-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CULV+49ye/0RpSblSAuK8ssCYisHrU1BD+VX8wwRyMZ1RU33AnGsLPtKz5AVOFHG 85iXdwycFMHkn1ljSgSbaw== 0000927016-01-501046.txt : 20010516 0000927016-01-501046.hdr.sgml : 20010516 ACCESSION NUMBER: 0000927016-01-501046 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 18 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BNS CO CENTRAL INDEX KEY: 0000014637 STANDARD INDUSTRIAL CLASSIFICATION: METALWORKING MACHINERY & EQUIPMENT [3540] IRS NUMBER: 050113140 STATE OF INCORPORATION: DE FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-05881 FILM NUMBER: 1635277 BUSINESS ADDRESS: STREET 1: PO BOX 456 STREET 2: 200 FRENCHTOWN ROAD CITY: NORTH KINGSTOWN STATE: RI ZIP: 02852 BUSINESS PHONE: 4018862000 MAIL ADDRESS: STREET 1: 200 FRENCHTOWN RD CITY: NORTH KINGSTOWN STATE: RI ZIP: 02852-1700 10-Q 1 d10q.txt FORM 10-Q 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 March 31, 2001 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 ------ BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 050113140 -------- --------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Precision Park, 200 Frenchtown Road, North Kingstown, Rhode Island 02852 ------------------------------------------------------------------------ (Address of principal executive offices and zip code) (401) 886-2000 -------------- (Registrant's telephone number, including area code) _____________________________________________________________________ (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; 13,329,337 shares of Class A common stock, 501,140 shares of Class B common stock, par value $1 per share, outstanding as of March 31, 2001. Page 1 PART I. FINANCIAL INFORMATION --------------------- Item 1. FINANCIAL STATEMENTS* - ------ -------------------- BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------- (Dollars in Thousands Except Per Share Data) (Unaudited)
For the Quarter Ended March 31 2001 2000 -------- -------- (Restated) Note 2 Sales $ 70,109 $ 73,124 Cost of goods sold 50,975 48,968 Research and development expense 2,705 2,844 Selling, general and administrative expense 21,252 18,392 Restructuring (benefit) (Note 3) - (472) -------- -------- Operating (loss) profit (4,823) 3,392 Interest expense 2,438 2,151 Other income, net 41 369 -------- -------- (Loss) income from continuing operations before income taxes, discontinued operations and cumulative effect of change in accounting principle (7,220) 1,610 Income tax provision (benefit) 700 (39) -------- -------- (Loss) income from continuing operations before discontinued operations and cumulative effect of change in accounting principle (7,920) 1,649 Discontinued operations: Loss from operations (829) (1,042) -------- -------- Loss before cumulative effect of change in accounting principle (8,749) (607) Cumulative effect of change in accounting principle, net of income taxes (Note 2) - (27,401) -------- -------- Net loss $ (8,749) $(26,794) ======== ======== Net (loss) income per common share, basic from continuing operations, before discontinued operations and cumulative effect of change in accounting principle (Note 6) $ (2.87) $ .61 Discontinued operations (.30) (.38) Cumulative effect of change in accounting principle - (10.13) -------- -------- Net loss per common share, basic $ (3.17) $ (9.90) ======== ======== Net (loss) income per common share, diluted, from continuing operations before discontinued operations and cumulative effect of change in accounting principle (Note 6) $ (2.83) $ .61 Discontinued operations (.30) (.38) Cumulative effect of change in accounting principle - (10.13) -------- -------- Net loss per common share, diluted $ (3.17) $ (9.90) ======== ========
* The accompanying notes are an integral part of the financial statements. 2 BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ CONSOLIDATED BALANCE SHEETS --------------------------- (Dollars in Thousands)
March 31 December 31 2001 2000 ---- ---- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 16,855 $ 27,213 Accounts receivable, net of allowances for doubtful accounts of $4,415 and $4,461 37,607 35,094 Inventories 88,586 94,394 Assets held for sale or disposition 5,754 5,943 Prepaid expenses and other current assets 9,191 9,235 --------- --------- Total current assets 157,993 171,879 Property, plant and equipment: Land 3,530 3,772 Buildings and improvements 23,983 25,670 Machinery and equipment 76,351 80,792 --------- --------- 103,864 110,234 Less-accumulated depreciation 68,378 72,103 --------- --------- 35,486 38,131 Goodwill, net 8,330 8,488 Other assets 30,126 32,147 --------- --------- $ 231,935 $ 250,645 ========= ========= LIABILITIES AND SHAREOWNERS' (DEFICIENCY) EQUITY Current liabilities: Notes payable to banks (Note 10) $ 39,045 $ 38,956 Accounts payable 43,023 45,431 Accrued expenses and income taxes 62,734 63,009 Current portion of long-term debt (Note 10) 54,118 54,404 --------- --------- Total current liabilities 198,920 201,800 Long-term debt 9,989 10,772 Long-term liabilities 26,177 26,930 Commitments and Contingencies -- -- Shareowners' (Deficiency) Equity: Preferred stock, $1 par value; authorized 1,000,000 shares; none issued -- -- Common stock: Class A, par value $1; authorized 30,000,000 shares; issued shares 13,329,337 in 2001 and 13,328,774 in 2000 13,329 13,329 Class B, par value $1; authorized 2,000,000 shares; issued 501,140 in 2001 and 501,703 shares in 2000 501 502 Additional paid-in capital 113,473 113,473 Retained deficit (110,292) (101,543) Accumulated other comprehensive loss (19,708) (14,163) Treasury stock; 42,592 shares in 2001 and 2000, at cost (455) (455) --------- --------- Total shareowners' equity (deficiency) (3,151) 11,143 --------- --------- $ 231,935 $ 250,645 ========= =========
The accompanying notes are an integral part of the financial statements. 3 BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ (Dollars in Thousands) (Unaudited)
For the Three-Months Ended -------------------------- March 31 -------- 2001 2000 ------ ------ (Restated) Note 2 Cash Provided by (Used in) Operations: Net loss $ (8,749) $ (26,794) Adjustment for Noncash Items: Cumulative effect of change in accounting principle - 27,401 Benefit for restructuring - (472) Depreciation and amortization 3,107 2,842 Pension charges 444 579 Deferred income taxes 250 - Termination indemnities 256 115 Other non-cash items 678 428 Changes in Working Capital: Decrease (Increase) in accounts receivable (6,183) 3,638 Decrease in inventories 1,416 111 (Increase) in prepaid expenses and other current assets (7) (1,105) (Decrease) Increase in accounts payable and accrued expenses 189 (745) --------- ---------- Net cash (Used in) Provided by Operations (8,599) 6,038 --------- ---------- Investment Transactions: Capital expenditures (2,284) (1,945) Other investing activities 320 (943) --------- ---------- Cash Used in Investment Transactions (1,964) (2,888) --------- ---------- Financing Transactions: (Decrease) in short-term debt (33) (257) Increase in short-term debt 918 - Principal payments of long-term debt (335) (393) --------- ---------- Cash Provided by (Used in) Financing Transactions 550 (650) --------- ---------- Effect of Exchange Rate Changes on Cash (345) (2,458) --------- ---------- Cash and Cash Equivalents: (Decrease) Increase during the period (10,358) 42 Beginning balance 27,213 36,643 --------- ---------- Ending balance $ 16,855 $ 36,685 ========= ========== Supplementary Cash Flow Information: Interest paid $ 846 $ 732 ========= ========== Taxes paid $ 230 $ 233 ========= ==========
