Exhibit 10.4


 


EMPLOYMENT AGREEMENT dated as of November 9, 2000, between YUASA,
INC., a Pennsylvania corporation (the “Company”), and CHARLES K. McMANUS
(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 Executive Vice President (Stationary),
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


 


9

















 


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/
  Charles K. McManus

  	
   

  
	
   

  	
  CHARLES
  K. McMANUS

  	
   

  
	
   

  	
  Address: 2155 Art
  School Rd

   Chester Springs, PA 19425

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  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


 


 


Charles
K. McManus


2155 Art
School Road


Che3ster
Springs PA 19425


 


Dear
Charles:


 


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
Reserve Power Business and World Wide Marketing 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/
  Charles K. McManus

  	
   

  	
   

  
	
  Charles
  K. McManus

  	
   

  
	
   

  	
   

  
	
  Date:
  7/15/02