<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement - Revised (to include the proxy cards as an
appendix)
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Brown & Sharpe Manufacturing Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Brown & Sharpe Manufacturing Company
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
April 3, 1995
To the Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Brown & Sharpe Manufacturing Company to be held on Wednesday, May 3, 1995, at
10:00 a.m. at the Company's corporate offices, Precision Park, 200 Frenchtown
Road, North Kingstown, RI.
The accompanying formal Notice of Annual Meeting of Stockholders and Proxy
Statement contain the principal items of business to be considered and acted
upon at the meeting, including information about the Directors of the Company
continuing in office and the four nominees for election as Directors for three-
year terms. In addition to the matters to be formally acted upon, there will be
a report on the progress of the Company and an opportunity for questions of
general interest to the stockholders.
We hope you will be able to attend the meeting, but if you cannot do so, it
is important that your shares be represented. WHETHER OR NOT YOU PLAN TO
PERSONALLY ATTEND THE MEETING, we urge you to mark, sign, date and promptly
return the enclosed proxy card in the return envelope.
Sincerely yours,
/s/ Henry D. Sharpe, Jr.
Henry D. Sharpe, Jr.
Chairman of the Board
<PAGE>
BROWN & SHARPE MANUFACTURING COMPANY
Precision Park, 200 Frenchtown Road
North Kingstown, Rhode Island 02852-1700
Telephone (401) 886-2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 3, 1995
Notice is hereby given that the Annual Meeting of Stockholders of Brown
& Sharpe Manufacturing Company will be held on Wednesday, May 3, 1995, at 10:00
a.m. at the Company's corporate offices, Precision Park, 200 Frenchtown Road,
North Kingstown, Rhode Island, for the following purposes:
1. To fix the number of Directors at ten and to elect a class of four
Directors, whose names are set forth in the accompanying proxy
statement, to succeed the class whose term expires with this Annual
Meeting of Stockholders, to serve until the 1998 Annual Meeting of
Stockholders and until their successors shall be elected and qualified.
2. To approve amendments to the Company's 1989 Equity Incentive Plan to (i)
increase the aggregate number of shares of Class A common stock
authorized for issuance and delivery in connection with awards under
such Plan by 500,000 shares to 875,000 shares; and (ii) limit to 300,000
shares the number of shares of Class A common stock that any individual
could receive in any calendar year pursuant to stock options granted
under the Plan , all as more fully set forth in the accompanying
Proxy Statement.
3. To ratify and approve the appointment by the Board of Directors of the
firm of Ernst & Young L.L.P. as the Company's independent accountants
for the year 1995.
4. To transact such other business that may properly come before
the meeting, and any adjournments thereof.
The Board of Directors has fixed the close of business on Thursday,
March 16, 1995, as the record date for determining stockholders entitled to
notice of the meeting and to vote at the meeting, and any adjournments thereof.
A copy of the Company's Annual Report containing financial data and a summary of
operations for 1994 is being mailed to the stockholders with this Proxy
Statement.
In the event you cannot attend the Annual Meeting in person, please
complete and promptly return the Proxy accompanying this Notice in the enclosed
envelope. PLEASE BE SURE TO SIGN AND DATE THE PROXY.
By Order of the Board of Directors,
/s/James W. Hayes, III
James W. Hayes, III
Secretary and Corporate Counsel
April 3, 1995
<PAGE>
BROWN & SHARPE MANUFACTURING COMPANY
Precision Park, 200 Frenchtown Road
North Kingstown, Rhode Island 02852-1700
Telephone (401) 886-2000
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
The accompanying Proxy is solicited by and on behalf of the Board of
Directors of Brown & Sharpe Manufacturing Company (the "Company") for use at the
Company's Annual Meeting of Stockholders (the "Annual Meeting") to be held at
the Company's corporate offices, Precision Park, 200 Frenchtown Road, North
Kingstown, Rhode Island, on Wednesday, May 3, 1995, at 10:00 a.m., and at any
adjournments thereof.
Stockholders of record at the close of business on Thursday, March 16,
1995, are entitled to receive notice of and to vote at the Annual Meeting. On
that date, the Company had 8,710,878 shares of common stock outstanding
comprised of 8,179,168 shares of Class A Common Stock, $1.00 par value
(the "Class A Stock") and 531,710 shares of Class B Common Stock, $1.00
par value (the "Class B Stock"). Except as may otherwise be provided by law,
each share of Class A Stock outstanding on the record date entitles the holder
thereof to one vote, and each share of Class B Stock outstanding on the record
date entitles the holder thereof to ten votes. The holders of Class A Stock are
entitled to elect one Director at the Annual Meeting, and such holders voting
together with the holders of Class B Stock as a single class are entitled to
elect the remaining Directors to be elected at the Annual Meeting. Except for
the foregoing and as may otherwise be provided by law, all other actions
submitted to a vote of the stockholders at the meeting will be voted on by the
holders of Class A Stock and Class B Stock voting together as a single class.
Proxies properly executed and returned will be voted at the Annual Meeting
in accordance with any directions noted thereon or, if no direction is
indicated, proxies will be voted FOR the election of the nominees for Directors
set forth herein , FOR the proposal to amend the Company's 1989 Equity
Incentive Plan, and FOR the proposal to ratify the selection of independent
accountants described in this Proxy Statement. Proxies will be voted in the
discretion of the holders of the proxy with respect to any other business that
may properly come before the Annual Meeting and all matters incidental to the
conduct of the Annual Meeting.
Any stockholder signing and delivering a proxy may revoke it at any time
before it is voted by delivering to the Secretary of the Company a written
revocation or a duly executed proxy bearing a date later than the date of the
proxy being revoked. Any stockholder personally attending the Annual Meeting
may also revoke his or her proxy and vote his or her shares of stock.
The approximate date this Proxy Statement is being mailed to stockholders
is April 3, 1995.
-1-
<PAGE>
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors proposes to fix the number of Directors at ten; to
designate a class of four Directors to serve until the 1998 Annual Meeting and
until their successors have been duly elected and qualified (the "1998 Class");
and to elect Messrs. Henry D. Sharpe, Jr., Howard K. Fuguet, Enrico Albareto and
Henry D. Sharpe, III, all of whom are currently members of the Board and who
have consented to stand for election to the 1998 Class. The Board has nominated
Mr. Albareto for election by the holders of Class A Stock and Messrs. Sharpe,
Jr., Fuguet and Sharpe, III for election by the holders of Class A Stock and
Class B Stock, voting together as a single class.
The table below provides, as of March 16, 1995, certain information
concerning the nominees for election to the 1998 Class as well as the Directors
continuing in office. Henry D. Sharpe, III, a nominee for election to office,
is the son of Henry D. Sharpe, Jr., the Chairman of the Board, who is also a
nominee for election to office. Mr. Enrico Albareto, a nominee for
election to office, and Messrs. Alberto de Benedictis and Vincenzo
Cannatelli are all senior executive officers of Finmeccanica S.p.A. and its
Elsag Bailey Division ("Finmeccanica"), an Italian company, or Finmeccanica's
affiliate, Elsag Bailey Process Automation N.V., a Dutch company. See the
discussion beginning on Page 4 relating to Security Ownership of Certain
Beneficial Owners and Management and on Page 9 relating to Certain Relationships
and Related Transactions.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF
MESSRS. SHARPE, JR., FUGUET, ALBARETO AND SHARPE, III.
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED A PRINCIPAL OCCUPATION DURING LAST FIVE YEARS AND
NAME (AGE) DIRECTOR DIRECTORSHIPS IN PUBLIC REPORTING AND OTHER COMPANIES
- ---------- -------- -----------------------------------------------------
Nominees for Election to Office
- -------------------------------
For Terms Expiring 1998
<S> <C> <C>
Henry D. Sharpe, Jr. (71) 1949 Chairman of the Board.
Howard K. Fuguet (57) 1990 Partner of the law firm of Ropes & Gray, Boston, MA.
Enrico Albareto (63) 1994 Chief Executive Officer, Elsag Bailey Division of
Finmeccanica S.p.A., Genoa , Italy,
manufacturer of automated process control systems and
devices.
Henry D. Sharpe, III (40) 1992 Co-founder and Technical Director, Design Lab, Inc.,
Providence, RI, a multi-disciplinary product design
firm specializing in research and design of new
products, re-design of existing products, and
engineering management services.
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED A PRINCIPAL OCCUPATION DURING LAST FIVE YEARS AND
NAME (AGE) DIRECTOR DIRECTORSHIPS IN PUBLIC REPORTING AND OTHER COMPANIES
- ---------- -------- -----------------------------------------------------
Directors Continuing in Office
- ------------------------------
Terms Expiring 1996
<S> <C> <C>
John M. Nelson (63) 1975 Chairman of the Board, Wyman-Gordon Company, Worcester, MA, manufacturer of steel
forgings, since May 1994 and Chairman and Chief Executive Officer from May 1991 to
May 1994; until October 1990, Chairman of the Board and Chief Executive Officer,
Norton Company, Worcester, MA, manufacturer of abrasives and related products;
Director, Cambridge Biotech Corp., a biotechnology firm; Director, The TJX
Companies, Inc., a discount specialty apparel retailing concern; Director, Commerce
Holdings Inc., a holding company for a property and casualty insurance company; and,
Director, Stocker & Yale Manufacturing Company, a specialty products company.
Vincenzo Cannatelli (42) 1994 Managing Director and Chief Executive Officer, Elsag Bailey Process
Automation N.V., New York, NY, manufacturer of automated process
control systems and devices.
Russell A. Boss (56) 1990 President and Chief Executive Officer and a Director, AT Cross Company,
Lincoln, RI, manufacturer of fine writing instruments; Trustee, Eastern
Utilities Associates.
Terms Expiring 1997
Fred M. Stuber (56) 1991 President and Chief Executive Officer and a Director since January 1991;
from March 1989 to January 1991, Vice President & Managing Director -
Tesa SA, a Swiss subsidiary of the Company; prior to March 1989,
Executive Vice President, Landis & Gyr, communications business.
Alberto de Benedictis (42) 1994 Senior Vice President North America and Corporate Development,
Finmeccanica S.p.A., Rome, Italy, since February 1995, manufacturer of
products for the aerospace, energy, transportation automation and defense
industries; Director, Union Switch & Signal, Inc., a manufacturer of
railway signaling systems; Director, Elsag Bailey Process Automation
N.V.; Director, Concentra Corp., a developer of CAD software.
Paul R. Tregurtha (59) 1984 Chairman of the Board and Chief Executive Officer, Mormac Marine
Group, Inc., Stamford, CT, a marine transportation company; Director,
Shawmut National Corporation, a bank holding company; Director, FPL
Group, Inc., a utility company; Trustee, Teachers Insurance and Annuity
Assoc.; Chairman, Moran Transportation Company, and Vice Chairman,
Interlake Steamship Company, Greenwich, CT, both marine transportation
companies.
</TABLE>
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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
I. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below as of March 16, 1995 are the persons or groups known
to the Company who beneficially own, under the applicable rules and regulations
of the Securities and Exchange Commission, more than 5% of any class of the
Company's voting securities.
<TABLE>
<CAPTION>
NAME AND ADDRESS TITLE OF CLASS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF COMMON STOCK OF BENEFICIAL OWNERSHIP OF CLASS
- ------------------- --------------- ----------------------- ---------
Direct Indirect
------ --------
<S> <C> <C> <C> <C>
Finmeccanica S.p.A. /(1)/ Class A 3,450,000 -- 42.1%
Viale Marescialo Class B -- -- --
Pilsudski 92
Rome 00197 Italy
Fiduciary Trust Company Class A 476,766 -- 5.8%
International /(2)/ Class B 158,920 -- 29.8%
Two World Trade Center
New York, NY 10048-0774
Henry D. Sharpe, Jr. /(3)/ Class A 536,576 7,200 6.6%
c/o Brown & Sharpe Class B 268,919 2,400 51.0%
Manufacturing Company
200 Frenchtown Road
Precision Park
N. Kingstown, RI 02852-1700
Fred M. Stuber /(4) (8)/ Class A 240,206 -- 4.1%
c/o Brown & Sharpe Class B 166,063 -- 31.0%
Manufacturing Company
200 Frenchtown Road
Precision Park
N. Kingstown, RI 02852-1700
Charles A. Junkunc /(5) (8)/ Class A 320,673 -- 3.9%
c/o Brown & Sharpe Class B 194,396 -- 36.5%
Manufacturing Company
200 Frenchtown Road
Precision Park
N. Kingstown, RI 02852-1700
Donald Smith & Co., Inc/.(6)/ Class A 419,600 -- 5.1%
15 Essex Road Class B -- -- --
Paramus, NJ 07652
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS TITLE OF CLASS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF COMMON STOCK OF BENEFICIAL OWNERSHIP OF CLASS
------------------- --------------- ----------------------- ---------
Direct Indirect
------ --------
<S> <C> <C> <C> <C>
Fleet Investment Services/(7)/ Class A 161,057 -- 1.9%
100 Westminster Street Class B 52,744 -- 9.9%
Providence, RI 02903
</TABLE>
_____________________________
/(1)/ Finmeccanica S.p.A. owns beneficially and of record and has the power to
vote or direct the vote and to dispose or direct the disposition of
3,450,000 shares of Class A Stock, amounting to 42. 1 % of such class
and representing 25.5% of the combined voting power of Class A and Class B
Stock, acquired in connection with the acquisition by the Company of the
DEA S.p.A. metrology business on September 28, 1994. Finmeccanica and IRI
are deemed to share the voting and investment power with respect to the
shares held by Finmeccanica because Finmeccanica may be deemed to be
controlled by IRI. (See discussion beginning on Page 7.)
