0000950109-95-003225.txt : 19950816 0000950109-95-003225.hdr.sgml : 19950816 ACCESSION NUMBER: 0000950109-95-003225 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950815 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BROWN & SHARPE MANUFACTURING CO /DE/ 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: 1934 Act SEC FILE NUMBER: 001-05881 FILM NUMBER: 95564134 BUSINESS ADDRESS: STREET 1: PO BOX 456 STREET 2: PRECISION PK - 200 FRENCHTOWN RD CITY: NORTH KINGSTOWN STATE: RI ZIP: 02852 BUSINESS PHONE: 4018862000 10-Q 1 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 June 30, 1995 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 ------ 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; 8,163,820 Class A common stock, 530,958 Class B common stock, par value $1 per share, outstanding as of June 30, 1995. PART I. FINANCIAL INFORMATION --------------------- Item 1. FINANCIAL STATEMENTS* ------ -------------------- BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ CONSOLIDATED STATEMENT OF INCOME (LOSS) --------------------------------------- (Dollars in Thousands Except Per Share Data) (Unaudited)
For the Quarter Ended For the Half-Year Ended ----------------------- ------------------------- June 30, 1995 July 2, 1994 June 30, 1995 July 2, 1994 ------------- ------------ ------------- ------------ Net sales $ 80,967 $ 43,152 $155,062 $ 79,811 Cost of goods sold 57,263 29,397 108,174 55,337 Selling, general and administrative expense 20,358 13,610 43,090 25,871 Restructuring expense 117 - 247 - ------- ------- ------- ------- Operating profit (loss) 3,229 145 3,551 (1,397) Interest expense 2,224 1,443 3,948 2,723 Other income, net 40 130 187 178 ------- ------- ------- ------- Income (loss) before income taxes 1,045 (1,168) (210) (3,942) Income tax provision - 200 200 300 ------- ------- ------- ------- Net income (loss) $ 1,045 $ (1,368) $ (410) $ (4,242) ======= ======= ======= ======= Primary and fully diluted income (loss) per common share $ .12 $ (.26) $ (.05) $ (.83) ======= ======= ======= ======= Weighted average shares outstanding and common stock equivalents during the period 8,705,241 5,191,299 8,691,487 5,114,403 ========= ========= ========= =========
* The accompanying notes are an integral part of the financial statements. BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ CONSOLIDATED BALANCE SHEET -------------------------- (Dollars in Thousands)
June 30, 1995 December 31, 1994 ASSETS (Unaudited) ----------------- Current Assets: ------------- Cash and cash equivalents $ 6,571 $ 6,676 Accounts receivable, net of allowances for doubtful accounts of $3,995 and $3,103 101,238 108,234 Inventories 98,950 88,639 Deferred income taxes, less $38,100 valuation allowance 2,000 2,000 Prepaid expenses and other current assets 8,615 5,981 -------- -------- Total current assets 217,374 211,530 Property, plant and equipment: Land 7,293 6,858 Buildings and improvements 37,052 33,124 Machinery and equipment 96,296 85,583 -------- -------- 140,641 125,565 Less-accumulated depreciation 91,063 80,210 -------- -------- 49,578 45,355 Other assets 15,001 15,389 -------- -------- $281,953 $272,274 ======== ======== LIABILITIES AND SHAREOWNERS' EQUITY Current Liabilities: Notes payable and current installments of long-term debt $ 41,677 $ 22,398 Accounts payable 43,552 36,896 Accrued expenses and income taxes 42,248 49,353 -------- -------- Total current liabilities 127,477 108,647 Long-term debt 59,732 70,215 Deferred income taxes 1,355 1,737 Unfunded accrued pension cost 5,863 5,035 Termination indemnities 7,821 7,715 Shareowners' Equity: Preferred stock, $1 par value; authorized 1,000,000 shares - - Common stock: Class A, par value $1; authorized 15,000,000 shares; issued 8,187,412 shares in 1995 and 8,122,086 shares in 1994 8,187 8,122 Class B, par value $1; authorized 2,000,000 shares; issued and outstanding 530,958 shares in 1995 and 534,821 shares in 1994 531 535 Additional paid in capital 66,863 66,412 Earnings employed in the business (10,366) (9,958) Cumulative foreign currency translation adjustment 15,217 14,530 Treasury stock: 23,592 shares in 1995 and 7,492 in 1994 at cost (270) (151) Unearned compensation (457) (565) -------- -------- Total shareowners' equity 79,705 78,925 -------- -------- $281,953 $272,274 ======== ========
* The accompanying notes are an integral part of the financial statements. BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ CONSOLIDATED STATEMENT OF CASH FLOWS ------------------------------------ (Dollars in Thousands) (Unaudited)
For the Half-Year Ended ----------------------- June 30, 1995 July 2, 1994 ------------- ------------- Cash Provided by (Used in) Operations: Net income (loss) $ (410) $(4,242) Adjustment for Noncash Items: Depreciation and amortization 4,094 2,884 Pension credits and charges 27 224 Deferred income taxes - 100 Unfunded pension 208 498 Termination Indemnities 46 - Changes in Working Capital: Accounts receivable 9,699 3,717 Inventories (4,431) 1,106 Prepaid expenses and other current assets (2,424) (457) Accounts payable and accrued expenses (3,866) (3,991) ------- ------- Net Cash Provided by (Used in) Operations 2,943 (161) ------- ------- Investment Transactions: Capital expenditures (3,933) (1,363) Cash equivalent pledged - (69) Other investing activities 619 (213) ------- ------- Cash (Used in) Investment Transactions (3,314) (1,645) ------- ------- Financing Transactions: Increase in long-term and short-term debt 9,976 4,902 Payment of long-term and short-term debt (4,998) (2,276) Other financing activities 503 (103) ------- ------- Cash Provided by Financing Transactions 5,481 2,523 ------- ------- Effect of Exchange Rate Changes on Cash (5,215) (528) ------- ------- Cash and Cash Equivalents: Increase (Decrease) during the period (105) 189 Beginning balance 6,676 2,094 ------- ------- Ending balance $ 6,571 $ 2,283 ======= ======= Supplementary Cash Flow Information: Interest paid $ 3,811 $ 2,547 ======= ======= Taxes paid $ 1,633 $ 730 ======= =======
* The accompanying notes are an integral part of the financial statements. BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (Dollars in Thousands) 1. The accompanying unaudited condensed 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 and half-year periods ended June 30, 1995 are not necessarily indicative of the results that may be expected for the year ended December 31, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in the Brown & Sharpe Manufacturing Company's annual report on Form 10-K for the year ended December 31, 1994. 2. The Company has changed its accounting period ending dates to a calendar month and year end basis beginning in 1995. Prior to 1995, the accounting year ended on the last Saturday in December. The first half of 1995 and 1994 consisted of 26 and 27 weeks, respectively, while the second quarters of 1995 and 1994 consisted of 13 weeks each. 3. The composition of inventory is as follows:
June 30, 1995 Dec. 31, 1994 ------------- ------------- Parts, raw materials, and supplies $ 42,790 $ 42,665 Work in process 20,644 17,069 Finished goods 35,516 28,905 ------- ------- $ 98,950 $ 88,639 ======= =======
4. Income taxes include provisions for U.S. federal, state, and foreign income taxes and is based on the Company's estimate of effective income tax rates for the full year. The current tax provision for the first half of 1995 and 1994 is $200 and $300, respectively. 5. In 1994, and for the half-year period ended June 30, 1995, earnings (loss) per share was based upon the weighted average number of common shares outstanding for the periods presented since inclusion of common stock equivalents would be antidilutive. Primary earnings per share for the quarter ended June 30, 1995 is based upon the weighted average number of common shares outstanding and common stock equivalents. Fully diluted earnings per share are not materially different. 6. On April 7, 1995, the U.S. Court of Appeals for the District of Columbia Circuit rendered a decision on the second appeal by the International Association of Machinists and Aerospace Workers (the "IAM") of a supplemental decision and order of the National Labor Relations Board ("NLRB") reaffirming an April 1986 decision of the NLRB dismissing reinstated unfair labor practice charges brought against the Company by the IAM in September 1982. These charges arose out of a strike which began at the Company's Rhode Island operations in October 1981. Although the NLRB has previously upheld dismissal of the reinstated unfair labor practices charges, the Appeals Court in its latest decision has stated that the NLRB failed to articulate and apply a judicially acceptable standard to determine whether certain evidence offered and characterized by the Union as being newly discovered was material and of such a nature to justify tolling the statute of limitations so as to permit the filing of the reinstated unfair labor practice charges. The Court vacated the judgment of the NLRB favorable to the Company and has remanded the case back to the NLRB for further proceedings to determine these evidentiary issues and their effect on the application of the statute of limitations to the reinstated unfair labor practice charges. The Court has directed that should the NLRB rule against the Company on the evidentiary issues presented for consideration then it must proceed to determine the merits of the reinstated unfair labor practice charges. Management of the Company and its counsel believe the NLRB is not likely to rule that the case must go forward on its merits and that a finding of liability against the Company in this matter continues to be remote. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS ------ OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------------ Brown & Sharpe Manufacturing Company acquired the DEA Group metrology businesses on September 28, 1994, as reported in the Company's Annual Report on Form 10-K for the year 1994. The acquisition has been accounted for using the purchase method of accounting, and, accordingly, the consolidated statements of income (loss) and cash flow for the first two quarters of 1995 include the results of the acquired operations. However, DEA's results are not included for the first three quarters of 1994. The ending consolidated balance sheet for both periods presented (June 30, 1995 and December 31, 1994) includes their assets and liabilities. The following table sets forth the percentage of net sales of Brown & Sharpe represented by the components of income and expense for the quarters and half years ended June 30, 1995 and July 2, 1994:
Quarters Ended Half-Years Ended -------------- ---------------- June 30 July 2 June 30 July 2 1995 1994 1995 1994 ---- ---- ---- ---- Net sales 100.0% 100.0% 100.0% 100.0% Cost of goods sold 70.7 68.1 69.7 69.3 Selling, general and administrative expense 25.2 31.6 27.8 32.5 Restructuring charges .1 - .2 - ----- ----- ----- ----- Operating profit (loss) 4.0 .3 2.3 (1.8) Interest expense 2.7 3.3 2.6 3.3 Other income, net - .3 .1 .2 ----- ----- ----- ----- Income (loss) before income taxes 1.3 (2.7) (.2) (4.9) Income tax provision - .5 .1 .4 ----- ----- ----- ----- Net income (loss) 1.3% (3.2)% (.3)% (5.3)% ===== ===== ===== =====
