Exhibit 10.1
April 1, 2003
Xx. Xxxxx X. Xxxxxxx 0000 Xxxxxxxx Xxxxx Xxxxxxxx, XX 00000
Dear Xxxxx:
You are presently employed by C&D Technologies, Inc., a Delaware
corporation (the "Company"), in an executive capacity and the Company desires to
encourage such continued employment by providing certain protections for you by
entering into this Agreement with you, in return for which you agree to continue
to be employed by the Company on the terms set forth herein, to refrain from
certain competitive activity and to provide the Company with certain assurances
upon your departure. In consideration of same, the Company agrees to employ you,
and you agree to accept such employment, under the following terms and
conditions:
1. Term of Employment.
(a) Except for earlier termination as is provided in Section 9 or 10 below,
your employment under this Agreement shall be automatically renewed for
successive terms of one month each, unless either party shall have given to the
other party at least 30 days' prior written notice of the termination of this
Agreement (a "Termination Notice"). If such 30 days' prior written notice is
given by either party, (i) the Company shall, without any liability to you, have
the right, exercisable at any time after such notice is sent, to elect any other
person to the office or offices in which you are then serving and to remove you
from such office or offices, but (ii) all other obligations each of you and the
Company have to the other, including the Company's obligation to pay your
compensation and make available the medical and dental insurance to which you
are entitled hereunder, shall continue until the date your employment terminates
as specified in such notice.
2. Compensation.
(a) Effective upon the date in 2003 on which salary increases are granted
to similarly situated executives, you shall be compensated for all services
rendered by you under this Agreement at the rate of $160,000 per annum (such
salary, as it is from time to time adjusted, is herein referred to as the ("Base
Salary"). Such Base Salary shall be payable in periodic installments twice
monthly in accordance with the Company's payroll practices for salaried
employees. The Compensation Committee of the Board of Directors shall review
such Base Salary prior to April 1, 2004 and each year thereafter during the term
of this Agreement, including any renewal term, and shall make such adjustments,
if any, as the Compensation Committee shall determine; provided, however, that
no adjustment shall reduce the Base Salary below $160,000.
(b) If your employment hereunder shall be terminated (i) by the Company
without notice of Cause (as defined in Section 9(c)) therefor having been given
to you (other than pursuant to Section 9(a) or 9(b), or (ii) as a result of the
non-renewal of this Agreement pursuant to a Termination Notice given by the
Company under Section 1(a), then, in addition to paying you the Accrued
Obligations (as hereinafter defined), for a 180 day period after the effective
date of such termination, the Company shall pay you at the rate of your Base
Salary in effect at the time of such termination in periodic payments in
accordance with the Company's payroll practices for salaried employees;
provided, however, that your right to receive such payments, other than the
Accrued Obligations, shall be conditioned upon your execution of a Release (the
"Release"). Such Release shall be substantially in the form of Exhibit A hereto
but may be modified by the Company in its sole discretion as it deems
appropriate to reflect changes in law or circumstances arising after the date of
this Agreement; provided, however, that no such modification shall increase any
of your obligations to the Company over those contemplated by this Agreement,
including Exhibit A hereto. The term "Accrued Obligations" shall mean (i) your
Base Salary through the date of termination and (ii) all benefits that have
accrued to you under the terms of all employee benefits plans of the Company in
which you are entitled to participate.
3. Duties.
(a) During the term of your employment hereunder, including any renewal
thereof, you agree to serve as the Vice President, Human Resources of C&D
Technologies, Inc. or in such other capacity with duties and responsibilities of
a similar nature as those initially undertaken by you hereunder as the President
of the Company may from time to time determine. Your duties may be changed at
any time and from time to time hereafter, upon mutual agreement, consistent with
office or offices in which you serve as deemed necessary by the President of the
Company. You also agree to perform such other services and duties consistent
with the office or offices in which you are serving and its responsibilities as
may from time to time be prescribed by the Board of Directors, and you also
agree to serve, if elected, as an officer and/or director of the Company and/or
any of the Company's other direct or indirect subsidiaries without additional
compensation, in all cases in conformity to the by-laws of each such
corporation. Unless you otherwise agree, you shall not be required to relocate
your place of business to a location that would increase your commuting distance
by greater than 25 miles.
