Document:

Exhibit
10.6

 

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

 

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

 

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

 

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

 

1.                                       EFFECTIVENESS OF AGREEMENT

 

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

 

2.                                       EMPLOYMENT AND DUTIES

 

2.1.         General.  The
Company hereby employs the Executive, and the Executive agrees to serve, as its
Executive Vice President and Chief Administrative Officer, 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 “TerminationYear”) and for each whole fiscal year following
the Termination Year included in the Severance Period, the Company shall pay
the Executive an amount equal to the average of the Annual Bonus paid to the
Executive for the two fiscal years preceding the Termination Year (including,
if applicable, annual bonus earned prior to the Effective Time), which amount
shall be payable at the time annual bonuses are paid to the Company’s
executives generally;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5.2.                              Termination for Cause; Resignation Without
Good Reason.

 

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

 

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

 

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

 

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

 

(b)                                 knowing and intentional fraud;

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

6.                                       DEATH OR DISABILITY

 

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

 

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

 

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

 

7.                                       PROTECTION OF THE COMPANY’S INTERESTS

 

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

 

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

 

7.2.                              Covenant Not to Compete; Nonsolicitation.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8.                                       CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

9.                                       ARBITRATION

 

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

 

10.                                 MISCELLANEOUS

 

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

 

(a)                                 if to the Company:

 

Yuasa, Inc.

P.O. Box 14145

2366 Bernville Road

Reading, PA 19612-4145

Attention: Chief Executive Officer

 

12

 

with copies to:

 

Morgan Stanley Dean Witter Capital Partners

1221 Avenue of the Americas

New York, NY 10020

Attention: Howard I. Hoffen and Eric T. Fry

 

Shearman & Sterling

599 Lexington Avenue

New York, NY 10022

Attention: George Spera, Esq.

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

	
   

  	
  YUASA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John D. Craig

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: 

  	
  C.E.O.

  
	
   

  	
   

  
	
   

  	
  /s/ Richard W. Zuidema

  	
   

  
	
   

  	
  RICHARD W. ZUIDEMA

  
	
   

  	
  Address:

  	
  PO Box 13515

  
	
   

  	
   

  	
  Reading, PA 19612

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  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 1(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 BernvilleRd

  
	
  Reading,
  PA 19605

  
	
  610-208-1991

  email: www.enersysinc.com

  

  www.enersysinc.com

  

 

 

June 27, 2002

 

 

Richard
W. Zuidema

1932
Wickford Place

Wyomissing
PA 19610

 

Dear
Richard:

 

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 Administration
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 $325,000.

 

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/ Richard W. Zuidema

  	
   

  	
   

  
	
  Richard W. Zuidema

  	
   

  
	
   

  	
   

  
	
  Date:Exhibit
10.7

 

EXECUTION
DRAFT

 

DIRECTORSHIP
AGREEMENT dated as of January 8, 2002, between ENERSYS, INC., a Pennsylvania
corporation (the “Company”),
and RAY KUBIS (the “Director”).

 

WHEREAS,
the Company has entered into a Stock Purchase Agreement (the “Purchase Agreement”), dated as of
the date hereof with Invensys plc, a corporation organized under the laws of
England and Wales, pursuant to which the Company will acquire (the “Acquisition”) the industrial
battery division of Invensys, plc (as defined in the Purchase Agreement, the “Business”);

 

WHEREAS,
following the Acquisition, the Director will remain a Director and shall be
appointed Managing Director of Hawker Belgium S.A., (“Hawker”) a Company organized under the
laws of Belgium that forms part of the Business pursuant to a Managing
Directorship Agreement executed concurrently with this Agreement, a copy of
which is attached hereto as Appendix A (the “Hawker Agreement”);

 

WHEREAS,
upon the Closing Date of the Acquisition (as defined in the Purchase Agreement), the Director
will be appointed as a member of the Board of Directors of
[          ] (the “Board”), a
[          ] corporation and
a wholly owned subsidiary of the Company (the “U.S.Subsidiary”);

 

WHEREAS,
upon the Closing Date of the Acquisition, Mr. Kubis shall be appointed as
President of Enersys Europe and shall responsible for the management and
direction of the Company’s operations in Europe, the Middle East and Africa;

 

WHEREAS,
in consideration of the Director’s services as a member of the Board of
Directors of the U.S. Subsidiary, the Company has agreed to grant to the
Director options to purchase shares of the Company’s common stock pursuant to
the Company’s Management Equity Plan, as the same shall be amended (the “MEP”); and

 

WHEREAS,
in consideration of the Director agreeing to be bound by certain restrictive
covenants following the termination of his services as a Director and Managing
Director of Hawker and a member of the Board of Directors of the U.S.
Subsidiary (collectively, the “Directorships”),
the Company wishes to provide the Director with certain termination payments
described herein.

