Exhibit
10.5


 


EMPLOYMENT
AGREEMENT dated as of November 9, 2000, between YUASA, INC., a Pennsylvania
corporation (the “Company”), and JOHN A. SHEA (the “Executive”).


 


WHEREAS,
the Company desires to employ the Executive and to assure itself of the
continued services of the Executive for the term of employment provided for in
this Agreement, and the Executive desires to be employed by the Company for
such period;


 


WHEREAS,
both parties desire that the terms and conditions of the Executive’s employment
with the Company be governed by this Agreement;


 


NOW, THEREFORE, in
consideration of the covenants and agreements hereinafter set forth, the
parties hereto agree as follows:


 


1.                                       EFFECTIVENESS
OF AGREEMENT


 


1.1. General.  This Agreement shall become effective as of
November 9, 2000 (the “Effective Time”).


 


2.                                       EMPLOYMENT
AND DUTIES


 


2.1.                              General.  The Company hereby employs the Executive,
and the Executive agrees to serve, as its Executive Vice President (Motive),
upon the terms and conditions herein contained. The Executive shall perform
such other duties and services for the Company and its subsidiaries,
commensurate with the Executive’s position, as may be designated from time to
time by the Board. The Executive agrees to serve the Company faithfully and to
the best of his ability under the direction of the Board and the Company’s
Chief Executive Officer.


 


2.2.                              Exclusive
Services.  Except as may otherwise
be approved in advance by the Board, and except during vacation periods and
reasonable periods of absence due to sickness, personal injury or other
disability, the Executive shall devote his full working time throughout the
Employment Term (as defined below) to the services required of him hereunder, provided,
however, that this Section 2.2 shall not preclude the Executive
from devoting time to civic and community activities or the management of
personal investments so long as such activities do not interfere with the
performance of his duties hereunder. The Executive shall render his services
exclusively to the Company during the Employment Term, and shall use his best
efforts, judgment and energy to improve and advance the business and interests
of the Company in a manner consistent with the duties of his position.


 


2.3.                              Term
of Employment.  The term of the
Executive’s employment under this Agreement (the “Employment Term”)
shall commence at the Effective Time and initially shall


 

















 


continue until the second
anniversary of the Effective Time. Starting with the day following the
Effective Time, the Employment Term shall be extended on a daily basis to
continue until the second anniversary of the date of such extension, provided,
however, that (i) the Company or the Executive may give the other notice
that it does not wish to extend the Term beyond two years from the date of such
notice, and (ii) unless the Company shall specify in writing to the contrary,
the Term shall not extend past the Executive’s sixty-fifth birthday, and provided,
further, that nothing in this Section 2.3 shall limit the right of
the Company to terminate the Executive’s employment hereunder on the terms and
conditions set forth in Section 5.


 


2.4.                              Reimbursement
of Expenses.  The Company shall
reimburse the Executive for reasonable travel and other business expenses
incurred by him in the fulfillment of his duties hereunder upon presentation by
the Executive of an itemized account of such expenditures, in accordance with
customary practice.


 


3.                                       SALARY
AND BONUS; BENEFITS.


 


3.1.                              Base
Salary.  From the Effective Time,
the Executive shall be entitled to receive a base salary (“Base Salary”)
at a rate of $225,000 per annum, payable in arrears in equal installments in
accordance with the Company’s payroll practices.


 


3.2.                              Salary
Adjustments.  The Executive’s Base
Salary shall be annually reviewed by the Compensation Committee of the
Company’s Board of Directors (the “Committee”) for upward adjustment
based on, among other factors, the performance of the Company and the
Executive. Any adjustments in Base Salary effected as a result of such review
shall be made by the Committee in its sole discretion.


 


3.3.                              Bonus.  After the Effective Time, the Board shall
adopt an annual bonus plan (“Bonus Plan”) upon which the annual bonus of
the Executive shall be determined. Under the Bonus Plan, the Executive shall be
eligible to receive an annual bonus (“Annual Bonus”) of up to 60% of the
Base Salary, based on the satisfaction of financial and other performance
targets to be established by the Board and the Committee, prior to the
commencement of each fiscal year with reference to the financial projections
used to solicit the investment of Morgan Stanley Dean Witter Capital Partners
IV, L.P (the “Investor”) in the Company. The first Annual Bonus shall be
paid in respect of the fiscal year of the Company ending March 31, 2001 (“Fiscal
2001”) and shall consist of two components: (i) a component based on
performance through the Effective Time (based on an aggregate accrual for all
executives of the Company for performance through the Effective Time currently
estimated to be $1.5 million, but the definitive amount of which will be
determined by the Board following the Effective Time); and (ii) a component
based on performance from the Effective Time through the end of Fiscal 2001.


