CHARTER POWER SYSTEMS, INC.
3043 Walton Road
Plymouth Meeting, Pa. 19462
May 30, 1989
Mr. Alfred Weber
158 Beecher Drive
Southbury, CT 06488
Dear Mr. Weber:
Charter Power Systems, Inc., a Delaware corporation
(the "Company"), agrees to employ you and you agree to accept
such employment under the following terms and conditions:
1. Term of Employment. (a) Except for earlier
termination as is provided in Section 12 below, your
employment under this agreement and the term of this
agreement shall be for an initial term commencing as of April
4, 1989 (the "Effective Date") and terminating on April 30,
1992 (the "Initial Term"); provided, however, that if a
Change of Control (as hereinafter defined) of the Company
occurs at any time during the Initial Term of during the
first Renewal Term provided for in subsection (b) below, you
shall have the right, by giving written notice to the Company
within 90 days after that Change of Control, to terminate
your employment hereunder effective the date of that notice,
whereupon the Initial Term or the first Renewal Term, as the
case may be, shall be deemed to have ended. As used herein,
the term "Change of Control" shall mean (i) any transaction
or set of circumstances that would be required to be reported
as a change of control under Item 6(e) of Schedule 14A (Rule
14a-101) promulgated under the Securities Exchange Act of
1934 (the "Exchange Act"), unless you are individually, or
you are an executive officer or a more than 5% equity holder
of an entity that is, directly or indirectly one of the new
controlling parties, or (ii) the completion by the Company of
a merger or consolidation with, or a sale of all or
substantially all of its assets to, another company, unless
either (A) the Company is the surviving corporation and has
not become a wholly owned subsidiary of another person or
entity or (B) you are an executive officer or a more that 5%
equity holder of the other party to the transaction or of any
entity controlling that party (any transaction of the type
described in this clause (ii) hereinafter being described as
a "Business Combination").
(b) After the Initial Term, this agreement and
your employment hereunder shall be renewed automatically for
successive terms of one year each (each, a "Renewal Term"),
unless prior to the end of the Initial Term or any Renewal
Term either party shall have given to the other party at
least three months' prior written notice (a "Termination
Notice") of termination of this agreement or you shall have
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exercised your right of termination upon a Change in Control
(to the extent applicable) provided for in subsection (a)
above. If a Termination Notice is given by either party, (i)
the Company shall, without any liability to you, have the
right, exercisable at any time after the Termination Notice
is given, to elect any other person to the office or offices
in which you are then serving and to remove you from such
office or offices, but (ii) all other obligations each of you
and the Company have to the other, including the Company's
obligation to pay your compensation and make available the
fringe benefits to which you are entitled hereunder, shall
continue until the end of the Initial Term or any Renewal
Term, as the case may be.
(2) Compensation. You shall be compensated for
performance of your obligations under this agreement at the
rate of $237,000 per annum (such salary, as adjusted from
time to time, hereinafter is referred to as the "Base
Salary"), payable in such manner as is consistent with the
Company's payroll practices for executive employees. On May
1, 1991 and the first day of each Renewal Term of this
Agreement, if any, the Base Salary shall be adjusted by
multiplying the Base Salary by a fraction (i) the numerator
of which shall be the Consumer Price Index (for urban wage
earners and clerical workers, all items) as reported by the
Bureau of Labor Statistics of the United States Department of
Labor for the New York, New York-Northeastern New Jersey area
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(or such other successor government agency as then shall
perform that reporting function) (the "Index") for the month
immediately preceding the month in which the Base Salary
adjustment shall occur and (ii) the denominator of which
shall be the Index for the month immediately preceding the
month in which the immediately preceding term commenced (or,
in the case of the Base Salary adjustment on May 1, 1991, for
the month of April 1989); provided, however, that in no event
shall any such adjustment result in a decrease in the Base
Salary.
3. Duties. (a) During the term of your
employment hereunder, including any Renewal Term hereof, you
shall serve and the Company shall employ you as the President
of the Company or in such other executive capacity with
duties, title and responsibilities of a similar or greater
nature and stature as those initially undertaken by you as
the Board of Directors from time to time may determine. In
your capacity as President, you shall serve as the Chief
Operating Officer of the Company, reporting to and under the
supervision and direction of the Chairman of the Board and
Chief Executive Officer. You also shall perform such other
services and duties consistent with the office or offices in
which you are serving and its responsibilities as from time
to time may be prescribed by the Board of Directors. You
shall be nominated, on an annual basis so long as you
continue to be employed hereunder, for election as a director
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of the Company and, if elected, you shall serve as such and
as an officer and/or director of any of the Company's
subsidiaries, in all cases in conformity to the by-laws and
the policy of the Board of Directors of each such
corporation.
(b) You shall be required to devote your entire
business time and energies during normal business hours to
the business and affairs of the Company and its subsidiaries.
Nothing in this Section shall be construed as prohibiting you
from (i) investing your personal assets in businesses in
which your participation is solely that of a passive investor
in such form or manner as will not violate Section 9 hereof
or require any services on your part in the operation or
affairs of those businesses or (ii) devoting a portion of
your time, which is not expected to be substantial, to the
matter described in a letter, dated as of the date hereof,
delivered by you to the Company.
(c) You shall cooperate with the Company,
including taking such medical examinations as the Company
reasonably shall deem necessary, if the Company shall desire
or be required (such as pursuant to the terms of any bank
loan or any agreement for merger, sale or purchase or any
Company medical, disability or life insurance plan) to
certify in writing the current state of your physical health.
Where reasonably possible, the Company shall cooperate with
your request to have such examinations performed by your
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personal physician or another physician reasonably acceptable
to you.
(d) You shall be subject to the Company's rules,
practices and policies applicable to the Company's senior
executive employees, except to the extent the same are
inconsistent with any of the express provisions hereof.
4. Benefits. (a) Subject to Section 4(b) hereof,
you shall have the benefit of and be entitled to participate
in such employee benefit plans and programs, including life,
disability and medical insurance, pension, savings and other
similar plans, as the Company now has or hereafter may
establish from time to time, and in which you would be
entitled to participate pursuant to the terms thereof;
provided, however, that notwithstanding the provisions of
Section 2 hereof, your base salary for the purpose of
determining the level of benefits available to you under
those plans and programs shall be deemed to be $200,000,
subject to adjustment in the same manner as the Base Salary
is to be adjusted pursuant to Section 2. The foregoing,
however, shall not be construed to require the Company to
establish any such plans or to prevent the Company from
modifying or terminating any such plans, and no such action
or failure thereof shall affect this agreement.
(b) You shall not be entitled to participate in
the Company's Incentive Compensation Plan; however, the
Compensation Committee shall consider annually granting you a
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cash bonus, to the extent (if any) it deems appropriate in
its sole discretion, (i) for the Company's fiscal years
ending January 31, 1990 and 1991, respectively, as a
mitigating factor if you fail to meet the performance
criterion for the relevant year for the vesting of your
Option (as defined in the Option Agreement attached as
Exhibit A hereto (the "Option Agreement")) and (ii) for any
fiscal year, if your performance for that year is considered
exceptional. You shall not be entitled to be granted options
under the Company's Stock Option Plan.
(c) You shall be entitled to four weeks of
vacation each year.
5. Change of Control; Severance Pay. If you elect
to terminate the Initial Term or the first Renewal Term as a
result of a Change of Control of the Company, then within ten
business days after the termination date of the relevant term
(the "Termination Date") the Company shall pay to you an
amount in cash (the "Termination Payment") equal to your Base
Salary at that time; provided, however, that if the
Termination Date occurs less than 12 months before the
original expiration date of the relevant term as provided
herein (the "Original Date"), then a portion of the
Termination Payment (the "Adjustment Portion"), determined by
multiplying the original amount of the Termination Payment by
a fraction (a) the numerator of which shall be 12 minus the
number of whole calendar months in the period from the
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Termination Date through the Original Date and (b) the
denominator of which shall be 12, shall be adjusted by
multiplying the Adjustment Portion by a fraction (i) the
numerator of which shall be the Index for the month
immediately preceding the month in which the Termination Date
occurs and (ii) the denominator of which shall be the Index
for the month immediately preceding the month in which the
relevant term commenced. The Termination Payment shall be
considered severance pay, and you shall not be under any duty
to mitigate damages by seeking further employment nor shall
any compensation that you may receive from future employment
be offset against your rights to receive that payment.
6. Other Agreements. As additional incentives for
you to enter into this agreement, you and the Company shall
enter into the following additional agreements (the "Other
Agreements"): (i) the Option Agreement; (ii) the Stock
Purchase Agreement attached as Exhibit B hereto; and (iii)
the Registration Rights Agreement attached as Exhibit C
hereto. If, at any time after the date hereof, the Company
shall amend the comparable agreements (including the
employment agreement) entered into as of May 26, 1988 with
Donald L. Nevins, Jr. so as to increase or otherwise improve
any of the rights or benefits available to Mr. Nevins
thereunder, the Company simultaneously shall cause the
relevant agreement with you to be amended so that those
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increased or improved rights or benefits also are made
available to you.
7. Working and Other Facilities. During the
Initial Term and any Renewal Term, you shall be provided with
such working facilities and other support services as are
suitable to your position and appropriate for the performance
of your duties.
8. Expenses. The Company shall reimburse you for
all legal and accounting fees and expenses incurred by you in
connection with the structuring, negotiation and preparation
of this agreement and the other agreements referred to in
Section 6 hereof, up to an aggregate maximum of $10,000, upon
the presentation by you of appropriate substantiation
thereof. In addition: (a) if you relocate the principal
residence of your family to the vicinity of the Company's
headquarters in Plymouth Meeting, Pennsylvania on or before
May 31, 1990, the Company shall reimburse you for expenses,
up to an aggregate maximum of $35,000, reasonably incurred by
you in effecting that relocation; and (b) the Company shall
reimburse you for all reasonable expense incurred by you in
connection with the performance of your obligations
hereunder, upon the presentation by you of appropriate
substantiation of such expenses and approval thereof by a
member of the Compensation Committee in accordance with
normal Company expense reimbursement policies.
