10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2009

Commission file no: 1-9389

C&D TECHNOLOGIES, INC.

Delaware	13-3314599
(State of incorporation)	(IRS employer identification no.)

1400 Union Meeting Road

Blue Bell, PA 19422

(Address of principal executive offices)

Telephone Number: (215) 619-2700

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	¨	Accelerated Filer	x
Non-Accelerated Filer	¨  (Do not check if a smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

At October 31, 2009, 26,302,775 shares of common stock, $0.01 par value, of the registrant were outstanding.

C&D TECHNOLOGIES, INC.

AND SUBSIDIARIES

FORM 10-Q

INDEX

Part I	FINANCIAL INFORMATION
Item 1	Financial Statements (Unaudited)
	Consolidated Balance Sheets – October 31, 2009 and January 31, 2009	3
	Consolidated Statements of Operations – Three and Nine Months Ended October 31, 2009 and 2008	5
	Consolidated Statements of Cash Flows – Nine Months Ended October 31, 2009 and 2008	6
	Consolidated Statements of Comprehensive Income (Loss) – Three and Nine Months Ended October 31, 2009 and 2008	7
	Notes to Consolidated Financial Statements	8
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3	Quantitative and Qualitative Disclosures about Market Risk	31
Item 4	Controls and Procedures	31
Part II	OTHER INFORMATION
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 6	Exhibits	34
SIGNATURES		35
EXHIBIT INDEX		36

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except par value)

(UNAUDITED)

	October 31, 2009		January 31, 2009¹
ASSETS
Current assets:
Cash and cash equivalents	$	1,920	$	3,121
Restricted cash		329		906
Accounts receivable, less allowance for doubtful accounts of $864 and $775		57,678		55,852
Inventories		71,217		61,128
Prepaid taxes		774		927
Other current assets		2,103		1,110
Assets held for sale		500		500
Total current assets		134,521		123,544
Property, plant and equipment, net		87,657		85,055
Deferred income taxes		626		626
Intangible and other assets, net		13,822		14,729
Goodwill		59,964		59,961
TOTAL ASSETS	$	296,590	$	283,915
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term debt	$	8,819	$	5,881
Accounts payable		45,430		32,396
Accrued liabilities		15,737		13,018
Deferred income taxes		1,492		1,492
Other current liabilities		3,895		8,267
Total current liabilities		75,373		61,054
Deferred income taxes		12,504		10,972
Long-term debt		117,456		107,637
Other liabilities		39,403		39,349
Total liabilities		244,736		219,012

¹ Certain items have been adjusted on these statements to reflect changes as required to present retroactive adoption of accounting standards as discussed in Note 1.

The accompanying notes are an integral part of these statements.

3

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (continued)

(Dollars in thousands, except par value)

(UNAUDITED)

	October 31, 2009			January 31, 2009¹
Commitments and contingencies (see Note 9)
Stockholders’ equity:
Common stock, $.01 par value, 75,000,000 shares authorized; 29,228,213 and 29,162,101 shares issued and 26,302,775 and 26,266,755 outstanding at October 31, 2009 and January 31, 2009, respectively		292			292
Additional paid-in capital		96,697			95,724
Treasury stock, at cost, 2,925,438 and 2,895,346 shares, respectively		(40,091	)		(40,035	)
Accumulated other comprehensive loss		(40,574	)		(45,733	)
Retained earnings		24,390			43,204
Total stockholders’ equity attributable to C&D Technologies, Inc.		40,714			53,452
Noncontrolling interest		11,140			11,451
Total stockholders’ equity		51,854			64,903
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	296,590		$	283,915

¹ Certain items have been adjusted on these statements to reflect changes as required to present retroactive adoption of accounting standards as discussed in Note 1.

The accompanying notes are an integral part of these statements.

4

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands, except per share data)

(UNAUDITED)

	Three months ended October 31,						Nine months ended October 31,
	2009			2008¹			2009			2008¹
NET SALES	$	91,210		$	93,822		$	247,309		$	280,083
COST OF SALES		78,200			77,645			218,951			236,767
GROSS PROFIT		13,010			16,177			28,358			43,316
OPERATING EXPENSES:
Selling, general and administrative expenses		11,457			10,178			30,810			30,198
Research and development expenses		2,108			1,657			5,785			5,051
OPERATING (LOSS) INCOME		(555	)		4,342			(8,237	)		8,067
Interest expense, net		3,069			2,869			8,909			8,843
Other (income) expense, net		(23	)		1,208			(57	)		910
(LOSS) INCOME BEFORE INCOME TAXES		(3,601	)		265			(17,089	)		(1,686	)
Income tax provision (benefit)		(120	)		490			2,052			502
NET LOSS		(3,481	)		(225	)		(19,141	)		(2,188	)
Net loss attributable to noncontrolling interests		(41	)		(79	)		(327	)		(484	)
NET LOSS ATTRIBUTABLE TO C&D TECHNOLOGIES, INC.	$	(3,440	)	$	(146	)	$	(18,814	)	$	(1,704	)
Loss per share attributible to C&D Technologies, Inc.:
Basic:	$	(0.13	)	$	(0.01	)	$	(0.72	)	$	(0.07	)
Diluted:	$	(0.13	)	$	(0.02	)	$	(0.72	)	$	(0.08	)

¹ Certain items have been adjusted on these statements to reflect changes as required to present retroactive adoption of accounting standards and restatement of prior year three and nine month information as discussed in Note 1.

The accompanying notes are an integral part of these statements.

5

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(UNAUDITED)

	Nine months ended October 31,
	2009			2008¹
Cash flows from operating activities:
Net loss	$	(19,141	)	$	(2,188	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Share-based compensation		949			704
Depreciation and amortization		8,694			8,468
Amortization of debt acquisition and discount costs		3,600			3,443
Annual retainer to Board of Directors paid by the issuance of common stock		24			190
Deferred income taxes		1,535			(17	)
Changes in assets and liabilities:
Accounts receivable		(856	)		(3,160	)
Inventories		(9,631	)		16,300
Other current assets		(780	)		(668	)
Other long-term assets		(112	)		82
Accounts payable		11,536			(11,126	)
Accrued liabilities		2,387			463
Book overdraft		1,205			—
Income taxes payable		491			(697	)
Other current liabilities		(2,437	)		(1,231	)
Other liabilities		2,057			(518	)
Other, net		1,378			3,248
Net cash provided by continuing operating activities		899			13,293
Net cash used in discontinued operating activities		(1,656	)		(3,790	)
Net cash (used in) provided by operating activities		(757	)		9,503
Cash flows from investing activities:
Acquisition of property, plant and equipment		(10,302	)		(12,017	)
Proceeds from disposal of property, plant and equipment		18			484
Change in restricted cash, net		577			2,283
Net cash used in investing activities		(9,707	)		(9,250	)
Cash flows from financing activities:
Borrowings on line of credit facility		82,750			62,223
Repayments on line of credit facility		(76,546	)		(62,223	)
Repayment of debt		(83	)		—
Proceeds from new borrowings		3,072			—
Proceeds from the exercise of stock options		—			247
Purchase of treasury stock		(56	)		(115	)
Other		—			54
Net cash provided by financing activities		9,137			186
Effect of exchange rate changes on cash and cash equivalents		126			(92	)
(Decrease) increase in cash and cash equivalents		(1,201	)		347
Cash and cash equivalents, beginning of period		3,121			6,536
Cash and cash equivalents, end of period	$	1,920		$	6,883

¹ Certain items have been adjusted on these statements to reflect changes as required to present retroactive adoption of accounting standards and restatement of prior year three and nine month information as discussed in Note 1.

The accompanying notes are an integral part of these statements.

6

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in thousands, except per share data)

(UNAUDITED)

	Three months ended October 31,				Nine months ended October 31,
	2009		2008¹		2009		2008¹
NET LOSS	$(3,481)		$ (225)		$(19,141)			$(2,188)
Other comprehensive (loss) income, net of tax:
Net unrealized gain (loss) on derivative instruments	1,009		(395	)	4,103			1,402
Adjustment to recognize pension liability and net periodic pension cost	269		83		808			249
Foreign currency translation adjustments	48		(1,074	)	264			824
Total comprehensive (loss) income	(2,155	)	(1,611	)	(13,966	)		287
Comprehensive loss (income) attributable to noncontrolling interests	34		95		311			(106	)
Total comprehensive (loss) income attributable to C&D Technologies, Inc.	$(2,121)		$(1,516)		$(13,655)		$	181

¹ Certain items have been adjusted on these statements to reflect changes as required to present retroactive adoption of accounting standards and restatement of prior year three and nine month information as discussed in Note 1.

The accompanying notes are an integral part of these statements.

7

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying interim unaudited consolidated financial statements of C&D Technologies, Inc. (the “Company” or “C&D”) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all the information and notes required for complete financial statements. In the opinion of management, the interim unaudited consolidated financial statements include all adjustments considered necessary for the fair statements of the financial position, results of operations and cash flows for the interim periods presented. Subsequent events have been evaluated through December 8, 2009, the date of issuance of the Company’s Condensed Consolidated Financial Statements. The financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2009 Annual Report on Form 10-K dated April 16, 2009.

Certain prior year amounts have been adjusted on the interim consolidated financial statements to reflect the Company’s adoption of the authoritative guidance issued by the Financial Accounting Standard Board (“FASB”) for non-controlling interests at the beginning of its 2010 fiscal year. Non-controlling interests in partially owned consolidated subsidiaries are classified in the consolidated balance sheet as a separate component of consolidated shareholders’ equity and net earnings attributable to the controlling and non-controlling interests are included on the face of the consolidated statements of operations. See Note 6 for additional information. In addition, certain amounts previously reported for the three and nine months ended October 31, 2008 have been restated. The restatement corrected an accounting error related to unreconciled differences in certain inventory clearing accounts which were identified by management during the Company’s year-end closing process. See Note 16 for additional information on the accounts affected by this restatement. Additionally, the Company adopted the authoritative guidance issued by the FASB for accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement). See Notes 5 and 16 for additional information.

2. STOCK-BASED COMPENSATION

The Company granted 0 and 351,076 stock option awards during the three and nine months ended October 31, 2009, and 17,500 and 390,029 during the three and nine months ended October 31, 2008, respectively. The Company recorded $155 and $529, of stock compensation expense related to stock option awards in its unaudited consolidated statement of operations for the three and nine months ended October 31, 2009, and $208 and $447 during the three and nine months ended October 31, 2008, respectively. The impact on basic and diluted loss per share for the three months ended October 31, 2009 and 2008 was $0.01. The impact on basic and diluted loss per share for the nine months ended October 31, 2009 and 2008 was $0.02.

The Company granted 19,098 and 368,688 restricted stock awards and 0 and 164,758 performance shares to selected executives and other key employees under the Company’s 2007 Stock Incentive Plan during the three and nine months ended October 31, 2009, respectively. The Company also granted 0 restricted and performance shares for the three months ended October 31, 2008 and 103,008 restricted stock awards and 90,750 performance shares to selected executives and other key employees during the nine months ended October 31, 2008. The restricted stock awards vest ratably over a period of one to four years and the expense is recognized over the related vesting period. The Company recorded $177 and $420, of compensation related to restricted stock awards in its unaudited consolidated statement of operations for the three and nine months ended October 31, 2009, respectively, and $118 and $257 during the three and nine months ended October 31, 2008, respectively. The performance shares vest at the end of the performance period upon the achievement of pre-established financial objectives. No compensation expense has been recorded for the performance related awards since the Company does not believe that the performance criteria established will be met.

8

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

The following table summarizes information about the stock options outstanding at October 31, 2009:

	OPTIONS OUTSTANDING				OPTIONS EXERCISABLE
Range of Exercise Prices	Number Outstanding	Weighted- Average Remaining Contractual Life	Weighted- Average Exercise Price		Number Exercisable	Weighted- Average Contractual Life	Weighted- Average Exercise Price
$1.30 - $1.53	301,076	7.3 Years	$	1.30	0	7.3 Years	$	1.30
$2.10 - $2.10	55,000	7.5 Years	$	2.10	0	7.5 Years	$	2.10
$4.25 - $6.30	634,000	6.1 Years	$	5.55	85,334	7.0 Years	$	6.07
$6.81 - $9.12	473,668	6.2 Years	$	7.66	458,668	6.2 Years	$	7.65
$9.80 - $14.28	111,556	5.2 Years	$	11.00	111,556	5.2 Years	$	11.00
$14.94 - $22.31	306,394	2.9 years	$	19.18	306,394	2.9 Years	$	19.18
$26.76 - $35.00	92,420	1.5 Years	$	31.64	92,420	1.5 Years	$	31.64
$49.44 - $55.94	30,800	0.7 Years	$	55.11	30,800	0.7 Years	$	55.11
	2,004,914	5.5 Years	$	9.67	1,085,172	4.7 Years	$	14.52

The estimated fair value of the options granted was calculated using the Black Scholes Merton option pricing model (“Black Scholes”). The Black Scholes model incorporates assumptions to value stock-based awards. The risk-free rate of interest for periods within the estimated life of the option is based on U.S. Government Securities Treasury Constant Maturities. Expected volatility is based on the historical volatility of the Company’s stock. The Company uses the shortcut method to determine the expected life assumption.

There were no stock options granted during the three months ended October 31, 2009. The fair value of stock options granted during the nine months ended October 31, 2009 and three and nine months ended October 31, 2008 was estimated on the grant date using the Black-Scholes option pricing model with the following average assumptions.

	Three months ended October 31,		Nine months ended October 31,
	2009	2008	2009	2008
Risk-free interest rate	N/A	2.95%-3.28%	2.02%-2.19%	2.58%-3.32%
Dividend yield	N/A	0.00%	0.00%	0.00%
Volatility factor	N/A	51.39%-52.34%	70.09%-74.88%	50.91%-52.92%
Expected lives	N/A	5.5 Years	5.25 - 5.5 Years	4.5 - 5.5 Years

3. NEW ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Guidance

On August 1, 2009, the Company adopted new accounting guidance regarding the FASB Accounting Standards Codification (“ASC”). Upon adoption, the ASC became the source of authoritative generally accepted accounting principles in the United States, and supersedes all then-existing non-SEC accounting and reporting standards. All other accounting literature not included in the ASC became non-authoritative. The adoption did not have a significant impact on the Company’s financial statements.

At the beginning of fiscal year 2010, the Company adopted new accounting guidance issued by FASB that changed the accounting and reporting for non-controlling interests. The change requires all entities to report non-controlling interests in subsidiaries as a component in equity in the consolidated financial statements. In addition, the new guidance eliminates the diversity that existed in accounting for transactions between an entity and non-controlling interests by requiring they be treated as equity transactions. The provisions are applied prospectively except for the presentation and disclosure requirements that have been applied retrospectively. The adoption principally impacted presentation of the Company’s financial statements.