/(2)/ Fiduciary Trust Company International, a bank, by virtue of various
investment management contracts and trust agreements with members of the
Sharpe family, shares voting and dispositive power with respect to the
aforementioned shares of Class A and Class B Stock. See Footnote (3)
below.
/(3)/ Various members of the Sharpe family, including Henry D. Sharpe, Jr. and
Henry D. Sharpe, III, beneficially owned an aggregate of 711,972 shares of
Class A Stock and 327,383 shares of Class B Stock of the Company,
amounting to 8.7% and 61.5 %, respectively, of each class of stock
and representing 29.5 % of the combined voting power of the Class A
Stock and Class B Stock. The table excludes (a) 168,076 shares of Class A
Stock and 56,024 shares of Class B Stock held by Henry D. Sharpe, Jr.'s
wife and children and by trusts, of which they are beneficiaries
and of which beneficial ownership is disclaimed; and (b) 120 shares of
Class A Stock and 40 shares of Class B Stock held by the Sharpe Family
Foundation, a charitable foundation, of which beneficial ownership is
disclaimed. The table includes (i) 7,200 shares of Class A Stock and 2,400
shares of Class B Stock as to which Henry D. Sharpe, Jr. has neither
voting nor dispositive power but as to which he is a beneficiary under a
trust established under the will of Henry D. Sharpe, Sr.; (ii) 228,006
shares of Class A Stock and 166,063 shares of Class B Stock as to which
Mr. Sharpe, by virtue of being one of the three Trustees under the
Company's Employee Stock Ownership and Profit Participation Plan (the
"ESOP"), has shared voting power (subject to direction from plan
participants) and limited residual investment power as a Trustee under the
terms of the Trust Agreement for the ESOP and of which beneficial
ownership is disclaimed; and (iii) 308,570 shares of Class A Stock and
102,856 shares of Class B Stock as to which Henry D. Sharpe, Jr. has
shared voting and dispositive power with Fiduciary Trust Company
International with respect to the shares of Class A Stock and Class B
Stock described in sub-clause (a) above, and sole voting and dispositive
power with respect to the shares of Class A Stock and Class B Stock
described in sub-clause (b) above.
/(4)/ Includes 228,006 shares of Class A Stock and 166,063 shares of Class B
Stock, which, by virtue of Mr. Stuber's role as a Trustee of the ESOP, are
deemed to be beneficially owned but as to all of which ESOP shares he
disclaims beneficial ownership.
/(5)/ Includes (a) 46,667 shares of Class A Stock and 28,333 shares of Class B
Stock held by the Company's United Kingdom Pension Plan as to which Mr.
Junkunc has shared voting and investment power; and (b) 228,006 shares of
Class A Stock and 166,063 shares of Class B Stock, which, by virtue of Mr.
Junkunc's role as a Trustee of the ESOP, are deemed to be owned
beneficially by him but as to which all of such ESOP (except for his
vested shares of Class A Stock and Class B Stock in such plan) and U.K.
Pension Plan shares he disclaims beneficial ownership.
/(6)/ Donald Smith & Co. is an investment advisory firm which has sole voting
power over 294,300 shares of Class A Stock and has sole dispositive power
over 419,600 shares of Class A Stock.
/(7)/ Fleet Investment Services, an affiliate of Fleet Financial Group, Inc.,
acts as Trustee of the Brown & Sharpe Savings and Retirement Plan and the
Brown & Sharpe Savings and Retirement Plan for Management Employees,
substantially similar tax qualified 401K savings plans covering U.S.
employees (together the "SARP"), and in that capacity shares voting power
with respect to the shares of Class A Stock and Class B Stock, subject to
direction from participants in such SARP Plan as to all of which Fleet
disclaims beneficial ownership .
/(8)/ Includes shares of Class A Stock issuable upon exercise of
incentive stock options held by such Executive Officers of the Company.
See Footnote (3) on Page 7 and Aggregated Options Table on Page 14.
-5-
<PAGE>
II. SECURITY OWNERSHIP OF MANAGEMENT
The following table and accompanying footnotes set forth certain
information about the beneficial ownership of the Company's Class A Stock and
Class B Stock as of March 16, 1995 by the Directors and Nominees and certain
named Executive Officers included in I. Summary Compensation Table and all
Directors and Executive Officers as a group.
<TABLE>
<CAPTION>
NAME OF TITLE OF CLASS AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER OF COMMON STOCK BENEFICIAL OWNERSHIP OF CLASS
- ---------------- --------------- -------------------- ---------
Direct Indirect
------ --------
<S> <C> <C> <C> <C>
Enrico Albareto /(1)/ Class A 3,450,000 -- 42.1%
Class B -- -- --
Vincenzo Cannatelli /(1)/ Class A 3,450,000 -- 42.1%
Class B -- -- --
Alberto de Benedictis /(1)/ Class A 3,450,000 -- 42.1%
Class B -- -- --
Henry D. Sharpe, Jr./(2)/ Class A 536,576 7,200 6.6%
Class B 268,919 2,400 51.0%
Fred M. Stuber /(2)/ Class A 340,206 -- 4.1%
Class B 166,063 -- 31.2%
Henry D. Sharpe, III Class A 55,145 -- *
Class B 18,381 -- 3.4%
John M. Nelson Class A 1,453 -- *
Class B 151 -- *
Howard K. Fuguet Class A 1,000 -- *
Class B -- -- --
Russell A. Boss Class A 1,000 -- *
Class B -- -- --
Paul R. Tregurtha Class A 705 -- *
Class B 13 -- *
Charles A. Junkunc/(2)/ Class A 320,673 -- 3.9%
Class B 194,396 -- 36.5%
Richard F. Paolino Class A 73,338 -- *
Class B 2,348 -- *
Antonio Aparicio Class A 45,000 -- *
Class B -- -- --
</TABLE>
-6-
<PAGE>
<TABLE>
<CAPTION>
NAME OF TITLE OF CLASS AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER OF COMMON STOCK BENEFICIAL OWNERSHIP OF CLASS
- ---------------- --------------- -------------------- ---------
Direct Indirect
---------- --------
<S> <C> <C> <C> <C>
C. John Cooke Class A 31,000 -- *
Class B -- -- --
All Directors, Nominees and Class A 4,538,967 7,200 55.5%
Executive Officers as a Group Class B 357,273 2,400 67.6%
(16 persons)/(3)/
</TABLE>
*Less than one percent (1%).
_____________________________
/(1)/ Messrs. Albareto, Cannatelli and de Benedictis, by virtue of their
positions as senior executives and employees of Finmeccanica S.p.A. or its
affiliates and Finmeccanica's authority to vote or direct the vote and to
dispose or direct the disposition of the Class A Stock, may each be deemed
to beneficially own the shares of Class A Stock owned of record by
Finmeccanica and as to all of which stock they disclaim ownership. See
Footnote (1) to I. Security Ownership of Certain Beneficial Owners, and
discussion under Certain Relationships and Related Transactions .
/(2)/ See Footnotes (3), (4) and (5) to I. Security Ownership of Certain
Beneficial Owners Page 5.
/(3)/ With respect to Executive Officers who are not Directors, includes 117,400
shares of Class A Stock as to which certain of the Executive Officers have
sole voting and investment power; 46,667 shares of Class A Stock and
28,333 shares of Class B Stock held in the Company's pension plan covering
its United Kingdom employees as to which an Executive Officer has shared
voting and investment power; and 6,638 vested shares of Class A Stock and
3,793 vested shares of Class B Stock as to which the Executive Officers
have shared voting power in the ESOP. Includes 209,332 shares of Class A
Stock subject to exercisable stock options granted pursuant to the
Company's Amended 1973 Stock Option Plan (under which no further awards
can be made) and 1989 Equity Incentive Plan. (See Options and SAR Table
under the heading "Executive Compensation".)
III. SUBSTANTIAL CHANGE IN OWNERSHIP OF COMMON STOCK OF THE COMPANY
THE COMPANY BELIEVES NO CHANGE IN CONTROL OF THE COMPANY
HAS OCCURRED ; H OWEVER, A SUBSTANTIAL CHANGE IN OWNERSHIP OF THE
COMMON STOCK OF THE COMPANY OCCURRED IN CONJUNCTION WITH THE ACQUISITION BY
THE COMPANY AND ITS WHOLLY OWNED SUBSIDIARY BROWN & SHARPE INTERNATIONAL
CAPITAL CORPORATION ON SEPTEMBER 28, 1994 OF ALL OF THE STOCK OF DEA S.P.A.,
AN ITALIAN CORPORATION, AND ITS RELATED METROLOGY BUSINESS FROM FINMECCANICA
S.P.A., AN ITALIAN CORPORATION. THE BUSINESS OF DEA S.P.A. AND ITS SUBSIDIARIES
("DEA") IS HEADQUARTERED IN TURIN, ITALY. TH E PURCHASE OF DEA S.P.A.
WAS PURSUANT TO THE PROVISIONS OF THE ACQUISITION AGREEMENT DATED AS OF JUNE
10, 1994 BETWEEN THE COMPANY AND FINMECCANICA S.P.A., AS AMENDED (THE "DEA
ACQUISITION AGREEMENT"). THE PURCHASE PRICE PAID FOR DEA WAS
DELIVERY BY THE COMPANY TO FINMECCANICA S.P.A. AT THE C LOSING OF
3,450,000 SHARES OF CLASS A STOCK OF THE COMPANY . APPROXIMATELY 63% OF
FINMECCANICA S.P.A.'S STOCK IS OWNED BY ISTITUTO PER LA RICOSTRUZIONE
INDUSTRIALE S.P.A., A JOINT STOCK COMPANY ("IRI"), ALL OF WHOSE STOCK IS
HELD BY THE MINISTRY OF THE TREASURY OF THE REPUBLIC OF ITALY.
IN ADDITION, THE DEA ACQUISITION AGREEMENT PROVIDES FOR A POST-CLOSING
PURCHASE PRICE ADJUSTMENT PURSUANT TO WHICH ADDITIONAL SHARES OF CLASS A STOCK
MAY, UNDER THE SPECIFIED CIRCUMSTANCES, BE REQUIRED TO BE DELIVERED TO
FINMECCANICA S.P.A. IF THE POST-CLOSING ADJUSTMENT INDICATES AN INCREASE OR A
DECREASE IN THE PURCHASE PRICE, THEN EITHER THE COMPANY WILL ISSUE TO
FINMECCANICA AN ADDITIONAL NUMBER OF SHARES OF CLASS A STOCK WITH A VALUE EQUAL
TO SUCH POSITIVE DIFFERENCE OR FINMECCANICA WILL MAKE A CASH PAYMENT TO THE
COMPANY EQUAL TO SUCH NEGATIVE DIFFERENCE. HOWEVER, IF SUCH POSITIVE OR
NEGATIVE DIFFERENCE IS LESS THAN $500,000, NO ADJUSTMENT WILL BE MADE. THE
-7-
<PAGE>
AMOUNT OF ANY PURCHASE PRICE ADJUSTMENT WILL BE CONCLUSIVELY DETERMINED,
SUBSEQUENT TO THE CLOSING DATE OF THE DEA ACQUISITION, BASED UPON THE SPECIFIED
CALCULATIONS AND THE AUDITED COMBINED BALANCE SHEET AS OF THE PRICING DATE OF
DEA AND ITS SUBSIDIARIES AS DETERMINED UNDER THE PROCEDURES SET FORTH IN THE
DEA ACQUISITION AGREEMENT. THE DEA ACQUISITION AGREEMENT ALSO PROVIDED
THAT PRIOR TO THE CLOSING FINMECCANICA WAS REQUIRED TO ASSUME OR DISCHARGE ALL
INDEBTEDNESS FOR BORROWED MONEY OF DEA OTHER THAN AN AMOUNT OF INDEBTEDNESS NET
OF CASH IN EXCESS OF LIT. 0.8 BILLION, TO REMAIN OUTSTANDING ON THE CLOSING,
WHICH AMOUNT IS DETERMINED AS OF JULY 31, 1994 (THE "PRICING DATE") PURSUANT TO
A FORMULA IN THE DEA ACQUISITION AGREEMENT. APPROXIMATELY $13.8 MILLION
AGGREGATE PRINCIPAL AMOUNT OF DEA INDEBTEDNESS REMAINED OUTSTANDING AT THE
CLOSING.