The accompanying notes are an integral part of the financial statements. 4 BNS Co. (FORMERLY 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 March 31, 2001 are not necessarily indicative of the results that may be expected for the year ended December 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2000. 2. During the fourth quarter of 2000, the Company changed its method of accounting for revenue recognition in accordance with Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements. Pursuant to Financial Accounting Standards Board Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, effective January 1, 2000, the Company recorded the cumulative effect of the accounting change and the effect of the new accounting method in the results of operations for the three months ended March 31, 2000. Accordingly, the information for the first quarter of 2000 has been restated. Also, in the second quarter of 2000, the Board of Directors approved a plan to discontinue the Electronics Division (ED). The results of operations of ED have been classified as a discontinued operation. As a result, the results of operations for the quarter ending March 31, 2000, have been restated to present ED as a discontinued operation. The following is a summary of the effect of Staff Accounting Bulletin No. 101 and the discontinued operations on the results of operations for the three months ended March 31, 2000:
Previously ---------- Reported Restated -------- -------- March 31 March 31 -------- -------- 2000 2000 ---- ---- Sales $ 72,473 $ 73,124 Gross profit 23,152 24,156 Income (loss) from continuing operations before cumulative effect of accounting change (72) 1,610 (Loss) from discontinued operations - (1,042) Cumulative effect of accounting change, net of tax - (27,401) --------- -------- Net (loss) $ (72) $ (26,794) ========= ======== Per common share: Income (loss) from continuing operations before cumulative effect of accounting change Basic $ (.03) $ .61 Diluted (.03) .61 (Loss) from discontinued operations Basic and diluted - (.38) Cumulative effect of change in accounting principle - (10.13) Net (loss): Basic (.03) (9.90) Diluted (.03) (9.90)
5 3. During the first quarter of 2000, the Company recorded a $.5 million restructuring benefit that resulted from a sublease of rental property that was vacated as part of the restructuring that occurred in 1999. In addition, in the first quarter of 2000, the Company terminated 76 employees as a result of the restructuring of one of the PMI divisions. The following is an analysis of the activity of the restructuring reserves from December 31, 2000 to March 31, 2001: 1997 Restructuring
Employee -------- Termination ----------- Benefits Inventory Total -------- --------- --------- Balance at December 31, 2000 $ 967 $ 2,803 $ 3,770 Utilized (53) (191) (244) ------- -------- -------- Balance at March 31, 2001 $ 914 (1) $ 2,612 $ 3,526 ======= ======= =======
1999 Restructuring
Employee -------- Termination ----------- Benefits Inventory Other Total -------- --------- ----- -------- Balance at December 31, 2000 $ 1,814 $ 2,194 $ 1,511 $ 5,519 Utilized (231) (49) (442) (752) -------- --------- -------- -------- Balance at March 31, 2001 $ 1,583 (2) $ 2,145 $ 1,069 (2) $ 4,796 ======== ========= ======== ========
(1) Future cash payments relating to employee termination benefits amount to $339 in 2001, $227 in 2002 and $348 thereafter. (2) Future cash payments relating to employee termination benefits, leases, and other restructuring costs amount to $2,489 in 2001, $112 in 2002 and $51 thereafter. 4. The composition of inventory is as follows:
March 31 December 31 -------- ----------- 2001 2000 ---- ---- Parts, raw materials, and supplies $30,434 $31,563 Work in process 14,093 14,731 Finished goods 44,059 48,100 -------- -------- $88,586 $94,394 ======== ========
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 three months of 2001 is $700 compared to a tax benefit of $39 in the same period of the previous year. 6 6. The following table sets forth the computation of basic and diluted (loss) earnings per share:
For the Quarter Ended --------------------- March 31 -------- 2001 2000 ---------- --------- Numerator: (Loss) Income from Continuing Operations before Discontinued Operations and Cumulative Effect of Change in Accounting Principle $ (7,920) $ 1,649 Loss from Discontinued Operations (829) (1,042) ---------- --------- (Loss) Income Before Cumulative Effect of Change in Accounting Principle (8,749) 607 Cumulative Effect of Change in Accounting Principle - (27,401) ---------- --------- Net Loss $ (8,749) $(26,794) ========== ========= Denominator for Basic Earnings Per Share: Weighted-Average Shares 2,758 2,705 Effect of Dilutive Securities: Employee Stock Options - - ---------- --------- Denominator for Diluted Earnings Per Share: 2,758 2,705 ========== ========= Weighted-Average Shares and Assumed Conversions Basic (Loss) Earnings Per Share from Continuing Operations Before Cumulative Effect of Change in Accounting Principle $ (2.87) $ .61 Discontinued Operations (.30) (.38) Cumulative Effect of Change in Accounting Principle - (10.13) ---------- --------- Basic Loss Per Share $ (3.17) $ (9.90) ========== ========= Diluted (Loss) Earnings Per Share from Continuing Operations Before Cumulative Effect of Change in Accounting Principle $ (2.87) $ .61 Discontinued Operations (.30) (.38) Cumulative Effect of Change in Accounting Principle - (10.13) ---------- --------- Diluted Loss Per Share $ (3.17) $ (9.90) ========== =========
Diluted loss per share is the same as basic loss per share in 2001 and 2000 because the computation of diluted earnings per share would have an antidilutive effect on loss per share. At the Special Meeting of Stockholders on April 27, 2001, the stockholders approved a one-for-five reverse stock split. Accordingly, the above calculation reflects the effect of the reverse stock split. 7. Components of comprehensive income (loss) are as follows:
For the Quarter Ended --------------------- March 31 -------- 2001 2000 --------- --------- Net Loss $ (8,749) $(26,794) Other comprehensive loss, net of tax: Foreign currency translation adjustments (5,545) (5,202) ---------- ---------- Comprehensive Loss $(14,294) $(31,996) ========= =========
Accumulated other comprehensive (loss) income, net of related tax, at March 31, 2001 and December 31, 2000 is composed of foreign currency translation adjustments amounting to a loss of $19.7 million and $14.2 million, respectively. 7 8. Contingencies The Company is a defendant in a variety of legal claims that arise in the normal course of business. Based upon the information presently available to Management, the Company believes that any liability for these claims would not have a material effect on the Company's results of operations or financial condition. 9. Financial Information by Business Segment Segment Information. The Company operates exclusively in the Metrology Business and conducts its business through the Measuring Systems Group ("MS"), Precision Measuring Instruments Division ("PMI"), and Xygent, Inc. (formerly Brown & Sharpe Information Systems).
