance and the report
of an independent consultant who examined Company's compensation policies, the
Compensation Committee granted a bonus award to Mr. Roberts in the amount of
$164,588. This bonus reflects Mr. Roberts' efforts toward achieving targeted
earnings per share and corporate cash flow targets and his augmenting of C&D's
executive staff.
STOCK OPTIONS. Based on the report of an independent consultant who
examined our compensation policies, the Stock Option Subcommittee of the
Compensation Committee granted Mr. Roberts options to purchase 25,000 shares of
Common Stock in September 1999 at an exercise price of $36.6875 per share, equal
to 100% of the fair market value of a share of Common Stock at the time of the
grant.
EXECUTIVE STOCK OWNERSHIP GUIDELINES. Under C&D's executive stock ownership
guidelines, the Chief Executive Officer is expected to own shares of C&D's
Common Stock equal in value to 200% of his base salary. Mr. Roberts is expected
to reach 25% of this goal, or share ownership having a value equal to 50% of his
base salary, by December 31, 2000.
Kevin P. Dowd
Peter R. Dachowski
Glenn M. Feit
William Harral, III
April 1, 2000
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
Messrs. Harral, Dowd and Feit served on the Compensation Committee for the
entire fiscal year ended January 31, 2000.
As of March 31, 2000: Mr. Harral beneficially owned 16,423 shares of Common
Stock; Mr. Dowd beneficially owned 6,290 shares of Common Stock; and Mr. Feit,
who retired May 23, 2000, beneficially owned 7,017 shares of Common Stock. Mr.
Feit is a member of the law firm of Proskauer Rose LLP, which provided legal
services to C&D during the last fiscal year. The above shares have been adjusted
to reflect C&D's two-for-one stock split, effected in the form of a 100% stock
dividend on July 24, 1998.
22
<PAGE>
Stock Price Performance Graph
- -----------------------------
The following graph compares on a cumulative basis the yearly percentage
change, assuming quarterly dividend reinvestment over the last five fiscal
years, in the total stockholder return on the Common Stock, with the total
return on the New York Stock Exchange Market Value Index (the "NYSE Market Value
Index"), a broad entity market index, and the total return on a selected peer
group index (the "SIC Code Peer Group Index"). The SIC Code Peer Group is based
on the standard industrial classification codes ("SIC Codes") established by the
U.S. government. The index chosen was "Miscellaneous Electrical Equipment and
Supplies" and is comprised of all publicly traded companies having the same
three-digit SIC Code (369) as C&D. The price of each unit has been set at $100
on January 31, 1995 for the purpose of preparation of the graph.
Comparison of Five-Year Cumulative Total Return
-----------------------------------------------
Among C&D Technologies, Inc., NYSE Market Value
Index and SIC Code Peer Group Index
Performance Results through January 31
Fiscal Year C&D NYSE Peer Group
----------- --- ---- ----------
1995 100.0 100.0 100.0
1996 128.3 135.5 121.6
1997 167.8 166.0 145.6
1998 238.5 208.2 205.1
1999 233.7 249.9 202.8
2000 401.6 259.4 249.0
23
<PAGE>
COMPLIANCE WITH SECTION 16(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
--------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers, and beneficial owners of more than 10% of the
Common Stock to file with the Securities and Exchange Commission initial reports
of ownership and periodic reports of changes in ownership of the Common Stock
and to provide copies of those filings to us. Based upon a review of those
copies and written representations, we believe that for the fiscal year ended
January 31, 2000, all of these reports were filed on a timely basis, except that
Mr. Roberts failed to timely file one report with respect to one transaction and
Mr. Murray and Dr. Holden each failed to timely file one report with respect to
two transactions. All of such reports have since been filed.
PROPOSAL TO APPROVE THE C&D TECHNOLOGIES, INC.
AMENDED AND RESTATED 1998 STOCK OPTION PLAN
-------------------------------------------
At the Annual Meeting, stockholders will be asked to approve the C&D
Technologies, Inc. Amended and Restated 1998 Stock Option Plan. The 1998 Plan
was adopted by the Board effective June 30, 1998 and was approved by the
stockholders on that date. The Board approved certain amendments to the 1998
Plan on February 22, 2000.
The amendments to the 1998 Plan, among other things, increase the number of
shares of C&D's Common Stock available for awards under the 1998 Plan from
600,000 shares to 1,500,000 shares, increase the number of stock options to be
granted to each outside director each year from 1,000 shares to 2,000 shares of
Common Stock, increase the value of the stock grants made to the Chairman of the
Board each year from $30,000 to $60,000, and prohibit outstanding stock options
from being repriced, regranted or amended so as to decrease the exercise price
of those stock options without stockholder approval.
As of March 31, 2000, stock options to purchase 57,799 shares of Common
Stock that had been granted under the 1998 Plan had been exercised, stock
options to purchase 515,627 shares of Common Stock that had been granted under
the 1998 Plan remained outstanding, and 7,920 shares of Common Stock had been
awarded as stock grants to non-employee directors, leaving only 18,654 shares of
Common Stock available for future awards under the 1998 Plan.
The following is a description of the 1998 Plan, as amended and restated, a
copy of which is attached to this proxy statement as Exhibit A.
PURPOSE. The purpose of the 1998 Plan is to enhance the profitability and
value of C&D for the benefit of C&D's stockholders by enabling C&D to offer
employees and consultants of C&D and its subsidiaries, as well as non-employee
directors of C&D, options to purchase Common Stock and to compensate
non-employee directors with shares of Common Stock. The 1998 Plan seeks to raise
the level of stock ownership by these persons in order to attract, retain and
reward them and to strengthen the mutuality of interests between them and the
stockholders.
ADMINISTRATION. The 1998 Plan is administered by the Stock Option
Subcommittee of the Compensation Committee of the Board of Directors appointed
from time to time by the Board consisting of two or more non-employee directors.
All questions of the interpretation and application of the 1998 Plan are
determined by the Subcommittee. The current members of the Subcommittee are
Kevin P. Dowd, Chair, and William Harral, III.
24
<PAGE>
PARTICIPATION. All employees and consultants of C&D and its subsidiaries
are eligible to receive stock options, but the actual recipients, number of
shares and exercise price of stock options to be granted are determined by the
Subcommittee. All non-employee directors receive annual grants of both shares of
Common Stock and stock options as described below.
SHARES OF STOCK AVAILABLE FOR GRANT. The number of stock options that may
be granted to any person under the 1998 Plan is subject to two limitations: (i)
if the amendments to the 1998 Plan are approved by the stockholders, the total
number of shares of Common Stock with respect to which stock options may be
granted may not exceed 1,500,000 shares, and (ii) the maximum number of shares
for which stock options may be granted during any calendar year of C&D to any
employee is 200,000 shares (both limitations being subject to adjustment by the
Subcommittee in the event of stock dividend, stock split or any other change in
capital structure or business of C&D). 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 for which the stock option has not been exercised will
again be available for awards made under the 1998 Plan.