(b) You shall devote your full employment energies, interest, abilities,
time and attention during normal business hours (excluding the vacation periods
provided in Section 4(b) below) exclusively to the business and affairs of the
Company, its parent corporation and subsidiaries, if any, and shall not engage
in any activity that conflicts or interferes with the performance of duties
hereunder.
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(c) You agree to cooperate with the Company, including taking such
reasonable medical examinations as may be necessary, in the event the Company
shall desire or be required (such as pursuant to the terms of any bank loan or
any other agreement) to obtain life insurance insuring your life.
(d) You shall, except as otherwise provided herein, be subject to the
Company's rules, practices and policies applicable to the Company's senior
executive employees. Without limiting the generality of the foregoing, you
shall, with respect to the Company and its parents, subsidiaries, assets and
stockholders, act in a manner consistent with your fiduciary responsibilities as
an executive of the Company.
4. Benefits.
(a) You shall have the benefit of such life and medical insurance, bonus,
stock option and other similar plans as the Company may have or may establish
from time to time, and in which you would be entitled to participate by reason
of your position with the Company, pursuant to the terms thereof. Also, to the
extent you have met the qualifications required, you may participate in the
Company's savings and retirement plans. The foregoing, however, shall not be
construed to require the Company to establish any such plans or to prevent the
Company from modifying or terminating any such plans, and no such action or
failure thereof shall affect this Agreement.
(b) You shall be entitled to a vacation of four weeks each year beginning
January 1, 2004.
(c) The Company will provide you with an annual physical examination.
5. Expenses. The Company will reimburse you for reasonable expenses
(consistent with Company policy), including traveling expenses, incurred by you
in connection with the business of the Company, upon the presentation by you of
appropriate substantiation for such expenses.
6. Restrictive Covenants.
(a) During such time as you shall be employed by the Company, and for the
applicable Restricted Period (as defined below) thereafter, you shall not,
without the written consent of the Board of Directors, directly or indirectly,
become associated with, render services to, invest in, represent, advise or
otherwise participate as an officer, employee, director, stockholder, partner,
agent of or consultant for, any business that, at the time your employment with
the Company ceases, is competitive with the business in which the Company is
engaged or in which the Company has taken affirmative steps to engage (a
"Competitive Business"); provided, however, that nothing herein (i) shall
prevent you from investing without limit in the securities of any company listed
on a national securities exchange, provided that your involvement with any such
company is solely that of a stockholder, and (ii) is intended to prevent you
from being employed during the applicable Restricted Period by any business
other than a Competitive Business. With respect to any termination of your
employment other than upon a Change of Control pursuant to Section 10, the
applicable Restricted Period shall be the period following the date your
employment terminates during which you are receiving the payments described in
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Section 2(b) hereof, and with respect to a termination of your employment upon a
Change of Control pursuant to Section 10, the applicable Restricted Period shall
be the two-year period following the date your employment terminates.
(b) The parties hereto intend that the covenant contained in this Section 6
shall be deemed a series of separate covenants for each state, county and city.
If, in any judicial proceeding, a court shall refuse to enforce all the separate
covenants deemed included in this Section 6, because, taken together, they cover
too extensive a geographic area, the parties intend that those of such covenants
(taken in order of the states, counties and cities therein which are least
populous), which, if eliminated, would permit the remaining separate covenants
to be enforced in such proceeding, shall, for the purpose of such proceeding, be
deemed eliminated from the provisions of this Section 6.
7. Confidentiality, Non-Interference, Inventions and Proprietary
Information.