 

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

 

1.     EFFECTIVENESS OF AGREEMENT

 

This
Agreement shall become effective on the date hereof; provided, however,
that if the Acquisition is not consummated, this Agreement shall terminate and
be of no further force and effect.

 

 

2.     DIRECTORSHIP OF THE U.S. SUBSIDIARY

 

2.1.          Appointment. Following the
Closing Date of the Acquisition and for so long as the Director remains a
Director and Managing Director of Hawker, the Director shall serve as a member
of the Board of Directors of the U.S. Subsidiary (“Director Term”). Upon the termination of the
Director’s service as a Director and Managing Director of Hawker, the Director
shall cease to serve as a member of the Board of Directors of the U.S.
Subsidiary.

 

2.2.          Company Options. In
consideration of the Director’s services as a member of the Board of Directors
of the U.S. Subsidiary, the Director shall be eligible to participate in the
MEP in accordance with the terms thereof as determined by the Company’s Board
of Directors from time to time.

 

2.3.          Reimbursement of Expenses. The
U.S. Subsidiary shall reimburse the Director for reasonable travel and other
expenses incurred by him in the fulfillment of his duties hereunder upon
presentation by the Director of an itemized account of such expenditures, in
accordance with customary practice.

 

3.     TERMINATION OF DIRECTORSHIPS

 

3.1.          Termination Without Cause;
Resignation for Good Reason.

 

3.1.1.       General. Subject to Sections 3.1.2
and 3.1.3, if the Directorships are terminated by Hawker and the U.S.
Subsidiary, as applicable, without Cause (as defined below) or if the Director
resigns the Directorships for Good Reason (as defined below), the Company
shall, subject to the Director’s execution of a general release of claims
against the Company and its affiliates (including, without limitation, Hawker
and the U.S. Subsidiary) substantially in the form annexed hereto as Appendix
B, pay to the Director the following amounts (the “Termination Payments”) which amounts shall be reduced
by any post-termination benefits made pursuant to the Hawker Agreement or
Belgian law, if any:

 

(a)                                                          For
a period equal to two years from the date of termination (or, if less than two
years remain until the Director’s 65th birthday, for the period from the date
of termination until the Director’s 65th birthday) (the “Restricted Period”), the Company
shall continue to pay the Director the Base Remuneration (as defined in the
Hawker Agreement), at the rate in effect on the date of such termination, at
such intervals as the same would have been paid had the Director remained in
service as a Director and Managing Director of Hawker and a member of the Board
of the U.S. Subsidiary;

 

(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
Restricted Period, the Company shall pay the Director an amount equal to the
average of the bonus paid to the Director pursuant to the Hawker Agreement for
the two fiscal years preceding the Termination Year (including, if applicable,
the

 

2

 

bonus
earned prior to the Acquisition), which amount shall be payable at the time
annual bonuses are paid by the Company;

 

(c)                                  For the partial fiscal year, if any,
immediately preceding the end of the Restricted Period, the Company shall pay
the Director a Pro Rata Portion (as defined below), through and including the
last day of the Restricted Period, of the amount provided for in paragraph (b)
above for whole fiscal years included in the Restricted 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 Restricted Period ends;

 

(d)                                 During the Restricted Period, the Company
will provide the Director and his beneficiaries with the pension, medical and
dental insurance benefits that in the aggregate are substantially similar to
the benefits provided for in Section 2.3 of the Hawker Agreement, on the same
terms as provided for therein; provided, however, that this
obligation on the part of the Company shall cease at such time as the Director
becomes eligible to participate in comparable programs of another company, and provided,
further, that the Company and Hawker reserve the right to alter or
discontinue specific benefit plans or programs as long as the Company continues
to provide substantially similar benefits to the Director in accordance with
this Section 3.1.l(d).