9

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

At the beginning of fiscal year 2010, the Company adopted new accounting guidance regarding disclosures about derivative instruments and hedging activities which improves financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance and cash flows. The additional disclosures are provided in Note 11. The adoption did not have a significant effect on the Company’s financial statements.

At the beginning of fiscal year 2010, the Company adopted new accounting guidance regarding the accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlements) (“ASC 470-20”) which changed the accounting treatment for convertible securities which the issuer may settle fully or partially in cash. Under the standard, cash settled convertible securities are separated into their debt and equity components. The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar debt instrument without the conversion feature, and the difference between the proceeds for the convertible debt and the amount reflected as a debt liability is recorded as additional paid-in capital. As a result, the debt is recorded at a discount reflecting its below market coupon interest rate. The debt is subsequently accreted to its par value over its expected life, with the rate of interest that reflects the market rate at issuance reflected on the income statement. This change in methodology affected the calculations of net income and earnings per share. Additional disclosures are provided in Note 5. The adoption affected the carrying value and future interest expense on the Company’s $75,000 Convertible Senior Notes 2005, due in 2025, only, as the Company’s Convertible Senior Notes 2006, due in 2026 do not contain a cash conversion feature at the election of the Company.

As of May 1, 2009, the Company adopted new accounting guidance regarding interim disclosures about fair value of financial instruments that required additional disclosures about the fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. The guidance does not require disclosures for earlier periods presented for comparative purposes at initial adoption, and, in periods after initial adoption, comparative disclosures are only required for periods ending after initial adoption. The adoption impacted the disclosures in the Company’s financial statements. See Note 10 for the additional disclosures.

Recently Issued Accounting Guidance Not Yet Adopted

In December 2008, the FASB issued authoritative guidance on employers’ disclosures about pensions and other postretirement benefits. Under the new guidance an employer’s disclosures about plan assets of a defined benefit pension or other postretirement plan is expanded and is effective for financial statements issued for fiscal years ending after December 15, 2009. The Company is currently evaluating the impact of adoption of this guidance on the Company’s financial statements.

In June 2009, the FASB issued authoritative guidance on the accounting for transfers of financial assets. The new guidance seeks to improve financial reporting by providing a short-term solution to address inconsistencies in practice relating to the existing concepts, such as eliminating the exceptions for qualifying special-purpose entities from the consolidation guidance. The guidance is effective for annual financial periods beginning after November 15, 2009, and interim periods within that annual period, and thereafter, and shall be applied prospectively. Early adoption is prohibited. The Company is in the process of evaluating the impact of adoption of this guidance, although it does not expect that adoption will have a significant impact on its financial statements.

In June 2009, the FASB issued authoritative guidance on variable interest entities which seeks to improve financial reporting by requiring that entities perform an analysis to determine whether any variable interest or interests that they have give them a controlling financial interest in a variable interest entity. The new guidance is effective for annual financial periods beginning after November 15, 2009, and interim periods within that annual period, and thereafter, and shall be applied prospectively. Early adoption is prohibited. The Company is in the process of evaluating the impact of adoption of this guidance although it does not expect it will have a significant impact on its financial statements.

10

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

4. INVENTORIES

Inventories consisted of the following:

	October 31, 2009		January 31, 2009
Raw materials	$	21,202	$	17,545
Work-in-process		20,749		17,721
Finished goods		29,266		25,862
Total	$	71,217	$	61,128

5. DEBT

Debt consisted of the following:

	October 31, 2009		January 31, 2009
Line of Credit Facility, maximum commitment of $75,000 at October 31, 2009 and January 31, 2009; bearing interest at 2.28% at October 31, 2009: availability is determined by a borrowing base calculation	$	6,204	$	—
Convertible Senior Notes 2005; due 2025, bears interest at 5.25% net of unamortized discounts of $13,514 and $16,121, respectively		61,486		58,879
Convertible Senior Notes 2006; due 2026, bears interest at 5.50%		52,000		52,000
China Line of Credit; Maximum commitment of 60 million RMB (with an effective interest rate of 5.74% and 6.37% as of October 31, 2009 and January 31, 2009)		8,643		5,852
Capital leases		288		125
Total debt		128,621		116,856
Less unamortized debt costs		2,346		3,338
Net debt		126,275		113,518
Less current portion		8,819		5,881
Total long-term portion	$	117,456	$	107,637

Line of Credit Facility

The Company has a $75,000 principal amount Line of Credit Facility (“Credit Facility”). The Credit Facility consists of a five-year senior revolving line of credit which does not expire until December 7, 2010. The availability under the Credit Facility is determined by a borrowing base, is collateralized by a first lien on certain assets and bears interest at LIBOR plus 1.75% or Prime plus .25%.

Convertible Senior Notes 2005

On November 21, 2005, the Company completed the private placement of $75,000 aggregate principal amount of 5.25% Convertible Senior Notes Due 2025 (“2005 Notes”) which raised proceeds of approximately $72,300, net of $2,700 in issuance costs. These costs are being amortized to interest expense over seven years.

The 2005 Notes mature on November 1, 2025 and require semi-annual interest payments at 5.25% per annum on the principal amount outstanding. Prior to maturity the holders may convert their 2005 Notes into shares of the Company’s common stock under certain circumstances. The initial conversion rate is 118.0638 shares per $1,000 principal amount of 2005 Notes, which is equivalent to an initial conversion price of approximately $8.47 per share. At any time between November 1, 2010 and November 1, 2012, the Company may at its option redeem the 2005 Notes, in whole or in part, for cash, at a redemption price equal to 100% of the principal amount of 2005 Notes to be

11

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

redeemed, plus any accrued and unpaid interest, including additional interest, if any, if in the previous 30 consecutive trading days ending on the trading day before the date of mailing of the redemption notice the closing sale price of the Common Stock exceeds 130% of the then effective conversion price of the 2005 Notes for at least 20 trading days. In addition, at any time after November 1, 2012, the Company may redeem the 2005 Notes, in whole or in part, for cash, at a redemption price equal to 100% of the principal amount of the 2005 Notes to be redeemed plus any accrued and unpaid interest, including additional interest, if any.

A holder of 2005 Notes may require the Company to repurchase some or all of the holder’s 2005 Notes for cash upon the occurrence of a fundamental change as defined in the indenture and on each of November 1, 2012, 2015 and 2020 at a price equal to 100% of the principal amount of the 2005 Notes being repurchased, plus accrued interest, if any, in each case. If applicable, the Company will pay a make-whole premium on 2005 Notes converted in connection with any fundamental change that occurs prior to November 1, 2012. The amount of the make-whole premium, if any, will be based on the Company’s stock price and the effective date of the fundamental change. The indenture contains a detailed description of how the make-whole premium will be determined and a table showing the make-whole premium that would apply at various stock prices and fundamental change effective dates based on assumed interest and conversion rates. No make-whole premium will be paid if the price of the Common Stock on the effective date of the fundamental change is less than $7.00. Any make-whole premium will be payable in shares of Common Stock (or the consideration into which the Company’s Common Stock has been exchanged in the fundamental change) on the conversion date for the 2005 Notes converted in connection with the fundamental change.

On February 1, 2009, the Company began accounting for the 2005 Notes in accordance with the new effective accounting guidance discussed in Note 3. This guidance requires an issuer to separately account for the liability and equity components in a manner that reflects the issuer’s nonconvertible borrowing rate resulting in higher non-cash interest expense over the expected life of the instrument. The Company determined that the effective rate of the liability component was 12.5%. The guidance requires retrospective application for all periods presented. See Note 16 for information on the impact of adoption.

Convertible Senior Notes 2006

On November 22, 2006, the Company completed the private placement of $54,500 aggregate principal amount of 5.50% Convertible Senior Notes Due 2026 (“2006 Notes”) which raised proceeds of approximately $51,900, net of $2,600 in issuance costs. These costs are being amortized to interest expense over five years.

The 2006 Notes mature on November 1, 2026 and require semi-annual payments at 5.50% per annum on the principal outstanding. Prior to maturity the holders may convert their 2006 Notes into shares of the Company’s common stock under certain circumstances. The initial conversion rate is 206.7183 shares per $1,000 principal amount of 2006 Notes, which is equivalent to an initial conversion price of approximately $4.84 per share. At any time on and after November 15, 2011, the Company may at its option redeem the 2006 Notes, in whole or in part, for cash, at a redemption price equal to 100% of the principal amount of 2006 Notes to be redeemed, plus any accrued and unpaid interest, including additional interest.

A holder of 2006 Notes may require the Company to repurchase some or all of the holder’s 2006 Notes for cash upon the occurrence of a fundamental change as defined in the indenture and on each of November 1, 2011, 2016 and 2021 at a price equal to 100% of the principal amount of the 2006 Notes being repurchased, plus accrued interest, if any, in each case. If applicable, the Company will pay a make-whole premium on 2006 Notes converted in connection with any fundamental change that occurs prior to November 15, 2011. The amount of the make-whole premium, if any, will be based on the Company’s stock price and the effective date of the fundamental change. The indenture contains a detailed description of how the make-whole premium will be determined and a table showing the make-whole premium that would apply at various stock prices and fundamental change effective dates based on assumed interest and conversion rates. No make-whole premium will be paid if the price of the Common Stock on the effective date of the fundamental change is less than $4.30. Any make-whole premium will be payable in shares of Common Stock (or the consideration into which the Company’s Common Stock has been exchanged in the fundamental change) on the conversion date for the 2006 Notes converted in connection with the fundamental change.

12

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

The accounting guidance regarding ASC 470-20 does not apply to the 2006 Notes since this note does not provide the Company with the option of settlement upon conversion in cash for all or part of the notes. As a result, the 2006 Note is carried at face value and interest is recorded based on the stated rate of 5.50%.

China Line of Credit

On January 18, 2007 the Company entered into a renewable nine month non-revolving line of credit facility in China. Under the terms of the China Line of Credit, as amended, the Company may borrow up to 60 million RMB (approximately $8,700 US Dollars) with an interest rate of 5.74% and 40 million RMB (approximately $5,900 US Dollars) with an interest rate of 6.37% as of October 31, 2009 and January 31, 2009, respectively. This credit line was established to provide our plant in China the flexibility needed to finalize the construction of its new manufacturing facility, which was completed in March 2007 and to fund working capital requirements. As of October 31, 2009 and January 31, 2009, $8,643 and $5,852, respectively, was funded under this facility.

6. STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

On February 1, 2009, we adopted new accounting guidance issued by FASB that changed the accounting and reporting for non-controlling interests. The new accounting guidance recharacterizes the accounting for minority interest as non-controlling interest and classifies it as a component of stockholders’ equity. Although adoption did not impact the Company’s results of operations and financial position, it required the Company to reclassify non-controlling interest as part of stockholders’ equity, include the net loss attributable to the non-controlling interest as part of consolidated net loss and provide additional disclosures as part of the financial statements. As required under the new guidance, we implemented the presentation and disclosure requirements of this new standard retrospectively for all periods presented. The January 31, 2009 balances below also reflect changes required by adoption of the accounting guidance regarding the accounting for convertible debt instruments that may be settled in cash upon conversion (including partial cash settlements). See Note 16 for additional information on the effects of adoption on these balances.

The following table presents the statement of changes in consolidated stockholders’ equity in conformity with the new guidance for non-controlling interests for the nine months ended October 31, 2009.

								Accumulated Other Comprehensive Income/(Loss)
			Additional Paid-In Capital											Total Stockholders’ Equity
	Common Stock			Treasury Stock						Retained Earnings		Noncontrolling Interest
	Shares	Amount		Shares		Amount
BALANCE AT JANUARY 31, 2009	29,162,101	292	95,724	(2,895,346	)	(40,035	)	(45,733	)	43,204		11,451		64,903
Total comprehensive income (loss):
Net loss										(18,814	)	(327	)	(19,141	)
Foreign currency translation adjustment								248				16		264
Unrealized gain on derivative instruments								4,103						4,103
Pension liability adjustment								808						808
Total comprehensive income (loss):								5,159		(18,814	)	(311	)	(13,966	)
Other changes in equity:
Deferred Compensation Plan				(30,092	)	(56	)							(56	)
Share based compensation expense			949											949
Stock awards issued/exercised	66,112		24											24
BALANCE AT OCTOBER 31, 2009	29,228,213	292	96,697	(2,925,438	)	(40,091	)	(40,574	)	24,390		11,140		51,854

13

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

7. INCOME TAXES

	Nine months ended October 31,
	2009			2008
Provision for income taxes	$	2,052		$	502
Effective income tax rate		(12.0	%)		(29.8	%)

Effective tax rates were (12.0%) and (29.8%) for the nine months ended October 31, 2009 and 2008, respectively. Tax expense for the nine months ended October 31, 2009 is due to tax expense in certain profitable foreign subsidiaries and no tax benefit recognized in certain jurisdictions where the Company incurred a loss, in addition to deferred tax expense related to the increase in the deferred tax liability related to certain indefinite life assets. Our effective tax rate fluctuates based on these factors, as well as adjustments to projected results of operations during the tax period. Tax expense includes $300 of additional expense related to an accrual for uncertain tax positions in the nine months ended October 31, 2009. This accrual relates to a tax exposure item with respect to the Company’s foreign operations.

8. EARNINGS PER SHARE

Basic earnings per common share was computed using net loss attributable to C&D and the weighted average number of common shares outstanding during the period. Diluted earnings per common share was computed using net loss attributable to C&D and the weighted average number of common shares outstanding plus potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the assumed exercise of stock options and assumed vesting of restricted stock awards using the treasury stock method, as well as the assumed conversion of debt using the if-converted method.

The following table sets forth the computation of basic and diluted losses per common share:

	Three months ended October 31,						Nine months ended October 31,
	2009			2008			2009			2008
Numerator:
Numerator for basic losses per common share	$	(3,440	)	$	(146	)	$	(18,814	)	$	(1,704	)
Effect of dilutive securities:
Income related to deferred compensation plan		(19	)		(462	)		(96	)		(305	)
Numerator for diluted losses per common share	$	(3,459	)	$	(608	)	$	(18,910	)	$	(2,009	)
Denominator:
Denominator for basic earnings per common share- weighted average common shares		26,302,775			25,752,649			26,298,007			25,704,677
Effect of dilutive securities:
Shares issuable under deferred compensation arrangements		112,566			101,980			96,032			93,287
Dilutive potential common shares		112,566			101,980			96,032			93,287
Denominator for diluted earnings per common share- adjusted weighted average common shares and assumed conversions		26,415,341			25,854,629			26,394,039			25,797,964
Basic loss per common share	$	(0.13	)	$	(0.01	)	$	(0.72	)	$	(0.07	)
Diluted loss per common share	$	(0.13	)	$	(0.02	)	$	(0.72	)	$	(0.08	)

14

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

The Company excluded dilutive securities of 19,604,137 issuable in connection with convertible bonds from the diluted income per share calculation for the three and nine months ended October 31, 2009 because their effect would be anti-dilutive. The Company also excluded dilutive securities of 20,098,463 and 20,113,387 issuable in connection with these bonds from the diluted income per share calculation for the three and nine months ended October 31, 2008, respectively, because their effect would be anti-dilutive. The above computation also excludes all anti-dilutive options and restricted stock awards, which amounted to, 2,239,782 and 2,231,980 shares for the three and nine months ended October 31, 2009, respectively, and 1,454,238 and 1,320,435 for the three and nine months ended October 31, 2008, respectively.