ON MARCH 16, 1995, AFTER THE DEA aCQUISITION (PRIOR TO THE POST-
CLOSING ADJUSTMENT, IF ANY, FOR THE DEA aCQUISITION PURCHASE PRICE), VARIOUS
MEMBERS OF THE SHARPE FAMILY, INCLUDING HENRY D. SHARPE, JR. AND HENRY D.
SHARPE, III (EACH OF WHOM IS A DIRECTOR OF THE COMPANY), ARE DEEMED TO
BENEFICIALLY OWN 711 , 972 SHARES OF CLASS A STOCK AND APPROXIMATELY
327 , 383 SHARES OF CLASS B STOCK, WHICH INCLUDES 228,006 SHARES
OF CLASS A STOCK AND 166,063 SHARES OF CLASS B STOCK HELD BY THE COMPANY'S ESOP
WITH RESPECT TO WHICH MR. SHARPE, JR. HAS SHARED VOTING POWER WITH PLAN
PARTICIPANTS AS A TRUSTEE OF SUCH PLAN, REPRESENTING APPROXIMATELY 12 %
OF THE OUTSTANDING AGGREGATE EQUITY IN THE COMPANY AND APPROXIMATELY
29 . 5 % OF THE COMBINED VOTING POWER OF THE COMPANY'S OUTSTANDING
COMMON STOCK . FINMECCANICA HELD 3,450,000 SHARES OF CLASS A STOCK,
REPRESENTING 39.9% OF THE OUTSTANDING AGGREGATE EQUITY OF THE COMPANY AND
APPROXIMATELY 25.5% OF THE COMBINED VOTING POWER OF THE COMPANY'S OUTSTANDING
COMMON STOCK. IN ADDITION, APPROXIMATELY 207,724 SHARES OF CLASS A STOCK
AND APPROXIMATELY 81 , 077 SHARES OF CLASS B STOCK ARE HELD
FOR EMPLOYEE BENEFIT PLAN PARTICIPANTS UNDER EMPLOYEE BENEFIT PLANS , WITH
RESPECT TO WHICH NEITHER OF THE SHARPES HAVE ANY VOTING POWER, MAINTAINED BY
BROWN & SHARPE AND ITS SUBSIDIARIES. FINMECCANICA HAS THE RIGHT TO DESIGNATE
THREE NOMINEES FOR ELECTION TO THE BROWN & SHARPE BOARD OF DIRECTORS (WHICH WAS
INCREASED FROM SEVEN TO TEN DIRECTORS) AND HAS CERTAIN RIGHTS AND OBLIGATIONS
WITH RESPECT TO THE ELECTION OF DIRECTORS AS PROVIDED IN THE SHAREHOLDERS
AGREEMENT BELOW.
UNDER THE TERMS OF A SHAREHOLDERS AGREEMENT DATED AS OF SEPTEMBER 28,
1994 BETWEEN FINMECCANICA AND THE COMPANY (THE "SHAREHOLDERS AGREEMENT") ENTERED
INTO IN CONNECTION WITH THE ACQUISITION OF DEA, FINMECCANICA WAS GRANTED THE
RIGHT TO NOMINATE AND HAVE ELECTED TO THE BOARD FOLLOWING THE ACQUISITION OF DEA
THREE OUT OF TEN MEMBERS OF THE COMPANY'S BOARD OF DIRECTORS EACH FOR RESPECTIVE
TERMS EXPIRING AT THE 1995, 1996 AND 1997 ANNUAL MEETINGS OF THE COMPANY'S
STOCKHOLDERS AND TO HAVE ONE OF SUCH DIRECTORS ON THE EXECUTIVE COMMITTEE OF THE
COMPANY'S BOARD OF DIRECTORS. THIS RIGHT WAS EXERCISED BY NOTICE GIVEN TO THE
COMPANY ON THE DATE OF CLOSING THE DEA ACQUISITION, AND FINMECCANICA'S THREE
NOMINEES FOR ELECTION TO THE COMPANY'S BOARD OF DIRECTORS, MESSRS. ALBARETO, DE
BENEDICTIS AND CANNATELLI, WERE DULY ELECTED TO OFFICE BY THE BOARD AT A REGULAR
MEETING OF THE COMPANY'S BOARD OF DIRECTORS HELD ON OCTOBER 28, 1994. PURSUANT
TO THE SHAREHOLDERS AGREEMENT, WHEN HENRY D. SHARPE, JR. CEASES TO BE A DIRECTOR
OF THE COMPANY, FINMECCANICA WILL THEREAFTER BE ENTITLED TO HAVE ONLY TWO
NOMINEES ON THE COMPANY'S BOARD OF DIRECTORS, PLUS A THIRD NOMINEE, WHO MAY NOT
BE AN EMPLOYEE OF FINMECCANICA BUT SHALL BE AN EXPERIENCED EXECUTIVE OR ADVISOR
TO INDUSTRIAL BUSINESSES, SELECTED BY FINMECCANICA BUT SUBJECT TO APPROVAL (NOT
TO BE UNREASONABLY UNHELD) BY THE COMPANY'S BOARD OF DIRECTORS. IN ANY EVENT,
FINMECCANICA IS ENTITLED TO TWO NOMINEES ON THE COMPANY'S BOARD OF DIRECTORS
WHILE IT OWNS AT LEAST 1,250,000 SHARES OF CLASS A STOCK AND ONE NOMINEE ON THE
COMPANY'S BOARD OF DIRECTORS WHILE FINMECCANICA OWNS AT LEAST 375,000 SHARES OF
CLASS A STOCK. UNDER THE TERMS OF A LETTER AGREEMENT DATED AS OF SEPTEMBER 28,
1994 BETWEEN HENRY D. SHARPE, JR., CHAIRMAN OF THE BOARD, AND FINMECCANICA, MR.
SHARPE HAS AGREED TO VOTE ALL SHARES OF COMPANY COMMON STOCK AS TO WHICH HE HAS
SOLE VOTING POWER IN FAVOR OF THE FINMECCANICA NOMINEE S STANDING FOR
ELECTION TO THE BOARD OF DIRECTORS. THE SHAREHOLDERS AGREEMENT PROVIDES THAT
FINMECCANICA WILL VOTE ITS SHARES OF CLASS A STOCK IN FAVOR OF THE ELECTION AS
DIRECTORS OF ALL OF THE NOMINEES SELECTED BY THE BOARD OF DIRECTORS OF THE
COMPANY.
THE SHAREHOLDERS AGREEMENT PROVIDES FINMECCANICA WITH CERTAIN RIGHTS AND
OBLIGATIONS WITH RESPECT TO ITS OWNERSHIP OF SHARES OF CLASS A STOCK IN THE
COMPANY. FINMECCANICA IS PROHIBITED FROM ACQUIRING ANY SHARES OF THE COMPANY'S
STOCK IF SUCH ACQUISITION WOULD INCREASE FINMECCANICA'S OWNERSHIP ABOVE
APPROXIMATELY 40% ON A FULLY DILUTED BASIS (AS
-8-
<PAGE>
DEFINED IN THE SHAREHOLDERS AGREEMENT) UNTIL DECEMBER 31, 1998, OR EARLIER UPON
THE OCCURRENCE OF CERTAIN SPECIFIED EVENTS. THE AGREEMENT ALSO PROVIDES
PREEMPTIVE RIGHTS TO FINMECCANICA SO LONG AS IT OWNS AT LEAST 862,500 SHARES OF
THE COMPANY'S CLASS A STOCK, SUCH THAT THE COMPANY MAY NOT ISSUE ANY SHARES
OF CLASS A STOCK TO ANY THIRD PARTY, OTHER THAN CERTAIN SPECIFIED EXCLUSIONS,
WITHOUT FIRST OFFERING TO FINMECCANICA THE RIGHT TO PURCHASE THAT PERCENTAGE OF
THE COMPANY'S EQUITY SECURITIES SUCH THAT FINMECCANICA'S PERCENTAGE OWNERSHIP OF
THE COMPANY'S COMMON STOCK ON A FULLY DILUTED BASIS (AS DEFINED IN THE
SHAREHOLDERS AGREEMENT) REMAINS CONSTANT. IN ADDITION, FINMECCANICA IS
PROHIBITED FROM SELLING ANY OF THE COMPANY'S EQUITY SECURITIES TO ANY THIRD
PARTY UNTIL THE EXPIRATION OF TWO YEARS AFTER THE CLOSING OF THE DEA A
CQUISITION AND UPON THE EXPIRATION OF SUCH TWO-YEAR PERIOD MAY SELL SECURITIES
TO A THIRD PARTY ONLY AFTER OFFERING THE COMPANY THE OPPORTUNITY TO PURCHASE
SUCH SHARES (OTHER THAN SALES PURSUANT TO A REGISTERED PUBLIC OFFERING PURSUANT
TO FINMECCANICA'S REGISTRATION RIGHTS AND SALES PURSUANT TO RULE 144 UNDER THE
SECURITIES ACT OF 1933).
PRIOR TO COMPLETION OF THE DEA A CQUISITION AND ENTERING INTO
THE SHAREHOLDERS AGREEMENT, THE COMPANY AMENDED THE RIGHTS AGREEMENT BETWEEN IT
AND THE FIRST NATIONAL BANK OF BOSTON DATED MARCH 9, 1988 PURSUANT TO AUTHORITY
RESERVED IN SUCH AGREEMENT TO EXCLUDE FINMECCANICA FROM THE DEFINITION OF AN
"ACQUIRING PERSON" UNDER THE RIGHTS AGREEMENT SO LONG AS IT DOES NOT OWN SHARES
OF CLASS A STOCK OTHER THAN THOSE ACQUIRED IN CONNECTION WITH THE DEA
A CQUISITION AND AS PROVIDED IN THE SHAREHOLDERS AGREEMENT. AS A RESULT
OF THE AMENDMENT THE EXERCISABILITY OF THE PREFERRED STOCK PURCHASE RIGHTS OF
THE HOLDERS OF CLASS A STOCK AND CLASS B STOCK CREATED UNDER THE RIGHTS
AGREEMENT WAS NOT TRIGGERED.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ON SEPTEMBER 28, 1994, IN CONNECTION WITH COMPLETION OF THE COMPANY'S
ACQUISITION OF DEA FROM FINMECCANICA IN EXCHANGE FOR 3,450,000 SHARES OF CLASS A
STOCK OF THE COMPANY, FINMECCANICA ENTERED INTO A CREDIT SUPPORT AGREEMENT WITH
THE COMPANY (THE "CREDIT SUPPORT AGREEMENT"). PURSUANT TO THE CREDIT SUPPORT
AGREEMENT, FINMECCANICA ISSUED UNCONDITIONAL PAYMENT GUARANTEES ON SEPTEMBER 28,
1994 TO BANCA COMMERCIALE ITALIANA, NEW YORK BRANCH, AND ISTITUTO BANCARIO SAN
PAOLO DI TORINO, NEW YORK BRANCH, WITH RESPECT TO THEIR EXTENSION OF TWO THREE-
YEAR TERM LOANS TO THE COMPANY IN THE AGGREGATE AMOUNT OF $25 MILLION BEARING
INTEREST AT A FLOATING RATE OF LIBOR PLUS 0.60% WITH INTEREST PAYABLE QUARTERLY
AND THE ENTIRE PRINCIPAL AMOUNT OF SUCH LOANS DUE ON SEPTEMBER 28, 1997. THE
COMPANY PAID FINMECCANICA A ONE-TIME FEE OF $800,000 UPON ENTERING INTO THE
CREDIT SUPPORT AGREEMENT WITH FINMECCANICA. IN THE EVENT FINMECCANICA IS
REQUIRED TO PAY SUCH BANKS ANY AMOUNTS UNDER ITS GUARANTEES, SUBJECT TO THE
PRIOR REPAYMENT BY THE COMPANY OF ANY AMOUNTS DUE IN RESPECT OF CERTAIN SENIOR
INDEBTEDNESS (AS DEFINED IN THE CREDIT SUPPORT AGREEMENT), FINMECCANICA WILL BE
ENTITLED TO REIMBURSEMENT FROM THE COMPANY OF ANY SUCH AMOUNTS PAID BY
FINMECCANICA UNDER ITS GUARANTEES. THE AGREEMENT PROVIDES THAT AS LONG AS
THE FINMECCANICA GUARANTEES REMAIN OUTSTANDING, THE COMPANY WILL NOT, WITH
CERTAIN EXCEPTIONS, CREATE ANY LIENS ON THE ACCOUNTS RECEIVABLE OR INVENTORY OF
DEA S.P.A. OR ITS SUBSIDIARIES OR PERMIT DEA S.P.A. AND ITS SUBSIDIARIES TO HAVE
ANY DEBT TO ANY OTHER FINANCIAL INSTITUTIONS OTHER THAN CERTAIN PERMITTED
INDEBTEDNESS. IN CONNECTION WITH ENTERING INTO THE CREDIT SUPPORT AGREEMENT,
DEA S.P.A. ALSO FURNISHED A GUARANTEE TO FINMECCANICA, SUBORDINATED TO THE
INTEREST OF FOOTHILL CAPITAL CORPORATION , A PRINCIPAL TERM LENDER TO
THE COMPANY UNDER A $25 MILLION REVOLVING LINE OF CREDIT AGREEMENT WITH THE
COMPANY.