 


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4.                                       BENEFITS


 


4.1.                              Employee
Benefits.  The Executive shall,
during his employment under this Agreement, be included to the extent eligible
thereunder in all employee benefit plans, programs or arrangements (including,
without limitation, any plans, programs or arrangements providing for
retirement benefits, profit sharing, disability benefits, health and life
insurance, or paid holidays) that shall be established by the Company for, or
made available to, its senior executives generally. Such benefits shall be
comparable in the aggregate to benefits provided to executive employees of
Yuasa, Inc. immediately prior to the Effective Time.


 


4.2.                              Vacation.  The Executive shall be entitled to four
weeks of vacation per year in accordance with the Company’s vacation policies.


 


5.                                       TERMINATION
OF EMPLOYMENT


 


5.1.                              Termination
Without Cause; Resignation for Good Reason.


 


5.1.1.                     General.  Subject to the provisions of Sections 5.1.2
and 5.1.3, if, prior to the expiration of the Employment Term, the Executive’s
employment is terminated by the Company without Cause (as defined below), or if
the Executive terminates his employment hereunder for Good Reason (as defined
below), the Company shall, subject to the Executive’s execution of a general
release of claims against the Company and its affiliates substantially in the
form annexed hereto as Appendix A:


 


(a)                                  For
a period (the “Severance Period”) equal to two years from the date of
termination (provided, however, that (i) if the Executive has
previously given the Company notice pursuant to Section 2.3 of his
intention not to renew the Employment Term, or (ii) less than two years remain
until the Executive’s 65th birthday, the Severance Period shall be
the period from the date of termination until the end of the Employment Term as
in effect immediately prior to the Executive’s termination or the date of the
Executive’s 65th birthday, as the case may be), the Company shall
continue to pay the Executive the Base Salary (at the rate in effect on the
date of such termination), at such intervals as the same would have been paid
had the Executive remained in the active service of the Company;


 


(b)                                 For
the fiscal year in which such termination occurs (the “Termination Year”)
and for each whole fiscal year following the Termination Year included in the
Severance Period, the Company shall pay the Executive an amount equal to the
average of the Annual Bonus paid to the Executive for the two fiscal years
preceding the Termination Year (including, if applicable, annual bonus earned prior
to the Effective Time), which amount shall be payable at the time annual
bonuses are paid to the Company’s executives generally;


 


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(c)                                  For
the partial fiscal year, if any, immediately preceding the end of the Severance
Period, the Company shall pay the Executive a Pro  Rata Portion
(as defined in Section 5.6), through and including the last day of the
Severance Period, of the amount provided for in paragraph (b) above for whole
fiscal years included in the Severance Period. Such Pro  Rata
Portion shall be payable at the time annual bonuses are paid to the Company’s
executives generally but in any event no later than 75 days following the end
of the fiscal year in which the Severance Period ends;


 


(d)                                 During
the Severance Period, the Executive and his beneficiaries shall remain eligible
to participate, on the same terms and conditions as apply from time to time to
the Company’s senior executives generally, in all employee welfare benefit
plans or programs (including health, disability and life insurance programs,
but excluding any vacation and severance programs), provided, however,
that such eligibility shall cease at such time as the Executive becomes
eligible to participate in comparable programs of a subsequent employer, and provided,
further, that the Company shall have no obligation to continue to
maintain during the Severance Period any plan or program, solely as a result of
the provisions of this Agreement. If the Executive is precluded from participating
in any such plan or program by its terms or applicable law, the Company shall
provide the Executive with benefits that are reasonably equivalent to those
that the Executive would have received under such plan or program had he been
eligible to participate therein.


 


The Executive shall have
no further right to receive any other compensation or benefits after his
termination or resignation of employment, except as determined in accordance
with the terms of the employee benefit plans or programs of the Company,
including without limitation the Yuasa Holdings Inc. Management Equity Plan
(the “MEP”).


 


5.1.2.                     Conditions
Applicable to the Severance Period. 
If, during the Severance Period, the Executive breaches any of his
obligations under Section 7, the Company may, upon written notice to the
Executive, terminate the Severance Period and cease to make any further
payments described in Section 5.1.1.


 


5.1.3.                     Death
During Severance Period.  In the
event of the Executive’s death during the Severance Period, payments of Base
Salary under Section 5.1.1 shall continue to be made during the remainder
of the Severance Period, and any amounts under clauses (b) and (c) of
Section 5.1.1 shall be paid on the terms set forth therein, to the
beneficiary designated in writing for this purpose by the Executive or, if no
such beneficiary is specifically designated, to the Executive’s estate.