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9. Restrictive Covenants. (a) During such time
as you shall be employed by the Company, and for a period of
one year thereafter, you shall not, without the prior written
consent of the Board of Directors, directly or indirectly
become associated with, render services to, invest in,
represent, advise or otherwise participate as an officer,
employee, director, stockholder, partner, agent of or a
consultant for, any business that is "In Competition" with
the Company at the time your employment with the Company
ceases; provided, however, that nothing herein shall prevent
you from (i) investing (A) without limit in the securities of
any company listed on a national securities exchange or
quoted on the NASDAQ quotation system, or (B) to the extent
of no more than 20% of the equity in any other company,
provided that (with reference to clauses (A) and (B) above)
your involvement (directly or through any affiliated person
or entity) with any such company is solely that of a
stockholder, (ii) retaining (or exercising your right to
acquire and thereafter retaining) any investment that you
owned (or had the contractual right to acquire) as of the
date of commencement of your employment with the Company, or
(iii) being employed during the one-year period referred to
above by any business that is not In Competition with the
Company. As used herein, the term "In Competition", when
used with reference to any business, means that (1) not less
than 25% of the consolidated revenues of that business are
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provided by one or more classes of products manufactured and
sold by such business and services provided by such business
(the "Common Classes") that, in the aggregate, provide not
less than 25% of the Company's consolidated revenues and (2)
at least one of the Common Classes individually provides not
less than 15% of the consolidated revenues of that business
and of the Company, respectively.
(b) The parties hereto intend that the covenant
contained in this Section 9 shall be deemed a series of
separate covenants for each appropriate jurisdiction. If,
in any judicial proceeding, a court shall refuse to enforce
all the separate covenants deemed included in this Section 9
on grounds that, taken together, they cover too extensive a
geographic area, the parties intend that those covenants
(taken in order of the jurisdictions that are the least
populous) that, if eliminated would permit the remaining
separate covenants to be enforced in that proceeding, shall,
for the purpose of such proceeding, be deemed eliminated
from the provisions of this Section 9.
10. Confidentiality, Noninterference and Proprietary
Information. (a) In the course of your employment by the
Company hereunder, you will have access to confidential or
proprietary data or information of the Company. You shall not
at any time divulge or communicate to any person, nor shall you
direct any Company employee to divulge or communicate to any
person (other than to a person bound by confidentiality
11
obligations similar to those contained herein and other than as
necessary in performing your duties hereunder) or use to the
detriment of the Company or for the benefit of any other
person, any of such confidential or proprietary data or
information, except to the extent the same (i) becomes publicly
known other than through a breach of this agreement by you,
(ii) was known to you prior to the disclosure thereof by the
Company to you or (iii) is subsequently disclosed to you by a
third party who shall not have received it under any obligation
of confidentiality to the Company. The provisions of this
Section 10(a) shall survive your employment hereunder, whether
by the normal expiration thereof or otherwise, for as long as
such data or information remains confidential. The term
"confidential or proprietary data or information" as used in
this agreement shall mean data or information not generally
available to the public, including personnel information,
financial information, customer lists, supplier lists, product
and trading specifications, trade secrets, information
concerning product composition and formulas, tools and dies,
drawings and schematics, manufacturing processes, information
regarding operations, systems and services, knowhow, computer
and any other processed or collated data, computer programs,
and pricing, marketing, sales and advertising data.
(b) You shall not, during the term of this Agreement
and for a period of one year after the termination of your
employment by the Company, for your own account or for the
12
account of any other person, interfere with the Company's
relationship with any of its suppliers, customers or employees;
provided, however, that your employment by a competitor of the
Company, if not in violation of your noncompetition agreement
contained in Section 9(a) hereof, and your contacting of
suppliers and customers in connection therewith, if not in
violation of this Section 10, shall not constitute
"interference" hereunder.
(C) You shall at all times promptly disclose to the
Company, in such form and manner as the Company reasonably may
require, any inventions, improvements or procedural or
methodological innovations, programs methods, forms, systems,
services, designs, marketing ideas, products or processes
(whether or not capable of being trade-marked, copyrighted or
patented) conceived or developed or created by you during and
in connection with your employment hereunder and which relate
to the business of the Company ("Intellectual Property"). All
such Intellectual Property shall be the sole property of the
Company. You shall execute such instruments and perform such
acts as reasonably may be requested by the Company to transfer
to and perfect in the Company all legally protectable rights in
such Intellectual Property. If the Company is unable for any
reason to secure your signature on such instruments, you
irrevocably appoint the Company and its duly authorized
officers and agents as your agents and attorneys-in-fact to
execute such instruments and to do such things with the same
13
legal force and effect as if executed or done by you. The
Company shall not claim any benefits under this paragraph if
the same are substantially derived or adapted from information
or data held or possessed by third parties and generally
available to you whether or not employed by the Company.
(d) All written materials, records and documents
made by you or coming into your possession during your
employment concerning any products, processes or equipment,
manufactured, used, developed, investigated or considered by
the Company or otherwise concerning the business or affairs of
the Company, shall be the sole property of the Company, and
upon termination of your employment, or upon the request of the
Company during your employment, you shall deliver the same to
the Company. In addition, upon termination of your employment,
or upon request of the Company during your employment, you
shall deliver to the Company all other Company property in your
possession or under your control, including confidential or
proprietary data or information and all Company credit cards
and automobiles.
11. Equitable Relief. With respect to the covenants
contained in Sections 9 and 10 of this agreement, you
acknowledge that any remedy at law for any breach of said
covenants may be inadequate and that the Company shall be
entitled to specific performance or any other mode of
injunctive or other equitable relief to enforce its rights
hereunder.
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12. Earlier Termination; Continued Compensation.
Your employment hereunder shall terminate prior to the stated
expiration date of the Initial Term or, if applicable, the then
current Renewal Term (the "Stated Expiration Date") on the
following terms and conditions:
(a) This agreement shall terminate
automatically on the date of your death. Notwithstanding the
foregoing, the Company shall: (i) continue to make payments to
your estate of your Base Salary as then in effect pursuant to
this agreement until six months after your death; provided,
however, that to the extent those Base Salary payments continue
beyond the original expiration date of the term of this
agreement during which you shall have died, the amount of each
of the payments to be made after that original expiration date
shall be adjusted by multiplying the same by a fraction (A) the
numerator of which shall be the Index for the last month of the
term in which you died (as originally provided for herein) and
(B) the denominator of which shall be the Index for the month
immediately preceding the month in which that term commenced;
and (ii) pay your estate any reimbursable expenses that had
been incurred by you and for which you had not been reimbursed
as provided herein as of the date of your death.
(b) This agreement shall be terminated, at the
option of the Company, if you are unable to perform your duties
hereunder for 90 days (whether or not continuous) during any
period of 365 consecutive days by reason of physical or mental
15
disability. The disability shall be deemed to have occurred on
the 90th day of your inability to perform your duties due to
disability, and notice of termination on account of such
disability shall be given (if at all) by the Company within 30
days after that date. Notwithstanding the foregoing, the
Company shall: (i) continue to pay to you your Base Salary as
then in effect pursuant to this agreement (less any amounts
paid to you pursuant to any disability policy provided by the
Company), until six months after such disability; provided,
however, that to the extent those Base Salary payments continue
beyond the original expiration date of the term of this
agreement during which you shall have been determined to be
disabled, the amount of each of the payments to be made after
that original expiration date shall be adjusted by multiplying
the same by a fraction (A) the numerator of which shall be the
Index for the last month of the term during which you were
determined to be disabled (as originally provided for herein)
and (B) the denominator of which shall be the Index for the
month immediately preceding the month in which that term
commenced; and (ii) pay you any reimbursable expenses that had
been incurred by you and had not been reimbursed as provided
herein as of the date of termination due to such disability.
Disability as used in this paragraph shall mean any single or
series of related physical or mental conditions, illnesses or
diseases which, in the opinion of a competent and mutually
selected medical specialist in the locale of your residence,
16
independent of you and the Company, prevents you (as the date
of that specialist's examination of you, which shall not take
place until the condition, illness or disease in question shall
have continued for at least 90 days) from substantially
fulfilling your duties for the Company. If the parties do not
agree on a physician mutually satisfactory to both you and the
Company within ten days after written demand by one or the
other, a physician shall be selected by the president of the
Pennsylvania Medical Association, and the physician shall,
within 30 days thereafter, make a determination as to whether
disability exists and certify the same in writing. The
services of the physician shall be paid for by the Company. No
termination for disability shall be effective unless (i) you
have first received notice in writing of the Company's
determination to have you medically examined and such
examination has taken place or (ii) you have unreasonably
delayed, or interfered or refused to cooperate with, the
examination process.
(c) This agreement shall terminate immediately
upon the Company's sending you written notice terminating your
employment hereunder for cause. "Cause", as used herein and in
the Other Agreements, shall mean: (i) your conviction of a
felony; (ii) your material breach of any obligations under this
agreement (including voluntary termination by you of this
agreement (other than at the end of the Initial Term or any
Renewal Term or by exercise of your right of termination
17
provided for in Section 1(a) hereof) without a material breach
by the Company of its obligations hereunder (an "Unexcused
Voluntary Termination"); provided, however, that anything
herein or in the Other Agreements to the contrary
notwithstanding, in the case of an Unexcused Voluntary
Termination, the Company shall not (except in connection with
any claim, litigation or judicial or administrative proceeding
that may arise therefrom or relate thereto) make any public
statement to the effect that such termination constituted a
termination for Cause, provided that the Company shall not be
restricted from making public statements describing the
consequences of such termination pursuant to this agreement and
the Other Agreements; or (iii) your gross negligence or willful
misconduct with respect to your duties or gross misfeasance of
office.
(d) Upon termination of this agreement, the
Company's obligations hereunder shall cease except as provided
in subsections (a) and (b) above and Section 5 hereof.