FOLLOWING ITS ACQUISITION BY THE COMPANY, DEA CONTINUES TO BE A LESSEE
UNDER A LEASE AGREEMENT WITH THE ELSAG BAILEY DIVISION OF FINMECCANICA
WITH RESPECT TO DEA'S PRINCIPAL HEADQUARTERS FACILITY LOCATED IN
MONCALIERI, ITALY AND THE DEA SALES AND SUPPORT FACILITY IN MADRID, SPAIN. THE
LEASE OF THE ITALIAN PROPERTY EXPIRES ON DECEMBER 31, 1997, AND THE MINIMUM
ANNUAL RENT UNDER SUCH LEASE IS APPROXIMATELY LI T. 1,400 MILLION OR
APPROXIMATELY $840,000 , SUBJECT TO ADJUSTMENT AS PROVIDED IN THE LEASE .
THE LEASE OF THE SPANISH PROPERTY EXPIRES ON JANUARY 4, 1998 AT AN ANNUAL RENT
OF PESETAS 30,600 MILLION OR APPROXIMATELY $200,000. THE COMPANY BELIEVES THAT
THE TERMS OF SUCH LEASES HAVE BEEN AND WILL BE COMPARABLE TO THOSE WHICH COULD
BE OBTAINED FROM THIRD PARTIES.
-9-
<PAGE>
THE DEA ACQUISITION AGREEMENT PROVIDES THAT FOR A PERIOD OF FIVE YEARS
AFTER THE CLOSING DATE OF THE DEA ACQUISITION, NEITHER FINMECCANICA NOR ANY OF
ITS AFFILIATES WILL DIRECTLY OR INDIRECTLY ACQUIRE MORE THAN A 20% OWNERSHIP
INTEREST IN ANY BUSINESS, VENTURE OR ACTIVITY WHICH COMPETES WITH THE METROLOGY
BUSINESS RELATING TO COORDINATE MEASURING MACHINES (INCLUDING PARTS AND
ACCESSORIES) BEING CONDUCTED OR PROPOSED TO BE CONDUCTED BY DEA AT THE CLOSING
DATE OF THE DEA ACQUISITION OR RELATING TO METROLOGY PRODUCTS PERFORMING
FUNCTIONS SIMILAR TO THOSE OF THE PRODUCTS MANUFACTURED AND SOLD BY DEA. THESE
NON-COMPETITION PROVISIONS WILL TERMINATE IF BROWN & SHARPE NO LONGER OWNS A
GREATER THAN 50% OWNERSHIP INTEREST IN DEA. FINMECCANICA WILL NOT BE IN BREACH
OF THE NON-COMPETITION PROVISION OF THE DEA ACQUISITION AGREEMENT IF IT OR ANY
OF ITS AFFILIATES ACQUIRES OR INVESTS IN ANY COMPANY WHICH INCLUDES AMONG ITS
BUSINESS OPERATIONS THE MANUFACTURE AND SALE OF METROLOGY PRODUCTS PERFORMING
FUNCTIONS SIMILAR TO THOSE OF THE PRODUCTS MANUFACTURED AND SOLD BY DEA TO THE
EXTENT THAT SALES OF SUCH PRODUCTS CONSTITUTE ONLY AN IMMATERIAL PORTION OF THE
TOTAL REVENUES OF THE ACQUIRED BUSINESS. IN THE DEA ACQUISITION AGREEMENT,
FINMECCANICA HAS REPRESENTED TO BROWN & SHARPE THAT IT HAS NO PRESENT INTENTION
OF ACQUIRING ANY SUCH COMPANY.
THE DEA ACQUISITION AGREEMENT PROVIDES THAT BROWN & SHARPE AND
FINMECCANICA WILL, FOR THE PERIODS SPECIFIED IN THE DEA ACQUISITION AGREEMENT,
NONE OF WHICH ARE SHORTER THAN 21 MONTHS AFTER THE CLOSING OF THE DEA
ACQUISITION, INDEMNIFY EACH OTHER AGAINST UP TO $10.0 MILLION (LESS THE FIRST
$500,000) RESULTING FROM THE INACCURACY OF REPRESENTATIONS AND WARRANTIES
COVERING MATTERS RELATING TO THE RESPECTIVE BUSINESS, FINANCIAL STATEMENTS,
MATERIAL CONTRACTS, COMPLIANCE WITH LAW AND OTHER ITEMS CUSTOMARY IN
TRANSACTIONS OF THIS TYPE), BREACH OF NON-FULFILLMENT OF ANY AGREEMENT OF
COVENANT CONTAINED IN OR REQUIRED TO BE ENTERED INTO IN CONNECTION WITH THE DEA
ACQUISITION AGREEMENT AND CERTAIN ENVIRONMENTAL AND TAX CLAIMS, IF ANY.
FINMECCANICA WILL ALSO INDEMNIFY BROWN & SHARPE FOR THE AMOUNT BY WHICH CERTAIN
OF THE LIABILITIES OF DEA EXCEEDS LIMITS PROVIDED FOR IN THE PURCHASE PRICE
PROVISIONS OF THE DEA ACQUISITION AGREEMENT.
EXCEPT FOR THEIR RELATIONSHIP TO FINMECCANICA BY VIRTUE OF THEIR
EXECUTIVE POSITIONS WITH SUCH COMPANY OR ITS AFFILIATES, NEITHER OF MR.
ALBARETO, WHO IS A NOMINEE FOR ELECTION TO OFFICE, OR MESSRS.
CANNATELLI OR DE BENEDICTIS , WHO ARE CONTINUING DIRECTORS, HAVE ANY
DIRECT OR INDIRECT INTEREST IN ANY OF THE FOREGOING TRANSACTIONS.
GENERAL INFORMATION
RELATING TO THE BOARD OF DIRECTORS
The Board of Directors, which held five regular and nine special
meetings in 1994, maintains a standing Executive Committee, composed of Messrs.
Sharpe, Jr., Stuber, Tregurtha and de Benedictis, which has substantially all of
the powers and authority of the Board of Directors when the full Board is not in
session. The Executive Committee did not meet in 1994. The Board of Directors
also maintains standing committees on audit ("Audit Committee"), corporate
development ("Corporate Development Committee") and compensation ("Salary
Committee"), each of which is composed exclusively of non-employee Directors.
The Board does not have a standing Nominating Committee. During 1994, each of
the Directors attended 75% or more of the aggregate number of meetings of the
Board and of the committees on which he sat.
The Audit Committee, whose members are Messrs. Boss, Fuguet, and
Sharpe, III, recommends to the Board of Directors, for approval by the
stockholders, the appointment of a firm of independent certified public
accountants to audit the Company's financial statements. The Audit Committee
also meets with the independent auditors and the Company's Chief Financial
Officer to review the scope and results of the audit, the scope of audit and
non-audit services and the range of audit and non-audit fees, and any proposed
changes in accounting policies, practices, or procedures, including those
relating to the Company's internal accounting controls, to review the Company's
financial statements to be included in the Company's Annual Report to
Stockholders and other related matters. The Audit Committee met twice in 1994.
-10-
<PAGE>
The Corporate Development Committee, whose members are Messrs. Nelson,
Fuguet and Tregurtha, considers matters concerning the relationship between the
Company and its stockholders, including offers to purchase outstanding Company
stock, acquisition proposals, and other matters which could affect the existence
of the Company as an independent company or otherwise affect the control of the
Company. The Corporate Development Committee did not hold any meetings in 1994.
The Salary Committee, whose members are Messrs. Boss, Nelson and
Tregurtha, performs a periodic review of the appropriate salaries and
compensation plans for the Executive Officers and other key management personnel
of the Company and administers the Amended Profit Incentive Plan and the 1989
Equity Incentive Plan. The Salary Committee met six times in 1994. See
"Compensation Committee Report" herein .
As compensation for services rendered during 1994, the Company paid
each non-employee Director an annual retainer of $10,000 (except the Chairman of
the Board, who was paid $15,000), a fee of $800 for each Board meeting attended,
a fee of $400 for each teleconference meeting which lasted more than one-half
hour in duration, and a fee of $500 for each Committee meeting attended ($200 if
held on the same day as a Board meeting). Directors who are members of the
Audit Committee also receive an additional $1,000 in their annual retainer fee.
Mr. Tregurtha has elected to defer 50% of his Director's fees under a
deferred stock equivalent unit contract with the Company dated September 3, 1987
pursuant to which all fees earned after that date were to be converted into
deferred stock equivalent units based on the market value of the Company's stock
on each fee payment date. Under such contract dividend equivalents in amounts
and timing equal to any cash dividends paid on the Company's outstanding stock
are similarly converted into additional stock equivalent units. The Company
paid no cash dividends on its stock in 1994. Mr. Tregurtha's contract matures
on October 1, 2005 or the earlier date of death or other termination of Mr.
Tregurtha as a Director. The contract was amended in 1992 to provide that fee
amounts deferred after May 1, 1991 (including any dividend equivalent amounts)
shall be payable on maturity only in cash, with amounts deferred prior to such
date payable in cash or shares.
The law firm of Ropes & Gray, Boston, Massachusetts, of which Mr.
Fuguet is a partner, has provided legal services to the Company since 1957.
EXECUTIVE COMPENSATION
I. SUMMARY COMPENSATION TABLE
The following table sets forth the annual and long-term compensation
for the Company's Chief Executive Officer and the four other highest-paid
Executive Officers whose earned compensation exceeded $100,000 in 1994 for each
person during each of the Company's last three fiscal years:
-11-
<PAGE>
<TABLE>
<CAPTION>
Long-Term Compensation Awards
------------------------------------
Annual Compensation Awards Pay-outs
-------------------------------------- ------ --------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted Securities
Annual Stock Underlying All Other
Name and Compen- Award(s) Options/ LTIP Pay- Compen-
Principal Position Year Salary($)/(4)/ Bonus($)/(4)/ sation ($) ($)/(7)/ SARs (#) outs ($) sation ($)/(4)/
- ------------------ ---- -------------- ------------ ---------- ----------- ---------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Fred M. Stuber 1994 320,742 19,000 -- -- 40,000 -- 31,125/(1)/
President and CEO 1993 285,811 50,000 -- -- -- -- 28,009/(1)/
1992 286,245 -- -- 305,900 -- -- 29,314/(1)/
Charles A. Junkunc 1994 190,000 19,000 -- 39,000 25,000 -- 21,247/(5)//(6)/
Vice President and 1993 178,369 46,720 -- -- -- -- 7,719/(5)/
Chief Financial Officer 1992 111,154 51,000 52,509/(2)/ 144,000 -- -- 144,803/(3)/
Richard F. Paolino 1994 190,000 19,000 -- -- 25,000 -- 20,854/(5)//(6)/
Vice President - 1993 178,369 42,473 -- -- -- -- 15,532/(5)/
Measuring Systems 1992 175,231 -- -- 191,900 -- -- --
Antonio Aparicio 1994 216,962 16,500 -- 26,000 25,000 -- 18,904/(1)/
Vice President - 1993 182,601 41,376 -- -- -- -- 15,209/(1)/
Precision Measuring 1992 168,937 -- -- 152,000 -- -- 14,721/(1)/
Instruments
1994 119,592 8,250 -- -- 15,000 -- --
C. John Cooke 1993 110,903 22,134 -- -- -- -- --
Vice President- 1992 107,923 -- -- 152,000 -- -- --
Custom Metrology
</TABLE>
- ----------------------------
/(1)/ Contributions to Tesa SA retirement plan for Messrs. Stuber and
Aparicio.