 

(e)                                  The Company will reimburse the Director for
documented reasonable costs of relocating him and his family and their
reasonable personal effects to a single location in the United States, but only
if such costs are incurred within nine months after the date of termination and
only to the extent that another company does not directly or indirectly bear
such relocation costs on his behalf.

 

Except as set forth in the
MEP and the applicable award agreement thereunder, the Director shall have no
further right to receive any other compensation or benefits from the Company,
Hawker or the U.S. Subsidiary after the termination of the Directorships. The
Director’s rights following termination of the Directorships in any awards
under the MEP will be determined in accordance with the MEP and the applicable award
agreement.

 

3.1.2.       Conditions Applicable to the
Restricted Period. If, during the Restricted Period, the Director breaches
any of his obligations under Section 5, the Company may, upon written notice to
the Director, terminate the Restricted Period and cease to make any further
Termination Payments.

 

3.1.3.       Death During the Restricted Period.
In the event of the Director’s death during the Restricted Period, the
Termination Payments shall continue to be made during the remainder of the
Restricted Period to the beneficiary designated in writing for this purpose by
the Director or, if no such beneficiary is specifically designated, to the
Director’s estate.

 

3

 

3.2.          Termination for Cause; Voluntary
Resignation. If the Directorships are terminated by Hawker and the U.S.
Subsidiary for Cause or the Director voluntarily terminates the Directorships
other than for Good Reason, the Director shall not be entitled to receive any
portion of the Termination Payment. The Director shall have no right to receive
any other compensation or benefits from the Company, Hawker or the U.S.
Subsidiary after such termination except as set forth in the MEP and the
applicable award agreement thereunder.

 

3.3.          Cause. Termination for “Cause” shall mean termination of
the Directorships 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 Director 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 Director to substantially perform the duties required of him as a director
other than by reason of physical or mental incapacity;

 

provided, however, that if any such Cause
relates to the Director’s obligations under this Agreement or the Hawker
Agreement, such termination shall not constitute Cause unless Hawker or the
U.S. Subsidiary, as the case may be, shall have given the Director notice of
its intention to terminate and of the grounds for such termination within 90
days of such event, and the Director has not, within 20 days following receipt
of such notice, cured such Cause to the reasonable satisfaction of Hawker or
the U.S. Subsidiary, as the case may be.

 

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

 

(a)                                  any decrease in the Director’s rate of Base
Remuneration (as defined in the Hawker Agreement);

 

(b)                                 a material diminution of the authority,
responsibilities or positions of the Director from those set forth in this
Agreement or the Hawker Agreement as in effect on the consummation of the
Acquisition;

 

(c)                                  the Company, Hawker or the U.S. Subsidiary
requiring the Director to relocate from Brussels, Belgium, except to the extent
the Director is relocated (i) to the United States or (ii) with 90 days prior
notice and an undertaking to pay reasonable relocation expense, to London,
Paris or Frankfort; or

 

4

 

(d)                                 the failure to renew the term of the Hawker
Agreement unless such failure to renew is based on the existence of Cause.

 

provided, however, that none of the foregoing
events or conditions shall constitute Good Reason unless (i) the Director gives
Hawker or the U.S. Subsidiary, as the case may be written notice of his
objection to such event or condition within 90 days of the occurrence of such
event or condition, (ii) Hawker or the U.S. Subsidiary, as the case may be,
does not correct or cure such event or condition within 20 days of its receipt
of such notice, and (iii) the Director terminates his service with Hawker and
the U.S. Subsidiary not more than 30 days following the expiration of the
20-day period described in the foregoing clause (ii).

 

3.5.          Mitigation and Offset. The
Director shall not be required to mitigate the amount of any payment provided
for in Section 3.1 by providing services to any third party, but the amount of
any payment provided for in Section 3.1 (other than any amount that had accrued
through the Director’s date of termination) shall be reduced (but not below
zero) by (i) any compensation earned (including any amounts deferred) from a
subsequent employer and (ii) any appreciation realized or accrued on equity or
equity-linked securities of a subsequent employer by the Director, 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 Restricted Period. The Director shall promptly notify the
Company in writing of any such arrangement during the Restricted Period and
will cooperate fully with the Company in determining the amount of any
reduction to amounts otherwise payable under Section 3.1.