9. CONTINGENT LIABILITIES

Legal

There is no material litigation pending to which the Company is a party or of which any of its property is the subject.

Environmental

The Company is subject to extensive and evolving environmental laws and regulations regarding the clean-up and protection of the environment, worker health and safety and the protection of third parties. These laws and regulations include, but are not limited to (i) requirements relating to the handling, storage, use and disposal of lead and other hazardous materials in manufacturing processes and solid wastes; (ii) record keeping and periodic reporting to governmental entities regarding the use and disposal of hazardous materials; (iii) monitoring and permitting of air emissions and water discharge; and (iv) monitoring worker exposure to hazardous substances in the workplace and protecting workers from impermissible exposure to hazardous substances, including lead, used in our manufacturing process.

Notwithstanding the Company’s efforts to maintain compliance with applicable environmental requirements, if injury or damage to persons or the environment arises from hazardous substances used, generated or disposed of in the conduct of the Company’s business (or that of a predecessor to the extent the Company is not indemnified therefor), the Company may be held liable for certain damages, the costs of investigation and remediation, and fines and penalties, which could have a material adverse effect on the Company’s business, financial condition, or results of operations. However, under the terms of the purchase agreement with Allied Corporation (“Allied”) for the acquisition (the “Acquisition”) of the Company (the “Acquisition Agreement”), Allied was obligated to indemnify the Company for any liabilities of this type resulting from conditions existing at January 28, 1986, that were not disclosed by Allied to the Company in the schedules to the Acquisition Agreement. These obligations have since been assumed by Allied’s successor in interest, Honeywell (“Honeywell”).

C&D is participating in the investigation of contamination at several lead smelting facilities (“Third Party Facilities”) to which C&D allegedly made scrap lead shipments for reclamation prior to the date of the acquisition.

Pursuant to a 1996 Site Participation Agreement, as later amended in 2000, the Company and several other potentially responsible parties (“PRP”s) agreed upon a cost sharing allocation for performance of remedial activities required by the United States EPA Administrative Order Consent Decree entered for the design and remediation phases at the former NL Industries, Inc. (“NL”) site in Pedricktown, New Jersey, Third Party Facility. In April 2002, one of the original PRPs, Exide Technologies (Exide), filed for relief under Chapter 11 of Title 11 of the United States Code. In August 2002, Exide notified the PRPs that it would no longer be taking an active role in any further action at the site and discontinued its financial participation, resulting in a pro rata increase in the cost participation of the other PRPs, including the Company, for which the Company’s allocated share rose from 5.25% to 7.79%.

In August 2002, the Company was notified of its involvement as a PRP at the NL Atlanta, Northside Drive Superfund site. NL and Norfolk Southern Railway Company have been conducting a removal action on the site, preliminary to remediation. The Company, along with other PRPs, continues to negotiate with NL at this site regarding the Company’s share of the allocated liability.

15

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

The Company has terminated operations at its Huguenot, New York, facility, and has completed facility decontamination and disposal of chemicals and hazardous wastes remaining at the facility following termination of operations in accordance with applicable regulatory requirements. The Company is also aware of the existence of soil and groundwater contamination at the Huguenot, New York, facility, which is expected to require expenditures for further investigation and remediation. The site is listed by the New York State Department of Environmental Conservation (“NYSDEC”) on its registry of inactive hazardous waste disposal sites due to the presence of fluoride and other contaminants in and underlying a lagoon used by the former owner of this site, Avnet, Inc., for disposal of wastewater. Contamination is present at concentrations that exceed state groundwater standards. In 2002, the NYSDEC issued a Record of Decision (“ROD”) for the soil remediation portion of the site. A ROD for the ground water portion has not yet been issued by the NYSDEC. In 2005, the NYSDEC also requested that the parties engage in a Feasibility Study, which the parties have conducted in accordance with a NYSDEC approved work plan. In February 2000, the Company filed suit against Avnet, Inc., and in December 2006, the parties executed a settlement agreement which provides for a cost sharing arrangement with Avnet bearing a majority of the future costs associated with the investigation and remediation of the lagoon-related contamination.

C&D, together with Johnson Controls, Inc. (“JCI”), is conducting an assessment and remediation of contamination at and near its facility in Milwaukee, Wisconsin. The majority of the on-site soil remediation portion of this project was completed as of October 2001. Under the purchase agreement with JCI, C&D is responsible for (i) one-half of the cost of the on-site assessment and remediation, with a maximum liability of $1,750 (ii) any environmental liabilities at the facility that are not remediated as part of the ongoing cleanup project and (iii) environmental liabilities for any new claims made after the fifth anniversary of the closing, i.e. March 2004, that arise from migration from a pre-closing condition at the Milwaukee facility to locations other than the Milwaukee facility, but specifically excluding liabilities relating to pre-closing offsite disposal. JCI retained the environmental liability for the off-site assessment and remediation of lead. In March 2004, the Company entered into an agreement with JCI to continue to share responsibility as set forth in the original purchase agreement. The Company continues to share with JCI the allocation of costs for assessment and remediation of certain off-site chlorinated volatile organic compounds in groundwater.

In February 2005, the Company received a request from the EPA to conduct exploratory testing to determine if the historical municipal landfill located on the Company’s Attica, Indiana, property is the source of elevated levels of trichloroethylene detected in two city wells downgradient of the Company’s property. The EPA advised that it believes the former landfill is subject to remediation under the Resource Conservation and Recovery Act (“RCRA”) corrective action program. The Company conducted testing in accordance with an investigation work plan and submitted the test results to the EPA. The EPA thereafter notified the Company that they also wanted the Company to embark upon a more comprehensive RCRA investigation to determine whether there have been any releases of other hazardous waste constituents from its Attica facility and, if so, to determine what corrective measure may be appropriate. In January 2007, the Company agreed to an Administrative Order on Consent with EPA to investigate, and remediate if necessary, site conditions at the facility. A RCRA Facility Investigation (RFI) Phase I Report has been submitted to EPA, and the Company is currently preparing a Final RFI Phase II Report and a Corrective Measures Plan to be submitted to EPA.

The Company has conducted site investigations at its Conyers, Georgia facility, and has detected chlorinated solvents in groundwater and lead in soil both onsite and offsite. The Company has recently completed further assessment of groundwater conditions, temporarily suspending remediation of the chlorinated solvents which had been initiated in accordance with a Corrective Action Plan approved by the Georgia Department of Natural Resources in January 2007. A modified Corrective Action Plan will be submitted based upon the assessment. Additionally, the Company has completed remediation of lead impacted soils identified in the site investigations. In September 2005, an adjoining landowner filed suit against the Company alleging, among other things, that it was allowing lead contaminated stormwater runoff to leave its property and contaminate the adjoining property. In November 2008, the parties entered into a final settlement agreement, pursuant to which the Company agreed to assess and remediate any contamination on the adjoining property due to the Company’s operations as required by Georgia Department of Natural Resources and with the concurrence of the adjoining landowner.

The Company accrues for environmental liabilities in its consolidated financial statements and periodically reevaluates the reserved amounts for these liabilities in view of the most current information available in accordance with accounting guidance for contingencies. As of October 31, 2009, accrued environmental reserves totaled $1,258 consisting of $628 in other current liabilities and $630 in other liabilities. Based on currently available information,

16

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

the Company believes that appropriate reserves have been established with respect to the foregoing contingent liabilities and that they are not expected to have a material adverse effect on its business, financial condition or results of operations.

Purchase Commitments

Periodically the Company enters into purchase commitments pertaining to the purchase of certain raw materials with various suppliers. The Company has entered into various lead commitments contracts expiring within the next year. The estimated commitment for the next twelve months is approximately $19,000.

10. FINANCIAL INSTRUMENTS

The estimated fair values of the Company’s financial instruments at October 31, 2009 were as follows:

	Carrying Amount		Fair Value
Investments held for deferred compensation plan	$	376	$	376
Debt		128,333		98,578
Commodity hedges		591		591

The following methods and assumptions were used to estimate the fair value of each class of financial instruments:

Investments held for deferred compensation plan – this asset is carried at quoted market values and, as a result, the fair value is equivalent to the carrying amount.

Long-term debt – the fair value of the Notes was determined using available market prices at the balance sheet date. The carrying value of the Company’s remaining long-term debt, including the current portion, approximates fair value based on the incremental borrowing rates currently available to the Company for loans with similar terms and maturity.

Commodity hedges – the fair value was determined using available market prices at the balance sheet date of commodity hedge contracts with similar characteristics and maturity dates.

11. DERIVATIVE INSTRUMENTS

The Company follows the applicable accounting guidance for accounting for derivative instruments and hedging activities. This guidance establishes accounting and reporting standards for derivative instruments. Specifically, it requires an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either stockholders’ equity as accumulated other comprehensive (loss) income (“AOCI”) or net (loss) income depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity.

To qualify for hedge accounting, the instruments must be effective in reducing the risk exposure that they are designed to hedge. For instruments that are associated with the hedge of an anticipated transaction, hedge effectiveness criteria also require that it be probable that the underlying transaction will occur. Instruments that meet established accounting criteria are formally designated as hedges at the inception of the contract. These criteria demonstrate that the derivative is expected to be highly effective at offsetting changes in fair value of the underlying exposure both at inception of the hedging relationship and on an ongoing basis. The assessment for effectiveness is documented at hedge inception and reviewed throughout the designated hedge period.

Changes in the fair value of a derivative that is designated as a cash flow hedge are recorded in accumulated other comprehensive loss. When operations are affected by the variability of the underlying cash flow, the applicable amount of the gain or loss from the derivative that is deferred in stockholders’ equity is released to

17

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

operations. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, all changes in the fair value of the instrument are included in operations each period until the instrument matures. Derivatives that are not designated as hedges, as well as the portion of a derivative excluded from the effectiveness assessment and changes in the value of the derivatives which do not offset the underlying hedged item throughout the designated hedge period, are recorded as a current period expense in operations.

The Company does not use derivatives for speculative purposes, nor is it a party to leveraged derivatives. The Company is exposed to credit risk related to its financial instruments in the event of non-performance by the counterparties. As such, the Company has a policy of only entering into contracts with major financial institutions. When viewed in conjunction with the underlying and offsetting exposure that the derivatives are designed to hedge, the Company has not sustained a material loss from these instruments nor does it anticipate any material adverse effect on its net income or financial position in the future from the use of derivatives.

Commodity risk – The Company has entered into lead hedge contracts, which is the primary raw material component of the Company, to manage risk of the cost of lead. The agreements are with major financial institutions with maturities generally less than one year. The Company employs cash flow hedge accounting in the treatment of these contracts. Changes in the value of the contracts are marked to market each month and the gains and losses are recorded in other comprehensive income (loss) until they are released to the income statement through cost of goods sold in the same period as is the related hedged item (lead).

Hedge accounting is discontinued when it is determined that a derivative instrument is not highly effective as a hedge. Hedge accounting is also discontinued when: (1) the derivative instrument expires, is sold, terminated or exercised; or is no longer designated as a hedge instrument because it is unlikely that a forecasted transaction will occur; (2) a hedged firm commitment no longer meets the definition of a firm commitment; or (3) management determines that designation of the derivative as a hedging instrument is no longer appropriate.

When hedge accounting is discontinued, the derivative instrument will be either terminated, continue to be carried on the balance sheet at fair value, or redesignated as the hedging instrument, if the relationship meets all applicable hedging criteria. Any asset or liability that was previously recorded as a result of recognizing the value of a firm commitment will be removed from the balance sheet and recognized as a gain or loss in current period earnings. Any gains or losses that were accumulated in other comprehensive loss from hedging a forecasted transaction will be recognized immediately in current period earnings, if it is probable that the forecasted transaction will not occur.

The Company had raw material commodity arrangements for 2,686 metric tons of base metals at October 31, 2009 and 5,056 metric tons at January 31, 2009.

The following table provides the fair value of the Company’s derivative contracts which include raw material commodity contracts.

	October 31, 2009		January 31, 2009			Balance Sheet Location
Derivatives designated as hedging instruments:
Commodity Hedges	$	591	$	0		Other current assets
Commodity Hedges		0		(992	)	Other current liabilities
Total fair value	$	591		($992	)

The Company estimates that $1,045 of net derivatives gains in AOCI as of October 31, 2009 will be reclassified into earnings in the next twelve months.

18

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

Derivatives in Cash Flow Hedging Relationships:	Amount of Gain (Loss) Recognized in OCI						Amount of Gain (Loss) Reclassified from AOCI into Income						Location of Gain (Loss) Reclassified from AOCI into Income
	2009			2008			2009			2008
Three months ended October 31,
Commodity Hedges	$	(270	)	$	(1,366	)	$	(593	)	$	(2,740	)	Cost of Sales
Nine months ended October 31,
Commodity Hedges	$	(102	)	$	(6,508	)	$	(2,336	)	$	(8,005	)	Cost of Sales

12. WARRANTY

The Company provides for estimated product warranty expenses when the related products are sold. Because warranty estimates are forecasts that are based on the best available information, primarily historical claims experience, claims costs may differ from amounts provided. An analysis of changes in the liability for product warranties follows:

	Nine months ended October 31,
	2009			2008
Balance at beginning of period	$	8,069		$	11,276
Current year provisions		4,237			3,181
Settlements		(6,115	)		(6,654	)
Effect of foreign currency translation		—			7
Balance at end of period	$	6,191		$	7,810

As of October 31, 2009, accrued warranty obligations of $6,191 include $2,349 in current liabilities and $3,842 in other liabilities. As of January 31, 2009 accrued warranty obligations of $8,069 include $3,528 in current liabilities and $4,541 in other liabilities.

Certain warranty costs associated with the discontinued operations were not assumed by the buyer and are included in the table above. Settlements include $1,656 and $3,790 related to discontinued operations in the first nine months of fiscal 2010 and 2009, respectively.

