<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[_]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-5881
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BROWN & SHARPE MANUFACTURING COMPANY
----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 050113140
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Precision Park, 200 Frenchtown Road, North Kingstown, Rhode Island 02852
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(Address of principal executive offices and zip code)
(401) 886-2000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes x No
------- ______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date; 12,873,769 shares of Class A
common stock, 511,083 shares of Class B common stock, par value $1 per share,
outstanding as of June 30, 1998.
1
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PART I. FINANCIAL INFORMATION
---------------------
Item 1. FINANCIAL STATEMENTS*
- ------ --------------------
BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(Dollars in Thousands Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
For the Quarter Ended June 30, For the Six Months Ended June 30,
----------------------------- ---------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 86,786 $ 78,094 $ 172,509 $ 148,896
Cost of sales 58,229 51,450 115,748 97,707
Research and development expense 2,907 1,936 5,653 4,562
Selling, general and
administrative expense 20,930 21,992 42,219 41,852
---------- ---------- ---------- ----------
Operating profit 4,720 2,716 8,889 4,775
Interest expense 1,458 1,499 2,926 2,933
Other income, net 580 294 542 616
---------- ---------- ---------- ----------
Income before income taxes 3,842 1,511 6,505 2,458
Income tax provision 883 302 1,496 492
---------- ---------- ---------- ----------
Net income $ 2,959 $ 1,209 $ 5,009 $ 1,966
========== ========== ========== ==========
Net income
per common share:
Basic and diluted $ .22 $ .09 $ .37 $ .15
========== ========== ========== ==========
Weighted average shares
outstanding 13,573,731 13,251,274 13,439,014 13,226,698
========== ========== ========== ==========
</TABLE>
* The accompanying notes are an integral part of the financial statements.
2
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BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
(Dollars in Thousands)
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
-------------- ------------------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 18,348 $ 20,458
Accounts receivable, net of allowances for
doubtful accounts of $3,150 and $3,456 110,520 106,072
Inventories 77,226 73,430
Deferred income taxes 1,274 1,274
Prepaid expenses and other current assets 3,606 5,176
-------- --------
Total current assets 210,974 206,410
Property, plant and equipment:
Land 6,549 6,627
Buildings and improvements 41,297 41,211
Machinery and equipment 87,201 85,405
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135,047 133,243
Less-accumulated depreciation 84,743 82,470
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50,304 50,773
Goodwill, net 8,855 9,211
Other assets 35,781 33,680
-------- --------
$305,914 $300,074
======== ========
LIABILITIES AND SHAREOWNERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current
installments of long-term debt $ 3,932 $ 3,995
Accounts payable 45,552 44,532
Accrued expenses and income taxes 48,851 44,699
-------- --------
Total current liabilities 98,335 93,226
Long-term debt 70,201 72,067
Long-term liabilities 18,200 18,283
SHAREOWNERS' EQUITY:
Preferred stock, $1 par value;
authorized 1,000,000 shares - -
Common stock:
Class A, par value $1; authorized 30,000,000
shares; issued and outstanding 12,916,361 shares
in 1998 and 12,821,867 shares in 1997 12,916 12,822
Class B, par value $1; authorized 2,000,000 shares;
issued and outstanding 511,083 shares in 1998
and 513,065 shares in 1997 511 513
Additional paid in capital 112,468 111,772
(Deficit) Earnings employed in business (5,748) (10,757)
Accumulated other comprehensive (loss) income (514) 2,603
Treasury stock: 42,592 shares in 1998 and
in 1997 at cost (455) (455)
-------- --------
Total shareowners' equity 119,178 116,498
-------- --------
$305,914 $300,074
======== ========
</TABLE>
* The accompanying notes are an integral part of the financial statements.
3
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BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Six-Months Ended June 30,
-----------------------------------
1998 1997
----------------- ----------------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS:
Net income $ 5,009 $ 1,966
Adjustment for Noncash Items:
Depreciation and amortization 5,557 4,964
Unfunded pension 179 196
Deferred compensation -- 26
Termination indemnities (48) 562
Changes in Working Capital:
(Increase) Decrease in accounts receivable (5,063) 13,871
Increase in inventories (4,737) (12,556)
Decrease in prepaid expenses
and other current assets 1,516 1,609
Increase (Decrease) in accounts payable
and accrued expenses 5,802 (5,115)
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Net Cash Provided by Operations 8,215 5,523
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INVESTMENT TRANSACTIONS:
Capital expenditures (4,443) (4,803)
Sale of an investment 891 --
Investment in other assets (4,710) (2,288)
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Cash (Used in) Investment Transactions (8,262) (7,091)
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FINANCING TRANSACTIONS:
Increase in short-term debt (22) (77)
Principal payments of long-term debt (1,554) (1,744)
Exercise of stock options 696 --
Other financing activities (81) (19)
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Cash Provided by (Used in) Financing Transactions (961) (1,840)
------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,102) (225)
------- --------
CASH AND CASH EQUIVALENTS:
(Decrease) during the period (2,110) (3,633)
Beginning balance 20,458 20,158
------- --------
Ending balance $18,348 $ 16,525
======= ========
SUPPLEMENTARY CASH FLOW INFORMATION:
Interest paid $ 2,589 $ 2,379
======= ========
Taxes paid $ 958 $ 952
======= ========
</TABLE>
* The accompanying notes are an integral part of the financial statements.
4
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BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Dollars in Thousands)
1. The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulations S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the quarter ended June 30, 1998 are not necessarily indicative
of the results that may be expected for the year ended December 31, 1998.
For further information, refer to the consolidated financial statements and
footnotes thereto included in the Brown & Sharpe Manufacturing Company's
annual report on Form 10-K for the year ended December 31, 1997.
2. Cash and cash equivalents are comprised of cash-on-hand deposits in banks
and short-term marketable securities with a maturity at acquisition of
three months or less.
3. The composition of inventory is as follows:
June 30, 1998 Dec. 31, 1997
------------- -------------
Parts, raw materials, and supplies $31,770 $29,760
Work in process 17,039 17,341
Finished goods 28,417 26,329
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$77,226 $73,430
======= =======
4. The composition of long-term liabilities is as follows:
June 30, 1998 Dec. 31, 1997
------------- -------------
Other long-term liabilities $ 2,097 $2,270
Deferred income taxes 2,068 2,001
Unfunded accrued pension cost 5,445 5,297
Termination indemnities 8,590 8,715
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$18,200 18,283
======= ======
5. Income taxes include provisions for federal, foreign and state income taxes
and are based on the Company's estimate of effective income tax rates for
the full year. The tax provision for the first six months of 1998 and 1997
is $1,496 and $492, respectively.
5
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6. The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
For the Quarter Ended June 30, For the Six Months Ended June 30,
------------------------------ ---------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerator:
Net income $ 2,959 $ 1,209 $ 5,009 $ 1,966
Denominator:
Denominator for basic
earnings per share:
Weighted - average
shares 13,574 13,251 13,439 13,227
Effect of dilutive
securities:
Employee stock
options 180 243 120 246
------- ------- ------- -------
Denominator for diluted
earnings per share:
Weighted - average
shares and
assumed
conversions 13,754 13,494 13,559 13,473
======= ======= ======= =======
Basic Earnings Per Share $ .22 $ .09 $ .37 $ .15
======= ======= ======= =======
Diluted Earnings Per Share $ .22 $ .09 $ .37 $ .15
======= ======= ======= =======
</TABLE>
7. As of January 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting
and display of comprehensive income and its components; however, the
adoption of this Statement had no impact on the Company's net income or
shareholders' equity. Statement 130 requires unrealized gains or losses on
the Company's foreign currency translation adjustments, which prior to
adoption were reported separately in shareholders' equity, to be included
in other comprehensive income. Prior year financial statements have been
reclassified to conform to the requirements of Statement 130.
Accumulated other comprehensive (loss) income, net of related tax, at June
30, 1998 and December 31, 1997 is composed of foreign currency translation
adjustments amounting to $(514) and $2,603, respectively.
Components of comprehensive income (loss) are as follows:
<TABLE>
<CAPTION>
For the Quarter Ended June 30, For the Six Months Ended June 30,
------------------------------ ---------------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income $2,959 $1,209 $ 5,009 $ 1,966
Other comprehensive
income (loss),
net of tax:
Foreign currency
translation
adjustments (695) (662) (3,117) (9,949)
------ ------ ------- -------
Comprehensive (loss) $2,264 $ (547) $(1,892) $(7,983)
====== ====== ======= =======
</TABLE>
6
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8. Contingencies.
Labor Relations. The registrant references its earlier filed report on Form
10-Q for the quarter ending March 30, 1998 furnishing information concerning
litigation brought against the Company by the International Association of
Machinists and Aerospace Workers ("IAM") which arose out of a strike by
approximately 1,800 production employees represented by the IAM at the Company's
Rhode Island operations which began in October of 1981. On June 15, 1998, the
Supreme Court of the United States entered an order denying the IAM's petition
for a writ of certiorari and declined to review a December 1997 decision of the
U.S. Circuit Court of Appeals for the District of Columbia upholding an earlier
decision of the National Labor Relations Board dismissing unfair labor practice
charges brought by the IAM against the Company following commencement of the
strike. As a result of the Supreme Court's ruling, the litigation brought
against the Company by the IAM, which has been pending for seventeen years, is
now concluded.
Environmental. On March 1, 1995, the Company received a notice from the State
of New York asserting a claim against it, along with a group of approximately
ten other companies, to recover costs incurred by the New York State Department
of Environmental Conservation to clean up a waste disposal site in Poughkeepsie,
New York. The State has alleged that the Company's former subsidiary, Standard
Gage Company, Poughkeepsie, New York, acquired in 1987 and merged with and into
the Company in 1991, contributed hazardous waste to the site for disposal and
that the Company is a PRP as the surviving corporation to the merger. The total
claim asserted by the State against all parties is approximately $500,000, with
no volumetric assignment of responsibility having yet been determined; however,
the State has expressed a willingness to settle its claim with all PRPs
receiving the notice. The Company is continuing efforts to settle this claim
and believes that any potential loss it might incur as a result of any
involvement or settlement at this site would not be material.
On April 20, 1998, the Company received a notice of responsibility letter from
the Rhode Island Department of Environmental Management informing it that the
Company is one of a group of at least twenty-five other companies similarly
notified that have responsibility under State environmental laws and RIDEM
regulations to perform investigation and remedial clean-up action at the closed
Sanitary Landfill site in Cranston, RI. The RIDEM has indicated it believes the
total cost of remediation of the Site to be in the range of $3 to $4 million,
and that there are numerous other responsible parties who were not notified of
their responsibility. The Company is working with the notified group of
responsible parties and the State to determine its response action at the Site.
At this time, the Company does not believe it was a major contributor of
industrial waste to the site or that its potential liability at the site is
material.
On May 8, 1998, the Company received a notice from the United States
Environmental Protection Agency, Region II, informing it that the Company is,
along with numerous other PRPs, most of whom have settled their liability, a
potentially responsible party ("PRP") having liability under Federal
Environmental law for past and future clean-up costs incurred and to be incurred
by the government at the Hertel Landfill Superfund Site, Plattekill, New York.
The Company's former subsidiary Standard Gage Company, Inc. of Poughkeepsie, NY,
which was acquired in 1987 and merged with and into the Company in 1991,
generated certain wastes which were disposed of at the Site in the mid-1970's.
On July 24, 1998, the EPA made an offer of settlement to the Company to resolve
its liability at the Site for a cash payment of $87,600 which includes a release
and covenant not to sue from the EPA and contribution protection from claims for
response costs incurred by any other parties. The EPA settlement offer does not
however include a release of liability for costs incurred by the EPA for future
groundwater remediation at the Site. Groundwater remediation is not presently
being conducted at the Site but is provided for in the Record of Decision for
the Site, and the EPA will consider whether to eliminate or modify the
groundwater component of the remedial action plan based on the test results of
future groundwater monitoring. The Company is in negotiations with the EPA to
resolve its liability at the Site based on the EPA's settlement offer.
Product Liability and Other Litigation Incidental to the Business. The Company
is involved in a number of product liability claims and lawsuits by plaintiffs
seeking monetary damages for personal injury which arose out of and were
incidental to the sale of products manufactured by the Company in its
discontinued
7
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metal cutting machine tool and fluid power businesses and certain other
litigation and claims incidental to the conduct of its business. The potential
liability of the Company for these claims and suits is adequately covered by
insurance or reserves established for such contingencies. The Company is
contesting or defending these claims and suits and management believes that the
ultimate liability, if any, resulting from these matters will not have a
material effect on the Company's financial position.
8
<PAGE>
BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
RESULTS OF OPERATIONS
(Quarter Ended June 30, 1998 compared to Quarter Ended June 30, 1997)
Sales.
Sales for the second quarter of 1998 were $86.8 million compared with the second
quarter of 1997 of $78.1 million, which is 11.1% above the 1997 level. Second
quarter sales for 1998 would have been $2.8 million higher than reported in
1998, if foreign denominated sales had been translated at 1997 foreign exchange
rates. The reduced U.S. Dollar value of 1998 foreign sales, which results from
translating the 1998 foreign denominated sales using lower exchange rates, is
due to the continued strength of the U.S. Dollar. When 1998 second quarter sales
are translated at the second quarter of 1997 exchange rates, 1998 sales amount
to $89.6 million, an $11.5 million increase over 1997. The $11.5 million sales
increase was caused by an $11.0 million increase in the Measuring Systems
Division ("MS") sales, and a $0.9 million increase in the Precision Measuring
Instruments Division ("PMI"), offset by a $0.4 million decrease in the Custom
Metrology Division ("CM").
The $11.0 million increase in MS sales was primarily due to an increase of
approximately $7.0 million in machine shipments and an increase of approximately
$4.0 million of aftermarket services revenue. Of the $7.0 million increase,
approximately $3.0 million of the increase was due to additional sales of
smaller coordinated measuring machines ("CMM") including the Gage 2000 and
Chameleon machines, and the remaining $4.0 million increase was from additional
sales of the larger, more fully configured, CMMs. Approximately $1.3 million of
the $4.0 million increase in aftermarket services revenue is due to the
inclusion of the sales of Automation Software, Inc. ("ASI"), which had been
accounted for by the equity method in 1997 until the Company's acquisition of
the remaining 50% interest of ASI in the third quarter of 1997.
Sales for PMI were up $0.9 million due to increased sales volume in Europe,
while sales in the United States were flat. Sales for CM were down $0.4 million
due to decreased sales volume of calibration equipment.
Earnings.
The Company's net income for the second quarter of 1998 was $3.0 million, which
compared with $1.2 million for the same period in 1997.
The Company had an operating profit of $4.7 million in the second quarter of
1998 compared to $2.7 million in 1997 for the same period. Gross profit for the
second quarter of 1998 was $28.6 million, or 32.9%, of sales. This compares
with a 1997 gross profit of $26.7 million, or 34.1% of sales. The $1.9 million
increase in 1998 gross profit comes primarily from MS. The 1.2% decrease in
gross profit percentage of net sales is due to lower margins of 1.5% for MS,
which is due to slightly lower margins for more fully configured CMMs that was
partially offset by improved gross margins for the smaller measuring systems. In
addition, PMI's gross margin in 1998 was also 0.4% lower than 1997 due to
product mix. CM's gross margin in 1998 was higher than 1997, bringing the
overall gross margin in 1998 to 32.9% of net sales.
Research and development expenses were $1.0 million higher in 1998 due to
increased spending of approximately $1.6 million in software development and
$0.1 million for non-contact sensing technology, offset by decreased
expenditures of $0.7 million in other product development areas, where common
design efforts are reducing duplicative development efforts at our various
operations.
Selling, general and administrative expenses ("SG&A") in the second quarter of
1998 were 24.1% of sales as compared to 28.2% for the period in 1997. 1998 SG&A
expenses were $1.1 million lower than 1997. SG&A expenses for 1998 translated
at 1997 exchange rates were $0.4 million higher than the
9
<PAGE>
$20.9 million reported for the quarter ended June 30, 1998. 1998 SG&A expenses,
expressed in 1997 foreign exchange rates, is $0.7 million lower than 1997 SG&A
expenses. 1997 SG&A expenses include $0.7 million of realized foreign exchange
losses that were not incurred in 1998. However, 1998 SG&A expenses include $0.9
million of expenses incurred by ASI, which were not included in 1997 for the
same reason described above. The net improvement in SG&A expenses in 1998 over
1997 equals about $0.9 million and resulted from various savings, including
reduced payroll and sundry other costs.
Other income was higher in the second quarter of 1998 by $0.3 million as
compared to the same period in 1997. This is due to increased interest income
of $0.1 million and increased miscellaneous income of $0.2 million.
Results for the second quarter of 1998 included a $0.9 million tax provision as
compared to $0.3 million in the second quarter of 1997. The effective tax rate
in the second quarter of 1998 was 23% as compared to 20% in the same period in
1997. The increase is due primarily to a change in the tax law in a foreign
jurisdiction in 1998.
RESULTS OF OPERATIONS
(First Six Months Ended June 30, 1998 compared to First Six Months Ended June
30, 1997)
Sales.
Sales for the first six months of 1998 were $172.5 million compared with the
first six months of 1997 of $148.9 million, which is 15.8% above the 1997 level.
First six months sales for 1998 would have been $5.6 million higher than
reported in 1998, if foreign denominated sales had been translated at 1997
foreign exchange rates. The reduced U.S. Dollar value of 1998 foreign sales,
which results from translating the 1998 foreign denominated sales using lower
exchange rates, is due to the continued strength of the U.S. Dollar. When 1998
first six months sales are translated at the first six months of 1997 exchange
rates, the first six months of 1998 sales amount to $178.1 million, a $29.2
million increase over 1997. The $29.2 million sales increase was caused by a
$27.2 million increase in MS sales with most of the remaining $2.0 million
increase from PMI.
The $27.2 million increase in MS sales was primarily due to an increase of
approximately $21.1 million in machine shipments and an increase of $6.1 million
of aftermarket services revenue. Of the $21.1 million increase, approximately
$14.9 million of the increase was from additional sales of the larger, more
fully configured, CMMs, and the remaining $6.5 million was due to additional
sales of smaller CMMs, including Gage 2000 and Chameleon machines. Approximately
$3.7 million of the $6.1 million increase in aftermarket services revenue is due
to the inclusion of the sales of ASI which were not included in 1997 sales for
the same reason described above.
Sales for PMI were up $1.8 million due to increased sales volume in Europe and
the United States, and sales for CM were up $0.2 million due to increased sales
volume of can gauging machines which was partially offset by reduced sales of
calibration equipment.
Earnings.
The Company's net income for the first six months of 1998 was $5.0 million,
which compared with $2.0 million for the same period in 1997.
The Company had an operating profit of $8.9 million in the first six months of
1998 compared to $4.8 million in 1997 for the same period. Gross profit for the
first six months of 1998 was $56.8 million, or 32.9%, of sales. This compares
with a 1997 gross profit of $51.2 million, or 34.4% of sales. The $5.6 million
increase in 1998 gross profit comes primarily from MS. The 1.5% decrease in
gross profit percentage of net sales is due to lower margins for MS, which
occurred in both the smaller and more fully configured CMMs. In addition, PMI's
gross margin in 1998 was also lower than 1997 due to product mix. CM's gross
margin in 1998 was higher than 1997, bringing the overall gross margin in 1998
to 32.9% of net sales.
10
<PAGE>
Research and development expenses were $1.1 million higher in 1998 due to
increased spending of approximately $2.6 million in software development and
$0.3 million for non-contact sensing technology offset by decreased expenditures
of $1.8 million in other product development areas, where common design efforts
are reducing duplicative development efforts at our various operations.
Selling, general and administrative expenses ("SG&A") in the first six months of
1998 were 24.5% of sales as compared to 28.1% for the period in 1997. SG&A
expenses were $0.3 million higher in 1998. SG&A expenses for 1998 translated at
1997 exchange rates were $1.2 million higher than the $42.2 million reported for
the six months ended June 30, 1998. The adjusted 1998 SG&A expenses were $1.5
million higher than 1997 SG&A expenses. The major reasons for the $1.5 million
difference was due to the inclusion of $0.7 million of realized foreign exchange
losses in 1997 SG&A expenses, which were not included in 1998 SG&A expenses, and
$1.8 million of additional expenses in 1998 that applied to ASI, which were not
included in 1997 SG&A expenses for the same reason described above.
Results in the first six months of 1998 included a $1.5 million tax provision as
compared to $0.5 million in the first six months of 1997. The effective tax
rate in the first six months of 1998 was 23% as compared to 20% in the same
period in 1997. The increase is due primarily to a change in the tax law in a
foreign jurisdiction in 1998.
LIQUIDITY AND CAPITAL RESOURCES
Over the last several years, prior to the 1996 equity offering, the Company had
funded its working capital, capital expenditure, research and development and
other cash needs from operating cash flows, sales proceeds from discontinued
businesses, borrowings under short-term credit facilities, and an aggregate of
$33.5 million of term and mortgage indebtedness incurred in 1994. In October
1996, the Company completed a $48 million public equity offering of 4.4 million
new shares of common stock. In November 1997, the final phase of the planned
restructuring of the Company's balance sheet was completed when the Company
entered into two financing arrangements to refinance certain existing debt
obligations of about $45.0 million and provide additional financing for future
needs of the Company. One of the borrowings was a $50.0 million private
placement of senior notes with a 10 year maturity and an interest rate of 7.29%.