 

3.6.          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.

 

4.     DEATH OR DISABILITY

 

4.1.          General. In the event the
Directorships are terminated as a result of the Director’s death or Disability,
the Company shall pay to the Director (or his estate, as applicable) (i) Base
Remuneration through the date of termination and (ii) a Pro  Rata
Portion (through and including the date of termination) of the Bonus to which
the Director would have be entitled to receive pursuant to the Hawker Agreement
during the year in which the Directorships were terminated payable at the time
Bonuses are generally paid to the Director pursuant to the Hawker Agreement; provided,
however, that each such amount shall be reduced (but not below zero) by
related amounts paid under the Hawker Agreement.

 

4.2.          Definition. For purposes of
this Agreement, “Disability”
means a physical or mental disability or infirmity of the Director, 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 a Director of Hawker and the
U.S. Subsidiary for any continuous period of 180 days, or for 180 days during
any one 12-month period.

 

5

 

5.     PROTECTION OF THE COMPANY’S INTERESTS

 

5.1.          Confidentiality. The Director
agrees with the Company that he will not at any time, except in performance of
his obligations to Hawker or the U.S. Subsidiary or with the prior written
consent of the Company, directly or indirectly, reveal to any person, entity or
other organization (other than the Company,  Hawker or the U.S. Subsidiary, or their 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, including, without limitation, Hawker and the U.S. Subsidiary (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 Director) to the Director by
reason of his services for, shareholdings in or other association with the
Company or any of its Affiliates. The Director further agrees that he will
retain all copies and extracts of any written Confidential Information acquired
or developed by him during any such service, shareholding or association in
trust for the sole benefit of the Company, its Affiliates and their successors
and assigns. The Director 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 Director 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 5.1.
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 Director. The Director’s agreements
set forth in this Section 5.1 regarding Confidential Information are
independent of, and in addition to, his agreements set forth in the rest of the
Section 5.1 and shall not be construed either to enlarge or to contract the
scope of such other agreements.

 

5.2.  Covenant Not to Compete; Nonsolicitation.

 

5.2.          The covenants of this Section 5.2 shall
apply during the Directorship Term and the Restricted Period provided, however,
that the Restricted Period shall be extended by a period of time equal to any
period during which the Director shall be in breach of any of such covenants,
and provided, further, that in the event the Directorships are
terminated under circumstances in which the Director is not entitled to the
Termination Payment, the Board may in its discretion elect to waive the
covenants of this Section 5.2 in whole or in part, but only if such waiver is
authorized by a written resolution approved by the Board.

 

5.2.1.       Competing Business. The Director
agrees with the Company that, during the Directorship Term and 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

 

6

 

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 Director 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 5.2.1 shall not be violated, however,
by the Director’s investment of up to $100,000 in the aggregate in one or
several publicly-traded companies that engage in a Competing Business.

 

5.2.2.       Solicitations. As a separate and
independent covenant, the Director agrees with the Company that, during
the Directorship Term and the Restricted Period, he will not in any way,
directly or indirectly (except in the course of his services to Hawker and the
U.S. Subsidiary), 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.

 

5.2.3.       Competing Business. For purposes
of this Agreement 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, Hawker or the
U.S. Subsidiary 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.

 

5.3.          Exclusive Property. The
Director 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 Director relating to the business of

 

7

 

the Company, Hawker and the U.S. Subsidiary shall be and remain the property
of the Company and its Affiliates.

 

5.4.          Certain Remedies. Without
intending to limit the remedies available to the Company and its Affiliates,
the Director agrees that a breach of any of the covenants contained in this
Section 5 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 Director
from engaging in activities prohibited by this Section 5 or such other relief
as may be required specifically to enforce any of the covenants in this Section
5. 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,

 

6.     CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY

 

6.1.          Gross-Up Payments. In the event
it shall be determined that any payment or distribution by the Company to or
for the benefit of the Director (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 6) (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 Director shall be entitled to receive an
additional payment (a “Gross-Up Payment”)
in an amount such that after payment by the Director 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
Director retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.

 

6.2.          Gross-Up Payment Calculation.
Subject to the provisions of Section 6.3, all determinations required to be
made under this Section 6, 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 6, shall be paid by the Company to Director 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 Director. 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 6.3 and the Director
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
Director.