/(2)/ Reimbursement for payment of taxes in connection with certain relocation
payments made to the Executive Officer, whose employment with the Company
commenced on April 24, 1992.
/(3)/ Amounts paid to Executive Officer and third-party relocation
service in connection with the Executive Officer's relocation.
/(4)/ Amounts converted from Swiss franc equivalent with respect to Messrs.
Stuber and Aparicio for 1994, 1993 and 1992 at the average U.S. dollar
exchange rates of $.7332, $.6759 and $.7102, respectively, and from
British pound equivalent with respect to Mr. Cooke for 1994, 1993 and 1992
at the average U.S. dollar exchange rates of $1.5332, $1.4987 and $1.7863,
respectively.
/(5)/ Value of 1993 and 1994 year-end Company contributions to the named
Executive Officers' SARP (4% cash contribution) and ESOP (2% in shares of
Class A Stock) and with respect to Mr. Junkunc for 1993 reflects eligible
wage participation for approximately six months.
/(6)/ Includes an amount of $6,937 and $6,629, respectively, for Messrs.
Junkunc and Paolino representing benefits in excess of limitat io ns
on Company contributions to the named executives' SARP and ESOP
accounts by the Internal Revenue Code credited to an unfunded deferred
compensation retirement plan account under the Supplemental Executive
Retirement Plan maintained by the Company.
/(7)/ The table indicates the dollar value at the date of the award of
restricted stock. The following table sets forth information relating
to unvested restricted stock awarded to and held by the Executive Officers
listed in the foregoing table:
-12-
<PAGE>
<TABLE>
<CAPTION>
Total Number Restricted Aggregate Market Value
Unvested Shares Held Restricted Unvested Shares
Name as of Fiscal Year-End* Held as at Fiscal Year-End
---- ----------------------- --------------------------
<S> <C> <C>
Fred M. Stuber 24,150 $159,993
Charles A. Junkunc 18,000 119,250
Richard F. Paolino 15,150 100,368
Antonio Aparicio 16,000 106,000
C. John Cooke 16,000 106,000
</TABLE>
* The awards to Messrs. Stuber, Paolino and Cooke were made in
1992 and awards to Messrs. Junkunc and Aparicio were made in 1992 and 1994.
Restrictions lapse ratably over five (5) years from the date of award with 25%
of the shares awarded vesting two years and three years, respectively, after
such date and the remaining 50% of the shares vesting five (5) years after
such date. The Company in 1991 omitted and has not reinstated its dividend on
its Class A Stock; however, should it be reinstated, dividends would be paid
on the restricted stock reported. At December 30, 1994 the closing market
price of the Company's shares of Class A Stock was $6.625 per share.
OPTIONS AND STOCK APPRECIATION RIGHTS
II. OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
Under the provisions of the Company's 1989 Equity Incentive Plan
("EIP"), a variety of stock and stock-based awards , performance cash
awards and related benefits, including stock options and stock appreciation
rights ("SARs"), may be awarded to Executive Officers and other key employees of
the Company and its subsidiaries. Any options previously awarded and remaining
outstanding under the Company's Amended 1973 Stock Option Plan (the "'73 Plan"),
which plan terminated on April 26, 1989, are subject to being exercised by
recipients and are included , if applicable, in the amounts set forth in
Table III on page 14. The following table sets forth stock options granted to
Executive Officers under the EIP. No options were exercised by such persons
during the year, and no SAR was exercised since no SARs have been granted at any
time under the Company's EIP.
Option/SAR Grants in Last Fiscal Year
-------------------------------------
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation for
Individual Grants Option Term/(2)/
-------------------------------- ----------------------------
(a) (b) (c) (d) (e) (f) (g)
# of Securities % of Total
Underlying Options/SARs Exercise
Options/ SARs Granted to or Base Expira-
Granted/(1)/ Employees in Price tion
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10%($)
- ---- --------------- ------------ -------- -------------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
F. Stuber 40,000 27.5 6.50 3-25-04 163,512 414,373
C. Junkunc 25,000 17.2 6.50 3-25-04 102,195 258,983
R. Paolino 25,000 17.2 6.50 3-25-04 102,195 258,983
A. Aparicio 25,000 17.2 6.50 3-25-04 102,195 258,983
C. Cooke 15,000 10.3 6.50 3-25-04 61,317 155,389
All current Executive 145,000
Officers as a Group
All Employees, includ- none
ing all current Officers
who are not Executive
Officers
</TABLE>
-13-
<PAGE>
/(1)/ There were no SARs granted to any of the Executive Officers named
in the table in 1994.
/(2)/ The potential realizable values represent future opportunity and
have not been reduced to present value in 1994 dollars. The dollar
amounts included in these columns are the result of calculations at
assumed rates set by the SEC for illustration purposes, and these rates
are not intended to be a forecast of the common stock price and are not
necessarily indicative of the values that may be realized by the named
Executive Officer. The potential realizable values are based on
arbitrarily assumed annualized rates of stock price appreciation of five
and ten percent over the full ten-year-term of the options. For example,
in order for the persons named in the table who received options with an
exercise price of $6.50 per share to realize the potential values set
forth in the five and ten percent columns, the price per share of the
Company's Class A Stock would have to be approximately $10.58 and
$16.86, respectively.
III. OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
The following table summarizes options and SARs exercised during 1994
and presents the value of unexercised options and SARs held by the named
Executive Officers at fiscal year-end:
Aggregated Options/SAR Exercises in Last Fiscal Year and Fiscal Year-End
------------------------------------------------------------------------
Option/SAR Values
-----------------
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money
Options/SARs at Options/SARs at
Fiscal Year-End (#) Fiscal Year-End ($)
Shares
Acquired on Value Exercisable (E)/ Exercisable (E)/
Name Exercise (#) Realized ($) Unexercisable (U) Unexercisable (U)
- ---- ------------ ------------ ----------------- -----------------
(E) (U) (E) (U)
--- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Fred M. Stuber None -- 80,000 -- $ 5,000 --
Charles A. Junkunc None -- 25,000 -- $ 3,125 --
Richard F. Paolino None -- 49,332 -- $ 3,125 --
Antonio Aparicio None -- 25,000 -- $ 3,125 --
C. John Cooke None -- 15,000 -- $ 1,875 --
All current Executive None
Officers as a Group
All Employees, includ- None
ing all current Officers
who are not Executive
Officers
</TABLE>
COMPENSATION COMMITTEE REPORT
The Salary Committee of the Board of Directors (the "Committee")
presents its report on executive compensation for the year 1994 . The
Committee is composed of three outside Directors of the Company, Messrs. Boss,
Nelson and Tregurtha, who have no interlocking relationships within the
meaning of regulations of the Securities and Exchange Commission, and is
responsible for reviewing and establishing the compensation of the Company's
Executive Officers. The Committee reports these actions to the Board of
Directors. The Committee also administers the Company's cash bonus and stock-
based award plans, the Amended Profit Incentive Plan and the 1989 Equity
Incentive Plan, respectively, which plans have been approved by the Company's
stockholders.
-14-
<PAGE>
Compensation Policy
- -------------------
The Committee has developed an executive compensation structure and
specific compensation plans which are designed to attract talented individuals,
reward superior achievement and create incentives for long-term tenure and
performance with a view towards enhancing corporate performance and thus
shareholder value. The Committee strives to base executive compensation on a
combination of individual and corporate performance, consistent with the
ability to attract and retain a capable management team. The result is a
compensation package intended to be competitive in the capital equipment
industry within which the Company operates for each Executive Officer and
senior employee which includes three components: a base salary combined
with the opportunity to earn significant near- or mid- term performance
cash bonuses and long-term stock-based incentives to link executive and
shareholder interests.
Components of Executive Compensation
- ------------------------------------
Base Salary. Under the Committee's guidance, the base salary of each
of the Company's Executive Officers is set through a combination of market
forces and an objective evaluation of the position's value and is reviewed
annually . The salaries of Messrs. Stuber and Junkunc, who assumed their
current positions on January 1, 1991 and April 24, 1992, respectively, were
fixed at the time in part through individual negotiation and were
consistent with the general salary range for comparable positions at similar
size U.S. companies within the industry. The salaries of other executives and
senior employees, while also a function of market pricing, have been established
by reference to a position evaluation system prepared by an outside consulting
firm and used by industrial companies to measure position responsibility and
value.
Short-Term Performance Bonuses. Under the Company's Amended Profit
Incentive Plan ("PIP"), Executive Officers are eligible to receive an annual
cash bonus of up to a specified percentage (generally 40% to 60% for Executive
Officers) of base salary. At the beginning of each fiscal year, the Committee
establishes for each executive a maximum aggregate percentage bonus opportunity,
which is comprised of separate bonus categories tied to the satisfaction of a
specified, largely quantitative formula of corporation goals (e.g.,
profitability and cash flow ), divisional goals (e.g., profitability
and cash flow and inventory levels), and personal goals (e.g., achievement
of specific objectives). In order to assure that the PIP would effectively
encourage and reward superior performance, the Committee, in 1993 and again
in 1995 , simplified the number of specific performance targets comprising
the overall formula to focus their content on promoting cross-divisional and
intra-Company cooperation. In addition, up to 40% of certain executives' annual
bonuses, including up to 40 % for the Chief Executive Officer, were
independent of the target formula and instead were subject to award at the
discretion of the Committee.
Long-Term Incentive Awards. The third primary component of
executive compensation is the 1989 Equity Incentive Plan ("EIP"), pursuant to
which the Company may make awards of stock options, restricted stock ,
performance cash awards and other stock-based awards. Restricted stock and
stock options align the interests of management most closely with those
of the Company's Shareholders. Restricted stock also provides management with
greater compensation per share awarded than do options--a desirable feature in
assembling a competitive overall compensation package. These attributes, as
well as the five-year vesting schedule, are expected to provide significant
incentives both for superior performance and to encourage the executives to
remain with the Company through a difficult operating period. Finally, the EIP
permits the accomplishment of these objectives (except where cash
awards are used) with potential advantageous tax and accounting treatment
for the Company and the employee as compared to cash awards. While cash
performance awards have not previously been granted under the EIP, the Committee
is considering using mid-term cash performance awards as a supplement to longer-
term stock-based awards under the EIP. Recognizing the importance of longer-
term stock-based awards to the alignment of the interests of management with
those of the stockholders, particularly following the 1994 acquisitions of DEA
and Roch and the "turn-around nature" of the Company's current operating
situation, the Committee believes it is
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appropriate to use mid- and longer-term stock-based awards in order to provide
the Executive Officers with a significant incentive stake in the Company's
future.
The Committee views the stock-based awards it made in early 1994 to
Executive Officers (discussed below) as the first part of its program to make
significant mid- and longer-term incentive awards to the Executive Officers,
including the new President and Chief Executive Officer when selected by the
Board of Directors later this year, as an incentive to their achieving
satisfactory financial results for the Company.
1994 Compensation of Chief Executive Officer
- --------------------------------------------
During 1994, the Committee made no adjustment to Mr. Stuber's base
salary which, at the specified contractual currency exchange rate, resulted in
1994 base salary payments (as stated in terms of U.S. dollars) of $320,742. Mr.
Stuber's base salary had been raised 5% in mid-1993. The annual base salary for
Mr. Stuber, who resides in Switzerland and performs most of his duties in
Switzerland, is approximately 62% of the midpoint salary for a comparable Chief
Executive Officer, based on a Swiss job survey furnished by the Company's
compensation consultant.
Mr. Stuber was awarded a cash bonus of $19,000 (approximately 5.9% of
1994 base salary) by the Committee under the provisions of the PIP Plan for
individual performance in 1994. Under PIP, since none of the corporate or
divisional financial objectives were met, no cash awards were made under those
provisions of PIP to Mr. Stuber (or any other Executive Officer). In March
1994, as part of grants to all Executive Officers prior to the negotiation of
the DEA Acquisition, Mr. Stuber received a long-term stock option grant in
1994 of 40,000 shares under the EIP , which are exercisable.
1994 Compensation of Other Named Executive Officers
- ---------------------------------------------------
Base salary adjustments for the other Executive Officers listed in the
preceding tables were made by the Committee for the year 1994 based on generally
accepted techniques of job, individual performance and judgmental evaluation.
