<PAGE>
 
                                                                   Exhibit 10.20


 
                         TERMINATION BENEFITS AGREEMENT
                         ------------------------------

     AGREEMENT by and between Control Devices, Inc., an Indiana corporation (the
"Company"), and Bruce D. Atkinson (the "Executive"), dated as of the third day
of September, 1998.

     WHEREAS, the Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its shareholders
to assure that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined in Section 2) of the Company.

     WHEREAS, the Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks
created by a pending or threatened Change of Control and to encourage the
Executive's full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and to provide the
Executive with compensation and benefits arrangements upon a Change of Control
which ensure that the compensation and benefits expectations of the Executive
will be satisfied and which are competitive with those of other corporations.

     WHEREAS, to accomplish these objectives, the Board desires to cause the
Company to enter into this Agreement.

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1.  Certain Definitions.  (a)  The "Effective Date" shall mean the first
         -------------------                                                 
date during the Change of Control Period (as defined in Section 1(b)) on which a
Change of Control occurs.  Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the Executive's employment
with the Company is terminated prior to the date on which the Change of Control
occurs, and if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third party who has taken
steps reasonably calculated to effect the Change of Control or (ii) otherwise
arose in connection with or anticipation of the Change of Control, then for all
purposes of this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.

     (b) The "Change of Control Period" shall mean the period commencing on the
date on which a Change of Control occurs and ending on the third anniversary of
such date provided, however, that commencing on each Renewal Date, the Change of
Control Period shall be automatically extended so as to terminate three years
from such Renewal Date, unless at least 60 days prior to the Renewal Date the
Company shall give notice to the Executive that the Change of Control Period
shall not be so extended.

     (c) The "Renewal Date" shall mean each anniversary of the Effective Date of
this Agreement.

     2.  Change of Control.  For the purpose of this Agreement, a "Change of
         -----------------                                                  
Control" shall mean:
<PAGE>
 
     (a) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
of Control: (i) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege), (ii) any
acquisition by the Company, (iii) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any corporation pursuant to
a reorganization, merger or consolidation, if, following such reorganization,
merger or consolidation, the conditions described in clauses (i), (ii) and (iii)
of subsection (c) of this Section 2 are satisfied; or

     (b) Individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or

     (c) Approval by the shareholders of the Company of a reorganization, merger
or consolidation, in each case, unless, following such reorganization, merger or
consolidation, (i) more than 60% of, respectively, the then outstanding shares
of common stock of the corporation resulting from such reorganization, merger or
consolidation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the outstanding Company Common Stock and Outstanding
Company Voting securities immediately prior to such reorganization, merger or
consolidation in substantially the same proportions as their ownership,
immediately prior to such reorganization, merger or consolidation, of the
Outstanding Company Common Stock and outstanding Company Voting Securities, as
the case may be, (ii) no Person (excluding the Company, any employee benefit
plan (or related trust) of the Company or such corporation resulting from such
reorganization merger or consolidation and any Person beneficially owning
immediately prior to such reorganization, merger or consolidation, directly or
indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding
Voting Securities, as the case may be) beneficially owns, directly or
indirectly, 20% or more of, respectively, the then outstanding shares of common
stock of the corporation resulting from such reorganization, merger or
consolidation or the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors and (iii) at least a majority of the members of the board of directors
of the corporation resulting from such reorganization, merger or consolidation
were members of the Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or consolidation; or

     (d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or  (ii) the sale or other disposition
of all or substantially all of the assets of the Company, other than to a
corporation, with respect to which following such sale or other disposition, (A)
<PAGE>
 
more than 60% of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and
outstanding Company Voting Securities, as the case may be, (B) no Person
(excluding the Company and any employee benefit plan (or related trust) of the
Company or such corporation and any Person beneficially owning, immediately
prior to such sale or other disposition directly or indirectly, 20% or more of
the Outstanding Company Common Stock or Outstanding Company Voting Securities,
as the case may be) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of such corporation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors and (C) at
least a majority of the members of the board of directors of such corporation
were members of the Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition of
assets of the Company.

     3.  Employment Period.  The Company hereby agrees to continue the Executive
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in its employ, and the Executive hereby agrees to remain in the employ of the
Company, in accordance with the terms and provisions of this Agreement, for the
period commencing on the Effective Date and ending on the third anniversary of
such date (the "Employment Period").  The Employment Period shall be
automatically extended so as to terminate three years from each Renewal Date,
unless this Agreement is terminated pursuant to the provisions of Section 5.