19

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

13. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

The components of net periodic benefit cost consisted of the following for the interim periods:

	Pension Benefits						Postretirement Benefits
	Three months ended October 31,						Three months ended October 31,
	2009			2008			2009			2008
Components of net periodic benefit cost:
Service cost	$	259		$	273		$	15		$	15
Interest cost		1,131			1,118			31			30
Expected return on plan assets		(904	)		(1,251	)		—			—
Amortization of prior service costs		—			—			(201	)		(201	)
Recognized actuarial loss/(gain)		692			294			(1	)		(1	)
Net periodic benefit cost	$	1,178		$	434		$	(156	)	$	(157	)
	Pension Benefits						Postretirement Benefits
	Nine months ended October 31,						Nine months ended October 31,
	2009			2008			2009			2008
Components of net periodic benefit cost:
Service cost	$	775		$	818		$	44		$	46
Interest cost		3,394			3,355			94			89
Expected return on plan assets		(2,711	)		(3,752	)		—			—
Amortization of prior service costs		—			—			(603	)		(603	)
Recognized actuarial loss/(gain)		2,077			883			(1	)		(3	)
Net periodic benefit cost	$	3,535		$	1,304		$	(466	)	$	(471	)

The Company made $1,606 of contributions to the pension plans in the nine months ended October, 31, 2009. The Company expects to make additional contributions of approximately $1,355 to its pension plans during fiscal year 2010. The Company also expects to make contributions totaling approximately $160 to the Company sponsored postretirement benefit plan during fiscal year 2010.

14. RESTRUCTURING

On February 4, 2009, the Company announced plans to reduce labor costs by reducing its workforce by approximately 90 employees. The Company recorded severance accruals in the fourth quarter of fiscal year 2009 of $1,334 in its consolidated statement of operations as Selling, general and administrative expenses as a result of these reductions. The Company expects to pay most of these costs in fiscal year 2010 with a small portion carrying over to fiscal year 2011.

A reconciliation of the beginning and ending liability and related activity is shown below.

	Balance at January 31, 2009		Provision Additions		Expenditures		Balance at October 31, 2009
Severance	$	1,253	$	—	$	1,025	$	228
Total	$	1,253	$	—	$	1,025	$	228

15. FAIR VALUE MEASUREMENT

Assets and liabilities subject to fair value measurements primarily consist of our derivative contracts and investments related to the deferred compensation plan. We utilize the market approach to measure fair value for our financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities. The accounting guidance includes a fair value

20

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels:

Level 1 Inputs are quoted prices in active markets for identical assets or liabilities.

Level 2 Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

Level 3 Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table represents our assets measured at fair value on a recurring basis as of October 31, 2009 and the basis for those measurements:

	Total Fair Value Measurement October 31, 2009		Quoted Priced in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Investments held for deferred compensation plan	$	376	$	376	$	—	$	—
Commodity hedge asset		591		—		591		—

16. ADOPTION OF FASB GUIDANCE ASC 470-20 AND RESTATED PRIOR YEAR BALANCES

Amounts previously reported for the three and nine months ended October 31, 2008 have been restated. The restatement adjustments affected the previously reported balances for accounts payable and cost of sales, which components affect reported gross profit, income tax provision/(benefit), operating income/(loss), net income (loss) and basic and diluted earnings per share. The impact of the adjustments was to increase costs of sales and reduce income before income taxes and non-controlling interest by $423 and $2,620 for the three and nine months ended October 31, 2008. As a result of these changes income tax calculations were also impacted resulting in a reduction of income tax expense by $61 and $344 for the three and nine months ended October 31, 2008. Basic and diluted earnings per share (“EPS”) were reduced by $0.02 and $0.01 per share in the third quarter of fiscal 2009. Basic and diluted EPS were reduced by $0.09 per share for the nine months ended October 31, 2008.

In addition, prior year amounts have been adjusted to reflect adoption of ASC 470-20 as required. See note 5 for additional information.

21

C&D TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Dollars in thousands, except per share data)

(UNAUDITED)

The following table summarizes the changes to our financial statements as a result of the restatements and adoption of the new guidance described above:

January 31, 2009 Balance Sheet	Previously Reported			Effect of Change due to ASC 470-20 Increase (Decrease)			Effect of Change due to Error Correction - Increase (Decrease)			As Adjusted
Debt issuance costs (included in long-term debt)	$	(3,672	)	$	334					$	(3,338	)
Convertible Senior Notes 2005		75,000			(16,121	)					58,879
Additional paid-in capital		71,749			23,975						95,724
Retained earnings		51,392			(8,188	)					43,204
Three Months ended October 31, 2008 Statement of Operations
Cost of sales	$	77,222					$	423		$	77,645
Gross profit		16,600						(423	)		16,177
Interest expense, net		2,121			748						2,869
Income tax provision		551						(61	)		490
Net income (loss) attributable to C&D Technologies, Inc.		964			(748	)		(362	)		(146	)
Income (Loss) per share basic and diluted
Basic	$	0.04		$	(0.03	)	$	(0.02	)	$	(0.01	)
Diluted	$	0.02		$	(0.03	)	$	(0.01	)	$	(0.02	)
Nine Months ended October 31, 2008 Statement of Operations
Cost of sales	$	234,147					$	2,620		$	236,767
Gross profit		45,936						(2,620	)		43,316
Interest expense, net		6,672			2,171						8,843
Income tax provision		846						(344	)		502
Net income attributable to C&D Technologies, Inc.		2,743			(2,171	)		(2,276	)		(1,704	)
Income (Loss) per share basic and diluted
Basic	$	0.11		$	(0.09	)	$	(0.09	)	$	(0.07	)
Diluted	$	0.09		$	(0.08	)	$	(0.09	)	$	(0.08	)
October 31, 2008 Statement of Cash Flows
Net income (loss)¹	$	2,259		$	(2,171	)	$	(2,276	)	$	(2,188	)
Amortization of debt acquisition and discount costs		1,272			2,171						3,443
Accounts payable		(13,746	)					2,620			(11,126	)
Deferred income taxes		327						(344	)		(17	)

¹ Previously reported net income has been adjusted to reflect change in noncontrolling interest as described in Note 1.

22

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

(Dollars in thousands, except per share data)

Item 2.

Three Months Ended October 31, 2009, compared to Three Months Ended October 31, 2008

Within the following discussion, unless otherwise stated, “quarter” and “three-month” period refer to the third quarter of fiscal year 2010. All comparisons are with the corresponding period in the prior fiscal year, unless otherwise stated.

Net sales in the third quarter of fiscal year 2010 decreased $2,612 or 3% to $91,210 from $93,822 in the third quarter of fiscal year 2009. This decrease was principally due to a reduction in contractual prices resulting from a decline in the price of lead over the comparable period, partially offset by higher volumes, primarily in our Asian business. Under our contractual pricing arrangements, generally pricing trails changes in the price of lead on the London Metal Exchange (“LME”). Average LME lead prices decreased from an average of $0.91 per pound in the second quarter of fiscal year 2009 to $0.72 per pound in the second quarter of fiscal year 2010.

Gross profit in the third quarter of fiscal year 2010 decreased $3,167 or 19.6% to $13,010 from $16,177 in the third quarter of fiscal year 2009. Margins as a percent of sales decreased from 17.2% in the third quarter of fiscal year 2009 to 14.3% in the third quarter of fiscal year 2010. Margins increased sequentially to 14.3% in the third quarter of fiscal 2010 compared to 12.1% in the second quarter of fiscal 2010. The decrease from the prior year was principally impacted by loss of benefits from tolling / LME pricing spread and overall market pricing competitiveness partially offset by a reduction in commodity hedge losses. The margin improvement versus the second quarter of fiscal 2010 was primarily driven by improved pricing, sales mix and volume, offset by increased lead prices. Lead prices traded on the LME have continued to be volatile, having traded as high as $1.11 per pound on September 8, 2009 and as low as $0.81 per pound on August 12, 2009. Higher pension and other fringe benefit costs also negatively impacted margin performance. These negative impacts on gross margin were partially offset by the positive impact of cost reduction actions announced in February 2009.

Selling, general and administrative expenses in the third quarter of fiscal year 2010 increased $1,279 or 12.6% to $11,457 from $10,178. The increase is primarily due to higher selling costs of approximately $600 associated primarily with new product introductions and increased warranty costs of approximately $900, partially offset by reduced bad debt expense of $400. As a percentage of sales, selling, general and administrative expenses increased to 12.6% in fiscal 2010 compared to 10.8% in the third quarter of fiscal 2009.

Research and development expenses in the third quarter of fiscal year 2010 increased $451 or 27.2% to $2,108 from $1,657. As a percentage of sales, research and development expenses increased from 1.8% in the third quarter of fiscal year 2009 to 2.3% in the third quarter of fiscal year 2010 due to higher costs supporting investment in new technologies and China growth initiatives.

The Company had an operating loss in the third quarter of fiscal year 2010 of $555 compared to operating income of $4,342 in the third quarter of fiscal year 2009. The change is mainly due to the decrease in gross profit compared to the third quarter of fiscal 2009 combined with the increased selling costs.

23

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

Analysis of Change in Operating Income/(Loss) from continuing operations for the 3 ^rd quarter of fiscal year 2010 vs. fiscal year 2009.

Fiscal Year 2010 vs. 2009
Operating Income Three months ended October 31, 2008	$	4,342
Lead, net		2,372
Price / Volume / Mix		(4,734	)
Warranty		(941	)
Pension		(744	)
Other		(850	)
Operating Loss Three months ended October 31, 2009	$	(555	)

Interest expense, net in the third quarter of fiscal year 2010 increased $200 or 7.0% to $3,069 from $2,869 in the third quarter of fiscal year 2009 due to a $103 increase in the non-cash amortization of debt discount related to the 2005 Notes (see Note 5) and higher interest expense due to higher China borrowings used for working capital needs and capital improvements. Interest expense includes $850 and $748 in fiscal years 2010 and 2009, respectively, for non-cash amortization of debt discount related to the 2005 Notes.

Other income was $23 in the third quarter of fiscal year 2010 compared to other expense of $1,208 in the third quarter of fiscal year 2009 primarily due to a decrease in foreign currency expense of $700 and an increase in other income of $500.

Income tax benefit of $120 was recorded in the third quarter of fiscal year 2010, compared to an expense of $490 in the third quarter of fiscal year 2009. The tax benefit in the third quarter of fiscal year 2010 is primarily due to foreign losses in taxable jurisdictions.

Non-controlling interest reflects the 33% ownership interest in the joint venture battery business located in Shanghai, China, that is not owned by the Company. Net loss attributable to Non-controlling interest was $41 in fiscal year 2010 compared to $79 in fiscal year 2009.

As a result of the above, net loss attributable to C&D of $3,440 was recorded in the third quarter of fiscal year 2010 compared to $146 in the prior year. Basic and diluted losses per share were $0.13 in the third quarter of fiscal year 2010 and $0.01 and $0.02 in fiscal 2009, respectively.

Other Comprehensive Income (Loss)

Other comprehensive loss attributable to C&D increased by $621 in the third quarter of fiscal year 2010 to $2,121 from $1,516 in the third quarter of fiscal year 2009. This increase was due primarily to the increase in net loss attributable to C&D from $146 in the third quarter of fiscal 2009 to $3,440 in the third quarter of fiscal year 2010 offset by an unrealized gain on derivative instruments of $1,009 in the third quarter of fiscal year 2010 compared to a loss of $395 in third quarter of fiscal year 2009 and foreign currency translation adjustments increasing by $48 in fiscal year 2010 compared to a decrease of $1,074 in fiscal year 2009.

24

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

Nine Months Ended October 31, 2009, compared to Nine months Ended October 31, 2008

Net sales for the nine months ended October 31, 2009 decreased $32,774 or 11.7% to $247,309 from $280,083 in the nine months ended October 31, 2008. This decrease was principally due to contractual price decreases resulting from the decline in the price of lead. Under our contractual pricing arrangements, generally pricing trails changes in the price of lead on the LME. Average London Metal Exchange (“LME”) prices decreased from an average of $1.02 per pound in the nine months ended October 31, 2008 to $0.96 per pound in the nine months ended October 31, 2009. Additionally, sales were negatively impacted by lower volumes as a result of the general economic environment, principally in the Company’s North American telecommunications and UPS markets partially offset by volume expansion in our Asian business.

Gross profit for the nine months ended October 31, 2009 decreased $14,958 or 34.5% to $28,358 from $43,316 in the nine months ended October 31, 2008. Margins decreased to 11.5% from 15.5% in the prior year. The decrease from the prior year was principally impacted by loss of benefits from tolling / LME pricing spread and overall market pricing competitiveness offset by a reduction in commodity hedge losses. Lead prices traded on the LME have continued to be volatile, having traded as high as $1.11 per pound on September 8, 2009 and as low as $0.45 per pound on February 24, 2009. Higher pension and other fringe benefit costs also negatively impacted margin performance. These negative impacts on gross margin were partially offset by the positive impact of cost reduction actions announced in February 2009.

Selling, general and administrative expenses for the nine months ended October 31, 2009, increased $612 or 2.0% to $30,810 from $30,198. The increase is primarily due to increased warranty costs of approximately $1,000, selling expenses of $200 and consulting charges of $500 offset by lower compensation and fringe benefits of approximately $1,000 and reduced bad debt charges of $200 in fiscal year 2010. As a percentage of sales, selling, general and administrative expenses were 12.4% and 10.8% in the nine months ended October 31, 2009 and 2008, respectively.

Research and development expenses for the nine months ended October 31, 2009 increased $734 or 14.5% to $5,785 from $5,051 in the nine months ended October 31, 2008. As a percentage of sales, research and development expenses increased from 1.8% in the nine months ended October 31, 2008 to 2.3% in the nine months ended October 31, 2009 due to higher costs supporting investment in new technologies and China growth initiatives.

Operating loss for the nine months ended October 31, 2009 was $8,237 compared to operating income of $8,067 in the nine months ended October 31, 2008. The reduction is due to the decreased gross profit and increases other expenses as described above.

25

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

Analysis of Change in Operating Income/(Loss)

Nine months ended October 31, 2009 vs. Nine months ended October 31, 2008

Fiscal Year 2010 vs. 2009
Operating Income Nine months ended October 31, 2008	$	8,067
Lead, net		23,243
Price / Volume / Mix		(34,551	)
Warranty		(1,056	)
Pension		(2,232	)
Other		(1,708	)
Operating Loss Nine months ended October 31, 2009	$	(8,237	)

Interest expense, net for the nine months ended October 31, 2009, increased $66 or 0.8% to $8,909 from $8,843 in the nine months ended October 31, 2008, primarily due to a $300 increase for non-cash amortization of debt discount on the 2005 Notes partially offset by a decrease in interest rates on certain variable rate debt.