Three Months Ended March 31, 2001 ---------------------------------------------------------------------- MS PMI XYGENT TOTALS Revenues from external customers $ 50,045 $ 20,064 $ - $ 70,109 Intersegment revenues - 23 - 23 Segment profit (loss) (5,361) 1,650 (1,510) (5,172)
Three Months Ended March 31, 2000 ---------------------------------------------------------------------- MS PMI XYGENT TOTALS Revenues from external customers $ 53,648 $ 19,476 $ - $ 73,124 Intersegment revenues 9 9 1,500 1,518 Restructuring benefit 472 - - 472 Segment profit (loss) 1,304 1,441 (2,363) 382
A reconciliation of combined operating profit for the MS, PMI, CM, Xygent and ED segments to consolidated profit or loss before income taxes is as follows:
2001 2000 ---- ---- Total revenue for reportable segment $ 70,131 $ 74,642 Elimination of intersegment revenues (22) (1,518) ------------- ---------- Total Consolidated Revenues $ 70,109 $ 73,124 ============ ========== Total (loss) profit for reportable segments $ (5,172) $ 382 Unallocated amounts: Interest income 229 257 Other (loss) income (2,277) 971 ----------- --------- (Loss) Profit Before Income Taxes and Cumulative Effect of Accounting Change and Discontinued Operations $ (7,220) $ 1,610 ========== ========
8 10. At a Special Meeting of Stockholders held on April 27, 2001, the Company's stockholders approved the sale of its worldwide Metrology Business to Hexagon AB of Stockholm, Sweden. The stockholders also approved at this meeting, a change of the Company's name to BNS Co., reduction of the par value per share of the Class A Common Stock and Class B Common Stock from $1.00 to $.01 and one-for-five reverse stock split of the Company's outstanding Class A Common Stock and Class B Common Stock. The record date for the one-for-five reverse stock split was May 10, 2001. Following the conclusion of the Special Meeting of Stockholders, the Company completed the closing of the sale of its worldwide Metrology Business to Hexagon AB, effective April 27, 2001. The purchase price for the sale of the Metrology Business was $170 million less a cash adjustment of approximately $12.4 million, which was based on the terms of the Acquisition Agreement. After the cash adjustment and payment of all U.S. bank debt and long-term senior noteholder obligations, the Company received net proceeds of approximately $70 million. Also in connection with the sale to Hexagon, Hexagon invested $2.5 million in Xygent Inc., the Company's software development subsidiary, in exchange for a 16.7% ownership interest in such subsidiary. The accompanying financial statements have been presented as if the Metrology Business would be a continuing operation, because management believes that it is the most meaningful presentation as of March 31, 2001. Had the consolidated financial statements for the three month period ended March 31, 2001 and 2000, presented the sale of the Metrology Business as a discontinued operation, the consolidated financial statements for the three month period ended March 31, 2001 and 2000, would have been as follows:
2001 2000 ---- ---- Cash $ 6,088 $ 8,882 Assets held for sale or disposition 214,263 230,833 2,964 2,498 -------- -------- Other current assets 223,315 241,913 Property, plant and equipment, net 4,453 4,535 Capitalized software and other costs 4,167 4,197 -------- -------- $231,935 $250,645 ======== ======== Other current liabilities $ 89,999 $ 88,954 Liabilities assumed by Hexagon 135,999 140,981 Mortgage payable 3,085 3,318 Long-term liabilities 6,003 6,249 --------- --------- 235,086 239,502 Equity (3,151) (11,143) --------- --------- $231,935 $250,645 ========= ========= 2001 2000 ---- ---- Rental income $ 303 $ 251 Income from extraction activities 144 174 --------- --------- 447 425 Research and development expense 1,139 1,293 Selling, general and administrative expenses 2,591 2,701 Interest expense 2,055 1,660 -------- --------- Loss from continuing operations before discontinued operations (5,338) (5,229) Loss from discontinued operations (3,411) (21,565) -------- --------- Net loss $ (8,749) $(26,794) ======== =========
11. Certain other amounts reported in 2000 have been reclassified to conform with the 2001 presentation. 9 BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS - ------ ----------------------------------------------------------------------- OF OPERATIONS ------------- Overview At a special meeting held on April 27, 2001, the stockholders of BNS Co. (formerly Brown & Sharpe Manufacturing Company) approved the sale of its worldwide Metrology Business to Hexagon AB of Stockholm, Sweden, ("Hexagon"). At the same meeting, the stockholders also approved the change of the Company's name to BNS Co., a reduction of the par value per share of the Class A Common Stock and Class B Common Stock from $1.00 to $.01 and a one-for-five reverse stock split of the Company's outstanding Class A Common Stock and Class B Common Stock. The record date for the one-for-five reverse stock split was May 10, 2001. Following the conclusion of the Special Meeting of Stockholders, the Company completed the closing of the sale of its worldwide Metrology Business to Hexagon AB, effective April 27, 2001. The purchase price for the sale of the Metrology Business was $170 million less a $12.4 million cash adjustment based on the terms of the Acquisition Agreement. After the cash adjustment and payment of all U.S. bank debt and long-term senior noteholder obligations, the Company received net proceeds of approximately $70 million. Also in connection with the sale to Hexagon, Hexagon invested $2.5 million in Xygent Inc., the Company's software development subsidiary, in exchange for a 16.7% ownership interest in such subsidiary. The accompanying financial statements for the three month periods ended March 31, 2001 and 2000, are presented as if the Metrology Business were a continuing operation and do not reflect any adjustment arising from the sale of the Metrology Business on April 27, 2001. During the fourth quarter of 2000, the Company changed its method of accounting for revenue recognition in accordance with Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements. Pursuant to Financial ------------------------------------------- Accounting Statements Board Statement No. 3, Reporting Accounting Changes in ------------------------------- Interim Financial Statements, effective January 1, 2000, the Company recorded - ---------------------------- the cumulative effect of the accounting change amounting to $27.4 million and, accordingly, the consolidated financial statements for the three month period ended March 31, 2000 has been restated to reflect the new accounting method. Forward Looking Statements This "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as other portions of this report contain forward looking statements concerning the Company's operations, economic performance and financial condition. Such statements are subject to various risks and uncertainties, including those set forth in "Risk Factors," and actual performance could differ materially from that currently anticipated by the Company. In addition, this "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the Company's Consolidated Financial Statements and the Notes thereto included elsewhere in this Form 10Q. 10 Results of Operations Sales Sales for the first quarter of 2001 were $70.1 million compared with sales in 2000 of $73.1 million, which is 4.1% below the 2000 level. The 2001 sales would have been $2.2 million higher than reported, if foreign denominated sales had been translated at 2000 foreign exchange rates. The reduced U.S. dollar value of 2001 foreign sales is due to the continued strength of the U.S. dollar. The $.8 million sales decrease in 2001 sales was caused by a $1.8 million decrease in the MS Division, offset by a $1.0 million increase for PMI. The PMI increase occurred due to increased sales activity in its European market. The $1.8 million sales decrease in MS' sales is due to increased sales of smaller coordinate measuring machines (CMM's) offset by reduced sales of larger more fully configured CMM's and after-market revenue. Net Loss The Company incurred a net loss in the first quarter of 2001 amounting to $8.8 million compared to $26.8 million in the first quarter of 2000. As discussed above in the Overview Section, the Company adopted SAB 101 in the fourth quarter of 2000. Since SAB 101 was adopted in the fourth quarter of 2000, effective January 1, 2000, the first quarter of 2000 was restated to reflect the new method, and the cumulative effect of the new accounting method, which amounted to $27.4 million, was included in the results of operations for the quarter ended March 31, 2000. After adjusting the cumulative effect of SAB 101 in 2000, the first quarter of 2000 would have had a net loss of $.6 million. The Company incurred an operating loss of $4.8 million in the first quarter of 2001, which compared to a $3.4 million operating profit in the same period in 2000. The first quarter of 2001 gross margin is $19.1 million, which is 27.3% of sales, compares with a first quarter 2000 margin of $24.2 million, which is 33.0% of sales. After adjusting the 2001 gross margin to reflect 2000 foreign exchange rates, the 2001 gross margin was $19.8 million (28.2% of 2001 sales). The $4.4 million decrease is a result of a $4.9 million decrease in MSD's gross margin, offset by a $.5 million improvement in PMI's gross margin. The reduced gross margin of MSD is due to sales of machines in the United States at lower selling prices. Selling, general and administrative expenses ("SG&A") were 30.3% of sales in the first quarter of 2001 as compared to 25.2% in the same period in 2000. If 2000 foreign exchange rates had been used to translate SG&A expenses for 2001, 2001 SG&A expenses would have been $3.4 million higher than the same period in 2000. The increase in SG&A results from higher compensation and related benefit costs of $1.5 million, increased warranty expense of $.5 and increased expenses for miscellaneous materials and advertising amounting to $1.2 million. Research and development expense decreased from $2.8 million in the first quarter of 2000 to $2.7 million in the first quarter of 2001. The decrease is due primarily to foreign exchange. Interest expense in the first quarter of 2001 was $.2 million higher than the same period in 2000 due to higher interest rates. Results in the first quarter of 2001 included $.7 million tax provision as compared to a tax benefit of $39 thousand in 2000. The higher tax provision in 2001 results from higher taxable income in certain jurisdictions that could not be offset by tax benefits in other jurisdictions. 11 Liquidity and Capital Resources Until the sale of the Company's Metrology Business on April 27, 2001, the Company was obligated under a $50 million private placement of senior notes with principal payments due from November 2001 to November 2007, which are classified as current liabilities, as well as other long-term debt amounting to $11.0 million. The Company also had, until April 27, 2001, a $30 million three-year syndicated multi-currency revolving Credit Agreement with four banks, which had a maturity and termination date of November 10, 2000 and was amended as of February 7, 2001 to extend the maturity date to April 30, 2001, or at an earlier date if the Acquisition Agreement between the Company and Hexagon AB is terminated. As a result of the sale of the Metrology Business to Hexagon on April 27, 2001, the Company paid all of the $50 million private placement notes and all of the $27.4 million outstanding balance of the $30 million Revolving Credit Agreement. In addition, through the acquisition by Hexagon of the Company's investment in its foreign subsidiaries, all of the foreign short-term and long- term debt is held by entities owned by Hexagon. After the sale of the Metrology Business, the Company is debt free, except for a $4.0 million mortgage on the North Kingstown facility, which was retained by the Company. Upon completion of sale of the Metrology Business on April 27, 2001, the Company had cash in excess of $70 million and liabilities, excluding the $4.0 million mortgage, amounting to approximately $25 million. Cash Flow Net cash used in operations in the first quarter of 2001 was $8.6 million compared with net cash provided by operations in the first quarter of 2000 of $6.0 million. For the quarter ended March 31, 2001, the net loss of $8.7 million was decreased by depreciation and amortization amounting to $3.1 million and other non-cash items amounting to $1.6 million. For the quarter ended March 31, 2000, the net loss of $26.8 was decreased by depreciation and amortization amounting to $2.8 million and other non-cash items, including $27.4 million for SAB 101, and other non-cash items amounting to $.7 