     4.  Terms of Employment.
         ------------------- 

     (a)  Position and Duties.   (i) During the Employment Period, (A) the
          -------------------                                             
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 90-day period immediately
preceding the Effective Date and (B) the Executive's services shall be performed
at the location where the Executive was employed immediately preceding the
Effective Date or any office which is the headquarters of the Company and is
less than 35 miles from such location.

     (ii) During the Employment Period and excluding any periods of vacation and
sick leave to which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities.  During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement.  It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the Executive's
responsibilities to the Company.
<PAGE>
 
     (b) Compensation.  (i)  Base Salary.  During the Employment Period, the
         ------------        -----------                                    
Executive shall receive an annual base salary ("Annual Base Salary"), which
shall be paid in equal installments on a monthly basis, at least equal to twelve
times the highest monthly base salary paid or payable to the Executive by the
Company and its affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs. During the
Employment Period, the Annual Base Salary shall be reviewed at least annually
and shall be increased at any time and from time to time as shall be
substantially consistent with increases in base salary generally awarded in the
ordinary course of business to other peer executives of the Company and its
affiliated companies. Any increase in Annual Base Salary shall not serve to
limit or reduce any other obligation to the Executive under this Agreement.
Annual Base Salary shall not be reduced after any such increase and the term
Annual Base Salary as utilized in this Agreement shall refer to Annual Base
Salary as so increased. As used in this Agreement, the term, "affiliated
companies" shall include any company controlled by, controlling or under common
control with the Company.

     (ii) Annual Bonus.  In addition to Annual Base Salary, the Executive shall
          ------------                                                         
be awarded, for each fiscal year ending during the Employment Period, an annual
bonus (the "Annual Bonus") in cash at least equal to the average annualized (for
any fiscal year consisting of less than twelve full months or with respect to
which the Executive has been employed by the Company for less than twelve full
months) bonus paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the three
fiscal years immediately preceding the fiscal year in which the Effective Date
occurs (the "Recent Average Bonus").  Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year next following the
fiscal year for which the Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.

     (iii)  Special Bonus.  In addition to Annual Base Salary and Annual Bonus
            -------------                                                     
payable as herein above provided, if the Executive remains employed with the
Company and its affiliated companies through the first anniversary of the
Effective Date, the Company shall pay to the Executive a special bonus (the
"Special Bonus") in recognition of the Executive's services during the crucial
one-year transition period following the Change of Control in cash equal to the
sum of (A) the Executive's Annual Base Salary and (B) the greater of (1) the
Annual Bonus paid or payable, including by reason of any deferral, to the
Executive (and annualized for any fiscal year consisting of less than twelve
full months or for which the Executive has been employed for less than twelve
full months) for the most recently completed fiscal year during the Employment
Period, if any, and (2) the Recent Average Bonus (such greater amount shall be
hereinafter referred to as the "Highest Annual Bonus").  The Special Bonus shall
be paid no later than 30 days following the first anniversary of the Effective
Date.

     (iv) Incentive, Savings and Retirement Plans.  During the Employment
          ---------------------------------------                        
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with incentive opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each
case, less favorable, in the aggregate, than the most favorable of those
provided by the Company and its affiliated companies for the Executive under
such plans, practices, policies and as in effect at any time during the 90-day
period immediately preceding the Effective Date or if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.
<PAGE>
 
     (v) Welfare Benefit Plans.  During the Employment Period, the Executive
         ---------------------                                              
and/or the Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.

     (vi) Expenses.  During the Employment Period, the Executive shall be
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entitled to receive prompt reimbursement for all reasonable employment expenses
incurred by the Executive in accordance with the most favorable policies,
practices and procedures of the Company and its affiliated companies in effect
for the Executive at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.

     (vii)  Fringe Benefits.  During the Employment Period, the Executive shall
            ---------------                                                    
be entitled to fringe benefits in accordance with the most favorable plans,
practices, programs and policies of the Company and its affiliated companies in
effect for the Executive at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies.

     (viii)  Office and Support Staff.  During the Employment Period, the
             ------------------------                                    
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 90-day period immediately preceding the Effective Date or, if more favorable
to the Executive, as provided generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.