 


5.1.4.                     Date of
Termination.  The date of
termination of employment without Cause shall be the date specified in a
written notice of termination to the Executive. The date of resignation for
Good Reason shall be the date specified in the written notice of resignation
from the Executive to the Company; provided, however, that no
such written notice shall be effective unless and until the cure period
specified in Section 5.4 has expired without the Company having


 


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corrected, in all
material respects, the event or events subject to cure. If no date of
resignation is specified in the written notice from the Executive to the
Company, the date of termination shall be the first day following the
expiration of such cure period.


 


5.2.                              Termination for Cause; Resignation Without
Good Reason.


 


5.2.1.                     General.  If, prior to the expiration
of the Employment Term, the Executive’s employment is terminated by the
Company for Cause, or the Executive resigns from his employment hereunder other
than for Good Reason, the Executive shall be entitled only to payment of his
Base Salary as then in effect through and including the date of termination or
resignation. The Executive shall have no further right to receive any other
compensation or benefits after such termination or resignation of employment
except as determined in accordance with the terms of the employee benefit plans
or programs of the Company, including without limitation the MEP. In
particular, and without limiting the generality of the preceding sentence, the
Executive shall not have any right to any portion of an Annual Bonus for the
Termination Year.


 


5.2.2.                     Date of
Termination.  Subject to the proviso
to Section 5.3, the date of termination for Cause shall be the date
specified in a written notice of termination to the Executive. The date of the
Executive’s resignation without Good Reason shall be the date specified in the
written notice of resignation from the Executive to the Company, or if no date
is specified therein, ten business days after receipt by the Company of written
notice of resignation from the Executive.


 


5.3.                              Cause.  Termination for “Cause” shall mean
termination of the Executive’s employment because of any of the following:


 


(a)                                  commission
of any felony or other crime involving moral turpitude;


 


(b)                                 knowing
and intentional fraud;


 


(c)                                  any
act or omission that is materially injurious to the financial condition or
business reputation of, or is otherwise materially injurious to, the Company or
any of its subsidiaries or affiliates, unless the Executive believed in good
faith that he was acting in the best interests of the Company and its subsidiaries
and affiliates; or


 


(d)                                 willful
and continued failure or refusal of the Executive to substantially perform the
duties required of him as an employee of the Company, or the Executive’s
failure to follow the lawful written instructions of the Board or the Company’s
Chief Executive Officer, in any case other than by reason of physical or mental
incapacity;


 


provided,
however, that if any such Cause relates to the Executive’s obligations
under this Agreement, the Company may not terminate the Executive’s employment
hereunder unless the Company first gives the Executive notice of its intention
to terminate and of the grounds for such


 


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termination within 90
days of such event, and the Executive has not, within 20 days following receipt
of such notice, cured such Cause to the reasonable satisfaction of the Company.


 


5.4.                              Good
Reason.  For purposes of this
Agreement, “Good Reason” shall mean any of the following (without the
Executive’s prior written consent):


 


(a)                                  any
decrease by the Board in the Executive’s rate of Base Salary;


 


(b)                                 a
material diminution of the authority, responsibilities or positions of the
Executive from those set forth in Section 2.1;


 


(c)                                  the
Company’s requiring the Executive to be based at any office or location more
than 50 miles from the Reading, Pennsylvania area; or


 


(d)                                 the
Company’s giving notice to the Executive pursuant to Section 2.3 of its
intention to discontinue the automatic extension of the Employment Term;


 


provided,
however, that none of the foregoing events or conditions shall
constitute Good Reason unless (i) the Executive gives the Company written
notice of his objection to such event or condition within 90 days of the
occurrence of such event or condition, (ii) the Company does not correct or
cure such event or condition within 20 days of its receipt of such notice, and
(iii) the Executive resigns his employment with the Company not more than 30
days following the expiration of the 20-day period described in the foregoing
clause (ii).


 


5.5.                              Mitigation
and Offset. The Executive shall not be required to mitigate the amount of
any payment provided for in Section 5.1 by seeking other employment, but
the amount of any payment provided for in Section 5.1 (other than any amount
that had accrued through the Executive’s date of termination) shall be reduced
(but not below zero) by (i) any compensation earned (including any amounts
deferred) and (ii) any appreciation realized or accrued on equity or
equity-linked securities by the Executive, in both such cases as a result of
providing services (whether as an employee, consultant, advisor, independent
contractor, founder, partner, shareholder, option holder, warrant holder, or
board member or in any other capacity) to any party or entity during the
Severance Period. The Executive shall promptly notify the Company in writing of
any such arrangement during the Severance Period and will cooperate fully with
the Company in determining the amount of any reduction to amounts otherwise payable
under Section 5.1.


 


5.6                                 Pro
Rata Amounts.  Whenever this
Agreement calls for payment of a “Pro  Rata  Portion” of a
referenced amount, such pro  rata amount shall be calculated on
the basis of (I) the number of days in the partial fiscal year up to and
including the day as of which the amount is to be calculated, divided by (II)
365.