million. Cash flows from working capital decreased $4.6 million in 2001 and increased $1.9 million in 2000. The $4.6 million decrease in 2001 was due to a $6.2 million increase in accounts receivable offset by a $1.4 million decrease in inventory. Net cash used in investment transactions in the first quarter of 2001 and 2000 was $2.0 million and $2.9 million, respectively. Capital expenditures in the first quarter of 2001 and 2000 amounted to $2.3 million and $1.9 million, respectively. The Company in the first quarter of 2000 also invested in expenditures related to debt refinancing activity. Cash provided by financing transactions was $.6 million during 2001 compared with cash used in financing transactions of $.7 million in the same period in 2000. Financing transactions during the first quarter of 2001 consisted of principal payments of long-term debt amounting to $.3 million and short-term debt increased $.9 million. Financing transactions during the same period in 2000 consisted of payments in short-term borrowings of $.3 million and principal payments of long-term debt of $.4 million. Working Capital Working capital decreased from a negative $29.9 million at December 31, 2000 to a negative working capital of $40.9 million at March 31, 2001. When December 31, 2000 foreign exchange rates are used to translate the March 31, 2001 balance sheet, working capital decreased to a negative $36.3 million. After 12 using the December 31, 2000 foreign exchange rates to translate the March 31, 2001 balance sheet, cash and inventory decreased $9.8 million and $1.7 million, respectively, and accounts receivable increased $6.2 million. Accounts payable and accrued expenses and short-term borrowings increased $.7 million and $1.1 million, respectively. Offsetting these increases was a $.7 million increase in prepaid expenses and other current assets. Product Design and Manufacturing Engineering The Company invested $3.8 million, or 5.4% of sales and $4.1 million, or 5.7% of sales; in the first quarter of 2001 and 2000, respectively, for product design and manufacturing engineering. RISK FACTORS AFTER THE SALE OF SUBSTANTIALLY ALL ASSETS After the completion of the sale to Hexagon on April 27, 2001, the Company has continued in the business of developing measuring software through its controlled subsidiary, Xygent (formerly BSIS) after the Closing under the Acquisition Agreement, and Xygent will be the only active operation of the Company. The Risk Factors set forth below relate to Xygent and hence to the Company from and after April 27, 2001. 13 RISK FACTORS RELATING TO XYGENT 1. BSIS software product is still in development; if we fail to develop our software product or our product fails to obtain market acceptance, we will not generate sufficient revenue to be successful. BSIS was formed in December 1997. BSIS has not yet completed or sold a software product. There can be no assurance that BSIS will be able to complete its development of a software product that is accepted by consumers on a basis which is profitable to BSIS. Market acceptance of the new software products is dependent in part on our ability to demonstrate the cost effectiveness, case of use and technological advantages of our products over competing products. 2. We have not had any sales and may not have any sales in the future. Since BSIS has not yet completed development of a product for sale to customers, BSIS has had no revenues, and hence its operating results to date (losses) do not form any basis for conclusion that BSIS will become profitable. 3. We may not have adequate resources for funding the operations of BSIS. We will have substantially more limited financial and other resources than all, or most, of our software competitors and potential software competitors and we may be unable to compete significantly against them. Hexagon has committed to invest an additional $4.5 million over the next three years. The Company will have limited funds available for investment in BSIS after the payment of the distribution voted by the Board on May 1, 2001 and the contemplated distributions to stockholders following the invested $2.5 million in Xygent and has contemplated closing of the sale of the North Kingstown facility, and there can be no assurance that BSIS, or the Company, will be able to raise additional funds for operations. There can be no assurance that Hexagon, which is expected to own up to as much as 47% of BSIS once it completes its four investments and which may view BSIS as a competitor, would want to, or be able to raise, additional funds for BSIS. 4. Our industry is very competitive and we may not be successful if we fail to compete effectively. In addition to the significant competition for software products, with many offerings in the marketplace, the software products to be developed by BSIS are expected at the outset to compete with software used by the Metrology Business sold to Hexagon, and may be competitive with software developed in the future by the Metrology Business being purchased by Hexagon. In addition, BSIS must, as a practical matter, concentrate initially on selling to businesses, including automotive and airplane manufacturers, who are customers of the Metrology Business sold to Hexagon; and in its marketing efforts BSIS will not be able to use the "Brown & Sharpe" name or the aftermarket sales force of the Metrology Business, unless an agreement is reached with Hexagon (and Hexagon has no obligation to enter into such an agreement), as an entree to prospective customers, thus making competing more difficult. Increased competition may result in lower prices for our products and reduced opportunities for growth and profitability. 5. Royalty and other obligations of BSIS to the Metrology Business sold to Hexagon may prevent BSIS from achieving profitability. For five years after the April 27, 2001 Closing of the sale to Hexagon, BSIS is required to sell is XactMeasure software products to Hexagon, on a non-exclusive basis, for use in CMM applications at a price per unit of $1,500, which is expected to be substantially below the price charged by BSIS to other customers for CMM applications. In addition, BSIS is required for the five-year period to pay a significant royalty to Hexagon of $5,000 per unit of software sold to persons other than Hexagon for CMM market applications. The effect of these provisions is necessarily adverse to the business of BSIS. Royalty and other obligations of BSIS to the Metrology Business sold to Hexagon may limit the profitability of BSIS, depending significantly on the extent to which BSIS is successful in introducing and selling software products which are used in applications other than CMM applications--namely Vision applications and CNC applications. The preferential pricing and royalty provisions in favor of Hexagon are applicable only to software products for use in CMM applications. 16 6. The relationship between BSIS and Wilcox Associates, Inc. ended with the Closing under the Acquisition Agreement with Hexagon. The Metrology Business sold to Hexagon has been significantly dependent on a software license from Wilcox Associates, Inc. and the service of William Wilcox, its president, and we had owned 30% of the stock of Wilcox Associates, Inc. A number of software products used by the Metrology Business sold to Hexagon were based on PCDIMIS, a software product developed by Wilcox Associates, Inc. Our license rights from Wilcox Associates, Inc. and its relationship with William Wilcox were acquired by Hexagon. While BSIS believes that its software products under development are and will be completely independent of PCDIMIS, the ending of this relationship may adversely affect BSIS because PCDIMIS is the leading software for CMMs. BSIS and PCDIMIS will be competitive substitutes for one another. 7. BSIS management has limited experience managing a software company and may fail to manage effectively, limiting BSIS's potential. The Company has historically been a manufacturing Company, after the sale to Hexagon, it is a software company. While BSIS has significant software business experience, there is no assurance the Company and BSIS will be able successfully to manage a "software company" and the possible loss of the services of any member of the management team may be materially adverse to the business of BSIS. BSIS management may not have the skills to introduce and market BSIS's software product, to manage future growth or obtain funds to fund growth and/or operations and their inexperience in these areas may detract from BSIS's business. 8. If BSIS fails to develop software products other than CMM applications, BSIS may fail to achieve profitability. The BSIS business plan contemplates the development of additional software products for markets other than CMM applications, including primarily Vijsion (non-contract) and CNC applications. There can be no assurance such additional software products will be developed, or, if developed, will be of interest to customers in fields beyond those in which the Metrology Business has been engaged in. Failure to develop and successfully market such products may prevent BSIS from achieving profitability. 9. BSIS may not succeed if it is unable to attract and retain key personnel and skilled employees. In order to grow our business, we will have to hire additional employees. Our future success, therefore, will depend, in part, on attracting and retaining additional qualified management, marketing and technical personnel. We do not know whether we will be successful in hiring or retaining qualified personnel. Competition for qualified personnel throughout the software industry is intense. The inability to hire additional qualified employees or the loss of the services of some of the foreign technical employees that are currently doing work for BSIS could have a material adverse effect on the business of BSIS. 10. BSIS may be unable to form the strategic alliances that are key to its strategy. The BSIS business plan calls for BSIS to establish marketing, development and distribution relationships through strategic alliances, and plans to enter into various agreements with other companies to achieve its marketing, development and distribution goals. There can be no assurance that BSIS will be able to establish any such agreements and, accordingly, there can be no assurance that BSIS will be able to achieve its planned objectives for the year 2001 or establish a software business that will grow and be profitable. In addition, BSIS is required for a five-year period after the Closing to pay royalties to Hexagon for any unit of software for CMM market applications sold to persons other than Hexagon and is required to sell its XactMeasure software products to Hexagon for CMM applications at a price per unit substantially below the price charged by BSIS to other customers, with Hexagon making no purchase commitment. 11. BSIS software may be subject to intellectual property infringement claims, which could limit BSIS's sales. If we become subject to intellectual property infringement claims, or if we are unable to protect important intellectual property, we could incur significant expenses and be prevented from offering specific products, and we may lose prospective sales to competitors. The success of BSIS may depend, in part, on its ability to obtain and maintain patent protection for its computer software products, to protect and preserve its proprietary information and trade secrets and to operate and sell its products without infringing the proprietary rights of others. It has been BSIS's policy to seek, where appropriate, to protect its proprietary positions by, among other methods, maintaining its 17 product information as a trade secret and filing United States and corresponding foreign patent applications covering its technology, inventions and improvement that are important to the development of its business. As of March 20, 2001, BSIS has filed three patent applications, two in the United States and one foreign application, covering methods and apparatus (i) for simulating the measurement of a part without using a physical measurement system and (ii) for interacting with measuring devices by allowing users to extend the capabilities of software for controlling measuring devices. These patent applications are pending and there can be no assurance that any pending patents will be issued, or that any pending applications will not be challenged, invalidated or circumvented in the future. Further, there can be no assurance that competitors, many of whom have substantially more resources than BSIS will not seek to apply for and obtain patents that will prevent, limit or interfere with BSIS's ability to make, use or sell its products in the United States or internationally. BSIS, like many software companies, also relies upon trade secrets, technical know-how and skill of its employees and continuing technical creativity and innovation to develop and maintain its products and its anticipated position in the software business market. It requires its employees, consultants and advisors to execute confidentiality and disclosure agreements and assignment of invention agreements in connection with their employment, consulting or advisory relationships with the Company. There can be no assurance, however, that these agreements will not be breached or that BSIS will have or be able to obtain an adequate remedy for any breach. Further, no assurance can be given that competitors will not independently develop substantially equivalent proprietary information and technologies or otherwise gain access to BSIS's proprietary technology, or that BSIS can meaningfully protect its rights in unpatented proprietary technology. The failure or inability of BSIS to adequately protect its intellectual property rights could have a material adverse effect on its business, financial condition, and future prospects and business plans. 