(a) In the course of (i) your employment with the Company hereunder, and
(ii) any prior employment with the Company, you will have and have had access to
Confidential or Proprietary Data or Information of the Company. You shall not at
any time divulge or communicate to any person nor shall you direct any Company
employee to divulge or communicate to any person (other than to a person bound
by confidentiality obligations similar to those contained herein and other than
as necessary in performing your duties hereunder) or use to the detriment of the
Company any of such Confidential or Proprietary Data or Information, except to
the extent the same (i) becomes publicly known other than through a breach of
this Agreement by you, (ii) was known to you prior to the disclosure thereof by
the Company to you from a source that was entitled to disclose it or (iii) is
subsequently disclosed to you by a third party who shall not have received it
under any obligation of confidentiality to the Company. The term "Confidential
or Proprietary Data or Information" as used in this Agreement, shall mean data
or information not generally available to the public, including personnel
information, financial information, customer lists, supplier lists, product and
tooling specifications, trade secrets, information concerning product
composition and formulas, tools and dies, drawings and schematics, manufacturing
processes, information regarding operations, systems and services, knowhow,
computer and any other electronic, processed or collated data, computer
programs, and pricing, marketing, sales and advertising data.
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(b) You shall not, during the term of this Agreement and for the applicable
Restricted Period after the termination of your employment by the Company, for
your own account or for the account of any other person, (i) solicit or divert
to any Competitive Business any individual or entity who is a customer of the
Company or any subsidiary or affiliate of the Company or who was a customer of
the Company or any subsidiary or affiliate during the preceding twelve-month
period, (ii) employ, retain as a consultant, attempt to employ or retain as a
consultant, solicit or assist any Competitive Business in employing or retaining
as a consultant any current employee of the Company or any subsidiary or
affiliate or any person who was employed by the Company or any subsidiary or
affiliate during the preceding twelve-month period or (iii) otherwise interfere
with the Company's relationship with any of its suppliers, customers, employees
or consultants; provided, however, that you shall not be prohibited from
contacting suppliers or customers after termination of your employment with
regard to matters that do not violate your noncompetition or confidentiality
obligations contained in Sections 6(a) and 7(a) or interfere with the Company's
relationship with such parties.
(c) It is understood that you may, during your employment, conceive or
develop certain inventions, innovations or discoveries related to any business
in which the Company may be engaged, either solely or jointly with others. In
connection with the conception or development thereof, you agree to disclose
promptly to the Company all such inventions, innovations and discoveries, to
assign, and hereby do assign, to the Company all of your right, title and
interest in and to said inventions, innovations and discoveries, and to do all
things and sign all documents deemed by the Company to be necessary or
appropriate to vest in the Company, its successors and assigns, all of your
right, title and interest in and to such inventions, innovations or discoveries,
and to procure for the Company, at the Company's expense, patents, copyrights
and/or trademarks covering such inventions, innovations or discoveries in the
United States and its possessions and in foreign countries, at the discretion
and under the direction of the Company. In the event the Company is unable for
any reason to assure your signature on such documents, you irrevocably appoint
the Company and its duly authorized officers and agents as your agents and
attorneys-in-fact to execute such documents and to do such things with the same
legal force and effect as if executed or done by you.
(d) All written, electronic and other tangible materials, records and
documents made by you or coming into your possession during your employment
concerning any products, processes or equipment, manufactured, used, developed,
investigated or considered by the Company, or otherwise concerning the business
or affairs of the Company, shall be the sole property of the Company, and upon
termination of your employment, or upon request of the Company during your
employment, you shall promptly deliver the same to the Company. In addition,
upon termination of your employment, or upon request of the Company during your
employment, you will deliver to the Company all other Company property in your
possession or under your control, including, but not limited to, financial
statements, marketing and sales data, patent applications, drawings and other
documents, and all Company keys, credit cards, computer and telephone equipment
and automobiles.
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8. Equitable Relief. With respect to the covenants contained in Sections 6
and 7 of this Agreement, you agree that any remedy at law for any breach of said
covenants may be inadequate and that the Company shall be entitled to specific
performance or any other mode of injunctive and/or other equitable relief to
enforce its rights hereunder or any other relief a court might award.
9. Earlier Termination. Your employment hereunder shall terminate prior to
the Initial Term (or any renewal term, in the event of renewal) on the following
terms and conditions:
(a) This Agreement shall terminate automatically on the date of your death.