STOCK OPTIONS. The 1998 Plan provides for the grant of both incentive stock
options and nonqualified stock options. The Subcommittee has the authority to
grant to any employee of C&D or a majority-owned subsidiary one or more
incentive stock options, nonqualified stock options or both types of stock
options. The Subcommittee also has the full authority to grant to any employee
of another subsidiary of C&D or a consultant one or more nonqualified stock
options.
The exercise price per share of Common Stock subject to a stock option
granted under the 1998 Plan will be determined by the Subcommittee at the time
of grant, but may not be less than 100% of the fair market value of a share of
Common Stock at the time of grant, except that, if an incentive stock option is
granted to a ten percent stockholder of C&D or its subsidiaries, the exercise
price per share may be no less than 110% of the fair market value of the Common
Stock. The term of each stock option will be fixed by the Subcommittee, but no
stock option will be exercisable more than ten years after the date the stock
option is granted, except that the term of an incentive stock option granted to
a ten percent stockholder may not exceed five years. As amended, the 1998 Plan
would prohibit an outstanding stock option from being repriced, regranted or
amended so as to decrease the exercise price of the stock option without the
approval of the stockholders.
Under the 1998 Plan, as amended, on the date of our 2000 Annual Meeting of
the Stockholders and on the date of the annual meeting of stockholders held each
year thereafter while shares of Common Stock remain available for the grant of
stock options under the 1998 Plan, each non-employee director will be
automatically granted nonqualified 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 will upon such
election or appointment, automatically be granted a pro rata portion of the
nonqualified 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. The exercise price
per share of Common Stock subject to such nonqualified stock options will be
equal to 100% of the fair market value of Common Stock at the time of the grant,
and such stock options will be exercisable in full immediately upon grant.
Except as otherwise provided in the 1998 Plan, if not previously exercised, each
nonqualified stock option will expire on the tenth anniversary of the date of
its grant.
GRANT OF SHARES OF COMMON STOCK TO NON-EMPLOYEE DIRECTORS. If the
amendments to the 1998 Plan are approved by the stockholders, on the date of
C&D's 2000 Annual Meeting of Stockholders and on the date of the annual meeting
of stockholders of C&D held in each year thereafter in which shares of Common
Stock remain available for grant under the 1998 Plan, each non-employee director
will be automatically granted shares of Common Stock having a fair market value
of $18,000 as compensation for
25
<PAGE>
his/her services; except that the Chairman of the Board will be granted shares
of Common Stock having a fair market value of $60,000 as compensation for the
substantial time and effort required of the Chairman of the Board in performing
his duties. Each non-employee director may elect to receive two-thirds of such
value in shares of Common Stock and one-third of such value in cash to permit
the non-employee director to pay a portion the federal, state and local income
taxes he/she will incur as a result of the receipt of the shares of Common
Stock. Any non-employee director who is first elected or appointed to the Board
after the grant of shares of Common Stock under the 1998 Plan in any year will,
upon such election or appointment, be automatically granted a pro rata portion
of the shares of Common Stock (and cash, if requested) referred to in the
preceding sentence, based upon the portion of the period between annual meetings
of stockholders the non-employee director is expected to serve in such capacity.
The 1998 Plan provides that the Board of Directors shall review the compensation
of C&D's non-employee directors annually and, as a result of that review, may
grant additional shares of Common Stock to the non-employee directors, which may
not exceed 1.25 times their compensation for the respective annual period.
AWARDS MADE UNDER THE 1998 PLAN. The following table sets forth the total
number of shares of Common Stock for which stock options and Common Stock grants
have been awarded to the persons and groups listed below under the Plan as of
March 31, 2000:
Name Stock Options Common Stock Grants
- ----- ------------- -------------------
Wade H. Roberts Jr..................... 55,000 ---
President and Chief Executive
Officer
Alfred Weber........................... 30,000 ---
Former Chairman of the Board and
Former Chief Executive Officer
Linda R. Hansen........................ 10,000 ---
Vice President, General Counsel and
Secretary
Leslie S. Holden....................... 6,500 ---
Former Vice President - Battery
Technology
Stephen E. Markert, Jr................. 20,000 ---
Vice President - Finance and Chief
Financial Officer
Larry W. Moore......................... 12,000 ---
Former Vice President, Strategic
Business Alliances
William Harral, III.................... 4,000 2,423
Chairman of the Board
Adrian A. Basora....................... 1,168 269
Director
Peter R. Dachowski..................... 708 143
Director
Kevin P. Dowd.......................... 4,000 1,017
Director
Pamela S. Lewis........................ 4,000 1,017
Director
George MacKenzie....................... 2,000 603
Director
John A.H. Shober....................... 4,000 1,017
Director
26
<PAGE>
Name Stock Options Common Stock Grants
- ----- ------------- -------------------
All current non-employee directors
as a group (8 persons)............... 23,876 ---
All current executive
officers as a group (12 persons)...... 169,200 ---
All employees other than
executive officers as a group......... 366,950 ---
(115 persons)
Glenn M. Feit, who was a director of C&D until his retirement on May 23,
2000, was awarded stock options to purchase 4,000 shares of Common Stock and
3,017 shares of Common Stock grants.
Stock options to purchase a total of 57,799 shares of Common Stock had been
exercised under the 1998 Plan, as of March 31, 2000, at exercise prices ranging
from $23.3125 to $45.625 per share. The market value of C&D's Common Stock as of
March 31, 2000 was $59.00 per share, based on the closing sales price on that
date for the Common Stock on the New York Stock Exchange.
FEDERAL TAX CONSEQUENCES. The rules concerning the federal income tax
consequences with respect to stock options are highly technical. In addition,
the applicable statutory provisions are subject to change and their application
may vary in individual circumstances. Therefore, the following discussion is
designed to provide a general understanding of the federal income tax
consequences discussions at the current time. It does not discuss any state or
local income tax or estate tax consequences that may be applicable.
INCENTIVE STOCK OPTIONS. Stock options granted under the 1998 Plan may be
"incentive stock options" as defined in the Code, provided that such stock
options satisfy the applicable requirements under the Code. In general, neither
the grant not the exercise of an incentive stock option will result in taxable
income to the optionee or a deduction to C&D. The sale of Common Stock received
pursuant to the exercise of a stock option that satisfied all the requirements
of an incentive stock option, as well as the holding period requirement
described below, will result in a long-term capital gain or loss to the optionee
equal to the difference between the amount realized on the sale and the exercise
price and will not result in a tax deduction to C&D. To receive incentive stock
option treatment, the optionee must not dispose of the Common Stock purchased
pursuant to the exercise of a stock option either (i) within two years after the
stock option is granted or (ii) within one year after the date of exercise. If
the Common Stock is held or more than twelve months after the date of the
exercise, the optionee will be taxed at a lower rate applicable to capital gains
for such optionee.