 


5.7                                 Stock
Options.  For purposes of this
Section 5.7, capitalized terms used without definition shall have the
meanings provided therefore in the MEP. Notwithstanding any provision to the
contrary in the MEP, the references in Section 8(a)(iv)(A) and
Section 8(a)(iv)(B) of the MEP to the 60th day following the
date of the Executive’s termination of


 


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employment, and to the 60th
day following the date on which Yuasa Holdings Inc. notifies the Executive that
certain conditions to the exercise of Vested Options have been satisfied, are
in each case amended and shall be understood as references to the first
anniversary of the Executive’s termination of employment and first anniversary
of the date such notification is given to the Executive, respectively.


 


6.                                       DEATH OR DISABILITY


 


6.1.                              Death.  In the event of termination of employment by
reason of death, the Executive (or his estate, as applicable) shall be entitled
(i) to Base Salary through the date of termination and for one year thereafter
and (ii) a Pro  Rata Portion (through and including the date of
death) of the Annual Bonus to which the Executive would have been entitled for
the Termination Year pursuant to Section 3.3 had the Executive remained
employed for the entire year, which bonus shall be payable at the time annual
bonuses are paid to the Company’s executives generally. Other benefits shall be
determined in accordance with the terms of the benefit plans maintained by the
Company, and the Company shall have no further obligation hereunder.


 


6.2.                              Disability.  In the event of termination of employment by
reason of Disability, the Executive shall be entitled (i) to Base Salary
through the date as of which the Executive starts to receive benefits under the
long-term disability program of the Company or its subsidiaries and affiliates
applicable to him (but in no event beyond the end of the Employment Term as in
effect immediately prior to termination of the Executive’s employment) and (ii)
a Pro  Rata Portion (through and including the date of Disability)
of the Annual Bonus to which the Executive would have been entitled for the
Termination Year pursuant to Section 3.3 had the Executive remained
employed for the entire year, which bonus shall be payable at the time annual
bonuses are paid to the Company’s executives generally. Other benefits shall be
determined in accordance with the terms of the benefit plans maintained by the
Company, and the Company shall have no further obligation hereunder.


 


6.3.                              For
purposes of this Agreement, “Disability” means a physical or mental
disability or infirmity of the Executive, as determined by a physician of
recognized standing selected by the Company, that prevents (or, in the opinion
of such physician, is reasonably expected to prevent) the normal performance of
his duties as an employee of the Company for any continuous period of 180 days,
or for 180 days during any one 12-month period.


 


7.                                       PROTECTION
OF THE COMPANY’S INTERESTS


 


7.1.                              Confidentiality.  The Executive agrees with the Company that
he will not at any time, except in performance of his obligations to the
Company hereunder or with the prior written consent of the Company, directly or
indirectly, reveal to any person, entity or other organization (other than the
Company, or its employees, officers, directors, shareholders or agents) or use
for his own benefit any information deemed to be confidential by the Company or
any of its subsidiaries or affiliates (such subsidiaries and affiliates,
collectively “Affiliates”) (“Confidential Information”) relating
to the assets, liabilities, employees, goodwill, business or


 


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affairs of the Company or
any of its Affiliates, including, without limitation, any information
concerning past, present or prospective customers, manufacturing processes,
marketing, operating or financial data, or other confidential information used
by, or useful to, the Company or any of its Affiliates and known (whether or
not known with the knowledge and permission of the Company or any of its
Affiliates and whether or not at any time prior to the Effective Time
developed, devised, or otherwise created in whole or in part by the efforts of
the Executive) to the Executive by reason of his employment by, shareholdings
in or other association with the Company or any of its Affiliates. The
Executive further agrees that he will retain all copies and extracts of any
written Confidential Information acquired or developed by him during any such
employment, shareholding or association in trust for the sole benefit of the
Company, its Affiliates and their successors and assigns. The Executive further
agrees that he will not, without the prior written consent of the Company,
remove or take from the Company’s or any of its Affiliate’s premises (or if
previously removed or taken, he will promptly return) any written Confidential
Information or any copies or extracts thereof. Upon the request and at the
expense of the Company, the Executive shall promptly make all disclosures,
execute all instruments and papers and perform all acts reasonably necessary to
vest and confirm in the Company and its Affiliates, fully and completely, all
rights created or contemplated by this Section 7.1. The term “Confidential
Information” shall not include information that is or becomes generally
available to the public other than as a result of a disclosure by, or at the
direction of, the Executive. The Executive’s agreements set forth in this
Section 7.1 regarding Confidential Information are independent of, and in
addition to, his agreements set forth in the rest of the Section 7 and
shall not be construed either to enlarge or to contract the scope of such other
agreements.