Notwithstanding the foregoing, if you die during the term of this Agreement, the
Company shall (i) continue to make payments to your estate of your Base Salary
as then in effect pursuant to this Agreement for 180 days after the date of your
death, and (ii) pay your estate any reimbursable expenses which otherwise would
have been paid to you to the date of your death.
(b) This Agreement shall be terminated if you are unable to perform your
duties hereunder for a period of any 180 days in any 365 consecutive day period
by reason of physical or mental disability. Notwithstanding the foregoing, if
this Agreement is terminated pursuant to this Section 9(b), the Company shall
pay any accrued but unpaid Base Salary through the date of termination and any
reimbursable expenses due to you hereunder. For purposes of this Agreement
"physical or mental disability" shall mean your inability, due to health
reasons, to discharge properly your duties of employment, supported by the
opinion of a physician satisfactory to both you and the Company. If the parties
do not agree on a physician mutually satisfactory to both of you and the Company
within ten days of written demand by one or the other, a physician shall be
selected by the president of the Pennsylvania Medical Association, and the
physician shall, within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. Services of the physician
shall be paid for by the Company. You shall fully cooperate with the examining
physician including submitting yourself to such examinations as may be requested
by the physician for the purpose of determining whether you are disabled.
(c) This Agreement shall terminate immediately upon the Company's sending
you written notice terminating your employment hereunder for Cause. The Company
may terminate this Agreement for Cause, but only after written notice specifying
the Cause of such action shall have been rendered to you by the President of the
Company. "Cause" shall mean any of the following:
(i) Breach of this Agreement.
(ii) Refusal or inability (other than pursuant to Section 9(a) or
9(b)) to perform duties assigned to you in accordance with the terms of this
Agreement or overt and willful disobedience of orders or directives issued to
you by the Company and within the scope of your duties to the Company.
(iii) Willful misconduct in the performance of your duties, functions
and responsibilities.
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(iv) Commission of acts that are illegal in connection with the
performance of your duties, functions and responsibilities under this Agreement.
(v) Commission of acts that would constitute a felony offense during
the term of this Agreement.
(vi) Violation of Company rules and regulations concerning conflict
of interest.
(vii) Gross mismanagement of the assets of the Company.
(viii) Gross incompetence, gross insubordination or gross neglect in
the performance of your duties hereunder or being under the habitual influence
of alcohol while on duty or possession, use, manufacture, distribution,
dispensation or sale of illegal drugs while on or off duty.
(ix) Any act or omission, whether or not included in the foregoing,
that a court of competent jurisdiction would determine to constitute cause for
termination.
Existence of Cause shall be conclusively determined for all purposes hereunder
by the President of the Company. Such advice and consultation shall be utilized
as such officer regards as appropriate, and no obligation or duty with respect
to any procedure or formality is created by this Agreement. If the Company
terminates this Agreement for Cause under this Section 9(c), the Company shall
not be obligated to make any further payments under this Agreement except for
the Accrued Obligations.
(d) Except as set forth in Section 10, your coverage under the benefits
program provided by the Company will cease effective on your termination date.
You will be entitled to elect continuation of your medical and dental benefits
at the same cost the Company pays, pursuant to the provisions of the
Consolidated Omnibus Budget Reconciliation Act ("COBRA"). Details with regard to
COBRA continuation coverage will be provided to you shortly after your
termination date.
(e) Except as set forth in Section 10, life insurance coverage will cease
upon your termination date. You may, however, apply to General American Life
Insurance Company (or such other insurance company as may provide group life
insurance to the Company's employees at the time) for an individual converted
life policy, with such application and payment of the first premium required to
be accomplished within 31 days after your termination date. Details regarding
this conversion option will be provided to you shortly after your termination
date.
(f) Accidental death and dismemberment and long term disability coverages
cease with your termination date and may not be extended or converted.