13. Entire Agreement; Modification; Construction.
This agreement constitutes the full and complete understanding
of the parties, and supersedes all prior agreements and
understandings, oral or written, between the parties, with
respect to the subject matter hereof. You acknowledge that you
have (a) carefully read this agreement, (b) had an opportunity
to consult with independent counsel with respect to this
agreement and (c) entered into this agreement of your own free
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will. You represent and warrant that you are not a party to,
or otherwise bound by, any employment contracts, restrictive
covenants or any other contracts preventing full performance of
your duties hereunder. Each party to this agreement
acknowledges that no representations, inducements, promises or
agreements, oral or otherwise, have been made by either party,
or anyone acting on behalf of either party, which are not
embodied or referred to herein and that, except for the
agreements referred to in Section 6 hereof, no other
agreement, statement or promise pertaining to the terms of your
employment by the Company and not contained in this agreement
shall be valid or binding. This agreement may not be modified
or amended except by an instrument in writing signed by the
party against which enforcement thereof may be sought.
14. Severability. Any term or provision of this
agreement that is held to be invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to
the extent of that invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this agreement or affecting the validity or
enforceability of any of the terms or provisions of this
agreement in any other jurisdiction.
15. Waiver of Breach. The waiver by either party of
a breach of any provision of this agreement, which waiver must
be in writing to be effective, shall not operate as or be
construed as a waiver of any subsequent breach.
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16. Notices. All notices hereunder shall be in
writing and shall be sent by messenger or by certified or
registered mail, postage prepaid, return receipt requested, if
to you, to your residence set forth above, with a copy to
Friedman & Kaplan, 150 East 52nd Street, New York, New York
10022, Attention: Gary D. Friedman, Esq., and if to the
Company, to the address set forth above with copies to Robert
Alvine, at the Company's address, and to Proskauer Rose Goetz &
Mendelsohn, 300 Park Avenue, New York, New York 10022,
Attention: Jonathan Shor, Esq., or to such other address as
either party to this agreement shall specify to the other.
17. Assignability; Binding Effect. This agreement
shall not be assignable by you without the written consent of
the Board of Directors of the Company. This agreement shall be
binding upon and inure to the benefit of you, your legal
representatives, heirs and distributees, and shall be binding
upon and inure to the benefit of the Company, its successors
and assigns.
18. Governing Law. All questions pertaining to the
validity, construction, execution and performance of this
agreement shall be construed and governed in accordance with
the laws of the State of New York, without giving effect to the
conflicts or choice of law provisions thereof.
19. Arbitration. Any disputes which arise under
this Agreement shall be settled by arbitration at New York, New
20
York or a mutually acceptable location pursuant to the rules of
the American Arbitration Association.
20. Headings. The headings in this agreement are
intended solely for convenience of reference and shall be given
no effect in the construction or interpretation of this
agreement.
21. Counterparts. This agreement may be executed in
several counterparts, each of which shall be deemed to be an
original but all of which together shall constitute one and the
same instrument.
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If this letter correctly sets forth our
understanding, please sign the duplicate original in the space
provided below and return it to the Company, whereupon this
shall constitute the employment agreement between you and the
Company effective and for the term as stated herein.
CHARTER POWER SYSTEMS, INC.
By: \s\ Robert Alvine
------------------
Chairman
Agreed as of the date
first above written:
\s\ Alfred Weber
-----------------------
Alfred Weber
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated May 30, 1989,
between Charter Power Systems, Inc., a Delaware corporation
(the "Company"), and Alfred Weber (the "Purchaser").
WHEREAS, the Company has entered into an employment
agreement, date as of May 30, 1989 (the "Employment
Agreement"), with the Purchaser, pursuant to which the
Company has engaged the Purchaser to serve as President,
upon the terms and subject to the conditions set forth
therein; and
WHEREAS, in connection with the Employment
Agreement, the Purchaser has agreed to purchase from the
Company, and the Company has agreed to sell to the Purchaser,
60,000 shares (the "Shares") of the common stock, $.01 par
value, of the Company ("Common Stock") upon the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements hereinafter set forth, the parties
hereto agree as follows:
1. Purchase of Shares. The Purchaser hereby
agrees to purchase from the Company, and the Company hereby
agrees to sell to the Purchaser, the Shares, at a purchase
price of $5.50 a share.
2. Closing of Purchase.
(a) The closing of the purchase and sale of the
Shares hereunder (the "Closing") shall be subject to the
approval of the Shares for listing on the American Stock
Exchange. The Closing shall take place on a date within five
business days following the date that the Shares have been
approved for listing on the American Stock Exchange, or on
such later date as shall be agreed upon by the parties
hereto. At the Closing, the Purchaser shall deliver to the
Company, (i) a duly executed Secured Promissory Note in the
form attached as Exhibit A hereto (the "Note"), in the amount
of $329,400.00, representing the purchase price of the Shares
less the par value thereof, and (ii) cash or a check in the
amount of the par value of the Shares plus the Company's good
faith determination of its withholding tax obligation
respecting the purchase of the Shares. Also at the Closing,
the Purchaser and the Company shall enter into a Pledge and
Security Agreement in the form attached as Exhibit B hereto.
3. Forfeiture. The Purchaser hereby agrees that
the Shares shall be subject to forfeiture under the following
terms and conditions:
(a) subject to clauses (c), (d) and (e) below,
100% of the Shares shall be forfeited to the Company if the
Purchaser's employment with the Company is terminated, other
than by the Company without "Cause" (as defined in the
2
Employment Agreement) or by the Purchaser as a result of a
material breach by the Company of the Employment Agreement,
prior to May 1, 1990;
(b) subject to clauses (c), (d) and (e) below, 50%
of the Shares shall be forfeited to the Company if the
Purchaser's employment with the Company is terminated, other
than by the Company without Cause or by the Purchaser as a
result of a material breach by the Company of the Employment
Agreement, prior to May 1, 1991;
(c) in the event such termination is the result of
the death or disability (as defined in the Employment
Agreement) of the Purchaser, the portion of the Shares
determined by multiplying the total number of Shares by a
fraction, the numerator of which is the number of complete
months during the period from May 1, 1989 through the date of
termination and the denominator of which is 24, shall no
longer be subject to forfeiture;
(d) in the event of a Business Combination (as
defined in the Employment Agreement), the forfeiture shall
cease to apply to all the Shares simultaneous with the
closing of the transaction; and
(e) in the event of a Change of Control (as
defined in the Employment Agreement) other than a Business
Combination, (i) the portion of the Shares determined as
3
provided in clause (c) above and (ii) the percentage of the
remainder of the Shares equal to the percentage of the
unvested Option (as defined in the Option Agreement, dated
the date hereof, between the Company and the Purchaser (the
"Option Agreement")) that simultaneously will vest on an
accelerated basis pursuant to clause (b) of the last
paragraph of Schedule 1 to the Option Agreement, shall no
longer be subject to forfeiture.
If and to the extent any portion of the Shares is forfeited
to the Company as aforesaid, (i) the equivalent portion of
the unpaid balance of the Note shall be deemed paid and a
notation to that effect shall be made by the Company on the
face of the Note, (ii) the Purchaser shall deliver to the
Company, within ten business days after the forfeiture, stock
certificates representing the forfeited portion of the Shares
and (iii) the Company shall deliver to the Purchaser, within
ten business after the forfeiture, cash or a check in the
amount of the par value of those Shares.
4. Purchaser's Representations, Warranties and
Covenants.
(a) Investment Intention. The Purchaser
represents and warrants that he is acquiring the Shares
solely for his own account, for investment, and not with a
view to or for sale in connection with any distribution
thereof. The Purchaser shall not, directly or indirectly,
offer, transfer, sell or otherwise dispose of any of the
4
Shares (or solicit any offers to buy, purchase or otherwise
acquire any of the Shares), except in compliance with the
Securities Act of 1933 (the "Act") and the rules and
regulations thereunder. The Purchaser further understands,
acknowledges and agrees that none of the Shares may be
transferred, sold or otherwise disposed of unless (i) the
disposition is pursuant to an effective registration
statement under the Act, (ii) the Purchaser shall have
delivered to the Company an opinion, from counsel and in form
and substance reasonably satisfactory to the Company, to the
effect that the disposition is exempt from the provisions of
Section 5 of the Act or (iii) a no-action letter from the
Securities and Exchange Commission shall have been obtained
with respect to the disposition.
(b) Legend. The certificate or certificates
representing the Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
UNLESS (A) THE DISPOSITION IS PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, (B) THE HOLDER HEREOF
SHALL HAVE DELIVERED TO THE COMPANY, AN OPINION
FROM COUNSEL AND IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE
DISPOSITION IS EXEMPT FROM THE PROVISIONS OF
SECTION 5 OF THAT ACT, OR (C) A NO-ACTION LETTER
FROM THE SECURITIES AND EXCHANGE COMMISSION SHALL
HAVE BEEN OBTAINED WITH RESPECT TO THE DISPOSITION.
THE SHARES EVIDENCED BY THIS CERTIFICATE ALSO ARE
SUBJECT TO FORFEITURE UNDER CERTAIN CIRCUMSTANCES
IN ACCORDANCE WITH THE TERMS OF A STOCK PURCHASE
AGREEMENT, DATED MAY 30, 1989, BETWEEN ALFRED
5
WEBER AND THE COMPANY, A COPY OF WHICH IS ON FILE
AT THE PRINCIPAL OFFICES OF THE COMPANY.
(c) Compliance with Rule 144. If any of the
Shares are disposed of in accordance with Rule 144 under the
Act, the Purchaser shall deliver to the Company at or prior
to the time of such disposition an executed copy of Form 144
(if required by Rule 144) and such other documentation as the
Company may reasonably require in connection with the
disposition.
(d) Section 83(b) Election. The Purchaser shall
make an election, pursuant to Section 83(b) of the Internal
Revenue Code of 1986, to include in his gross income for 1989
the excess of the total fair market value of the Shares on
the date of the Closing over $330,000.