RESULTS OF OPERATIONS (Quarter Ended June 30, 1995 compared to Quarter Ended July 2, 1994) Orders and Backlog. Orders during the second quarter of 1995 totaled $78.2 million compared to $46.8 million for the second quarter of 1994. DEA, which was acquired on September 28, 1994, represented $26.1 million in orders during the second quarter of 1995, and foreign currency fluctuations caused a $5.2 million increase in second quarter 1995 orders compared to the second quarter of 1994. The second quarter, after reflecting the effect of DEA and foreign exchange, includes increased orders in the Precision Measuring Instruments Division offset by reduced orders for the Measuring Systems Division. Backlog at June 30, 1995 decreased to $66.2 million compared to $69.3 million at the end of the first quarter 1995. Net Sales. Net sales in the second quarter of 1995 were $81.0 million, compared to $43.2 million in the second quarter of 1994. DEA's sales were $27.6 million in the second quarter of 1995. In addition, foreign currency exchange rate fluctuations caused an increase in net sales in the second quarter of 1995 of $5.1 million as compared to the second quarter of 1994. Gross Profit. Gross profit margin decreased to 29.3% of sales in the second quarter of 1995 from 31.9% in the second quarter of 1994. The majority of this percent decrease resulted from increased inventory valuation reserves of $1.3 million. Selling, General and Administrative Expense. Selling, general and administrative expense as a percentage of net sales decreased to 25.2% in the second quarter of 1995 from 31.6% in the second quarter of 1994, reflecting the benefits of the acquisition consolidation savings actions of the Company. Dollar spending, however, increased $6.7 million in the second quarter of 1995 from the second quarter of 1994 which was primarily due to the inclusion of DEA selling, general and administrative expense in the second quarter of 1995 amounting to $6.6 million, which was not included in the second quarter of 1994. The second quarter of 1995 also included an accrual of $.6 million which was recorded to reflect benefits payable to the former President and Chief Executive Officer who resigned and was replaced, as previously announced by the Company at the 1995 Annual Meeting on May 3, 1995. In addition, $2.0 million of realized and unrealized foreign exchange gains were recognized in the same quarter. Realized and unrealized foreign exchange losses amounted to $.1 million in the second quarter of 1994. Restructuring Charges. Restructuring charges of $.1 million, were provided for in the second quarter of 1995, principally for Brown & Sharpe employee severance and Brown & Sharpe sales offices closing costs, associated with integrating Brown & Sharpe's existing operations with those of DEA, acquired on September 28, 1994. Operating Profit (Loss). Operating profit was $3.2 million in the second quarter of 1995. This compared to an operating profit of $.1 million in the second quarter of 1994. In the United States, an operating loss of $1.1 million was recognized for the second quarter of 1995 compared to an operating profit of $1.3 million in the second quarter of 1994. Foreign operations had an operating profit of $4.3 million in the second quarter of 1995 as compared to an operating loss of $1.2 million in the second quarter of 1994. The improved second quarter operating results reflect the specific items noted above and reflect, overall, the benefit of the integration of the DEA and Roch acquisitions as well as the impact of the strengthening European economies offset by weaker operating results in the United States, due to a product mix that resulted in reduced margins. Interest Expense. Interest expense totaled $2.2 million in the second quarter of 1995 compared to $1.4 million in the second quarter of 1994. This increase reflects a $28.8 million increase in borrowings over the comparable period in 1994. $13.8 million of the increase resulted from debt related to the DEA acquisition, and $11.6 million, including $6.7 million borrowed in the second quarter of 1995, resulted from additional working capital requirements, including additional costs related to restructuring. The remainder of the increase is due to changes in foreign exchange rates on offshore borrowings. Net Income/(Loss). Brown & Sharpe had a net income of $1.0 million ($.12 per share) in the second quarter of 1995, compared to a net loss of $1.4 million ($.26 per share) in the second quarter of 1994. RESULTS OF OPERATIONS (Half-Year Ended June 30, 1995 compared to Half-Year Ended July 2, 1994) Orders and Backlog. Orders during the first half-year of 1995 totaled $157.3 million compared to $84.7 million for the first half-year of 1994. DEA which was acquired on September 28, 1994, represented $51.8 million in orders during the first half of 1995, and foreign currency fluctuations caused a $10.4 million increase in first half 1995 orders compared to the first half of 1994. Backlog at June 30, 1995 increased to $66.2 million compared to $61.0 million at year- end 1994. Net Sales. Net sales in the first half of 1995 were $155.1 million compared to $79.8 million for the first half of 1994. DEA's sales were $52.8 million in the first half of 1995. Foreign currency exchange rate fluctuations caused an increase in net sales of $9.3 million in the first half of 1995 as compared to the first half of 1994. Gross Profit. Gross profit margin decreased .5% to 30.2% in the first half of 1995 from 30.7% in the first half of 1994. The 1995 gross profit margin would have increased by .3%, except for the effect of the valuation reserves of $1.3 million recorded in 1995 which reduced the gross margin .8%. Selling, General and Administrative Expense. Selling, general and administrative expense as a percentage of net sales decreased to 27.8% in the first half of 1995 from 32.5% in the first half of 1994, reflecting the acquisition consolidation savings actions of the Company. Dollar spending increased in the first half of 1995 by $17.2 million from the first half of 1994, which was primarily due to the inclusion of DEA selling, general and administrative expense amounting to $13.7 million in the first half of 1995 and the effect of translating the selling, general and administrative expenses of the foreign operations of the Company at higher exchange rates than the previous period. Realized and unrealized exchange gains of $2.0 million were recognized during the first half of 1995 and losses of $.1 million were recognized in the first half of 1994. Operating Profit (Loss). Brown & Sharpe generated an operating profit of $3.6 million in the first half of 1995. This compared to an operating loss of $1.4 million in the first half of 1994. In the United States, operating loss for the first half of 1995 totaled $1.2 million as compared to an operating profit of $1.2 million in the first half of 1994. Foreign operations generated an operating income of $4.8 million in the first half of 1995 as compared to an operating loss of $2.6 million in the first half of 1994. The European operations, in total, generated significant operating profit in the first half of 1995, led by our Swiss operation's return to profitability. These improved results were diminished by weaker operating results in the United States due to a product mix that resulted in reduced margins. Interest Expense. Interest expense totaled $3.9 million in the first half of 1995 compared to $2.7 million in the first half of 1994. This increase reflects a $28.8 million increase in borrowings over the comparable period in 1994. $13.8 million of the increase resulted from debt related to the DEA acquisition, and $11.6 million resulted from additional working capital requirements, including additional costs related to restructuring. The remainder of the increase is due to changes in foreign exchange rates on offshore borrowings. Net Income (Loss). As a result of the foregoing, Brown & Sharpe had a net loss of $.4 million ($.05 per share) in the first half of 1995, compared to net loss of $4.2 million ($.83 per share) in the first half of 1994. Brown & Sharpe expects to report a net loss for the third quarter of 1995 primarily resulting from the effect of normally low sales volume due to the general European practice of summer vacations, shutdowns, etc. which occur in the third quarter. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1995, total debt increased $8.8 million to a total of $101.4 million at June 30, 1995 as compared to $92.6 million outstanding at December 31, 1994. Approximately $3.8 million of the debt increase is due to foreign denominated borrowings which were translated at exchange rates that were higher than the exchange rates in existence at the borrowing date. Brown & Sharpe had borrowings of $26.4 million under the lines of credit compared to total availability at that date of $60.7 million under the lines of credit including lines of credit for DEA in an amount of $18 million. As of June 30, 1995, there were borrowings of $11.4 million outstanding under the Company's $25.0 million secured revolving credit facility. Notes payable and current installments of long term debt at June 30, 1995 includes $11.6 million of mortgage notes payable that mature in June 1996, which prior to June 1995 had been classified as long-term debt. Management expects to refinance this debt prior to the maturity of the notes. Management believes that the current availability of borrowings, from short term credit lines and term debt, together with cash flow from current levels of operations and anticipated cost savings from the integration of DEA, Roch, and Mauser will be sufficient to meet operational cash requirements well into 1996, including one-time costs in integrating Roch, Mauser, and DEA, working capital requirements and planned capital expenditures. However, failure to achieve anticipated cost savings from the integration of DEA, Roch, and Mauser, or unexpected delays in or costs related to the integration, could have a material adverse effect on Brown & Sharpe's liquidity. Cash Flow. The net loss of $.4 million in the first half of 1995, reduced by depreciation and other non-cash items and changes in working capital, including additional costs related to restructuring, in the second quarter of 1994 resulted in operations providing $2.9 million of cash. In the first half of 1994, $.2 million of cash was used by operations. In the first half of 1995, capital expenditures were $3.9 million, as compared with depreciation and amortization of $4.1 million for the same period. Other investment transactions in 1995 provided $.6 million. Investment transactions in 1994 used cash of $1.6 million, of which capital expenditures amounted to $1.4 million and depreciation and amortization amounted to $2.9 million. Cash provided from financing transactions was $5.5 million in the first half of 1995 compared to $2.5 million provided in the 1994 period. Working Capital. Working capital was $89.9 million at the end of the first half of 1995 compared to $102.9 million at the end of 1994. The major reason for the decrease in working capital in 1995 was due to the reclassification of the mortgage notes payable discussed above from long-term debt to current liabilities. Inventories increased to $98.9 million at June 30, 1995, an increase of $10.3 million from the end of 1994, and accounts receivable decreased to $101.2 million at June 30, 1995, a decrease of $7.0 million from year end 1994. Working capital was also affected by increased borrowings on current lines of credit. Capital Expenditures. Brown & Sharpe's capital expenditures were approximately $3.9 million in the first half of 1995 compared to $1.4 million in the first half of 1994. Management estimates that annual capital expenditures of approximately $8.0 million to $10.0 million are required to tool new products, improve product and service quality, expand the distribution network, and support the operations of the combined Company. Planned capital expenditures, later in 1995, will include an additional amount of approximately $2.3 million for the construction of a new facility in Telford, England to replace an existing facility for which the lease expires and is non-renewable. PART II. OTHER INFORMATION ----------------- Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ------ --------------------------------------------------- The Company's 1995 Annual Meeting of Stockholders was held on Wednesday, May 3, 1995. The stockholders voted to (1) fix the number of directors at ten and to elect nominees to the Board of Directors to serve for the ensuing term; (2) approve amendments to the Company's 1989 Equity Incentive Plan, (i) increasing the number of shares for issuance and delivery in connection with awards from 500,000 shares to 875,000 shares and, (ii) limiting to 300,000 shares the number of shares of Class A common stock that any individual could receive in any calendar year (as set forth in the Proxy Statement); (3) ratify and approve the appointment by the Board of Directors of Ernst & Young L.L.P. as the Company's independent accountants for the year 1995. The following is a summary of the results of matters submitted to security holders: (1) The following persons were elected to serve as directors for three year terms expiring in 1998 and received the votes listed. There were no abstentions or broker non-votes applicable to the election of directors:
Name For Withheld ---- --- -------- Class A Common Stock -------------------- Enrico Albareto 7,387,156 375,496 Henry D. Sharpe, Jr. 7,387,300 375,352 Howard K. Fuguet 7,386,376 376,276 Henry D. Sharpe, III 7,387,560 375,092 Class B Common Stock -------------------- Henry D. Sharpe, Jr. 4,299,228 166,547 Howard K. Fuguet 4,299,158 166,617 Henry D. Sharpe, III 4,299,558 166,217
The following directors have terms of office which continued after the meeting: Russell A. Boss, John M. Nelson, Paul R. Tregurtha, Vincenzo Canatelli, and Alberto de Benedictis. Subsequent to the meeting, Frank T. Curtin was elected to complete Fred M. Stuber's term.