10. Termination upon a Change of Control.
(a) In the event a Change of Control (as defined below) occurs, and within
24 months after such Change of Control: (i) your employment with the Company is
terminated by you pursuant to a Termination for Good Reason (as defined below);
or (ii) your employment with the Company is terminated by the Company for any
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reason other than death, disability or for Cause pursuant to Sections 9(a), (b)
or (c); or (iii) this Agreement is not renewed due to a Termination Notice given
by the Company, as provided in Section 1(a), (the events under clauses (i), (ii)
and (iii) herein collectively called a "Change of Control Termination"), you
shall be entitled to receive the payments and benefits set forth in Section
10(e) and (f) below, which payments and benefits shall be in substitution for,
and not in addition to, the payments and benefits otherwise payable under
Section 2(a) or 2(b) of this Agreement in the event of termination. Your right
to receive such payments and benefits, other than the Accrued Obligations, shall
be in consideration of your agreements under this Agreement, including but not
limited to your agreement not to compete with the Company for two years after a
Change of Control pursuant to Section 6, and shall be conditioned upon your
execution of a Release. Such Release shall be substantially in the form of
Exhibit A but may be modified by the Company as it deems appropriate to reflect
changes in law or circumstances arising after the date of this Agreement;
provided that no such modification shall increase any of your obligations to the
Company over those contemplated by this Agreement, including Exhibit A hereto.
(b) For purposes of the Agreement, a "Change of Control" shall be deemed to
have occurred if: (i) any person (as defined in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in
Sections 13(d) and 14(d) thereof)), excluding the Company, any subsidiary and
any employee benefit plan sponsored or maintained by the Company or any
subsidiary (including any trustee of any such plan acting in his capacity as
trustee), but including a "group" as defined in Section 13(d)(3) of the Exchange
Act, becomes the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of shares of the Company having at least 30% of the total number of votes
that may be cast for the election of directors of the Company; (ii) the
shareholders of the Company shall approve any merger or other business
combination of the Company, sale of all or substantially all of the Company's
assets or combination of the foregoing transactions (a "Transaction"), other
than a Transaction involving only the Company and one or more of its
subsidiaries, or a Transaction immediately following which the shareholders of
the Company immediately prior to the Transaction continue to have a majority of
the voting power in the resulting entity (excluding for this purpose any
shareholder of the Company owning directly or indirectly more than 10% of the
shares of the other company involved in the Transaction) and no person is the
beneficial owner of at least 30% of the shares of the resulting entity as
contemplated by Section 10(b)(i) above; or (iii) within any 24-month period
beginning on or after the date hereof, the persons who were directors of the
Company immediately before the beginning of such period (the "Incumbent
Directors") shall cease (for any reason other than death) to constitute at least
a majority of the Board of Directors of the Company or the board of directors of
any successor to the Company, provided that any director who was not a director
as of the date hereof shall be deemed to be an Incumbent Director if such
director was elected to the Board by, or on the recommendation of or with the
approval of, at least two-thirds of the directors who then qualified as
Incumbent Directors either actually or by prior operation of this Section
10(b)(iii), unless such election, recommendation or approval was the result of
an actual or threatened election contest of the type contemplated by Regulation
14a-11 under the Exchange Act or any successor provision. Notwithstanding the
foregoing, no Change of Control of the Company shall be deemed to have occurred
for purposes of this Agreement by reason of any actions or events in which you
participate in a capacity other than in your capacity as an executive or
director of the Company.
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(c) For purposes of the Agreement, a "Termination for Good Reason" means a
termination by you by written notice given within 90 days after the occurrence
of the Good Reason event. A notice of Termination for Good Reason shall indicate
the specific termination provision in Section 10(d) relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for Termination for Good Reason. Your failure to set forth in such notice
any facts or circumstances that contribute to the showing of Good Reason shall
not waive any of your rights hereunder or preclude you from asserting such fact
or circumstance in enforcing your rights hereunder. The notice of Termination
for Good Reason shall provide for a date of termination not less than 10 nor
more than 60 days after the date such Notice of Termination for Good Reason is
given.