Other income was $57 for the nine months ended October 31, 2009, compared to other expense of $910 in the nine months ended October 31, 2008. The increase was primarily due to a change in foreign currency from an expense of $500 to income of $100 and an increase in other income of $200.

Income tax expense of $2,052 was recorded in the nine months ended October 31, 2009, compared to $502 in the nine months ended October 31, 2008. Tax expense in the nine months ended October 31, 2009 is primarily due to amortization of intangible assets, resulting in deferred income tax expense, foreign taxes on profits in taxable jurisdictions and a $300 tax accrual for an uncertain tax position related to foreign operations.

Non-controlling interest reflects the 33% ownership interest in the joint venture battery business located in Shanghai, China, that is not owned by the Company. In the nine months ended October 31, 2009, the joint venture had a net loss attributable to non-controlling interest of $327 compared to $484 in the nine months ended October 31, 2008. The variance is reflected by improved performance of the Company’s China operations.

As a result of the above, net loss attributable to C&D of $18,814 was recorded compared to $1,704 in the prior year.

Other Comprehensive Income

The Company recorded other comprehensive loss of $13,655 for the nine months ended October 31, 2009 as compared to income of $181 in the nine months ended October 31, 2008. This decrease was primarily due to the net loss attributable to C&D of $18,814 in the nine months ended October 31, 2009 as compared to $1,704 in the comparable period in the previous fiscal year and a decrease in foreign currency adjustments of $264 compared to $824 in the prior year. This increase in loss was partially offset by an increase in the unrealized gain on derivative instruments of $4,103 in fiscal year 2010 compared to $1,402 in fiscal year 2009 and an increase in pension adjustments to $808 in fiscal 2010 as compared to $249 in fiscal 2009.

26

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

Liquidity and Capital Resources

Net cash used in operating activities was $757 for nine months ended October 31, 2009, compared to net cash provided of $9,503 in the comparable period of the prior fiscal year. This change is primarily a result from the increased loss in fiscal 2010 combined with an increase in inventory in the current year while in the prior year cash was generated from decreases in inventory. Inventory levels have increased primarily due to increases in the cost of lead. These changes were offset by a reduction in the use of cash for accounts payable compared to the prior year as a result of corresponding lead price changes and ongoing accounts payable management.

Net cash used in investing activities was $9,707 in the first nine months of fiscal year 2010 as compared to $9,250 in the first nine months of fiscal year 2009. In fiscal year 2010, we had purchases of property, plant and equipment of $10,302 compared with $12,017 in the prior year. Capital expenditures are principally in support of our cost reduction activities and new product development. This was offset by a reduction of restricted cash of $577 related to commodity hedging activities in the first nine months of fiscal 2010 compared to $2,283 in the prior fiscal year.

Net cash provided by financing activities increased $8,951 to $9,137 for the nine months ended October 31, 2009, compared to $186 in the comparable period of the prior fiscal year. Proceeds from borrowings under the Company’s revolving Credit Facility and expansion of the Company’s China line of credit were the primary source of cash provided by financing activities in fiscal year 2010. The primary purpose of the new borrowings in the current fiscal year was to fund capital purchases and working capital needs.

The Credit Facility includes a material adverse change clause which defines an event of default as a material adverse change in our business, assets or prospects. Our lenders could claim a breach under the material adverse change covenant or the cross-default provisions under our Credit Facility under certain circumstances, including, for example, if holders of our 2005 Notes and 2006 Notes were to obtain the right to put their notes to us in the event that our common stock was no longer listed on any national securities exchange. An interpretation of events as a material adverse change or any breach of the covenants in our Credit Facility or the indentures governing our 2005 Notes and 2006 Notes could cause a default under our Credit Facility and other debt (including the 2005 and 2006 Notes), which would restrict our ability to borrow under our Credit Facility, thereby significantly impacting our liquidity.

We have also assessed the impact of the severe liquidity crises at major financial institutions on our ability to access capital markets on reasonable terms. Although our credit facility syndicate bank is currently meeting all of their lending obligations, there can be no assurance that these banks will be able to meet their obligations in the future if the liquidity crisis intensifies or is protracted. Our current credit facility does not expire until December 7, 2010. As of October 31, 2009, the maximum availability calculated under the borrowing base was approximately $44,288, of which $6,204 was funded, and $5,645 was utilized for letters of credit. As provided under the Credit Facility, excess borrowing capacity will be available for future working capital needs and general corporate purposes, subject to the above discussion.

Additionally, our $52,000 and $75,000 convertible notes do not have initial maturities (put provisions) until November 2011 and November 2012 respectively. Only upon the occurrence of a fundamental change as defined in the indenture agreements, holders of the notes may require the Company to repurchase some or all of the notes prior to these dates.

If at some future time we are notified by the NYSE that we have fallen below the NYSE’s continued listing standards relating to minimum average global market capitalization and minimum equity, we could face suspension and delisting proceedings. In that case, we have 45 days to submit a plan to NYSE that demonstrates our ability to regain compliance within 18 months. If we are permitted to submit a plan, upon receipt of this plan, the NYSE would have 45 calendar days to review and determine whether we have made a reasonable demonstration of our ability to come into conformity with the relevant standards within the 18-month period. The NYSE would either accept the plan, at which time we would be subject to ongoing monitoring for compliance with this plan, or the NYSE would not accept the plan and we would be subject to suspension and delisting proceedings.

27

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

A delisting of our common stock and our inability to list the stock on another national securities exchange could negatively impact us by: (i) reducing the liquidity and market price of our common stock; (ii) reducing the number of investors willing to hold or acquire our common stock, which could negatively impact our ability to raise equity financing; (iii) limiting our ability to use a registration statement to offer and sell freely tradable securities, thereby preventing us from accessing the public capital markets; (iv) impairing our ability to provide equity incentives to our employees and (v) causing holders of our 2005 Notes and our 2006 Notes to have the right to require us to repurchase their notes for an amount equal to the principal amount outstanding plus accrued but unpaid interest and the make-whole premium set forth in the respective indentures as applicable. While a delisting of our common stock would not constitute a specific event of default under the documents governing our senior credit facilities, our lenders could claim that a delisting would trigger a default under the material adverse change covenant or the cross-default provisions under such documents.

At this time, we do not believe recent market disruptions will impact our long-term ability to obtain financing. We expect to have access to liquidity in the capital markets on terms acceptable to us before the maturity date of our Current Facility, which expires on December 7, 2010, and we do not expect a significant number of our lenders to default on their commitments thereunder. In addition, we can delay major capital investments or pursue financing from other sources to preserve liquidity, if necessary. Cash from operations and availability under the amended Credit Facility is expected to be sufficient to meet our ongoing cash needs for working capital requirements, restructuring, capital expenditures and debt service for at least the next twelve months.

We estimate capital spending for fiscal year 2010 to be in the range of $14,000 to $16,000, including funding for new product modifications and cost reduction opportunities.

Contractual Obligations and Commercial Commitments

The following tables summarize our contractual obligations and commercial commitments as of October 31, 2009:

	Payments Due by Period
Contractual Obligations	Total		Less than 1 year		1 - 3 years		4 - 5 years		After 5 years
Debt	$	141,848	$	8,644	$	6,204	$	—	$	127,000
Interest payable on notes		113,320		6,798		13,595		13,595		79,332
Operating leases		5,563		1,854		1,492		685		1,532
Projected – lead purchases*		19,000		18,000		1,000		—		—
Equipment and other		293		293		—		—		—
Capital Leases		288		175		111		2		—
Total contractual cash obligations	$	280,312	$	35,764	$	22,402	$	14,282	$	207,864
*  Amounts are based on the cash price of lead at October 30, 2009 which was $1.05.
	Amount of Commitment Expiration per Period
Other Commercial Commitments	Total Amount Committed		Less than 1 year		1 - 3 years		4 - 5 years		After 5 years
Standby letters of credit	$	5,645	$	5,645	$	—	$	—	$	—
Total commercial commitments	$	5,645	$	5,645	$	—	$	—	$	—

28

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

FORWARD-LOOKING STATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements we make. We may, from time to time, make written or verbal forward-looking statements. Generally, the inclusion of the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “will,” “guidance,” “forecast,” “plan,” “outlook” and similar expressions in filings with the Securities and Exchange Commission (“SEC”), in our press releases and in oral statements made by our representatives, identify statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”) and are intended to come within the safe harbor protection provided by those sections. The forward-looking statements are based upon management’s current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

By their nature, forward-looking statements involve risk and uncertainties that could cause our actual results to differ materially from anticipated results. Examples of forward-looking statements include, but are not limited to:

• projections of revenues, cost of raw materials, income or loss, earnings or loss per share, capital expenditures, growth prospects, dividends, the effect of currency translations, capital structure and other financial items;

• statements of plans, strategies and objectives made by our management or board of directors, including the introduction of new products, cost savings initiatives or estimates or predictions of actions by customers, suppliers, competitors or regulating authorities;

• statements of future economic performance; and

• statements regarding the ability to obtain amendments under our debt agreements or our long term ability to obtain financing.

We caution you not to place undue reliance on these forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, those factors discussed under Item 1A - Risk Factors, Item 7 – Management’s Discussion and Analysis of Financial Conditions and Results of Operations and Item 8 – Financial Statements and Supplementing Data of our Form 10-K, and the following general factors:

• our ability to implement and fund based on current liquidity, business strategies and restructuring plans;

• our substantial debt and debt service requirements, which may restrict our operational and financial flexibility, as well as impose significant interest and financing costs;

• restrictive loan covenants may impact our ability to operate our business and pursue business strategies;

• the litigation and regulatory proceedings to which we are subject, the results of which could have a material adverse effect on us and our business;

• our exposure to fluctuations in interest rates on our variable debt;

• the realization of the tax benefits of our net operating loss carry forwards, which is dependent upon future taxable income;

• the fact that lead, a major constituent in most of our products, experiences significant fluctuations in market price and is a hazardous material that may give rise to costly environmental and safety claims;

• our ability to successfully pass along increased material costs to our customers;

• unanticipated warranty and quality problems associated with our products;

• failure of our customers to renew supply agreements;

• competitiveness of the battery markets in North America, Europe and Asia;

• the substantial management time and financial and other resources needed for our consolidation and rationalization of acquired entities;

• political, economic and social changes, or acts of terrorism or war;

• successful collective bargaining with our unionized workforce;

• risks involved in our foreign operations such as disruption of markets, changes in import and export laws, currency restrictions, currency exchange rate fluctuations and possible terrorist attacks against the United States interests;

• our ability to maintain and generate liquidity to meet our operating needs;

29

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

• economic conditions or market changes in certain market sectors in which we conduct business;

• uncertainty in financial markets;

• our ability to stay listed on a national securities exchange;

• our success or timing of new product development;

• impact of any changes in our management;

• we may have additional asset impairment charges;

• our ability to acquire goods and services and/or fulfill labor needs at budgeted costs;

• economic conditions or market changes in certain market sectors in which we conduct business;

• our success or timing of new product development;

• changes in our product mix;

• success of productivity initiatives, including rationalizations, relocations or consolidations;

• costs of our compliance with environmental laws and regulations and resulting liabilities; and

• our ability to protect our proprietary intellectual property and technology;

The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in “Risk Factors” included in the Company’s Form 10-K annual report for the year ended January 31, 2009.

30

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

Item 3. Quantitative and Qualitative Disclosure about Market Risk

The Company is exposed to various market risks. The primary financial risks include fluctuations in interest rates, certain raw material commodity prices, and changes in currency exchange rates. The Company manages these risks through normal operating and financing activities and, when appropriate, through the use of derivative instruments. It does not invest in derivative instruments for speculative purposes, but enters into hedging arrangements in order to reduce its exposure to fluctuations in the price of lead.

On occasion, the Company has entered into non-deliverable forward contracts with certain financial counterparties to hedge our exposure to the fluctuations in the price of lead, the primary raw material component used by the Company. The Company employs hedge accounting in the treatment of these contracts. Changes in the value of the contracts are marked to market each month and the gains and losses are recorded in other comprehensive gain or loss until they are released to the income statement through cost of goods sold in the same period as is the hedged item (lead).

Additional disclosure regarding various market risks are set forth in the Company’s fiscal year 2009 Annual Report on Form 10-K filed with the SEC.

Item 4. Controls and Procedures:

Evaluation of Disclosure Controls and Procedures

Management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. The Company maintains controls and procedures to prevent and detect material misstatements in financial statements on a timely basis, information required to be disclosed by it in the reports that it files or submits under the Exchange Act and include controls and procedures designed to ensure that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding timely disclosures.

As of October 31, 2009, our previously identified material weakness in our internal control over financial reporting relating to effective controls over the period end reconciliation of inventory liability clearing accounts remains. Specifically, our account reconciliations, analyses and review procedures were ineffective as it related to the following: (1) timely completion of the account reconciliation (2) independent and timely review of the reconciliation and (3) review and approval of journal entries related to these accounts.

Such deficiency could result in misstatements of the aforementioned accounts and disclosures that would result in a material misstatement of the consolidated financial statements that would not be prevented and detected. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

As a result of this material weakness, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of October 31, 2009. Nevertheless, management has concluded that the consolidated financial statements in this Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows as of the dates, and for the periods, presented, in conformity with generally accepted accounting principles in the United States of America.

31

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS (continued)

(Dollars in thousands, except per share data)

Plan for Remediation of Material Weakness

We believe that we have taken the appropriate actions to remediate the material weakness described above by (1) conducting training on controls over maintenance of inventory liability clearing accounts and preparation of reconciliations of related balances (2) made certain personnel changes and reallocated duties as deemed appropriate, and (3) designing and implementing new policies, procedures and controls for monthly account reconciliations. We believe this material weakness will remain until we have had sufficient experience with the sustainability of the controls.

Changes in Internal Control over Financial Reporting:

Other than the above, there have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

32

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities:

NONE

On September 30, 2004, the Board of Directors authorized a new stock repurchase program. Under the program, the Company is permitted to repurchase up to 1 million shares of C&D Technologies common stock having a total purchase price of no greater than $25 million. This program entirely replaces and supersedes all previously authorized stock repurchase programs. No shares were purchased during the first nine months of fiscal year 2010 under this program.

Restrictions on Dividends and Treasury Stock Purchases:

Our Credit Facility limits restricted payments including dividends and Treasury Stock purchases to no more than $250,000 for Treasury Stock in any one calendar year and $1,750,000 for dividends for any one calendar year subject to adjustments of up to $400,000 per year in the case of the conversion of debt to stock per the terms of our convertible offerings. These restricted payments can only occur with prior notice to the lenders and provided that there is a minimum of $30,000,000 in excess Credit Facility availability for a period of thirty days prior to the dividend. The Company may declare and pay a dividend provided these conditions are met and there does not exist an event of default. No dividends have been declared during the first nine months of fiscal year 2010.

33

Item 6. Exhibits.

	Exhibit Description	Incorporated by Reference			Filed Herewith
Exhibit Number		Form	Date	Exhibit Number
10.1	Employment Agreement dated October 1, 2009. between C&D Technologies, Inc. and Todd J. Greenspan				X
31.1	Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
31.2	Certification of the Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002				X
32.1	Certification of the President and Chief Executive Officer and Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002				X

34

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	C&D TECHNOLOGIES, INC.
December 8, 2009	By:	/s/    JEFFREY A. GRAVES
		Jeffrey A. Graves
		President, Chief Executive Officer and Director (Principal Executive Officer)
December 8, 2009	By:	/s/    IAN J. HARVIE
		Ian J. Harvie
		Vice President Finance and Chief Financial Officer (Principal Financial Officer)
December 8, 2009	By:	/s/    TODD J. GREENSPAN
		Todd Greenspan
		Vice President & Corporate Controller (Principal Accounting Officer)

35

EXHIBIT INDEX

10.1	Employment Agreement dated October 1, 2009. between C&D Technologies, Inc. and Todd J. Greenspan
31.1	Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of the President and Chief Executive Officer and Vice President and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

36

EX-10.1

EXHIBIT 10.1

October 1, 2009

Todd Greenspan

405 Willowbend Court

Hockessin, DE 19707

Dear Todd:

C&D Technologies, Inc., a Delaware corporation (the “Company”), wishes to employ you in an executive capacity and the Company desires to encourage such employment by providing certain protections for you by entering into this Agreement with you, in return for which you agree to be employed by the Company on the terms set forth herein, to refrain from certain competitive activity and to provide the Company with certain assurances upon your departure. In consideration of same, the Company agrees to employ you, and you agree to accept such employment, under the following terms and conditions:

1. Term of Employment. Your employment under this Agreement shall continue in effect until either party shall give to the other party at least 30 days prior written notice (or such other notice period as may be specifically provided for in this Agreement) of the termination of this Agreement (a “Termination Notice”), or until it is terminated in accordance with Section 8. If a Termination Notice is given by either party the Company shall, without any liability to you, have the right, exercisable at any time after such notice is sent 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. The period during which you are employed under this Agreement is hereafter referred to as the “Term.”

2. Compensation and Benefits.

(a) During the Term, you shall receive a salary for performance of your obligations under this Agreement at an initial rate of $195,000 per year, payable in such manner as is consistent with the Company’s payroll practices for executives and subject to increase (but not decrease) by the Board of Directors in its sole discretion. Such salary, as it may be adjusted from time to time, is hereinafter referred to as the “Base Salary.”

(b) During the Term, you shall have the benefit of and be entitled to participate in such employee benefit plans and programs, including life, disability and medical insurance, savings, retirement and other similar plans, as the Company now has or hereafter may establish from time to time, and in which you are entitled to participate pursuant to the terms thereof. 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.

(c) During the Term, you shall be entitled (i) to participate in the Company’s Management Incentive Compensation Plan or any successor thereto each year in accordance with criteria and for amounts approved by the Board of Directors, except as may otherwise be delegated to the Compensation Committee or other relevant committee, and (ii) to be granted options to acquire stock of the Company or other equity awards, to the extent (if any) approved by the Compensation Committee or the relevant committee, under the Company’s stock option or equity incentive plans in effect from time to time (all such options and equity awards, “Awards”). Without limiting the foregoing, you shall have a minimum targeted bonus for each fiscal year of 35% of your Base Salary (with the actual payment of any bonus being dependent on your or the Company’s achievement of targeted objectives except as otherwise set forth in this Agreement). Each of the actual annual bonuses paid to you each year is hereinafter referred to as an “Annual Bonus.”

(d) You shall be entitled to payments and benefits in connection with a Change of Control Termination (as defined in Exhibit A hereto) and to certain additional payments if you are subjected to the federal excise tax on excess parachute payments, as more fully set forth in Exhibit A.

(e) To the extent that any payment hereunder or under any plan, program or policy is determined to be nonqualified deferred compensation that is noncompliant with Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”), and is therefore subject to additional taxes and penalties, the Company shall provide you with additional payments as more fully set forth in Exhibit A. Any reference to Section 409A shall be deemed to include any applicable guidance that has been provided thereunder.

(f) You shall be entitled to a minimum of four weeks of vacation each calendar year during the Term. To the extent that Company policy provides additional vacation days, you shall also be entitled to such additional vacation days. Any unused vacation days in any one year shall carry over to the next calendar year.

(g) The Company will provide you at its expense with an annual physical examination each year during the Term.

3. Duties.

(a) During the Term, you shall serve and the Company shall employ you as the Vice President, Controller of the Company, with such executive duties and responsibilities consistent with such positions and stature as the Chief Financial Officer of the Company may from time to time determine. Your duties may be changed at any time and from time to time hereafter, upon mutual agreement, consistent with the office or offices in which you serve as deemed necessary by the Chief Financial Officer of the Company. You shall report to, and act under the general direction of, the Chief Financial Officer of the Company. You shall use your best efforts to carry out the instructions of the Chief Financial Officer of the Company. You also agree to perform such other services and duties consistent with the office or offices in which you are serving from time to time and those responsibilities as may from time to time be prescribed by the Board of Directors. You also agree to serve as an officer and/or director of the Company and/or any of the Company’s other direct or indirect subsidiaries, in all cases in conformity with

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the organizational documents and the policies of the Board of Directors of each such subsidiary, without additional compensation. You will review and agree to comply with the Company’s then-current Code of Business Conduct to the same extent required for other United States-based employees of the Company. You will perform all of your responsibilities in compliance with all applicable laws.

(b) During the Term, you shall 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 3 shall be construed as prohibiting you from 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 5 hereof or require any services on your part in the operation or affairs of those businesses. You may also participate in philanthropic or civic activities as long as they do not materially interfere with your performance of your duties hereunder. Service on any board of directors other than those of the Company and its subsidiaries must be approved, in advance, by the Board of Directors of the Company.

(c) During the Term, you shall be subject to the Company’s rules, practices and policies applicable to the Company’s senior executive employees.

4. Expenses. The Company shall reimburse you for all reasonable expenses incurred by you during the Term in connection with your employment upon presentation of appropriate documentation therefor in accordance with the Company’s expense reimbursement practices. In the event during the Term the Company’s principal executive offices are relocated to a location that increases your commute to work by more than 35 miles, the Company shall reimburse your moving expenses (including reasonable costs relating to interim living accommodations).

5. Restrictive Covenants.

(a) During the Term, and for the applicable Restricted Period (as defined below) thereafter, you shall not, without the 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 or agent of, or as a consultant for, any business anywhere in the world that is competitive with the business in which the Company is engaged or in which the Company has taken affirmative steps to engage (a “Competitive Business”) as of the time your employment with the Company ceases; provided, however, that (i) nothing herein shall prevent you from investing in up to 5% of the securities of any company listed on a national securities exchange or quoted on the NASDAQ quotation system, as long as your involvement with any such company is solely that of a stockholder, and (ii) nothing herein is intended to prevent you from being employed by, or otherwise rendering services to, any business other than a Competitive Business following the termination of your employment with the Company. The Restricted Period shall be the one-year period following the date your employment terminates. You acknowledge that the provisions of this Section 5 are reasonable in light of the Company’s worldwide business operations and the position in which you will serve at the Company and that the provisions will not prevent you from obtaining employment after the termination of this Agreement.

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(b) The parties hereto intend that the covenant contained in this Section 5 shall be deemed a series of separate covenants for each appropriate jurisdiction. If, in any judicial proceeding, a court shall refuse to enforce all of the separate covenants deemed included in this Section 5 on grounds that, taken together, they cover too extensive a geographic area, the parties intend that those covenants (taken in order of the least populous jurisdictions) which, 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 5.

6. 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 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 from a source that was entitled to disclose it, 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. For purposes of this Agreement, the term “Confidential or Proprietary Data or Information” shall mean data or information not generally available to the public, including personnel information, financial information, customer lists, supplier lists, product and tooling specifications, trade secrets, information concerning product composition and formulas, tools and dies, drawings and schematics, manufacturing processes, information regarding operations, systems and services, know-how, computer and any other electronic, processed or collated data, computer programs, and pricing, marketing, sales and advertising data.

(b) You shall not, during the Term and for the applicable Restricted Period after the termination of your employment with the Company, for your own account or for the account of any other person, (i) solicit or divert to any Competitive Business any individual or entity who is then a customer of the Company or any subsidiary or affiliate of the Company or who was a customer of the Company or any subsidiary or affiliate during the preceding twelve-month period, (ii) employ, retain as a consultant, attempt to employ or retain as a consultant, or solicit or assist any Competitive Business in employing or retaining as a consultant any individual who is then an employee of the Company or any subsidiary or affiliate or who was employed by the Company or any subsidiary or affiliate during the preceding twelve-month period, or (iii) otherwise interfere in any material respect with the Company’s relationship with any of its suppliers, customers, employees or consultants; provided, however, that you shall not be prohibited from contacting suppliers or customers after termination of your employment with regard to matters that do not violate your non-competition or confidentiality obligations contained in Sections 5(a) and 6(a) or interfere in any material respect with the Company’s relationship with such parties.

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(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 trademarked, 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 hereby irrevocably appoint the Company and its officers and agents as your agents and attorneys-in-fact to execute such instruments and to do such things with the same legal force and effect as if executed or done by you.

(d) All written, electronic and other tangible 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 computer and telephone equipment.

7. Equitable Relief. With respect to the covenants contained in Sections 5 and 6 of this Agreement, you acknowledge that any remedy at law for any breach of said covenants may be inadequate and that the Company, in addition to its rights at law, shall be entitled to specific performance or any other mode of injunctive or other equitable relief to enforce its rights hereunder.

8. Termination of Term. The Term shall terminate upon the following terms and conditions:

(a) The Term shall automatically terminate upon your death.

(b) The Term may be terminated by the Company upon your Disability. For purposes of this Agreement, “Disability” shall mean your inability, due to reasons of physical or mental health, to discharge properly a substantial portion of your duties hereunder for any 180 days (whether or not consecutive) during any period of 365 consecutive days, as determined in the opinion of a physician reasonably satisfactory to both you and the Company. If the parties do not agree on a mutually satisfactory physician 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. You shall fully cooperate with the examining physician, including submitting yourself to such examinations as may be requested by the physician for the purpose of determining whether you are disabled.

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(c) The Term shall terminate immediately if the Company terminates your employment for Cause. For purposes of this Agreement, “Cause” shall exist upon a finding by the Board of Directors of any of the following: (i) an act or acts of willful material misrepresentation, fraud or dishonesty by you that results in the personal enrichment of you or another person or entity at the expense of the Company; (ii) your admission, confession or conviction of any felony or any other crime or offense involving misuse or misappropriation of money or other property; (iii) any act involving gross moral turpitude by you that adversely and materially affects the Company; (iv) your continued breach of any of your material obligations under this Agreement 30 days after the Company has given you notice thereof in reasonable detail, if such breach has not been cured by you during such period; or (v) your willful misconduct with respect to your duties or gross misfeasance of office.

For purposes of this Section 8(c), no act or failure to act, on your part shall be considered “willful” unless it is done, or omitted to be done, by you in bad faith or without reasonable belief that your action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board of Directors or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company. Your termination of employment shall not be deemed to be for Cause unless prior to such termination you have received a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the disinterested membership of the Board of Directors at a meeting of such Board of Directors called and held for such purpose (after reasonable notice is provided to you and you are given an opportunity to be heard before such Board of Directors), stating the clause pursuant to which the Board of Directors has effected your termination. If you appeal this decision to arbitrators pursuant to Section 23, the arbitrators shall be required to make a de novo review of the circumstances of your termination and independently determine whether facts exist to support such termination.

(d) The Term shall terminate if your employment is terminated in a Change of Control Termination (as defined in Exhibit A).

(e) The Term shall terminate upon the expiration of the thirty (30) day period after delivery of a Termination Notice if your employment is terminated by the Company without Cause or voluntarily by you (a termination by you not due to Breach or a termination by you without Good Reason).

9. Compensation Upon Termination of Employment. Separation pay shall be paid in accordance with the schedule set forth below upon a termination of employment that constitutes a “separation from service” as defined under Section 409A (“Separation from Service”). If a termination of employment does not constitute a Separation from Service, separation pay shall be paid at such later time that a Separation from Service occurs. For purposes of this Agreement, the default definition of Separation from Service under the Final Regulations promulgated under Section 409A shall be employed.

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(a) For Any Reason. Upon termination of employment: (i) you or your estate, as applicable, shall be paid within fifteen business days after your date of termination (A) your accrued and unpaid Base Salary through the date of termination, (B) any then-vested and unpaid Annual Bonus or other incentive compensation that you may have earned pursuant to the terms of any applicable incentive compensation or bonus plan of the Company with respect to any fiscal year or other performance period completed prior to your date of termination, and (C) any then-unused accrued vacation pay; (ii) you, your beneficiaries and/or your estate, as applicable, shall be entitled to any payments and benefits under the benefits and incentive plans and perquisite programs of the Company, in accordance with the respective terms of those plans and perquisite programs (including without limitation, any conversion option available to you under the Company’s life insurance plan(s)); and (iii) you or your estate, as applicable, shall be reimbursed for your business expenses incurred prior to termination in accordance with Section 4 above.

(b) Change of Control Termination. Upon the termination of employment by reason of a Change of Control Termination, you shall receive the payments and benefits set forth in Exhibit A.

(c) Termination without Cause or Breach Termination. Upon the termination of employment that is not by reason of a Change of Control Termination, but results from either (1) a termination by the Company without Cause (excluding a termination due to death or Disability), or (2) a termination by you which is a Breach Termination (as defined below), you shall also receive the following payments; provided, however, that any payment made under this Section 9(c) shall be reduced by any amount paid or payable to you with respect to the same type of payment under any other plan maintained by the Company to avoid duplication of payments:

(i) The Company shall pay you an amount equal to your Base Salary at the rate in effect on the date of termination. Payment of such amount will commence in the form of normal payroll installments through the period ending as of the end of the second month following the later of (A) the calendar year in which your termination of employment occurs or (B) the taxable year of the Company in which your termination of employment occurs. The balance of such payments shall be made in a single lump sum payable within the fifteen day period immediately following the end of the month in which installment payments are to cease.