If all requirements for incentive stock option treatment other than the
holding period rules are satisfied, the recognition of income by the optionee is
deferred until disposition of the Common Stock, but, in general, any gain (in an
amount equal to the lesser of (i) the fair market value of the Common Stock on
the date of exercise minus the exercise price or (ii) the amount realized on the
disposition minus the exercise price) is treated as ordinary income. Any
remaining gain is treated as long-term or short-term capital gain depending on
the optionee's holding period for the stock disposed of. C&D generally will be
entitled to a deduction at that time equal to the amount of ordinary income
realized by the optionee.
27
<PAGE>
The 1998 Plan provides that an optionee may pay for Common Stock received
upon the exercise of a stock option (including an incentive stock option) with
other shares of Common Stock held for at least six months. In general an
optionee's transfer of stock acquired pursuant to the exercise of an incentive
stock option to acquire other stock in connection with the exercise of an
incentive stock option may result in ordinary income if the transferred stock
has not met the minimum statutory holding period necessary for favorable tax
treatment as an incentive stock option. For example, if an optionee exercises an
incentive stock option and uses the stock so acquired to exercise another
incentive stock option within the two-year or one-year holding periods discussed
above, the optionee may realize ordinary income under the rules summarized
above.
NONQUALIFIED STOCK OPTIONS. An optionee will recognize no taxable income at
the time he/she is granted a nonqualified stock option. Such conclusion is
predicated on the assumption that, under existing Treasury Department
regulations, a nonqualified stock option, at the time of its grant, has no
readily ascertainable fair market value. Ordinary income will be recognized when
a nonqualified stock option is exercised. The amount of such income will be
equal to the excess of the fair market value on the exercise date of the shares
of Common Stock issued to an optionee over the exercise prices. The optionee's
holding period with respect to the shares acquired will begin on the date of
exercise.
The tax basis of the Common Stock acquired upon the exercise of any
nonqualified stock option will be equal to the sum of (i) the exercise price of
such nonqualified stock option and (ii) the amount included in income with
respect to such nonqualified stock option. Any gain or loss on a subsequent sale
of the Common Stock will be either a long-term or short-term capital gain or
loss, depending on the optionee's holding period for the Common Stock disposed
of. Subject to the limitations under Sections 162(m) and 280G of the Code (as
described below), C&D generally will be entitled to a deduction for federal
income tax purposes at the same time and in the same amount as the optionee is
considered to have recognized ordinary income in connection with the exercise of
the nonqualified stock option.
STOCK GRANTS. A non-employee director will recognize ordinary taxable
income upon the grant of shares of Common Stock equal to the fair market value
of the shares received. C&D will generally be entitled to a federal income tax
deduction in the amount of such ordinary income.
CERTAIN OTHER TAX ISSUES. In general, Section 162(m) denies a publicly held
corporation a deduction for federal income tax purposes for compensation in
excess of $1,000,000 per year per person to its chief executive officer and the
four other most highly compensated executive officers subject to certain
exceptions. Stock options will generally qualify under one of these exceptions
if they are granted under a plan that states the maximum number of shares with
respect to which options may be granted to any employee during a specified
period and the plan under which the options are granted is approved by
stockholders and is administered by a compensation committee comprised of
outside directors. The 1998 Plan is intended to satisfy these requirements with
respect to stock options. The 1998 Plan is not subject to any of the
requirements of the Employee Retirement Income Security Act of 1974, as amended.
The 1998 Plan is not, nor is it intended to be, qualified under Section 401(a)
of the Code.
TERMINATION OR AMENDMENT OF 1998 PLAN. The Subcommittee may at any time,
and from time to time, amend, prospectively or retroactively, any or all of the
provisions of the 1998 Plan, or suspend or terminate it entirely, retroactively
or otherwise; provided, that, unless otherwise required by law or specifically
provided in the 1998 Plan, the rights of an optionee granted prior to any
amendment, suspension or termination may not be impaired without the consent of
the optionee; and provided further, that without the approval of the
stockholders of C&D in accordance with the laws of the State of Delaware, to the
extent required by the applicable provisions of Rule 16b-3 of the Securities
Exchange Act of 1934, Section 162(m) of the Code, Section 422 of the Code (with
respect to incentive stock options) or the rules of the New York Stock Exchange,
no amendment may be made that would: (i) increase the aggregate number of shares
of
28
<PAGE>
Common Stock that may be issued under the 1998 Plan; (ii) increase the maximum
individual Participant limitations for a fiscal year under the 1998 Plan; (iii)
change the classification of employees and Consultants eligible to receive
awards under the 1998 Plan; (iv) decrease the minimum exercise price at which
any stock option may be granted; (v) extend the maximum option term under the
1998 Plan; or (vi) reprice, regrant or amend any outstanding stock option so as
to effect a decrease in the exercise price.
EXTRAORDINARY TRANSACTION. In the event of an Extraordinary Transaction (as
defined in the 1998 Plan), the Subcommittee 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 optionee,
at least 30 days prior to the date of consummation of the Extraordinary
Transaction, that each optionee shall have the right to exercise in full all
his/her stock options that are then outstanding (whether vested or not vested)
but contingent on the occurrence of the Extraordinary Transaction; and provided,
further, that, if the Extraordinary Transaction does not take place within a
specified period after giving such notice for any reason whatsoever, the notice
and exercise shall be null and void.
RECOMMENDATION. The Board of Directors recommends a vote FOR the approval
of the C&D Technologies, Inc. Amended and Restated 1998 Stock Option Plan.
PROPOSAL TO APPROVE THE C&D TECHNOLOGIES, INC.
EXECUTIVE STOCK PURCHASE LOAN PROGRAM
-------------------------------------
At the annual meeting, stockholders will be asked to approve the C&D
Technologies, Inc. Executive Stock Purchase Loan Program. In order to enhance
C&D's ability to attract and retain those executive officers of C&D who are
covered by our Executive Stock Ownership Guidelines, in February 2000 the Board
of Directors adopted the loan program, a copy of which is attached to this proxy
statement as Exhibit B. The loan program is intended to complement the
incentives offered by us to our executives under our stock plans, which allow
our executives to acquire shares of our Common Stock, and to assist our
executives in satisfying the stock ownership guidelines. Under the stock
ownership guidelines, the chief executive officer of C&D is expected to own
shares equal in value to at least 200% of the executive's base salary and
certain corporate officers are expected to own shares equal in value to at least
100% of the officer's base salary. Currently, Mr. Roberts and all of the
executive officers listed under "Management" above, except for Mr. Marley, are
covered by the stock ownership guidelines.