Broker For Against Abstain Non-Votes --- ------- ------- --------- (2) (i) increasing the number of shares from 500,000 shares to 875,000 shares 10,308,654 936,533 117,253 865,987 (ii) limiting to 300,000 Class A shares that any one individual can receive in one year 10,308,654 936,533 117,253 865,987 (3) appointment of Ernst & Young L.L.P. as the Company's independent accountants 12,084,503 120,504 23,420 0
Item 6. EXHIBITS AND REPORTS ON FORM 8-K ------ -------------------------------- A. See Exhibit Index annexed. B. A report on Form 8-K was filed during the quarter ended June 30, 1995. On April 4, 1995, Brown & Sharpe filed a Current Report under Item 4 reporting the Change in Registrants Independent Auditors. A report on Form 10-K/A was filed during the quarter ended June 30, 1995. On June 27, 1995, Brown & Sharpe filed an Annual Report on Form 11-K for the Brown & Sharpe Savings and Retirement Plan for Management Employees, and for the Brown & Sharpe Retirement Plan for the year ended December 31, 1994. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. BROWN & SHARPE MANUFACTURING COMPANY By: /s/ Charles A. Junkunc --------------------------------------- Charles A. Junkunc Vice President and Chief Financial Officer (Principal Financial Officer) August 9, 1995 BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ EXHIBIT INDEX ------------- 4. Indenture dated as of October 1, 1980 (including form of debenture) between the Company and Morgan Guaranty Trust Company of New York as trustee relating to 9-1/4% convertible subordinated debentures due December 15, 2005, originally filed as Exhibit (b) (1) to Form S-16 Registration Statement No. 2-69203 dated October 1, 1980 and incorporated herein by reference. The Registrant hereby agrees to furnish a copy to the Commission of other instruments defining the rights of holders of long-term debt, as to which the securities thereunder do not exceed ten percent of total assets on a consolidated basis. 10.56 Amendment No. 1 dated May 31, 1995 to the Brown & Sharpe Savings and Retirement Plan for Management Employees. (1994 Restatement) 10.57 Amendment No. 2 dated May 31, 1995 to the Brown & Sharpe Savings and Retirement Plan for Management Employees. (1994 Restatement) 10.58 Amendment No. 1 dated May 31, 1995 to the Brown & Sharpe Savings and Retirement Plan. (1994 Restatement) 10.59 Severance termination agreement for Fred Stuber dated May 3, 1995. 10.60 Employment Agreement with Frank T. Curtin dated May 17, 1995. 11. Computation of Per Share Data for the half-years ended June 30, 1995 and July 2, 1994. 27. Financial Data Schedule. EX-10.56 2 AMENDMENT NO. 1 TO RETIREMENT PLAN EXHIBIT 10.56 ------------- FIRST AMENDMENT TO THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES ------------------------ Pursuant to Section 12.1 of the Brown & Sharpe Savings and Retirement Plan for Management Employees (the "Plan"), the Plan is hereby amended in the following respects to allow for discretionary matching contributions. This amendment is effective as of January 1, 1995. 1. All references to "Matching Contribution Account" in the Plan as in effect prior to the amendments made by this instrument of amendment are hereby deleted and replaced with references to "Prior Matching Contribution Account." 2. Section 2.25 is hereby renumbered as Section 2.25B and amended in its entirety to read as follows: "2.25B. 'Matching Contribution Account' means that portion of a Participant's Share of the Trust Fund which is attributable to Matching Contributions and earnings thereon." 3. A new Section 2.25A is added to the Plan, to read in its entirety as follows: "2.25A. 'Matching Contribution' means any contribution made to the Trust under Section 5.1A." 4. A new Section 2.33A is added to the Plan, to read in its entirety as follows: "2.33A. 'Prior Matching Contribution Account' means that portion, if any, of a Participant's Share of the Trust Fund which is attributable to Participating Employer matching contributions under the Plan as in effect prior to January 1, 1987, and the earnings thereon." 5. Section 5.1A is added to the Plan as follows: "Section 5.1A. Matching Contributions. For each Plan Year commencing ---------------------- on or after January 1, 1995, the Participating Employers will contribute to the Trust for the benefit of eligible Participants such Matching Contributions, if any, as are determined pursuant to this Section. For each such Plan Year, the Board of Directors shall determine the aggregate net after-tax income for the Year of the Company and all Affiliated Companies, based on such accounting procedures and adjustments as the Board of Directors may reasonably determine but without taking into account Plan contributions under this Section. The aggregate net after-tax income amount so determined shall then be reduced by an amount equal to 25% of the aggregate Elective Contributions made for the Plan Year for the benefit of eligible Participants (for this purpose disregarding Elective Contributions for the benefit of any eligible Participant for any Plan Year in excess of 6% of such eligible Participant's Salary for such Plan Year). If the resulting balance is a positive number, the Board of Directors may, but need not, determine that a Matching Contribution will be made for the Plan Year. If the Board of Directors determines that a Matching Contribution is to be made for the Plan Year, each Participating Employer shall contribute, for the benefit of each of its eligible Participants (as determined by the Committee), a Matching Contribution equal to a percentage (not to exceed 25%), as set by the Board of Directors, of the Elective Contributions made for the benefit of such eligible Participant for such Year, disregarding any Elective Contributions for any Plan Year in excess of 6% of such eligible Participant's Salary for such Plan Year. For purposes of this Section 5.1A, a Participant shall be considered an 'eligible Participant' for any Plan Year if he or she is an Eligible Employee on the last day of the Plan Year or, while an Eligible Employee, separated from service on account of Retirement, death, or Total and Permanent Disability during such Plan Year." 6. Section 5.2 is amended by inserting the phrase "and Section 5.1A" after the phrase "Section 5.1." 7. Section 5.4 is amended by inserting the following paragraph to the end thereof: "Elective Contributions for the benefit of a Participant which are returned as a result of this Section shall not be taken into account in determining the amount of Matching Contributions to be made for the Participant's benefit. To the extent Matching Contributions have already been made with respect to the Elective Contributions at the time the Elective Contributions are determined to be excess contributions, such Matching Contributions shall be distributed to the Participant at the same time the Elective Contributions are returned." 8. Section 5.4A is added to the Plan as follows: "5.4A. Certain limitations and adjustments pertaining to Matching ---------------------------------------------------------- Contributions. ------------- (a) In general. Matching Contributions made under the Plan ---------- are subject to the limits of Code section 401(m), as more fully described below. The Plan provisions relating to the 401(m) limits are to be interpreted and applied in accordance with Code sections 401(m) and 401(a)(4), which are hereby incorporated by reference, and in such manner as to satisfy such other requirements relating to Code section 401(m) as may be prescribed by the Secretary of the Treasury from time to time. (b) Limits. In addition to the limitations of Section 5.5, ------ Matching Contributions for any Plan Year shall be limited so that the nondiscrimination standard described in this subsection is satisfied. The nondiscrimination standard described in this subsection is satisfied if and only if (i) either (A) the average of the ratios of all Matching Contributions to Salary (the "contribution ratios") for all highly compensated Participants does not exceed 1.25% times the average of the contribution ratios for all Participants other than highly compensated Participants, or (B) the excess of the average of the contribution ratios for all highly compensated Participants over that for all other Participants is not more than two percentage points, and the average of the contribution ratios for all highly compensated Participants does not exceed the product of 2 times the average of the contribution ratios for all Participants other than highly compensated Participants; and --- (ii) after taking into account Elective Contributions made for the benefit of highly compensated Participants, the so-called "multiple use" limitations of Treasury Regulations (S)1.401(m)-2 have not been exceeded. For purposes of these determinations, "highly compensated Participants" has the same meaning as in Section 5.3. Elective Contributions not applied to satisfy the Code section 401(k)(3) limits described in Section 5.3 above may be treated as Matching Contributions for purposes of the limitations described in this Section to the extent permitted by Regulation Section 1.401(m)-1(b)(5). In the event that the Plan satisfies the requirements of Code sections 401(k), 410(a)(4), or 410(b) only if aggregated with one or more other plans with the same plan year, or if one or more other plans with the same plan year satisfy such Code sections only if aggregated with this Plan, then this Section shall be applied by determining the ratios of Matching Contributions to Salary as if all such plans were a single plan. (c) Adjustments. Notwithstanding Section 5.1A above, if the ----------- amount determined to be contributed to the Trust for any Plan Year as Matching Contributions would result in a failure to satisfy the limitations of (b) above, then the Matching Contributions to be contributed to the Trust for the benefit of highly compensated Participants shall be reduced in such manner and to such extent as the Committee determines to be necessary to satisfy such limitations. If, notwithstanding such precautions, Matching Contributions made to the Trust for a Plan Year are later determined to exceed the limitations of (b) above, then before the end of the Plan Year following the Plan Year for which the Matching Contributions were made the Committee shall cause to be distributed the excess of the aggregate amount of the Matching Contributions (and any Elective Contribution taken into account in computing the actual contribution percentages) actually made on behalf of highly compensated employees for the Plan Year over the maximum amount of such contributions permitted under (b) above. In doing so, the Committee shall incrementally decrease, to the extent necessary, the contribution ratios of highly compensated Participants starting with the highest such ratio. The aggregate amount of such decreases will be designated by the Committee as a distribution of excess aggregate contributions and will be distributed to the affected Participants together with any allocable income determined in accordance with applicable Treasury Regulations. For purposes of distributing any excess Matching Contribution under this subsection, the determination and distribution of the excess with respect to a highly compensated Participant whose contribution ratio is determined after application of family aggregation rules will be accomplished by allocating the excess among family members in proportion to the Matching Contributions of each family member who is combined to determine the contribution ratio. Any excess Matching Contributions distributed in accordance with this subsection shall nevertheless be treated as employer contributions for purposes of Code sections 401(a)(4), 404, and 415." 9. Section 5.5 is amended by deleting the phrase "Section 5.1 and Section 5.2" and inserting therefor the phrase "Sections 5.1, 5.1A and 5.2". 10. Section 6.1 is amended by inserting after "Participating Employer Contribution Account" the following phrase ", a Matching Contribution Account". 11. Section 6.2, paragraph (d) is amended by inserting to the end thereof the following: "and credit the Participant's Matching Contribution Account with the contribution (if any) made in respect of such Participant for such Plan Year under Section 5.1A." 12. Section 6.3 is amended in its entirety to read as follows: "6.3. Treatment of forfeitures. If a Participant forfeits any ------------------------ interest in the Trust Fund as provided under Section 10.5 below, the amount of the forfeiture will be applied toward Matching Contributions under Section 5.1A (if any) for the Plan Year, with any excess applied toward Participating Employer Contributions for such Year, if any. If any excess remains after application of the preceding sentence, the excess shall be applied first toward the correction of any errors in allocation, the determination of benefit amounts or the execution of benefit payments, and then toward the payment of Plan expenses in accordance with Section 3.9. If any excess still remains after application of the preceding sentences, it shall be allocated in the same manner as Participating Employer Contributions." 13. Section 6.4, paragraph (d) is amended in its entirety to read as follows: "(d) Correction of excess Annual Addition. The Committee, to the ------------------------------------ extent necessary to satisfy the foregoing limitations in the case of any Participant, shall: (i) first, reduce any future contributions remaining to be made for the Limitation Year for the benefit of the Participant; (ii) second, if a reduction is necessary in respect of amounts already contributed, return to the affected Participant his or her Elective Contributions while transferring any related Matching Contributions (and earnings) to a suspense account within the Plan, to be applied or allocated as hereinafter provided; and (iii) if a further reduction is necessary, transfer any Participating Employer Contributions (and earnings) for the benefit of the Participant to a suspense account within the Plan, to be applied or allocated as hereinafter provided. Amounts held in a suspense account pursuant to the preceding sentence shall be used to reduce Matching Contributions for the benefit of the affected Participant for the next Limitation Year (and succeeding Limitation Years, if any), if the Participant is an Eligible Employee as of the end of such Limitation Year. If the Participant is not an Eligible Employee as of the end of any such Limitation Year, any amount remaining in such suspense account shall be applied toward Matching Contributions for remaining Participants. If for any Plan Year a Participating Employer Contribution but no Matching Contribution is made to the Trust, any amounts that would have been applied under this Section to Matching Contributions shall instead be applied to reduce Participating Employer Contributions." 