(d) For purposes of the Agreement, "Good Reason" shall mean the occurrence,
without your express written consent, of any of the following circumstances,
unless such circumstances are fully corrected prior to the date of termination
specified in the notice of Termination for Good Reason as contemplated in
Section 10(c) above: (i) any material diminution of your positions, duties or
responsibilities hereunder (except in each case in connection with the
termination of your employment for Cause pursuant to Section 9(c) or due to
disability or death pursuant to Section 9(a) or 9(b) or temporarily as a result
of your illness or other absence), or the assignment to you of duties or
responsibilities that are inconsistent with your position under the Agreement at
the time of a Change of Control; (ii) your removal from, or your non-reelection
to, the officer positions with the Company specified in this Agreement; (iii)
relocation of the Company's principal executive offices to a location more than
25 miles from its location at the time of the Change of Control; (iv) failure by
the Company, after a Change of Control, (A) to continue any bonus plan, program
or arrangement in which you are entitled to participate immediately prior to the
Change of Control (the "Bonus Plans"), provided that any such Bonus Plans may be
modified at the Company's discretion from time to time but shall be deemed
terminated if (x) any such plan does not remain substantially in the form in
effect prior to such modification and (y) if plans providing you with
substantially similar benefits are not substituted therefor ("Substitute
Plans"), or (B) to continue you as a participant in the Bonus Plans and
Substitute Plans on at least the same basis as to potential amount of the bonus
and substantially the same level of criteria for achievability thereof as you
participated in immediately prior to any change in such plans or awards, in
accordance with the Bonus Plans and the Substitute Plans; (v) any material
breach by the Company of any provisions of this Agreement; or (vi) failure of
any successor to the Company to promptly acknowledge in writing the obligations
of the Company hereunder.
(e) Upon a Change of Control Termination, as provided in Section 10(a), the
Company shall pay or provide you the following payments and benefits:
(i) The Company shall pay to you the Accrued Obligations in a lump
sum within five business days after the date of termination.
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(ii) The Company shall pay to you as severance pay, not later than
the tenth day following the date of your execution and delivery of the Release
required pursuant to Section 10(a) of this Agreement:
(A) a lump sum payment in an amount equal to two years of your
Base Salary; and
(B) a lump sum payment in an amount equal to two of your annual
incentive bonuses, such payment to be equal to the greater of (i) the amount
of all incentive bonuses paid to you with respect to each of the two most
recently completed fiscal years of the Company for which a bonus has been paid
or (ii) the incentive bonus paid to you with respect to the most recently
completed fiscal year of the Company for which a bonus has been paid plus an
amount equal to your Target Bonus (as hereinafter defined); provided, however,
that if you have been employed by the Company for less than two years, such
payment shall be equal to the greater of (x) the amount of the incentive bonus
paid to you with respect to the most recently completed fiscal year of the
Company for which a bonus has been paid plus your Target Bonus or (y) the amount
of your Target Bonus multiplied by two. The term "Target Bonus" shall mean the
incentive bonus that would have been payable for the fiscal year that includes
the date on which your employment terminates under the incentive bonus program
in effect as of the date of the Change of Control, assuming that you had been
entitled to receive an amount in respect of such bonus based solely upon the
target percentage applicable to employees in the same employment grade as you
and your Base Salary as of the date of termination (or if greater, your Base
Salary as of the date on which occurred an event giving rise to a Change of
Control Termination), and without regard to actual performance.
(iii) The Company shall continue the participation of you and your
dependents for a period of two years after the date of termination in all
health, medical and accident, life and other welfare plans (as defined in
Section 3(l) of ERISA), in which you were participating immediately prior to the
date of termination, except for any disability plans; provided, however, that to
the extent the Company's plans do not permit such continued participation or
such participation would have an adverse tax impact on such plans or on the
other participants in such plans, the Company may instead provide materially
equivalent benefits to you outside of such plans; provided, further, that under
such circumstances, (i) medical insurance benefits may be provided by the
Company paying any COBRA premiums (COBRA coverage, in any event, to be measured
from the date of termination of employment) and (ii) if the Company is unable to
continue your life insurance coverage, the Company shall pay you an amount equal
to twice the premium paid during the year prior to termination or if you convert
the insurance to an individual policy, the Company shall pay the premium for
such insurance for two years. You shall complete such forms and take such
physical examinations as reasonably requested by the Company. To the extent you
incur any tax obligation as a result of the provisions of this Section 10(e)
that you would not have incurred if you remained an employee of the Company and
had continued to participate in the benefit plans as an employee, the Company
shall pay to you, at the time the tax is due, an amount to cover such taxes and
the taxes on the amount paid to cover such taxes.