The other arrangement was a $30.0 million three year syndicated multi-currency
revolving credit facility with four banks. 65% of the shares of certain of the
Company's foreign subsidiaries are pledged as security under the 1997
financings.
$11.7 million of the private placement was used to repay a bridge loan incurred
two months earlier to pay a portion of the $25.0 million notes payable due
September 28, 1997, the balance of which was paid with internally generated
funds. $13.0 million of the private placement was used to retire the 9 1/4%
convertible subordinated debentures, and the remaining balance is cash available
for payment of the $6.8 million mortgage when it matures in 1999 and to fund
certain of the Company's development plans and for other general corporate
purposes. As of June 30, 1998, the Company has not borrowed any amount under
the revolving credit facility described above. At June 30, 1998, the Company's
outstanding indebtedness was $74.1 million (including the current portion) of
long-term debt. There was no short-term debt outstanding at June 30, 1998. The
Company's cash and cash equivalents at June 30, 1998 were $18.3 million.
At December 31, 1997, the annual maturities of the Company's long-term debt were
$4.0 million, $9.0 million, $3.8 million, $12.1 million, and $7.8 million for
1998, 1999, 2000, 2001, and 2002, respectively, and $39.4 million thereafter.
Management believes that the two 1997 financing arrangements and the 1996 public
equity offering and the further additional borrowing capacity the offering
allows along with the available existing short- and long-term borrowings, cash
on hand and future cash flow from operations will be sufficient to meet
foreseeable cash requirements of the Company for the next three to four years.
Significant acquisitions or strategic partnerings could, however, increase the
Company's capital requirements, and in such event the Company might seek to
raise additional debt or equity.
11
<PAGE>
CASH FLOW. Net cash provided by operations in the first six months of 1998 was
$8.2 million, as compared to net cash provided by operations of $5.5 million in
1997. For the six months ended June 30, 1998, cash flow included, net income of
$5.0 million increased by depreciation and other non-cash items of $5.7 million,
further was decreased by increases in working capital of $2.5 million. For the
six months ended June 31, 1997, cash flow included, net income of $2.0 million,
increased by depreciation and other non-cash items of $5.7 million and decreases
in working capital of $2.2 million.
Net cash used in investment transactions in 1998 was $8.3 million as compared to
net cash used in investment transactions during 1997 of $7.1 million. During the
first six months of 1998, investment transactions included capital expenditures
of $4.4 million and $3.7 million for a continuing upgrade of its management
information systems. Also during the first six months of 1998, the Company sold
an investment for $0.9 million which was offset partially by investing in other
assets $0.8 million. During the first six months of 1997, investment
transactions included capital expenditures of $4.8 million and $1.1 million for
certain information systems.
Cash used in financing transactions was $1.0 million during the first six months
of 1998 compared with $1.8 million used by financing transactions for the same
period in 1997. Financing transactions during 1998 consisted of a decrease of
$0.2 million in short-term borrowings and principal payments of long-term debt
of $1.6 million, offset by $0.7 million due to the exercise of stock options.
Financing transactions during the same period in 1997 consisted of a $0.1
million decrease in short-terms borrowings, offset by principal payments of $1.7
million of long-term debt.
WORKING CAPITAL. Working capital of $112.6 million at June 30, 1998 decreased
from $113.2 million at December 31, 1997 principally due to a decrease in cash
and an increase in accrued expenses partially offset by an increase of
inventories and receivables. Inventories increased to $77.2 million at June 30,
1998, an increase of $3.8 million from the end of 1997, and accounts receivable
increased $4.4 million from December 31, 1997. In addition, total short- and
long-term borrowing of $74.1 million at June 30, 1998 compared to $76.1 million
at December 31, 1997.
PRODUCT DESIGN AND MANUFACTURING ENGINEERING. The Company invested $9.1
million, or 5.3% of sales, and $6.9 million, or 4.7% of sales, respectively, for
product design and manufacturing engineering for the first six months of 1998
and 1997.
FORWARD-LOOKING INFORMATION
This section and other portions of this report include certain forward-looking
statements about the Company's sales, expenditures, and various risks and
uncertainties, including those set forth in "Risk Factors". Such statements are
subject to risks that could cause the actual results or needs to vary materially
from those currently anticipated by the Company. These risks are discussed in
"Risk Factors" in the Company's Report on Form 10-K for the year 1997.
12
<PAGE>
PART II. OTHER INFORMATION
-----------------
Item 1. LEGAL PROCEEDINGS
- ------ -----------------
Refers to footnote 8 under contingencies for further details.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
The Company's 1998 Annual Meeting of Stockholders was held on Friday, May 1,
1998. At the meeting, the stockholders voted: (1) to fix the number of
directors at nine and to elect three nominees to the Board of Directors to serve
for the ensuing three-year term; and (2) to ratify and approve the appointment
by the Board of Directors of Ernst & Young LLP as the Company's independent
accountants for the year 1998.
The following is a summary of the results of matters submitted to security
holders:
(1) The following persons were elected to serve as directors for three year
terms expiring in 2001 and received the votes listed. There were no
abstentions or broker non-votes applicable to the election of directors:
Name For Withheld
---- --- --------
Class A Common Stock
-------------------------
Howard K. Fuguet 10,950,061 100,871
Henry D. Sharpe, III 10,950,061 100,871
J. Robert Held 10,950,061 100,871
Class B Common Stock
-------------------------
Howard K. Fuguet 3,997,662 102,600
Henry D. Sharpe, III 3,997,662 102,600
The following directors have terms of office which continued after the meeting:
Frank T. Curtin, Paul R. Tregurtha, Russell A. Boss, John M. Nelson, and Roger
E. Levien.
For Against Abstain No Vote
--- ------- ------- -------
(2) Appointment of Ernst & Young
L.L.P. as the Company's independent
accountants 14,732,782 56,767 62,781 307,864
13
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------ --------------------------------
A. See Exhibit Index annexed.
B. No Form 8-K was filed during the quarter ended June 30, 1998.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
BROWN & SHARPE MANUFACTURING COMPANY
By: /s/ Charles A. Junkunc
--------------------------------------
Charles A. Junkunc
Vice President and Chief Financial Officer
(Principal Financial Officer)
August 13, 1998
14
<PAGE>
BROWN & SHARPE MANUFACTURING COMPANY
------------------------------------
EXHIBIT INDEX
-------------
10.92 Severence agreement between Brown & Sharpe Manufacturing Company and
Frank T. Curtin dated February 17, 1998.
10.93 Severence agreement between Brown & Sharpe Manufacturing Company and
Charles A. Junkunc dated February 17, 1998.
10.94 Severence agreement between Brown & Sharpe Manufacturing Company and
Philip James dated February 17, 1998.
10.95 Severence agreement between Brown & Sharpe Manufacturing Company and
Antonio Aparicio dated February 17, 1998.
10.96 Severence agreement between Brown & Sharpe Manufacturing Company and
Marcus Burton dated February 17, 1998.
10.97 Severence agreement between Brown & Sharpe Manufacturing Company and
Edward D. DiLuigi dated February 17, 1998.
10.98 Severence agreement between Brown & Sharpe Manufacturing Company and
Christopher J. Garcia dated February 17, 1998.
10.99 Severence agreement between Brown & Sharpe Manufacturing Company and
Brian Gaunt dated February 17, 1998.
10.100 Severence agreement between Brown & Sharpe Manufacturing Company and
Alfred J. Corso dated February 17, 1998.
10.101 Severence agreement between Brown & Sharpe Manufacturing Company and
James W. Hayes, III dated February 17, 1998.
10.102 Severence agreement between Brown & Sharpe Manufacturing Company and
Les W. Sgnilek dated February 17, 1998.
10.103 Severence agreement between Brown & Sharpe Manufacturing Company and
Bryn Edwards dated February 17, 1998.
10.104 Severence agreement between Brown & Sharpe Manufacturing Company and
Kenneth Kirkendall dated February 17, 1998.
10.105 Severence agreement between Brown & Sharpe Manufacturing Company and
Fred Shutter dated February 17, 1998.
10.106 Key Employee's Long-Term Deferred Cash Incentive Plan as amended
through February 23, 1998.
10.107 Supplemental Executive Retirement Plan as amended February 13, 1998.
10.108 Senior Executive Supplemental Umbrella Pension Plan dated February 13,
1998.
27. Financial Data Schedule.
15
<PAGE>
EXHIBIT 10.92
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and
Frank T. Curtin, Chairman of the Board of Directors, President, and Chief
Executive Officer ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to twice (two times) the
sum of (a) the higher of the Executive's annual base salary in effect
immediately prior to the occurrence of the event or circumstance upon
which the Notice of Termination is based or in effect immediately prior
to the Change in Control, and (b) the highest annualized (for a partial
year of service) annual aggregate bonuses paid, or accrued to be paid if
not then yet paid (or, in the event that the Executive has been recently
hired and has not had a full fiscal year of employment and Profit
Incentive Plan opportunity, then the higher of the amount paid in the
prior year, recalculated as if the Executive had been employed for the
full entire year, or the planned amount of Profit Incentive Plan bonus
payout for the Executive for the year in which the termination occurs)
to the Executive under the Profit Incentive Plan or its successor plan
or by vote of the Board of Directors (or a committee thereof) or bonuses
of Sales Incentive Compensation or other bonuses, in each case
determined (except as provided above with respect to a recently hired
Executive) over the period beginning with the fifth (5th) year preceding
the year in which occurs the Change in Control and ending with the
period in which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
twice (two times) the annual level of contributions, credits or other
benefits the Executive was receiving (or that were being made or were
required to be made for the Executive's benefit) for the most recent
applicable plan period prior to the Change in Control or prior to the
Notice of Termination (whichever is more favorable to the Executive)
under any employee benefits plan then existing including the SARP, the
ESOP, the "excess benefit" restoration account under the Company's
Supplemental Executive Retirement Plan, the Company's Senior Executive
Supplemental Umbrella Pension Plan, the Company's matching contribution
under its 401(k) plan applicable to the Executive and (subject to the
following sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credits that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs and for the
succeeding year, assuming for each of such years, (i) the Company's
Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount
projected for the applicable year as Adjusted Pretax Profit (as defined
in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case"
provided to the Company's investment banker prior the Change in Control
(or if not available, the best equivalent), and (ii) the Executive's
percentage award opportunity had equaled the percentage award
opportunity which was the Executive's most recent award level preceding
the Change in Control.
For the period of twenty-four (24) months following the Date of
Termination, the Company shall arrange to provide the Executive with any
employee welfare benefits including health, dental, disability, life,
and accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twenty-four (24) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 24-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of two years from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Frank T. Curtin
56 Main Street
Wickford, RI 02852
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long-Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h), below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for
Good Reason shall not be affected by the Executive's incapacity due
to physical or mental illness. The Executive's continued performance
shall not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- ---------------------------- --------------------------------------------
Charles A. Junkunc
Corporate Vice President and Chief Financial
Officer
WITNESSED:
- ---------------------------- --------------------------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
<PAGE>
EXHIBIT 10.93
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and
Charles A. Junkunc, Corporate Vice President and Chief Financial Officer
("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to twice (two times) the
sum of (a) the higher of the Executive's annual base salary in effect
immediately prior to the occurrence of the event or circumstance upon
which the Notice of Termination is based or in effect immediately prior
to the Change in Control, and (b) the highest annualized (for a partial
year of service) annual aggregate bonuses paid, or accrued to be paid if
not then yet paid (or, in the event that the Executive has been recently
hired and has not had a full fiscal year of employment and Profit
Incentive Plan opportunity, then the higher of the amount paid in the
prior year, recalculated as if the Executive had been employed for the
full entire year, or the planned amount of Profit Incentive Plan bonus
payout for the Executive for the year in which the termination occurs)
to the Executive under the Profit Incentive Plan or its successor plan
or by vote of the Board of Directors (or a committee thereof) or bonuses
of Sales Incentive Compensation or other bonuses, in each case
determined (except as provided above with respect to a recently hired
Executive) over the period beginning with the fifth (5th) year preceding
the year in which occurs the Change in Control and ending with the
period in which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
twice (two times) the annual level of contributions, credits or other
benefits the Executive was receiving (or that were being made or were
required to be made for the Executive's benefit) for the most recent
applicable plan period prior to the Change in Control or prior to the
Notice of Termination (whichever is more favorable to the Executive)
under any employee benefits plan then existing including the SARP, the
ESOP, the "excess benefit" restoration account under the Company's
Supplemental Executive Retirement Plan, the Company's Senior Executive
Supplemental Umbrella Pension Plan, the Company's matching contribution
under its 401(k) plan applicable to the Executive and (subject to the
following sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credits that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs and for the
succeeding year, assuming for each of such years, (i) the Company's
Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount
projected for the applicable year as Adjusted Pretax Profit (as defined
in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case"
provided to the Company's investment banker prior the Change in Control
(or if not available, the best equivalent), and (ii) the Executive's
percentage award opportunity had equaled the percentage award
opportunity which was the Executive's most recent award level preceding
the Change in Control.
For the period of twenty-four (24) months following the Date of
Termination, the Company shall arrange to provide the Executive with any
employee welfare benefits including health, dental, disability, life,
and accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twenty-four (24) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 24-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of two years from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
7.1. Notice of Termination. After a Change in Control, any purported
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Charles A. Junkunc
110 Signal Ridge Way
East Greenwich, RI 02818
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long-Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h), below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance shall
not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- -------------------------- --------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
- -------------------------- --------------------------
Charles A. Junkunc
Corporate Vice President and Chief Financial
Officer
<PAGE>
EXHIBIT 10.94
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and
Philip James, Corporate Group Vice President - Measuring Systems ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to twice (two times) the
sum of (a) the higher of the Executive's annual base salary in effect
immediately prior to the occurrence of the event or circumstance upon
which the Notice of Termination is based or in effect immediately prior
to the Change in Control, and (b) the highest annualized (for a partial
year of service) annual aggregate bonuses paid, or accrued to be paid if
not then yet paid (or, in the event that the Executive has been recently
hired and has not had a full fiscal year of employment and Profit
Incentive Plan opportunity, then the higher of the amount paid in the
prior year, recalculated as if the Executive had been employed for the
full entire year, or the planned amount of Profit Incentive Plan bonus
payout for the Executive for the year in which the termination occurs)
to the Executive under the Profit Incentive Plan or its successor plan
or by vote of the Board of Directors (or a committee thereof) or bonuses
of Sales Incentive Compensation or other bonuses, in each case
determined (except as provided above with respect to a recently hired
Executive) over the period beginning with the fifth (5th) year preceding
the year in which occurs the Change in Control and ending with the
period in which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
twice (two times) the annual level of contributions, credits or other
benefits the Executive was receiving (or that were being made or were
required to be made for the Executive's benefit) for the most recent
applicable plan period prior to the Change in Control or prior to the
Notice of Termination (whichever is more favorable to the Executive)
under any employee benefits plan then existing including the SARP, the
ESOP, the "excess benefit" restoration account under the Company's
Supplemental Executive Retirement Plan, the Company's Senior Executive
Supplemental Umbrella Pension Plan, the Company's matching contribution
under its 401(k) plan applicable to the Executive and (subject to the
following sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credits that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs and for the
succeeding year, assuming for each of such years, (i) the Company's
Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount
projected for the applicable year as Adjusted Pretax Profit (as defined
in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case"
provided to the Company's investment banker prior the Change in Control
(or if not available, the best equivalent), and (ii) the Executive's
percentage award opportunity had equaled the percentage award
opportunity which was the Executive's most recent award level preceding
the Change in Control.
For the period of twenty-four (24) months following the Date of
Termination, the Company shall arrange to provide the Executive with any
employee welfare benefits including health, dental, disability, life,
and accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twenty-four (24) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 24-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of two years from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Philip James
100 Kristen Court
Warwick, RI 02888
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long-Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h), below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance shall
not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- -------------------------- --------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
- -------------------------- --------------------------
Philip James
Corporate Group Vice President - Measuring
Systems
<PAGE>
EXHIBIT 10.95
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and
Antonio Aparicio, Corporate Vice President and General Manager - Precision
Measuring Instruments Division ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or
(B) the date of termination by the Executive of the Executive's employment for
Good Reason (determined, for purposes of this clause (B), without regard to
Section 15(K)(a)) or by reason of death or Disability, or the efforts to effect
a Change in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to twice (two times) the
sum of (a) the higher of the Executive's annual base salary in effect
immediately prior to the occurrence of the event or circumstance upon
which the Notice of Termination is based or in effect immediately prior
to the Change in Control, and (b) the highest annualized (for a partial
year of service) annual aggregate bonuses paid, or accrued to be paid if
not then yet paid (or, in the event that the Executive has been recently
hired and has not had a full fiscal year of employment and Profit
Incentive Plan opportunity, then the higher of the amount paid in the
prior year, recalculated as if the Executive had been employed for the
full entire year, or the planned amount of Profit Incentive Plan bonus
payout for the Executive for the year in which the termination occurs)
to the Executive under the Profit Incentive Plan or its successor plan
or by vote of the Board of Directors (or a committee thereof) or bonuses
of Sales Incentive Compensation or other bonuses, in each case
determined (except as provided above with respect to a recently hired
Executive) over the period beginning with the fifth (5th) year preceding
the year in which occurs the Change in Control and ending with the
period in which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
twice (two times) the annual level of contributions, credits or other
benefits the Executive was receiving (or that were being made or were
required to be made for the Executive's benefit) for the most recent
applicable plan period prior to the Change in Control or prior to the
Notice of Termination (whichever is more favorable to the Executive)
under any employee benefits plan then existing including the SARP, the
ESOP, the "excess benefit" restoration account under the Company's
Supplemental Executive Retirement Plan, the Company's Senior Executive
Supplemental Umbrella Pension Plan, the Company's matching contribution
under its 401(k) plan applicable to the Executive and (subject to the
following sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credits that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs and for the
succeeding year, assuming for each of such years, (i) the Company's
Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount
projected for the applicable year as Adjusted Pretax Profit (as defined
in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case"
provided to the Company's investment banker prior the Change in Control
(or if not available, the best equivalent), and (ii) the Executive's
percentage award opportunity had equaled the percentage award
opportunity which was the Executive's most recent award level preceding
the Change in Control.
For the period of twenty-four (24) months following the Date of
Termination, the Company shall arrange to provide the Executive with any
employee welfare benefits including health, dental, disability, life,
and accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twenty-four (24) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 24-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of two years from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Antonio Aparicio
Chemin des Creuses 35
1008 Prilly, Switzerland
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long-Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h), below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and
(iii) the participant award factors remain unchanged, and (iv)
change of bases used in determining the annual participant award
credit or accrual within a fiscal year shall require use of the new
bases for the whole fiscal year. If any of the above conditions
(15(K)(e) (i), (ii), (iii) or (iv)) is not satisfied, then the
LTDCIP's continuity or equivalency may only be achieved for purposes
of this paragraph by determining the annual participant award credit
or accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance shall
not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
_________________________ ____________________________________________
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
_________________________ ____________________________________________
Antonio Aparicio
Corporate Vice President and General Manager -
Precision Measuring Instruments Division
<PAGE>
EXHIBIT 10.96
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and
Marcus Burton, Corporate Vice President and General Manager - Custom Metrology
Division ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to twice (two times) the
sum of (a) the higher of the Executive's annual base salary in effect
immediately prior to the occurrence of the event or circumstance upon
which the Notice of Termination is based or in effect immediately prior
to the Change in Control, and (b) the highest annualized (for a partial
year of service) annual aggregate bonuses paid, or accrued to be paid if
not then yet paid (or, in the event that the Executive has been recently
hired and has not had a full fiscal year of employment and Profit
Incentive Plan opportunity, then the higher of the amount paid in the
prior year, recalculated as if the Executive had been employed for the
full entire year, or the planned amount of Profit Incentive Plan bonus
payout for the Executive for the year in which the termination occurs)
to the Executive under the Profit Incentive Plan or its successor plan
or by vote of the Board of Directors (or a committee thereof) or bonuses
of Sales Incentive Compensation or other bonuses, in each case
determined (except as provided above with respect to a recently hired
Executive) over the period beginning with the fifth (5th) year preceding
the year in which occurs the Change in Control and ending with the
period in which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
twice (two times) the annual level of contributions, credits or other
benefits the Executive was receiving (or that were being made or were
required to be made for the Executive's benefit) for the most recent
applicable plan period prior to the Change in Control or prior to the
Notice of Termination (whichever is more favorable to the Executive)
under any employee benefits plan then existing including the SARP, the
ESOP, the "excess benefit" restoration account under the Company's
Supplemental Executive Retirement Plan, the Company's Senior Executive
Supplemental Umbrella Pension Plan, the Company's matching contribution
under its 401(k) plan applicable to the Executive and (subject to the
following sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credits that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs and for the
succeeding year, assuming for each of such years, (i) the Company's
Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount
projected for the applicable year as Adjusted Pretax Profit (as defined
in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case"
provided to the Company's investment banker prior the Change in Control
(or if not available, the best equivalent), and (ii) the Executive's
percentage award opportunity had equaled the percentage award
opportunity which was the Executive's most recent award level preceding
the Change in Control.