14. Section 7.6 is amended by inserting the phrase "or Matching" after the phrase "(but not Participating Employer" in the first sentence thereof. 15. Section 10.1 is amended by inserting after the phrase "Participating Employer Contribution Account" the phrase "and Matching Contribution Account". 16. Section 10.2 is amended by inserting after the phrase "Participating Employer Contribution Account" the phrase "and Matching Contribution Account". 17. Section 10.5 is deleted in its entirety and is replaced with the following: "10.5. Forfeitures. If a Participant separates from the service of ----------- the Employer at a time when he or she has a less than one hundred percent (100%) nonforfeitable interest in his or her Participating Employer and Matching Contribution Accounts, the forfeitable portion of such Accounts will immediately be treated as forfeited. Notwithstanding the foregoing, if at any time prior to incurring five consecutive Breaks in Service the Participant is reemployed by the Employer, any amount so forfeited will be recredited to the Participant's Participating Employer and Matching Contribution Accounts, as appropriate, subject to the following special rules: (a) Amounts required to be recredited to a Participant's Participating Employer and Matching Contribution Accounts pursuant to this Section will be taken first from amounts forfeited by other Participants which have not yet been applied in accordance with Section 6.3. (b) A reemployed Participant's nonforfeitable interest in any amounts recredited to his or her Participating Employer and Matching Contribution Accounts pursuant to this Section will be determined under Section 10.2, taking into account the Participant's Years of Service for Vesting accumulated before the separation from service which caused the forfeiture. All forfeitures under this Section 10.5, to the extent not applied to the recrediting of Participating Employer and Matching Contribution Accounts of reemployed Participants as described above, will be applied in accordance with Section 6.3." 18. Section 14.1 is amended by deleting the phrase "the sum of the Elective and Participating Employer Contributions" wherever it appears and replacing that phrase with the following phrase "the sum of the Elective, Matching and Participating Employer Contributions." IN WITNESS WHEREOF, Brown & Sharpe Manufacturing Company. has caused this amendment to be signed by its duly authorized officer this 31st day of May, 1995. BROWN & SHARPE MANUFACTURING COMPANY By: /s/ Charles A. Junkunc ---------------------- EX-10.57 3 AMENDMENT NO. 2 TO RETIREMENT PLAN EXHIBIT 10.57 ------------- THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN FOR MANAGEMENT EMPLOYEES (1994 Restatement) Amendment Two ------------- Pursuant to Section 12.1 of the Brown & Sharpe Savings and Retirement Plan for Management Employees (the "Plan"), the Plan is hereby amended in the following respects to credit service performed for Digital Electronic Automation Company as service under the Plan for purposes of participation and vesting. 1. Section 2.46 is amended by adding to the end thereof the following sentence: "For purposes of this Section 2.46, service performed for Digital Electronic Automation Company shall be credited as service for the Employer, provided, however, that no individual shall participate in the Plan before April 1, 1995, solely on account of the application of this sentence." 2. Section 2.47 is amended by adding to the end thereof the following sentence: "For purposes of this Section 2.47, service performed for Digital Electronic Automation Company shall be credited as service for the Employer." IN WITNESS WHEREOF, Brown & Sharpe Manufacturing Company has caused this instrument to be signed by its duly authorized officer this 31st day of May, 1995. BROWN & SHARPE MANUFACTURING COMPANY By: /s/ Charles A. Junkunc ---------------------- EX-10.58 4 RETIREMENT PLAN EXHIBIT 10.58 ------------- FIRST AMENDMENT TO THE BROWN & SHARPE SAVINGS AND RETIREMENT PLAN ------------------------------------------ Pursuant to Section 12.1 of the Brown & Sharpe Savings and Retirement Plan (the "Plan"), the Plan is hereby amended in the following respects to allow for discretionary matching contributions. This amendment is effective as of January 1, 1995. 1. A new Section 2.24A is added to the Plan, to read in its entirety as follows: "2.24A. 'Matching Contribution' means any contribution made to the Trust under Section 5.1A." 2. A new Section 2.24B is added to the Plan, to read in its entirety as follows: "2.24B. 'Matching Contribution Account' means that portion of a Participant's Share of the Trust Fund which is attributable to Matching Contributions and earnings thereon." 3. Section 5.1A is added to the Plan as follows: "Section 5.1A. Matching Contributions. For each Plan Year commencing ---------------------- on or after January 1, 1995, the Participating Employers will contribute to the Trust for the benefit of eligible Participants such Matching Contributions, if any, as are determined pursuant to this Section. For each such Plan Year, the Board of Directors shall determine the aggregate net after-tax income for the Year of the Company and all Affiliated Companies, based on such accounting procedures and adjustments as the Board of Directors may reasonably determine but without taking into account Plan contributions under this Section. The aggregate net after-tax income amount so determined shall then be reduced by an amount equal to 25% of the aggregate Elective Contributions made for the Plan Year for the benefit of eligible Participants (for this purpose disregarding Elective Contributions for the benefit of any eligible Participant for any Plan Year in excess of 6% of such eligible Participant's Salary for such Plan Year). If the resulting balance is a positive number, the Board of Directors may, but need not, determine that a Matching Contribution will be made for the Plan Year. If the Board of Directors determines that a Matching Contribution is to be made for the Plan Year, each Participating Employer shall contribute, for the benefit of each of its eligible Participants (as determined by the Committee), a Matching Contribution equal to a percentage (not to exceed 25%), as set by the Board of Directors, of the Elective Contributions made for the benefit of such eligible Participant for such Year, disregarding any Elective Contributions for any Plan Year in excess of 6% of such eligible Participant's Salary for such Plan Year. For purposes of this Section 5.1A, a Participant shall be considered an 'eligible Participant' for any Plan Year if he or she is an Eligible Employee on the last day of the Plan Year or, while an Eligible Employee, separated from service on account of Retirement, death, or Total and Permanent Disability during such Plan Year." 4. Section 5.2 is amended by inserting the phrase "and Section 5.1A" after the phrase "Section 5.1." 5. Section 5.4 is amended by inserting the following paragraph to the end thereof: "Elective Contributions for the benefit of a Participant which are returned as a result of this Section shall not be taken into account in determining the amount of Matching Contributions to be made for the Participant's benefit. To the extent Matching Contributions have already been made with respect to the Elective Contributions at the time the Elective Contributions are determined to be excess contributions, such Matching Contributions shall be distributed to the Participant at the same time the Elective Contributions are returned." 6. Section 5.4A is added to the Plan as follows: "5.4A. Certain limitations and adjustments pertaining to Matching ---------------------------------------------------------- Contributions. ------------- (a) In general. Matching Contributions made under the Plan ---------- are subject to the limits of Code section 401(m), as more fully described below. The Plan provisions relating to the 401(m) limits are to be interpreted and applied in accordance with Code sections 401(m) and 401(a)(4), which are hereby incorporated by reference, and in such manner as to satisfy such other requirements relating to Code section 401(m) as may be prescribed by the Secretary of the Treasury from time to time. (b) Limits. In addition to the limitations of Section 5.5, ------ Matching Contributions for any Plan Year shall be limited so that the nondiscrimination standard described in this subsection is satisfied. The nondiscrimination standard described in this subsection is satisfied if and only if (i) either (A) the average of the ratios of all Matching Contributions to Salary (the "contribution ratios") for all highly compensated Participants does not exceed 1.25% times the average of the contribution ratios for all Participants other than highly compensated Participants, or (B) the excess of the average of the contribution ratios for all highly compensated Participants over that for all other Participants is not more than two percentage points, and the average of the contribution ratios for all highly compensated Participants does not exceed the product of 2 times the average of the contribution ratios for all Participants other than highly compensated Participants; and --- (ii) after taking into account Elective Contributions made for the benefit of highly compensated Participants, the so-called "multiple use" limitations of Treasury Regulations (S) 1.401(m)-2 have not been exceeded. For purposes of these determinations, "highly compensated Participants" has the same meaning as in Section 5.3. Elective Contributions not applied to satisfy the Code section 401(k)(3) limits described in Section 5.3 above may be treated as Matching Contributions for purposes of the limitations described in this Section to the extent permitted by Regulation Section 1.401(m)-1(b)(5). In the event that the Plan satisfies the requirements of Code sections 401(k), 410(a)(4), or 410(b) only if aggregated with one or more other plans with the same plan year, or if one or more other plans with the same plan year satisfy such Code sections only if aggregated with this Plan, then this Section shall be applied by determining the ratios of Matching Contributions to Salary as if all such plans were a single plan. (c) Adjustments. Notwithstanding Section 5.1A above, if the ----------- amount determined to be contributed to the Trust for any Plan Year as Matching Contributions would result in a failure to satisfy the limitations of (b) above, then the Matching Contributions to be contributed to the Trust for the benefit of highly compensated Participants shall be reduced in such manner and to such extent as the Committee determines to be necessary to satisfy such limitations. If, notwithstanding such precautions, Matching Contributions made to the Trust for a Plan Year are later determined to exceed the limitations of (b) above, then before the end of the Plan Year following the Plan Year for which the Matching Contributions were made the Committee shall cause to be distributed the excess of the aggregate amount of the Matching Contributions (and any Elective Contribution taken into account in computing the actual contribution percentages) actually made on behalf of highly compensated employees for the Plan Year over the maximum amount of such contributions permitted under (b) above. In doing so, the Committee shall incrementally decrease, to the extent necessary, the contribution ratios of highly compensated Participants starting with the highest such ratio. The aggregate amount of such decreases will be designated by the Committee as a distribution of excess aggregate contributions and will be distributed to the affected Participants together with any allocable income determined in accordance with applicable Treasury Regulations. For purposes of distributing any excess Matching Contribution under this subsection, the determination and distribution of the excess with respect to a highly compensated Participant whose contribution ratio is determined after application of family aggregation rules will be accomplished by allocating the excess among family members in proportion to the Matching Contributions of each family member who is combined to determine the contribution ratio. Any excess Matching Contributions distributed in accordance with this subsection shall nevertheless be treated as employer contributions for purposes of Code sections 401(a)(4), 404, and 415." 7. Section 5.5 is amended by deleting the phrase "Section 5.1 and Section 5.2" and inserting therefor the phrase "Sections 5.1, 5.1A and 5.2". 8. Section 6.1 is amended by inserting after "Participating Employer Contribution Account" the following phrase ", a Matching Contribution Account". 9. Section 6.2, paragraph (d) is amended by inserting to the end thereof the following: "and credit the Participant's Matching Contribution Account with the contribution (if any) made in respect of such Participant for such Plan Year under Section 5.1A." 10. Section 6.3 is amended in its entirety to read as follows: "6.3. Treatment of forfeitures. If a Participant forfeits any ------------------------ interest in the Trust Fund as provided under Section 10.5 below, the amount of the forfeiture will be applied toward Matching Contributions under Section 5.1A (if any) for the Plan Year, with any excess applied toward Participating Employer Contributions for such Year, if any. If any excess remains after application of the preceding sentence, the excess shall be applied first toward the correction of any errors in allocation, the determination of benefit amounts or the execution of benefit payments, and then toward the payment of Plan expenses in accordance with Section 3.9. If any excess still remains after application of the preceding sentences, it shall be allocated in the same manner as Participating Employer Contributions." 11. Section 6.4, paragraph (d) is amended in its entirety to read as follows: "(d) Correction of excess Annual Addition. The Committee, to the ------------------------------------ extent necessary to satisfy the foregoing limitations in the case of any Participant, shall: (i) first, reduce any future contributions remaining to be made for the Limitation Year for the benefit of the Participant; (ii) second, if a reduction is necessary in respect of amounts already contributed, return to the affected Participant his or her Elective Contributions while transferring any related Matching Contributions (and earnings) to a suspense account within the Plan, to be applied or allocated as hereinafter provided; and (iii) if a further reduction is necessary, transfer any Participating Employer Contributions (and earnings) for the benefit of the Participant to a suspense account within the Plan, to be applied or allocated as hereinafter provided. Amounts held in a suspense account pursuant to the preceding sentence shall be used to reduce Matching Contributions for the benefit of the affected Participant for the next Limitation Year (and succeeding Limitation Years, if any), if the Participant is an Eligible Employee as of the end of such Limitation Year. If the Participant is not an Eligible Employee as of the end of any such Limitation Year, any amount remaining in such suspense account shall be applied toward Matching Contributions for remaining Participants. If for any Plan Year a Participating Employer Contribution but no Matching Contribution is made to the Trust, any amounts that would have been applied under this Section to Matching Contributions shall instead be applied to reduce Participating Employer Contributions." 