 


7.2.                              Covenant
Not to Compete; Nonsolicitation.


 


The covenants of
this Section 7.2 shall apply for so long as the Executive is employed by
the Company or any of its Subsidiaries and continuing for a period (the “Restricted
Period”) equal to two years following the termination of such employment
for any reason, provided, however, that the Restricted Period
shall be extended by a period of time equal to any period during which the
Executive shall be in breach of any of such covenants, and provided, further,
that in the event the Executive’s employment with the Company is terminated by
the Company under circumstances in which the Executive is not entitled to any
severance benefits, the Board may in its discretion elect to waive the
covenants of this Section 7.2 in whole or in part, but only if such waiver
is authorized by a written resolution approved by the Board and supported by at
least one of the Investor’s representatives on the Board.


 


7.2.1.                     Competing
Business. The Executive agrees with the Company that, for so long as the
Executive is employed by the Company or any of its Subsidiaries and continuing
for the Restricted Period, he will not, without the prior written consent of
the Company, directly or indirectly, and whether as principal or investor or as
an employee, officer, director, manager, partner, consultant, agent or
otherwise, alone or in association with any other person, firm, corporation or
other business organization, become involved in a Competing Business (as
hereinafter defined) in any geographic area in which the Company or any of its
Affiliates has engaged during such period in a Competing Business, or in which
the Executive has knowledge of the Company’s plans to engage in a Competing
Business (including, without limitation, any area in which any customer of the
Company or any of its Affiliates may be located). This


 


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Section 7.2.1 shall
not be violated, however, by the Executive’s investment of up to $100,000 in
the aggregate in one or several publicly-traded companies that engage in a
Competing Business.


 


7.2.2.                     Solicitations.  As a separate and independent covenant, the
Executive agrees with the Company that, for so long as the Executive is
employed by the Company or any of its Subsidiaries and continuing for the
Restricted Period, he will not in any way, directly or indirectly (except in
the course of his employment with the Company and its Subsidiaries), for the
purpose of conducting or engaging in any Competing Business, call upon,
solicit, advise or otherwise do, or attempt to do, business with any person who
is, or was, during the then most recent 12-month period, a customer of the
Company or any of its Affiliates, or take away or interfere or attempt to take
away or interfere with any custom, trade, business, patronage or affairs of the
Company or any of its Affiliates, or hire or attempt to hire any person who is,
or was during the then most recent 12-month period, an employee, officer,
representative or agent of the Company or any of its Affiliates, or solicit,
induce, or attempt to solicit or induce any person who is an employee, officer,
representative or agent of the Company or any of its Affiliates to leave the
employ of the Company or any of its Affiliates, or violate the terms of their
contracts, or any employment arrangements, with it.


 


7.2.3.                     Competing
Business.  For purposes of this
Section 7.2, a “Competing Business” means a business or enterprise
(other than the Company and its direct or indirect subsidiaries) that is
engaged in any or all of the manufacture, importing, development, distribution,
marketing or sale of:


 


(a)                                  motive
power batteries and chargers (including without limitation batteries and
chargers for industrial forklift trucks and other materials handling
equipment); and/or


 


(b)                                 stationary
batteries and chargers (including without limitation standby batteries and
power supply equipment for wireless and wireline telecommunications
applications, such as central telephone exchanges, microwave relay stations,
and switchgear and other instrumentation control systems); and/or


 


(c)                                  any
other product the Company now makes or is presently researching or developing,
such as lithium batteries.


 


“Competing
Business” also includes the design, engineering, installation or service of
stationary and DC power systems, and any consulting and/or turnkey services
relating thereto.


 


7.3.                              Exclusive
Property.  The Executive confirms
that all confidential information is and shall remain the exclusive property of
the Company and its Affiliates.  All
business records, papers and documents kept or made by the Executive relating
to the business of the Company shall be and remain the property of the Company
and its Affiliates.


 


7.4.                              Certain
Remedies.  Without intending to
limit the remedies available to the Company and its Affiliates, the Executive
agrees that a breach of any of the covenants contained in this Section 7
may result in material and irreparable injury to the Company or its Affiliates
for which there is no adequate remedy at law, that it will not be possible to
measure


 


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damages for such injuries
precisely and that, in the event of such a breach or threat thereof, the
Company and its Affiliates shall be entitled to seek a temporary restraining
order or a preliminary or permanent injunction, or both, without bond or other
security, restraining the Executive from engaging in activities prohibited by
this Section 7 or such other relief as may be required specifically to enforce
any of the covenants in this Section 7. 
Such injunctive relief in any court shall be available to the Company
and its Affiliates in lieu of, or prior to or pending determination in, any
arbitration proceeding.


 


8.                                       CERTAIN
ADDITIONAL PAYMENTS BY THE COMPANY.


 


8.1.                              Gross-Up
Payment.  In the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 8) (a “Payment”) would be subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”)
(such excise tax being referred to as the “Excise Tax”), then the
Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.