For the period of twenty-four (24) months following the Date of
Termination, the Company shall arrange to provide the Executive with any
employee welfare benefits including health, dental, disability, life,
and accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twenty-four (24) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 24-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of two years from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Marcus Burton
32 Glen Brook Road
Priorslee
Telford, Shropshire TF7 9QY
England
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long-Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella
<PAGE>
Pension Plan, the Company's Salary and Retirement Plan for Management Employees
and the Employee Stock Ownership Plan and Trust, or any offer letter or
employment agreement, subject to the controlling provisions of
Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the
<PAGE>
Chief Executive Officer with respect to officers other than the Chief
Executive Officer); provided, however, that the termination for Cause
shall have been approved or ratified by the Board after notice to the
Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
<PAGE>
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires approval by the Company's
shareholders of the agreement or transaction or the satisfaction of
other conditions, a Change in Control shall not be deemed to have taken
place unless and until such approval is secured and all conditions are
satisfied (but upon any such approval and the satisfaction of such
conditions and the consummation of the transaction, a Change in Control
shall be deemed to have occurred on the date of execution of such
agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h), below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those
<PAGE>
in effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer, Secretary and
Corporate Counsel and the Chief Information Officer, the change in
status from an officer of a "public company" to an officer of a
"private" company or a "public" company in which another person owns
more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance shall
not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- ------------------------ ------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
- ------------------------ ------------------------
Marcus Burton
Corporate Vice President and General Manager
Custom Metrology Division
<PAGE>
EXHIBIT 10.97
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and
Edward D. DiLuigi, Corporate Vice President and General Manager, Measuring
Systems - U.S.A. and Wetzlar ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to twice (two times) the
sum of (a) the higher of the Executive's annual base salary in effect
immediately prior to the occurrence of the event or circumstance upon
which the Notice of Termination is based or in effect immediately prior
to the Change in Control, and (b) the highest annualized (for a partial
year of service) annual aggregate bonuses paid, or accrued to be paid if
not then yet paid (or, in the event that the Executive has been recently
hired and has not had a full fiscal year of employment and Profit
Incentive Plan opportunity, then the higher of the amount paid in the
prior year, recalculated as if the Executive had been employed for the
full entire year, or the planned amount of Profit Incentive Plan bonus
payout for the Executive for the year in which the termination occurs)
to the Executive under the Profit Incentive Plan or its successor plan
or by vote of the Board of Directors (or a committee thereof) or bonuses
of Sales Incentive Compensation or other bonuses, in each case
determined (except as provided above with respect to a recently hired
Executive) over the period beginning with the fifth (5th) year preceding
the year in which occurs the Change in Control and ending with the
period in which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
twice (two times) the annual level of contributions, credits or other
benefits the Executive was receiving (or that were being made or were
required to be made for the Executive's benefit) for the most recent
applicable plan period prior to the Change in Control or prior to the
Notice of Termination (whichever is more favorable to the Executive)
under any employee benefits plan then existing including the SARP, the
ESOP, the "excess benefit" restoration account under the Company's
Supplemental Executive Retirement Plan, the Company's Senior Executive
Supplemental Umbrella Pension Plan, the Company's matching contribution
under its 401(k) plan applicable to the Executive and (subject to the
following sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credits that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs and for the
succeeding year, assuming for each of such years, (i) the Company's
Adjusted Pretax Profit (as defined in the LTDCIP) had equaled the amount
projected for the applicable year as Adjusted Pretax Profit (as defined
in LTDCIP) in the Company's latest "BNS Five Year Plan - Base Case"
provided to the Company's investment banker prior the Change in Control
(or if not available, the best equivalent), and (ii) the Executive's
percentage award opportunity had equaled the percentage award
opportunity which was the Executive's most recent award level preceding
the Change in Control.
For the period of twenty-four (24) months following the Date of
Termination, the Company shall arrange to provide the Executive with any
employee welfare benefits including health, dental, disability, life,
and accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twenty-four (24) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 24-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of two years from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Edward D. DiLuigi
25 Wood Duck Court
East Greenwich, RI 02818
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long-Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h), below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance
shall not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- ------------------------- -------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
- ------------------------- -------------------------
Edward D. DiLuigi
Corporate Vice President and General Manager,
Measuring Systems - U.S.A. and Wetzlar
<PAGE>
EXHIBIT 10.98
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and
Christopher J. Garcia, Corporate Vice President - Software Product Development
("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to the sum of (a) the
higher of the Executive's annual base salary in effect immediately prior
to the occurrence of the event or circumstance upon which the Notice of
Termination is based or in effect immediately prior to the Change in
Control, and (b) the highest annualized (for a partial year of service)
annual aggregate bonuses paid, or accrued to be paid if not then yet
paid (or, in the event that the Executive has been recently hired and
has not had a full fiscal year of employment and Profit Incentive Plan
opportunity, then the higher of the amount paid in the prior year,
recalculated as if the Executive had been employed for the full entire
year, or the planned amount of Profit Incentive Plan bonus payout for
the Executive for the year in which the termination occurs) to the
Executive under the Profit Incentive Plan or its successor plan or by
vote of the Board of Directors (or a committee thereof) or bonuses of
Sales Incentive Compensation or other bonuses, in each case determined
(except as provided above with respect to a recently hired Executive)
over the period beginning with the fifth (5th) year preceding the year
in which occurs the Change in Control and ending with the period in
which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
the annual level of contributions, credits or other benefits the
Executive was receiving (or that were being made or were required to be
made for the Executive's benefit) for the most recent applicable plan
period prior to the Change in Control or prior to the Notice of
Termination (whichever is more favorable to the Executive under any
employee benefits plan then existing including the SARP, the ESOP, the
"excess benefit" restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental
Umbrella Pension Plan, the Company's matching contribution under its
401(k) plan applicable to the Executive and (subject to the following
sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credit that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs, assuming for such
year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected for the applicable year as
Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest
"BNS Five Year Plan - Base Case" provided to the Company's investment
banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had
equaled the percentage award opportunity which was the Executive's most
recent award level preceding the Change in Control.
For the period of twelve (12) months following the Date of Termination,
the Company shall arrange to provide the Executive with any employee
welfare benefits including health, dental, disability, life, and
accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twelve (12) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 12-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of one year from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Christopher J. Garcia
25 Shepherd Street
Foxboro, MA 02035
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h) below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance shall
not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- ------------------------- -------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
- ------------------------- -------------------------
Christopher J. Garcia
Corporate Vice President Software
Product Development
<PAGE>
EXHIBIT 10.99
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and
Brian Gaunt, Corporate Vice President and Managing Director - Brown & Sharpe DEA
S.p.A. ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make
a lump sum cash payment to the Executive equal to twice (two times)
the sum of (a) the higher of the Executive's annual base salary in
effect immediately prior to the occurrence of the event or
circumstance upon which the Notice of Termination is based or in
effect immediately prior to the Change in Control, and (b) the highest
annualized (for a partial year of service) annual aggregate bonuses
paid, or accrued to be paid if not then yet paid (or, in the event
that the Executive has been recently hired and has not had a full
fiscal year of employment and Profit Incentive Plan opportunity, then
the higher of the amount paid in the prior year, recalculated as if
the Executive had been employed for the full entire year, or the
planned amount of Profit Incentive Plan bonus payout for the Executive
for the year in which the termination occurs) to the Executive under
the Profit Incentive Plan or its successor plan or by vote of the
Board of Directors (or a committee thereof) or bonuses of Sales
Incentive Compensation or other bonuses, in each case determined
(except as provided above with respect to a recently hired Executive)
over the period beginning with the fifth (5th) year preceding the year
in which occurs the Change in Control and ending with the period in
which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal
to twice (two times) the annual level of contributions, credits or
other benefits the Executive was receiving (or that were being made or
were required to be made for the Executive's benefit) for the most
recent applicable plan period prior to the Change in Control or prior
to the Notice of Termination (whichever is more favorable to the
Executive) under any employee benefits plan then existing including
the SARP, the ESOP, the "excess benefit" restoration account under the
Company's Supplemental Executive Retirement Plan, the Company's Senior
Executive Supplemental Umbrella Pension Plan, the Company's matching
contribution under its 401(k) plan applicable to the Executive and
(subject to the following sentence) the LTDCIP (and in each case any
successor plan or arrangement), in each case based on the levels of
compensation taken into account under Section 6.1(i). In the case of
the LTDCIP the payment shall equal to an amount equal to the award
credits that would have been credited to the Executive's account under
the LTDCIP for the calendar year in which the Date of Termination
occurs and for the succeeding year, assuming for each of such years,
(i) the Company's Adjusted Pretax Profit (as defined in the LTDCIP)
had equaled the amount projected for the applicable year as Adjusted
Pretax Profit (as defined in LTDCIP) in the Company's latest "BNS Five
Year Plan - Base Case" provided to the Company's investment banker
prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had
equaled the percentage award opportunity which was the Executive's
most recent award level preceding the Change in Control.
For the period of twenty-four (24) months following the Date of
Termination, the Company shall arrange to provide the Executive with
any employee welfare benefits including health, dental, disability,
life, and accident insurance benefits substantially similar to those
which the Executive is receiving on the same premium cost share basis
as was applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA
rights under applicable laws and without giving effect to any
reduction in such benefits subsequent to a Change in Control which
reduction constitutes Good Reason). Benefits otherwise receivable by
the Executive under any employee welfare benefits including health,
dental, disability, life, and accident insurance pursuant to this
Section 6.1(ii) shall be reduced to the extent comparable benefits are
actually received by or made available to the Executive without cost
or at a lower cost than was charged to the Executive prior to the
Change in Control or the Notice of Termination (whichever is more
favorable to the Executive) during the twenty-four (24) month period
following the Executive's termination of employment (and any such
benefits actually received or made available by the Executive shall be
reported to the Company by the Executive). In the event that the
Company self-insures with respect to one of these benefits, such as
for example dental benefits, then the Executive shall be reimbursed
for all dental expenses during the 24-month period that would have
been reimbursed under the self-funded policy in effect prior to the
Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of
comparable benefits, the Company shall, at the time of such reduction,
pay to the Executive the lesser of (a) the amount of the decrease made
in the Severance Payments pursuant to Section 6.2, or (b) the maximum
amount which can be paid to the Executive without being, or causing
any other payment to be, nondeductible by reason of section 280G of
the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of two years from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
-------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Brian Gaunt
Villa Taverna
Via Roma 1
22020 Torno (Como), Italy
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long-Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious
and substantial crimes against the Company, intentional wrongful
engagement in competitive activity with respect to any business of the
Company or its subsidiaries, or intentional wrongful commission of
material acts in clear and direct contravention of instructions from
the Board (or from the Chief Executive Officer with respect to
officers other than the Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or
other fiduciary holding securities under an employee benefit plan of
the Company or of any subsidiary of the Company; or (4) any company
owned, directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of
the combined voting power of the Company's then outstanding
securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity), in combination with the ownership
of any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any subsidiary of the Company, at least
65% of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after such
merger or consolidation; or (2) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction)
in which no "person" (with the exception given and the method of
determining "beneficial ownership" used in clause (1) of this
definition) acquires more than 30% of the combined voting power of the
Company's then outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new
director (other than a director designated by a person who has entered
into an agreement with the Company to effect a transaction described
in clause (i), (ii), or (iv) of this definition) whose election by the
Board or nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds (2/3) of the directors then
still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved cease for any reason to constitute at least a majority
thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is
secured and all conditions are satisfied (but upon any such approval
and the satisfaction of such conditions and the consummation of the
transaction, a Change in Control shall be deemed to have occurred on
the date of execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute
a Change in Control, provided that a Change in Control will not be
deemed to have taken place unless and until actions are taken that
constitute a Change in Control (but upon the taking of any such
actions a Change in Control shall be deemed to have occurred on the
date of such announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes
of this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon
the taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h), below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with
the Executive's status as a senior executive officer of the
Company or an adverse alteration in the nature or status of the
Executive's responsibilities, authority or reporting relationships
from those in effect immediately prior to the Change in Control,
as outlined on attached Exhibit A, including, for the Chief
Executive Officer, Chief Financial Officer, Controller,
Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary
as in effect on the date hereof or as the same may be increased
from time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel
on the Company's business to an extent substantially consistent
with the Executive's present business travel obligations prior to
the Change in Control; provided that if the Executive was not
located prior to the Change in Control at the principal executive
office then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written
notice thereof to the Company, by the Company, without the
Executive's consent, to pay to the Executive any portion of the
Executive's current compensation, or to pay to the Executive any
portion of an installment of deferred compensation under any
deferred compensation program of the Company, within seven (7)
days of the date such compensation is due;
(e) the failure, not corrected within five (5) days after written
notice thereof to the Company, by the Company to continue in
effect any compensation plan (until its stated expiration date) in
which the Executive participated immediately prior to the Change
in Control which is material to the Executive's total
compensation, including but not limited to the Company's Equity
Incentive Plan, the Profit Incentive Plan, the LTDCIP, the
Supplemental Executive Retirement Plan, the Senior Executive
Supplemental Umbrella Pension Plan, the SARP and the ESOP (all of
which plans are deemed material) or any substitute plans adopted
prior to the Change in Control, but in each case only if such plan
is one in which the Executive participated immediately prior to
the Change in Control, unless a substantially equivalent equitable
arrangement, reasonably acceptable to the Executive (embodied in
an ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to continue
the Executive's participation therein (or in such substitute or
alternative plan) on a basis not materially less favorable than
the basis on which benefits were provided or made available to the
Executive prior to the Change in Control. For purposes of the
preceding provision, it is understood that the LTDCIP is a Company
before tax profit based plan and that effective continuity of this
plan or any substantial equivalent to it by definition requires
with regard to the determination of the benefit (i) continuity of
the existing organizations within the Company immediately prior to
the Change in Control whereby these revenue and profit generating
capability of each part and in total is no less than it was
immediately prior to the Change in Control, (ii) the accounting
and consolidation methodologies are equivalent and (iii) the
participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases
for the whole fiscal year. If any of the above conditions
(15(K)(e) (i), (ii), (iii) or (iv)) is not satisfied, then the
LTDCIP's continuity or equivalency may only be achieved for
purposes of this paragraph by determining the annual participant
award credit or accrual based on the Company's planned Adjusted
Pretax Profit (as defined in the LTDCIP) for the applicable period
per the latest "BNS Five Year Plan - Base Case" provided to the
Company's investment banker prior to the Change in Control (or if
not available, the best equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written
notice thereof to the Company, by the Company to continue to
provide the Executive with benefits substantially similar to those
enjoyed by the Executive under any of the Company's pension, life
insurance, medial, health and accident, or disability plans in
which the Executive was participating at the time of the Change in
Control (other than changes required by law), the taking of any
action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the Executive of
any material fringe benefit enjoyed by the Executive at the time
of the Change in Control, or the failure by the Company to provide
the Executive with the number of paid vacation days to which the
Executive is entitled in accordance with the Company's normal
vacation policy in effect prior to the Change in Control;
(g) any purported termination of the Executive's employment which is
not effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement,
no such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance
shall not constitute consent to, or a waiver of rights with respect
to, any act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their
ownership of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- -------------------- --------------------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
- -------------------- --------------------------------------
Brian Gaunt
Corporate Vice President and Managing Director
Brown & Sharpe DEA S.p.A.
<PAGE>
EXHIBIT 10.100
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and
Alfred J. Corso, Corporate Controller ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to the sum of (a) the
higher of the Executive's annual base salary in effect immediately prior
to the occurrence of the event or circumstance upon which the Notice of
Termination is based or in effect immediately prior to the Change in
Control, and (b) the highest annualized (for a partial year of service)
annual aggregate bonuses paid, or accrued to be paid if not then yet
paid (or, in the event that the Executive has been recently hired and
has not had a full fiscal year of employment and Profit Incentive Plan
opportunity, then the higher of the amount paid in the prior year,
recalculated as if the Executive had been employed for the full entire
year, or the planned amount of Profit Incentive Plan bonus payout for
the Executive for the year in which the termination occurs) to the
Executive under the Profit Incentive Plan or its successor plan or by
vote of the Board of Directors (or a committee thereof) or bonuses of
Sales Incentive Compensation or other bonuses, in each case determined
(except as provided above with respect to a recently hired Executive)
over the period beginning with the fifth (5th) year preceding the year
in which occurs the Change in Control and ending with the period in
which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
the annual level of contributions, credits or other benefits the
Executive was receiving (or that were being made or were required to be
made for the Executive's benefit) for the most recent applicable plan
period prior to the Change in Control or prior to the Notice of
Termination (whichever is more favorable to the Executive under any
employee benefits plan then existing including the SARP, the ESOP, the
"excess benefit" restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental
Umbrella Pension Plan, the Company's matching contribution under its
401(k) plan applicable to the Executive and (subject to the following
sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credit that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs, assuming for such
year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected for the applicable year as
Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest
"BNS Five Year Plan - Base Case" provided to the Company's investment
banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had
equaled the percentage award opportunity which was the Executive's most
recent award level preceding the Change in Control.
For the period of twelve (12) months following the Date of Termination,
the Company shall arrange to provide the Executive with any employee
welfare benefits including health, dental, disability, life, and
accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twelve (12) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 12-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of one year from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Alfred J. Corso
6 Lewis Street
Barrington, RI 02806
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h) below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance
shall not constitute consent to, or a waiver of rights with respect to,
any act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- --------------------------- ---------------------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
- --------------------------- ---------------------------------------
Alfred J. Corso
Corporate Controller
<PAGE>
EXHIBIT 10.101
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and
James W. Hayes, III, Corporate Secretary and General Counsel ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to the sum of (a) the
higher of the Executive's annual base salary in effect immediately prior
to the occurrence of the event or circumstance upon which the Notice of
Termination is based or in effect immediately prior to the Change in
Control, and (b) the highest annualized (for a partial year of service)
annual aggregate bonuses paid, or accrued to be paid if not then yet
paid (or, in the event that the Executive has been recently hired and
has not had a full fiscal year of employment and Profit Incentive Plan
opportunity, then the higher of the amount paid in the prior year,
recalculated as if the Executive had been employed for the full entire
year, or the planned amount of Profit Incentive Plan bonus payout for
the Executive for the year in which the termination occurs) to the
Executive under the Profit Incentive Plan or its successor plan or by
vote of the Board of Directors (or a committee thereof) or bonuses of
Sales Incentive Compensation or other bonuses, in each case determined
(except as provided above with respect to a recently hired Executive)
over the period beginning with the fifth (5th) year preceding the year
in which occurs the Change in Control and ending with the period in
which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
the annual level of contributions, credits or other benefits the
Executive was receiving (or that were being made or were required to be
made for the Executive's benefit) for the most recent applicable plan
period prior to the Change in Control or prior to the Notice of
Termination (whichever is more favorable to the Executive under any
employee benefits plan then existing including the SARP, the ESOP, the
"excess benefit" restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental
Umbrella Pension Plan, the Company's matching contribution under its
401(k) plan applicable to the Executive and (subject to the following
sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credit that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs, assuming for such
year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected for the applicable year as
Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest
"BNS Five Year Plan - Base Case" provided to the Company's investment
banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had
equaled the percentage award opportunity which was the Executive's most
recent award level preceding the Change in Control.
For the period of twelve (12) months following the Date of Termination,
the Company shall arrange to provide the Executive with any employee
welfare benefits including health, dental, disability, life, and
accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twelve (12) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 12-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of one year from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
James W. Hayes, III
16 Mather Street
Cranston, RI 02905
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h) below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance shall
not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- ------------------------- ----------------------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
- ------------------------- ----------------------------------------
James W. Hayes, III
Corporate Secretary and General Counsel
<PAGE>
EXHIBIT 10.102
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and Les
W. Sgnilek, Corporate Treasurer ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to the sum of (a) the
higher of the Executive's annual base salary in effect immediately prior
to the occurrence of the event or circumstance upon which the Notice of
Termination is based or in effect immediately prior to the Change in
Control, and (b) the highest annualized (for a partial year of service)
annual aggregate bonuses paid, or accrued to be paid if not then yet
paid (or, in the event that the Executive has been recently hired and
has not had a full fiscal year of employment and Profit Incentive Plan
opportunity, then the higher of the amount paid in the prior year,
recalculated as if the Executive had been employed for the full entire
year, or the planned amount of Profit Incentive Plan bonus payout for
the Executive for the year in which the termination occurs) to the
Executive under the Profit Incentive Plan or its successor plan or by
vote of the Board of Directors (or a committee thereof) or bonuses of
Sales Incentive Compensation or other bonuses, in each case determined
(except as provided above with respect to a recently hired Executive)
over the period beginning with the fifth (5th) year preceding the year
in which occurs the Change in Control and ending with the period in
which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
the annual level of contributions, credits or other benefits the
Executive was receiving (or that were being made or were required to be
made for the Executive's benefit) for the most recent applicable plan
period prior to the Change in Control or prior to the Notice of
Termination (whichever is more favorable to the Executive under any
employee benefits plan then existing including the SARP, the ESOP, the
"excess benefit" restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental
Umbrella Pension Plan, the Company's matching contribution under its
401(k) plan applicable to the Executive and (subject to the following
sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credit that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs, assuming for such
year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected for the applicable year as
Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest
"BNS Five Year Plan - Base Case" provided to the Company's investment
banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had
equaled the percentage award opportunity which was the Executive's most
recent award level preceding the Change in Control.
For the period of twelve (12) months following the Date of Termination,
the Company shall arrange to provide the Executive with any employee
welfare benefits including health, dental, disability, life, and
accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twelve (12) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 12-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of one year from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Les W. Sgnilek
107 Hedgerow Drive
Warwick, RI 02886
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h) below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance shall
not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- --------------------------- ---------------------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
- --------------------------- ---------------------------------------
Les W. Sgnilek
Corporate Treasurer
<PAGE>
EXHIBIT 10.103
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and Bryn
Edwards, General Manager - Brown & Sharpe Aftermarket Services Inc.