12. Risks particular to BSIS's international operations and potential international sales could adversely affect its results. Our financial condition and results of operations may be adversely affected by international business risks, including currency exchange rate fluctuation, inflation, import and export controls, exchange controls and other business factors in foreign countries that may complicate BSIS operations, including the fact that the protection of copyrights and other intellectual property is difficult to achieve under the laws of certain foreign countries. 13. Sales of Company stock in the market before and after the Closing may adversely impact this market. The market price of our Common Stock could decline as a result of sales of shares by the Company's existing stockholders, including option holders who became shareholders, in connection with the Closing under the Acquisition Agreement, including sales by trustees under the Company's Employee Stock Ownership Plan ("ESOP") (which will be terminated as a result of the Closing), and sales by trustees of the Company's other employee benefit plans (or of employees benefit plans of Hexagon which receive shares of stock of the Company previously held in accounts under the Company's other employee benefit plans), or sales by Metrology Business employees or other former employees of the Company having accounts under these other plans, could further adversely affect the market price for the Company's stock. Approximately 969,031 shares of Common Stock were held under the ESOP and approximately 675,378 shares were held under the Company's other employee benefit plans at February 15, 2001. 14. Possible delisting of Company stock by New York Stock Exchange may prevent the Company from sustaining an active trading market. Although we expect the Company's Class A Stock will continue to be listed on the New York Stock Exchange, it is possible that future results of the Company (which will be engaged only in the software business conducted by BSIS) or future discussions with the New York Stock Exchange, may lead to delisting of the Company's Class A Stock owned by the New York Stock Exchange, in which event the Company may not be able to have its shares quoted on another stock exchange. Consequently, an active trading market for the Company's shares may not be sustained. There is no assurance that the one-for-five reverse stock split of the Company's Class A Stock and Class B Stock if approved by the stockholders on April 27, 2001 and effective May 10, 2001, will assist the Company in meeting the qualitative and quantitative requirements of the New York Stock Exchange to maintain its listing. 18 15. Possible change in capital structure after the closing with Hexagon may negatively impact the market price of the Company's Common Stock. Other than the reduction in par value per, and the cash amounts distributed in the contemplated distributions to stockholders, including the previously announced distribution voted by the Board May 1, 2001 payable May 25, 2001 to common stockholders of record May 11, 2001, and the issuance of additional shares for cash upon exercise of outstanding options and the effects of the investment by Hexagon in BSIS, there will not be any change in the stockholders' equity of the Company from the transaction with Hexagon. It is possible that the Board may, depending on developments with BSIS and other factors, decide to recommend some further change in the capital structure, which may require stockholder approval in the future. However, there is no present intention to take any such action. In addition, the Company cannot predict the effect the sale of Hexagon, related transactions, sale of the North Kingstown facility, and related cash distributions will have on the market price of the Company's Common Stock. 19 Item 4. NONE - ------ ---- Item 5. NONE - ------ ---- 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 March 31, 2001. 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. BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) By: /s/ Andrew C. Genor ------------------------------------------- Andrew C. Genor Chief Financial Officer (Principal Financial Officer) April 14, 2001 BNS Co. (FORMERLY BROWN & SHARPE MANUFACTURING COMPANY) ------------------------------------------------------ EXHIBIT INDEX ------------- 10.114 Change in control agreement between Brown & Sharpe Manufacturing Company and Alfred J. Corso dated August 31, 1999. 10.115 Change in control agreement between Brown & Sharpe Manufacturing Company and Christopher J. Garcia dated August 31, 1999. 10.116 Change in control agreement between Brown & Sharpe Manufacturing Company and Fred Schutter dated August 31, 1999. 10.117 Change in control agreement between Brown & Sharpe Manufacturing Company and Antonio Aparacio dated August 31, 1999. 10.118 Change in control agreement between Brown & Sharpe Manufacturing Company and Ettore Bandieri dated August 31, 1999. 10.119 Change in control agreement between Brown & Sharpe Manufacturing Company and Marcus Burton dated August 31, 1999. 10.120 Change in control agreement between Brown & Sharpe Manufacturing Company and Frank T. Curtin dated August 31, 1999. 10.121 Change in control agreement between Brown & Sharpe Manufacturing Company and Edward D. DiLuigi dated August 31, 1999. 10.122 Change in control agreement between Brown & Sharpe Manufacturing Company and Andrew C. Genor dated August 31, 1999. 10.123 Change in control agreement between Brown & Sharpe Manufacturing Company and Philip James dated August 31, 1999. 10.124 Change in control agreement between Brown & Sharpe Manufacturing Company and Charles A. Junkunc dated August 31, 1999. 10.125 Amended change in control agreement between Brown & Sharpe Manufacturing Company and Edward D. DiLuigi dated January 3, 2000. EX-10.114 2 dex10114.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & CORSO Exhibit 10.114 "CIC" Agreement --------------- THIS AGREEMENT dated as of August 31, 1999, 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. 1 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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). 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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. 4 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. 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. 5 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 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 6 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. 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 02816 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. 7 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 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: 8 (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); 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 9 (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 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. 10 (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, 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 11 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). (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. 12 (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. 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 13 Exhibit A --------- Position Corporate Controller Reporting and Responsibility Reports to the Vice President and Chief Financial Officer. Direct reports include Assistant Controller and Director of Taxation, Director of External Reporting and Special Projects, and the Internal Audit Department. Responsible for all consolidated external and internal financial reporting including the following: Annual Report to Shareholders, Form 10-K and Form 10-Q filed with the SEC, federal and state income tax returns, state sales tax returns, and management financial reports prepared using Comshare data and Global Management Analysis and Reporting Systems. Coordinates the preparation of the Company's Annual Operating Plan, Assists CEO in each division's quarterly review, and is responsible for BNS worldwide Internal Audit Program and selection and application of the Company's use of United States Generally Accepted Accounting Principles, as well as over responsibility for the Company's financial internal controls. Has signatory authority for the Company's Form 10-K and Form 10-Q, as well as all Federal and State income tax returns and sales tax returns, and for various Company checking accounts. Has authority to hire and fire all members of the Corporate Accounting Department. Headquartered in North Kingstown, Rhode Island. EX-10.115 3 dex10115.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & EDWARDS Exhibit 10.115 "CIC" Agreement --------------- THIS AGREEMENT dated as of August 31, 1999, 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. 1 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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). 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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. 4 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. 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. 5 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 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 6 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. 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 7 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 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: 8 (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); 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 9 (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 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 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 this Agreement. 10 (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, 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 11 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). (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. 12 (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. 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. 13 Exhibit A --------- Position General Manager - Brown & Sharpe Aftermarket Services Inc. Reporting Reports to Corporate Vice President and General Manager, Measuring Systems - U.S.A. and Wetzlar, Germany. Direct reports include all Aftermarket Group department heads including: Software, Upgrades, Service, Sales, and Finance. Responsible for profitability and asset management and development of future growth plans for Aftermarket Services and commercial relationship and distribution of Wilcox Software (may be changed in 1999). Headquartered in Wixom, Michigan. 14 EX-10.116 4 dex10116.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & GARCIA Exhibit 10.116 "CIC" Agreement -------------- THIS AGREEMENT dated as of August 31, 1999, 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. 1 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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). 2 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, 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 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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. 4 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. 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 5 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 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. ----------------------------- 6 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. 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 Sheperd 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. 