 


8.2.                              Gross-Up
Payment Calculation.  Subject to the
provisions of Section 8.3, all determinations required to be made under
this Section 8, including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by the Company’s independent
certified public accountants (the “Accounting Firm”). All fees and
expenses of the Accounting Firm shall be borne solely by the Company.  Any Gross-Up Payment, as determined pursuant
to this Section 8, shall be paid by the Company to Executive within five
days of the receipt of the Accounting Firm’s determination.  Any determination by the Accounting Firm
shall be binding upon the Company and the Executive.  As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder.  In the event that the Company exhausts its
remedies pursuant to Section 8.3 and the Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of Executive.


 


8.3.                              Claim
by the IRS.  The Executive shall
notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up
Payment.  Such notification shall be
given as soon as practicable but no later than ten business days after the
Executive is informed in writing of such claim and shall apprize the Company of
the nature of such claim and the date on which such claim is requested


 


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to be paid.  The Executive shall not pay such claim prior
to the expiration of the 30-day period following the date on which he gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such period that it desires
to contest such claim, the Executive shall:


 


(i)                                     give
the Company any information reasonably requested by the Company relating to
such claim;


 


(ii)                                  take
such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation,
accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company;


 


(iii)                               cooperate with the
Company in good faith in order effectively to contest such claim; and


 


(iv)                              permit
the Company to participate in any proceedings relating to such claim;


 


provided,
however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions
of this Section 8.3, the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive
to pay such claim and sue for a refund, the Company shall advance the amount of
such payment to the Executive, on an interest-free basis and shall indemnify
and hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and provided, further, that any extension of the
statute of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company’s control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.


 


8.4.                              Entitlement
to Refund.  If, after the receipt by
the Executive of an amount advanced by the Company pursuant to
Section 8.3, the Executive becomes entitled to receive any


 


11

















 


refund with respect to
such claim, the Executive shall promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 8.3, a determination is made
that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.


 


9.                                       ARBITRATION


 


Subject to
Section 7.4, any dispute or controversy arising under or in connection
with this Agreement that cannot be mutually resolved by the parties hereto
shall be settled exclusively by arbitration in New York City before one
arbitrator of exemplary qualifications and stature, who shall be selected
jointly by the Company and the Executive, or, if the Company and the Executive
cannot agree on the selection of the arbitrator, shall be selected by the
American Arbitration Association. 
Judgment may be entered on the arbitrator’s award in any court having
jurisdiction.  The parties hereby agree
that the arbitrator shall be empowered to enter an equitable decree mandating
specific enforcement of the terms of this Agreement.  Each party shall bear its own costs, including legal fees and
out-of-pocket expenses, incurred in connection with any arbitration, and the
party that prevails shall bear all expenses of the arbitrator.


 


10.                                 MISCELLANEOUS


 


10.1.                        Communications.  All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered or on the fifth business day after
mailed if delivered personally or mailed by registered or certified mail
(postage prepaid, return receipt requested) to the party at the following
addresses (or at such other address for a party as shall be specified by like
notice, except that notices of changes of address shall be effective upon
receipt):


 


(a)                                  if
to the Company:


 


Yuasa, Inc.


P.O. Box 14145


2366 Bernville
Road


Reading, PA
19612-4145


Attention: Chief
Executive Officer


 


12

















 


with copies to:


 


Morgan Stanley
Dean Witter Capital Partners


1221 Avenue of the
Americas


New York, NY 10020


Attention: Howard
I. Hoffen and Eric T. Fry


 


Shearman &
Sterling


599 Lexington Avenue


New York, NY 10022


Attention: George
Spera, Esq.


 


(b)                                 if
to the Executive: at the address for the Executive indicated on the signature
page hereof.


 


10.2.                        Waiver
of Breach; Severability.  (a) The
waiver by the Executive or the Company of a breach of any provision of this
Agreement by the other party hereto shall not operate or be construed as a
waiver of any subsequent breach by either party.


 


(b) The parties
hereto recognize that the laws and public policies of various jurisdictions may
differ as to the validity and enforceability of covenants similar to those set
forth herein. It is the intention of the parties that the provisions hereof be
enforced to the fullest extent permissible under the laws and policies of each
jurisdiction in which enforcement may be sought, and that the unenforceability
(or the modification to conform to such laws or policies) of any provisions
hereof shall not render unenforceable, or impair, the remainder of the
provisions hereof. Accordingly, if at the time of enforcement of any provision
hereof, a court of competent jurisdiction holds that the restrictions stated
herein are unreasonable under circumstances then existing, the parties hereto
agree that the maximum period, scope, or geographic area reasonable under such
circumstances will be substituted for the stated period, scope or geographical
area and that such court shall be allowed to revise the restrictions contained
herein to cover the maximum period, scope and geographical area permitted by
law.