(iv) All outstanding stock options and restricted stock awards that
have been granted to you by the Company at any time but have not yet vested and
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upon which vesting depends solely upon the passage of time, shall immediately
vest or become nonforfeitable, as the case may be. In the event the foregoing
sentence becomes applicable, the Company agrees to cause the Board of Directors
to take all steps necessary to implement the foregoing sentence.
(v) All amounts payable to you upon a Change of Control under the
Company's Supplemental Executive Retirement Plan and Deferred Compensation Plan
shall be paid to you in accordance with the respective terms of those plans.
(vi) The Company, at its expense, shall provide you with outplacement
services at a level appropriate for the most senior executive employees through
an outplacement firm of your choice for a period of up to one year after the
date of the Change of Control Termination.
(f) (i) In the event that any payment, coverage or benefit (collectively,
the "Covered Benefits") provided to you by the Company or an Affiliate (as
defined below) is or becomes subject to the excise tax imposed under Section
4999 or any successor provision of the Internal Revenue Code of 1986, as amended
(the "Code"), or you incur interest or penalties with respect to that excise tax
(that excise tax, together with any interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), the Company shall pay you an
additional amount (a "Gross-Up Bonus") at the time or times specified in Section
10(f)(iii)(z) below. The amount of the Gross-Up Bonus shall equal the quotient
determined by dividing (x) the Excise Tax attributable to the Covered Benefits
by (y) one minus the highest marginal income tax rate, where the term "highest
marginal income tax rate" means the sum of the highest combined local, state and
federal personal income tax rates (including any state unemployment compensation
tax rate, any surtax rate as well as the Medicare hospital insurance tax rate
imposed on employees under the Federal Insurance Contributions Act) as in effect
for the calendar year to which the Excise Tax attributable to the Covered
Benefits relates, provided that in determining the highest tax rate for federal
purposes both the deductibility of state and local income tax payments and the
reduction in the deductibility of itemized deductions shall be taken into
account; it being the intention of the parties hereto that your net after tax
position (after taking into account any interest or penalties imposed with
respect to such taxes) upon receipt of the Covered Benefits is no less
advantageous to you than the net after tax position you would have had if
Section 4999 of the Code had not been applicable to any portion of the Covered
Benefits.
(ii) All determinations to be made under this Section 10(f), including
the determination of whether an Excise Tax is payable and the amount thereof,
shall be made by a law firm practicing in the Philadelphia, Pennsylvania
metropolitan area that is knowledgeable in tax law matters, which firm shall be
selected and paid for by the Company and acceptable to you. If tax counsel's
determinations are not finally accepted by the Internal Revenue Service upon
audit, then appropriate adjustments shall be computed (with a Gross-Up Bonus, if
applicable) by that tax counsel based upon the final amount of the Excise Tax so
determined.
(iii) For purposes of this Section 10(f):
(x) An "Affiliate" shall mean any successor to the Company, any
member of an affiliated group including the Company (determining using the
definition in Section 1504 of the Code) or any entity that becomes a member
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of such an affiliated group as a result of the transaction causing the Change of
Control.
(y) When determining the amount of the Gross-Up Bonus, you will
be deemed to have otherwise allowable deductions for federal, state and local
tax purposes at least equal to those disallowed because of the inclusion of the
Gross-Up Bonus in your adjusted gross income.