5. Listing. The Company shall apply for the
listing on the American Stock Exchange of the Shares and the
shares of Common Stock issuable upon exercise of the Option
(subject to notice of issuance).
6. Miscellaneous.
(a) Notices. All notices and other communications
required or permitted to be given under this Agreement shall
be in writing and shall be deemed to have been given if
delivered personally or sent by certified mail, return
receipt requested, postage prepaid, to the Company at 3043
6
Walton Road, Plymouth Meeting, Pennsylvania 19462,
Attention: Robert Alvine, with a copy to Proskauer Rose
Goetz & Mendelsohn, 300 Park Avenue, New York, New York
10022, Attention: Jonathan Shor, Esq., and to the Purchaser
at the Purchaser's address contained in the Company's
records, with a copy to Friedman & Kaplan, 150 East 52nd
Street, New York, New York 10022, Attention: Gary D.
Friedman, Esq., or to such other address as either party to
this Agreement shall specify by notice to the other.
(b) Binding Effect; Benefits. This Agreement
shall be binding upon and inure to the benefit of the parties
to this Agreement and their respective successors and
permitted assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person
other than the parties to this Agreement or their respective
successors or permitted assigns any legal or equitable right,
remedy or claim under or in respect of any agreement or any
provision contained herein.
(c) Amendment. This Agreement may be amended,
modified or supplemented only by a written instrument
executed by the Purchaser and the Company.
(d) Assignability. Neither this Agreement nor
any right, remedy, obligation or liability arising hereunder
or by reason hereof shall be assignable by either the Company
7
or Purchaser without the prior written consent of the other
party.
(e) Applicable Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, without giving effect to the conflicts of
law provisions thereof.
(f) Counterparts. This Agreement may be executed
in any number of counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed
to be one and the same instrument.
(g) Entire Agreement. This Agreement constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company and the Purchaser
have executed this Agreement as of the date first above
written.
CHARTER POWER SYSTEMS, INC.
By: \s\ President
------------------
Title:
\s\ Alfred Weber
-----------------
Alfred Weber
8
EXHIBIT A to
Stock Purchase Agreement
PURCHASE
SECURED PROMISSORY NOTE
$329,400.00 June , 1989
FOR VALUE RECEIVED, ALFRED WEBER (the "Payor")
hereby promises to pay to CHARTER POWER SYSTEMS, INC., a
Delaware corporation ("the Company"), the principal sum of
Three Hundred Twenty Nine Thousand Four Hundred Dollars
($329,400.00) with interest on the outstanding principal
balance hereof until paid in full at the rate of 12.5% per
annum. Payment of principal and interest is to be made in
lawful money of the United States of America at the offices
of the Company or at such other place as the holder hereof
shall designate.
Interest hereon shall be due and payable, in
arrears, on the first business day of each month, commencing
August 1, 1989. Subject to the prepayment and acceleration
provisions hereinafter set forth, this Note shall mature and
the principal and any accrued and unpaid interest shall be
due and payable in full on April 30, 1993; provided, however,
that (i) if the employment of the Payor with the Company
shall have been terminated after October 31, 1991 and before
May 1, 1993, other than for "Cause" as defined in the
employment agreement, dated May 30, 1989, between the Payor
and the Company (a "Cause Termination"), the maturity of this
Note shall be extended until 18 months after the date of
termination of the Payor's employment with the Company; and
(ii) if the employment of the Payor with the Company shall
not have been terminated on or before April 30, 1993, the
maturity of this Note shall be extended until April 30, 1998;
provided, further, that this Note shall mature and be due and
payable 18 months after the date of termination (other than a
Cause Termination) of the Payor's employment with the
Company, which termination shall occur after April 30, 1993.
This Note is secured by the pledge by the Payor to
the Company of certain shares of common stock of the Company,
in accordance with the terms of a Pledge and Security
Agreement (the "Security Agreement") between the Payor and
the Company, dated June , 1989, and in that respect is
subject to all of the terms, provisions and conditions of the
Security Agreement.
This Note evidences a loan made by the Company to
the Payor to enable him to purchase 60,000 shares of common
stock of the Company (the "Shares). If the Payor shall sell
or transfer any of his Shares or the proceeds thereof, or any
cash (other than cash dividends), securities, or other
property at any time and from time to time receivable or
otherwise distributed in respect of or in exchange for any or
all of the Shares (collectively, the "Additional Shares"),
there shall be due and payable, immediately upon the
consummation of the sale or transfer, a payment of principal
2
hereunder in an amount equal to the product obtained by
multiplying the then outstanding principal amount of this
Note by a fraction, the numerator of which shall be the
number of Shares and Additional Shares then sold or
transferred and the denominator of which shall be the number
of Shares and Additional Shares then owned by the Payor
(before giving effect to the sale or transfer). Nothing in
this paragraph shall be deemed to permit any sale or transfer
by the Payor of any Shares by the Payor of any Shares or
Additional Shares, to the extent the same otherwise would be
prohibited by the provisions of any other agreement to which
the Payor and the Company are parties.
If: (i) the Payor fails to make any payment
hereunder within ten days after notice from the Company to
the Payor that the payment is due; or (ii) a Cause
Termination occurs; or (iii) a Default (as defined in the
Security Agreement) shall have occurred under the Security
Agreement (each of the events listed in (i), (ii) and (iii)
above being an "Event of Default" hereunder); the then
outstanding principal balance hereof shall become immediately
due and payable.
The Payor may, at any time and from time to time,
prepay in whole or part, without premium or penalty, the then
outstanding principal balance hereof.
The Payor hereby agrees to pay all reasonable
costs, fees and expenses incurred by the Company for the
3
collection of all sums due hereunder, including reasonable
attorneys' fees and court costs. The Payor hereby waives
presentment, demand, notice of dishonor, protest and all
other demands and notices in connection with this Note
(including any acceleration of the maturity hereof) and
further agrees that this Note shall be governed by the laws
of the State of New York in all respects (without giving
effect to the conflicts of law provisions thereof), including
matters of construction, validity and performance, and that
none of its terms or provisions may be waived, altered,
modified or amended except to the extent the Company may
consent thereto in writing.
IN WITNESS WHEREOF, the Payor has executed and
delivered this Note to the Company as of the date first above
written.
\s\ Alfred Weber
-----------------
ALFRED WEBER
4
EXHIBIT B to
Stock Purchase Agreement
PLEDGE AND SECURITY AGREEMENT
AGREEMENT, dated June , 1989, between ALFRED
WEBER ("Pledgor") and CHARTER POWER SYSTEMS, INC., a
Delaware corporation ("the Company").
WHEREAS, the Company has made a loan to Pledgor on
the date hereof in the amount of $329,400.00, pursuant to
the Stock Purchase Agreement, dated May 30, 1989 (the "Stock
Agreement"), between Pledgor and the Company, to enable the
Pledgor to purchase 60,000 shares (the "Purchased Shares") of
Common Stock of the Company, par value $.01 per share
("Common Stock"), and the Company in the future may make
additional loans to Pledgor to enable Pledgor to purchase
certain additional shares of Common Stock (the "Option
Shares") issuable upon the exercise of an option granted to
him pursuant to the Option Agreement dated May 30, 1989 (the
"Option Agreement"), between Pledgor and the Company
(collectively, the "Loans"); and
WHEREAS, in order to induce the Company to make the
Loans, Pledgor has agreed to grant, and does hereby grant, to
the Company, a security interest in the Purchased Shares and
all Option Shares hereafter purchased by Pledgor with the
proceeds of any of the Loans (collectively, the "Shares").
NOW THEREFORE, in consideration of the premises and
the mutual agreements hereinafter contained, the parties
hereto agree as follows:
1. Creation of Security Interest. As security for
payment in full of the Loans, Pledgor hereby pledges,
hypothecates, assigns, transfers, sets over and delivers unto
the Company as collateral security, and hereby grants to the
Company a first lien and security interest in, all of the
Shares, whether now owned or hereafter acquired, the proceeds
thereof, and all cash (other than cash dividends, except to
the extent expressly provided herein), securities or other
property at any time and from time to time receivable or
otherwise distributed in respect of or in exchange for any of
the Shares (all of such Shares, proceeds thereof, cash (other
than cash dividends, except to the extent expressly provided
herein), securities and other property hereinafter being
referred to collectively as the "Collateral"). Concurrently
with the execution of this Agreement, Pledgor is delivering
to the Company (i) all stock certificates representing the
Purchased Shares and (ii) a duly endorsed irrevocable stock
power in blank therefor. Upon the issuance of any Option
Shares purchased by Pledgor with the proceeds of any of the
Loans, Pledgor shall deliver to the Company (i) all stock
certificates representing those Option Shares and (ii) duly
endorsed irrevocable stock powers in blank therefor.
2
2. Stock Dividends and Adjustments; Voting Rights.
If, during the term of this Agreement, any stock dividend,
reclassification, stock split, readjustment, warrant, option
or right to acquire additional securities is issued with
respect to the Collateral or any part thereof, or any other
change is made in the capital structure of the Company, all
new, substituted or additional shares or securities that
Pledgor shall become entitled to receive as a result thereof
promptly shall be delivered to the Company (together with
appropriate instruments of transfer duly endorsed in blank)
and, from and after the time Pledgor shall be entitled to
receive the same, those shares and securities shall be, and
be deemed to be, part of the property pledged hereunder and
included in the term Collateral as defined herein. So long
as a Default (as hereinafter defined) shall not have occurred
and be continuing, Pledgor shall be entitled to receive all
cash dividends payable with respect to, and to exercise all
rights to vote, the securities contained in the Collateral.
Upon the occurrence and during the continuance of a Default,
the Company shall be entitled to receive all such cash
dividends and to exercise all such voting rights.