12. Section 7.6 is amended by inserting the phrase "or Matching" after the phrase "(but not Participating Employer" in the first sentence thereof. 13. Section 10.1 is amended by inserting after the phrase "Participating Employer Contribution Account" the phrase "and Matching Contribution Account". 14. Section 10.2 is amended by inserting after the phrase "Participating Employer Contribution Account" the phrase "and Matching Contribution Account". 15. Section 10.5 is deleted in its entirety and is replaced with the following: "10.5. Forfeitures. If a Participant separates from the service of ----------- the Employer at a time when he or she has a less than one hundred percent (100%) nonforfeitable interest in his or her Participating Employer and Matching Contribution Accounts, the forfeitable portion of such Accounts will immediately be treated as forfeited. Notwithstanding the foregoing, if at any time prior to incurring five consecutive Breaks in Service the Participant is reemployed by the Employer, any amount so forfeited will be recredited to the Participant's Participating Employer and Matching Contribution Accounts, as appropriate, subject to the following special rules: (a) Amounts required to be recredited to a Participant's Participating Employer and Matching Contribution Accounts pursuant to this Section will be taken first from amounts forfeited by other Participants which have not yet been applied in accordance with Section 6.3. (b) A reemployed Participant's nonforfeitable interest in any amounts recredited to his or her Participating Employer and Matching Contribution Accounts pursuant to this Section will be determined under Section 10.2, taking into account the Participant's Years of Service for Vesting accumulated before the separation from service which caused the forfeiture. All forfeitures under this Section 10.5, to the extent not applied to the recrediting of Participating Employer and Matching Contribution Accounts of reemployed Participants as described above, will be applied in accordance with Section 6.3." 16. Section 14.1 is amended by deleting the phrase "the sum of the Elective and Participating Employer Contributions" wherever it appears and replacing that phrase with the following phrase "the sum of the Elective, Matching and Participating Employer Contributions." IN WITNESS WHEREOF, Brown & Sharpe Manufacturing Company. has caused this amendment to be signed by its duly authorized officer this 31st day of May, 1995. BROWN & SHARPE MANUFACTURING COMPANY By: /s/ Charles A. Junkunc ---------------------- EX-10.59 5 TERMINATION AGREEMENT EXHIBIT 10.59 ------------- Draft of 5/17/95 SEVERANCE AGREEMENT Severance Agreement dated as of May 3, 1995 between Brown & Sharpe Manufacturing Company, headquartered at 200 Frenchtown Road, North Kingstown, RI 02852 (the "Company") and Fred M. Stuber, residing at Chemin des Salines, CH-1132 Lully s/Morges, Switzerland ("Stuber"). WHEREAS, Stuber announced in February, 1995 his intention to resign as an employee, President and CEO of the Company, subject to staying on until the Board of Directors has selected a new President and CEO; and WHEREAS, the Company wishes to confirm its understandings with Stuber with respect to a payment of capital and all other matters in accordance with the terms specified below. NOW THEREFORE, in consideration of the mutual promises set forth below and these premises, the Company and Stuber hereby agree as follows: Section 1. Resignation. Stuber hereby confirms his decision to resign as an employee of the Company effective May 31, 1995, at which time all salary payments and other compensation of any kind whatsoever from the Company and from any subsidiary, affiliate or joint venture of the Company shall cease, except as otherwise expressly provided herein. Stuber has delivered to the Secretary of the Company his resignations (and the resignations have been accepted) effective May 3, 1995 as an officer and director of the Company, each subsidiary of the Company and each joint venture of the Company in which he is an officer or director, and his resignations as a trustee or other fiduciary of any employee benefit plan for any of such entities. Execution of this Agreement by Mr. Stuber shall constitute his resignation as an employee of the Company and any subsidiary or affiliate effective May 31, 1995. Section 2. Capital Payment; Other Benefits. 2.1 Payment of Capital. In accordance with the terms and subject to the ------------------ conditions contained in this Agreement, the Company agrees to make a payment of capital (severance and forbearance of competition) to Stuber in recognition of his past contributions and services to the Company as an employee, President and Chief Executive Officer and in consideration of Stuber entering into the non-competition provisions of this Agreement. The amount of the payment of capital is 681,211 Swiss Francs, consisting of (i) a lump sum payment in cash in the amount of 340,605.50 Swiss Francs on May 31, 1995, which shall be for the non-competition provisions, and (ii) a monthly amount payable on the first day of each month in cash equal to 48,657.93 Swiss Francs per month for seven months, commencing with the month of June, 1995 and ending with the month of December, 1995, which shall be for the severance provisions. Payments shall be made in Switzerland. 2.2 Benefits. -------- 2.2.1 All outstanding stock options previously granted to Stuber may be exercised by Stuber at any time prior to the earlier of (i) their stated expiration date or (ii) three months from May 31, 1995 (the effective date of termination of his employment), as provided in the relevant stock option plan. 2.2.2 16,100 shares of Class A Common Stock held by Stuber subject to forfeiture restrictions which have not lapsed are hereby forfeited and the stock certificates therefor shall be transferred back to the Company, by assignment by Stuber on or promptly after the date hereof for no payment. 2.2.3 Any business expenses of Stuber which are reimbursable by the Company shall be reimbursed by the Company upon submission by Stuber within 30 days of the date hereof of proper documentation in accordance with Company policy (or 30 days after May 31, 1995 in respect of expenses incurred between the date hereof and May 31,1995). 2.2.4 Stuber is a participant in two retirement plans of Tesa SA under which he will receive benefits in accordance with the provisions of those Plans. Stuber confirms that he is not entitled to any other payments from Tesa SA or under Swiss law in connection with his termination of employment. Section 3. Survival of Severance Benefits. In the event Stuber dies, his beneficiary (as designated to the Company in writing) or, if none, his estate, will be entitled to receive all unpaid severance compensation amounts and benefits due under the terms of this Agreement. Section 4. [Intentionally Left Blank]. Section 5. Termination of Employment Status. Stuber acknowledges and agrees with the Company that the monetary arrangements provided for in this Agreement are granted by the Company voluntarily and that in no event are the benefits granted under this Agreement intended or shall be construed to create, imply or constitute salary or the continuation or existence of any employment relationship with the Company subsequent to the May 31, 1995 effective date of Stuber's termination of employment. Section 6. Competitive Activity, Confidential Information. 6.1 Prior to two years from the effective date of termination of Stuber's employment, and in consideration of the payments to Stuber under Section 2.1, Stuber shall not, provided the Company is not in material default of its obligations to Stuber under this Agreement (or has cured such default within 30 days after written notice to the Company), without obtaining the prior written consent of the Company, engage in any competitive activity in the United States and any other country in which the Company (or its subsidiaries or joint ventures) was making sales either on the date hereof or in the later year within said two year period or in which the Company (or its subsidiaries or joint ventures) was proposing to enter directly or through a joint venture or otherwise. For purposes of this Agreement, the term "competitive activity" shall mean Stuber's employment by, consulting for or other participation in, directly or indirectly, through a consulting company or otherwise, any business enterprise engaged in competition with any business of the Company and its subsidiaries or joint venture affiliates. "Competitive activity" shall not include the ownership of securities in any such enterprise and exercise of rights appurtenant thereto not involving any management influence or participation in management by Stuber. 6.2 Except as authorized in writing by the President of the Company, Stuber agrees to keep confidential and not use or disclose all confidential matters of the Company (and its subsidiaries and joint ventures in which the Company participates), including without limitation "know how", trade secrets, customer lists, pricing information, details of material contracts, operational methods, marketing plans or strategies, and all other business information, knowledge or data of a like nature, and including the terms of this Agreement, except to the extent such information, knowledge or data has become or becomes available to the general public (except from a party who unlawfully acquired such information, knowledge, or data). Stuber agrees to return all copies of any materials or other property of the Company under his control and to vacate his offices and the premises of the Company and its subsidiaries effective May 31, 1995. Stuber agrees not to do anything that could reasonably be expected to injure the Company's reputation with its customers, suppliers, or other entities or persons with whom it has relationships. 6.3 The parties agree that a breach by Stuber of Sections 6.1 or 6.2 of this Agreement will cause irreparable harm to the Company and that payment of monies will not remedy such breach and that accordingly, such Sections may be specifically enforced against Stuber, in addition to any other rights or remedies available to the Company on account of any such breach. Without limiting the foregoing, it is understood that the Company shall not be obligated to continue to make the payments specified in Section 2.1 in the event of a material breach by Stuber of Sections 6.1 or 6.2, which breach continues without having been cured within 30 days written notice to Stuber specifying the breach in reasonable detail. It is also understood that if in any judicial proceeding in any jurisdiction a court of competent jurisdiction shall determine that the provisions of Sections 6.1 or 6.2 are unenforceable because they cover too extensive a geographical area or business scope or for any other reason, then the parties intend that such provisions shall be deemed to be limited in such manner as will be deemed enforceable by such court. Section 7. Consulting. Stuber agrees, in consideration of the payments in Section 2.1, to be available, commencing June 1, 1995, for consultation as an independent contractor to the Company within Switzerland (or such other place as is mutually agreed) to the President during the transition period for the new President and CEO of the Company upon request of the President, at times to be mutually agreed, but in any event not more than four work days in the aggregate prior to December 31, 1995. Section 8. Release. Stuber agrees to deliver to the Company an executed release of all claims that he may have against the Company, any of its subsidiaries or affiliates and any of their respective directors, officers and employees, in the form attached as Exhibit A. Section 9. Withholding. All payments required to be made by the Company hereunder to Stuber or his dependents, beneficiaries or estate will be subject to the withholding of such amounts relating to tax and/or other payroll deductions as may be required by law. Section 10. Amendment. No amendment, change or modification of this Agreement may be made except in writing, signed by both parties. Section 11. Miscellaneous. 11.1 The provisions of this Agreement shall be binding upon and shall inure to the benefit of Stuber, his heirs, executors, administrators, legal representatives and the Company and its successors and assigns. 11.2 The validity, interpretation and enforcement of this Agreement shall be governed by the laws of the State of Rhode Island. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity of any other provision. Each of the Company and Stuber (i) irrevocably submits to the jurisdiction of the United States District Court for the District of Rhode Island and to the jurisdiction of the state courts of the State of Rhode Island for the purpose of any suit or other proceeding arising out of or based upon this Agreement, the subject matters hereof or any former relationship between the parties, (ii) agrees that any claim or suit based on this Agreement or relating to any of the foregoing will be brought only in said federal or state courts in the State of Rhode Island and (iii) waives, to the extent not prohibited by applicable law, and agrees not to assert in any such proceeding, any claim that it or he is not subject personally to the jurisdiction of the above-named courts, that he or it is immune from extraterritorial injunctive relief or other injunctive relief, that his or its property is exempt or immune from attachment or execution, that any such proceeding 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. 11.3 No right to or interest in any payments provided herein shall be assignable by Stuber; provided, however, that this provision shall not preclude -------- ------- him from designating one or more beneficiaries to receive any amount that may be payable after his death and shall not preclude the legal representative of his estate from assigning any right hereunder to the person or persons entitled thereto under his will or, in the case of intestacy, to the person or persons entitled thereto under the laws of intestacy applicable to his estate. The term "beneficiaries" as used in this Agreement shall mean a beneficiary or beneficiaries so designated to receive any such amount, or if no beneficiary has been so designated, the legal representative of Stuber's estate. 