 


10.3.                        Assignment;
Successors.  No right, benefit or
interest hereunder shall be assigned, encumbered, charged, pledged,
hypothecated or be subject to any setoff or recoupment by the Executive. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the Company.


 


10.4.                        Entire
Agreement.  This Agreement
represents the entire agreement of the parties and shall supersede any and all
previous contracts, arrangements or understandings between the Company and the
Executive relating to the Executive’s employment or the consequences of a
termination of such employment. This Agreement may be amended at any time by
mutual written agreement of the parties hereto.


 


10.5.                        Other
Severance Benefits.  The Executive
hereby agrees that in consideration for the payments to be received under this
Agreement, the Executive waives any and all rights to any payments or benefits
under any severance plans, programs, contracts or arrangements of the Company
or any of its Affiliates.


 


13

















 


10.6.                        Withholding.  The payment of any amount pursuant to this
Agreement shall be subject to applicable withholding and payroll taxes, and
such other deductions as may be required under the Company’s employee benefit
plans, if any.


 


10.7.                        Governing
Law.  This Agreement shall be
governed by, and construed with, the law of the State of New York.


 


10.8.                        Headings.  The headings in this Agreement are for
convenience only and shall not be used to interpret or construe any of its
provisions.


 


10.9.                        Counterparts.  This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.


 


 


IN WITNESS
WHEREOF, the Company has caused this Agreement to be duly executed and the
Executive has hereunto set his hand, as of the day and year first above
written.


 


 


	
   

  	
  YUASA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John D. Craig

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:  C.E.O.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ John A. Shea

  	
   

  
	
   

  	
  JOHN A. SHEA

  	
   

  
	
   

  	
  Address:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  YUASA HOLDINGS INC. (as
  to Section 5.7)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John D. Craig

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:  C.E.O.

  



 


14

















 


APPENDIX A


 


Form of General
Release


 


15

















 


APPENDIX A


 


FORM OF GENERAL RELEASE


 


Reference is made
to the Employment Agreement dated as of November 9, 2000 (the “Employment
Agreement”), between YUASA, INC., a Pennsylvania corporation (the “Company”)
and
[               ]
(the “Executive”). Capitalized terms used herein without definition
shall have the meanings assigned to them in the Employment Agreement, a copy of
which is attached hereto.


 


SECTION 1.   Mutual Release.


 


(a)                                  General
Waiver and Release.  In
consideration of their respective obligations under the Employment Agreement in
connection with and following the Executive’s termination of employment with
the Company and its affiliates, and subject to the limitations set forth in
Section 2 hereof, the Company, on the one hand, does hereby release and
forever discharge the Executive, and the Executive, on the other hand, does
hereby release and forever discharge the Company, its present, former and
future shareholders, affiliates, direct and indirect parents, subsidiaries,
successors, directors, officers, employees, agents, attorneys, heirs and
assigns (the “Company Parties” and, together with the Executive, the “Released
Parties”), from any and all claims, actions, causes of action, suits,
costs, controversies, judgments, decrees, verdicts, damages, liabilities,
attorneys’ fees, covenants, contracts, and agreements that the Executive may
have against the Company Parties or the Company Parties may have against the
Executive, or in the future may possess based on events occurring during the
term of the Executive’s employment with the Company arising out of (i) the
Executive’s employment relationship with or service as an employee or officer
of the Company and its affiliates or the termination of such relationship or
service or (ii) any event, condition, circumstance or obligation that occurred,
existed or arose on or prior to the date the Executive signs this Release, with
respect to each other, including, but not limited to, any claims arising under
Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the
Americans with Disabilities Act of 1990, the Civil Rights Act of 1866, the
Civil Rights Act of 1991, the Employee Retirement Income Security Act of 1974,
the Family Medical Leave Act of 1993, or any other federal or state or local
law or any foreign jurisdiction, whether such claim arises under statute,
common law or in equity, and whether or not any of the Released Parties are
presently aware of the existence of such claim, damage, action or cause of
action, suit or demand (collectively, including claims, actions and causes of
action set forth in Section l(b) below, the “Claims”). The
Executive and the Company Parties also do forever release, discharge and waive
any right the Executive or the Company Parties may have to recover in any
proceeding brought by any federal, state or local agency against the Company
Parties and the Executive, respectively, to enforce any laws.  Each of the parties hereto agrees that the
value received or to be received in the future as described in the Employment
Agreement shall be in full satisfaction of any and all claims, actions or
causes of action for payment or other benefits of any kind that the Executive
may have against the Company Parties and that the Company Parties may have
against the Executive.


 

















 


(b)                                 ADEA
Release.  In further recognition of
the above, the Executive hereby releases and forever discharges each of the
Company Parties from any and all claims, actions and causes of action that he
may have as of the date he signs and delivers to the Company this Release arising
under the federal Age Discrimination in Employment Act of 1967, as amended, and
the applicable rules and regulations promulgated thereunder (“ADEA”).