("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
]
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to the sum of (a) the
higher of the Executive's annual base salary in effect immediately prior
to the occurrence of the event or circumstance upon which the Notice of
Termination is based or in effect immediately prior to the Change in
Control, and (b) the highest annualized (for a partial year of service)
annual aggregate bonuses paid, or accrued to be paid if not then yet
paid (or, in the event that the Executive has been recently hired and
has not had a full fiscal year of employment and Profit Incentive Plan
opportunity, then the higher of the amount paid in the prior year,
recalculated as if the Executive had been employed for the full entire
year, or the planned amount of Profit Incentive Plan bonus payout for
the Executive for the year in which the termination occurs) to the
Executive under the Profit Incentive Plan or its successor plan or by
vote of the Board of Directors (or a committee thereof) or bonuses of
Sales Incentive Compensation or other bonuses, in each case determined
(except as provided above with respect to a recently hired Executive)
over the period beginning with the fifth (5th) year preceding the year
in which occurs the Change in Control and ending with the period in
which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
the annual level of contributions, credits or other benefits the
Executive was receiving (or that were being made or were required to be
made for the Executive's benefit) for the most recent applicable plan
period prior to the Change in Control or prior to the Notice of
Termination (whichever is more favorable to the Executive under any
employee benefits plan then existing including the SARP, the ESOP, the
"excess benefit" restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental
Umbrella Pension Plan, the Company's matching contribution under its
401(k) plan applicable to the Executive and (subject to the following
sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credit that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs, assuming for such
year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected for the applicable year as
Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest
"BNS Five Year Plan - Base Case" provided to the Company's investment
banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had
equaled the percentage award opportunity which was the Executive's most
recent award level preceding the Change in Control.
For the period of twelve (12) months following the Date of Termination,
the Company shall arrange to provide the Executive with any employee
welfare benefits including health, dental, disability, life, and
accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twelve (12) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 12-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of one year from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty
(30) days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Bryn Edwards
2533 Universal Drive
Pinckney, MI 48169
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including wothout
limitation the Long Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h) below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance shall
not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
- ----------------------------------- By -----------------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief
Executive Officer
WITNESSED:
- ----------------------------------- -----------------------------------
Bryn Edwards
General Manager - Brown & Sharpe
Aftermarket Services Inc.
<PAGE>
EXHIBIT 10.104
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and
Kenneth Kirkendall, Corporate Chief Information Officer ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to the sum of (a) the
higher of the Executive's annual base salary in effect immediately prior
to the occurrence of the event or circumstance upon which the Notice of
Termination is based or in effect immediately prior to the Change in
Control, and (b) the highest annualized (for a partial year of service)
annual aggregate bonuses paid, or accrued to be paid if not then yet
paid (or, in the event that the Executive has been recently hired and
has not had a full fiscal year of employment and Profit Incentive Plan
opportunity, then the higher of the amount paid in the prior year,
recalculated as if the Executive had been employed for the full entire
year, or the planned amount of Profit Incentive Plan bonus payout for
the Executive for the year in which the termination occurs) to the
Executive under the Profit Incentive Plan or its successor plan or by
vote of the Board of Directors (or a committee thereof) or bonuses of
Sales Incentive Compensation or other bonuses, in each case determined
(except as provided above with respect to a recently hired Executive)
over the period beginning with the fifth (5th) year preceding the year
in which occurs the Change in Control and ending with the period in
which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
the annual level of contributions, credits or other benefits the
Executive was receiving (or that were being made or were required to be
made for the Executive's benefit) for the most recent applicable plan
period prior to the Change in Control or prior to the Notice of
Termination (whichever is more favorable to the Executive under any
employee benefits plan then existing including the SARP, the ESOP, the
"excess benefit" restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental
Umbrella Pension Plan, the Company's matching contribution under its
401(k) plan applicable to the Executive and (subject to the following
sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credit that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs, assuming for such
year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected for the applicable year as
Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest
"BNS Five Year Plan - Base Case" provided to the Company's investment
banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had
equaled the percentage award opportunity which was the Executive's most
recent award level preceding the Change in Control.
For the period of twelve (12) months following the Date of Termination,
the Company shall arrange to provide the Executive with any employee
welfare benefits including health, dental, disability, life, and
accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twelve (12) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 12-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of one year from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith
that the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or Section
7.4. Further, the amount of any payment or benefit provided for in Section 6
(other than the health or insurance benefits in Section 6.1(ii)) or Section 7.4
shall not be reduced by any compensation earned by the Executive as the result
of employment by another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Kenneth Kirkendall
98 Beauchamp Drive
Saunderstown, RI 02874
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h) below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance shall
not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- ------------------------------- -----------------------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
- ------------------------------- -----------------------------------------
Kenneth Kirkendall
Corporate Chief Information Officer
<PAGE>
EXHIBIT 10.105
"CIC" AGREEMENT
---------------
THIS AGREEMENT dated as of February 17, 1998, is made by and between Brown
& Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and Fred
Schutter, General Manager, Brown & Sharpe Wetzlar Factory ("Executive").
WHEREAS the Compensation and Nominating Committee of the Board of Directors
of the Company (the "Committee" and the "Board", respectively) recognizes that,
as is the case with many publicly held corporations, the possibility of a Change
in Control (as defined in the last Section hereof) exists and that such
possibility, and the resultant uncertainty as to the Executive's
responsibilities, compensation or continued employment, may result in the
departure or distraction of the Executive, and whereas the Board believes it is
important to the Company and the interests of its stockholders, should the
Company receive acquisition or combination proposals from outside parties, to
enable the Executive, without being distracted by the uncertainties of his own
employment situation, to perform his regular duties and to act objectively in
connection with any such proposals; and
WHEREAS the Company considers it essential to the best interests of the
Company, its shareholders, and its employees generally to agree to provide the
benefits set forth below;
NOW THEREFORE, in consideration of the premises and the mutual covenants
herein contained and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. Defined Terms. The definition of capitalized terms used in this
-------------
Agreement is provided in the last Section hereof.
2. Term of Agreement. This Agreement shall commence on the date hereof
-----------------
and shall continue in effect until terminated by written agreement between the
Company and the Executive or until the Executive's employment with the Company
has been terminated under circumstances not involving a Change in Control.
3. Company's Covenants Summarized. In consideration of the Executive's
------------------------------
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the "Severance Payments"
described in Section 6.1 hereof and the other payments and benefits described
herein in the event the Executive's employment with the Company is terminated
following a Change in Control. No amount or benefit shall be payable under this
Agreement unless there shall have been (or, under the terms hereof, there shall
be deemed to have been) a termination of the Executive's employment with the
Company following a Change in Control. This Agreement shall not be construed as
creating an express or implied contract of employment prior to the date of a
Change in Control and, except as otherwise agreed in writing between the
Executive and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive's Covenants. The Executive agrees that if the Company
-------------------------
enters into an agreement described in Section 15(C)(v), or if there is a public
announcement described in Section 15(C)(vi), or if the Board adopts a resolution
described in Section 15(C)(vii), in each case regardless of whether such
agreement or the action or actions contemplated by such announcement or
resolution have yet resulted in a Change in Control, the Executive will, if
requested by the Company, remain in the employ of the Company until the earlier
of (A) a date specified in such request which is not later than three (3) months
after the date on which the actions ultimately resulting in a Change in Control
are consummated (but one (1) month if Section 15(C)(vi) is applicable), or (B)
the date of termination by the Executive of the Executive's employment for Good
Reason (determined, for purposes of this clause (B), without regard to Section
15(K)(a)) or by reason of death or Disability, or the efforts to effect a Change
in Control have been abandoned or terminated.
<PAGE>
5. Compensation Other Than Severance Payment.
-----------------------------------------
5.1. Following a Change in Control, during any period that the Executive
fails to perform the Executive's full-time duties with the Company as a result
of incapacity due to physical or mental illness, the Company shall pay the
Executive's full salary to the Executive at the rate in effect at the
commencement of such period (or the rate in effect immediately prior to the
Change in Control, if higher), together with all compensation and benefits
payable to the Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such period, until the
Executive's employment is terminated by the Company for Disability or the
Executive resumes full-time duties, subject to the other termination provisions
of this Agreement.
5.2. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's full salary
to the Executive through the Date of Termination at the rate in effect at the
time the Notice of Termination is given (or the rate in effect immediately prior
to the Change in Control, if higher), together with all prorated compensation
and benefits payable to the Executive or creditable to his plan account under
the terms of any compensation or benefit plan, program or arrangement maintained
by the Company prior to the Date of Termination (or such terms as in effect
immediately prior to the Change in Control, if more favorable to the Executive)
were the Executive employed by the Company on the last day of the year. In the
case of the PIP payout, the amount to be paid shall be equal to the larger of
(i) the PIP amount that would be payable if all objectives were met 100% (payout
factor of 1.0) or (ii) the largest PIP amount paid to the Executive during the
past three years, in either case prorated for the period of the Executive's
employment during such year and paid in cash within 15 days of the date of
termination. In the case of the Company's Savings and Retirement Plan for
Management Employees ("SARP"), Employee Stock Ownership Plan and Trust ("ESOP"),
the excess benefit restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental Umbrella
Pension Plan, and any other plan benefits under the first sentence of this
section for the year or period in which the Executive's termination of
employment occurs shall be determined without regard either to the right of the
Board to not authorize any contribution to the SARP, ESOP, SERP, or other plan
for that year or to any requirement in such plan or program that the Executive
continue employment until the end of such year or period and as so determined
shall be prorated for the period of the Executive's employment during such year
or period provided that if such contributions cannot validly be made pursuant to
the terms of the plans, then the amount that could not be so contributed to the
SARP, ESOP, or other plan shall be paid under this Agreement in cash in a lump
sum to the Executive within 15 days of the Date of Termination. In the case of
the Company's Long Term Deferred Cash Incentive Plan (the "LTDCIP"), for
purposes of the first sentence of this Section, there shall be paid to the
Executive in a cash lump sum payment within 15 days of the Date of Termination
an amount equal to the applicable pro rate portion, based on the days of the
Executive's employment in the year prior to the Date of Termination of the award
or credit that would have been credited to the Executive's account under the
LTDCIP for the calendar year in which the Date of Termination occurs assuming,
for such year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected as Adjusted Pretax Profit in the
Company's latest "BNS Five Year Plan - Base Case" provided to the Company's
investment banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had equaled
the Executive's percentage award opportunity specified in the most recent award
to the Executive preceding the Change in Control.
Upon a Change in Control, all options held by the Executive at such date
shall immediately vest and become exercisable and all restrictions on restricted
stock shall lapse, to the extent that such vesting or lapse has not occurred by
said date under the terms of the Equity Incentive Plan (or other applicable
plan).
5.3. If the Executive's employment shall be terminated for any reason
following a Change in Control, the Company shall pay the Executive's post-
termination compensation and benefits to the Executive as such payments become
due, as determined under and paid in accordance with the Company's retirement,
insurance and other compensation or benefit plans, programs and arrangements and
agreements, including the plans referred to in Section 5.2, other than this
Agreement; provided,
<PAGE>
however, that the Severance Payments under Section 6 of this Agreement shall be
the only severance and benefits paid or provided following a Change in Control
for a termination by the Executive with Good Reason or a termination by the
Company Without Cause unless the Executive elects within 30 days after the
Termination Date to take such other payments and benefits exclusively in lieu of
the Severance Payments under Section 6.
6. Severance Payments.
------------------
6.1. Subject to Section 6.2 hereof, the Company shall pay the Executive
the payments and benefits described in this Section 6.1 ("Severance Payments"),
in addition to the applicable payments and benefits described in Section 5
hereof, upon any termination after a Change in Control by the Company Without
Cause or by the Executive for Good Reason.
(i) Within 15 days of the Date of Termination, the Company shall make a
lump sum cash payment to the Executive equal to the sum of (a) the
higher of the Executive's annual base salary in effect immediately prior
to the occurrence of the event or circumstance upon which the Notice of
Termination is based or in effect immediately prior to the Change in
Control, and (b) the highest annualized (for a partial year of service)
annual aggregate bonuses paid, or accrued to be paid if not then yet
paid (or, in the event that the Executive has been recently hired and
has not had a full fiscal year of employment and Profit Incentive Plan
opportunity, then the higher of the amount paid in the prior year,
recalculated as if the Executive had been employed for the full entire
year, or the planned amount of Profit Incentive Plan bonus payout for
the Executive for the year in which the termination occurs) to the
Executive under the Profit Incentive Plan or its successor plan or by
vote of the Board of Directors (or a committee thereof) or bonuses of
Sales Incentive Compensation or other bonuses, in each case determined
(except as provided above with respect to a recently hired Executive)
over the period beginning with the fifth (5th) year preceding the year
in which occurs the Change in Control and ending with the period in
which occurs the Date of Termination.
(ii) Within 15 days of the Date of Termination, the Company shall make
an additional lump sum cash severance payment to the Executive equal to
the annual level of contributions, credits or other benefits the
Executive was receiving (or that were being made or were required to be
made for the Executive's benefit) for the most recent applicable plan
period prior to the Change in Control or prior to the Notice of
Termination (whichever is more favorable to the Executive under any
employee benefits plan then existing including the SARP, the ESOP, the
"excess benefit" restoration account under the Company's Supplemental
Executive Retirement Plan, the Company's Senior Executive Supplemental
Umbrella Pension Plan, the Company's matching contribution under its
401(k) plan applicable to the Executive and (subject to the following
sentence) the LTDCIP (and in each case any successor plan or
arrangement), in each case based on the levels of compensation taken
into account under Section 6.1(i). In the case of the LTDCIP the
payment shall equal to an amount equal to the award credit that would
have been credited to the Executive's account under the LTDCIP for the
calendar year in which the Date of Termination occurs, assuming for such
year, (i) the Company's Adjusted Pretax Profit (as defined in the
LTDCIP) had equaled the amount projected for the applicable year as
Adjusted Pretax Profit (as defined in LTDCIP) in the Company's latest
"BNS Five Year Plan - Base Case" provided to the Company's investment
banker prior the Change in Control (or if not available, the best
equivalent), and (ii) the Executive's percentage award opportunity had
equaled the percentage award opportunity which was the Executive's most
recent award level preceding the Change in Control.
For the period of twelve (12) months following the Date of Termination,
the Company shall arrange to provide the Executive with any employee
welfare benefits including health, dental, disability, life, and
accident insurance benefits substantially similar to those which the
Executive is receiving on the same premium cost share basis as was
applicable to the
<PAGE>
Executive immediately prior to the Notice of Termination or the Change
in Control, whichever is more favorable to the Executive (without
utilizing or limiting the Executive's subsequent resort to COBRA rights
under applicable laws and without giving effect to any reduction in such
benefits subsequent to a Change in Control which reduction constitutes
Good Reason). Benefits otherwise receivable by the Executive under any
employee welfare benefits including health, dental, disability, life,
and accident insurance pursuant to this Section 6.1(ii) shall be reduced
to the extent comparable benefits are actually received by or made
available to the Executive without cost or at a lower cost than was
charged to the Executive prior to the Change in Control or the Notice of
Termination (whichever is more favorable to the Executive) during the
twelve (12) month period following the Executive's termination of
employment (and any such benefits actually received or made available by
the Executive shall be reported to the Company by the Executive). In the
event that the Company self-insures with respect to one of these
benefits, such as for example dental benefits, then the Executive shall
be reimbursed for all dental expenses during the 12-month period that
would have been reimbursed under the self-funded policy in effect prior
to the Notice of Termination or the Change in Control, whichever is more
favorable to the Executive. If the benefits provided to the Executive
under this Section 6.1(ii) shall result in a decrease, pursuant to
Section 6.2, in the Severance Payments and as a result the Section
6.1(ii) benefits are thereafter reduced pursuant to the immediately
preceding sentence because of the receipt or availability of comparable
benefits, the Company shall, at the time of such reduction, pay to the
Executive the lesser of (a) the amount of the decrease made in the
Severance Payments pursuant to Section 6.2, or (b) the maximum amount
which can be paid to the Executive without being, or causing any other
payment to be, nondeductible by reason of section 280G of the Code.
6.2. Notwithstanding any other provisions of this Agreement, in the event
that any payment or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the Executive's
employment (whether or not received pursuant to the terms of this Agreement or
otherwise) (all such payments and benefits, including option benefits and the
Severance Payments, being hereinafter called the "Total Payments") would be
subject in whole or in part to the Excise Tax, then the Severance Payments shall
be reduced to the extent, but only to the extent, necessary so that no portion
of the Total Payments is subject to the Excise Tax; provided, that no such
reduction shall be effected unless the net amount of the Total Payments after
such reduction in the Severance Payments and after deduction of the net amount
of federal, state and local income taxes on such reduced Total Payments would be
greater than the excess of (A) the net amount of the Total Payments without such
reduction in the Severance Payments but after deduction of the net amount of
federal, state and local income taxes (other than the Excise Tax) on such
unreduced Total Payments, over (b) the Excise Tax to which the Total Payments
are subject. The determination as to whether a reduction in Severance Payments
is to be made under this Section 6.2 and, if so, the amount of any such
reduction shall be made by the firm of certified public accountants that had
been acting as the Company's auditors prior to the Change in Control or by such
other firm of certified public accountants, benefits consulting firm or legal
counsel as the Board may designate for such purpose, with the approval of the
Executive, prior to the Change in Control.
The Company shall provide the Executive with the auditor's calculations of
the amounts referred to in this Section 6.2 and such supporting materials as are
reasonably necessary for the Executive to evaluate the Company's calculations.
6.3. In the event of a termination following a Change in Control, the
Company also shall pay to the Executive all legal fees and expenses, if any,
incurred in disputing in good faith any such termination or in seeking in good
faith to obtain or enforce any payment, benefit or right provided by this
Agreement or in connection with any tax audit or proceeding to the extent
attributable to the application of section 4999 of the Code to any payment or
benefit provided hereunder). Such payments shall be made within five (5)
business days after delivery of the Executive's written requests for payment
accompanied with such evidence of fees and expenses incurred as the Company
reasonably may require.
<PAGE>
6.4. During the period of one year from the Termination Date, the Company
shall engage, at the request of the Executive, made in writing in the
Termination Notice or within ten days of receipt by the Executive of a Notice of
Termination, a mutually agreed upon, full executive outplacement counseling
service of national reputation, reasonably proximate to the Executive's home or
home office, to assist the Executive in obtaining employment.
7. Termination Procedures and Compensation During Dispute.
------------------------------------------------------
7.1. Notice of Termination. After a Change in Control, any purported
---------------------
termination of the Executive's employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 10 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated. Further, a Notice of Termination for Cause is required to include a
copy of a resolution duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership (excluding the Executive, if a
Director) of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.
7.2. Date of Termination. "Date of Termination", with respect to any
-------------------
purported termination of the Executive's employment after a Change in Control
during the term of this Agreement, shall mean, subject to the provisions of
Section 7.3:
(A) if the Executive's employment is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the Executive
shall not have returned to the full-time performance of the Executive's
duties during such thirty (30) day period), and
(B) if the Executive's employment is terminated for any other reason, the
date specified in the Notice of Termination which, in the case of a
termination by the Company, shall not be less than thirty (30) days (except
in the case of a termination for Cause) and, in the case of a termination
by the Executive, shall not be less than fifteen (15) days nor more than
sixty (60) days from the date such Notice of Termination is given.
7.3. Dispute Concerning Termination. If within fifteen (15) days after
------------------------------
any Notice of Termination is given, the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally resolved, either by mutual written agreement of the parties, by
arbitrator's award, or, to the extent permitted by Section 14, by a final
judgment, order or decree of a court of competent jurisdiction on the
arbitrator's award (which is not appealable or with respect to which the time
for appeal therefrom has expired and no appeal has been perfected); provided
further that the Date of Termination shall be extended by a notice of dispute
only if such notice is given in good faith and the party giving such notice
pursues the resolution of such dispute with reasonable diligence.
7.4. Compensation During Dispute. If a purported termination occurs
---------------------------
following a Change in Control and such termination is disputed in accordance
with Section 7.3 hereof, the Company shall continue to pay the Executive the
full compensation (including, but not limited to, salary) in effect when the
notice giving rise to the dispute was given and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the dispute is finally resolved in accordance with Section 7.3
hereof. Amounts paid under this Section 7.4 are in addition to all other
amounts due under this Agreement (other than those due under Section 5.2 hereof)
and shall not be offset against or reduce any other amounts due under this
Agreement. In the event of such purported termination by the Company or
<PAGE>
the Executive, the Executive need not provide any services to the Company and no
mitigation requirement shall apply.
It is the intent of the Company that the Executive not be required to incur
the expenses associated with the enforcement of his rights under this Agreement
by an arbitration proceeding or otherwise because the cost and expense thereof
would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if the Executive determines in good faith that
the Company has failed to comply with any of its obligations under this
Agreement or if the Company or any other person takes any action to declare this
Agreement void or unenforceable, or institutes any litigation or arbitration
proceeding designed to deny, or to recover from the Executive the benefits
intended to be provided to the Executive hereunder or in the event of
arbitration proceedings instituted as contemplated by Section 7.3 above, the
Company confirms that it has irrevocably authorized the Executive from time to
time to retain counsel of his choice, at the expense of the Company as hereafter
provided, to represent the Executive in connection with the arbitration
proceeding provided for above (or in any other legal proceeding), whether by or
against the Company or any director, officer, stockholder or other person
affiliated with the Company, in any jurisdiction which may adversely affect
Executive's rights under this Agreement. Without limiting the provisions of
Section 7.3 above, the Company shall pay or cause to be paid and shall be solely
responsible for any and all attorneys' fees and related expenses incurred by the
Executive as a result of the Company's failure to perform this Agreement or any
provision thereof or as a result of the Company or any person contesting the
validity or enforceability of this Agreement or any provision thereof.