Base salary for Messrs. Junkunc and Paolino was raised $12,000 (6.7%) for 1994.
Base salaries for the other two Executive Officers in the tables were not
adjusted (and increased amounts reported in U.S. dollars in the tables reflect
devaluation of the U.S. dollar as compared to the Swiss franc and British
pound ) . The other Executive Officers listed in the preceding tables were
awarded cash bonuses under PIP for 1994 individual performance of $19,000 for
Messrs. Junkunc and Paolino, $16,500 for Mr. Aparicio and $8,250 for Mr. Cooke.
No awards were made under PIP for 1994 with respect to corporate and divisional
financial objectives, which were not met.
In making compensation decisions for senior executives, the Committee
gives important consideration to the reports it receives from its compensation
consultants regarding national trends for comparable jobs in similar industries.
As a result, therefore, the Committee remains concerned that the Company's
executive base salary levels continue to be more modest than it would like them
to be. The Company's mid- and long-term stock incentive plans were, and will
have to continue to be for the foreseeable future, the Company's best answer to
compensating for base salaries which must, for budgetary reasons, be below
desired salary range midpoints.
On March 25, 1994, prior to negotiation of the DEA Acquisition,
longer-term awards in the form of incentive stock option grants were made to six
Executive Officers of the Company under EIP. Options for 40,000 shares were
granted to Mr. Stuber, President and Chief Executive Officer (as described
above), and options for 25,000 shares each to Messrs. Junkunc, Paolino and
Aparicio; and 15,000 shares each to Messrs. Cooke and one other Executive
Officer , which are exercisable. On such date awards of restricted stock
in the amount of 6,000 and 4,000 shares of Class A Stock, which vest ratably
over a five-year period from the date of grant, were also made to Messrs.
Junkunc and Aparicio, respectively.
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<PAGE>
The amount of the stock-based awards was based in each case on an
evaluation by the Committee of an appropriate level for the Executive Officer,
which evaluation took into account the overall responsibility of the Executive
Officer and his ability to impact results and also the amount of stock-based
awards previously made to each Executive Officer. The Committee views these
March 1994 stock-based awards as the first part of its program to make
significant mid- and longer-term awards to the Executive Officers, including the
new President and Chief Executive Officer when selected later this year, as an
incentive to their achieving satisfactory financial results for the Company.
Accordingly, the principal reason for the proposed increase of 500,000
shares of Class A Stock in the aggregate number of shares deliverable under the
Company's 1989 Equity Incentive Plan, as proposed for stockholder approval in
Item 2, is to have sufficient shares to make substantial stock-based awards,
together with short- or mid-term cash awards (for each year in a three-year
period) to the group of senior executives, principally the Executive Officers,
who have the task of turning around the Company's financial performance
following the acquisitions completed in 1994 and the Company's results over the
last several years. The Executive Officers expected to receive future stock-
based and performance cash awards (the amounts of which have not been determined
by the Committee) under the 1989 Equity Incentive Plan as amended would include
the person subsequently selected by the Board of Directors to serve as the
Company's new President and Chief Executive Officer following Mr. Stuber's
decision in February 1995 to resign these positions.
Russell A. Boss, Chairman
John M. Nelson
Paul R. Tregurtha
FOREIGN RETIREMENT PLANS
Tesa SA ("Tesa"), one of the Company's principal foreign subsidiaries,
maintains a defined contribution retirement plan required by Swiss law, pursuant
to which benefits accrue on behalf of Messrs. Stuber and Aparicio annually in an
amount equal to a percentage (based on the executive's age) of annual
compensation and under which interest accrues on accrued benefit amounts at a
compound annual rate of 4%. Upon retirement, the executive is entitled to
receive an annual pension in an amount equal to 7.2% of the executive's total
accrued benefits, and the estimated annual pension payable upon retirement at
normal retirement age under such plan is $49,634 for Mr. Stuber and $99,416 for
Mr. Aparicio. In addition, Tesa sponsors a separate defined contribution plan
pursuant to which the named Executive Officers and other key employees are
eligible to receive a lump-sum payment upon retirement. The estimated lump sums
payable upon retirement under this sponsored plan at normal retirement age are
$258,940 and $335,691, respectively, for Messrs. Stuber and Aparicio (converted
at the rate of $.7332 per Swiss franc).
Dr. C. John Cooke, Vice President-Custom Metrology Division, one of
the named Executive Officers in the Summary Compensation Table, is a participant
in the Brown & Sharpe Pension Plan covering the Company's U.K. employees. Dr.
Cooke, who is designated a "Special Member" of the Plan which entitles him to
the highest retirement benefit under such Plan, is eligible to retire and
receive pension benefits under the plan at age 60 on January 19, 1997. Based on
an estimated total final average salary of (Pounds)84,500, length of service and
13 3/4 years' participation in the Plan, he would be eligible to receive an
estimated final annual pension benefit net of any statutory governmental
social benefit of (Pounds)33,272 equivalent to approximately $51,012.
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<PAGE>
EMPLOYMENT, SEVERANCE AND OTHER AGREEMENTS
The Company has an Employment/Severance Agreement dated March 14, 1988
with Richard F. Paolino, Vice President-Measuring Systems, which provides for a
two-year term of employment, commencing upon the date of a change of control (as
defined for the purposes in the Agreement) of the Company. The two-year term of
employment commenced on the occurrence of the acquisition by Finmeccanica S.p.A.
of shares of Class A Stock in connection with the acquisition on September
28, 1994 by the Company of DEA S.p.A. In general, it provides for salary,
bonus, participation in employee benefit plans and other fringe benefits at
rates at least equal to those in effect immediately prior to the Change of
Control. In the event his employment is terminated by the Company before the
term expires (except for cause, as defined), Mr. Paolino is entitled to (i) the
same rates of salary, bonus, benefits and fringes for the lesser of 12 months or
the number of months remaining in the two-year term of employment, which
payments are subject to mitigation, and (ii) a lump sum equal to the sum of his
highest annual base salary during the three-year period immediately preceding
termination, the value of annual fringe benefits, and the highest cash bonus
received during the prior three-year period. Upon such termination, Mr. Paolino
is also entitled to limited continuation of certain employee welfare plans and
accelerated vesting of any stock options or restricted stock. For purposes of
this agreement, Mr. Paolino's severance rights would also be triggered by a
deemed termination following the change of control, which would include a
reduction of employment compensation, benefits, position or responsibilities or
relocation of the Company's principal executive offices. The payment and
benefits will be reduced to the extent necessary to preserve their deductibility
to the Company for Federal income tax purposes and to avoid imposition of any
"excess parachute payments" taxes under the Internal Revenue Code. Mr. Paolino
is subject to a covenant not to compete with the Company (as specified) during
the two-year term of such employment and for the lesser of one-year or the
balance of the term of employment following any such termination. The
agreement also obligates the Company to pay legal fees incurred by Mr. Paolino
to maintain his rights under the agreement and provides for letter of credit
mechanics to carry this out.
The Company also has an agreement with Charles A. Junkunc, Vice
President and Chief Financial Officer, who joined the Company on May 4, 1992, to
pay a severance amount to him equal to his annual salary in effect at the time
of termination and to continue his basic employee benefits for a one-year period
in the event his employment with the Company is terminated for any reason.
Under the agreement the Company will pay a bonus equal to the average of the
bonus payments received by him during the three years (or such lesser period)
prior to termination, pro rated according to the number of months of service
during the year in which any termination occurs. In addition, Bonus payments
of $51,000 for 1992 and $34,000 for 1993 were guaranteed pursuant to the
agreement. Upon any termination Mr. Junkunc, if requested by the Company, is to
provide consulting services to the Company for one year, with offsets against
the payments to be made by the Company for any income received from other
sources.
STOCK PERFORMANCE GRAPH
The following graph sets forth information comparing the cumulative
total return to holders of the Company's Class A Stock over the Company's last
five fiscal years beginning at the market close on the last trading day
before the beginning of the Company's fifth preceding fiscal year (the
"Measuring Period") with (1) the cumulative total return of the Standard &
Poor's 500 Stock Index, and (2) the cumulative total return of the Standard &
Poor's Machinery (Diversified) Index. The yearly change in cumulative total
return is measured by dividing (i) the sum of (a) the cumulative amount of
dividends for each fiscal year, assuming dividend reinvestment, and (b) the
change in share price between the beginning and end of the Measuring Period, by
(ii) the share price at the beginning of the Measuring Period.
-18-
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[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Brown & Sharp S&P 500 S&P Machinery
Date Index Index Index
- ---- ----- ----- -----
<S> <C> <C> <C>
12/29/89 100 100 100
12/31/90 73.83804 96.83884 88.76608
12/31/91 67.37721 126.0344 98.924
12/31/92 49.84068 135.3301 109.0602
12/31/93 56.30151 148.5131 161.2158
12/30/94 48.9177 150.0091 153.5161
</TABLE>
ITEM 2
APPROVAL OF AMENDMENT S TO THE EQUITY INCENTIVE PLAN
INCREASING THE NUMBER OF SHARES AUTHORIZED
TO BE AWARDED AND DELIVERED THEREUNDER AND
LIMITING ANNUAL AWARDS TO EACH INDIVIDUAL
Subject to approval by the stockholders at the 1995 Annual Meeting,
the Board of Directors at its regular meeting held on February 15, 1995 approved
a proposal to amend the Company's 1989 Equity Incentive Plan (the "Plan") to
increase by 500,000 shares the aggregate number of shares of Class A Stock of
the Company which may be issued and delivered upon options, restricted stock
awards or other stock-based awards granted to employees under the Plan and to
limit to 300,000 shares the number of shares that any recipient could
thereafter be awarded in any calendar year pursuant to stock options
granted under the Plan. The Plan as originally approved by the stockholders at
the April 28, 1989 Annual Meeting authorized the issuance of 225,000 shares of
the Company's Class A Stock and was amended by the Board of Directors on
February 21, 1992 and approved by the stockholders of the Company at the 1992
Annual Meeting, to increase the number of shares authorized for delivery under
the Plan by 150,000 shares for an aggregate of 375,000 shares of Class A Stock
currently authorized for issuance.
As of March 16, 1995, incentive stock options for a total of 195,000
shares (net of forfeitures) of the Company's Class A Stock and restricted stock
awards for a total of 118,400 shares of Class A Stock have been awarded under
the Plan leaving 61,600 shares available for the granting of options, restricted
stock awards or other stock-based future awards under the Plan. The Board of
Directors believes that the number of shares remaining available for issuance
under the Plan is insufficient to continue to fulfill the purposes of the Plan
as originally approved by the stockholders and that the number of shares
authorized for delivery thereunder should be increased to 875,000.
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<PAGE>
The Board approved , subject to stockholder approval, an
amendment limiting to 300,000 the number of shares that may thereafter be
awarded in a stock option grant to an individual in any calendar year during the
remaining term of the Plan. Recently enacted Section 162(m) of the Internal
Revenue Code places limitations on the deductibility of compensation in excess
of $1 million paid to the Chief Executive Officer and the four other most highly
compensated Executive Officers unless the compensation is performance based.
For compensation attributable to stock options and stock appreciation rights to
qualify as performance based, the plan under which they are granted must state a
maximum number of shares with respect to which options and rights may be granted
during a specified period. The Board believes that the Company will benefit
from this amendment by being able to deduct for income tax purposes any income
realized by one of the designated Executive Officers in excess of $1 million
upon the exercise of non-qualified stock option or stock appreciation right.
The Directors believe that the Plan is an important means of
attracting, holding and motivating key employees of the Company and that the
Plan is a necessary and integral part of the Company's overall management
compensation program. As noted under the heading "Compensation Committee
Report" earlier in the Proxy Statement, the principal reason for the proposed
increase in the aggregate number of shares deliverable under the Company's 1989
Equity Incentive Plan, as proposed for stockholder approval in this Item
2, is to have sufficient shares to make substantial stock awards, together with
mid -term cash awards (for each year in a three-year period) to the group
of senior executives, principally the Executive Officers, who have the task of
turning around the Company's financial performance following the acquisitions
completed in 1994. The group of Executive Officers to receive awards under the
1989 Equity Incentive Plan would include the person subsequently selected to
serve as the Company's new President and Chief Executive Officer following Mr.
Stuber's decision in February 1995 to resign these positions. To date,
cash performance awards have not been made under the 1989 Equity Incentive Plan,
but the Committee is considering that such awards would be an important part of
the overall executive compensation program to be put into place later in
1995 (the amounts of which have not been determined by the Committee) .