Summary Description of the Loan Program
- ---------------------------------------
The loan program will enable executives covered by the stock ownership
guidelines to borrow funds from C&D to purchase shares of our Common Stock. The
maximum loan amount that can be made to an executive equals the amount necessary
for that person to acquire additional shares of our Common Stock so that the
executive will be able to satisfy 110% of the stock ownership guidelines
applicable to the executive.
Each loan under the loan program will be evidenced by a promissory note
executed by the executive. The executive and the executive's spouse, if it is
deemed desirable for the spouse to be a co-signer of the note, will be
personally liable for the repayment in full of all principal and interest on the
note. No loan shall be forgiven by C&D, unless a modification to the terms of
the note is authorized by our Compensation Committee, comprised of independent
directors.
29
<PAGE>
Each note will provide for the payment of interest at an annual rate equal
to the prime rate as of the date the note is issued, which rate may not be less
than that necessary to avoid the loan being characterized as carrying "unstated
interest" or as a "below-market loan" under the Code. Each note will provide
that, commencing the calendar month after the month in which the note was
issued, the executive will pay with respect to each pay period in that month and
each subsequent pay period all accrued interest under the note plus outstanding
principal in accordance with the amortization schedule attached to the note.
The outstanding principal amount of and accrued interest on each note will
become due and fully payable on the first to occur of the following events:
o The termination of employment of the executive for any reason other
than death;
o 180 days after the date of the executive's death; or
o The tenth anniversary date of the note.
Upon the maturity date of the note, the note will provide that C&D will
have the right to offset the outstanding principal and accrued interest under
the note against any compensation owing to the executive, including severance
payments and benefits, accrued vacation pay and any business expense
reimbursements.
Each note will be secured by shares of our Common Stock acquired with the
loan proceeds, the market value of which may not be less than the principal
amount of the note on the loan date, and all other assets of the executive held
as collateral by us pursuant to any other agreement entered into between us and
the executive. In the event that the market value of the shares held as
collateral under the note declines to below the outstanding loan balance, the
executive will not be required to furnish additional collateral or accelerate
payments of principal under the note.
Administration of the Program
- -----------------------------
The Compensation Committee of our Board of Directors will administer the
loan program and has the exclusive power to determine which executives are
covered by the stock ownership guidelines and thus eligible to receive loans
under the program. The President and Chief Executive Officer of C&D, however, is
authorized to approve all loans to all executives, other than loans to the
President and Chief Executive Officer.
Federal Income Tax Consequences
- -------------------------------
Provided that the loans to executives bear interest at a rate equal to or
greater than the applicable federal rate under the Code, the executives will not
recognize income upon the occurrence of a loan transaction under the loan
program.
Recommendation
- --------------
The Board of Directors recommends a vote FOR the approval of the Executive
Stock Purchase Loan Program.
30
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
------------------------------------------------------
Based upon the recommendation of the Audit Committee, the Board of
Directors has reappointed PricewaterhouseCoopers LLP as C&D's independent
accountants for the fiscal year ending January 31, 2001. In the absence of
instructions to the contrary, the shares of Common Stock represented by a proxy
delivered to the Board of Directors will be voted FOR the ratification of the
appointment of PricewaterhouseCoopers LLP. A representative of
PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting of
Stockholders, will be available to respond to appropriate questions and, if
he/she so desires, may make a statement.
The Board of Directors recommends a vote FOR the ratification of the
appointment of PricewaterhouseCoopers LLP as our independent accountants for the
fiscal year ending January 31, 2001.
ANNUAL REPORT
-------------
We are mailing our Annual Report for the fiscal year ended January 31, 2000
together with this Proxy Statement to stockholders of record of C&D at the close
of business on May 9, 2000. We will provide additional copies, without charge,
upon the request of stockholders. To obtain copies, you should contact us at C&D
Technologies, Inc., 1400 Union Meeting Road, Blue Bell, Pennsylvania 19422,
Attention: Vice President-Finance and Chief Financial Officer.
OTHER BUSINESS
--------------
The Board of Directors does not know of any other business to be presented
to the meeting and does not intend to bring any other matters before the
meeting. However, if any other matters properly come before the meeting or any
adjournments thereof, it is intended that the persons named in the accompanying
proxy will vote on those matters according to their best judgment in the
interests of C&D.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Linda R. Hansen
-------------------
LINDA R. HANSEN
Secretary
We request that you date and sign the enclosed proxy and return it in the
enclosed, self-addressed envelope. No postage is required if you mail it in the
United States. Your prompt response will be helpful, and we appreciate your
cooperation.
31
<PAGE>
EXHIBIT A
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......................................... A-2
ARTICLE II - DEFINITIONS.................................... A-2
ARTICLE III - ADMINISTRATION................................ A-4
ARTICLE IV - SHARE AND OTHER LIMITATIONS.................... A-5
ARTICLE V - STOCK OPTIONS................................... A-7
ARTICLE VI - NON-EMPLOYEE DIRECTOR STOCK OPTIONS............ A-9
ARTICLE VII - GRANT OF SHARES OF COMMON STOCK
TO NON-EMPLOYEE DIRECTORS................................... A-10
ARTICLE VIII - NON-TRANSFERABILITY AND TERMINATION OF
EMPLOYMENT/CONSULTANCY PROVISIONS........................... A-11
ARTICLE IX - TERMINATION OR AMENDMENT OF PLAN............... A-12
ARTICLE X - UNFUNDED PLAN................................... A-13
ARTICLE XI - GENERAL PROVISIONS............................. A-13
ARTICLE XII - EFFECTIVE DATE OF PLAN........................ A-14
ARTICLE XIII - TERM OF PLAN................................. A-15
ARTICLE XIV - NAME OF PLAN.................................. A-15
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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 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.
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"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.
"Nonqualified Stock Option" shall mean any Stock Option that is not an
Incentive Stock Option.
"Participant" shall mean any Eligible Employee, Consultant or
Non-Employee Director to whom a Stock Option has been granted.
"Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of the Exchange
Act as then in effect or any successor provisions.
"Section 162(m) of the Code" shall mean the exception for
performance-based compensation under Section 162(m) of the Code.
"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.
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"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 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
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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.
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
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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.