3. Representations, Warranties and Covenants.
Pledgor hereby represents, warrants and covenants that:
(a) Pledgor is and will be the sole legal and
equitable owner of the Collateral, and that Pledgor has and
3
will have the right to transfer, pledge and deliver the
Collateral to the Company hereunder;
(b) there are and will be no outstanding
liens, encumbrances, or claims in respect of the Collateral
other than the security interest created by this Agreement;
(c) Pledgor will preserve and defend all
right, title and interest of the Company in and to the
Collateral against all claims thereon; and
(d) the pledge of the Collateral made hereby
and the delivery of the Collateral in accordance herewith are
and will be effective to vest in the Company a perfected,
first priority security interest in the Shares as set forth
herein.
4. Default; Remedies. (a) A Default shall be
deemed to have occurred hereunder if:
(i) an Event of Default (as such term is
defined in the Notes evidencing the Loans (the "Notes"))
shall occur;
(ii) Pledgor sells, assigns, transfers or
otherwise disposes of, or grants a lien on or security
interest in or option or right with respect to, or otherwise
encumbers the Collateral or any part thereof or any interest
therein, unless concurrently therewith Pledgor repays the
Notes to the extent required in accordance with the terms
thereof;
4
(iii) Pledgor becomes insolvent, makes a
general assignment for the benefit of creditors, or files or
has filed against him any petition under any bankruptcy or
insolvency law or any action for the appointment of a
receiver or trustee; provided, however, that in the event of
an involuntary bankruptcy or insolvency proceeding, Pledgor
shall have 60 days from the date of filing thereof to stay such
proceeding;
(iv) any of the Collateral shall be attached
or levied upon or seized in any legal proceedings, or held by
virtue of any levy or distraint, which attachment, levy or
distraint shall not be vacated within 60 days; provided,
however, that any such attachment, levy or distraint shall
not constitute a Default so long as it is stayed; or
(v) Pledgor otherwise defaults in any
material respect in the observance or performance of any
representation or other covenant or agreement contained
herein or in any of the Notes, and that default continues for
a period of ten days after notice thereof from the Company.
(b) If a Default shall have occurred and be
continuing, the Company shall be entitled, in addition to any
other rights granted under the Notes, to exercise all of the
rights and remedies with respect to the Collateral of a
secured party under the Uniform Commercial Code or any other
applicable law, all of which rights and remedies, to the full
extent permitted by law, shall be cumulative and not
5
alternative. Pledgor agrees that 30 days shall constitute
reasonable notice of a sale or other disposition of any of
the Collateral. The remainder of the proceeds from any such
sale or other disposition, after deducting therefrom all
expenses incurred in connection therewith (including
reasonable legal fees and expenses) and after payment in full
of Pledgor's obligations to the Company under the Notes and
this Agreement, shall be paid over to Pledgor. The Company
shall not sell or otherwise dispose of a greater number of
Shares than it reasonably determines is necessary for the
payment in full of Pledgor's obligations to the Company under
the Notes and this Agreement, including all expenses incurred
in connection with such sale or other disposition. Pledgor
further agrees that a private sale of the Collateral on such
terms as the Company approves shall be deemed to be
commercially reasonable; provided, however, that the Company
is authorized in its absolute discretion to restrict the
prospective purchasers to those persons who represent and
agree to the satisfaction of the Company and its counsel that
they are purchasing the Collateral for their own account, for
investment, and not with a view to or for sale in connection
with a distribution in violation of the Securities Act of
1933 or any other applicable law or regulation.
5. Waiver of Rights or Remedies. (a) The
Company, by act, delay, omission, acceptance of partial
payment or otherwise, shall not be deemed to have waived any
6
rights or remedies hereunder or under the Notes unless the
waiver is in writing and signed by the Company, and then only
to the extent therein set forth. A waiver by the Company of
any right or remedy on any one occasion, shall not be
construed as a bar to or waiver of any such right or remedy,
or both, that the Company otherwise would have had on any
future occasion.
(b) To the full extent that Pledgor may lawfully
so agree, Pledgor agrees that it will not at any time plead,
claim or take the benefit of any moratorium or redemption law
now or hereafter enforced, in order to prevent or delay the
enforcement of this Agreement or the application of any
portion or all of the Collateral as provided by this
Agreement, and Pledgor, for himself and all who may claim
under Pledgor, as far as they now or hereafter lawfully may,
hereby waives the benefit of all such laws.
6. Authorization. The Company shall have and be
entitled to exercise all such powers hereunder as are
specifically delegated to the Company by the terms hereof,
together with such powers as are reasonable incidental
thereto. The Company may execute any of its duties hereunder
by or through designees and shall be entitled to retain
counsel and to act in reliance upon the advice of such
counsel concerning all matters pertaining to its duties
hereunder. Neither the Company, nor any director, officer or
employee of the Company, shall be liable to Pledgor for any
7
action taken or omitted to be taken by it or them hereunder
in connection herewith, except for its or their own
negligence or willful misconduct or breach of this Agreement.
The Company shall be entitled to rely on any communication,
instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person
or persons.
7. Further Assurances. Pledgor agrees that he
shall at the request of the Company execute and deliver all
such further assignments, endorsements and other documents
and take all such further action as the Company may
reasonably request in order to effect the purposes and
provisions of this Agreement and to perfect, continue, better
assure or confirm the rights of the Company in the Collateral
provided for hereunder.
8. Termination. The security interest and
assignment created and granted hereunder shall terminate only
when Pledgor has fully satisfied all of his obligations
hereunder and under the Notes, and at that time all
Collateral remaining in the possession of the Company shall
be returned to Pledgor, accompanied by appropriate stock
powers.
9. Notices. Notices or other communications to
either of the parties shall be in writing and shall be deemed
to have been duly and properly given on the date such notices
8
or other communications are (i) personally delivered with
receipt acknowledged, or (ii) received when mailed by
registered or certified mail, postage prepaid, return receipt
requested, to the addresses set forth below or to which other
address as either party to this Agreement shall specify to
the other:
To Pledgor: Alfred Weber
158 Beecher Drive
Southbury, CT 06488
-with a copy to-
Friedman & Kaplan
150 East 52nd Street
New York, New York 10022
Attention: Gary D. Friedman, Esq.
To the Company: Charter Power Systems, Inc.
3043 Walton Road
Plymouth Meeting, Pennsylvania
Attention: Robert Alvine
-with a copy to-
Proskauer Rose Goetz
& Mendelsohn
300 Park Avenue
New York, New York 10022
Attention: Jonathan Shor, Esq.
10. Miscellaneous. (a) This Agreement shall be
governed by and interpreted under the laws of the State of
New York applicable to contracts made and performed therein
without regard to the principles of conflict of laws thereof.
If any term or provision of this Agreement shall, for any
reason, be held to be illegal, invalid or unenforceable under
the laws of any governmental authority to which this
9
Agreement is subject, the term or provision shall be deemed
severed from this Agreement, and the remaining terms and
provisions shall be enforceable, to the fullest extent
permitted by law.
(b) This Agreement shall inure to the benefit of
and shall be binding upon the respective successors, assigns
and legal representatives of the parties, except that
Pledgor shall not be permitted to assign this Agreement or
any interest herein or in the Collateral, or any part
thereof, or otherwise pledge, encumber or grant any option
with respect to the Collateral, or any part thereof, or any
cash or property held by the Company as Collateral under this
Agreement, except to the extent provided herein. The Company
may assign this Agreement, any interest herein or in the
Collateral or any part thereof, to any wholly owned
affiliated entity of the Company.
(c) Captions used herein are inserted for
reference purposes only and shall not affect the
interpretation or meaning of this Agreement.
(d) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
agreement.
(e) This Agreement may not be changed, modified
or, except as provided in Section 8 hereof, terminated, in
whole or in part, except by a written instrument signed by
10
the party against whom any such change, modification or
termination is sought to be enforced.
IN WITNESS WHEREOF, Pledgor has executed this
Agreement on the date hereinabove first written.
\s\ Alfred Weber
-----------------------
Alfred Weber
AGREED TO AND ACCEPTED:
CHARTER POWER SYSTEMS, INC.
By: \s\ D. L. Nevins, Jr.
-----------------------------
Vice President Finance
11
OPTION AGREEMENT
ALFRED WEBER (the "Optionee") hereby is granted the
option (the "Option") to purchase One Hundred Ten Thousand
(110,000) fully paid and nonassessable shares of the common
stock, par value $.01 per share (the "Common Stock"), of
Charter Power Systems, Inc., a Delaware corporation (the
"Company"), upon and subject to the following terms and
conditions:
1. OPTION PRICE. The price at which shares of
Common Stock subject to the Option may be purchased is $6.04
a share.
2. DURATION OF OPTION. The Option shall expire,
and all rights to purchase shares of Common Stock pursuant
thereto shall cease, on April 30, 1994 (the "Expiration
Date").
3. VESTING OF OPTION. No portion of the Option
may be exercised until it has vested. The Option shall vest
as set forth in SCHEDULE 1 attached hereto.
4. EXERCISE OF OPTIONS. A person entitled to
exercise the Option may exercise it in whole at any time, or
in part from time to time, by delivering to the Company at
its principal office, directed to the attention of its
President, (a) written notice specifying the number of shares
of Common Stock with respect to which the Option is being
exercised, (b) payment in full of the purchase price for
those shares and (c) payment of the amount required for the
Company to satisfy its withholding tax obligation respecting
that exercise as determined by the Company's independent
accountants. Those payments shall be made in cash, by check
to the order of the Company or, in the case of a payment of
the amount described in clause (b) above (less the par value
of the relevant shares), by delivery of a Secured Promissory
Note in the form attached as Exhibit A hereto.
5. NONTRANSFERABILITY. The Option shall not be
transferable other than by will or the laws of descent and
distribution, and the Option may not be exercised by anyone
other than the Optionee, except that, if the Optionee dies or
becomes incapacitated, the Option may be exercised by the
Optionee's estate, legal representative or beneficiary, as
the case may be, subject to all other terms and conditions
contained in this Agreement.