 


SECTION 2.                                Limitations.


 


(a)                                  No
Impact on Obligations Under The Employment Agreement or the Shareholder
Agreement.  The releases contained
herein do not, are not intended to and shall not be interpreted to serve as a
release or waiver by the Executive or the Company Parties with respect to their
respective rights and obligations set forth in the Employment Agreement or the
Shareholder Agreement. In particular, and without limiting the generality of
the preceding sentence, the Executive does not waive or release any claim he
might now or in the future have to be paid or receive the payments and benefits
provided for in Section 5.1 or Section 8 of the Employment Agreement,
and the Company Parties do not waive or release any claim they might now or in
the future have under Section 5.5 or Section 7 of the Employment
Agreement or under the Shareholder Agreement.


 


(b)                                 No
Impact on Indemnification Rights. 
The releases contained herein do not, are not intended to and shall not
be interpreted to serve as a release or waiver by the Executive with respect to
any indemnification rights he may have and such indemnification rights shall
not be effected, modified or extinguished by the Executive’s execution of this
Release.


 


SECTION 3.  No Pending Litigation.


 


The Executive
represents and agrees that he has not filed, and will not file, any action,
complaint, charge, grievance or arbitration against any Company Party, except
that such agreement shall not apply to any claim based on any matter which,
pursuant to Section 2, is excluded from the scope of this Release. The
Company hereby represents and agrees that no Company Party has filed, and no
Company Party will file, any action, complaint, charge, grievance or
arbitration against the Executive except that such agreement shall not apply to
any claim based on any matter which, pursuant to Section 2, is excluded
from the scope of this Release.


 


SECTION 4.  Acknowledgment.


 


The Executive
acknowledges and confirms that (i) he has been advised in writing by the
Company in connection with his resignation to consult with an attorney of his
choice prior to signing this Release and to have such attorney explain to him
the terms of the Release, including, without limitation, the terms relating to
his release of Claims arising under ADEA; (ii) he has read this Release
carefully and completely and understands each of the terms hereof; and (iii) he
was given not less than twenty-one (21) days to consider the terms of the
Release and to consult with an attorney of his choosing with respect thereto,
and that for a period of seven (7) days following his signing of this
Agreement, he shall have the option to revoke this Agreement in accordance with
the terms set forth in Section 6 below.


 

















 


SECTION 5.  Successors.


 


The rights and
obligations under this Agreement shall inure to any and all successors of the
Company.


 


SECTION 6  Revocation.


 


The Executive have
the right to revoke this Release during the seven-day period commencing
immediately following the date he signs and delivers this Agreement to the
Company (the “Revocation Period”). The period shall expire at 5:00 p.m.,
Eastern [Standard] Time, on the last day of the seven-day period; provided,
however, that if such seventh day is not a business day, the period
shall extend to 5:00 p.m. on the next succeeding business day. In the event of
any such revocation by the Executive, the obligations of the Company under this
Release shall terminate and be of no further force and effect as of the date of
such revocation. No such revocation by the Executive shall be effective unless
it is in writing and signed by the Executive and received by a representative
of the Company prior to the expiration of the Revocation Period.


 


SECTION 7.  Counterparts.


 


This Release may
be executed in two or more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.


 


 


	
   

  	
  YUASA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


 


	
  ACCEPTED AND AGREED:

  
	
   

  
	
   

  	
   

  
	
  [EXECUTIVE]

  
	
  Address:

  
	
   

  
	
   

  
	
  Dated:

  



 

















 


	
  

  	
   

  	
  EnerSys Inc.

  PO Box 14145 2366 Bernville Rd

  Reading, PA 19605

  610-208-1991

  email: www.enersysinc.com

  
www.enersysinc.com

  



 


June 27, 2002


 


 


John A. Shea


1016 Hilltop Road


Leesport PA 19533


 


Dear John:


 


With reference to your
employment agreement (the “Employment
Agreement”) with
EnerSys, Inc. (the “Company”), dated November 9, 2000, pursuant
to which you are currently employed as Executive Vice President North America
Motive Power Business of the Company, we confirm that effective as of
March 22, 2002, your salary provided for in Section 3 of the
Employment Agreement has been increased to $300,000.


 


Except as expressly set
forth in the letter, the Employment Agreement shall remain in full force and
effect.


 


	
   

  	
  ENERSYS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John D. Craig

  	
   

  
	
   

  	
  John
  D. Craig

  
	
   

  	
  Chairman, President & Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted and Agreed:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/ John A. Shea

  	
   

  	
   

  
	
  John A. Shea

  	
   

  
	
   

  	
   

  
	
  Date: