EMPLOYEE RETENTION AGREEMENT

EXHIBIT 10.1

[LETTER HEAD C&D TECHNOLOGIES, INC.]

February 20, 2007

Personal and Confidential

Bill Bachrach

Vice President and General Manager

C&D Technologies, Inc.

Power Electronics Division

11 Cabot Boulevard

Dear Bill:

C&D Technologies, Inc. (“C&D” or “Company”) is reviewing strategic options regarding its Power Electronics Division (“PED”), including the possible sale of PED (such a sale hereinafter referred to as the “Transaction”) to a third party (the “Buyer”). If the Transaction is ultimately consummated, it is possible that your employment with PED may be terminated. However, C&D recognizes your contributions to the business of PED and desires to continue to retain your services with PED through and until the consummation of the Transaction, and at the discretion of the Buyer, during a period following the Transaction. Additionally, your effective participation in the sale process, as requested by C&D, should assist in maximizing the value received for PED if sold. In C&D’s view, you should be rewarded based on how successful the sale process turns out to be, and protected financially if you are not offered employment by the Buyer. Accordingly, the Company agrees to offer you retention bonus and special bonus opportunities, under the following terms and conditions:

1.            Your Role in and Performance Requirements for Pre-Sale PED Operations and the Sale Process.  Subject to Paragraph 5 below, between now and a closing on the Transaction (the “Closing”), you will (i) continue to devote all of your working time and attention to the business affairs of PED as required by your position and supervisor, including performance of assigned tasks related to your work for PED and C&D.  These responsibilities include your involvement in ongoing PED business and operations, your continued support of the sale of PED with customers, employees and potential buyers, your maintenance and promotion of a positive attitude for yourself and among your employees, and your continued efforts to achieve the best possible financial results during the sale process, as well as your participation in the sale process as requested by C&D.

2.            Your Retention Bonus and Special Bonus Opportunities.  Subject to Paragraphs 4 and 5 below:

A.           Retention Bonus Opportunity. Your total retention bonus opportunity shall be the sum of $281,250, payable as follows:

i.) On or within the later of ten (10) days after the Closing and the effective date of the release agreement described below, you will be paid, in a lump sum, 50% of the total retention bonus opportunity or the amount of $140,625 (less applicable federal, state, and local taxes and other required or authorized deductions and withholdings); and

ii.) 180 calendar days following the Closing, you will be paid, in a lump sum, the remaining 50% of the total retention bonus opportunity or the amount of $140,625 (less applicable federal, state, and local taxes and other required or authorized deductions and withholdings). Notwithstanding the foregoing, if your employment is terminated without cause by the Buyer within 180 calendar days following the Closing, then you will be paid the amount in this clause (ii) within 30 days after written notice confirming such termination is received by the Company from Buyer confirming such termination.

B.           Severance. If the Buyer of PED does not offer you employment upon the Closing and as a result your employment is terminated by C&D without cause at the Closing, you will be entitled to severance in accordance with your employment agreement with the Company dated February 1, 2006 (the “Employment Agreement”). Further, if your employment is terminated before the Closing, regardless of the reason, you will not be eligible for any payments described in Paragraphs 2.A. and 2.C.

C.           Special Bonus Opportunity. Within the later of (i) 30 days after the Closing or (ii) 30 days after the post-Closing establishment of the final adjusted sale price (the “Sale Price”) pursuant to any procedures set forth in the definitive purchase and sale agreement for the stock or substantially all of the assets of PED (an “Agreement”), you will be eligible to receive a Special Bonus payment in an amount calculated in accordance with the below listed Sale Price/Special Bonus parameters (the “Special Bonus Payment”), if, and only if, in C&D CEO’s (Jeff Graves or another appropriate C&D designee appointed by Jeff Graves) sole discretion you have met the performance requirements described in Paragraph 1 above.  The decision of C&D’s CEO regarding the eligibility to receive the Special Bonus payable to you shall be final and binding.  Any Special Bonus will be paid, in a lump sum (less applicable federal, state, and local taxes and other required or authorized deductions and withholdings).

PED Sale Price