11.4 Notices. All notices under this Agreement shall be in writing and ------- shall be deemed given if delivered in person or by confirmed telecopy or three business days after being deposited in the U.S. mail, postage pre-paid, registered or certified mail, addressed as follows: If to the Company, to: Brown & Sharpe Manufacturing Company 200 Frenchtown Road North Kingstown, RI 02852 Attention: President With a copy to: Ropes & Gray One International Place Boston, MA 02110 Attention: Howard K. Fuguet, Esq. If to Stuber, to Chemin des Salines CH-1132 Lully s/Morges SWITZERLAND 11.5 This Agreement, together with the employee benefit plans in which Stuber is a participant, as listed in Section 2, constitutes the entire agreement between the parties (and any subsidiaries or joint ventures of the Company) with respect to the resignation of Stuber and any severance, compensation, pension or other benefit arrangements continuing after his termination of employment and supercedes any other oral or written agreements or understandings with respect thereto (including without limitation any agreement between Stuber and Tesa SA dated November 10, 1988 and any agreement between the Company and Stuber dated September 18, 1990). 11.6 The Company hereby guarantees, warrants and covenants that the provisions of Section 10 and Section 11 of the By-laws shall remain applicable to claims against Stuber, relating to action or non-action prior to his resignation as a director and officer of the Corporation (and any subsidiary or affiliate), notwithstanding any repeal or modification of said By-law. In addition, the Company agrees that it will, for the next five years, include Stuber (to the same extent as if he were still a director and officer), as an insured under the Company's D&O Insurance Policy (presently with Chubb Insurance Company) with respect to claims later made with respect to actions or non-actions occurring prior to Stuber's resignation as such director and officer. Section 12. Review of Agreement. In signing this Agreement, Stuber acknowledges that he understands its provisions, that his agreement is knowing and voluntary and that he has been afforded a full and reasonable opportunity of at least 21 days to consider its terms and consult with or seek advice from an attorney or any other person of his choice, and that he has been advised by the Company to consult with an attorney prior to executing this Agreement. Stuber may revoke this Agreement at any time during the seven day period immediately following the date of Stuber's execution and delivery of this Agreement. If this Agreement is not revoked by Stuber by written notification to the Company at the address set forth above prior to the expiration of said seven-day period, this Agreement shall take effect as a legally binding agreement between Stuber and the Company on the basis set forth above. IN WITNESS WHEREOF, the Company and Stuber have each caused this Agreement to be duly executed and delivered as of the date set forth above. BROWN & SHARPE MANUFACTURING COMPANY By: /s/ Frank T. Curtin ------------------- /s/ Fred M. Stuber 5/23/95 ------------------------ Fred M. Stuber EX-10.60 6 EMPLOYMENT AGREEMENT EXHIBIT 10.60 ------------- EMPLOYMENT AGREEMENT AGREEMENT by and between Brown Sharpe Manufacturing Company ("Company"), a Delaware corporation with its principal place of business at 200 Frenchtown Road, North Kingstown, RI 02852, and Frank T. Curtin of One Underdown Road, Ann Arbor, Michigan 48105 (the "Executive"), effective as of May 2, 1995. WHEREAS, the operations of the Company require new leadership by an individual qualified for this task; WHEREAS, the Executive is possessed of certain experience and expertise that qualify him to provide the direction and leadership required by the Company; and WHEREAS, subject to the terms and conditions hereinafter set forth, the Company wishes to employ the Executive as its President and Chief Executive Officer and the Executive wishes to accept such employment; NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms, provisions and conditions set forth in this Agreement, the parties hereby agree: 1. Employment. Subject to the terms and conditions set forth in this ---------- Agreement, the Company hereby offers and the Executive hereby accepts employment. 2. Term. Subject to earlier termination as hereafter provided, the ---- Executive's employment hereunder shall be for a term of three (3) years, commencing on the effective date hereof, and may be extended or renewed only by a written agreement signed by the Executive and an officer of the Company expressly authorized by the Company's Board of Directors. The term of this Agreement, as from time to time extended or renewed, is hereafter referred to as "the term of this Agreement" or "the term hereof". 3. Capacity and Performance. ------------------------ a. During the term hereof, the Executive shall serve the Company as its President and Chief Executive Officer. b. During the term hereof, the Executive shall be employed by the Company on a full-time basis and shall have the leadership of and be responsible to the Board of Directors for all operations of the Company and shall have all powers and duties consistent with such position, subject to the direction of the Board. c. During the term hereof, and subject to the provisions of Section 9.d, the Executive shall devote his full business time (other than vacations) and his best efforts, business judgment, skill and knowledge exclusively to the advancement of the business and interests of the Company and to the discharge of his duties and responsibilities hereunder, except as provided in Section 9.d. The Executive shall not engage in any other business activity or serve in any industry, trade, governmental position during the term of this Agreement, except as may be approved by the Board. d. The Company agrees to propose and recommend to the Board of Directors that the Executive be elected by the Board as a director to fill the unexpired term of Fred Stuber, upon Mr. Stuber's resignation as a director on the date hereof, and the Company further agrees to propose and recommend to the shareholders of the Company at each appropriate Annual Meeting of such shareholders during the term hereof, the re-election of the Executive as a member of the Board. e. The Executive agrees that he shall as soon as practicable move his residence and home to Rhode Island, to be able to be close to the Company's headquarters at North Kingstown, Rhode Island. 4. Compensation and Benefits. As compensation for all services performed ------------------------- by the Executive under and during the term hereof and subject to performance of the Executive's duties and of the obligations pursuant to this Agreement: a. Base Salary. During the term hereof, the Company shall pay the ----------- Executive base salary at the rate of Three Hundred Thousand Dollars ($300,000) per annum, payable weekly in accordance with the payroll practices of the Company for its executives, and subject to increase from time to time by the Board, in its sole discretion. Such base salary, as from time to time in effect is hereafter referred to as the "Base Salary". The Executive shall have the right to defer portions of Base Salary and of Annual Incentive Award, until a date in a later year, including a date beyond the termination of his employment with the Company, under provisions that are mutually satisfactory to the Executive and the Salary Committee of the Board of Directors. b. Annual Incentive Award. Executive shall be entitled to an annual ---------------------- incentive award (the "Incentive Award") payable in cash by February 28 of the following year in an amount up to but not exceeding (i) One Hundred Fifty Thousand Dollars ($150,000), with all or such portion thereof as is "earned out" to be dependent, on a sliding scale, on the extent to which the Committee determines that the Executive has met in each fiscal year, commencing with the year 1996, the objectives previously established for that fiscal year by the Compensation Committee, after consultation with the Executive as to the establishment of such objectives (the "Incentive Award Objectives"). For fiscal 1995 the Executive shall receive a guaranteed Incentive Award of $75,000, payable by February 28, 1996. The Incentive Award Objectives shall be established for each fiscal year, commencing with the year 1996, by February 28 of such year by the Committee, after consultation with the Executive. The determination as to the amount of the Incentive Award payable in respect of each year shall be made by the Committee by not later than March 15 of the following year, and the amount so determined shall be promptly paid by the Company, unless the Executive shall have, prior to the beginning of the year in respect of which the Incentive Award is payable, by written notice to the Company, elected to defer payment until January 2 of such other year as is approved by the Committee. Cash amounts deferred shall bear interest at a rate equal to the average rate of interest at which the Company borrows (or can borrow) short term funds from its regular banks during the year. If this Agreement is terminated under Sections 5a. or 5d., any Incentive Award in respect of the fiscal year in which such termination occurs to which the Executive would be entitled (as subsequently determined by the Compensation Committee) shall be pro-rated based upon the actual number of days elapsed in such fiscal year through and including the effective date of such termination. If this Agreement is terminated under Section 5b., any Incentive Award in respect of the fiscal year in which such termination occurs to which the employee would be entitled (as subsequently determined by the Compensation Committee) shall be pro-rated based on the actual number of days elapsed in such fiscal year through and including the last date prior to the Executive's first becoming disabled. Any Incentive Award in respect of the fiscal year in which the Executive is disabled (but in which year this Agreement has not been terminated on account of disability under Section 5b.) to which the Executive would be entitled (as subsequently determined by the Compensation Committee) shall be pro-rated, based on the actual number of days elapsed in such fiscal year through and including the last date prior to the Executive's first becoming disabled. Any and all questions as to interpretation of any Incentive Award Objectives or any Incentive Award shall be conclusively determined by the Committee in good faith after consultation with the Executive. c. Stock Options. The Executive shall receive options, which are ------------- non-statutory, non-incentive stock options, to purchase Two Hundred Thousand (200,000) shares (the "Shares") of Class A Common Stock of the Company exercisable at the market price on the New York Stock Exchange at the close of business on the effective date of the grant by the Salary Committee of the Board of Directors under the Company's Equity Incentive Plan (the "Plan"), subject to approval of the stockholders of amendments to the Plan as proposed to be acted upon at the May 3 1995 Annual Meeting of Stockholders. The Options have a term of ten (10) years, will become exercisable, so long as the Executive is an employee of the Company under this Agreement (or some other agreement), and subject to the provisions of the Plan for post-termination of employment exercise or option termination as the case may be as follows: From and After May 3, 1997 exercisable as to 50% of the Shares; From and After May 3, 1998 exercisable as to an additional 25% of the Shares; and From and After May 3, 1999 exercisable as to an additional 25% of the Shares The full terms of the Options shall be set forth in the form of Option Certificate attached as Exhibit A (and the Equity Incentive Plan incorporated thereby), which shall be the controlling document in all cases. d. Vacations. During the term hereof, the Executive shall be entitled to --------- four (4) weeks of vacation per annum, to be taken at such times and intervals as shall be determined by the Executive, subject to the reasonable business needs of the Company. e. Medical and Hospitalization Insurance. The Executive (and his family) ------------------------------------- shall be entitled to participate in the Medical and Hospitalization Insurance benefit plan for Company employees, and the Long-Term Disability Plan for Company employees. f. Life Insurance. The Executive shall be entitled to participate in the -------------- Life Insurance benefit plan for Company employees. g. SERP. The Company has a Supplemental Executive Retirement Plan, a copy ---- of which has been provided to Executive. The Company agrees to credit annually to said Plan (or a new plan solely for the Executive) on January 2 for the benefit of the Executive's account thereunder an amount equal to 10% of Base Salary paid during the prior fiscal year. Distributions from the SERP shall be made as provided therein. The Company agrees to enter into a SERP for the benefit of the Executive as soon as practicable after the date hereof. h. Other Benefits. During the term hereof, and subject to the eligibility -------------- criteria of and any contribution thereto generally required of executives of the Company, the Executive shall be entitled to participate in any other employee benefit plans from time to time in effect for executives of the Company generally, including the Company Savings and Retirement Plan for Management Employees, the Company ESOP and the Amended Profit Incentive Plan, except to the extent that the Annual Incentive Award provided for in Section 4b above shall preclude any annual award under the Amended Profit Incentive Plan and except to the extent that such other plans are in a category of benefit otherwise provided to the Executive under this Agreement. The Executive is not precluded from receiving an additional award under the Equity Incentive Plan. The Company may alter, modify, add to or delete its employee benefit plans at any time as it, in its sole judgment, determines to be appropriate. In addition, it is understood that, contingent upon the Company attaining profitable operations, the Salary Committee of the Board of Directors will undertake a review of the Company's various compensation, incentive and retirement programs and its other employee benefit programs, in which review the Executive will be asked to participate. i. Business Expenses. The Company shall pay or reimburse the Executive ----------------- for all reasonable business expenses of the Executive in the performance of his duties and responsibilities hereunder, subject to such reasonable substantiation and documentation as may be specified by the Company from time to time. j. Lump Sum Payment. The Company shall pay the Executive within seven (7) ---------------- days of the effective date of this Agreement an amount equal to $50,000, which shall be used by the Executive in connection with the sale of his house in Michigan, purchase of a house in Rhode Island and the like. In addition, the Company shall reimburse the Executive for moving expenses from Michigan to Rhode Island and for the reasonable cost of interim lodging until such time as the Executive has moved into a house in Rhode Island and of interim travel expenses to and from his present residence in Michigan and Rhode Island interim lodging. 