(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
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of the sale or transfer of all or substantially all of the Company's assets (all
of the foregoing being referred to as "Extraordinary Transactions"), then in any
such event the Committee may, in its sole discretion, terminate all outstanding
Stock Options, effective as of the date of the Extraordinary Transaction by
delivering notice of termination to each such Participant at least 30 days prior
to the date of consummation of the Extraordinary Transaction; provided, that
during the period from the date on which such notice of termination is delivered
to the consummation of the Extraordinary Transaction, each such Participant
shall have the right to exercise in full all of his or her Stock Options that
are then outstanding (whether vested or not vested) but contingent on the
occurrence of the Extraordinary Transaction; provided, further, that, if the
Extraordinary Transaction does not take place within a specified period after
giving such notice for any reason whatsoever, the notice and exercise shall be
null and void. If an Extraordinary Transaction occurs, to the extent the
Committee does not terminate the outstanding Stock Options pursuant to this
Section 4.2(d), then the provisions of Section 4.2(b) shall apply.
ARTICLE V.
STOCK OPTIONS
5.1. STOCK OPTIONS. Each Stock Option granted hereunder shall be one of
two types: (i) an Incentive Stock Option intended to satisfy the requirements of
Section 422 of the Code, or (ii) a Non-qualified Stock Option.
5.2. GRANTS. The Committee shall have the authority to grant to any
Eligible Employee one or more Incentive Stock Options, Nonqualified 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
Nonqualified Stock Option. The Committee shall have the authority to grant to
any Consultant one or more Nonqualified 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 Nonqualified 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
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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 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
Nonqualified Stock Options. In addition, if an Eligible Employee's employment by
the Company, a Subsidiary or a parent corporation (within the meaning of Section
424(e) of the Code) terminates more than three months prior to the date of
exercise (or such other period as required by applicable law), such Stock Option
shall be treated as a Nonqualified 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 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
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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. NONQUALIFIED 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. 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 therefor, 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.
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(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.
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
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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.
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 Nonqualified 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
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Participant's Termination of Employment or Termination of Consultancy, by the
Participant's estate or by the person given authority to exercise such Stock
Options by his or her will or by operation of law, at any time within a period
of one year from the date of such death, but in no event beyond the expiration
of the stated term of such Stock Option.
(b) If a Participant's Termination of Employment or Termination of
Consultancy is by reason of his Disability or retirement, any Stock Option held
by such Participant may be exercised, to the extent exercisable at the
Participant's Termination of Employment or Termination of Consultancy, by the
Participant, at any time within a period of one year from the date of such
Termination of Employment or Termination of Consultancy, but in no event beyond
the expiration of the stated term of such Stock Option; provided, however, that,
if the Participant dies within such exercise period, any unexercised Stock
Option held by such Participant shall thereafter be exercisable by the
Participant's estate or by the person given authority to exercise such Stock
Options by his or her will or by operation of law, to the extent to which it was
exercisable at the time of death, for a period of one year (or such other period
as the Committee may specify at grant or, if no rights of the Participant's
estate are reduced, thereafter) from the date of such death, but in no event
beyond the expiration of the stated term of such Stock Option.
(c) If a Participant's Termination of Employment or Termination of
Consultancy is by the Company without cause, any Stock Option held by such
Participant may be exercised, to the extent exercisable at termination, by the
Participant at any time within a period of 90 days from the date of such
termination, but in no event beyond the expiration of the stated term of such
Stock Option.
(d) If a Participant's Termination of Employment or Termination of
Consultancy is (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
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or other action by the Committee shall impair the rights of any Participant
without the Participant's consent.
ARTICLE X.
UNFUNDED PLAN
10.1. UNFUNDED STATUS OF PLAN. This Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any rights that are greater than those of a general
creditor of the Company.
ARTICLE XI.
GENERAL PROVISIONS
11.1. LEGEND. All certificates for shares of Common Stock delivered
under this Plan shall be subject to such stock transfer orders and other
restrictions as the Committee or the Board, as applicable, may deem advisable
under the rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Stock is then
listed or any national securities association system upon whose system the
Common Stock is then quoted, any applicable Federal or state securities law, and
any applicable corporate law, and the Committee or the Board, as applicable, may
cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
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
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Plan shall be limited, construed and interpreted in a manner so as to comply
with Section 162(m) of the Code and the applicable requirements of Rule 16b-3;
provided, however, that noncompliance with Section 162(m) of the Code and Rule
16b-3 shall have no impact on the effectiveness of a Stock Option under this
Plan.
11.7. OTHER BENEFITS. No Stock Option under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries or affiliates nor affect any benefits under any
other benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation.
11.8. COSTS. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing shares of Common Stock
pursuant to this Plan or any Stock Options granted hereunder.
11.9. NO RIGHT TO SAME BENEFITS. The provisions of Stock Options need
not be the same with respect to each Participant, and such Stock Options to
individual Participants need not be the same in subsequent years.
11.10. DEATH/DISABILITY. The Committee 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.
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ARTICLE XIII.
TERM OF PLAN
No Stock Option shall be granted pursuant to this Plan on or after the
tenth anniversary of the Effective Date, but Stock Options granted prior to such
tenth anniversary may extend beyond that date.
ARTICLE XIV.
NAME OF PLAN
This Plan shall be known as the C&D Technologies, Inc. 1998 Stock
Option Plan.
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EXHIBIT B
C&D TECHNOLOGIES, INC.
EXECUTIVE STOCK PURCHASE LOAN PROGRAM
-------------------------------------
1. Purpose.
--------
The purpose of the C&D Technologies, Inc. Executive Loan Program (the
"Program") is to benefit C&D Technologies, Inc. (the "Company") by enhancing the
Company's ability to attract and retain those executive officers of the Company
("Company Executives") who are covered by the Company's Executive Stock
Ownership Guidelines (the "Stock Ownership Guidelines"), as may be amended from
time to time. The Program is intended to complement the incentives offered by
the Company to Company Executives under stock plans of the Company, which allow
them to acquire shares of Common Stock of the Company, and to assist Company
Executives in satisfying the Stock Ownership Guidelines.
2. Participation.
--------------
Participation in the Program shall be limited to those Company Executives
who are covered by the Stock Ownership Guidelines.
3. Administration.
---------------
The Compensation Committee of the Board of Directors shall administer the
Program and have exclusive power to determine which Company Executives who are
covered by the Stock Ownership Guidelines shall become recipients of loans and
the amount to be loaned to any Company Executive, subject to the provisions of
this Program; provided, however, that the President and Chief Executive Officer
of the Company is hereby authorized to approve all loans under the Program to
all Company Executives, other than loans to the President and Chief Executive
Officer, and the President and Chief Executive Officer shall have the right to
deny, in such officer's sole discretion, a loan request from a Company
Executive. The Compensation Committee shall have the authority to approve all
loans under the Program to the President and Chief Executive Officer or to deny,
in its sole discretion, a loan request from the President and Chief Executive
Officer.