The foregoing proposed amendment s will make no change to the Plan
other than increasing the total number of shares authorized to be delivered
under the Plan and imposing a limit on annual grants of stock options.
Set forth below is a summary of the Plan as is now in effect.
ADMINISTRATION; ELIGIBLE EMPLOYEES. The Plan is administered by the
Salary Committee of the Board, consisting of no fewer than three persons
appointed by and serving on the Board of Directors, all of the members of which
Committee must be "disinterested persons" as that term is defined under rules
promulgated by the Securities and Exchange Commission and all of whom are
considered "outside directors" for purposes of Code Section 162(m) and the
regulations, including proposed regulations, thereunder. The Committee has full
power to, among other matters, select from among the employees eligible for
awards, the individuals to whom awards will be granted, to make any combination
of awards to any participants, to determine the specific terms of each grant,
waive compliance with any term or condition of a grant, and, with the consent of
the employee, substitute one grant for another, subject to the provisions of the
Equity Incentive Plan. Persons eligible to participate in the Equity Incentive
Plan will be those employees of the Company or any of its subsidiaries who are
in a position to make a significant contribution to the success of the Company
or its subsidiaries, as selected from time to time by the Committee. At March
1 6, 199 5 approximately 65 persons, including one Director and 11
other officers, were eligible to participate in awards under the Equity
Incentive Plan.
STOCK OPTIONS. The Plan permits the granting of options that qualify
as incentive stock options under the Internal Revenue Code ("incentive options"
or "ISOs") and stock options that do not so qualify ("non-statutory options").
The option exercise price of each option shall be determined by the Committee
but shall not be less than 100% of the fair market value of the shares on the
date of grant (110% in case of ISOs granted to a ten percent shareholder).
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The term of each option will be fixed by the Committee but may not
exceed ten years from the date of grant (five years in the case of an ISO
granted to a ten percent stockholder). The Committee will determine at what
time or times each option may be exercised. Options may be made exercisable in
installments, and the exercisability of options may be accelerated by the
Committee. The Committee may, in its discretion, provide that upon exercise of
an option, instead of receiving shares free from restrictions under the Equity
Incentive Plan, the participant will receive shares of Restricted Stock or
Deferred Stock awards. Also, if the market price of the Common Stock subject to
an option exceeds the exercise price of the option at the time of exercise, the
Committee may, in its discretion and upon request by an employee, cancel the
option and pay to the employee an amount in cash equal to the difference between
the fair market value of the Common Stock which would have been purchased
pursuant to the exercise (determined on the date the option is canceled) and the
aggregate exercise price which would have been paid.
The exercise price of options granted under the Equity Incentive Plan
must be paid in full in cash or by check or other instrument acceptable to the
Committee or , if the terms of the option permit (or for a non-statutory
option, if the Committee permits at or after the grant of the option), by shares
of Common Stock, which have been held for at least six months (unless the
Committee approves in any instance a shorter period); by a promissory note
payable on terms acceptable to the Committee ; by delivery of an
unconditional and irrevocable undertaking by a broker to deliver promptly to the
Company sufficient funds to pay the exercise price; or by any combination of the
foregoing, provided that the par value must be paid in cash or by check
or other instrument acceptable to the Committee.
In the event of termination of employment by reason of retirement at
or after age 60 with the consent of the Company, total and permanent disability,
or death, an option will thereafter be exercisable until the date the option
would have terminated if the participant had remained an employee or such
earlier date as may be established by the Committee either at or after
grant of the award. If an optionee terminates employment by reason of
retirement or total and permanent disability and thereafter dies while the
option is still exercisable, the option will be exercisable until the date the
option would have terminated if the participant had remained an employee or
such earlier date as may be established by the Committee either at
or after grant of the award.
If an optionee terminates employment for any reason other than
retirement, total and permanent disability or death, his or her options, to the
extent then exercisable, will remain exercisable until the earlier of (i) the
date which is three months after the date of termination of employment or
such later date as may be determined by the Committee either at or after grant
of the Award; and (ii) the date on which the award would have terminated if the
participant had remained an employee . However, if employment was
terminated for cause , any awards held by the optionee at the time of
termination shall promptly expire .
To qualify as incentive options, options must meet additional Federal
tax requirements, including limits on the value of shares subject to incentive
options that vest annually for any participant, a shorter exercise
period after termination and a higher minimum exercise price in the case
of certain large stockholders.
STOCK APPRECIATION RIGHTS. The Committee may also grant stock
appreciation rights, alone or in conjunction with options, entitling the holder
upon exercise to receive an amount in any combination of cash or shares of
unrestricted Common Stock, Restricted Stock, or Deferred Stock awards (as
determined by the Committee), not greater in value than the increase since the
date of grant in the value of the shares covered by such right. Stock
appreciation rights may be granted separately from or in tandem with the grant
of an option. In the case of stock appreciation rights granted in tandem with
options, each stock appreciation right will be exercisable only at such time or
times, and to the extent, that the related option is exercisable and will
terminate upon the termination or exercise of any accompanying option. The
accompanying option will terminate upon the exercise of the related stock
appreciation right.
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In the event of the termination of an employee holding a stock
appreciation right, the exercisability of such right will be treated in the same
manner as a non-statutory option, such treatment being more fully described
above.
RESTRICTED STOCK AND UNRESTRICTED STOCK. The Committee may also award
shares of Common Stock subject to such conditions and restrictions as the
Committee may determine ("Restricted Stock"). The purchase price of shares of
Restricted Stock shall equal the par value of those shares.
Recipients of Restricted Stock must accept an award within 60 days of
the grant of such award by written instrument and tender full payment, if any,
in order to have any rights with respect to the Restricted Stock. The Committee
may, at any time, accelerate the dates on which the restrictions will lapse or
waive the restrictions. Generally, shares of Restricted Stock are non-
transferable, and if a participant who holds shares of Restricted Stock
terminates employment for any reason except retirement prior to the lapse or
waiver of the restrictions, the employee must resell to the Company the shares
of Restricted Stock for the amount paid for such shares, or forfeit them to the
Company if no cash was paid. Prior to the lapse of restrictions on shares of
Restricted Stock, the participant will have all rights of a stockholder with
respect to the shares, including voting and dividend rights, subject only to the
conditions and restrictions generally applicable to Restricted Stock.
The Committee may also grant shares (at a purchase price equal to par
value) which are free from any restrictions under the Plan ("Unrestricted
Stock"), in recognition of past services or in other circumstances where the
Committee determines the grant to be in the best interests of the Company.
DEFERRED STOCK. The Committee may also make deferred stock awards
under the Plan ("Deferred Stock Awards"). These are awards entitling the
recipient to receive shares of Common Stock in one or more installments at a
future date or dates, and on such conditions as may be determined by the
Committee. Except as otherwise specified in the grant or agreed to by the
Committee, all such rights will terminate upon the participant's termination of
employment. The Committee may at any time accelerate the time at which delivery
of all or any part of the shares will take place.
PERFORMANCE AWARDS. The Committee may also grant awards based on
certain performance criteria ("Performance Awards") entitling the recipient to
receive, without payment, shares of Common Stock or cash performance awards
in such combinations as the Committee may determine. Payment of the award
may be conditioned on achievement of individual, departmental or any other
category of performance goals over a fixed or determinable period and such other
conditions as the Committee shall determine. Except as otherwise specified in
the grant or agreed to by the Committee, rights under a Performance Award will
terminate upon a participant's termination of employment.
Any conditions in any award may be waived or modified by the Committee
at any time prior to termination of employment. Cash awards have not been
made under the Plan. However, as noted above, the Committee is considering a
program of cash awards and stock options as incentives for the senior executives
who are responsible for turning around the Company's financial performance.
LOANS. The Company may make a loan to a participant ("Loan"), either
on the date of or after the grant of any award to the participant. A Loan may
be made either in connection with the purchase (whether upon exercise of an
option or otherwise) of Common Stock under the award or with the payment of any
Federal income tax with respect to income recognized as a result of the award.
The Committee will have full authority to decide whether to make a Loan and to
determine the amount, terms and conditions of the Loan, including the interest
rate, if any, whether the Loan is to be secured or unsecured or with or without
recourse against the borrower, the terms on which the Loan is to be repaid and
the conditions, if any, under which it may be forgiven. However, no Loan may
have a term (including extensions) exceeding ten years in duration.
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SUPPLEMENTAL GRANTS. In connection with any award the Committee may,
at the time such award is made or at a later date, provide for and grant a cash
award to the participant ("Supplemental Grant") not to exceed an amount equal to
(1) the amount of any Federal, state and local income tax or ordinary income for
which the participant will be liable with respect to the award, plus (2) an
additional amount on a grossed-up basis necessary to make the participant whole
after tax, discharging all the participant's income tax liabilities arising from
all payments made in connection with awards.
DIVIDENDS AND DEFERRALS. Except as specifically provided by the Plan,
the recipient of an award will not give a participant rights as a Shareholder;
the participant will obtain such rights subject to any limitations imposed by
the Plan or the instrument evidencing the award, upon the actual receipt of
Common Stock. The Committee may permit the immediate payment or the deferral or
investment of benefits in an amount equal to cash dividends which would have
been paid if shares subject to an award had been outstanding at the time of
payment of such dividends. It may also permit participants to make elections to
defer receipt of benefits under the Plan.
ADJUSTMENTS FOR STOCK DIVIDENDS, MERGERS, ETC. The Committee is
required to make appropriate adjustments in connection with outstanding awards
and the maximum number of shares that may be delivered under the Plan to reflect
stock dividends, stock splits and similar events. The Committee may also make
such adjustments to take into account material changes in law or in accounting
practices or principles, mergers, consolidations, acquisitions, dispositions, or
any similar corporate transactions, or any other event if it is determined by
the Committee that adjustments are appropriate to avoid distortion in the
operation of the Plan.
NON-TRANSFERABILITY OF AWARDS. No award (other than an award in the
form of an outright transfer of cash or Unrestricted Stock) may be transferred
other than by will or by the laws of descent and distribution, and during an
employee's lifetime an award requiring exercise may be exercised only by the
participant (or in the event of incapacity, the person or persons legally
appointed to act on the participant's behalf).
EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT, AND TERMINATION.
Neither adoption of the Plan nor the grant of awards to a participant affects
the Company's right to grant to such participant awards that are not subject to
the Plan, to issue to such participant Common Stock as a bonus or otherwise, or
to adopt other plans or arrangements under which Common Stock may be issued to
employees.
The Committee may at any time discontinue granting awards under the
Plan. The Board may at any time or times amend the Plan or any outstanding
award for any purpose which may at the time be permitted by law, or may at any
time terminate the Plan as to any further grants of awards, provided that
(except to the extent expressly required or permitted by the Plan) no such
amendment will, without the approval of the Stockholders of the Company)
increase the maximum number of shares available under the Plan, change the group
of persons eligible to receive awards under the Plan, or extend the time within
which awards may be granted. No amendment or termination of Plan may adversely
affect the rights of any participant (without the participant's consent) under
any award previously granted. Moreover, any amendment requiring Stockholder
approval for purposes of satisfying any then applicable incentive stock option
requirements under Federal tax law or the requirements of Rule 16b-3 under the
Securities and Exchange Act of 1934 shall be subject to such Stockholder
approval to the extent then required. Currently, the incentive stock option
regulations would require Stockholder approval for an increase in the maximum
number of shares issuable pursuant to incentive options under the Plan or a
modification in eligibility requirements under the Plan. Rule 16b-3 requires
such approval if the amendment materially increased benefits accruing to Company
Directors and Officers under the Plan, materially increased the number of
securities issuable under the Plan or materially modified eligibility
requirements under the Plan.
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STOCK WITHHOLDING. In the case of an award under which Common Stock
may be delivered, the Committee may permit the participant or other appropriate
person to elect to have the Company hold back from the shares to be delivered
for delivery to the Company, shares of Common Stock having a value sufficient to
satisfy any Federal, state, and local withholding tax requirements.
PAST SERVICE AS CONSIDERATION. Where a participant purchases Common
Stock under an award for a price equal to the par value of the Stock, the
Committee may determine that the price has been satisfied by past services
rendered by the participant.
CHANGE IN CONTROL PROVISIONS. The Plan provides that in the event of
a "Change in Control" (as defined in the Plan): (a) each outstanding option and
appreciation right will immediately become exercisable in full; (b) Restricted
Stock will immediately become free of all restrictions and conditions; (c)
conditions on other awards which relate solely to the passage of time and
continued employment will be removed but other conditions will continue to apply
unless otherwise provided in the instrument evidencing the awards or by
agreement between the Company and the participant; and (d) unless otherwise
provided in the award, during the 60-day period following the Change in Control,
a participant holding an option or an appreciation right will have the right to
surrender all or part of his or her award to the Company and receive cash
payment equal, in general, to the difference between (i) the exercise price and
(ii) the value of the stock determined by reference to the highest reported
value of the stock in the 60-day period ending on the date of the Change in
Control or, if higher, the highest price paid for the stock by certain persons
described in the definition of the term Change in Control. The issue of shares
to Finmeccanica S.p.A. in connection with the DEA acquisition did not constitute
a change in control under the EIP.