5. Termination of Employment and Severance Benefits. Notwithstanding the ------------------------------------------------ provisions of Section 2 hereof, the Executive's employment hereunder shall terminate prior to the expiration of the term of this Agreement under the following circumstances: a. Death. In the event of the Executive's death during the term hereof, ----- the Company shall pay to the Executive's designated beneficiary or, if no beneficiary has been designated by the Executive, to his estate, any earned and unpaid Base Salary that is earned but unpaid, pro-rated through the date of his death and payment or reimbursement of business expenses accrued prior to the date of death. b. Disability. ---------- i. The Company may terminate the Executive's employment hereunder, upon thirty (30) days written notice to the Executive, in the event that the Executive becomes disabled during his employment hereunder through any illness, injury, accident or condition of either a physical or psychological nature and, as a result, is unable to perform substantially all of his duties and responsibilities hereunder for one hundred twenty (120) consecutive days during any period of three hundred and sixty-five (365) consecutive calendar days. ii. The Board may designate another employee to act in the Executive's place during any period of the Executive's disability prior to termination as provided in b.i above. Notwithstanding any such designation, the Executive shall continue to receive from the Company (or under a disability plan) the Base Salary in accordance with Section 4a and benefits in accordance with other portions of Section 4 (other than 4b., except to the extent that payment of an Incentive Award is expressly provided for therein), to the extent permitted by the then-current terms of the applicable benefit plans until the termination of his employment. iii. The Executive shall be entitled to participate in the Company's long-term disability plan, to the same extent as other employees. iv. If any question shall arise as to whether during any period the Executive is disabled through any illness, injury, accident or condition of either a physical or psychological nature so as to be unable to perform substantially all of his duties and responsibilities hereunder, the Executive may, and at the request of the Company shall, submit to a medical examination by a physician selected by the Company, to whom the Executive or his duly appointed guardian has no reasonable objection, to determine whether the Executive is so disabled and such determination shall for the purposes of this Agreement be conclusive of the issue. If such question shall arise and the Executive shall fail to submit to such medical examination, the Company's determination of the issue shall be binding on the Executive. c. By the Company for Cause. The Company may terminate the Executive's ------------------------ employment hereunder for Cause at any time upon written notice to the Executive setting forth in reasonable detail the nature of such Cause, and the Executive's failure to cure within thirty (30) days. The following, as determined by the Board in its reasonable judgment, shall constitute Cause for termination: The Executive's willful failure to perform (other than by reason of disability) or negligence (measured against standards generally prevailing in the Company's industry) in the performance of his material duties and responsibilities to the Company; or other deliberate willful action by the Executive that is materially harmful to the business, interests or reputation of the Company; For purposes of Section 5c., no act, or failure to act, shall be "willful" unless done, or omitted to be done, without reasonable belief that the action or omission was in the best interests of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to him a notice of termination, and such termination shall have been approved by the vote of two-thirds of the members of the Board of Directors at a meeting of the Board (after reasonable notice to the Executive and an opportunity for him, together with counsel, to be heard before the Board of Directors) finding that, in the good faith opinion of the Board of Directors, the above standard of termination for Cause was met in such case and that such Cause was not cured. Upon the giving of notice of termination of the Executive's employment hereunder for Cause following the Executive's failure to cure, the Company shall have no further obligation or liability to the Executive, other than for Base Salary earned and unpaid at the date of termination, any Incentive Award that is determined to be earned in accordance with Section 4b. and this Section, and for payments or reimbursement of business expenses accrued prior to the date of termination. Upon termination of employment for Cause, all options shall terminate. For purposes of this Section 5c., so long as the Executive is an employee of the Company at the end of the fiscal year in respect of which an Incentive Award is subsequently determined by the Committee to be payable, he (or his estate in the event of his subsequent death) shall be entitled to receive the Incentive Award so determined by the Compensation Committee by not later than March 15 of the following year, whether or not he is on that date of determination an employee of the Company. d. By the Company Other than for Cause. The Company may terminate the ----------------------------------- Executive's employment hereunder other than for Cause at any time upon notice to the Executive, provided that the Board of Directors determines, after consultation with the Executive and after setting forth the reasons for the Board's actions, that retention of the Executive as the Chief Executive Officer would no longer be in the best interests of the Company. In the event of such termination, then for the remaining period of the term of this Agreement, the Company shall continue to pay the Executive the Base Salary at the rate in effect on the date of termination, provided that the period under which Base Salary shall be payable under this Section shall in no event be less than twelve (12) months, and provided further that this 12 month provision shall continue in effect if the Executive remains an employee of the Company after the expiration of the term of this Agreement and is later terminated by the Company other than for cause. Subject to any employee contribution applicable to the Executive on the date of termination, the Company shall continue to contribute, for such remaining period of the term of this Agreement, to the cost of the Executive's participation (including his family) in the Company's group medical and hospitalization insurance plans and group life insurance plan, provided that the Executive is entitled to continue such participation under applicable law and plan terms. Options which are exercisable immediately prior to any such termination shall be exercisable in accordance with the provisions of the Plan. Reference is made to the applicable provisions of the next to last paragraph of Section 4b. The provisions of this subsection 5d shall control the provisions of Section 4c. e. By the Executive for Good Reason Following a Change in Control. The -------------------------------------------------------------- Executive may terminate his employment hereunder for Good Reason following a Change in Control (as defined below), upon notice to the Company setting forth in reasonable detail the nature of such Good Reason, and the Company's failure to remedy such matter within thirty (30) days. The following shall constitute Good Reason for termination by the Executive: i. Failure of the Company to continue the Executive in the position of President and Chief Executive Officer; ii. Material diminution in the nature or scope of the Executive's responsibilities, duties or authority; or iii. Material failure of the Company to provide the Executive the Base Salary and benefits in accordance with the terms of Section 4 hereof (including the Incentive Award to the extent earned out as determined in Section 4b. above). In the event of termination in accordance with this Section 5e, then, for the remaining term of this Agreement, the Company shall continue to pay the Executive the Base Salary at the rate in effect on the date of termination. Subject to any employee contribution applicable to the Executive on the date of termination, the Company shall continue to contribute for such remaining period of the term of this Agreement to the cost of the Executive's participation (including his family) in the Company's group medical and hospitalization insurance plans and group life insurance plan, provided that the Executive is entitled to continue such participation under applicable law and plan terms. Options exercisable immediately prior to any such termination shall be exercisable in accordance with the provisions of the Plan. The provisions of this subsection 5e shall control the provisions of Sections 4b and 4.c. 6. Effect of Termination. The provisions of this Section 6 shall apply --------------------- to termination due to the expiration of the term, termination pursuant to Section 5 or otherwise. a. Except for benefits continued pursuant to Section 5.d and Section 5.e, benefits shall terminate pursuant to the terms of the applicable benefit plans based on the date of termination of the Executive's employment without regard to any continuation of Base Salary or other payment to the Executive following such date of termination. b. Provisions of this Agreement shall survive any termination if so provided herein or if necessary or desirable fully to accomplish the purposes of such provision, including without limitation the obligations of the Executive under Sections 7, 8 and 9 hereof. The obligation of the Company to make payments to or on behalf of the Executive under Section 5d and 5e hereof is expressly conditioned upon the Executive's continued full performance of obligations under Sections 7, 8 and 9 hereof. The Executive agrees that, except as expressly provided in Section 5d and 5e, no compensation is earned after termination of employment or as a result of termination of employment. 7. Confidential Information. ------------------------ a. The Executive acknowledges that the Company and its Subsidiaries continually develop Confidential Information, that the Executive may develop Confidential Information for the Company or its Subsidiaries and that the Executive may learn of Confidential Information during the course of employment. The Executive will comply with the policies and procedures of the Company and its Subsidiaries for protecting Confidential Information and shall never disclose to any Person (except as required by applicable law or for the proper performance of his duties and responsibilities to the Company and its Subsidiaries), or use for his own benefit or gain, any Confidential Information obtained by the Executive incident to his employment or other association with the Company or any of its Subsidiaries. The Executive understands that this restriction shall continue to apply after his employment terminates, regardless of the reason for such termination. b. All documents, records, tapes and other media of every kind and description relating to the business, present or otherwise, of the Company or its Subsidiaries and any copies, in whole or in part, thereof (the "Documents"), whether or not prepared by the Executive, shall be the sole and exclusive property of the Company and its Subsidiaries. The Executive shall safeguard all Documents and shall surrender to the Company at the time his employment terminates, or at such earlier time or times as the Board or its designee may specify, all Documents then in the Executive's possession or control. 8. Assignment of Rights to Intellectual Property. The Executive shall --------------------------------------------- promptly and fully disclose all Intellectual Property to the Company. The Executive hereby assigns and agrees to assign to the Company (or as otherwise directed by the Company) the Executive's full right, title and interest in and to all Intellectual Property. The Executive agrees to execute any and all applications for domestic and foreign patents, copyrights or other proprietary rights and to do such other acts (including without limitation the execution and delivery of instruments of further assurance or confirmation) requested by the Company to assign the Intellectual Property to the Company and to permit the Company to enforce any patents, copyrights or other proprietary rights to the Intellectual Property. The Executive will not charge the Company for time spent in complying with these obligations. All copyrightable works that the Executive creates shall be considered "work made for hire". 