(z) The portion of the Gross-Up Bonus attributable to a Covered
Benefit shall be paid to you within 10 business days following the provision to
you of the Covered Benefit. In the event that the amount of Excise Tax due
exceeds the amount of Excise Tax determined by tax counsel, the Company shall
pay you an additional Gross-Up Bonus in respect of that excess at the time that
the amount of the excess is determined under Section 10(f)(ii). In the event
the amount of Excise Tax due is less than the amount of Excise Tax determined by
tax counsel, you shall repay the Company the portion of the Gross-Up Bonus
attributable thereto at the time that the amount of the reduction in Excise Tax
is determined under Section 10(f)(ii); provided, however, that if any portion
of the amount you must repay to the Company has been paid to any federal, state
or local tax authority, your repayment of that portion shall be postponed until
the tax authority has actually refunded or credited that amount to you.
(g) Upon the occurrence of a Change of Control, if the Company fails
to perform any of its obligations under this Agreement or the Company or any
other person asserts the invalidity of any provision of this Agreement and you
incur any costs in successfully enforcing or defending any of the provisions of
this Agreement, including legal fees and expenses and court costs, the Company
shall reimburse you for all such costs incurred by you.
11. Entire Agreement; Modification. This Agreement, together with
Exhibit A hereto and all rights to which you are entitled under all employee
benefit plans in which you participate, constitutes the full and complete
understanding of the parties, and will, on the Effective Date, supersede all
prior agreements and understandings, oral or written, between the parties,
except for the Agreement Relating to Intellectual Property and Confidential
Information dated June 10, 2002 between you and the Company ("Confidentiality
Agreement"); provided, however, that if the terms of any of such employee
benefit plan or Confidentiality Agreement shall be inconsistent with the
provisions of the Agreement, the provisions of this Agreement shall prevail.
This Agreement may not be modified or amended except by an instrument in writing
signed by he party against which enforcement thereof may be sought. Each
party to this Agreement, acknowledges that no representations, inducements,
promises or agreements, oral or written, have been made by either party or
anyone acting on behalf of either party, which are not embodied herein and
that no other agreement, statement or promise not set forth or referred to in
this Agreement shall be valid or binding.
12. Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
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Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
13. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed as a waiver of
any subsequent breach.
14. No Mitigation Required. Upon a termination of your employment by
the Company without Cause pursuant to Section 2(b) or upon a Change of Control
pursuant to Section 10, you shall have no obligation to seek other employment
but shall not be prohibited from doing so, and no compensation paid to you as
the result of any other employment shall reduce any payment required to be made
by the Company hereunder.
15. Notices. All notices hereunder shall be in writing and shall be
sent by express mail or by certified or registered mail, postage prepaid, return
receipt requested: if to you, to your residence as listed in the Company's
records; and if to the Company, to the address set forth above with copies to
the President.
16. Assignability; Binding Effect. This Agreement shall not be
assigned by either party, except that it may be assigned by the Company to an
acquirer of all or substantially all of the assets of the Company or other
successor to the Company, subject to your rights arising from a change of
control as provided in Section 10. This Agreement shall be binding upon and
inure to the benefit of you, your legal representatives, heirs and distributees,
and shall be binding upon and inure to the benefit of the Company, its
successors and assigns.
17. Nondisparagement. You agree not to publicly or privately
disparage the Company, its personnel, products or services either during or upon
termination of your employment with the Company.
18. Survival. All of the provisions of this Agreement that by their
terms are to be performed or that otherwise are to endure after the termination
of your employment by the Company shall survive the termination of your
employment and shall continue in effect for the respective periods therein
provided or contemplated.
19. Governing Law. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed
and governed in accordance with the laws of the Commonwealth of Pennsylvania,
without giving effect to the conflicts or choice of law provisions thereof.
20. Headings. The headings of this Agreement are intended solely
for convenience of reference and shall be given no effect in the construction
or interpretation of this Agreement.
21. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
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If this Agreement correctly sets forth our understanding, please sign
the duplicate original in the space provided below and return it to the
Company, whereupon this shall constitute the employment agreement between you
and the Company effective and for the term as stated herein.
C&D TECHNOLOGIES, INC.
By: /s/ Xxxxx Xxxxxx
Title: VP General Counsel
Agreed as of the date first above written:
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
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