7 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 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. 8 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); 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 9 (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 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. 10 (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, 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 11 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). (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 12 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. 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 13 Exhibit A Position Corporate Vice President - Software Product Development Reporting and Responsibilities Reports to BNS Chairman, President, and CEO. Responsible for the development and management of BSIS Inc. per the spirit or intent behind Goals and Objectives outlined in the BSIS PIP Goals submitted on March 1, 1998. Responsible for the aggressive launch of an independent business unit which would develop, market, and distribute all Metrological software for the existing business or new business structure, including management of worldwide software engineering staff of about 50 personnel. Member of the P&O Committee. Headquartered in North Kingstown, Rhode Island. EX-10.117 5 dex10117.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & HAYES EXHIBIT 10.117 "CIC" Agreement --------------- THIS AGREEMENT dated as of August 31, 1999, 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. 1 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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). 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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. 4 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. 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 5 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 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. ----------------------------- 6 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. 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 Avenue 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. 7 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 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. 8 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); 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 9 (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 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. 10 (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, 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 11 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). (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 12 (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. 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 13 Exhibit A --------- Position Corporate Secretary and General Counsel Reporting and Responsibility Reports to the President and Chief Executive Officer. The Corporate Secretary is an elected officer of the corporation whose duties are generally described in the corporation's by-laws and is a senior level member of management of the corporation. The incumbent's duties include recording the minutes of meetings of the Board of Directors and stockholders; assisting in the preparation of the agendas and logistical arrangements for such meetings; drafting resolutions of corporate actions to be taken; preparing annual and special proxy statements for mailing to stockholders; managing the stock registrar and transfer activities; managing relationships with New York Stock Exchange; certifying corporate documents and actions taken at proceedings of Board and stockholder meetings; administration of compensation of Board of Directors; maintenance of custody and control of corporate legal entity documents; and responding to shareholder inquiries concerning company stock. The General Counsel advises and represents, either directly or in association with outside counsel, the corporation in a variety of legal matters affecting the corporation and its subsidiaries. The incumbent is responsible for the overall management of litigation claims brought against or asserted by the corporation; furnishing legal advice to and, where appropriate, drafting necessary legal documents for corporate staff and operating management personnel on matters relating to or affecting operation of the corporation's businesses, including but not limited to the areas of commercial contracts, trade regulation, product liability, intellectual property, corporate governance, securities laws, filings, and compliance, and employment laws. Headquartered in North Kingstown, Rhode Island. EX-10.118 6 dex10118.txt CHANGE OF CONTROL BETWEEN CO. & KIRKENDALL Exhibit 10.118 "CIC" Agreement --------------- THIS AGREEMENT dated as of August 31, 1999, 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. 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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). 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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. 4 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. 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 5 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 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 6 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. 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 Schutter Hauptstrasse 43 D-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. 7 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 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. 8 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); 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 9 (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 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. 10 (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, 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 11 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). (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, 12 (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. 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 13 Exhibit A --------- Position Corporate Chief Information Officer Reporting and Responsibility Reports to Vice President and Chief Financial Officer and has access to the CEO for important IT related decisions. Responsible for the worldwide deployment of information technology for all of Brown & Sharpe and its subsidiaries. Sets the standards for all IT related hardware and software networking. Responsible for the short, intermediate, and long-term information needs and develops and leads execution of acquisition, implementation, and maintenance strategies and tactics in support of these needs. Also responsible for the network infrastructure, including all security measures that are necessary. The CIO negotiates contracts with software and hardware vendors as well as the wide area network carrier. The CIO is asked to give presentations to the P&O Committee and is a key member of the senior management team of Brown & Sharpe. Headquartered in North Kingstown, Rhode Island. EX-10.119 7 dex10119.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & SCHUTTER Exhibit 10.11 "CIC" Agreement --------------- THIS AGREEMENT dated as of August 31, 1999, 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. 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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). 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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. 4 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. 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 5 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 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 6 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. 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 Schutter Hauptstrasse 43 D-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 7 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 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. 8 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); 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 9 (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 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. 10 (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, 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 11 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). (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, 12 (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. 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 13 Exhibit A --------- Position General Manager, Brown & Sharpe Wetzlar Factory Reporting and Responsibility Reports to Vice President and General Manager, Measuring Systems - U.S.A. and Wetzlar. Direct reports consist of Shop Operations, Materials, Engineering, Quality, Product Management, Finance, Human Resources and Manufacturing Support at Brown & Sharpe GmbH. Responsible for total Factory Operations at Wetzlar, Germany. Responsibilities include the generation of planned revenues, design, manufacture, and installation of the products, along with the management of Inventory, Cash, and the measurable business measurements. Headquartered in Wetzlar, Germany. EX-10.120 8 dex10120.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & SGNILEK Exhibit 10.20 "CIC" Agreement -------------- THIS AGREEMENT dated as of August 31, 1999, 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. 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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). 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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. 4 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. 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 5 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 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 6 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. 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 41 Cedar Pond Drive, No. 9 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. 7 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 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. 8 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); 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 9 (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 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. 10 (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, 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 11 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). (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, 12 (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. 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 13 Exhibit A --------- Position Corporate Treasurer Reporting and Responsibility Reports to Vice President and Chief Financial Officer, Direct reports include Cash Manager and Treasury Analyst. Responsibilities are as follows: Corporate Finance - responsible for all financing and covenant compliance on a global basis; Investor Relations - interface with analysts and shareholders in providing information about the Company; Corporate Planning - create plans which present forward looking Financial Statements which aid in the planning of the future Capital and Debt structure of the Company; Pension Management - manage the 401(k), ESOP, SARP, and Non-Qualified plans of the Company; Risk Management - manage all aspects of corporate risk management; Exposure Management - manage all aspects of foreign exchange and interest rate exposure management; Liquidity Management - manage all aspects of cash management on a global basis. Headquartered in North Kingstown, Rhode Island. EX-10.121 9 dex10121.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & APARACIO Exhibit 10.121 "CIC" Agreement THIS AGREEMENT dated as of August 31, 1999, 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. 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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. 4 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. 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. 5 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 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 6 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. 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 7 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 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 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 8 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); 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 9 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 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 10 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, 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 11 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). (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. 