(ii) If you terminate employment on or after May 1^st of a fiscal year, you shall be entitled to an Annual Bonus for that fiscal year, based on the actual bonus earned under the applicable bonus plan for the fiscal year, pro-rated to reflect the number of business days during the fiscal year in which you were employed by the Company. This bonus shall be paid only when and if bonuses are paid to other senior executives of the Company for such year, but, if any such bonus is payable, it shall be paid no later than the 15^th day of the third month following the earlier of (A) the calendar year in which your termination of employment occurs or (B) the taxable year of the Company in which your termination of employment occurs.

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As used in this Section 9(c), a “Breach Termination” means a termination of your employment by you by written Termination Notice given to the Company within 90 days after the occurrence of any action or inaction that constitutes a material breach by the Company of the Agreement. A Termination Notice for a Breach Termination shall indicate the specific action or inaction that constitutes the material breach, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for the Breach Termination, and shall provide the Company a minimum of 30 days in which to remedy such facts or circumstances. Your failure to set forth in such Termination Notice any facts or circumstances which contribute to the showing of Breach Termination shall not constitute your waiver of any right hereunder or preclude you from asserting such fact or circumstance in enforcing your rights hereunder. The Termination Notice for a Breach Termination shall provide for a date of termination not less than 30 nor more than 60 days after the date such Termination Notice is given.

Notwithstanding the foregoing, should a termination of employment by the Company without Cause or a Breach Termination occur within six months prior to, or within two years after, a Change of Control, your termination shall be considered a Change of Control Termination and you shall vest in the payments and benefits set forth in Exhibit A. Any such payments or benefits shall be offset by any payments or benefits that you may have been already paid or received due to the occurrence of the termination of employment prior to the Change of Control, and shall be paid in accordance with Exhibit A.

(d) The payment by the Company of any compensation or the provision of benefits, if any, pursuant to Section 9(c) and Exhibit A shall be conditioned on your execution, without revocation, of a Release (a “Release”) in a form provided by and acceptable to the Company. Such Release shall be substantially in the form of Exhibit B hereto but may be modified by the Company in its sole discretion as it deems appropriate to reflect changes in law or circumstances arising after the date of this Agreement; provided, however, that no such modification shall reduce your rights or increase your obligations to the Company over those contemplated in this Agreement, including the Exhibits hereto. No Release shall be required for any benefits to which you are entitled under the terms of any plan.

10. Indemnification. At all times, prior to, on or after a Change of Control, the Company shall indemnify you for your acts as an officer and director to the fullest extent permitted by law. Further, the Company shall provide you with advance attorneys fees and expenses to you as they are incurred subject to presentation of invoices.

11. Representations. You hereby represent and warrant that you are not subject to any employment agreement, non-competition or confidentiality agreement or other commitment that either would be violated by your entering into or performing your obligations under this Agreement or that would restrict in any manner or interfere with the performance of your obligations under this Agreement. You hereby further represent and warrant that you have not revealed to the Company or any employee of the Company any confidential information of any former employer, and you agree that you will not do so in the future.

12. Entire Agreement; Modification; Construction. This Agreement, together with the Exhibits hereto and those portions of the offer letter dated August 13, 2009 (the “Offer Letter”) not specifically addressed in this Agreement, and all other employee benefit

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plans in which you participate, constitute the full and complete understanding of the parties, and supersede all prior agreements and understandings, oral or written, between the parties, with respect to the subject matter hereof. The Offer Letter, Exhibit A and Exhibit B are hereby incorporated by reference and made a part of this Agreement. 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, that are not set forth or referred to herein. This Agreement may not be modified or amended except by an instrument in writing signed by the parties.

13. 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 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.

14. 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.

15. 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, and if to the Company, to the Vice President-Human Resources, at the Company’s address set forth above, or to such other address as either party to this Agreement shall specify to the other.

16. Assignability; Binding Effect. This Agreement shall not be assignable by either party, except that it may be assigned by the Company to an acquirer of all or substantially all of the assets of the Company or other successor to the Company, subject to your rights arising from a Change of Control as provided in Exhibit A and your other rights hereunder. 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 and detriment of the Company, its successors and assigns. Prior to a Change of Control, any successor to the Company shall be required to acknowledge in writing its obligations hereunder as successor to the Company to the extent that the Company has not fulfilled its obligations prior to the Change of Control or any amounts or benefits are still due to you after the Change of Control.

17. No Mitigation Required. No Offset. Following any termination of your employment hereunder, you shall have no obligation to seek other employment but shall not be prohibited from doing so, and no compensation paid to you as the result of any other employment shall reduce any payment or benefit required to be provided by the Company hereunder. Not in limitation of any other rights which the Company may have, including without limitation, injunctive or other equitable relief, in the event of a violation by you of any of the covenants set forth in Section 5, Section 6 or Section 19 hereof, the Company may cease paying any compensation and benefits, if any, to you under Section 9 hereof and may seek recovery of any such amount paid to you during any period in which you were in violation of the provisions of Section 5, Section 6 or Section 19. The cessation and/or recovery of any of the payments described in Section 9(c) in connection with any such violation shall not be deemed to be evidence that monetary damages are sufficient to cure any damage to the Company for any such violation.

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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 Commonwealth of Pennsylvania, without giving effect to the conflicts or choice of law provisions thereof.

19. Nondisparagement. You agree not to publicly or privately disparage the Company, its personnel, products or services either during your employment by the Company or during the Restricted Period.

20. Survival. All of the provisions of this Agreement that by their terms are to be performed or that otherwise are to endure after the termination of this Agreement and/or the termination of your employment, including, without limitation, Sections 5, 6, 7, 10, 17 and 19, shall survive the termination of your employment and shall continue in effect for the respective periods therein provided or contemplated.

21. 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.

22. 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.

23. Dispute Resolution. In the event of any claim or controversy arising out of or relating to this Agreement or the performance, construction, interpretation, enforcement or breach hereof (excluding injunctive and other equitable relief regarding a dispute over the covenants contained in Sections 5, 6, and 19 hereof) (a “dispute”), the parties shall settle disputes in accordance with this Section 23.

(a) Notice and Selection of Arbitrators. The parties shall first attempt to settle any disputes amicably between themselves. Should they fail to do so, either party may, upon written demand from the claiming party of the specific nature of any purported claims and the amount of damages attributable to each such claim, served upon the other, submit such dispute to binding arbitration. The arbitration panel shall consist of three arbitrators, shall take place in Philadelphia, Pennsylvania and shall proceed in accordance with the employment dispute resolution rules of the American Arbitration Association (“AAA”).

Within 15 days after the commencement of arbitrations, each party shall select one arbitrator from a list of arbitrators provided by the AAA. A third neutral arbitrator shall be designated by the arbitrators selected by the parties within 15 days of their appointment. In the event that any arbitrator is not appointed within the prescribed time period, then either party may apply to the AAA for the appointment of such arbitrator. Prior to the commencement of hearings, each of the arbitrators appointed shall provide an oath or undertaking of impartiality.

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(b) Hearings. After the arbitrators have been appointed as provided above, the arbitrators shall hold such meetings as a party may reasonably request and at such meetings hear and consider any evidence that a party desires to present. Within 60 days after the appointment of the third arbitrator, the arbitrators shall make their determination.

(c) Determinations. The determination of a majority of the arbitrators shall be final and binding on the parties, regardless of whether one of the parties fails or refuses to participate in the arbitration. The arbitrators shall have the power and authority to grant any remedy or relief they deem just and equitable, including injunctive relief, specific performance (excluding, however, equitable relief regarding a dispute over the covenants contained in Sections 5, 6 and 19 hereof), and reasonable costs and expenses of such arbitration and attorneys’ fees. Absent any specific order of the arbitrators, the costs and expenses of the arbitration shall be paid equally by the parties. The arbitration award, decree or order shall be in writing and shall be accompanied by a reasoned opinion. The award may be entered in any court of competent jurisdiction, and any judgment, decree or order entered in any such court and any related orders may be enforced as any other judgment, decree or order of such court. The arbitration proceedings and all materials, submissions and documents relating thereto shall be confidential, and except as may be required by law neither a party nor an arbitrator may disclose the existence, contents or results of any arbitration hereunder without the consent of all parties hereto. All disputes shall be resolved in accordance with the laws of the Commonwealth of Pennsylvania.

(d) Qualifications of Arbitrators. Any arbitrator chosen by or through the AAA shall be chosen from a class of disinterested experts qualified by education, training and/or experience to resolve the particular issue(s) in a dispute in an informed and efficient manner.

(e) Preservation of Remedies. Notwithstanding the preceding binding arbitration provisions, the parties agree to preserve, without diminution, certain remedies that any party may exercise before, during or after an arbitration proceeding is brought. The parties shall have the right to proceed in any court of proper jurisdiction or by self-help to exercise or prosecute the following remedies, as applicable: obtaining provisional or ancillary remedies, including injunctive and other equitable relief with regard to disputes over the covenants contained in Sections 5, 6 and 19 hereof.

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If you are in agreement with the foregoing, please sign the duplicate original in the space provided below and return it to the Company.

C&D TECHNOLOGIES, INC.
By:	/s/ Jeffrey A. Graves
	Jeffrey A. Graves
Title:	President and Chief Executive Officer

Agreed as of the date above written:

/s/ Todd Greenspan

Todd Greenspan

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EXHIBIT A

TO EMPLOYMENT AGREEMENT (THE “AGREEMENT”)

OF TODD GREENSPAN (“EXECUTIVE”)

(Capitalized terms used herein and not otherwise defined have the meanings given to them in the Agreement.)

I. Change of Control Termination. A “Change of Control Termination” means the occurrence of any of the following within six months before or within 24 months after a Change of Control (as defined below): (a) the Executive’s employment with the Company is terminated by the Executive pursuant to (1) a Breach Termination, if the termination occurs within six months prior to a Change of Control, or (2) a Termination for Good Reason (as defined below), if the termination occurs after a Change of Control; or (b) the Executive’s employment with the Company is terminated by the Company for any reason other than death, Disability or for Cause.

II. Certain Other Definitions.

(a) Change of Control. For purposes of the Agreement, a “Change of Control” shall mean the first to occur of:

1. The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section II(a)1, the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any majority-owned subsidiary of the Company, or (iv) any acquisition by any corporation pursuant to a transaction that complies with Subsections (A), (B) and (C) of Section II(a)3 below. Separation payments that constitute nonqualified deferred compensation set forth in this Exhibit A shall be paid upon a Change in Control Termination that constitutes a Separation from Service. For purposes of this Exhibit A, the default definition of “Separation from Service” under the Final Regulations promulgated under Section 409A shall be employed.

2. Individuals who, as of the date hereof, constitute the Board of Directors (the “Incumbent Board”) cease, for any reason, to constitute at least a majority of the Board of Directors; provided, however, that any individual becoming a director subsequent to the date of the Agreement whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least

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two-thirds of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors.

3. Consummation of a reorganization, merger, statutory share exchange, recapitalization or consolidation or similar corporate transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board of Directors providing for such Business Combination; or

4. Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

(b) Termination for Good Reason. For purposes of this Exhibit A, a “Termination for Good Reason” means a termination of the Executive’s employment by the Executive by written Termination Notice given to the Company within 90 days after the occurrence of the Good Reason event. A Termination Notice for a Termination for Good Reason shall indicate the specific provision in Section II(c) relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for Termination for Good Reason, and shall provide the Company a minimum of 30 days in which to

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remedy such facts or circumstances. The failure by the Executive to set forth in such Termination Notice any facts or circumstances which contribute to the showing of Good Reason shall not waive any right of Executive hereunder or preclude the Executive from asserting such fact or circumstance in enforcing his rights hereunder. The Termination Notice for a Termination for Good Reason shall provide for a date of termination not less than 30 nor more than 60 days after the date such Termination Notice is given.

(c) Good Reason. For purposes of this Exhibit A, “Good Reason” shall mean the occurrence, without the Executive’s express written consent, of any of the following circumstances, unless such circumstances are fully corrected prior to the date of termination specified in the Termination Notice for a Termination for Good Reason as contemplated in Section II(b) above: (i) a material diminution in the Executive’s authority, duties, or responsibilities; (ii) a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Executive is required to report, including, if applicable. a requirement that the Executive report to a corporate officer or employee instead of reporting directly to the board of directors; (iii) a material diminution in the budget over which the Executive retains authority; (iv) a material relocation of the Company’s principal executive offices (or such other office to which the Executive is required to report); (v) a material diminution in the Executive’s Base Salary or (vi) any other action or inaction that constitutes a material breach by the Company of the Agreement.

III. Payments and Benefits.

Separation pay upon a Change in Control Termination shall be paid in accordance with this Section III provided that such termination constitutes a “separation from service” as defined under Section 409A (“Separation from Service”). If a Change of Control Termination does not constitute a Separation from Service, separation pay shall be paid at such later time that a Separation from Service occurs.

Upon a Separation from Service occurring upon or after a Change of Control Termination, the Executive shall be entitled to receive, subject to the execution of the Release, the payments and benefits set forth below in this Section III in consideration of the Executive’s agreements under the Agreement, including but not limited to the Executive’s agreement not to compete with the Company for a period of one year after a Change of Control Termination pursuant to Section 5(a) of the Agreement; provided, however, that any payment made or benefit provided under this Section III shall be reduced by any amount paid or payable to the Executive and/or the Executive’s family with respect to the same type of payment or benefit under any other plan maintained by the Company to avoid duplication of payments or benefits, including without limitation, any amounts that were paid upon termination of employment prior to the Change of Control:

(a) The Company shall pay to the Executive within fifteen days following the Change of Control Termination, a lump sum amount equal to (i) two times the sum of (x) the Base Salary as in effect immediately before the date of termination (disregarding any reduction thereof in violation of Section 2(a) of the Agreement) and (y) the Annual

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Bonus Amount, plus (ii) $10,000. The “Annual Bonus Amount” shall mean the greater of (i) the average of the Annual Bonuses paid to the Executive with respect to each of the three most recently completed fiscal years of the Company before the date of termination for which a bonus has been paid or (ii) the Executive’s Targeted Bonus Amount. The Executive’s “Targeted Bonus Amount” shall mean (x) the higher of 35% and the percentage of the Executive’s targeted bonus in effect before the date of termination for purposes of determining the Executive’s Annual Bonus for the year in which the termination occurs, times (y) the amount of the Executive’s Base Salary as in effect for the year in which the Executive’s termination occurs (disregarding any reduction thereof in violation of Section 2(a) of the Agreement).

