Exhibit 10.2


 


EMPLOYMENT AGREEMENT dated as of November 9, 2000, between YUASA,
INC., a Pennsylvania corporation (the “Company”), and JOHN D. CRAIG (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 the Chairman, President and Chief Executive Officer of the Company,
upon the terms and conditions herein contained. So long as the Executive is
employed by the Company hereunder, (i) prior to an initial public offering of
the Company’s equity securities (an “IPO”), the Executive shall serve as
Chairman of the Board of Directors of the Company (the “Board”) and
(ii), following an IPO, the Company shall nominate and use its best efforts to
cause the Executive to be elected as a member and Chairman of the Board. 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.


 


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 third 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 third
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 three 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 $450,000 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 Board 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 Board 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 100% of the Base Salary, based on
the satisfaction of financial and other performance targets to be established
by the Board and the Compensation Committee of the Board 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.


 


4.3           Certain Individual Benefits. The Company shall continue to maintain for
the Executive that certain individual disability insurance policy and that
certain split dollar life insurance policy heretofore maintained by Yuasa, Inc.
for his benefit. Such continued maintenance shall be on the same terms and
conditions as have heretofore applied. As soon as practicable following the
Executive’s termination of employment, for any reason other than termination
for Cause (as defined below), without Good Reason (as defined below) or by
reason of death, the Company shall assign (to the extent assignable) to the
Executive, without cost to him, all of its right, title and interest in and
under such policies. In the case of the Executive’s termination for Cause or
without Good Reason, at the Executive’s written election made within 30 days
following such termination, the Company shall assign to him all of its right,
title and interest in and under such policies, or either one of them, provided
the Executive pays to the Company the then cash surrender value, if any, of the
policy or policies to be assigned. In the case of the Executive’s death, his
rights with respect to the policies shall be determined under the terms thereof
and any documents between the Company and the Executive pertaining to such
rights.


 


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 three 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 three
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


 


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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;


 


(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


 


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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 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;


 


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(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, 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 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 (including the
failure of the Executive to be elected a director or Chairman of the Board);


 


(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. The payments provided for in Section 5.1.1 (a) through
5.1.1(c) shall not be subject to offset for any compensation earned by the
Executive as a result of providing services for pay to any party.


 


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


 


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(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 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.


 


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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 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 three 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


 


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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 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.


 


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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 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


 


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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 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


 


11

















 


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 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


 


12

















 


Attention: Chief Financial Officer


 


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, including without limitation the Employment Agreement dated as of
January 2, 2000 between the Company and the Executive.  This Agreement may be amended at any time by
mutual written agreement of the parties hereto.


 


13

















 


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.


 


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/
  Michael T. Philion

  	
   

  
	
   

  	
   

  	
  Name:
  MICHAEL T. PHILION

  
	
   

  	
   

  	
  Title:
  EVP

  
	
   

  	
   

  
	
   

  	
  /S/
  JOHN D. CRAIG

  	
   

  
	
   

  	
  JOHN
  D. CRAIG

  
	
   

  	
  Address:

  	
  6  Rick Rd

  
	
   

  	
   

  	
  Shillington,
  PA 19607

  
	
   

  	
   

  
	
   

  	
  YUASA
  HOLDINGS INC. (as to Section 5.7)

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Michael T. Philion

  	
   

  
	
   

  	
   

  	
  Name:
  MICHAEL T. PHILION

  
	
   

  	
   

  	
  Title:
  EVP

  
								



 


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.


 


16

















 


 


(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.


 


17

















 


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 D. Craig


6 Rick Road


Shillington PA 19607


 


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
Chairman, President & Chief Executive Officer 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 $700,000.


 


In addition, the
second sentence of Section 2.1 of the Employment Agreement is amended to
remove the word “and” before clause (ii) thereof and to add new clauses (iii)
and (iv) to the end thereof as follows:


 


“(iii) the
Executive shall serve as Chief Executive Officer of EnerSys Holdings Inc., a Delaware
Corporation (“Holdings”), and of
each direct or indirect subsidiary of Holdings, whether currently owned or
subsequently acquired and (iv) the Executive will be elected as a member and
chairman of the board of directors of Holdings and each such subsidiary.”


 


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


 


	
   

  	
   

  	
  ENERSYS HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Richard W. Zuidema

  	
   

  
	
   

  	
   

  	
   

  	
  Richard W. Zuidema

  
	
   

  	
   

  	
   

  	
  Executive Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Accepted and Agreed:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ John D. Craig

  	
   

  	
   

  	
   

  
	
  John D. Craig

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date: 7/15/02