6. TERMINATION OF EMPLOYMENT. The following
rules shall apply in the event of the termination of the
Optionee's employment with the Company:
(i) if the termination is for "Cause", as
defined in the employment agreement, dated the
date hereof, between the Optionee and the Company,
the Option immediately shall terminate;
2
(ii) if the termination is other than for
Cause (including due to death or disability), the
Option shall expire 18 months after the date of
termination, or on the applicable Expiration Date,
whichever first shall occur; and
(iii) anything contained in this Section 6 to
the contrary notwithstanding, except as provided in
Part B of SCHEDULE 1 hereto, the Option may be
exercised following termination of the Optionee's
employment only if, and to the extent that, the
Option was exercisable as of the date of
termination.
7. NO RIGHTS AS STOCKHOLDER OR TO CONTINUED
EMPLOYMENT. The Optionee shall not have any rights as a
stockholder of the Company with respect to any shares covered
by the Option prior to the date of issuance to the Optionee
of the certificate or certificates for such shares, and the
Option shall not confer upon the Optionee any right to
continuance of employment with the Company or any of its
subsidiaries or interfere in any way with the right of the
Company or of its subsidiaries to terminate the employment of
the Optionee.
8. ISSUANCE OF SHARES; RESTRICTIONS. (a)
Subject to the conditions and restrictions provided in this
Section 8, the Company shall, within 20 business days after
3
the Option has been duly exercised in whole or in part,
deliver to the person who exercised the Option one or more
certificates, registered in the name of that person, for the
number of shares of Common Stock with respect to which the
Option was exercised. The Company may place a legend on any
stock certificate issued hereunder to reflect any restrict-
ions provided for in this Section 8.
(b) Unless the issuance of the shares subject to
the Option has been registered under the Securities Act of
1933 (the "Act") (and, if the Optionee may be deemed an
"affiliate" of the Company, as defined in Rule 405 under the
Act, if the resale by the Optionee of those shares also has
been registered under the Act), or the Company (based on
advice of counsel) has determined that an exemption from
registration under the Act is available, the Company may
require prior to and as a condition of the issuance of any
shares of Common Stock, that the person exercising the Option
hereunder provide to the Company a written representation in
a form prescribed by the Company to the effect that that
person is acquiring those shares solely with a view to
investment, for that person's own account, and not with a
view to the resale or distribution of all or any part hereof,
and that such a person will not dispose of any of those
shares other than in accordance with the registration
provisions of the Act, unless the Company (based upon advice
4
of counsel) is satisfied that an exemption from such
registration is available.
(c) Anything contained herein to the contrary
notwithstanding, the Company shall not be obligated to issue
any shares of Common Stock upon the exercise of the Option
granted hereunder unless and until the Company is satisfied
that such issuance complies with all applicable provisions of
the Act and all other applicable laws or regulations by which
the Company is bound or to which the Company or those shares
are subject.
9. ADJUSTMENTS. The number of shares of Common
Stock covered by the Option and the exercise price therefore
shall be adjusted proportionately for any increase or
decrease in the number of outstanding shares of Common Stock
resulting from a stock split or other subdivision or
consolidation of shares or other capital adjustment, or the
payment of a stock dividend; PROVIDED, HOWEVER, that any
fractional shares resulting from any such adjustment shall be
eliminated. Notwithstanding the foregoing, no adjustment
shall be made upon the issuance of new shares of Common Stock
for fair consideration.
10. CONDITION. The Option is subject to the
listing on the American Stock Exchange of the shares of
Common Stock issuable upon exercise of the Option (subject to
notice of issuance).
5
11. MISCELLANEOUS. (a) NOTICES. All notices and
other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have
been given if delivered personally or sent by certified mail,
return receipt requested, postage prepaid, to the Company at
3043 Walton Road, Plymouth Meeting, Pennsylvania 19462,
Attention: Robert Alvine, with a copy to Proskauer Rose Goetz
& Mendelsohn, 300 Park Avenue, New York, New York 10022,
Attention: Jonathan Shor, Esq., and to the Optionee at the
Optionee's address contained in the Company's records, with a
copy to Friedman & Kaplan, 150 East 52nd Street, New York,
New York 10022, Attention: Gary D. Friedman, Esq., or to such
other address as either party to this Agreement shall
specify by notice to the other.
(b) BINDING EFFECT; BENEFITS. This Agreement
shall be binding upon and inure to the benefit of the parties
to this Agreement and their respective successors and
permitted assigns. Nothing in this Agreement, express or
implied, is intended or shall be construed to give any person
other than the parties to this Agreement or their respective
successors or permitted assigns any legal or equitable right,
remedy or claim under or in respect of any agreement or any
provision contained herein.
6
(c) AMENDMENT. This Agreement may be amended,
modified or supplemented only by a written instrument
executed by the Optionee and the Company.
(d) APPLICABLE LAW. This Agreement shall be
governed by and construed in accordance with the laws of the
State of New York, without giving effect to the conflicts of
law provisions thereof.
(e) COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which shall be deemed
to be an original and all of which together shall be deemed
to be one and the same instrument.
(f) ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company and the Optionee
have executed this Agreement as of the date written below.
Date of Grant: May 30, 1989
CHARTER POWER SYSTEMS, INC.
By: \s\ D. L. Nevins, Jr.
VP Finance
\s\ Alfred Weber
Alfred Weber
7
SCHEDULE 1
A. VESTING OF OPTION.
The Option shall vest: (i) to the extent of 27,500
shares, as of January 31, 1990, only if the Company's
earnings per share (the "EPS") for the fiscal year ending
January 31, 1990 equal or exceed $.90; (ii) to the extent of
an additional 27,500 shares (together with the initial 27,500
shares, the "First Portion"), as of January 31, 1990, only if
the EPS for the fiscal year ending January 31, 1990, equal or
exceed $1.05; and (iii) to the extent of the remaining 55,000
shares (the "Second Portion"), as of January 31, 1991, only
if the EPS for the fiscal year ending January 31, 1991 equal
or exceed $1.25. For this purpose, the EPS shall be as
reported in the Company's audited financial statements for
the relevant fiscal year, adjusted to exclude from the
calculation of EPS (a) any extraordinary items (as determined
by the Company's independent accountants in accordance with
generally accepted accounting principles), (b) any shares
issued or issuable pursuant to the Company's Stock Option
Plan and (c) any increase or decrease in the number of
outstanding shares resulting from a stock split or other
subdivision or consolidation of shares or other capital
adjustment, or the payment of a stock dividend.
If the employment of the Optionee with the Company
is terminated due to death or disability (as defined in the
1
employment agreement, dated the date hereof, between the
Optionee and the Company (the "Employment Agreement") after
October 31, 1989 or 1990 and the applicable EPS amount for
the fiscal year ending January 31, 1990 or 1991, as the case
may be, is met, the Optionee shall be deemed to have been
employed through the end of the relevant fiscal year for the
purpose of the vesting of the Option.
B. ALTERNATIVE VESTING.
The Option (if (i) the circumstance or transaction
described in paragraph 1 or 2(a) below occurs or is completed
on or before January 31, 1992 or (ii) the transaction
described in paragraph 2(b) below is completed on or before
January 31, 1991) or the Second Portion (if the transaction
described in paragraph 2(b) below occurs or is completed
after January 31, 1991 and on or before January 31, 1992)
shall vest on an accelerated basis to the extent provided
below:
1. If the average of the daily closing prices of
the Common Stock of the Company, as reported by the American
Stock Exchange (the "AMEX"), during any 60-day period equals
or exceeds $15.00 a share, full alternative vesting shall
occur on the last day of that 60-day period.
2. If: (a) a Business Combination (as defined in
the Employment Agreement) has occurred at a weighted average
price per share on a fully diluted basis (the "Transaction
2
Price") of not less than $11.00; or (b) a Change of Control
(as defined in the Employment Agreement) other than a
Business Combination has occurred and the average of the
daily closing prices of a share of the Common Stock of the
Company, as reported by the AMEX, during the 20 trading days
prior thereto (the "CC Price"), is not less than $11.00,
alternative vesting to the extent of the percentage specified
below shall occur upon consummation of the transaction:
Transaction Price Percentage of Unvested
or CC Price Option to Vest
$11.00 - $11.99 20%
$12.00 - $12.99 40%
$13.00 - $13.99 60%
$14.00 - $14.99 80%
$15.00 or greater 100%
PROVIDED, HOWEVER, that notwithstanding the foregoing, with
respect to the First Portion, if the Change in Control shall
occur during the period from February 1, 1990 through January
31, 1991 (it being agreed that alternative vesting shall
occur with respect to the Second Portion to the extent, if
any, hereinabove provided without regard to this proviso if
the Change in Control shall occur during that period), and
with respect to the Second Portion, if the Change in Control
shall occur during the period from February 1, 1991 through
January 31, 1992 (it being agreed that alternative vesting
shall not occur with respect to the First Portion on account
of a Change in Control that occurs during that period),
alternative vesting shall occur only if the CC Price is not
3
less than $12.00 (but the percentage of alternative vesting
if the CC Price is from $12.00 - $12.99 shall remain 40%).
4
EXHIBIT A to
Option Agreement
OPTION
SECURED PROMISSORY NOTE
$___________ [Date] [1]
FOR VALUE RECEIVED, ALFRED WEBER (the "Payor")
hereby promises to pay to CHARTER POWER SYSTEMS, INC., a
Delaware corporation ("the Company"), the principal sum of
________________________ (S________), without interest, on
____.[2] Payment of principal is to be made in lawful money of
the United States of America at the offices of the Company or
at such other place as the holder hereof shall designate.
This Note is secured by the pledge by the Payor to
the Company of certain shares of common stock of the Company,
in accordance with the terms of a Pledge and Security Agree-
ment (the "Security Agreement") between the Payor and the
Company, dated as of June ____, 1989, and in that respect is
subject to all of the terms, provisions and conditions of the
Security Agreement.
___________________
[1] Insert date of exercise of option respecting Shares
purchased with the principal amount of this Note.
[2] Insert date that is 18 months subsequent to date of this
Note.