Interest at the rate of prime of The First National Bank of Boston (or its
successor) plus 2 shall be payable monthly on all amounts due but not paid under
this Agreement.
8. No Mitigation, etc. The Company agrees that, if the Executive's
------------------
employment by the Company is terminated after a Change in Control, the Executive
is not required to seek other employment or to attempt in any way to reduce any
amounts payable to the Executive by the Company pursuant to Section 6 or
Section 7.4. Further, the amount of any payment or benefit provided for in
Section 6 (other than the health or insurance benefits in Section 6.1(ii)) or
Section 7.4 shall not be reduced by any compensation earned by the Executive as
the result of employment by another employer, by retirement benefits, by offset
against any amount claimed to be owed by the Executive to the Company, or
otherwise.
In the event that the Executive's employment is terminated by the Company
after a Change in Control without Cause or by the Executive for Good Reason, the
Executive shall not be required to refrain from competition with Company or any
subsidiary but shall not be entitled to use or disclose trade secrets or
confidential information of the Company or any subsidiary.
9. Successors; Binding Agreement.
-----------------------------
9.1. In addition to any obligations imposed by law upon any successor to
the Company, the Company will require any successor (whether direct or indirect,
by purchase, merger or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to or promptly after the
effectiveness of any such succession, unless remedied within ten days after
written notice by the Executive to the Company, shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. In any event this agreement shall be binding
upon the Company and any successors or assignees.
<PAGE>
9.2. This Agreement shall inure to the benefit of and be enforceable by
the Executive's guardian, personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while any amount would still be payable to the Executive
hereunder (other than amounts which, by their terms, terminate upon the death of
the Executive) if the Executive had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or administrators of the
Executive's estate.
10. Notices. For the purpose of this Agreement, notices and all other
-------
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered in hand or when delivered or
mailed by United States certified mail, return receipt requested, postage
prepaid, addressed to the respective addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
actual receipt:
To the Company:
Brown & Sharpe Manufacturing Company
Precision Park
200 Frenchtown Road
North Kingstown, RI 02852
Attention: Secretary
To the Executive:
Fred Schtter
Hauptstrasse 43
56337 Arzbach
Germany
11. Miscellaneous. No provision of this Agreement may be modified or
-------------
waived unless such waiver or modification is agreed to in writing and signed by
the Executive and such officer as may be specifically designated by the Board.
No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to
be performed by such other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the same or at any prior or subsequent
time. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of Delaware (other then its internal conflict of laws) and this
Agreement shall be an instrument under seal. All references to sections of the
Exchange Act or the Code shall be deemed also to refer to any successor
provisions to such sections.
Any payments provided for hereunder shall be paid net of any applicable
withholding required under federal, state or local law and any additional
withholding to which the Executive has agreed. The obligations of the Company
and the Executive under Sections 6, 7, 8 and 14 shall survive the expiration of
the term of this Agreement.
The Company shall have no right of setoff against any payments required to
be made by the Company hereunder, and any claims by the Company against the
Executive may not be set off and must be made against the Executive in an
independent proceeding.
Nothing herein shall adversely affect any of the Executive's rights under
the terms of any option, employee benefit plan or agreement, including without
limitation the Long Term Deferred Cash Incentive Plan, the Supplemental
Executive Retirement Plan, the Senior Executive Supplemental Umbrella Pension
Plan, the Company's Salary and Retirement Plan for Management Employees and the
<PAGE>
Employee Stock Ownership Plan and Trust, or any offer letter or employment
agreement, subject to the controlling provisions of Sections 5.3 and 6.
Nothing in this Agreement shall detract from or limit the Executive's right
to participate in any stock option, bonus or other plan which may become
applicable to executives of the Company resulting from any merger of
consolidation of the Company or sale of all or substantially all of the assets
of the Company.
12. Validity. The invalidity or unenforceability of any provision of this
--------
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect. In addition, if
any provision of this Agreement is held invalid or unenforceable by a court of
competent jurisdiction, then such provision shall be deemed modified to the
extent necessary to enable such provision to be valid and enforceable.
13. Counterparts. This Agreement may be executed in several counterparts,
------------
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
14. Settlement of Disputes; Arbitration. All claims by the Executive for
-----------------------------------
benefits under this Agreement shall be directed to the Board c/o the Secretary
of the Company and shall be in writing. Any denial by the Board of a claim for
benefits under this Agreement shall be delivered to the Executive in writing and
shall set forth the specific reasons for the denial and the specific provisions
of this Agreement relied upon. The Board then shall afford a reasonable
opportunity to the Executive for a review of the decision denying a claim and
shall further allow the Executive to appeal to the Board a decision of the Board
within sixty (60) days after notification by the Board that the Executive's
claim has been denied. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration
(except to the limited extent provided below) in Boston, Massachusetts in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of the Executive's right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement by a proceeding in such arbitration or by a
proceeding for such relief in the federal court in Boston or the Massachusetts
state court in Suffolk County. Each party irrevocably submits, with respect to
the matter specified in the proviso to the immediately preceding sentence, to
the jurisdiction of the United States District Court for the Commonwealth of
Massachusetts and to the jurisdiction of the Massachusetts state court of
Suffolk County for the purpose of any suit or other proceeding arising out of or
based upon this Agreement or the subject matter hereof and agrees that any such
proceeding shall be brought or maintained only in such courts and waives, to the
extent not prohibited by applicable law, and agrees not to assert in any such
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that any such proceeding brought or maintained in a
court provided for above may not be properly brought or maintained in such
court, should be transferred to some other court or should be stayed or
dismissed by reason of the pendency of some other proceeding in some other
court, or that this Agreement or the subject matter hereof may not be enforced
in or by such court.
15. Definitions. For purposes of this Agreement, the following terms
-----------
shall have the meanings indicated below:
(A) "Board" shall have the meaning given it in the first "WHEREAS" clause
of this Agreement.
(B) "Cause" for termination by the Company of the Executive's employment,
after any Change in Control, shall mean:
(i) intentional commission of theft, embezzlement, or other serious and
substantial crimes against the Company, intentional wrongful engagement
in competitive activity with respect to any business of the Company or
its subsidiaries, or intentional wrongful commission of material acts in
clear and direct contravention of instructions from the Board (or from
the Chief Executive Officer with respect to officers other than the
Chief Executive Officer);
<PAGE>
provided, however, that the termination for Cause shall have been
approved or ratified by the Board after notice to the Executive, or
(ii) the willful engaging by the Executive in conduct which is
demonstrably and materially injurious to the Company or its
subsidiaries, monetarily or otherwise.
For purposes of this definition, no act, or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted to be
done, by the Executive not in good faith and without reasonable belief that
the Executive's act, or failure to act, was in the best interest of the
Company.
(C) A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied.
(i) any "person" as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than (1) the Company; (2) any wholly-owned or
otherwise controlled subsidiary of the Company; (3) any trustee or other
fiduciary holding securities under an employee benefit plan of the
Company or of any subsidiary of the Company; or (4) any company owned,
directly or indirectly, by the shareholders of the Company in
substantially the same proportions as their ownership of capital stock
of the Company), is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act), together with all Affiliates and
Associates (as such terms are used in Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(ii) the shareholders of the Company approve a merger or consolidation
of the Company with any other company, other than (1) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
the Company or any subsidiary of the Company, at least 65% of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
"person" (with the exception given and the method of determining
"beneficial ownership" used in clause (1) of this definition) acquires
more than 30% of the combined voting power of the Company's then
outstanding securities; or
(iii) during any period of two consecutive years (not including any
period prior to the execution of this Agreement), individuals who, at
the beginning of such period, constitute the Board, and any new director
(other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause
(i), (ii), or (iv) of this definition) whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved cease for
any reason to constitute at least a majority thereof; or
(iv) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(v) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control, provided,
however, that if such agreement requires
<PAGE>
approval by the Company's shareholders of the agreement or transaction
or the satisfaction of other conditions, a Change in Control shall not
be deemed to have taken place unless and until such approval is secured
and all conditions are satisfied (but upon any such approval and the
satisfaction of such conditions and the consummation of the transaction,
a Change in Control shall be deemed to have occurred on the date of
execution of such agreement); or
(vi) the Company or any person publicly announces an intention to take
or to consider taking actions which, if consummated, would constitute a
Change in Control, provided that a Change in Control will not be deemed
to have taken place unless and until actions are taken that constitute a
Change in Control (but upon the taking of any such actions a Change in
Control shall be deemed to have occurred on the date of such
announcement); or
(vii) the Board adopts a resolution to the effect that, for purposes of
this Agreement, a Change in Control will occur upon the taking of
certain action provided that the Change in Control shall not be deemed
to have taken place unless and until such action is taken (but upon the
taking of such action, a Change in Control shall be deemed to have
occurred on the date of such resolution of the Board).
(D) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(E) "Company" shall mean Brown & Sharpe Manufacturing Company and any
successor to its business and/or assets which assumes and agrees to perform
this Agreement by operation of law, or otherwise (except in determining,
under Section 15(C) hereof, whether or not any Change in Control of the
Company has occurred in connection with such succession).
(F) "Date of Termination" shall have the meaning stated in Section 7.2
hereof.
(G) "Disability" shall be deemed the reason for the termination by the
Company of the Executive's employment if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the
Company for a period of six (6) consecutive months, the Company shall have
given the Executive a Notice of Termination for Disability, and, within
thirty (30) days after such Notice of Termination is given, the Executive
shall not have returned to the full-time performance of the Executive's
duties.
(H) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(I) "Excise Tax" shall mean any excise tax imposed under section 4999 of
the Code or any successor section.
(J) "Executive" shall mean the individual named in the first paragraph of
this Agreement.
(K) "Good Reason" for termination by the Executive of the Executive's
employment shall mean the occurrence (without the Executive's express
written consent), within not more than three years after the Change in
Control, of any one of the following acts by the Company, or failures by
the Company to act, unless, in the case of any act or failure to act
described in paragraph (a), (d), (e), (f), (g), or (h) below, such act or
failure to act is corrected prior to the Date of Termination specified in
the Notice of Termination given in respect thereof:
(a) the assignment to the Executive of any duties inconsistent with the
Executive's status as a senior executive officer of the Company or
an adverse alteration in the nature or status of the Executive's
responsibilities, authority or reporting relationships from those in
effect immediately prior to the Change in Control, as outlined on
attached Exhibit A, including, for the Chief Executive Officer,
Chief Financial Officer, Controller, Treasurer,
<PAGE>
Secretary and Corporate Counsel and the Chief Information Officer,
the change in status from an officer of a "public company" to an
officer of a "private" company or a "public" company in which
another person owns more than 20% of the voting power;
(b) a reduction by the Company in the Executive's annual base salary as
in effect on the date hereof or as the same may be increased from
time to time;
(c) the relocation of the Company's principal executive office to a
location more than twenty (20) miles from the location of such
office immediately prior to the Change in Control or the Company's
requiring the Executive to be based anywhere other than the
Company's principal executive office, except for required travel on
the Company's business to an extent substantially consistent with
the Executive's present business travel obligations prior to the
Change in Control; provided that if the Executive was not located
prior to the Change in Control at the principal executive office
then such office where the Executive was located shall be
substituted for the term "principal executive office";
(d) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company, without the Executive's
consent, to pay to the Executive any portion of the Executive's
current compensation, or to pay to the Executive any portion of an
installment of deferred compensation under any deferred compensation
program of the Company, within seven (7) days of the date such
compensation is due;
(e) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue in effect any
compensation plan (until its stated expiration date) in which the
Executive participated immediately prior to the Change in Control
which is material to the Executive's total compensation, including
but not limited to the Company's Equity Incentive Plan, the Profit
Incentive Plan, the LTDCIP, the Supplemental Executive Retirement
Plan, the Senior Executive Supplemental Umbrella Pension Plan, the
SARP and the ESOP (all of which plans are deemed material) or any
substitute plans adopted prior to the Change in Control, but in each
case only if such plan is one in which the Executive participated
immediately prior to the Change in Control, unless a substantially
equivalent equitable arrangement, reasonably acceptable to the
Executive (embodied in an ongoing substitute or alternative plan)
has been made with respect to such plan, or the failure by the
Company to continue the Executive's participation therein (or in
such substitute or alternative plan) on a basis not materially less
favorable than the basis on which benefits were provided or made
available to the Executive prior to the Change in Control. For
purposes of the preceding provision, it is understood that the
LTDCIP is a Company before tax profit based plan and that effective
continuity of this plan or any substantial equivalent to it by
definition requires with regard to the determination of the benefit
(i) continuity of the existing organizations within the Company
immediately prior to the Change in Control whereby these revenue and
profit generating capability of each part and in total is no less
than it was immediately prior to the Change in Control, (ii) the
accounting and consolidation methodologies are equivalent and (iii)
the participant award factors remain unchanged, and (iv) change of
bases used in determining the annual participant award credit or
accrual within a fiscal year shall require use of the new bases for
the whole fiscal year. If any of the above conditions (15(K)(e)
(i), (ii), (iii) or (iv)) is not satisfied, then the LTDCIP's
continuity or equivalency may only be achieved for purposes of this
paragraph by determining the annual participant award credit or
accrual based on the Company's planned Adjusted Pretax Profit (as
defined in the LTDCIP) for the applicable period per the latest "BNS
Five Year Plan - Base Case" provided to the Company's investment
banker prior to the Change in Control (or if not available, the best
equivalent thereof).
<PAGE>
(f) the failure, not corrected within five (5) days after written notice
thereof to the Company, by the Company to continue to provide the
Executive with benefits substantially similar to those enjoyed by
the Executive under any of the Company's pension, life insurance,
medial, health and accident, or disability plans in which the
Executive was participating at the time of the Change in Control
(other than changes required by law), the taking of any action by
the Company which would directly or indirectly materially reduce any
of such benefits or deprive the Executive of any material fringe
benefit enjoyed by the Executive at the time of the Change in
Control, or the failure by the Company to provide the Executive with
the number of paid vacation days to which the Executive is entitled
in accordance with the Company's normal vacation policy in effect
prior to the Change in Control;
(g) any purported termination of the Executive's employment which is not
effected pursuant to a Notice of Termination satisfying the
requirements of Section 7.1; and for purposes of this Agreement, no
such purported termination shall be effective; or
(h) any breach by the Company of any provision of this Agreement, not
corrected within 15 days after notice by the Executive to the
Company.
The Executive's right to terminate the Executive's employment for Good
Reason shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued performance shall
not constitute consent to, or a waiver of rights with respect to, any
act or failure to act constituting Good Reason hereunder.
(L) "Notice of Termination" shall have the meaning stated in Section 7.1
hereof.
(M) "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof;
however, a Person shall not include:
(i) the Company,
(ii) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or
(iii) a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership
of stock of the Company.
(N) "Severance Payments" shall mean those payments and benefits described
in Section 6.1 hereof.
(O) "Terminate Without Cause" shall mean a termination by the Company,
within not more than three years after the Change in Control, other than a
termination upon death, disability or retirement at age 65 (or such later
age as may be established by the Board of Directors or the Compensation and
Nominating Committee) or for Cause (as defined above).
(P) "Total Payments" shall mean those payments described in Section 6.2
hereof.
<PAGE>
IN WITNESS WHEREOF, the undersigned parties have each executed or caused
this Agreement to be duly executed as of the date set forth above.
WITNESSED: BROWN & SHARPE MANUFACTURING COMPANY
By
- -------------------------- --------------------------
Frank T. Curtin
Chairman of the Board of Directors,
President, and Chief Executive Officer
WITNESSED:
-------------------------- --------------------------
Fred Schutter
General Manager, Brown & Sharpe Wetzlar Factory
<PAGE>
EXHIBIT 10.106
BROWN & SHARPE MANUFACTURING COMPANY
KEY EMPLOYEES' LONG-TERM DEFERRED CASH INCENTIVE PLAN
(AS AMENDED THROUGH FEBRUARY 23, 1998)
1. PURPOSE
The purpose of the Brown & Sharpe Long-Term Deferred Cash Incentive Plan
(the "Plan") is to promote the long term success of Brown & Sharpe (the
"Company") and its shareholders by providing long-term incentive compensation to
key employees of the Company.
2. TERM
The Plan, which was originally effective January 1, 1995, will remain in
effect until terminated by the Company's Board of Directors (the "Board").
3. PLAN ADMINISTRATION
The Plan is administered by the Compensation and Nominating Committee of
the Board (the "Committee"). The Committee has full and exclusive power to
interpret the Plan in its discretion and to adopt such rules, regulations and
guidelines for carrying out the Plan as it may deem necessary. The Committee
may delegate administrative responsibilities under the Plan to such person or
persons as it deems advisable. As used herein, the term "Administrator" refers
to the Committee and such other person or persons, if any, as the Committee may
appoint to assist in the administration of the Plan pursuant to the preceding
sentence.
4. ELIGIBILITY
The Committee shall designate those key employees of the Company or its
subsidiaries who will participate in the Plan ("Participants"). In addition to
the Chief Executive Officer of the Company, only those key employees who report
directly to the Chief Executive Officer of the Company (or, in the case of an
otherwise eligible division or group general manager, who reports directly to an
individual who has a direct report to the Chief Executive Officer of the
Company) shall be eligible to be designated as Participants. Persons who have
been designated as Participants by the Committee shall be eligible to share in
awards until such time, if any, as their participation is terminated by the
Committee (or until they cease to be employed by the Company, if earlier).
Employment by a subsidiary of the Company shall be deemed to be employment by
the Company for purposes of the Plan.
5. BONUS POOL; AWARD CREDITS; ACCOUNTS
A. With respect to each fiscal year beginning with the 1998 fiscal year,
the Committee shall specify for each Participant an award opportunity
for the year expressed as a percentage of Adjusted Pretax Profit (as
defined on Schedule A) for the year. The determination of awards for
fiscal years prior to the 1998 fiscal year shall be made under the terms
of the Plan as in effect prior to 1998.
B. Each Participant employed on December 31 of such year shall become,
subject to E below and Section 10, entitled to an award credit (an
"Award Credit") equal to (i) with respect to the 1998 fiscal year and
later fiscal years, the dollar amount of his or her award opportunity,
if any, determined under A above, or (ii) with respect to fiscal years
prior to 1998, the amount determined under Section 5.B of the Plan as in
effect prior to 1998. A Participant who retires during 1998 or any
later year under Section 5.E(i)(b) or (c) below shall become, subject to
<PAGE>
the remaining provisions of E below and Section 10, entitled to an Award
Credit equal to a prorated portion of his or her award opportunity for
such year, based on the period of service during such year prior to
retirement.
C. Each Award Credit shall, as soon as practicable after it is determined
and effective as of the January 1 immediately following the fiscal year
to which the Award Credit relates, be credited to a memorandum account
(an "Account") maintained under the Plan to reflect the Company's
unfunded deferred compensation obligation to the Participant under the
terms of the Plan. Effective as of such date (on or after January 1,
1998) as may be specified by the Administrator (the "Investment Date"),
the Administrator shall specify one or more mutual funds or other
market-based investments (each, an "Investment Alternative"), including
common stock of the Company (the "Company Stock Investment
Alternative"), to be used to measure the notional investment of
Accounts. Notional investments in the Company Stock Investment
Alternative will be expressed in whole and fractional shares of common
stock of the Company. Effective as of the Investment Date, the then
balance of each Participant's Account under the Plan (determined under
the terms of the Plan as in effect prior to 1998) shall be treated
(solely for purposes of the Plan) as having been invested in such
Investment Alternative or Alternatives as may be selected by the
Participant from among those specified by the Administrator, or in the
absence of such a Participant selection in such Investment Alternative
or Alternatives as the Administrator may determine. Each Participant
shall be entitled thereafter, by written notice to the Administrator, to
reallocate the notional investment of his or her Account (as the same
may be adjusted for additional Award Credits, distributions, or notional
investment experience under this paragraph C) among the Investment
Alternative or Alternatives specified by the Administrator, any such
change to take effect as of the beginning of the calendar quarter (i.e.,
January 1, April 1, July 1 or October 1) next following receipt (at
least ten days prior thereto) by the Administrator of such change
notice, except in the event of the Participant's retirement or
termination in which case the Participant can make such change with one
day's notice. The Administrator may prescribe rules and procedures for
the notional investment of Accounts under this paragraph and may at any
time and from time to time eliminate (including as to existing Account
balances) or add one or more Investment Alternatives from or to those
Investment Alternatives that are available for the notional investment
of Accounts hereunder. In determining the interest of any Participant
under the Plan, the Administrator shall maintain such accounts
(including such accounts or sub-accounts as may be necessary to track
the vesting provisions of paragraph E below) as it deems necessary or
advisable.