12 (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. 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 13 Exhibit A --------- Position - -------- Corporate Vice President & General Manager - PMI Division Reporting and Responsibility - ---------------------------- Reports to BNS Chairman, President, and CEO. Management responsibility for five PMI units: PMI-CH, PMI-France, PMI-UK, PMI-U.S.A., and PMI-Japan. Worldwide responsibility for PMI Division profitability and asset management and all management functions in all sectors including: R&D, Marking & Sales, Manufacturing, Human Resources, and Administration. President of the Brown & Sharpe Tesa S.A. Board, President of the Brown & Sharpe Roch S.A. Board, Administrator of Brown & Sharpe PMI KK, and Administrator of PMI-UK. Member of the P&O Committee. Headquartered in Renens, Switzerland. EX-10.122 10 dex10122.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & BANDIERI Exhibit 10.122 "CIC" Agreement THIS AGREEMENT dated as of August 31, 1999, is made by and between Brown & Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and Ettore Bandieri, 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. 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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 4 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. 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. 5 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 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 6 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. 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: Ettore Bandieri Corso Regina Margherita, 3 10124 Torino, 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 7 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 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. 8 (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); 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 9 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 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 10 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, 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 11 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). (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 12 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. 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: - ------------------------ ------------------------------------------ Ettore Bandieri Managing Director, Brown & Sharpe DEA S.p.A. 13 Exhibit A --------- Position - -------- Corporate Vice President and Managing Director (Amministratore Delegato) - Brown & Sharpe DEA S.p.A. Reporting and Responsibility - ---------------------------- Reports to Group Vice President, Measuring Systems. Direct reports consist of Shop Operations, Materials, Engineering, Quality, Product Management, Finance, Human Resources, and Manufacturing Support in the Brown & Sharpe DEA S.p.A. manufacturing facility. Responsible for worldwide product profitability and asset management and management of total Factory Operations at Grugliasco, Italy. Responsibilities also include: the generation of planned revenues, design, manufacture, and installation of the products at both manufacturing sites, along with the management of Inventory, Cash, and the measurable business parameters; worldwide product profitability and asset management and management of Brown & Sharpe DEA S.p.A. and of its total Factory Operations; and compliance with Italian local requirements covering all aspects of business, including fiscal and environmental responsibilities and local representation of Brown & Sharpe DEA S.p.A. Member of the P&O Committee. Also responsible for Commercial Operations - Europe for all the Brown & Sharpe Measuring Systems products, including sales, service, and aftermarket. Direct reports consist of the country General Managers for France, UK, and Spain; the Commercial Operations General Managers for Italy, Germany and Northern Europe; the "new machine" and "aftermarket" Sales Manager for Europe; the BaaN Front Office Project Manager. Headquartered in Grugliasco, Italy. EX-10.123 11 dex10123.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & BURTON Exhibit 10.12 "CIC" Agreement THIS AGREEMENT dated as of August 31, 1999, is made by and between Brown & Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and Marcus Burton, Corporate Vice President & 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. 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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 4 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. 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. 5 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 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 6 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. 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. 7 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 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. 8 (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); 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 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 9 (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 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), 10 (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, 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"; 11 (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). (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 12 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. 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 & General Manager - Custom Metrology Division 13 Exhibit A --------- Position - -------- Corporate Vice President and General Manager - Custom Metrology Division Reporting and Responsibility - ---------------------------- Reports to the Group Vice President -Measuring Systems. Responsible for: the worldwide strategic and operating management of the Division (Strategic Business Unit) headquartered in Telford, England within the Brown and Sharpe Group; and worldwide division profitability and asset management and all management functions including Sales, Marketing, Finance, Personnel, Manufacturing, Engineering, and Research and Development. Corporate wide responsibility for the development and commercialization of non-contact blade (airfoil) measurement machines utilizing technology developed by Metroptic Technologies Ltd., a 50% JV sensor development company based in Israel. Director of Metroptic Technologies Ltd.; Managing Director of the Brown & Sharpe Ltd. and Brown & Sharpe Group Ltd. U.K. legal entities. Member of the President and CEO's executive Planning & Operating Committee. Employed by Brown & Sharpe Limited, Telford, England. EX-10.124 12 dex10124.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & CURTIN Exhibit 10.124 "CIC" Agreement THIS AGREEMENT dated as of August 31, 1999, 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. 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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 4 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. 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. 5 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 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 6 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. 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 7 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 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 bedeemed 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. 8 (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); 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 9 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 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 10 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, 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 11 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). (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 12 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. 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 Executive Vice President, Strategic Development WITNESSED: ________________________ __________________________________________ Frank T. Curtin ---------------------- Chairman of the Board of Directors, President, and Chief Executive Officer 13 Exhibit A --------- Position - -------- Chairman of the Board of Directors, President, and Chief Executive Officer Reporting and Responsibility - ---------------------------- Reports to BNS Board of Directors. Direct reports include Executive Vice President, Strategic Development; Vice President & Chief Financial Officer; Group Vice President, Measuring Systems; Vice President & General Manager - Custom Metrology Division; Vice President & General Manager - PMI Division; and Vice President - Software Product Development. Responsible for the strategic direction, profitability and asset management, and management of BNS worldwide and all functions in BNS. Headquartered in North Kingstown, Rhode Island. - ----------------------------------------------- EX-10.125 13 dex10125.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & DILUIGI EXHIBIT 10.125 "CIC" Agreement THIS AGREEMENT dated as of August 31, 1999, is made by and between Brown & Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and Edward D. DiLuigi, Corporate Vice President & 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. 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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 4 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. 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. 5 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 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 6 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. 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 16 Reed Place 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 7 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 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. 8 (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); 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 9 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 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 10 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, 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 11 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). (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 12 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. 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 & General Manager, Measuring Systems - U.S.A. and Wetzlar 13 Exhibit A --------- Position - -------- Corporate Vice President and General Manager, Measuring Systems - U.S.A. & Wetzlar, Germany Reporting and Responsibility - ---------------------------- Reports to Group Vice President, Measuring Systems. Direct reports consist of Shop Operations, Materials, Engineering, Quality, Product Management, Finance, Human Resources, and Manufacturing Support in the U.S.A., and General Manager - Brown & Sharpe Aftermarket Services, Americas; and General Manager responsibility at Wetzlar's manufacturing facility. Responsible for worldwide product profitability and asset management and management of total Factory Operations at North Kingstown, Rhode Island, U.S.A. and Wetzlar, Germany. Responsibilities also include the generation of planned revenues, design, manufacture, and installation of the products at both manufacturing sites, along with the management of Inventory, Cash, and the measurable business parameters. Member of the P&O Committee. Headquartered in North Kingstown, Rhode Island. 14 EX-10.126 14 dex10126.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & GENOR Exhibit 10.126 "CIC" Agreement THIS AGREEMENT dated as of August 31, 1999, is made by and between Brown & Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and Andrew C. Genor, 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. 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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 4 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. 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. 5 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 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 6 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. 