This Note evidences a loan made by the Company to
the Payor to enable him to purchase ________[3] shares of common
stock of the Company (the "Shares"). If the Payor shall sell
or transfer any of his Shares or the proceeds thereof, or any
cash (other than cash dividends), securities, or other prop-
erty at any time and from time to time receivable or
otherwise distributed in respect of or in exchange for any or
all of the Shares (collectively, the "Additional Shares"),
there shall be due and payable, immediately upon the
consummation of the sale or transfer, a payment of principal
hereunder in an amount equal to the product obtained by
multiplying the then outstanding principal amount of this
Note by a fraction, the numerator of which shall be the
number of Shares and Additional Shares then sold or
transferred and the denominator of which shall be the number
of Shares and Additional Shares then owned by the Payor
(before giving effect to the sale or transfer). Nothing in
this paragraph shall be deemed to permit any sale or transfer
by the Payor of any Shares or Additional Shares, to the
extent the same otherwise would be prohibited by the
provisions of any other agreement to which the Payor and the
Company are parties.
If: (i) the Payor fails to make any payment here-
under within ten days after notice from the Company to the
_____________________
[3] Insert numer of Shares purchased with the principal
amount of this Note.
2
Payor that the payment is due; or (ii) the Payor's employment
with the Company is terminated for "Cause", as defined in the
employment agreement, dated as of April 4, 1989, between the
Payor and the Company; or (iii) a Default (as such term is
defined in the Security Agreement) shall have occurred under
the Security Agreement (each of the events listed in (i),
(ii) and (iii) above being an "Event of Default" hereunder);
the then outstanding principal balance hereof shall be
immediately due and payable.
The Payor may, at any time and from time to time,
prepay in whole or part, without premium or penalty, the then
outstanding principal balance hereof.
The Payor hereby agrees to pay all reasonable
costs, fees and expenses incurred by the Company for the
collection of all sums due hereunder, including reasonable
attorneys' fees and court costs. The Payor hereby waives
presentment, demand, notice of dishonor, protest and all
other demands and notices in connection with this Note
(including any acceleration of the maturity hereof) and
further agrees that this Note shall be deemed to have been
made under and shall be governed by the laws of the State of
New York in all respects (without giving effect to the
conflicts of law provisions thereof), including matters of
construction, validity and performance, and that none of its
terms or provisions may be waived, altered, modified or
3
amended except to the extent the Company may consent thereto
in writing.
IN WITNESS WHEREOF, the Payor has executed and
delivered this Note to the Company as of the date first above
written.
________________________
ALFRED WEBER
4
REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated May 30, 1989, between ALFRED
WEBER (the "Shareholder") and CHARTER POWER SYSTEMS, INC., a
Delaware corporation (the "Company").
WHEREAS, the Shareholder on the date hereof has
agreed to purchase 60,000 shares of Common Stock, $.01 par
value, of the Company ("Common Stock"), may purchase up to
5,000 additional shares of Common Stock in the open market
and has been granted the option to purchase an additional
110,000 shares of Common Stock (all such shares hereinafter
are referred to collectively as the "Shares");
WHEREAS, the Company and Robert Alvine ("Alvine")
have entered into a Registration Rights Agreement on May 26,
1988 (the "Alvine Agreement");
WHEREAS, the Company has agreed to provide the
Shareholder with certain registration rights respecting the
Shares.
NOW, THEREFORE, in consideration of the foregoing
and of the mutual covenants and agreements set forth herein,
the parties hereto agree as follows:
1. PIGGYBACK REGISTRATION. Whenever the Company
proposes to register under the Securities Act of 1933 (the
"Act") any shares of Common Stock owned by Alvine, in
accordance with the terms of the Alvine Agreement, the
Company shall give prompt written notice to the Shareholder
of its intention to effect such a registration. The Company
shall include in such registration all or any portion of the
Shares owned by the Shareholder at the time of the notice, in
the case of clause 1(a) of the Alvine Agreement, or up to 50%
of such Shares, in the case of clause 1(b) of the Alvine
Agreement, with respect to which the Company has received
written request for inclusion therein within 30 days after
the date of the Company's notice to the Shareholder (the
"Piggyback Registrations"). The Company shall pay all
Registration Expenses (as defined in Section 6 hereof).
2. NO-SALE AGREEMENT. The obligation of the Com-
pany to include Shares in the Piggyback Registrations as
provided in Section 1 hereof shall be subject to the
Company's receipt from the Shareholder of a written agreement
not to effect any public sale or distribution (other than
through the registered public offering) of equity securities
of the Company during the ten days prior to and the 90-day
period beginning on the effective date of that registration
or, if sooner, until all Shares and other securities included
in that registration have been sold.
3. EFFECTING THE REGISTRATION. Whenever the
Shareholder requests that any Shares be registered pursuant
to the provisions of this Agreement, the Company shall use
its best efforts to effect the registration and the sale of
those Shares in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall,
as expeditiously as possible:
(a) prepare and file with the Securities and
Exchange Commission (subject to its receipt from the Share-
holder of the written information specified in Section 7(b)
hereof) a registration statement with respect to those
Shares, which registration statement shall state that the
Shareholder may sell those Shares either under that
registration statement or (to the extent available to the
Shareholder) pursuant to Rule 144 (or any similar rule then
in effect), and shall use its best efforts to cause such
registration statement to become effective;
(b) prepare and file with the Securities and
Exchange Commission (subject to its receipt from the Share-
holder of the written information specified in Section 7(b)
hereof) such amendments and supplements to that registration
statement and the prospectus used in connection therewith as
may be necessary to keep that registration statement
effective for a period of not less than six months and comply
with the provisions of the Act with respect to the
disposition of all securities covered by that registration
statement during that six-month period in accordance with the
intended method of disposition by the Shareholder set forth
in that registration statement;
(c) provide to the Shareholder such number of
copies of that registration statement, each amendment and
supplement thereto, the prospectus included in such
registration statement (including each preliminary
prospectus) and such other documents as the Shareholder
reasonably may request in order to facilitate the disposition
of the Shares owned by the Shareholder included in that
registration statement;
(d) use its best efforts to register or
qualify those Shares under the securities or blue-sky laws of
such jurisdictions as the Shareholder reasonably requests and
do any and all other acts and things that may be reasonably
necessary or advisable to enable the Shareholder to
consummate the disposition in those jurisdictions of the
Shares owned by the Shareholder included in that registration
statement (PROVIDED, HOWEVER, that the Company shall not be
required, in order to complete that registration or
qualification, to (i) qualify generally to do business in any
2
such jurisdiction where it otherwise would not be required to
qualify but for this subparagraph, (ii) subject itself to
taxation in any such jurisdiction, (iii) consent to general
service or process in any such jurisdiction (it being agreed
that the Company shall be obligated, to the extent required
in any applicable jurisdiction, to consent to limited service
of process with respect to matters relating to the offering
being so registered or qualified), or (iv) otherwise subject
itself or any of its affiliates to unreasonable expense or
restrictions);
(e) notify the Shareholder, at any time when
a prospectus relating thereto is required to be delivered
under the Act, of the happening of any event or the discovery
of any information, as a result of which the prospectus
included in that registration statement contains any
statement which, at the time and in light of the
circumstances under which it was made, is false or misleading
with respect to any material fact or omits to state a
material fact required to be stated therein or necessary in
order to make the statement therein not false or misleading,
and, at the request of the Shareholder, the Company shall
prepare a supplement or amendment to that prospectus so that,
as thereafter delivered to the purchasers of those Shares,
that prospectus will not contain any statement which, at the
time and in light of the circumstances under which it was
made, is false or misleading with respect to any material
fact or omits to state a material fact required to be stated
therein or necessary in order to make the statements therein
not false or misleading;
(f) enter into such customary agreements (in-
cluding an underwriting agreement in customary form and on
terms reasonably agreeable to it) and take all such other ac-
tions as the holders of a majority of the securities covered
by the registration statement or the underwriters, if any,
reasonably request in order to expedite or facilitate the
disposition of those securities; and
(g) make available for inspection by the
Shareholder, any underwriter participating in any disposition
pursuant to the registration statement, and any attorney, ac-
countant or other agent retained by the Shareholder or that
underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause
the Company's officers, directors and employees to supply all
information reasonably requested by the Shareholder or that
underwriter, attorney, accountant or agent in connection with
that registration statement.
Notwithstanding anything contained in this Section 3 to the
contrary, the Company shall not be required to file any
3
registration statement pursuant to Section 1 hereof; (i)
until it has filed its Form 10-Q (or its then equivalent) for
its most recently completed fiscal quarter (unless the
Company meets the eligibility requirements for the use of a
registration statement on Form S-2) and its Form 10-K for its
most recently completed fiscal year; or (ii) during any
period of time when (A) the Company is contemplating an
underwritten public offering of any of its securities within
three months and, in the judgement of the managing or
principal underwriter thereof or of the Company, that filing
would have an adverse effect on the contemplated offering,
(B) the Company is in possession of material nonpublic
information (notice of which shall have been given by the
Company to the Shareholder) that it deems in its legitimate
business interest not to disclose in a registration
statement or (C) the Company is engaged in any program for
the purchase of shares of its Common Stock; PROVIDE, HOW-
EVER, that the aggregate of the periods in this clause (ii)
shall not exceed 120 days during the 18-month period provided
in Section 1(a) hereof).