(b) The Company shall, until the earlier of 18 months after the date of the Change of Control Termination and such time that the Executive obtains alternative coverage, pay or reimburse the Executive for the Company’s and the Executive’s portion of the cost to provide the Executive and the Executive’s eligible beneficiaries (if applicable) health and medical coverage under the Company’s health and medical plans provided that the Executive timely elects COBRA coverage upon termination of employment. In addition, for two years after the date of the Change of Control, the Company shall provide the Executive with life insurance coverage under the Company’s life insurance policy. Notwithstanding the foregoing, to the extent the Company’s plans do not permit the continued participation by the Executive and/or the Executive’s eligible beneficiaries or such participation would have an adverse tax impact on such plans or on the other participants in such plans or the continued participation is otherwise prohibited by applicable law, or if such continuance would constitute nonqualified deferred compensation that does not comply with Section 409A, the Company may instead provide materially equivalent benefits to the Executive and/or the Executive’s eligible beneficiaries outside such plans. For purposes of this Agreement, “materially equivalent benefits” means the aggregate premiums that the Company would have paid to maintain the Executive’s coverage under the health, medical and life insurance plans. The Executive agrees to complete such forms and take such physical examinations as may be reasonably requested by the Company in connection with life insurance coverage.

(c) All outstanding Options and restricted stock awards that have been granted to the Executive by the Company at any time but have not yet expired or vested and upon which vesting depends solely upon the Executive’s remaining employed by the Company for a specified period of time, shall immediately vest or become nonforfeitable, as the case may be, and the Company shall, in the case of Options that are not exercised or cashed out, extend the period during which such Options may be exercised to the greatest extent permitted by the applicable plan, Section 409A or other applicable law. The Company agrees to take all steps necessary to implement the foregoing sentence.

(d) The Company, at its expense, shall provide the Executive with outplacement services at a level appropriate for the most senior level of executive employees through an outplacement firm of the Executive’s choice for a period of up to one year after the date of the Change of Control Termination.

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IV. Certain Additional Payments.

(a) Anything in the Agreement and this Exhibit A to the contrary notwithstanding, in the event it shall be determined that any Payment or any other amounts or benefits delivered to the Executive under the Agreement or any other agreement, plan, policy or program, including, without limitation, equity awards, would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment and after the payment of all additional taxes and interest imposed under Code Section 409A(a)(1)(B) on the Gross-Up Payment and any separation payment made to the Executive hereunder, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the foregoing provisions of this Section IV(a), if it shall be determined that the Executive is entitled to the Gross-Up Payment, but that the Parachute Value of all Payments does not exceed 110% of the Safe Harbor Amount, then no Gross-Up Payment shall be made to the Executive and the amounts payable under this Agreement shall be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by first reducing the payments under Section III(a) of this Exhibit A and shall be made in such a manner as to maximize the Value of all Payments actually made to the Executive. For purposes of reducing the Payments to the Safe Harbor Amount, only amounts payable under this Agreement (and no other Payments) shall be reduced. If the reduction of the amounts payable under this Agreement would not result in a reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no amount payable under the Agreement shall be reduced pursuant to this Section IV(a). The company’s obligations under this Section IV shall not be conditioned upon the Executive’s termination of employment and they shall survive the termination of the Executive’s employment. In furtherance of the foregoing, the provisions of this IV(a) shall supersede any provision of any equity award or agreement that limits payment of such award or agreement due to Section 280G or 4999 of the Code, and the Company shall take any necessary action to amend such every such award or agreement to comply with this provision.

(b) Anything in the Agreement and this Exhibit A to the contrary notwithstanding, in the event it shall be determined that any amounts or benefits delivered to the Executive under the Agreement or any other agreement, plan, policy or program shall be deemed to be nonqualified deferred compensation that does not comply with Section 409A (“Noncompliant 409A Payment”), and that is therefore subject to the taxes and penalties under Section 409A (the “409A Taxes”), then the Executive shall be entitled to receive an additional payment (the “409A Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and taxes imposed upon the 409A Gross-Up Payment, the Executive shall retain an amount of the 409A Gross-Up Payment equal to the 409A Taxes imposed upon the Payments.

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(c) Subject to the provisions of Section IV(d), all determinations required to be made under this Section IV, including whether and when a Gross-Up Payment or 409A Gross-Up Payment is required, the amount of such Gross-Up Payment or 409A Gross-Up Payment, and the assumptions to be utilized in arriving at such determination, shall be made by any nationally recognized certified public accounting firm as may be designated by the Executive (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or a payment that the Executive reasonably believes to be a Noncompliant 409A Payment, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, or 409A Gross-Up Payment, as determined pursuant to this Section IV, shall be paid by the Company to the Executive within five business days of the receipt of the Accounting Firm’s determination, which determination shall be made no later than the end of the second month following the later of (1) the calendar year in which the Executive’s employment with the Company terminates and (2) the taxable year of the Company in which the Executive’s employment with the Company terminates. Payment of the Gross-Up Payment or the 409A Gross-Up Payment shall be made as soon as practicable after such determination has been made, but in no event shall payment be made later than the end of the Executive’s taxable year next following the Executive’s taxable year in which the Executive shall have remitted the related taxes.

Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of the uncertainty in the application of Sections 4999 and 409A of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments and 409A Gross-Up Payments that will not have been made by the Company should have been made (the “Underpayment”), consistent with the calculations required to be made hereunder. In the event the Company exhausts its remedies pursuant to Section IV(c) and the Executive thereafter is required to make a payment of any Excise Tax or 409A Taxes, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.

(d) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment or the 409A Gross-Up Payment. Such notification shall be given as soon as practicable, but no later than ten business days after the Executive is informed in writing of such claim. The Executive shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Executive in writing prior to the expiration of such period that the Company desires to contest such claim, the Executive shall:

(1) give the Company any information reasonably requested by the Company relating to such claim,

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

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

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

provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest, and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section IV(c), the Company shall control all proceedings taken in connection with such contest, and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties) or 409A Taxes imposed with respect to such advance or with respect to any imputed income in connection with such advance; and provided, further, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest shall be limited to issues with respect to which the Gross-Up Payment or 409A Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

(e) If, after the receipt by the Executive of a Gross-Up Payment or 409A Gross-Up Payment or an amount advanced by the Company pursuant to Section IV(d), the Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, the Executive shall

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

(f) Notwithstanding any other provision of this Section IV, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Executive, all or any portion of any Gross-Up Payment or 409A Gross-Up Payment, and the Executive hereby consents to such withholding.

(g) Definitions. The following terms shall have the following meanings for purposes of this Section IV.

(i) “Code” shall mean the Internal Revenue Code of 1986, as amended, or any successor thereto.

(ii) “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

(iii) “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

(iv) “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

(v) “Safe Harbor Amount” means 2.99 times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.

(vi) “Value” of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.

(h) The Company’s obligations under this Section IV shall not be conditioned upon the Executive’s termination of employment, and they shall survive the termination of the Executive’s employment and the Term with respect to any Payments or other payments

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that are determined by the Accounting Firm to be either (i) contingent on a “change of control” (as defined in Section 280G of the Code) of the Company that occurs during the Term, or (ii) nonqualified deferred compensation that does not comply with Section 409A.

(i) Any Gross-Up Payment or 409A Gross-Up Payment shall be made no later than the end of the Executive’s taxable year following the taxable year in which the Executive remits the related taxes.

V. Legal Fees. If, following a Change of Control, the Company fails to perform any of its obligations under this Agreement or the Company or any other person asserts the invalidity of any provision of this Agreement and the Executive incurs any costs in successfully enforcing or defending any of the provisions of this Agreement, including legal fees and expenses and court costs, the Company shall reimburse the Executive for all such costs incurred by him, unless the trier of fact in such dispute determines that the Executive has not been at least partially successful in such enforcement or defense. Any reimbursement under this Section V shall be made no later than the end of calendar year following the calendar year in which such costs are incurred by the Executive.

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EXHIBIT B

RELEASE

This Release is made this _____ day of _______________, ____ by and between C&D Technologies, Inc. (“Employer”) and Todd Greenspan (“Employee”).

Recitals:

WHEREAS, the parties are parties to an Employment Agreement (the “Employment Agreement”) dated October 1, 2009, pursuant to which Employee was employed by Employer; and

WHEREAS, Employee’s employment and the Term, as defined in the Employment Agreement, have terminated; and

WHEREAS, the execution and delivery of this Release by Employee is a condition to the Employer’s obligations to pay certain compensation and provide certain benefits to Employee under the Employment Agreement;

NOW THEREFORE, the parties hereto, intending to be legally bound, in consideration of the mutual promises and undertakings set forth herein, do hereby agree as follows:

1. As of _____________________, ____, Employee’s employment with Employer shall terminate, and Employee shall have no further job responsibilities to perform for Employer; provided, however, that Employee shall cooperate with Employer in transitioning Employee’s job responsibilities as Employer shall reasonably request, provided that Employee shall be entitled to receive reasonable compensation for any services rendered prior to such date and shall not be obligated to take any action that would interfere with any subsequent employment of Employee or otherwise result in economic hardship to Employee.

2. Employer shall pay and provide to Employee the amounts and benefits contemplated pursuant to Section 9 [and Exhibit A] of the Employment Agreement, less applicable deductions; provided however, the first payment shall not be due and payable until ten days after the execution by Employee and delivery to Employer of this Release.

3. For and in consideration of the monies and benefits paid to Employee by Employer, as more fully described in Section 2 above, and for other good and valuable consideration, Employee hereby waives, releases and forever discharges Employer, its assigns, predecessors, successors, and affiliated entities, and its current or former stockholders, officers, directors, administrators, agents, servants and employees, individually and as representatives of the corporate entity (hereinafter collectively referred to as “Releasees”), from any and all claims, suits, debts, dues, accounts, reckonings, bonds, bills, specialties, covenants, contracts, bonuses, controversies, agreements, promises, charges, complaints, damages, sums of money, interest, attorney’s fees and costs, or causes of action of any kind or nature whatsoever whether in law or equity, including, but not limited to, all claims arising out of his employment or termination of employment with Employer, such as all claims for wrongful discharge, breach of contract, either

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express or implied, interference with contract, emotional distress, fraud, misrepresentation, defamation, claims arising under the Civil Rights Acts of 1964 and 1991, as amended, the Americans With Disabilities Act, the Age Discrimination in Employment Act (ADEA), the National Labor Relations Act, the Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974 (ERISA), as amended, the Family and Medical Leave Act, the Pennsylvania Human Relations Act, the Pennsylvania Wage Payment & Collection Law, the Pennsylvania Minimum Wage Act of 1968, the Pennsylvania Equal Pay Law, and any and all other claims arising under federal, state or local law, rule, regulation, constitution, ordinance or public policy whether known or unknown, arising up to and including the date of execution of this Release; provided, however, that the parties do not release each other from any claim of breach of the terms of this Release. This release of rights does not extend to claims that may arise after the date of this Release, including without limitation, for payments or benefits described in Section 2 of this Release, nor to claims under employee benefit plans that are qualified under Section 401(a) of the Internal Revenue Code, nor to any rights of indemnification by the Company or advancement of expenses to which the Employee is otherwise entitled, nor to any equity awards that are outstanding on the date of termination. Employee agrees that Employee will not initiate any charge or complaint or institute any claim or lawsuit against Releasees or any of them based on any fact or circumstance occurring up to and including the date of the execution by Employee of this Release based upon a claim that is released hereunder.

4. Employee agrees that the payments made and other consideration received pursuant to this Release are not to be construed as an admission of legal liability by Releasees or any of them and that no person or entity shall utilize this Release or the consideration received pursuant to this Release as evidence of any admission of liability since Releasees expressly deny liability.

5. Employee affirms that the only consideration for the signing of this Release are the terms stated herein and in the Employment Agreement and that no other promise or agreement of any kind has been made to Employee by any person or entity whatsoever to cause Employee to sign this Release.

6. Employee and Employer affirm that the Employment Agreement and this Release set forth the entire agreement between the parties with respect to the subject matter contained herein and supersede all prior or contemporaneous agreements or understandings between the parties with respect to the subject matter contained herein. Further, there are no representations, arrangements or understandings, either oral or written, between the parties, which are not fully expressed herein. Finally, no alteration or other modification of this Release shall be effective unless made in writing and signed by both parties.

7. Employee acknowledges that Employee has been given a period of at least 21 days within which to consider this Release.

8. Following the execution of this Release, Employee has a period of seven days from the date of execution to revoke this Release, and this Release shall not become effective or enforceable until the revocation period has expired.

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9. Employee certifies that Employee has returned to Employer all keys, identification cards, credit cards, computer and telephone equipment and other property or information of Employer in Employee’s possession, custody, or control including, but not limited to, any information contained in any computer files maintained by Employee during Employee’s employment with Employer. Employee certifies that Employee has not kept the originals or copies of any documents, files, or other property of Employer which Employee obtained or received during Employee’s employment with Employer.

10. Employee acknowledges and agrees that the execution of this Release does not supercede any of the provisions of the Employment Agreement which otherwise survive the termination of Employee’s employment with the Employer, including without limitation, Section 5, 6, 7 and 19 thereof.

11. Employee acknowledges that Employer advised Employee to consult with an attorney prior to executing this Release.

12. Employee affirms that Employee has carefully read this Release, that Employee fully understands the meaning and intent of this document, that Employee has signed this Release voluntarily and knowingly, and that Employee intends to be bound by the promises contained in this Release for the aforesaid consideration.

IN WITNESS WHEREOF, Employee and the authorized representative of Employer have executed this Release on the dates indicated below:

	C&D TECHNOLOGIES, INC.
Dated:	By:
	Title:
Dated:
	Todd Greenspan

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ENDORSEMENT

I, Todd Greenspan, hereby acknowledge that I was given 21 days to consider the foregoing Release and voluntarily chose to sign the Release prior to the expiration of the 21-day period.

I declare under penalty of perjury under the laws of the Commonwealth of Pennsylvania that the foregoing is true and correct.

EXECUTED this ________ day of __________________, ____, at ____________________________, Pennsylvania.

Todd Greenspan

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Jeffrey A. Graves, certify that:

1. I have reviewed this quarterly report on Form 10-Q of C&D Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 8, 2009	/s/ Jeffrey A. Graves
	Jeffrey A. Graves
	President and Chief Executive Officer

A signed original of this written statement required by Section 302 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Ian J. Harvie, certify that:

1. I have reviewed this quarterly report on Form 10-Q of C&D Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 8, 2009	/s/ Ian J. Harvie
	Ian J. Harvie
	Vice President and Chief Financial Officer

A signed original of this written statement required by Section 302 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of C&D Technologies, Inc. (the “Company”) for the fiscal quarter ended October 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey A. Graves, President and Chief Executive Officer of the Company, and I, Ian J. Harvie, Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Jeffrey A. Graves

Jeffrey A. Graves

President and Chief Executive Officer

/s/ Ian J. Harvie

Ian J. Harvie

Vice President and Chief Financial Officer

Dated: December 8, 2009

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed to be filed by the Company for purpose of Section 18 of the Securities Exchange Act of 1934, as amended.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.