D. Notwithstanding C above, if as of January 1 of any year commencing on or
after January 1, 1998 the number of shares of Company common stock
attributable to the Participant for purposes of the Company's executive
stock ownership policy (as from time to time in effect, the "Stock
Ownership Policy") is smaller than the number of shares required under
the Stock Ownership Policy, there shall be notionally invested in the
Company Stock Investment Alternative the Award Credit (if any) to be
credited to the Participant's Account as of such date or, if less, the
portion of such Credit that is needed to satisfy the Stock Ownership
Policy. The Company Stock Investment Alternative may include fractional
shares. For 1998 there shall also be notionally invested in the Company
Stock Investment Alternative, as of the Investment Date, such portion,
if any, of a Participant's remaining balance in his or her Account as is
needed to satisfy the Stock Ownership Policy. Notional investments in
the Company Stock Investment Alternative under the first sentence of
this Paragraph D shall be determined by dividing the amount to be
invested by the closing price of a share of common stock of the Company
on the trading day coinciding with the date the Committee makes its
final determination as to the Participant's Award Credit, or if such
date was not a trading day, then on the next preceding trading day. For
1998, any additional notional investments in the Company Stock
Investment Alternative under the second sentence of this Paragraph D
shall be determined by dividing the additional amount to be invested by
the closing price of a share of common stock of the Company on the
Investment date. At no time shall a
<PAGE>
Participant be entitled to direct the notional investment of any portion
of his or her Account out of the Company Stock Investment Alternative
if, after giving effect to such notional investment change, there would
be attributable to the Participant for purposes of the Stock Ownership
Policy fewer shares of Company common stock than are then required under
the Stock Ownership Policy. The Stock Ownership Policy shall cease to
apply from and after a Change in Control as defined in Schedule B. In
the event of a Change in Control as so defined, the value of a
Participant's interest (if any) in the Company Stock Investment
Alternative shall be based on a value for the common stock of the
Company that is not less than the highest closing price of such stock
during the ten (10) trading days immediately preceding the Change in
Control. In the event of a distribution date under the Rights Agreement
between the Company and BankBoston, N.A. dated as of February 13, 1998,
the preceding sentence shall also be applied by substituting such
distribution date for the date of a Change in Control.
E. (i) Subject to subparagraph (ii) below, a Participant shall become
vested in that portion of his or her Account attributable to an
Award Credit (and any notional investment experience with respect
thereto) upon the earliest to occur of (a) the date of the
Participant's death or disability (as determined by the
Administrator) while an employee of the Company, (b) the date of a
Participant's retirement from the Company at or after age 65 with
at least five years of service (as determined by the
Administrator), (c) the date of the Participant's retirement from
the Company at or after age 60 but before age 65 with at least 10
years of service (as determined by the Administrator), or (d) the
third anniversary of the close of the fiscal year to which the
Award Credit relates, provided the Participant has been
continuously employed by the Company through and including such
third anniversary date; provided, that if the Participant's
employment with the Company terminates (other than by reason of
the Participant having been terminated for cause as described in
(ii) below) after he or she has attained age 55 and after at least
5 years of service (as determined by the Administrator), the
Participant shall be deemed to be vested in the portion of his or
her Account in which he or she would have been vested had clause
(d) above been applied by substituting the words "first
anniversary" for "third anniversary".
(ii) A Participant shall forfeit his or her Account (vested and
unvested) if he or she is terminated for cause at any time.
"Termination for cause" shall mean termination on account of
intentional commission of theft, embezzlement, or other serious
and substantial crimes against the Company, intentional wrongful
engagement of competitive activity with respect to any business of
the Company or its subsidiaries as provided in Section 7 below, or
intentional wrongful commission of material acts in clear and
direct contravention of instructions from the Board or the Chief
Executive Officer; provided, however, that the termination for
cause shall have been approved or ratified by the Board after
notice to the Participant.
(iii) Notwithstanding clause (i), but subject to the over-riding
provisions of clause (ii) above, in the event of a Change in
Control of the Company (as defined in Schedule B), all
Participants employed by the Company immediately prior to such
Change in Control shall have a fully vested and nonforfeitable
interest in their Accounts as of the date immediately preceding
the Change in Control and, as to such Participants, the provisions
of Section 7 below shall cease to apply.
F. Except as otherwise provided by the Committee, in the event that a
Participant forfeits all or a portion of his or her Account, the amount
of such forfeiture (i) shall be added to the Bonus Pool for the fiscal
year with respect to which the amount being forfeited had originally
been credited to the forfeiting Participant, with respect to forfeitures
occurring prior to January 1, 1998, and (ii) in every other case shall
be disregarded in determining any other Participant's rights to an award
or benefit under the Plan.
<PAGE>
6. PAYMENT OF ACCOUNTS
That portion of a Participant's Account that is notionally invested in the
Company Stock Investment Alternative on the date of the Participant's
termination of employment shall, to the extent vested, be distributed in shares
of Class A common stock of the Company within 20 days of such termination,
except that the value of any fractional share shall be distributed in cash. In
connection with his or her initial participation in the Plan (or by March 31,
1998, if later), each Participant shall elect, in such manner and form as the
Administrator may determine, how the remainder of the Participant's vested
Account (the "residual vested Account") under the Plan (as the same may
accumulate and be adjusted) shall be paid from among the following options:
(a) A lump sum cash payment within 20 days of termination of employment.
(b) Three annual cash installments, the first such installment (equal to
one-third of the Participant's residual vested Account) being paid within
20 days of termination of employment, the second installment (equal to one-
half of the residual vested Account remaining after the first installment,
as adjusted for notional investment experience) being paid on the first
anniversary of the termination of employment, and the third and final
installment (equal to the entirety of the residual vested Account remaining
after the first and second installments, as adjusted for notional
investment experience) being paid on the second anniversary of the
termination of employment.
(c) A single life annuity, payable monthly in cash for the Participant's
life commencing with the first day of the month coinciding with or next
following the Participant's termination of employment and ending with the
month of the Participant's death, that is the actuarial equivalent of the
Participant's residual vested Account hereunder at termination of
employment determined by the Administrator using the actuarial assumptions
set forth in Schedule C.
(d) A 50% joint and survivor annuity (that is actuarially equivalent to
the Participant's residual vested Account hereunder at termination of
employment determined by the Administrator using the actuarial assumptions
set forth in Schedule C) providing monthly cash payments to the Participant
commencing with the first day of the month coinciding with or next
following the Participant's termination of employment, with 50% of such
monthly cash amount being paid thereafter to the person to whom the
Participant was married at the date annuity payments to the Participant
commenced or to such other person as the Participant may designate with the
consent of the Administrator (the "contingent annuitant"), provided the
contingent annuitant survives the Eligible Employee, with the last such
payment being made for the month in which the contingent annuitant dies.
A Participant who has made an initial election as described above may
change such election by delivering a notice of such change, in such form and
manner as the Administrator may determine, to the Administrator not later than
December 31 of the second calendar year preceding the calendar year in which
termination of employment occurs. Any change in form of payment, upon becoming
effective, shall apply to the Participant's entire residual vested Account
(including future accumulations, if any) unless later changed again in
accordance with this Section. If a Participant's employment terminates prior to
January 1 of the second year following the year in which he or she has made a
change in election described above, his or her residual vested Account, if any,
shall be distributed in accordance with the most recent distribution election.
In the absence of an effective election, the Participant's residual vested
Account, if any, shall be distributed in three annual installments as described
at (b) above. Notwithstanding the foregoing,
(1) the distribution alternatives described at (c) and (d) above shall
not be available with respect to any residual vested Account having a
balance at termination of employment of $50,000 or less. In the event any
Participant has made an otherwise effective election to have his or her
residual vested Account distributed under an alternative described at (c)
or (d) above,
<PAGE>
but the residual vested Account balance at termination of employment is
$50,000 or less, distribution shall be made in three annual installments as
described at (b) above;
(2) if a Participant effectively elects the form of distribution
described in (b) above and dies or becomes disabled (as determined by the
Administrator) during the installment distribution period, the
Administrator may provide for immediate payment of the remaining balance in
the Participant's residual vested Account; and
(3) if the Participant's termination of employment occurs within twelve
(12) months following a Change in Control of the Company as defined in
Schedule B, the Participant's entire residual vested Account shall be
promptly distributed in a single lump sum cash payment, unless the
Participant and the Company agree in writing on another form of
distribution.
Payment to a Participant under any of the forms of payment described above,
including distribution of shares of common stock of the Company, shall be
conditional on a Participant's compliance with the covenant not to compete
described in Section 7 below. If the Participant does not comply with the terms
of Section 7, he or she shall forfeit all amounts not already paid under the
Plan and shall be required to disgorge to the Company any amounts already paid.
A Participant shall execute all documents as the Administrator may deem
appropriate or necessary, including without limitation such documents as may be
appropriate to evidence the covenant not to compete, before any distributions
will be made from his or her Account.
Notwithstanding the foregoing, the Administrator may defer payment of all
or a portion of a Participant's Account beyond the scheduled payment dates if in
the judgment of the Administrator such deferral is necessary to avoid
disallowance of a deduction under Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"). Amounts, if any, deferred pursuant to the
preceding sentence shall be paid or commence to be paid not later than the date
Code Section 162(m) would no longer limit the deductibility of such payment, as
reasonably determined by the Administrator.
7. COVENANT NOT TO COMPETE
The Participant agrees, as a condition of obtaining any Award Credit, that
until two years after the Participant's employment with the Company and its
affiliates terminates, the Participant shall not, without the prior written
consent of the Administrator, directly or indirectly, whether as owner, partner,
principal, investor, consultant, agent, employee, co-venturer or otherwise,
compete with any business of the Company or any of its affiliates within the
United States and any other country in which the Company and its affiliates is
engaged in business at the time or, if employment has terminated, at the date of
termination of employment, or undertake any planning for any such business
competitive with the Company or any of its affiliates in the United States and
such other countries. To the extent any portion of this Section 7 is determined
by a court of competent jurisdiction to be invalid or unenforceable, this
Section 7 shall be reformed so as to avoid such illegality and unenforceability
and the resulting provisions shall be fully enforceable.
8. ASSIGNMENT
The Company's obligations under the Plan shall be binding upon it and any
successor to all or a major portion of its business or assets.
Awards and rights to benefits under the Plan may not be assigned,
alienated, sold or otherwise transferred by the Participant other than by will
or the laws of descent and distribution. A Participant shall file with the
Company the names of the beneficiaries to receive amounts, if any, remaining in
his or her Account at the time of the Participant's death.
<PAGE>
9. WITHHOLDING TAXES
The Company will have the right to deduct withholding taxes from any
payments made pursuant to the Plan, or make such other provisions as it deems
necessary or appropriate to satisfy its obligations for withholding federal,
state or local income, employment, excise or other taxes of the United States or
other applicable foreign jurisdiction (including without limitation satisfying
withholding obligations from a Participant's base salary) as a result of Plan
awards or as a result of other payments or benefits, not under the Plan, to a
Participant.
10. AMENDMENT AND MODIFICATION
The Board or the Committee may terminate the Plan at any time and the Board
may amend the Plan at any time and from time to time, with or without
retroactive effect, including without limitation amendments that change the form
or timing of distributions or amendments that accelerate the vesting of all or a
portion of a Participant's Account; provided, that no such amendment shall,
without the consent of the affected Participant, reduce the balance (vested and
unvested) of any Participant's Account below what it was immediately prior to
the amendment or alter the definition of "Change in Control". Without limiting
the foregoing, the Board shall have power to make such adjustments in the
definition of Adjusted Pre-Tax Profit as it deems equitable to carry out the
purposes of the Plan. Any decision of the Board or Committee shall be final and
binding on all parties. If it determines such action to be necessary to
preserve or reinstate the Plan's status as a "top hat" plan under Sections
201(2), 301(a)(3) or 401(a)(1) of the Employee Retirement Income Security Act of
1974 ("ERISA"), or to ensure effective tax deferral under the Plan, the
Committee may at any time exclude any individual from participation in the Plan
or may make such other changes in the deferral or distribution rules hereunder
as are reasonably determined by the Committee to be necessary to accomplish such
result or results.
11. NO CONTRACT OF EMPLOYMENT
By participating in the Plan, each Participant expressly acknowledges and
agrees that (i) nothing in the Plan or in its operation, including deferrals
hereunder, limits the right of the Company to terminate the employment of the
Participant at any time, with or without cause, and that (ii) neither the
Participant nor his or her beneficiaries will claim lost compensation or
associated tax benefits related to discontinuance of participation in the Plan
as damages or as a measure of damages in connection with any termination of
employment.
12. PLAN TO BE UNFUNDED, ETC.
The Plan is intended to be a "pension plan" (within the meaning of Section
3(2) of ERISA) that is unfunded for ERISA and tax purposes and that qualifies
for the exemptions described in ERISA Sections 201(2), 301(a)(3) and 401(a)(1).
The Committee shall be the "plan administrator" of the Plan and shall have
discretion to construe its terms and determine each Participant's eligibility
for awards or distributions hereunder. If any person claims any benefit
hereunder, the Administrator shall make and communicate its decision with
respect to the claim within 90 days from the date the claim was received. Where
special circumstances require additional time for processing the claim, the
ninety-day response period may be extended by the plan administrator to 180
days. If the Administrator does not render a written determination prior to the
expiration of such 90-day (or 180-day) period, the claim will be deemed denied.
If a claim hereunder is denied, the claimant may, within 60 days of such denial,
appeal the denial by written request for review delivered to the Committee,
which request may include a request to review pertinent documents and to submit
issues and comments in writing. The Committee shall render a decision on the
appeal within 60 days (or, if special circumstances require an extension of the
time for processing, 120 days) after receipt of the request for review; but if
no written decision is rendered within such period(s), the appeal will be deemed
denied.
Nothing in this Section or in Section 5 shall be construed as prohibiting
the Company from establishing and maintaining a "rabbi trust" or similar trust
or account in connection with the Plan, so long
<PAGE>
as the maintenance and funding of such a trust or account does not jeopardize
the unfunded status of the Plan under ERISA or effective tax deferral under the
Code.
13. CERTAIN ADJUSTMENTS
In the event of stock split, stock dividend, recapitalization, merger,
consolidation or similar change affecting the capital stock of the Company, the
Committee shall make appropriate adjustments in the units representing the
deemed investments under the Company Stock Investment Alternative and in the
provisions of Section 6 relating to distributions in respect of the Company
Stock Investment Alternative, to reflect such stock split, stock dividend or
other change.
14. GOVERNING LAW
The Plan shall be construed under the laws of the State of Delaware.
<PAGE>
SCHEDULE A
"Adjusted Pretax Profit" for any fiscal year subsequent to 1997 (the "current
year") shall mean the product of (i) Profit Before Tax for such year and (ii)
the ratio of The Weighted Average Outstanding Shares (1997) to The Weighted
Average Outstanding Shares for the current year where:
"Current Fiscal Year" means the fiscal year on which an Award Credit is
based,
"The Weighted Average Outstanding Shares" for the current year means the
current year's monthly average of the sum of the Company's common shares
including, without limitation, Class A common stock and Class B common
stock determined by the definitions and methods specified in APB No. 15 and
as reported in Exhibit 11 of the Company's 10-K for such year.
"The Weighted Average Outstanding Shares (1997)" shall be 13,256,993, as
adjusted from time for all stock splits, stock dividends and similar
transactions.
"Profit Before Tax" means the Company's consolidated net profit before
income taxes, computed taking into account all expenses and charges except
(a) the current fiscal year's expense for the Plan and (b) gains and losses
that result from extraordinary transactions or events, mergers,
consolidations, acquisitions and dispositions or other extraordinary or
unusual transactions or events, if it is determined by the Administrator
that an adjustment in respect of such transaction or event is appropriate
to avoid distortion in the operation of the Plan.
<PAGE>
SCHEDULE B
Change in Control
-----------------
A "Change in Control" shall be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act") (other than (i) the
Company; (ii) any subsidiary of the Company; (iii) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or of
any subsidiary of the Company; or (iv) any company owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of Stock of the Company), is or becomes the
"beneficial owner" (as defined in Section 13(d) of the 1934 Act), together with
all Affiliates and Associates (as such terms are used in Rule 12b-2 of the
General Rules and Regulations under the 1934 Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(b) the shareholders of the Company approve a merger or consolidation of
the Company with any other company, other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 65% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (with the exception given and the
method of determining 'beneficial ownership' used in clause (a) of this
definition) acquires more than 30% of the combined voting power of the Company's
then outstanding securities; or
(c) during any period of two consecutive years (not including any period
prior to the execution of the Plan), individuals who, at the beginning of such
period, constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (a), (b), or (d) of this definition)
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
cease for any reason to constitute at least a majority thereof; or
(d) the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
<PAGE>
SCHEDULE C
Actuarial Assumptions
---------------------
Interest rate: 7.5%
Mortality: 1983 Group Annuity Mortality Table (male rates)
<PAGE>
EXHIBIT 10.107
BROWN & SHARPE MANUFACTURING COMPANY
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(FEBRUARY 13, 1998)
1. Purpose and Nature of Plan. This Plan is intended to provide
--------------------------
supplemental retirement benefits to certain key employees and former employees
of Brown & Sharpe Manufacturing Company (the "Company"). The Plan is not
intended to be a tax-qualified plan. Although the Company reserves the right to
establish a so-called grantor trust or another funding medium or investment
vehicle to provide for the payment of benefits hereunder, nothing in the Plan
will be construed to create a trust or to obligate the Company or any other
person to segregate a fund, purchase an insurance contract, or in any other way
currently to fund the future payment of any benefits hereunder, nor will
anything herein be construed to give any employee or any other person rights to
any specific assets of the Company or of any other person.
2. Meaning of Terms. Except as may otherwise be clearly indicated by the
----------------
context, for purposes of the Plan the following terms shall have the following
meanings:
. "Administrator" has the meaning given it in Section 3.
. "Board" means the Board of Directors of the Company.
. "Change in Control" means a change in control of the Company as defined
in Exhibit A.
. "Code" means the Internal Revenue Code of 1986, as from time to time
amended.
. "Committee" means the Compensation and Nominating Committee of the
Board.
. "Company" means Brown & Sharpe Manufacturing Company and any successor
to all or a major portion of its business or assets.
. "Eligible Employee" means an individual who (i) is employed by the
Company or a subsidiary of the Company, (ii) is a U.S. citizen or
resident, (iii) is individually designated (or is a member of a
classification of persons designated) by the Committee as eligible to
participate in the Plan, and (iv) satisfies the requirements of the
following sentence. No person shall be eligible to participate in the
Plan unless he or she (A) is the Chief Executive Officer of the Company,
or (B) reports directly to the Chief Executive Officer of the Company, or
(C) in the case of a division or group general manager, reports directly
to an individual described in (B), or (D) reports directly to an
individual described in (B) or (C).
. "ESOP" means the Brown & Sharpe Employee Stock Ownership Plan as from
time to time in effect.
. "Investment Alternative" means any of the mutual funds or other market-
based investments, including common stock of the Company, designated from
time to time by the Committee as notional investment options for that
portion of a Participant's Plan account attributable to credits under
Section 5. The Committee may at any time and from time to time change
the Investment Alternatives available under the Plan, including as to
amounts already accrued or deferred hereunder.
. "Investment Date" means the date fixed by the Committee for initiating
the use of Investment Alternatives to adjust the balances of Section 5
Accounts.
<PAGE>
. "Non-Directed Account" has the meaning given it in Section 7.
. "Nondiscretionary Fund" means, from and after the Investment Date, the
investment fund or funds designated by the Committee as the measure of
notional investment return for the Non-Directed Account. It is
anticipated that upon and after the establishment of a "rabbi trust" or
similar fund permissible under Section 1, the Nondiscretionary Fund shall
consist of the investments of that portion of the assets of such trust or
fund accumulated to help meet the Company's obligations hereunder with
respect to the Non-Directed Account.
. "Plan" means the Brown & Sharpe Manufacturing Company Supplemental
Executive Retirement Plan as set forth herein, together with any and all
amendments hereto.
. "Participant" means an Eligible Employee who participates in deferrals
under the Plan or for whom one or more accounts are maintained under the
Plan.
. "Salary" has the same meaning as the term "Salary" under the Savings
Plan, determined without regard to the limitations described in Section
401(a)(17) of the Code and any corresponding limitation language in the
Savings Plan and without regard to any deferrals hereunder.
. "Savings Plan" means the Brown & Sharpe Savings and Retirement Plan for
Management Employees as from time to time in effect.
. "Section 5 Account" has the meaning given it in Section 7.
. "Subject Rate" means, for any period prior to the Investment Date, the
rate credited for that year with respect to amounts invested in the
Guaranteed Interest Fund within the Savings Plan; provided, that if for
any period the Guaranteed Interest Fund (or a comparable fund investing
in guaranteed interest contracts) shall no longer be maintained within
the Savings Plan, the Subject Rate shall be the prime rate as in effect
at Rhode Island Hospital Trust National Bank; and further provided, that
the Committee may at any time prior to the beginning of a year fix a
Subject Rate for such year different than the rate determined in
accordance with the foregoing.
3. Administration. The Plan shall be administered by the Committee, which
--------------
shall serve as "plan administrator" for purposes of ERISA, and by such person or
persons, if any, as the Committee may appoint to assist it in such
administration (the Committee and such persons being hereinafter referred to as
the "Administrator"). The Administrator shall have the discretionary authority
to construe the Plan, determine all questions relating to eligibility for or the
amount of benefits payable under the Plan, prescribe such forms and procedures
as it or they deem necessary or appropriate for the administration of the Plan,
and generally to determine all matters pertaining to the administration of the
Plan. The Committee's determination in any such matter shall be final and
binding on all parties.