9. Restricted Activities. The Executive agrees that some restrictions on --------------------- his activities during and after his employment are necessary to protect the goodwill, Confidential Information and other legitimate interests of the Company and its Subsidiaries, and that the agreed restrictions set forth below will not deprive the Executive of the ability to earn a livelihood: a. While the Executive is employed by the Company and for two years after his employment terminates (the "Non-Competition Period"), the Executive shall not, directly or indirectly, whether as owner, partner, investor, consultant, agent, employee, co-venturer or otherwise, compete with the Company or any of its Subsidiaries within the United States, or within any foreign county in which the Products are sold at the date of termination of employment, or undertake any planning for any business competitive with the Company or any of its Subsidiaries. Specifically, but without limiting the foregoing, the Executive agrees not to engage in any manner in any activity that is directly or indirectly competitive with the business of the Company or any of its Subsidiaries as conducted or under consideration at any time during the Executive's employment. Restricted activity also includes without limitation accepting employment or a consulting position with any Person who is, or at any time within twelve (12) months prior to termination of the Executive's employment has been, a distributor of the Company or any of its Subsidiaries. For the purposes of this Section 9, the business of the Company and its Subsidiaries shall include all Products. b. The Executive further agrees that while he is employed by the Company and during the Non-Competition Period, the Executive will not hire or attempt to hire any employee of the Company or any of its Subsidiaries, assist in such hiring by any Person, encourage any such employee to terminate his or her relationship with the Company or any of its Subsidiaries, or solicit or encourage any customer or vendor of the Company or any of its Subsidiaries to terminate its relationship with them, or, in the case of a customer, to conduct with any Person any business or activity which such customer conducts or could conduct with the Company or any of its Subsidiaries. c. The provisions of this Section 9 shall not be deemed to preclude the Executive from employment during the Non-Competition Period following termination of employment hereunder by a corporation, some of the activities of which are competitive with the business of the Company, if the Executive's employment does not relate, directly or indirectly, to such competitive business, and nothing contained in this Section 9 shall be deemed to prohibit the Executive, during the Non-Competition Period following termination of employment hereunder, from acquiring or holding, solely as an investment, publicly traded securities of any competitor corporation so long as such securities do not, in the aggregate, constitute one-half of 1% of the outstanding voting securities of such corporation. Without limiting the foregoing, it is understood that the Company shall not be obligated to continue to make the payments specified in Section 5d and 5e in the event of a material breach by the Executive of the provisions of Sections 7, 8 or 9 of this Agreement, which breach continues without having been cured within 30 days after written notice to the Executive specifying the breach in reasonable detail. d. The Executive owns a pre-existing corporation known as Curtin & Associates, Inc. which develops computer software for business applications. The business of Curtin & Associates, Inc. does not compete with the business of the Company. The Executive does not participate in the day-to-day operations of Curtin & Associates, Inc. and he represents and agrees that his part-time responsibilities to Curtin & Associates, Inc. will not conflict with his obligations under this Agreement. The provisions of this Section 9 shall not preclude the Executive's ownership and part time involvement in the operations of Curtin & Associates, Inc. so long as such business does not compete with the Company. 10. Enforcement of Covenants. The Executive acknowledges that he has ------------------------ carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed upon him pursuant to Sections 7, 8 and 9 hereof. The Executive agrees that said restraints are necessary for the reasonable and proper protection of the Company and its Subsidiaries and that each and every one of the restraints is reasonable in respect to subject matter, length of time and geographic area. The Executive further acknowledges that, were he to breach any of the covenants contained in Sections 7, 8 or 9 hereof, the damage to the Company would be irreparable. The Executive therefore agrees that the Company, in addition to any other remedies available to it, shall be entitled to preliminary and permanent injunctive relief against any breach or threatened breach by the Executive of any of said covenants, without having to post bond. The parties further agree that, in the event that any provision of Section 7, 8 or 9 hereof shall be determined by any court of competent jurisdiction to be unenforceable by reason of its being extended over too great a time, too large a geographic area or too great a range of activities, such provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law. 11. Conflicting Agreements. The Executive hereby represents and warrants ---------------------- that the execution of this Agreement and the performance of his obligations hereunder will not breach or be in conflict with any other agreement to which the Executive is a party or is bound and that the Executive is not now subject to any covenants against competition or similar covenants that would affect the performance of his obligations hereunder. The Executive will not disclose to or use on behalf of the Company any proprietary information of a third party without such party's consent. 12. Indemnification. The Company shall indemnify the Executive to the --------------- extent provided for Company executive officers in its then current Articles of Incorporation or By-Laws. The Executive agrees to promptly notify the Company of any actual or threatened claim arising out of or as a result of his employment with the Company. 13. Full Settlement. Following a termination of employment, the Executive --------------- shall not be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. 14. Definitions. Words or phrases which are initially capitalized or are ----------- within quotation marks shall have the meanings provided in this Section 13 and as provided elsewhere herein. For purposes of this Agreement, the following definitions apply: a. "Confidential Information" means any and all information of the Company and its Subsidiaries that is not generally known by others with whom they compete or do business, or with whom they plan to compete or do business and any and all information not readily available to the public, which, if disclosed by the Company or its Subsidiaries would assist in competition against them. Confidential Information includes without limitation such information relating to (i) the development, research, testing, manufacturing, plant operational processes, marketing and financial activities, including costs, profits and sales, of the Company and its Subsidiaries, (ii) the Products and all formulas therefor, (iii) the costs, sources of supply, financial performance and strategic and other business plans of the Company and its Subsidiaries, (iv) the identity and special needs of the customers and suppliers of the Company and its Subsidiaries and (v) the people and organizations with whom the Company and its Subsidiaries have business relationships and those relationships. Confidential Information also includes comparable information that the Company or any of its Subsidiaries have received belonging to others or which was received by the Company or any of its Subsidiaries with any understanding that it would not be disclosed. b. "Intellectual Property" means inventions, discoveries, developments, methods, processes, formulas, compositions, works, concepts and ideas (whether or not patentable or copyrightable or constituting trade secrets) conceived, made, created, developed or reduced to practice by the Executive (whether alone or with others, whether or not during normal business hours or on or off Company premises) during the Executive's employment that relate to either the Products or any prospective activity of the Company or any of its Subsidiaries. c. "Products" mean all products planned, researched, developed, tested, manufactured, sold, licensed, leased or otherwise distributed or put into use by the Company or any of its Subsidiaries, together with all services provided or planned by the Company or any of its Subsidiaries, during the Executive's employment. d. A "Change in Control" shall be deemed to have occurred if: (a) any person as such term is used in Sections 13(d) and 14(d) of the 1934 Act (other than (i) the Company, (ii) members of or trusts for the benefit of the family of Henry D. Sharpe, (iii) Finmeccanica S.A. or its affiliates; (iv) any subsidiary of the Company; (v) any trustee or other fiduciary holding securities under an employee benefit plan of the Company or of any subsidiary of the Company; or (vi) any company owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, who is or becomes the beneficial owner (as defined in Section 13(d) of the 1934 Act), together with all affiliates and associates (as such terms are used in Rule 12b-2 of the General Rules and Regulations under the 1934 Act) of such person, directly or indirectly, of securities of the Company representing the greater of (A) 35% or more of the combined voting power of the Company's then outstanding securities or (B) more than the combined voting power of the Company's then outstanding securities held in the aggregate by persons in clauses (ii) - (v) of this Clause (a); (b) 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 affected to implement a recapitalization of the Company (or similar transaction) in which no person (with the exception given and the method of determining beneficial ownership used in clause (a) of this definition) acquires more than 50% of the combined voting power of the Company's then outstanding securities; or (c) during any period of two consecutive years (not including any period prior to the execution of 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 (a), (b) or (d) of this definition) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved cease for any reason to constitute at least a majority thereof; or (d) the shareholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets. 15. Withholding. All payments made by the Company under this Agreement ----------- shall be reduced by any tax or other amounts required to be withheld by the Company under applicable law. 16. Assignment. Neither the Company nor the Executive may make any ---------- assignment of this Agreement or any interest herein, by operation of law or otherwise, without the prior written consent of the other; provided, however, that, in the event that the Company shall hereafter effect a reorganization, consolidate with, or merge into, any other Person or transfer all or substantially all of its properties or assets to any other Person, the Company shall require such Person or the resulting entity to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it. This Agreement shall inure to the benefit of and be binding upon the Company and the Executive, their respective successors, executors, administrators, heirs and permitted assigns. 17. Severability. If any portion or provision of this Agreement shall to ------------ any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 18. Waiver. No waiver of any provision hereof shall be effective unless ------ made in writing and signed by the waiving party. The failure of either party to require the performance of any term or obligation of this Agreement, or the waiver by either party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. 19. Notices. Any and all notices, requests, demands and other ------- communications provided for by this Agreement shall be in writing and shall be effective when delivered in person or deposited in the United States mail, postage prepaid, registered or certified, and addressed to the Executive at his last known address on the books of the Company or, in the case of the Company, at its principal place of business, attention Chief Financial Officer, with a copy to Ropes & Gray, One International Place, Boston, MA 02110, Attention: Howard K. Fuguet, Esq., or to such other address as either party may specify by notice to the other. 20. Medical Physical. It is understood that the offer by the Company set ---------------- forth in this Agreement is subject to the Executive's passing, to the reasonable satisfaction of the Company, a complete medical physical. 21. Entire Agreement. This Agreement constitutes the entire agreement ---------------- between the parties and supersedes all prior communications, representations and understandings, written or oral, with respect to the terms and conditions of the Executive's employment. 22. Amendment. This Agreement may be amended or modified only by a --------- written instrument signed by the Executive and by a expressly authorized officer of the Company. 23. Governing Law and Consent to Jurisdiction. This is a Rhode Island ----------------------------------------- contract and shall be construed and enforced under and be governed in all respects by the laws of the State of Rhode Island, without regard to the conflict of laws principles thereof. Each of the Company and the Executive (i) irrevocably submits to the jurisdiction of the United States District Court for the District of Rhode Island and to the jurisdiction of the state courts of the State of Rhode Island 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 court, and (ii) waives, to the extent not prohibited by applicable law and agrees not to assert in any such proceedings, any claim that it is not subject personally to the jurisdiction of the above-named courts, that he or it is immune from extraterritorial injunctive relief or other injunctive relief, 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. IN WITNESS WHEREOF, this Agreement has been executed by the Company, by its duly authorized officer, and by the Executive, as of the date first above written. THE EXECUTIVE: BROWN & SHARPE MANUFACTURING COMPANY /s/ Frank T. Curtin By: /s/ Henry D. Sharpe, Jr. ------------------- ------------------------ Title: Chairman of the Board of Directors ---------------------------------- EX-11 7 COMPUTATION TABLE EXHIBIT 11 ---------- BROWN & SHARPE MANUFACTURING COMPANY ------------------------------------ COMPUTATION OF PER SHARE DATA ----------------------------- (Dollars in Thousands Except Per Share Data)
Quarter Ended Half-Year Ended ------------- --------------- June 30, July 2, June 30, July 2, 1995 1994 1995 1994 ---- ---- ---- ---- Primary: Average shares outstanding 8,702,828 5,191,299 8,691,487 5,114,403 Net effect of dilutive stock options -- based on the treasury stock method using average market price 2,413 - 1,206 4,854 ---------- ---------- ---------- ---------- Totals 8,705,241 5,191,299 8,692,693 5,119,248 ========== ========== ========== ========== Net income (loss) $ 1,045 $ (1,368) $ (410) $ (4,242) ========== ========== ========== ========== Per share amount $ .12 $ (.26) $ (.05) $ (.83) ========== ========== ========== ========== Fully diluted: Average shares outstanding 8,702,828 5,191,299 8,691,487 5,114,403 Net effect of dilutive stock options -- based on the treasury stock method using average market price which is greater than quarter-end market price 2,413 - 5,706 4,845 Assumed conversion of 9 1/4% convertible subordinated debentures 571,429 609,524 571,429 609,524 ---------- ---------- ---------- ---------- Totals 9,276,670 5,800,823 9,268,622 5,728,772 ========== ========== ========== ========== Net income (loss) $ 1,045 $ (1,368) $ (410) $ (4,242) Add 9 1/4% convertible subordinated debenture interest, net of federal income tax effect 246 263 493 518 ---------- ---------- ---------- ---------- Totals $ 1,291 $ (1,105) $ 83 $ (3,724) ========== ========== ========== ========== Per share amount $ .14 $ (.19) $ .01 $ (.65) ========== ========== ========== ==========
EX-27 8 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1995 DEC-31-1994 JUN-30-1995 6,571 0 105,233 (3,995) 98,950 217,374 140,641 91,063 281,953 127,477 14,000 8,718 0 0 70,987 281,953 155,062 155,062 108,174 108,174 43,337 0 3,948 (210) 200 (410) 0 0 0 (410) (0.05) (0.05)