4. Maximum Loan Amounts.
---------------------
The maximum loan amount that can be made to an eligible Company Executive
under this Program shall be equal to the amount necessary to acquire additional
shares of Common Stock of the Company so that the Company Executive will be
able, upon such acquisition, to satisfy 110% of the Stock Ownership Guidelines
applicable to the Company Executive measured at the time the loan is approved.
5. Use of Proceeds of Loans.
-------------------------
The proceeds of each loan made by the Company under this Program shall be
used by the Company Executive exclusively to purchase shares of the Company's
Common Stock and thereby assist the Company Executive in complying with the
Stock Ownership Guidelines.
6. Terms of Notes.
---------------
Each loan made under the Program shall be evidenced by a promissory note
executed and delivered by the Company Executive and the Company Executive's
spouse, if any, to the Company (the "Note"), substantially in the form attached
hereto as Exhibit A. The Note evidencing a loan shall comply
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in all respects with the provisions of this Program and must be executed by the
respective Company Executive and the Company Executive's spouse, if deemed
desirable or necessary by the Compensation Committee or the Chief Executive
Officer, as the case may be, before the loan is funded. Each Note shall be
subject to the following terms and conditions:
(a) The Company Executive (jointly and severally with the Company
Executive's spouse, if so included) shall be personally liable for the repayment
in full of all principal and interest on the Note. No loan shall be forgiven by
the Company, unless a modification to the terms of the Note, including the
amounts owed thereunder, is otherwise authorized by the Compensation Committee.
(b) Each Note shall provide for the payment of interest at an annual rate
equal to the prime rate as of the date the Note is issued, as determined by the
Compensation Committee or the President and Chief Executive Officer, as the case
may be. Notwithstanding the foregoing, the rate shall not be less than that
necessary to avoid the loan being characterized as either (i) carrying "unstated
interest," within the meaning of Section 483 of the Internal Revenue Code of
1986, as amended (the "Code"), in the case of loans the proceeds of which are
used to acquire shares of Common Stock from the Company, or (ii) a "below-market
loan" within the meaning of Section 7872 of the Code in all cases.
(c) The outstanding principal and accrued interest of each Note shall
become due and fully payable on the first to occur of the following events:
(i) Termination of employment of the Company Executive for any reason
other than death;
(ii) 180 days after the death of the Company Executive; or
(iii)The tenth anniversary of the date the Note is issued (any one of
which shall be the "maturity date").
(d) Each Note shall provide that, commencing the calendar month after the
month in which the loan is funded and the Note is issued, the Company Executive
shall pay with respect to each pay period in that month and each pay period
thereafter, by means of automatic payroll deductions, all accrued interest on
the Note plus outstanding principal under the Note in accordance with the
amortization schedule to be annexed to the Note. Also, upon the maturity date of
the Note, the Note shall provide that the Company shall have the right to offset
the outstanding principal and accrued interest under the Note against any
compensation owing to the Company Executive, including but not limited to any
salary payments, severance payments and benefits, accrued vacation pay and any
business expense reimbursements; provided, however, that any outstanding
principal and accrued interest remaining after any such offset shall remain
immediately due and payable.
7. Collateral.
-----------
Each Note shall be secured by the shares of the Company's Common Stock
acquired with the loan proceeds under the Note, the market value of which shall
not be less than the principal amount of the Note on the loan date and all other
assets of the Company Executive (and the Company Executive's spouse, if so
included) held as collateral by the Company pursuant to any other agreement
entered into between the Company Executive and the Company. The Company
Executive (and the Company Executive's spouse, if so included) shall be required
in connection with the issuance of the Note to execute and deliver to the
Company a stock pledge agreement (the "Pledge Agreement"), substantially in the
form attached hereto as Exhibit B. In the event that the market value of the
shares of Common Stock held as collateral under a Note declines to below the
outstanding loan balance, the respective Company Executive shall not be required
either to furnish additional collateral or accelerate payment of principal under
the Note. The
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Note and Pledge Agreement shall contain such other terms and conditions as
required under applicable regulations of the Board of Governors of the Federal
Reserve System.
8. Miscellaneous.
--------------
A Company Executive will be required, as a condition to making a loan, to
enter into such agreements as may be required by the Compensation Committee, in
the case of the President and Chief Executive Officer, or by the President and
Chief Executive Officer, in the case of other Company Executives, including a
Note, a pledge agreement and other agreements.
9. Stockholder Approval.
---------------------
The Company shall submit this Program to the stockholders entitled to vote
hereon for approval after the date of adoption by the Board of Directors of the
Company, and no loans shall be made to any Company Executive until such approval
of stockholders has been obtained.
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EXHIBIT A
FORM OF NOTE
Principal Amount $____________ Date:____________
The undersigned Company Executive [and the Company Executive's spouse] (the
"Payor(s)") promise(s)[, jointly and severally,] to pay to the order of C&D
Technologies, Inc. (the "Company"), in lawful money of the United States of
America, the principal sum of __________________ ($________) and to pay simple
interest on the principal amount of this Note outstanding from time to time at
the rate of ___% per annum.
Commencing ______________, the calendar month after the month in which this
Note was originally issued by the Payor(s) to the Company, the Company Executive
shall pay with respect to each pay period in that month and each pay period
thereafter, by means of automatic payroll deductions, all accrued interest under
this Note plus outstanding principal under this Note in accordance with the
amortization schedule attached to this Note as Annex A.
The principal amount of this Note is payable in full upon the earliest to
occur of: (i) termination of employment of the Company Executive for any reason
other than death; (ii) 180 days after the death of the Company Executive; or
(iii) , the tenth anniversary date of the date the Note is issued. Unpaid
accrued interest on this Note shall be payable in full on the same date as the
principal amount becomes payable. Upon such maturity date, the Company shall
have the right to offset the outstanding principal and accrued interest under
the Note against any compensation owing to the Company Executive, including but
not limited to any salary payments, severance payments and benefits, accrued
vacation pay and any business expense reimbursements; provided, however, that
any outstanding principal and accrued interest remaining after any such offset
shall remain immediately due and payable.
This Note may be prepaid in full at any time or in part from time to time.
The Payor(s) hereby waives presentment, demand for payment, notice of dishonor,
protest and notice of protest, and any and all other notices and demands in
connection with this Note. Any failure of the holder hereof to exercise any
right hereunder shall not be construed as a waiver of the right to exercise such
right or any other right at any time and from time to time thereafter.