FEDERAL INCOME TAX EFFECTS
In general, neither the grant or the exercise of an incentive stock
option will result in taxable income to the option holder or a deduction to the
Company. However, option holders exercising incentive stock options may become
subject to the alternative minimum tax by reason of that exercise.
If the stock received upon the exercise of an incentive stock option
is held for at least two years from the date of grant and at lease one year
after the date of exercise, any gain or loss recognized upon the disposition of
the stock will be considered long-term capital gain or loss and will be taxed
accordingly. If shares received upon exercise of an incentive stock option are
disposed of before the holding period requirements described above have been
satisfied (a "disqualifying disposition"), the option holder will realize
ordinary income and the Company will be entitled to a deduction, equal in
general to the difference between the option price and the value of the stock on
the date of exercise. The amount of ordinary income realized on a disqualifying
disposition may be limited when the stock is sold for less than its value on the
exercise date. Incentive options granted to an optionee will be treated for
Federal income tax purposes as non-statutory options (see below) to the extent
the aggregate value (determined as of the time of grant) of the stock for which
the options first become exercisable in any calendar year exceeds $100,000.
In the case of non-statutory options, no income results upon the grant
of the option. When an option holder exercises a non-statutory option, he or
she will realize ordinary income, subject to withholding, equal in general to
the excess of the then-fair market value of the stock over the option price.
The Company will in general be entitled to a deduction equal to the amount of
ordinary income realized by the optionee, provided the Company satisfies certain
withholding and reporting requirements.
Special rules will apply in the case of officers or directors subject
to the short-swing profit limitations of Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), who exercise options
within six months of the grant of those options.
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Section 162(m) of the Internal Revenue Code limits to $1 million the
deduction a public corporation may claim with respect to the remuneration paid
in any year to any of the corporation's top five officers. The deduction
limitation is subject to a number of important exceptions, including an
exception for so-called "performance-based" compensation. It is anticipated
that options granted under the Plan as proposed to be amended will be
eligible for an exception from the $1 million deduction limitation. However,
final regulations under Section 162(m) have not yet been issued.
The Internal Revenue Code also imposes a 20% additional tax, and
denies a deduction, where remuneration paid in connection with a change in
control exceeds specified limits. In determining whether these limits have been
exceeded, options that vest upon a change in control of the Company may be taken
into account.
The foregoing summary is limited to Federal income tax consequences
and does not purport to be a complete description of those taxes.
VOTE REQUIRED FOR APPROVAL.
Approval of the Amendment s described above to the 1989 Equity
Incentive Plan will require the affirmative vote of the holders of the
shares of Class A Stock and Class B Stock voting together as a single class
representing a majority of the votes cast on the proposal . The
amendment s shall become effective upon Stockholder approval thereof.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSED AMENDMENTS TO THE 1989 EQUITY INCENTIVE PLAN.
ITEM 3
RATIFICATION OF APPOINTMENT
OF
INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit
Committee, has appointed the firm of Ernst & Young L.L.P. as the
Company's independent accountants for fiscal 1995, subject to approval by the
stockholders. In the event the stockholders do not ratify the selection of
Ernst & Young, the Board of Directors will consider the selection of another
accounting firm to serve as the Company's independent accountants. Neither
Ernst & Young nor any of its partners has any direct or indirect financial
interest in or any connection (other than as independent auditor) with the
Company or any subsidiary. Coopers & Lybrand L.L.P. has acted as the Company's
independent accountants for the past two fiscal years. The Audit Committee of
the Board, upon the recommendation of management and after consideration of
various factors, including presentation s made to the Committee by
Ernst & Young and Coopers & Lybrand outlining the respective
scope s and cost s of audit and non-audit services they propose
to make available to the Company, has recommended to the Board at its regular
meeting held on February 15, 1995 and the Board unanimously approved, subject to
ratification of the stockholders, that Ernst & Young be appointed to replace
Coopers & Lybrand as the Company's independent accountants for 1995. Coopers &
Lybrand's report on the Company's financial statements for the past two fiscal
years did not contain any adverse opinion or a disclaimer of opinion nor were
such statements qualified or modified as to uncertainty, audit scope or
accounting principles. During the Company's two most recent fiscal years and
interim period subsequent to completion of the most recent fiscal year, the
Company believes there were no disagreements with Coopers & Lybrand preceding
the effective date of their dismissal on any matter of accounting principles or
practices, financial statement disclosure or auditing scope
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<PAGE>
of procedure which were not resolved to the satisfaction of Coopers & Lybrand.
Coopers & Lybrand has delivered a letter to the Securities and Exchange
Commission and the Company confirming the foregoing statements.
Ernst & Young is a well recognized firm of independent certified
public accountants of long-standing reputation in the accounting profession and
is one of the so-called "big six" firms of international certified public
accounting firms. The firm has extensive experience auditing the accounts of
some of the largest publicly owned industrial companies in the world and
possesses extensive domestic and foreign resources in all of the countries in
which the Company has its major operations. In addition, the firm's Italian
affiliated partnership, Reconta Ernst & Young, have been for the past three
years the auditors for DEA S.p.A., which now comprises a significant portion of
the Company's business operation since its acquisition from Finmeccanica S.p.A.
in September of 1994 and accordingly possesses significant knowledge and
understanding of the accounting policies, practices and procedures affecting
that operation. Although the Company has generally been satisfied with the
services provided by Coopers & Lybrand over the years, management believes based
on the foregoing and on other factors considered by the Audit Committee that it
is in the best interest of the Company to appoint Messrs. Ernst & Young as its
independent accountants for the 1995 year.
Representatives of Ernst & Young and Coopers & Lybrand are expected to
be present at the Annual Meeting with the opportunity to make a statement if
they desire to do so and to respond to appropriate questions from the
stockholders. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
PROPOSAL TO APPOINT ERNST & YOUNG L.L.P. AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS FOR FISCAL 1995.
GENERAL INFORMATION
STOCKHOLDER PROPOSALS
All stockholder proposals intended to be submitted at the Company's
1996 Annual Meeting must be received by the Secretary of the Company on or
before November 30, 1995 in order to be considered for inclusion in the
Company's 1996 proxy materials.
SOLICITATION AND VOTE OF PROXIES
All shares represented by duly elected proxies will be voted FOR the
election of the Board's nominees named herein as Directors unless authority to
vote for the proposed slate of Directors or any individual Director has been
withheld. If for any reason any of such nominees should not be available as a
candidate for Director, the proxies will be voted for such other candidate or
candidates as may be nominated by the Board of Directors. With respect to the
proposal to amend the Company's 1989 Equity Incentive Plan and the proposal
to ratify the appointment of Ernst & Young L.L.P. as the Company's
independent accountants, all such shares will be voted FOR such
proposal s , unless the proxy specifies that it should be voted against
a proposal or not voted at all. If any other matter should come before
the meeting, then the persons named in the enclosed form of proxy will have
discretionary authority to vote all proxies with respect thereto in accordance
with their judgment.
Consistent with state law and under the Company's by-laws, the holders
of shares entitled to cast a majority of the votes entitled to be cast on
a particular matter, present in person or represented by proxy, constitutes a
quorum as to such matter. Votes cast by proxy or in person at the Annual
Meeting will be counted by persons appointed by the Company to act as Judges of
Election for the meeting.
The four nominees for election as Directors at the Annual Meeting who
receive the greatest number of votes properly cast for the election of Directors
shall be elected Directors. A majority of the votes properly cast on the
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matter is necessary to approve the action s proposed in Item s 2
and 3 , as well as any other matter which comes before the Annual Meeting,
except where law or the Company's certificate of incorporation or by-laws
require otherwise.
The Judges of Election will count the total number of votes cast "For"
approval of proposals, other than the election of Directors, for purposes of
determining whether sufficient affirmative votes have been cast. The Judges of
Election will count shares represented by proxies that withhold authority to
vote for a nominee for election as a Director or that reflect abstentions and
"broker non-votes" (i.e., shares represented at the Annual Meeting held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners or persons entitled to vote and (ii) the broker or nominee
does not have the discretionary voting power on a particular matter) only as
shares that are present and entitled to vote on the matter for purposes of
determining the presence of a quorum, but neither abstentions nor broker non-
votes will have any effect on the outcome of voting on the matter.
The entire expense of solicitation of proxies will be borne by the
Company. In addition to the solicitation of proxies by mail, Directors,
officers, and employees of the Company may solicit in person, by telephone,
facsimile, telegram or by telex. The Company will reimburse persons holding
stock for others in their names or in nominee names for their reasonable
expenses in sending soliciting material to the beneficial owners of common
stock.
IMPORTANT NOTICE
No matter how small your holdings, if you do not plan to attend the
meeting in person, you are respectfully requested to complete, sign, date and
return the accompanying Proxy in the enclosed envelope at your earliest
convenience.
By Order of the Board of Directors,
/s/ James W. Hayes, III
James W. Hayes, III
Secretary and Corporate Counsel
North Kingstown, Rhode Island 02852
April 3, 1995
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BROWN & SHARPE MANUFACTURING COMPANY
PROXY FOR CLASS A COMMON STOCK AND CLASS B COMMON STOCK
P THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
R MAY 3, 1995
O
X The undersigned appoints each of Fred M. Stuber, Paul R. Tregurtha and
Y Russell A. Boss proxies with power of substitution to vote for the
undersigned at the Annual Meeting of Stockholders called for Wednesday, May
3, 1995, at 10:00 A.M., at Precision Park, 200 Frenchtown Road, North
Kingstown, Rhode Island, and at any adjournments, all shares of stock which
the undersigned would be entitled to vote if present in accordance with
their judgment upon any matters that may properly come before said meeting
and to vote as specified on the reverse.
A majority of the proxies present and acting at the meeting in person
or by substitute (or if only one shall be so present, then that one) shall
have and may exercise all of the power and authority of said proxies
hereunder. The undersigned hereby revokes any proxy previously given and
acknowledges receipt of the Notice of Annual Meeting and Proxy Statement
pertaining to the aforesaid meeting and a copy of the Company's Annual
Report for the year ended December 31, 1994.
Your Shares of Class A Common Stock on the back are designated "Class
A Stock", and your Shares of Class B Common Stock are designated "Class B
Stock".
To approve the Board of Directors' recommendations, simply sign and
date the back. You need not mark any boxes.
---------------
| SEE REVERSE |
| SIDE |
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<PAGE>
Please mark
[X] votes as in
this example.
1. Election of Directors: To fix the number of Directors, at ten and to elect
four Directors as set forth in the Proxy Statement. Class A Stock may be voted
for Messrs. Aloareto, Sharpe, Jr., Fuguet and Sharpe III and Class B Stock may
be voted for Messrs. Sharpe, Jr., Fuguet and Sharpe III as indicated below.
Holders of Class A Stock and Class B Stock who wish to provide instructions
should vote such class of stock in the space indicated below.
Class A Stock:
Aloareto, Sharpe, Jr., Fuguet and Sharpe III
FOR WITHHELD
ALL [ ] FROM [ ]
NOMINEES ALL
NOMINEES
For, except vote withheld from the
[ ] _____________________________
Class B Stock:
Sharpe, Jr., Fuguet and Sharpe III
FOR WITHHELD
ALL [ ] FROM [ ]
NOMINEES ALL
NOMINEES
For, except vote withheld from the
[ ] _____________________________
FOR AGAINST ABSTAIN
2. To approve the [ ] [ ] [ ]
proposal to amend
the 1969 Equity
Incentive Plan.
3. To ratify the appoint- [ ] [ ] [ ]
ment of Ernst &
Young LLP as the
Company's Indepen-
dent accountants for
the fiscal year ending
December 31, 1995.
MARK HERE
FOR ADDRESS [ ]
CHANGE AND
NOTE AT LEFT
Note: When signing as Executor, Administrator,
Trustee, Guardian, etc., add full title. (Sign
exactly as name appears on this card.)
This proxy when properly executed will
be voted in the manner directed herein.
If no direction is made the proxy will
be voted FOR the election of the nominees
indicated and FOR proposals 2 and 3.
Signature: __________________________ Date __________
Signature: __________________________ Date __________