If any person claims any benefit hereunder, the Administrator shall make
and communicate its decision with respect to the claim within 90 days from the
date the claim was received. Where special circumstances require additional
time for processing the claim, the ninety-day response period may be extended by
the plan administrator to 180 days. If the Administrator does not render a
written determination prior to the expiration of such 90-day (or 180-day)
period, the claim will be deemed denied. If a claim hereunder is denied, the
claimant may, within 60 days of such denial, appeal the denial by written
request for review delivered to the Committee, which request may include a
request to review pertinent documents and to submit issues and comments in
writing. The Committee shall render a decision on the appeal within 60 days
(or, if special circumstances require an extension of the time for processing,
120 days) after receipt of the request for review; but if no written decision is
rendered within such period(s), the appeal will be deemed denied.
<PAGE>
4. Participation. Each Eligible Employee shall be notified of his or her
-------------
eligibility to participate in the Plan as soon as practicable after designation
by the Committee. In order to elect deferrals under the Plan, a Participant
must enter into an agreement with the Company, in such form as the Administrator
shall approve or prescribe, providing for deferral of future Salary in
accordance with the rules set forth in Section 5 below. Any Participant with
amounts deferred under the Plan (or his or her surviving beneficiary, in the
event of the Participant's death), shall remain a Participant until all amounts
credited to his or her account have been paid out, or until the termination of
the Plan if earlier.
5. Deferral Elections. For any year commencing on or after January 1,
------------------
1988 a Participant may elect to defer any number of whole percentage points
between 1 and 50 (or such other percentage limit, if any, as the Administrator
may specify for such year) of his or her Salary payable in such year (including
bonuses that may be attributable in part to services in prior periods). The
Administrator may provide for separate elections as to base salary and bonuses
and may permit deferrals up to a dollar limit rather than or in conjunction with
a percentage limit. The Participant may also elect that, in the event the
aggregate of elective contributions to the Savings Plan for his or her benefit
for such year are prospectively reduced by the plan administrator under the
Savings Plan on account of the nondiscrimination requirements of section 401(k)
of the Code or the limitations of sections 402(g) or 415 of the Code (including
the corresponding provisions of the Savings Plan), an amount equal to such
reduction shall be automatically deferred hereunder rather than paid currently
to the Participant. Each election hereunder shall be made in writing prior to
the commencement of the year of reference and shall be effective beginning with
the first pay period in such year, except that a person who becomes an Eligible
Employee prior to December 1 of a given year may elect to participate hereunder
for the remainder of such year by submitting a properly executed election within
thirty (30) days of becoming eligible to participate, such election to take
effect with the first pay period following the receipt of such election by the
Company. An election once made hereunder shall continue in force from year to
year unless revoked or altered as to Salary to be earned in a subsequent year.
6. Additional Credits. For each year in which an Eligible Employee is a
------------------
participant in either the Savings Plan or the ESOP, or both, there shall be
credited to the Eligible Employee's account hereunder an amount equal to the
excess, if any, of (a) over (b), where
(a) is the aggregate for such year of all Company contributions, other
than elective contributions under the Savings Plan but including
allocations from the ESOP supplemental suspense account (such ESOP
allocations to be valued for purposes of this paragraph in the same manner
as for purposes of determining "annual additions" under paragraph (b)
below), that would have been allocated to the Eligible Employee's accounts
under the Savings Plan or the ESOP but for the limitations of section 415
or section 401(a)(17) of the Code and the corresponding limitation language
of those plans provided that credits hereunder in lieu of matching
contributions under the Savings Plan shall be made only if the eligible
Employee was participating to the fullest extent possible (taking into
account applicable limitations) in elective contributions under the Savings
Plan; and
(b) is the aggregate of the "annual additions" (as defined in section
415(c) of the Code) actually made to or allocated under the Savings Plan
and the ESOP for such year for the benefit of the Eligible Employee, other
than elective contributions for his or her benefit for such year under the
Savings Plan.
7. Accounts. For each Participant there shall be maintained hereunder
--------
memorandum accounts to which shall be credited amounts deferred under Section 5
and any other credits made under the Plan (including credits, if any, under
Section 6). Amounts deferred under Section 5 shall be allocated to accounts as
of the end of the calendar quarter in which the corresponding Salary, if paid in
cash, would have been paid. Amounts credited under Section 6 or Section 9 shall
be allocated as of the end of the year or at such other time or times as the
Administrator may determine. From and after the Investment Date there shall be
separate accounting for amounts described in Section 5 and related notional
investment experience (the "Section 5 Account") and other balances under the
Plan (the "Non-Directed Account").
<PAGE>
Effective as of the Investment Date, each Participant's Section 5 Account,
if any, adjusted for interest at the Subject Rate through the immediately
preceding day, shall be treated (solely for purposes of the Plan) as having been
invested in such Investment Alternative or Investment Alternatives as the
Participant shall have selected from among those made available under the Plan,
or in the absence of such a Participant selection in such Investment Alternative
or Alternatives as the Administrator may determine. Each Participant with a
Section 5 Account shall be entitled thereafter, by written notice to the
Company, to reallocate the notional investment of such Account (as the same may
be adjusted for additional credits, distributions, or notional investment
experience under this paragraph) among the Investment Alternative or
Alternatives made available under the Plan, any such change to take effect as of
the beginning of the calendar quarter (i.e., January 1, April 1, July 1 or
October 1) next following receipt by the Company of such change notice, except
in the event of the Participant's retirement or termination in which case the
Participant can make such change with one day's notice. All Participant
selections of or changes in notional investments under this paragraph shall be
made by written notice delivered to the Company. The Administrator may
prescribe such additional rules and procedures for the notional investment of
Section 5 Accounts as it deems advisable.
As of the end of each calendar quarter (i.e., March 31, June 30, September
30 and December 31) and as of the Investment Date there shall be allocated to
each Non-Directed Account notional interest at an annual rate equal to the
Subject Rate. Thereafter, each Non-Directed Account shall be adjusted for
notional investment experience as though invested (as of the Investment Date) in
the Nondiscretionary Fund.
A Participant's account or accounts shall continue to be maintained and
adjusted for notional interest or other notional investment experience until
distributed in full.
8. Distribution. Subject to such restrictions and limitations as the
------------
Administrator may impose, benefits under the Plan shall be distributed as
follows. In connection with his or her initial participation in the Plan (or by
March 31, 1998, if later), each Participant shall elect, in such manner and form
as the Administrator may determine and separately as to the Participant's
Section 5 Account and vested Non-Directed Account under the Plan, how such
Accounts (as the same may accumulate and be adjusted in the future) shall be
paid from among the following options:
(a) A lump sum cash payment within 20 days of termination of
employment.
(b) Three annual cash installments, the first such installment (equal
to one-third of the Participant's vested Account) being paid within 20 days
of termination of employment, the second installment (equal to one-half of
the vested Account remaining after the first installment, as adjusted for
notional investment experience) being paid on the first anniversary of the
termination of employment, and the third and final installment (equal to
the entirety of the vested Account remaining after the first and second
installments, as adjusted for notional investment experience) being paid on
the second anniversary of the termination of employment.
(c) A single life annuity, payable monthly in cash for the
Participant's life commencing with the first day of the month coinciding
with or next following the Participant's termination of employment and
ending with the month of the Participant's death, that is the actuarial
equivalent of the Participant's vested Account hereunder at termination of
employment determined by the Administrator using the actuarial assumptions
set forth in Exhibit B.
(d) A 50% joint and survivor annuity (that is actuarially equivalent
to the Participant's vested Account hereunder at termination of employment
determined by the Administrator using the actuarial assumptions set forth
in Exhibit B) providing monthly cash payments to the Participant commencing
with the first day of the month coinciding with or next following the
Participant's termination of employment, with 50% of such monthly cash
amount being paid thereafter to the person to whom the Participant was
married at the date annuity payments to the Participant commenced or to
such other person as the Participant may designate with the consent of the
Administrator (the "contingent annuitant"), provided the contingent
annuitant
<PAGE>
survives the Eligible Employee, with the last such payment being
made for the month in which the contingent annuitant dies.
A Participant who has made an initial election as described above may
change such election by delivering a notice of such change, in such form and
manner as the Administrator may determine, to the Administrator not later than
December 31 of the second calendar year preceding the calendar year in which
termination of employment occurs. Any change in form of payment with respect to
a Participant's Section 5 Account or vested Non-Directed Account, as the case
may be, upon becoming effective shall apply to the entirety of such Account,
including future accumulations, if any, unless later changed again in accordance
with this Section. If a Participant's employment terminates prior to January 1
of the second year following the year in which he or she has made a change in
election described above, his or her vested Accounts, if any, shall be
distributed in accordance with the most recent distribution elections applicable
to such Accounts. In the absence of an effective election with respect to a
Participant's Section 5 Account or vested Non-Directed Account, as the case may
be, the entirety of such vested Account, if any, shall be distributed in
accordance with the election, if any, in effect with respect to the remainder of
the Participant's vested interest in the Plan, and in the absence of any such
election in three annual installments as described at (b) above.
Notwithstanding the foregoing, the distribution alternatives described at (c)
and (d) above shall not be available with respect to any Account if the totality
of the Participant's vested Accounts at termination of employment have a balance
of $50,000 or less. In the event any Participant has made an otherwise
effective election to have his or her Section 5 Account or vested Non-Directed
Account distributed under an alternative described at (c) or (d) above, but the
totality of the Participant's vested Accounts at termination of employment have
a balance of $50,000 or less, distribution shall be made in three annual
installments as described at (b) above. If a Participant effectively elects the
form of distribution described in (b) above and dies or becomes disabled (as
determined by the Administrator) during the installment distribution period, the
Administrator may provide for immediate payment of the remaining balance in the
Participant's Account.
Notwithstanding the foregoing, the Company prior to a Change in Control may
defer distributions hereunder (but not beyond a Change in Control) to the extent
it determines that the distributable amount, if not deferred, would (together
with other compensation paid to the Eligible Employee) result in amounts that
are not deductible to the Company by reason of Section 162(m) of the Code. Any
distributable amount deferred under the preceding sentence shall continue to
earn notional interest at the Subject Rate pursuant to Section 7 above until
actually paid.
Prior to termination of employment, an Eligible Employee who has suffered a
severe and unanticipated financial emergency may petition the Committee for a
hardship withdrawal in an amount not to exceed the vested balances of his or her
Section 5 Account and/or Non-Directed Account. The Committee shall have
complete discretion to determine whether a hardship withdrawal will be permitted
and, if so, the amount of the withdrawal. The balance of an Eligible Employee's
Accounts shall be reduced to reflect any hardship withdrawal under this
paragraph.
9. Additional Accounts. In addition to credits under Section 5 or Section
-------------------
6 above, the Committee in its sole discretion may provide for discretionary
credits hereunder with respect to any employee or former employee of the Company
who is designated by the Committee, whether or not such employee is otherwise
designated an Eligible Employee with rights of participation under the Plan.
Any credits under this Section 9 shall be allocated to the Participant's Non-
Directed Account and, if there are other amounts allocated to such Account,
shall be separately accounted for as a sub-account of such Account. The
Committee may impose such vesting rules as it may determine on an individual's
right to receive a distribution in respect of any amounts described in this
Section. Subject to such vesting rules, the balance of any account maintained
under this Section 9 shall be distributed at such time or times and in such
manner as the Committee shall determine, subject, however, to the provisions of
Section 15 below.
10. Death. In the event a Participant hereunder should die prior to
-----
complete distribution of his or her accounts, the remaining balance of such
accounts shall be distributed as soon as practicable thereafter in a lump-sum
payment to the Participant's designated beneficiary or beneficiaries. A
<PAGE>
Participant may at any time specify or add a beneficiary, or revoke an existing
beneficiary designation, by notice in writing delivered to the Secretary of the
Company. If the Participant dies without a beneficiary designation in effect,
the death benefit payable hereunder shall be paid to the Participant's estate.
11. No Assignment. No Participant and no beneficiary of a Participant
-------------
shall have any right to assign or otherwise alienate the right to receive
payments hereunder, in whole or in part.
12. Taxes. All distributions from the Plan shall be subject to, and
-----
reduced by, applicable tax withholding. To the extent amounts deferred under
the Plan are determined by the Company to be subject to FICA or Medicare tax at
time of deferral or at any later time prior to distribution, the Company in its
discretion may withhold the required taxes from other amounts payable to the
Eligible Employee or may require the Eligible Employee to pay the required taxes
by separate check; but if the required taxes are not so paid or withheld, the
Eligible Employee's account balance hereunder shall be appropriately reduced.
13. Amendment; Termination. The Committee or the Board may terminate and
----------------------
the Board may at any time and from time to time amend the Plan; provided, that
no such amendment to the definition of "Change in Control" shall be effective as
to any Participant without his or her consent; further provided, that no
amendment or termination following a Change in Control shall affect the rights
of Participants to an immediate payment of amounts deferred or credited under
the Plan prior to the Change in Control; and further provided, that accounts
maintained under the Plan shall continue to be adjusted for notional interest or
other notional earnings until distributed in full. If the Committee in its sole
discretion should at any time deem it necessary to preserve the qualification of
the plan under Title I of the Employee Retirement Income Security Act of 1974,
as amended, as a plan maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees,
it may terminate the Plan solely as to those Participants whose continued
participation in the Plan would or, in the determination of the Committee, might
cause the Plan to fail to be so qualified. Upon termination of the Plan as to
any individual, no further deferrals or credit under Section 5 or 6 shall be
made in respect of such individual, and the Committee in its sole discretion may
elect to accelerate the payment of any or all of such individual's remaining
benefits under the Plan.
14. No Employment Rights. Nothing in this Plan shall be construed as
--------------------
giving any person rights to be employed or remain employed by the Company or to
receive any remuneration from the Company, except payment of deferrals and
credits as described above. Nothing in this Plan shall be construed as
obligating the Company in any way to maintain either the Savings Plan or the
ESOP. By participating in the Plan, each Eligible Employee affirms and
acknowledges the Company's absolute right, subject only to the limitations of
law, to make such changes in the Saving Plan and the ESOP as the Company may
from time to time see fit, or to terminate one or both of those plans if it so
chooses.
15. Acceleration Upon Change in Control. In the event of a Change in
-----------------------------------
Control, all amounts theretofore deferred or credited under the Plan shall
become immediately due and payable and shall be distributed in a lump sum not
later than by the 60th day following the Change in Control.
16. Governing law. The Plan shall be construed under the laws of the
-------------
State of Delaware.
<PAGE>
EXHIBIT A
Change in Control
-----------------
A "Change in Control" shall be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act") (other than (i) the
Company; (ii) any subsidiary of the Company; (iii) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or of
any subsidiary of the Company; or (iv) any company owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of Stock of the Company), is or becomes the
"beneficial owner" (as defined in Section 13(d) of the 1934 Act), together with
all Affiliates and Associates (as such terms are used in Rule 12b-2 of the
General Rules and Regulations under the 1934 Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(b) the shareholders of the Company approve a merger or consolidation of
the Company with any other company, other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 65% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (with the exception given and the
method of determining 'beneficial ownership' used in clause (a) of this
definition) acquires more than 30% of the combined voting power of the Company's
then outstanding securities; or
(c) during any period of two consecutive years (not including any period
prior to the execution of the Plan), individuals who, at the beginning of such
period, constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (a), (b), or (d) of this definition)
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
cease for any reason to constitute at least a majority thereof; or
(d) the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
<PAGE>
EXHIBIT B
Actuarial Assumptions
---------------------
Interest rate: 7.5%
Mortality: 1983 Group Annuity Mortality Table (male rates)
<PAGE>
EXHIBIT 10.108
BROWN & SHARPE MANUFACTURING COMPANY
SENIOR EXECUTIVE SUPPLEMENTAL UMBRELLA PENSION PLAN
(FEBRUARY 13, 1998)
1. Purpose and Nature of Plan. The Senior Executive Supplemental Umbrella
--------------------------
Pension Plan set forth herein (as the same may be amended, the "Plan") is
intended to assure certain senior executives of Brown & Sharpe Manufacturing
Company (the "Company") and its subsidiaries, subject to the terms of the Plan,
a specified level of retirement benefits upon retirement from the employ of the
Company and its subsidiaries. The Plan is intended to be unfunded for purposes
of both the Internal Revenue Code of 1986, as amended (the "Code") and the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") and as a
plan maintained for the benefit of a select group of management or highly
compensated employees for purposes of Sections 201(2), 301(a)(2) and 401(a)(2)
of ERISA, and shall be construed accordingly. Although the Company reserves the
right to establish a so-called grantor trust or another funding medium or
investment vehicle to provide for the payment of benefits hereunder, nothing in
the Plan will be construed to create a trust or to obligate the Company or any
other person to segregate a fund, purchase an insurance contract, or in any
other way currently to fund the future payment of any benefits hereunder, nor
will anything herein be construed to give any employee or any other person
rights to any specific assets of the Company or of any other person.
2. Meaning of Terms. Except as may otherwise be clearly indicated by the
----------------
context, for purposes of the Plan the following terms shall have the following
meanings:
. "Actuarial Equivalent" means a benefit that is the actuarial equivalent
of a benefit payable in another form or commencing at another time or
both, as determined by the Committee based on the actuarial assumptions
set forth in Exhibit B.
. "Administrator" has the meaning given it in Section 8.
. "Applicable Annuity Factor" for any age means the factor set forth in
Exhibit C for such age, representing the Actuarial Equivalent present
value of a single life annuity of one dollar ($1.00) per year payable
monthly commencing at such age.
. "Applicable Percentage" means such percentage as the Committee may
specify in the case of any Eligible Employee.
. "Average Annual Plan Compensation" means, in the case of any Eligible
Employee, the amount determined by (a) determining for each Compensation
Component the three calendar years (or such lesser period during which
the Eligible Employee was employed by the Company and its subsidiaries)
out of the ten consecutive calendar-year period ended on December 31 next
preceding (i) the date of the Eligible Employee's retirement or other
termination of employment, in the case of a determination under Sections
3 or 4, (ii) the date of the Participant's death, in the case of a
determination under Section 6, or (iii) the date of a Change in Control,
in the case of a determination under Section 10, during which the amount
of such Compensation Component paid or accrued with respect to the
Eligible Employee was highest, and determining an annual average for such
Compensation Component using such three high years; and (b) adding
together the results of the annual averages determined under (a). For
the avoidance of doubt, the three years used to average one Compensation
Component need not be the same three years used to average other
Compensation Components.
<PAGE>
. "Board" means the Board of Directors of the Company.
. "Change in Control" means a change in control of the Company as defined
in Exhibit A.
. "Code" has the meaning given it in Section 1.
. "Committee" means the Compensation and Nominating Committee of the Board.
. "Company" has the meaning given it in Section 1 and includes any
successor to all or a major portion of the business or assets of Brown &
Sharpe Manufacturing Company.
. "Compensation Component" means any of the following as applied to an
Eligible Employee: (i) the Eligible Employee's base salary using annual
rate in a partial year of service, (ii) any annual bonus plus special
bonuses paid or accrued for the benefit of the Eligible Employee, whether
or not under the Company's Profit Incentive Plan, (iii) "Participating
Employer Contributions" (as that term is defined in the SARP under
Section 5.2) for the Eligible Employee's benefit under SARP, (iv)
allocations (other than of income or earnings) to the Eligible Employee's
account under the ESOP, (v) credits under Section 6 of the SERP to the
Eligible Employee's "Non-Directed Account" as that term is defined in the
SERP, and (vi) "Matching Contributions" (as that term is defined in the
SARP under Section 5.1A). For the avoidance of doubt, the following
shall not constitute Compensation Components: accruals or benefits under
the Company's Long Term Deferred Compensation Incentive Plan or any
similar long-term plan, payments or reimbursements of or for relocation
or moving expenses, or income in respect of the grant, vesting or
exercise of stock (including restricted stock) awards or stock options.
. "Eligible Employee" means an individual who (i) is employed by the
Company or a subsidiary of the Company, (ii) is the Chief Executive
Officer of the Company or reports directly to the Chief Executive Officer
of the Company (or in the case of an otherwise eligible division or group
general manager, reports to an individual who has a direct report to the
Chief Executive Officer of the Company), and (iii) is individually
designated (or is a member of a classification of persons designated) by
the Committee as eligible to participate in the Plan.
. "ESOP" means the Brown & Sharpe Employee Stock Ownership Plan as from
time to time amended and in effect.
. "ESOP Benefit" means, with respect to any Eligible Employee, the
following expressed as an annual benefit: a 50% Joint and Survivor
Annuity that is the Actuarial Equivalent of the Eligible Employee's
account balance under the ESOP determined as of the date of the Eligible
Employee's retirement or other termination of employment with the Company
and its subsidiaries (the "applicable ESOP valuation date") by assuming,
instead of the actual value of such account on such date, that the dollar
value of the Eligible Employee's account balance under the ESOP as of
January 1, 1998, as thereafter increased by allocations of employer
contributions and forfeitures, had been increased with interest from time
to time through the applicable ESOP valuation date at a rate equal to the
Test Rate. If the Eligible Employee has received a distribution or
withdrawal from his or her ESOP account prior to the applicable ESOP
valuation date, the value of the Eligible Employee's ESOP account as of
the applicable ESOP valuation date shall be increased by an amount equal
to each such distribution or withdrawal increased by interest at the Test
Rate from the date of such distribution or withdrawal through the
applicable ESOP valuation date.
. "50% Joint and Survivor Annuity" means an annuity payable monthly in cash
to the Eligible Employee commencing with the month next following the
month in which the Eligible Employee retires or otherwise terminates
employment with the Company and its subsidiaries and continuing for the
Eligible Employee's lifetime, with 50% of such monthly cash amount
<PAGE>
being paid thereafter to the person to whom the Eligible Employee was
married at the date annuity payments to the Eligible Employee commenced
or to such other person as the Eligible Employee may designate with the
consent of the Administrator, provided such spouse or other person
survives the Eligible Employee, with the last such payment being made for
the month in which such surviving spouse or other person dies.