This Note is secured by a pledge of _________ shares of the Company's
Common Stock pursuant to a Pledge Agreement dated as of the date hereof (the
"Pledge Agreement") from the Payor(s) to the Company and all other assets of the
Payor(s) held as collateral by the Company pursuant to any other agreement that
is, has been or may later be entered into between [either] Payor(s) and the
Company. Notwithstanding obligations of the Payor(s) under the Pledge Agreement,
the Payor(s) shall be personally liable[, jointly and severally,] for the
repayment in full of all principal and interest on this Note.
If any of the following events (each an "Event of Default") shall occur and
be continuing for any reason whatsoever (and whether such occurrence shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise):
(1) if any principal or interest on this Note shall not be paid when due;
(2) if the Payor(s) defaults in any payment of principal of or interest on
any other obligation for money borrowed beyond any period of grace provided with
respect thereto or defaults in any material respect in the performance of any
other agreement, term or condition contained in any material agreement under
which any such obligation is created (or if any other default under any such
material agreement
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shall occur and be continuing) if the effect of any such default is to cause, or
permit the holder or holders of any such obligation (or a trustee on behalf of
such holder or holders) to cause, such obligation to become due prior to its
stated maturity;
(3) if the Payor(s) defaults in any material respect in the performance of
any agreement, term or condition set forth in any agreement between the Payor(s)
and the Company, including, but not limited to, any other note, the Pledge
Agreement and any other pledge agreement, any employment agreement and any
confidentiality or non-competition agreement;
(4) if an order, judgment or decree is entered adjudicating the Payor(s)
bankrupt or insolvent; or the Payor(s) shall commence any case, proceeding or
other action relating to the Payor(s) in bankruptcy or seeking reorganization,
liquidation, dissolution, winding-up, arrangement, composition or readjustment
of his debts, or for any other relief, under any bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement, composition, readjustment
of debt or other similar act or law of any jurisdiction, domestic or foreign,
now or hereafter existing; or if the Payor(s) shall apply for a receiver,
custodian or trustee of the Payor(s) or for all or a substantial part of the
property of the Payor(s); or if the Payor(s) shall make an assignment for the
benefit of creditors; or if the Payor(s) shall be unable to, or shall admit in
writing the inability to, pay the debts of the Payor(s) as they become due; or
if the Payor(s) shall take any action indicating the Payor(s)' consent to,
approval of, or acquiescence in, or in furtherance of, any of the foregoing; or
(5) if any case, proceeding or other action against the Payor(s) shall be
commenced in bankruptcy or seeking reorganization, liquidation, dissolution,
winding-up, arrangement, composition or readjustment of its debts, or any other
relief, under any bankruptcy, insolvency, reorganization, liquidation,
dissolution, arrangement, composition, readjustment of debt or other similar act
or law of any jurisdiction, domestic or foreign, now or hereafter existing; or
if a receiver, custodian or trustee of the Payor(s) or for all or a substantial
part of the properties of the Payor(s) shall be appointed; or if a warrant of
attachment, execution or distraint, or similar process, shall be issued against
any substantial part of the property of the Payor(s); and if in each such case
such condition shall continue for a period of 30 days undismissed, undischarged
or unbonded;
then the holder of this Note may, at its option and in addition to any right,
power or remedy permitted under this Note and the Pledge Agreement, or by law or
equity or otherwise, by notice in writing to the Payor(s), declare this Note to
be, and this Note shall thereupon be and become, forthwith due and payable
together with interest accrued hereon.
If this Note is not paid at the earlier of the stated maturity hereof or at
the acceleration of maturity as stated herein and is placed in the hands of an
attorney for collection, or if this Note is collected through bankruptcy,
probate or other court, the holder shall be entitled to be paid reasonable
attorneys' fees and collection costs.
This Note shall be governed by and construed in accordance with the
substantive laws of the Commonwealth of Pennsylvania.
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<PAGE>
IN WITNESS WHEREOF, (each of) the undersigned, intending to be legally
bound, has executed this Note as of the day and year first above written.
PAYOR(S):
---------------------------------------
[Name of Company Executive]
[---------------------------------------]
[If included, Name of Company Executive's Spouse]
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EXHIBIT B
FORM OF
PLEDGE AGREEMENT
----------------
To induce C&D Technologies, Inc. (the "Lender") to lend $__________ to
___________________, the Company Executive[, and the Company Executive's spouse]
(the "Borrower(s)"), and intending to be legally bound hereby, the Borrower(s)
has (have) transferred, delivered and pledged to and does (do) hereby transfer,
deliver and pledge to the Lender, with stock power duly executed in blank, as
collateral security for the payment of the principal and other amounts payable
under that certain Promissory Note in the principal amount of $________ dated
the date hereof issued by the Borrower(s) to the Lender (the "Note"), (i)
________ shares of Common Stock, $.01 par value, of the Lender (the "Pledged
Stock"), (ii) all cash, securities, cash and non-cash dividends, including
liquidating dividends and dividends paid in stock and stock splits, stock
rights, rights to subscribe, capital distributions and the like, and other
property at any time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Stock and
(iii) all other assets of the Borrower(s) pledged, assigned, mortgaged or
transferred to the Lender pursuant to all other agreements, notes, instruments,
guarantees, amendments, certificates, financing statements and other documents
that are, or have been or may later be entered into between [either] Borrower,
the Lender and/or any guarantor, (collectively, the "Collateral"); and in the
event that the Borrower(s) receive(s) any such property, the Borrower(s) shall
immediately deliver it to the Lender to be held pursuant to this Agreement.
The Collateral shall constitute collateral security for the obligations of
the Borrower(s) to do each and all of the following (the "Obligations"): (i) to
pay principal, interest and any other amounts due or to become due to the Lender
under the Note and all of the other agreements, notes, instruments, guarantees,
amendments, certificates, financing statements and other documents that are,
have been or may later be entered into between any one or more of the
Borrower(s), Lender and/or any guarantor; and (ii) to satisfy all of the other
direct or indirect liabilities of the Borrower(s) to the Lender, whether under
the Note or otherwise, whether now existing or hereafter incurred.
Upon the occurrence of an event of default under the Note or an event that
with lapse of time or notice or both would become an event of default, the
Lender may, at its option and without notice to the Borrower(s), transfer or
register the Pledged Stock or any shares thereof into the name of the Lender or
its nominee with or without indication of pledge and give all consents, waivers
and ratifications in respect thereof and otherwise act with respect thereto as
though it were the outright owner of the Pledged Stock or to act in the name of
the Borrower(s) and to enter into transactions regarding the Pledged Stock on
Borrower(s) behalf to pay the Obligations.