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: Andrew C. Genor 77 Lloyd Road 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 7 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 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. 8 (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); 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 9 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 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 10 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 in consistent 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, 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 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 11 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). (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 12 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. 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: - ---------------- ------------------------------------------ Andrew C. Genor Corporate Vice President and Chief Financial Officer 13 Exhibit A --------- Position - -------- Corporate Vice President and Chief Financial Officer Reporting and Responsibility - ---------------------------- Reports to BNS Chairman, President, and CEO. Direct reports include Corporate Treasurer, Corporate Controller, and Corporate Chief Information Officer. Responsible for worldwide financial and information systems, accounting, reporting, staff, organization funding, and investor relations. Member of the P&O Committee. Attends all BNS Board of Directors Meetings and Compensation and Nominating and Audit Committees Meetings. Headquartered in North Kingstown, Rhode Island. 14 EX-10.127 15 dex10127.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & JAMES Exhibit 10.127 "CIC" Agreement THIS AGREEMENT dated as of August 31, 1999, 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. 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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 4 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. 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. 5 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 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 6 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. 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 7 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 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. 8 (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); 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 9 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 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 10 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, 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 11 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). (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 12 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. 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 13 Exhibit A --------- Position - -------- Corporate Group Vice President, Measuring Systems Reporting and Responsibility - ---------------------------- Reports to BNS Chairman, President, and CEO. Direct reports include Vice President & General Manager, Measuring Systems - U.S.A. and Wetzlar, Germany; Managing Director (Amministratore Delegato) - Brown & Sharpe DEA S.p.A.; General Manager, Brown & Sharpe Qianshao (China); Group Controller, Measuring Systems; and General Managers of Commercial Operations for the Americas, Europe, and Asia. Responsible for profitability and asset management and management of all functions of the Measuring Systems Group worldwide including Aftermarket Services. Member of the P&O Committee. Headquartered in North Kingstown, Rhode Island. 14 EX-10.128 16 dex10128.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & JUNKUNC Exhibit 10.128 "CIC" Agreement THIS AGREEMENT dated as of August 31, 1999, is made by and between Brown & Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and Charles A. Junkunc, Executive Vice President, Strategic 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. 5. Compensation Other Than Severance Payment. ----------------------------------------- 1 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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 4 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. 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. 5 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 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 6 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. 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 398 Wickford Point North Kingstown, 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 7 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 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. 8 (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); 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 9 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 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 th e 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 10 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, Executive Vice President, Strategic Development, 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 11 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) . (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. 12 (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. 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 Executive Vice President, Strategic Development 13 Exhibit A --------- Position - -------- Corporate Executive Vice President, Strategic Development Reporting and Responsibility - ---------------------------- Reports to BNS Chairman, President, and CEO. Direct report: Corporate Secretary and General Counsel. Responsible for corporate development and the legal affairs of the Company. Member of the P&O Committee. Attends all BNS Board of Directors Meetings. Headquartered in North Kingstown, Rhode Island. 14 EX-10.129 17 dex10129.txt AMENDED CHANGE OF CONTROL BETWEEN CO. & DILUIGI Exhibit 10.129 "CIC" Agreement THIS AGREEMENT dated as of August 31, 1999, is made by and between Brown & Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and Edward D. DiLuigi, Corporate Vice President & General Manager, Measuring Systems - Americas ("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. 5. Compensation Other Than Severance Payment. ----------------------------------------- 1 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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 2 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, 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, (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 excluding any bonuses paid as part of the hiring process, 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, and (c) the highest of the Executive's Perquisite Plan award amount in effect immediately prior to the occurrence of the event or circumstance upon which Notice or Termination is based or in effect immediately prior to the Change in Control or the Perquisite Plan amount last paid to the Executive. (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 3 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 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. 4 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. 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. 5 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 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 6 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. 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 16 Reed Place 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 7 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 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 8 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); 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 9 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 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. 10 (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, 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"; 11 (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). (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 12 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. 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 & General Manager, Measuring Systems - Americas 13 Position - -------- Corporate Vice President and General Manager, Measuring Systems - Americas Reporting and Responsibility - ---------------------------- Reports to Group Vice President, Measuring Systems. Employee's Title and Duties - ---------------------------- Direct reports consist of Sales, Customer Support, Quality, Finance, R&D, Global Engineering, Product Management, Shop Operations and Human Resources. Responsiblities include full responsibility for all activities of the Measuring Systems Americas Division with the primary objective of improving customer satisfaction, development of new products, growth of revenues, decrease costs, improve profitability and assure on-time delivery of products that meet specified quality standards. The position will work closely with, and engage in joint projects where appropriate, with the General Managers of all B&S Divisions and work closely on overall long-range planning and strategy for the Measuring Systems business and the Company. Member of P&O Committee. Headquartered in North Kingstown, RI 14 EX-10.130 18 dex10130.txt CHANGE OF CONTROL AGREEMENT BETWEEN CO. & ROSIGNAL Exhibit 10.130 "CIC" Agreement --------------- THIS AGREEMENT dated as of September 18, 2000, is made by and between Brown & Sharpe Manufacturing Company, a Delaware Corporation, (the "Company") and Jack R. Rosignal ("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. 5. Compensation Other Than Severance Payment. ----------------------------------------- 5.1. Following a Change in Control, during any period that the Executive fails to perform the 1 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 Perquisite Plan, the amount to be paid out is such that, including amounts already paid to the Executive during the calendar year of the Termination, 100% of the annual amount last awarded to the Executive by the Committee prior to the Change in Control shall have been paid to the Executive. 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 2 and agreements, including the plans referred to in Section 5.2, other than this Agreement; provided, 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 excluding any bonuses paid as part of the hiring process, 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. 3 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 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 4 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. 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 5 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 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 6 Termination. In any event this agreement shall be binding upon the Company and any successors or assignees. 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: Jack R. Rosignal 507 Wexford Court St. Charles, IL 60175 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, 7 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 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 8 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); 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 9 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 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 10 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, Executive Vice President, Strategic Development, 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 11 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). (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 12 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. 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 _____________________________ Kenneth N. Kermes President and Chief Executive Officer WITNESSED: _______________________ _________________________________ Jack R. Rosignal Vice President, Sales for MS/Americas, Measuring Systems Div. 13 EXHIBIT A JOB DESCRIPTION --------------- Position: Vice President Sales/Americas Reports to: Vice President/General Manager Rhode Island Operations Responsible for: Commercial Operations in North America and South America Includes: . Sales Management, both direct and independent sales organization. . Direct Applications Engineering Group Training, demonstrations, contract programming . Technical Sales Group Special applications/quote . Telemarketing Group . Remote Precision Centers "Sales/demo facilities" . Total Staff - 120 Based in Illinois - Offices in Elgin, Illinois and Wixom, Michigan 14 -----END PRIVACY-ENHANCED MESSAGE-----