. "Plan" has the meaning given it in Section 1.
. "SARP" means the Brown & Sharpe Savings and Retirement Plan for
Management Employees as from time to time amended and in effect.
. "SARP Benefit" means, with respect to any Eligible Employee, the
following expressed as an annual benefit: a 50% Joint and Survivor
Annuity that is the Actuarial Equivalent of that portion of the Eligible
Employee's accounts under the SARP, determined as of the SARP valuation
date that coincides with or next follows the first day of the month
coinciding with or next following the date of the Eligible Employee's
retirement or other termination of employment with the Company and its
subsidiaries (the "applicable SARP valuation date"), that is attributable
to "Participating Employer Contributions" as that term is defined in the
SARP under Section 5.2 (including similar contributions under any
predecessor version of SARP) (the "applicable SARP account") by assuming,
instead of the actual value of the applicable SARP account on such date,
that the dollar value of the Eligible Employee's accounts under SARP as
of January 1, 1998, as thereafter increased by "Participating Employer
Contributions", had been increased with interest from time to time
through the applicable SARP determination date at a rate equal to the
Test Rate but excluding "Matching Contributions" (as that term is defined
in the SARP under Section 5.1A). If the Eligible Employee has received a
distribution or withdrawal from his or her SARP accounts prior to the
applicable SARP valuation date, the value of the Eligible Employee's SARP
accounts as of the applicable SARP valuation date shall be increased by
an amount equal to each such distribution or withdrawal increased by
interest at the Test Rate from the date of such distribution or
withdrawal through the applicable SARP valuation date.
. "SERP" means the Company's Supplemental Executive Retirement Plan as from
time to time amended and in effect.
. "SERP Benefit" means, with respect to any Eligible Employee, the
following expressed as an annual benefit: a 50% Joint and Survivor
Annuity that is the Actuarial Equivalent of that portion of the Eligible
Employee's "Non-Directed Account" (as that term is defined in SERP)
attributable to credits under Section 6 of SERP (and notional earnings
with respect thereto), determined as of the date of the Eligible
Employee's retirement or other termination of employment with the Company
and its subsidiaries but excluding "Matching Contributions" (as that term
is defined in the SARP under Section 5.1A).
. "Service" means, in the case of any Eligible Employee and except as
otherwise determined by the Administrator, the Eligible Employee's most
recent period of uninterrupted service as an employee of the Company and
its subsidiaries.
. "Social Security Benefit" means, except as provided in the following
paragraph, the retirement benefit (expressed as an annual amount) which
an Eligible Employee would be eligible to receive from Social Security
during his lifetime, assuming no offsets or reductions for other earnings
and commencing with the month next following the month of his or her
retirement or other termination of employment from the Company and its
subsidiaries, as determined by the Administrator in its reasonable
discretion. Determination of such benefit will reflect the provision of
the Social Security Act in effect on the January 1 preceding the Eligible
Employee's retirement or termination of employment, as applicable. If an
Eligible Employee retires or his or her employment terminates prior to
age 62 and at a time when he
<PAGE>
or she is not yet eligible to receive Social Security, the Eligible
Employee's Social Security Benefit for purposes of the Plan shall be zero
(0) until the month next following the Eligible Employee's 62nd birth
date and thereafter shall be the Actuarial Equivalent (expressed as an
annual amount) of the retirement benefit that he or she would have been
eligible to receive from Social Security at age 62, based on the
methodology described in the preceding paragraph and assuming that the
Eligible Employee's earnings in the year prior to termination or
retirement continued at the same rate until the year prior to attainment
of age 62.
. "Test Rate" means, except as otherwise determined by the Committee with
respect to future periods, a rate equal to the monthly average of the
Merrill Lynch Government Master Treasury Bond Index (Ten Plus Years).
3. Benefits at Normal or Early Retirement. Each Eligible Employee with at
--------------------------------------
least five (5) years of Service who retires from the employ of the Company and
its subsidiaries upon or after attaining age 65, or upon or after attaining age
60 with at least ten (10) years of Service, will be entitled to a benefit,
payable in the form described in Section 5, that is the Actuarial Equivalent of
the benefit described in this Section. The benefit described in this Section is
a 50% Joint and Survivor Annuity where each of the monthly payments payable
during the Eligible Employee's lifetime equals one-twelfth (1/12) the amount
obtained by subtracting (b) from (a), where
(a) is the Applicable Percentage of the Eligible Employee's Average
Annual Plan Compensation; and
(b) is the sum of the Eligible Employee's (i) SERP Benefit; (ii) SARP
Benefit; (iii) ESOP Benefit; and (iv) Social Security Benefit.
4. Benefits Upon Other Termination of Employment. Each Eligible Employee
---------------------------------------------
with at least five (5) years of Service whose employment with the Company and
its subsidiaries terminates (other than by reason of a retirement described in
Section 3 above) after the Eligible Employee attains age 55 will be entitled to
a benefit, payable in the form described in Section 5, that is the Actuarial
Equivalent of the benefit described in this Section. The benefit described in
this Section is a 50% Joint and Survivor Annuity where each of the monthly
payments payable during the Eligible Employee's lifetime equals one-twelfth
(1/12) the amount obtained by subtracting (b) from (a), multiplying the result
by (c), and multiplying the result of that computation by (d), where
(a) is the Applicable Percentage of the Eligible Employee's Average
Annual Plan Compensation;
(b) is the sum of the Eligible Employee's (i) SERP Benefit; (ii) SARP
Benefit; (iii) ESOP Benefit; and (iv) Social Security Benefit;
(c) is one (1) minus the fraction determined under (i) or (ii), whichever
is applicable:
(i) If the Eligible Employee's age at the beginning of his or her
period of Service taken into account under the Plan (determined to the
nearest whole month) was 55 or older, the applicable fraction for
purposes of this paragraph (c) shall be a fraction, the numerator of
which is the excess of 65 over the Eligible Employee's age at termination
of employment (determined to the nearest whole month), and the
denominator of which is the excess of 65 over the Eligible Employee's age
at the beginning of the period of Service taken into account under the
Plan (determined to the nearest whole month).
(ii) If the Eligible Employee's age at the beginning of his or her
period of Service taken into account under the Plan was less than 55, the
applicable fraction for purposes of this paragraph (c) shall be a
fraction, the numerator of which is the excess of the Eligible
<PAGE>
Employee's "full accrual age" (determined to the nearest whole month)
over the Eligible Employee's age at termination of employment (determined
to the nearest whole month), and the denominator of which is the excess
of 65 over his or her age at the beginning of the period of Service taken
into account under the Plan (determined to the nearest whole month),
where "full accrual age" means the later of age 60 or the age at which
the Eligible Employee would have completed 10 years of Service assuming
continued employment; and
(d) is (1) divided by (2), where (1) is the Applicable Annuity Factor at
age 65, if the Eligible Employee's age at the beginning of his or her
period of Service taken into account under the Plan was 55 or greater, and
in every other case the Applicable Annuity Factor at the Eligible
Employee's "full accrual age" as determined under (c)(ii) above, and (2) is
the Applicable Annuity Factor at the Eligible Employee's age at termination
of employment.
5. Form of Payment. The benefit with respect to an Eligible Employee who
---------------
retires or whose employment terminates under Section 4 or Section 5 above shall
be paid in accordance with this Section 5. In connection with his or her
initial participation in the Plan (or by March 31, 1998, if later), each
Participant shall elect, in such manner and form as the Administrator may
determine, how the Participant's entire benefit under the Plan shall be paid
from among the following options:
(a) A lump sum cash payment within 20 days of termination of employment.
(b) Three annual cash installments, the first such installment (equal to
one-third of the lump-sum amount described in (a)) being paid within 20
days of termination of employment, the second installment (equal to one-
third of the amount described in (a), increased by interest at the Test
Rate) being paid on the first anniversary of the termination of employment,
and the third and final installment (equal to one-third the amount
described in (a), increased by interest at the Test Rate) being paid on the
second anniversary of the termination of employment.
(c) A single life annuity payable monthly in cash for the Eligible
Employee's life commencing with the first day of the month coinciding with
or next following the Eligible Employee's retirement or other termination
of employment and ending with the month of the Eligible Employee's death.
(d) A 50% Joint and Survivor Annuity; provided, that if the Eligible
Employee elects the form of benefit described in this paragraph (d) and
wishes to designate a contingent annuitant other than the Eligible
Employee's spouse, any such designation must be made at the time of the
election and shall be subject to approval by the Administrator.
An Eligible Employee who has made an initial election as described above
may change such election by delivering a notice of such change, in such form and
manner as the Administrator may determine, to the Administrator not later than
December 31 of the second calendar year preceding the calendar year in which
retirement or other termination of employment occurs. Any change in form of
payment, upon becoming effective, shall apply to the Eligible Employee's entire
benefit, if any, hereunder unless later changed again in accordance with this
Section. If an Eligible Employee retires or his or her employment terminates
prior to January 1 of the second year following the year in which he or she has
made a change in election described above, his or her benefit, if any, shall be
distributed in accordance with the most recent distribution election. In the
absence of an effective election, the Eligible Employee's benefit, if any, shall
be distributed in the annuity option described in (c) above if the Eligible
Employee is not married on the date of retirement or other termination of
employment and otherwise in the form of the annuity option described in (d)
above (with the Eligible Employee's spouse as the contingent annuitant).
Notwithstanding the foregoing, the distribution alternatives described at (c)
and (d) above shall not be available with respect to any benefit with an
Actuarial Equivalent value at retirement or other termination of employment of
$50,000 or less. In the event any Eligible Employee has made an otherwise
effective election to have his or her benefit, if any, distributed under an
alternative described at (c) or (d) above, but the Actuarial Equivalent value of
such benefit at retirement or other termination of
<PAGE>
employment is $50,000 or less, distribution shall be made in three annual
installments as described at (b) above.
6. Certain Death Benefits. If a married Eligible Employee dies prior to
----------------------
retirement or other termination of employment but after attaining age 55 with at
least five years of Service and is survived by his or her spouse, such spouse
shall be entitled to an annuity for the remainder of her or his lifetime equal
to the annuity to which she or he would have been entitled had the Eligible
Employee retired or terminated employment and commenced receiving benefits under
Section 5(d) immediately prior to death, having designated his or her spouse as
the contingent annuitant. Notwithstanding the foregoing, if the lump sum
Actuarial Equivalent determined as of the date of death of the survivor benefit
described in the preceding sentence is $50,000 or less, the Administrator shall
cause the entire benefit to be paid in a single lump sum payment to the
surviving spouse as soon as practicable following the date of the Eligible
Employee's death.
7. No other benefits payable. Except as provided under Sections 3, 4, 5
-------------------------
and 6 above, no benefits shall be payable under the Plan upon the retirement,
death or other termination of employment of an Eligible Employee or upon the
death of an Eligible Employee following retirement or other termination of
employment.
8. Administration. The Plan shall be administered by the Committee (which
--------------
shall serve as "plan administrator" for purposes of ERISA) with assistance from
such person or persons, if any, as the Committee appoints to assist it in such
administration. The Committee and those persons to whom the Committee delegates
its authority (such persons together with the Committee, the "Administrator")
shall have the discretionary authority to construe the Plan, determine all
questions relating to eligibility for or the amount of benefits payable under
the Plan, prescribe such forms and procedures as it or they deem necessary or
appropriate for the administration of the Plan, and generally to determine all
matters pertaining to the administration of the Plan. The Committee's
determination in any such matter shall be final and binding on all parties.
If any person claims any benefit hereunder, the Administrator shall make
and communicate its decision with respect to the claim within 90 days from the
date the claim was received. Where special circumstances require additional
time for processing the claim, the ninety-day response period may be extended by
the plan administrator to 180 days. If the Administrator does not render a
written determination prior to the expiration of such 90-day (or 180-day)
period, the claim will be deemed denied. If a claim hereunder is denied, the
claimant may, within 60 days of such denial, appeal the denial by written
request for review delivered to the Committee, which request may include a
request to review pertinent documents and to submit issues and comments in
writing. The Committee shall render a decision on the appeal within 60 days
(or, if special circumstances require an extension of the time for processing,
120 days) after receipt of the request for review; but if no written decision is
rendered within such period(s), the appeal will be deemed denied.
9. Termination for cause; covenant not to compete. Notwithstanding any
----------------------------------------------
other provision of the Plan,
(a) no benefit shall be payable hereunder to or on account of any
Eligible Employee whose employment with the Company or its subsidiaries is
terminated for cause. For purposes of the preceding sentence, termination
for "cause" shall mean termination on account of intentional commission of
theft, embezzlement, or other serious and substantial crimes against the
Company, intentional wrongful engagement of competitive activity with
respect to any business of the Company or its subsidiaries as provided in
(b) below, or intentional wrongful commission of material acts in clear and
direct contravention of instructions from the Board or the Chief Executive
Officer; provided, however, that the termination for cause shall have been
approved or ratified by the Board after notice to the Participant; and
<PAGE>
(b) no benefit shall be payable hereunder to or on account of any
Eligible Employee who at any time during his or her employment with the
Company and its subsidiaries or within the two-year period following
retirement or other termination of employment competes with the Company.
For purposes of this clause (b), an Eligible Employee shall be deemed to be
competing with the Company if, without the prior written consent of the
Committee, he or she directly or indirectly, whether as owner, partner,
principal, investor, consultant, agent, employee, co-venturer or otherwise
competes with any business of the Company or any of its affiliates within
the United States and any other country in which the Company and its
affiliates is engaged in business at the time or, if employment has
terminated, at the date of termination of employment, or undertakes any
planning for any business competitive with the Company or any of its
affiliates in the United States and such other countries. If an Eligible
Employee does not comply with the terms of this paragraph he or she shall
forfeit all amounts not already paid under the Plan and shall be required
to disgorge to the Company any amounts already paid. An Eligible Employee
shall execute all documents that the Administrator may deem appropriate or
necessary, including without limitation such documents as may be
appropriate to evidence the covenant not to compete, before any benefits
are payable with respect to the Eligible Employee hereunder.
(c) To the extent any portion of this Section 9 is determined by a court
of competent jurisdiction to be invalid or unenforceable, this Section 9
shall be reformed so as to avoid such illegality and unenforceability and
the resulting provisions shall be fully enforceable.
10. Change in Control. In the event of a Change in Control of the
-----------------
Company, the provisions of this Section 10 shall apply notwithstanding any other
provision of the Plan to the contrary. Each Eligible Employee who is employed
immediately prior to the Change in Control shall have a fully vested benefit
that is the Actuarial Equivalent (determined as of the date of the Change in
Control) of the benefit to which such Eligible Employee would have been entitled
under Section 3 or Section 4 had he or she retired or terminated employment
(other than by reason of a termination for cause) upon the later of the date of
the Change in Control or the date on which the Eligible Employee would have
attained age 55, determined taking into account the following special rules:
(a) The Eligible Employee's Average Annual Plan Compensation, SARP
Benefit, SERP Benefit, ESOP Benefit, Social Security Benefit, and Early
Commencement Factor shall be determined as of the date of the Change in
Control.
(b) The Eligible Employee's entitlement to a benefit shall be determined
without regard to whether he or she has the minimum five years of Service
referenced in the first sentence of each of Sections 3 and 4.
(c) In the case of an Eligible Employee who is a party to a Change in
Control agreement with the Company under which the Eligible Employee may
become entitled to severance or severance-type payments in connection with
or following a Change in Control, (i) the Eligible Employee's age shall be
increased by the number of years and months constituting the maximum period
that would be used under such agreement to measure any such severance or
severance-type payments, whether or not the Eligible Employee has become
entitled to such severance or severance-type payments at the time of the
Change in Control, and (ii) the Eligible Employee's Service for purposes of
the ten (10) years of Service requirement under Section 3 and/or the ten
(10) years of Service requirement for attaining "full accrual age" under
Section 4(c)(ii) shall be increased by the same period.
The benefit described in this Section shall be paid in a single lump sum
cash payment of Actuarial Equivalent value as soon as practicable following the
Change in Control and in all events not later than thirty (30) days thereafter.
In the event of a Change in Control, the restrictions of Section 9(b) shall
cease to apply.
<PAGE>
11. Binding effect; no assignment. The Company's obligations under the
-----------------------------
Plan shall be binding upon its successors and assigns. Awards and rights to
benefits under the Plan may not be assigned, alienated, sold or otherwise
transferred by the Eligible Employee or any other person.
12. Taxes. The Company will have the right to deduct withholding taxes
-----
from any payments made pursuant to the Plan, or make such other provisions as it
deems necessary or appropriate to satisfy its obligations for withholding
federal, state or local income, employment, excise or other taxes of the United
States or other applicable foreign jurisdiction (including without limitation
satisfying withholding obligations from an Eligible Employee's salary) as a
result of Plan accruals or payments or as a result of other payments or
benefits, not under the Plan, to an Eligible Employee.
13. Amendment and termination. The Committee or the Board may terminate
-------------------------
the Plan at any time and the Board may amend the Plan at any time and from time
to time, with or without retroactive effect, including without limitation
amendments that change the form or timing of distributions or amendments that
accelerate the vesting of all or a portion of an Eligible Employee's Account;
provided, that in the case of an Eligible Employee who has attained age 55 and
has at least five years of Service, no such amendment (other than a change in
the actuarial assumptions set forth in Exhibit B or the Early Commencement
Factors in Exhibit C) shall, without the consent of the affected Eligible
Employee, alter the definition of "Change in Control" or reduce the amount of
the benefit to which the Eligible Employee would have been entitled if he or she
had terminated employment immediately prior to such amendment. Without limiting
the foregoing, if it determines such action to be necessary to preserve or
reinstate the Plan's status as a "top hat" plan under Sections 201(2), 301(a)(3)
or 401(a)(1) of the Employee Retirement Income Security Act of 1974 ("ERISA"),
or to ensure effective tax deferral under the Plan, the Committee may at any
time exclude any individual from participation in the Plan or may make such
other changes in the deferral or distribution rules hereunder as are reasonably
determined by the Committee to be necessary to accomplish such result or
results.
14. No contract of employment. Nothing in the Plan or in its operation
-------------------------
limits the right of the Company to terminate the employment of any Eligible
Employee at any time, with or without cause, and no Eligible Employee nor any
other persons shall have any right to claim lost compensation or associated
benefits related to discontinuance of participation in the Plan as damages or as
a measure of damages in connection with any termination of employment.
15. Governing law. The Plan shall be construed under the laws of the
-------------
State of Delaware.
<PAGE>
EXHIBIT A
Change in Control
-----------------
A "Change in Control" shall be deemed to have occurred if:
(a) any "person" as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act") (other than (i) the
Company; (ii) any subsidiary of the Company; (iii) any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or of
any subsidiary of the Company; or (iv) any company owned, directly or
indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of Stock of the Company), is or becomes the
"beneficial owner" (as defined in Section 13(d) of the 1934 Act), together with
all Affiliates and Associates (as such terms are used in Rule 12b-2 of the
General Rules and Regulations under the 1934 Act) of such person, directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities; or
(b) the shareholders of the Company approve a merger or consolidation of
the Company with any other company, other than (i) a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 65% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (ii) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no "person" (with the exception given and the
method of determining 'beneficial ownership' used in clause (a) of this
definition) acquires more than 30% of the combined voting power of the Company's
then outstanding securities; or
(c) during any period of two consecutive years (not including any period
prior to the execution of the Plan), individuals who, at the beginning of such
period, constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with the Company to
effect a transaction described in clause (a), (b), or (d) of this definition)
whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved
cease for any reason to constitute at least a majority thereof; or
(d) the shareholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets.
<PAGE>
EXHIBIT B
Actuarial Assumptions
---------------------
Interest rate: 7.5%
Mortality: 1983 Group Annuity Mortality Table (male rates)
<PAGE>
EXHIBIT C
Applicable Annuity Factors
--------------------------
<TABLE>
<CAPTION>
AGE ANNUITY FACTOR
<S> <C>
45 12.1203
46 12.0160
47 11.9071
48 11.7937
49 11.6757
50 11.5529
51 11.4252
52 11.2923
53 11.1538
54 11.0093
55 10.8585
56 10.7006
57 10.5353
58 10.3621
59 10.1807
60 9.9913
61 9.7939
62 9.5889
63 9.3770
64 9.1588
65 8.9353
</TABLE>
Factors for ages between the ages specified shall be interpolated on a straight-
line basis to the nearest completed month.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 18,348
<SECURITIES> 0
<RECEIVABLES> 113,670
<ALLOWANCES> 3,150
<INVENTORY> 77,226
<CURRENT-ASSETS> 4,880
<PP&E> 135,047
<DEPRECIATION> 84,743
<TOTAL-ASSETS> 305,914
<CURRENT-LIABILITIES> 98,335
<BONDS> 0
0
0
<COMMON> 13,427
<OTHER-SE> 105,751
<TOTAL-LIABILITY-AND-EQUITY> 305,914
<SALES> 172,509
<TOTAL-REVENUES> 172,509
<CGS> 0
<TOTAL-COSTS> 115,748
<OTHER-EXPENSES> 47,872
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,926
<INCOME-PRETAX> 6,505
<INCOME-TAX> 1,496
<INCOME-CONTINUING> 5,009
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,009
<EPS-PRIMARY> .37
<EPS-DILUTED> .37
</TABLE>