Upon the occurrence of an event of default under the Note or an event which
with lapse of time or notice or both would become an event of default, the
Lender shall have the right thereupon or at any time or times thereafter to
sell, acting on behalf of the Borrower(s) or directly, the Pledged Stock and/or
the Collateral and/or any part thereof and/or any substitute therefor and/or any
additions thereto at any public or private sale upon 20 days' prior written
notice, which shall conclusively be deemed to be a reasonable notice thereof,
without any other notice, advertisement or demand of any kind, and may apply the
net proceeds after deducting all costs and expenses for collection, sale and
delivery to the payment of the Note and the Obligations, returning the residue,
if any, to the Borrower(s) on demand. The Lender may purchase any of the Pledged
Stock and/or other Collateral at any such public sale and may use the Note or
any part thereof as a credit upon the purchase price at any such sale. The
certificate(s) representing the Pledged Stock shall bear the following legend:
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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED BY
THE REGISTERED HOLDER (THE "BORROWER") PURSUANT TO THE EXECUTIVE
LOAN PROGRAM (THE "LOAN PROGRAM") OF C&D TECHNOLOGIES, INC. (THE
"COMPANY"). PURSUANT TO THE PLEDGE AGREEMENT ENTERED INTO BETWEEN
THE BORROWER AND THE COMPANY, THESE SHARES ARE HELD AS COLLATERAL
BY THE COMPANY, AND THE COMPANY HAS THE RIGHT, AS PROVIDED IN THE
PLEDGE AGREEMENT, TO DIRECT THAT THE SHARES BE SOLD ON BEHALF OF
THE BORROWER, WITH THE PROCEEDS OF SUCH SALE TO BE APPLIED TO THE
REPAYMENT OF THE OUTSTANDING LOAN(S) OF THE BORROWER UNDER THE
LOAN PROGRAM.
Notwithstanding anything to the contrary set forth above, upon the
occurrence of an event of default under the Note or an event which with lapse of
time or notice or both would become an event of default, the Lender shall have
all of the rights and remedies of a secured party under the Uniform Commercial
Code in effect in Pennsylvania.
The Borrower(s) hereby agree(s) to execute and deliver to the Lender or
such other person as Lender shall direct such other documents and to do such
other acts and things as the Lender may request for the purpose of carrying out
the intent of this Agreement.
Without the prior written consent of the Lender, the Borrower(s) agree(s)
that the Borrower(s) will not sell, assign, transfer, exchange or otherwise
dispose of or grant any option with respect to any of the Pledged Stock or other
Collateral nor will the Borrower(s) create any lien with respect to the Pledged
Stock or other Collateral other than the lien created by this Pledge Agreement.
Until a default shall have occurred under the Note, the Borrower(s) shall be
entitled to exercise all voting powers incident to the Pledged Stock and the
Collateral. Thereafter, the undersigned's right to exercise such voting rights
shall immediately cease and terminate, and such voting rights shall thereupon
rest solely and exclusively in the Lender.
The Pledged Stock and all Collateral shall be released by the Lender upon
the payment in full of the Note and the Obligations.
This Agreement shall be binding upon the Borrower(s) and the heirs,
executors, administrators, personal representatives, successors and assigns of
the Borrower(s), and shall inure to the benefit of the Lender and its successors
and assigns. This Agreement shall be governed by the internal laws and not the
law of conflicts of the Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned has
executed this Agreement as of _______________________.
Witness:
_____________________________ ______________________________(SEAL)
[Name of Borrower]
_____________________________ ______________________________(SEAL)]
[Name of Borrower' Spouse, if included]
B-8
<PAGE>
ASSIGNMENT SEPARATE FROM CERTIFICATE
------------------------------------
For Value Received, ________________________________________________________
hereby sell, assign and transfer unto_______________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
-----------------------------------
| |
| |
-----------------------------------
___________________________________________(______________) Shares of the Common
Stock of C&D Technologies, Inc. standing in __________________ name on the books
of said corporation represented by Certificate No. _____ herewith and do hereby
irrevocably constitute and
appoint_________________________________________________________________________
attorney to transfer the said stock on the books of the within named Company
with full power of substitution in the
premises.
Dated:_________________________________
In presence of:_________________________________
B-9
<PAGE>
PROXY
C&D TECHNOLOGIES, INC.
1400 UNION MEETING ROAD, BLUE BELL, PENNSYLVANIA 19422
SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AT THE UNION LEAGUE OF PHILADELPHIA
ON TUESDAY, JUNE 27, 2000
The undersigned hereby appoints Wade H. Roberts, Jr., Stephen E. Markert,
Jr. and Kevin P. Dowd, or any of them, with the power of substitution, as
proxies and hereby authorizes them to represent and to vote, as designated
below, all shares of Common Stock of C&D Technologies, Inc. held of record by
the undersigned at the close of business on May 9, 2000, at the Annual Meeting
of Stockholders to be held on Tuesday, June 27, 2000, and at any adjournments of
that meeting.
(Continued and to be signed on other side)
<PAGE>
Please mark your votes as indicated in this example [X]
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR THE NOMINEES FOR DIRECTORS SET FORTH IN
PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTORS SET
FORTH IN PROPOSAL 1 AND FOR PROPOSALS 2, 3 AND 4.
1. Election of Directors:
[ ] FOR all nominees listed to [ ] WITHHOLD AUTHORITY for all nominees
the right (except as marked listed to the right
to the contrary)
William Harral, III Wade H. Roberts, Jr. Adrian A. Basora
Peter R.Dachowski Kevin P. Dowd Pamela S. Lewis
George MacKenzie John A. H. Shober
INSTRUCTION: TO WITHHOLD AUTHORITY FOR ANY NOMINEE, WRITE THE NAME OF THE
NOMINEE(S) IN THE SPACE PROVIDED:
- --------------------------------------------------------------------------------
2. Approval of the Amended and Restated 1998 Stock Option Plan:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Approval of the Executive Stock Purchase Loan Program:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratification of the appointment of PricewaterhouseCoopers LLP as
independent accountants for the fiscal year ending January 31, 2001:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the proxies are authorized to vote upon any other
business that may properly come before the meeting and any adjournments of
the meeting.
PLEASE SIGN EXACTLY AS YOUR NAME APPEARS BELOW.
Dated: _____________________________________________, 2000
---------------------------------------------------------
Signature
---------------------------------------------------------
Representative Capacity (if any)
Please sign exactly as your name appears on this proxy. If
you are signing in a representative capacity (for example,
as attorney, executor, administrator, guardian, trustee, or
the officer or agent of a company), you should indicate your
name and title or capacity. If you hold the stock in custody
for a minor (for example, under the Uniform Transfers to
Minors Act), you should sign as custodian, not the minor. If
you hold the stock in joint ownership with another person or
persons, one owner may sign on behalf of all the owners.
PLEASE COMPLETE, DATE, SIGN AND RETURN THIS PROXY PROMPTLY,
USING THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF
AMERICA.