 

8

 

6.3.          Claim by the IRS. The Director
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 Director 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 Director 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 Director in writing prior to the expiration of such period
that it desires to contest such claim, the Director 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 Director 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 6.3,
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 Director
to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Director 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 Director to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Director, on an interest-free basis and shall indemnify and hold
the Director 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
Director 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 Director 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.

 

9

 

6.4.          Entitlement to Refund. If,
after the receipt by the Director of an amount advanced by the Company pursuant
to Section 6.3, the Director becomes entitled to receive any refund with
respect to such claim, the Director 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 Director of an
amount advanced by the Company pursuant to Section 6.3, a determination is made
that the Director shall not be entitled to any refund with respect to such
claim and the Company does not notify the Director 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.

 

7.     TAXATION.

 

7.1.          Tax Rate Increase. The Director
acknowledges that during the Directorship Term, in connection with his services
to the Company, Hawker or the U.S. Subsidiary, he will be required to travel.
The Company acknowledges that a decrease in the amount of travel required of
the Director during the Directorship Term may increase the Director’s Belgian
tax rate above the Base Tax Rate (as defined below). Such an increase in the
Base Tax Rate may increase the net amount of taxes (taking into account any
foreign tax credits) that the Director is obligated to pay in the United States
and Belgium. Notwithstanding anything set forth in Article 9 of the Hawker
Agreement, the Company agrees to reimburse the Director on a gross-up basis for
the net amount of additional Belgian and United States taxes, if any, owed by
the Director as a result of an increase in his Base Tax Rate due solely to a
decrease in his required travel. Any calculation regarding payments to be made
by the Company pursuant to this Section 7.1 shall be made by the Accounting
Firm. For purposes of this Agreement, the Director’s “Base Tax Rate” shall be the average of the Director’s
Belgian tax rates for the three calendar years immediately preceding the
consummation of the Acquisition.

 

7.2.          Taxation of Options. Upon the
initial grant of stock options (the “Initial
Grant”) made to the Director pursuant to the MEP, the Company
shall pay to the Director a payment (the “Option
Tax Payment”) in an amount equal to the Belgian taxes owed by
the Director in connection with the Initial Grant on a gross-up basis. The
amount of the Option Tax payment shall be calculated by the Accounting Firm. To
the extent that Option Tax Payment can be used by the Director as a foreign tax
credit on the Director’s United States tax return at any time, the Director
shall promptly pay to the Company the amount of such foreign tax credit.

 

8.     ARBITRATION

 

Subject
to Section 5.4, 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 Director, or, if the Company and the Director 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

 

10

 

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..

 

9.     MISCELLANEOUS

 

9.1.          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:

 

Enersys,
Inc.

P.O. Box 14145

2366 Bernville Road

Reading, PA 19612-4145

Attention: Chief Executive 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: John Herbert, Esq.

 

Stevens
& Lee

111 North Sixth Street

P.O. Box 679

Reading, PA 19603-0679

Attention: Joseph M. Harenza, Esq.

 

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

 

9.2.          Waiver of Breach; Severability. (a) The waiver by the Director 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.

 

11

 

(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.

 

9.3.          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 Director. This Agreement shall inure to the benefit of and be
binding upon the successors and assigns
of the Company.

 

9.4.          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 Director relating to the matters described herein. This
Agreement may be amended at any time by mutual written agreement of the parties
hereto.

 

9.5.          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 benefit plans, if any.

 

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

 

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

 

9.8.          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.

 

9.9.          Nature of Services.
Notwithstanding anything herein to the contrary, Director’s services hereby
shall be performed by him in an autonomous and independent means, consistent
with the obligations of a director under applicable law. Subject to the
provisions of such law, the Company shall have no power to control the means
and methods utilized by the Director in discharging his duties hereunder.

 

12

 

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

 

	
   

  	
  ENERSYS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard W. Zuidema

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  /s/ Ray Kubis

  	
   

  
	
   

  	
  RAY KUBIS

  	
   

  
	
   

  	
  Address: 

  	
  Dreve de Rembucher 44

  	
   

  
	
   

  	
   

  	
  1170 Watermael-Boisfort

  	
   

  
						

 

 

13

 

APPENDIX A

Hawker Agreement

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