4. OPINION OF COUNSEL AND LETTER FROM
ACCOUNTANTS. If and whenever the Company is required by the
provisions of this Agreement to use its best efforts to
effect the registration of Shares under the Act, the Company
shall provide, at the request of the Shareholder, on the date
that those Shares are delivered to the underwriters for sale
pursuant to that registration or, if those Shares are not
being sold through underwriters, on the date the registration
statement with respect to those Shares becomes effective: (a)
an opinion, dated such date, of the independent counsel
representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to
the Shareholder, to the effect that (i) the registration
statement, the related prospectus and each amendment or
supplement thereto, comply as to form in all material
respects with the requirements of the Act and the applicable
rules and regulations of the Securities and Exchange
Commission thereunder (except that such counsel need express
no opinion as to the financial statements and schedules and
other financial and statistical data contained therein), (ii)
while such counsel is not passing upon and does not assume
any responsibility for the accuracy, completeness or fairness
of the statements contained in the registration statement and
the prospectus (except for the matters referred to in clause
(iii) below), such counsel has no reason to believe either
that the registration statement or the prospectus (and any
amendment or supplement thereto), at the time that
registration statement became effective (or in the case of an
amendment or supplement, at the time it was filed), and with
respect to the prospectus, on the date of such prospectus,
contains any statement which, at the time and in light of the
4
circumstances under which it was made, is false or misleading
with respect to any material fact or omits to state a
material fact required to be stated therein or necessary in
order to make the statements therein not false or misleading
(except that such counsel need express no opinion as to the
financial statements and schedules and other financial and
statistical data, or the information provided by the
Shareholder pursuant to Section 7(b) hereof, contained
therein), and (iii) all of the Shares included in the
registration statement have been duly authorized and validly
issued, and are fully paid and nonassessable; and (b) a
letter, dated that date, from the independent certified
public accountants of the Company, addressed to the under-
writers, if any, and to the Shareholder, if he would be
deemed an affiliate of the Company as defined in Rule 405
under the Act, stating (i) that they are independent
certified public accountants within the meaning of the Act
and that in the opinion of such accountants, the financial
statements and schedules of the Company included in the
registration statement or the prospectus, or any amendment or
supplement thereto, comply as to form in all material
respects with the applicable accounting requirements of the
Act, and (ii) such other financial matters (including
information as to the period ending not more than five
business days prior to the date of such letter) with respect
to the registration statement as the underwriters, if any, or
the Shareholder, if he would qualify as an underwriter, may
reasonably request; PROVIDED, HOWEVER, that the Company shall
not be considered to be in breach of this Section 4 if its
independent certified public accountants or counsel shall
have refused to deliver all or any part of the letter or
opinion specified in this Section 4 without qualification or
limitation (other than standard qualifications and
limitations) not specified above, if the Company shall have
requested such accountants or counsel to provide the same and
shall have cooperated in all reasonable respects, to the
extent requested by such accountants or counsel, in
providing them with information required for the preparation
of that letter or opinion.
5. REVIEW BY THE SHAREHOLDER. No less than five
business days prior to the filing of a registration statement
or prospectus, or any amendment or supplement thereto, the
Company shall provide the Shareholder with a substantially
final copy of such proposed registration statement, pros-
pectus, amendment or supplement. If, prior to that filing,
the Company shall receive written notice from the Shareholder
to the effect that the registration statement, prospectus,
amendment or supplement contains any statement relating to
the Shareholder which is false or misleading or omits to
state a material fact, then the Company shall not file that
registration statement, prospectus, amendment or supplement
5
without the prior written consent of the Shareholder, which
consent shall not be unreasonably withheld.
6. EXPENSES. All expenses incident to the Com-
pany's performance of or compliance with the registration ob-
ligations set forth in this Agreement, including all
registration and filing fees, expenses of compliance with
securities or blue-sky laws, printing expenses, messenger and
delivery expenses, and fees and disbursements of counsel for
the Company (but not counsel for the Shareholder) and all
independent certified public accountants, underwriters
(excluding discounts and commissions) and other persons
retained by the company (all such expenses being herein
called "Registration Expenses"), shall be borne by the
Company.
7. INDEMNIFICATION. (a) The Company shall indem-
nify, to the extent permitted by law, the Shareholder and any
underwriter (and any controlling person thereof) acting on
his behalf, against all losses, claims, damages, liabilities
and expenses (including reasonable attorneys' fees and dis-
bursements) resulting from any untrue or alleged untrue
statement of material fact contained in any registration
statement, prospectus or preliminary prospectus, or any
amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
not misleading, except insofar as the same are caused by or
contained in any information provided in writing to the
Company by the Shareholder expressly for use therein or by
the Shareholder's or such underwriters' failure to deliver a
copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has
provided the Shareholder or such underwriter with a
sufficient number of copies of the same.
(b) In connection with any registration
statement or amendment thereto in which the Shareholder is
participating pursuant to the provisions of this Agreement,
the Shareholder shall provide the Company in writing with
such information and affidavits as the Company reasonably
shall request for use in connection with any such
registration statement or amendment and, to the extent
permitted by law, shall indemnify the Company, its directors
and officers, each person who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act of 1934 (the "Exchange Act") and any underwriter
(and any controlling person thereof) acting on the Company's
behalf against any losses, claims, damages, liabilities and
expenses (including reasonable attorneys' fees and
disbursements) resulting from any untrue or alleged untrue
statement of material fact or any omission or alleged
6
omission of a material fact required to be stated in the
registration statement or any amendment thereof or supplement
thereto or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement
or omission is contained in (or should have been contained
in, but was omitted from) any information or affidavit so
provided in writing by the Shareholder.
(c) Any person entitled to indemnification
hereunder shall (i) give prompt notice to the indemnifying
party of any claim with respect to which the indemnified
party seeks indemnification and (ii) unless in the
indemnified party's reasonable judgement a conflict of
interest between the indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying
party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such
defense is assumed, the indemnifying party shall be entitled
in its sole discretion to settle such claim at no cost to the
indemnified party. An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim shall not
be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable
judgement of any indemnified party a conflict of interest may
exist between such indemnified party and any other
indemnified party with respect to such claim.
Notwithstanding the foregoing, any indemnified party shall
have the right, in any action the defense of which has been
assumed by the indemnifying party, to employ separate counsel
and to participate in the defense of such action, but the
fees and expenses of such counsel (except those, if any,
incurred before the defense was assumed by the indemnifying
party) shall be the responsibility of the indemnified party.
8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
The Shareholder may not participate in any underwritten
registration pursuant to the provisions of this Agreement
unless he (i) agrees to sell his Shares on the basis provided
in any underwriting arrangements approved by the person
entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other
documents required under the terms of such underwriting
arrangements.
9. SELECTION OF UNDERWRITERS. If any registration
pursuant hereto is an underwritten offering, the Company will
have the right to reasonably approve the investment banker(s)
and manager(s) selected by the Shareholder to administer the
offering.
7
10. COVENANTS OF THE COMPANY. The Company shall
use its best efforts to file in a timely manner all reports
required to be filed by it pursuant to the Exchange Act and,
upon request of the Shareholder, shall provide the
Shareholder with such information as may be necessary to
enable the Shareholder to effect routine sales pursuant to
Rule 144 under the Act.
11. MISCELLANEOUS. (a) NOTICES. All notices and
other communications required or permitted to be given under
this Agreement shall be in writing and shall be deemed to
have been given if delivered by hand, sent by telex,
telecopy, cable, same day or overnight courier, or mailed
(registered or certified mail, return receipt requested) to
the Company at 3043 Walton Road, Plymouth Meeting,
Pennsylvania 19462, Attention: Robert Alvine, with a copy to
Proskauer Rose Goetz & Mendelsohn, 300 Park Avenue, New York,
New York 10022, Attention: Jonathan Shor, Esq., and to the
Shareholder at his address contained in the stock record book
of the Company, with a copy to Friedman & Kaplan, 150 East
52nd Street, New York, New York 10022, Attention: Gary D.
Friedman, Esq., or to such other address as a party to this
Agreement shall specify by notice to the other.
(b) BINDING EFFECT; BENEFITS. This Agreement
shall be binding upon and inure to the benefit of the parties
to this Agreement, and the successors and assigns of the Com-
pany, on the one hand, and any other person which acquires
any Shares from the Shareholder in a transaction that is
exempt from the registration and prospectus delivery
requirements of the Act and has given written notice to the
Company of its acquisition of these Shares, on the other
hand. Nothing in this Agreement, expressed or implied, is
intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect
of any agreement or any provision contained herein. Except
as provided in this subsection (b), neither this Agreement
nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by the
Shareholder without the prior written consent of the Company.
(c) WAIVER, AMENDMENT.
(i) WAIVER. Any party hereto may by
written notice to the others (a) extend the time for the
performance of any of the obligations or other actions of any
other party to it under this Agreement, (b) waive complaince
with any of the conditions or covenants of any other party to
it contained in this Agreement, and (c) waive or modify
performance of any of the obligations of any other party to
it under this Agreement. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement,
8
including, without limitation, any investigation by or on
behalf of any party, shall be deemed to constitute a waiver
by the party taking such action of compliance with any
representations, warranties, covenants or agreements
contained herein. The waiver by any party hereto of a breach
of any provision of the Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach
and no failure by any party to exercise any right or
privilege hereunder shall be deemed a waiver of such party's
rights or privileges hereunder or shall be deemed a waiver of
such party's rights to exercise the same at any subsequent
time or times hereunder.
(ii) AMENDMENT. This Agreement may be
amended, modified or supplemented only by a written
instrument executed by the Shareholder and the Company.
(d) APPLICABLE LAW. This Agreement shall be
governed as to its validity, interpretation and effect and
constured in accordance with the laws of the State of New
York, regardless of the law that might be applied under the
principles of conflicts of law.
(e) COUNTERPARTS. This Agreement and any
amendments, waivers, consents or supplements hereto may be
executed in any number of counterparts, each of which when so
executed shall be deemed to be an original, but all of which
counterparts when taken together shall constitute one and the
same instrument.
(f) ENTIRE AGREEMENT. This Agreement
constitututes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof.
(g) ADJUSTMENTS AFFECTING SECURITIES. The
term "Shares" as used herein shall include all additional
equity securities issued with respect thereto pursuant to any
subsequent stock split, stock dividend, recapitalization,
merger, consolidation or other reorganization affecting the
number of outstanding shares of Common Stock.
(h) SEVERABILITY. If any provision of this
Agreement is unenforceable for any reason, the remaining pro-
visions hereof shall not be effected thereby and shall never-
theless remain in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this
Agreement on the date first written above.
CHARTER POWER SYSTEMS, INC.
By: \s\ D. L. Nevins, Jr.
Vice President - Finance
\s\ Alfred Weber
ALFRED WEBER
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