     (ix) Vacation.  During the Employment Period, the Executive shall be
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entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.

     5.  Termination of Employment.  (a)  Death or Disability.  The Executive's
         -------------------------        -------------------                  
employment shall terminate automatically upon the Executive's death during the
Employment Period.  If the Company determines in good faith that the Disability
of the Executive has occurred during the Employment Period (pursuant to the
definition of Disability set forth below), it may give to the Executive written
notice in accordance with Section 12(b) of its intention to terminate the
Executive's employment.  In such event, the Executive's employment with the
Company shall terminate effective an the 30th day after receipt of such notice
by the Executive (the "Disability Effective Date"), provided that, within the 30
days after such receipt, the Executive shall not have returned to full-time
performance of the Executive's duties.  For purposes of this Agreement,
"Disability" shall mean the absence of the Executive from the Executive's duties
with the Company on a full-time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness which is determined to be
total
<PAGE>
 
and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld unreasonably).

     (b)  Cause.  The Company may terminate the Executive's employment during
          -----                                                              
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean (i) a material breach by the Executive of the Executive's obligations under
Section 4(a) (other than as a result of incapacity due to physical or mental
illness) which is demonstrably willful and deliberate on the Executive's part,
which is committed in bad faith or without reasonable belief that such breach is
in the best interests of the Company and which is not remedied in a reasonable
period of time after receipt of written notice from the Company specifying such
breach or (ii) the conviction of the Executive of a felony involving moral
turpitude.

     (c) Good Reason; Window Period.  The Executive's employment may be
         --------------------------                                    
terminated (i) during the Employment Period by the Executive for Good Reason or
(ii) during the Window Period by the Executive without any reason.  For purposes
of this Agreement, the "Window Period" shall mean the 30-day period immediately
following the first anniversary of the Effective Date.  For purposes of this
Agreement, "Good Reason" shall mean

     (i) the assignment to the Executive of any duties inconsistent in any
     respect with the Executive's position (including status, offices, titles
     and reporting requirements), authority, duties or responsibilities as
     contemplated by Section 4(a) or any other action by the Company which
     results in a diminution in such position, authority, duties or
     responsibilities excluding for this purpose an isolated, insubstantial and
     inadvertent action not taken in bad faith and which is remedied by the
     Company promptly after receipt of notice thereof given by the Executive;

     (ii) any failure by the Company to comply with any of the provisions of
     Section 4(b), other than an isolated, insubstantial and inadvertent failure
     not occurring in bad faith and which is remedied by the Company promptly
     after receipt of notice thereof given by the Executive;

     (iii)  the Company's requiring the Executive to be based at any office or
     location other than that described in Section 4 (a) (i) (B);

     (iv) any purported termination by the Company of the Executive's employment
     otherwise than as expressly permitted by this Agreement; or

     (v) any failure by the Company to comply with and satisfy Section 11(c),
     provided that such successor has received at least ten days prior written
     notice from the Company or the Executive of the requirements of Section
     11(c).

For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.

     (d) Notice of Termination.  Any termination by the Company for Cause, or by
         ---------------------                                                  
the Executive without any reason during the Window Period or for Good Reason,
shall be communicated by Notice of Termination to the other party hereto given
in accordance with Section 12(b).  For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under
<PAGE>
 
the provision so indicated and (iii) if the Date of Termination (as defined
below) is other than the date of receipt of such notice, specifies the
termination date (which date shall be not more than 15 days after the giving of
such notice). The failure by the Executive or the Company to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason or Cause shall not waive any right of the Executive or the Company
hereunder or preclude the Executive or the Company from asserting such fact or
circumstance in enforcing the Executive's or the Company's rights hereunder.

     (e)  Date of Termination.  "Date of Termination" means (i) if the
          -------------------                                         
Executive's employment is terminated by the Company for Cause, or by the
Executive during the Window Period or for Good Reason, the date of receipt of
the Notice of Termination or any later date specified therein, as the case may
be, (ii) if the Executive's employment is terminated by the Company other than
for Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the Executive's
employment is terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the Disability
Effective Date, as the case may be.

     6.  Obligations of the Company upon Termination.
         ------------------------------------------- 

     (a)   Good Reason or during the Window Period; Other Than for Cause, Death
           --------------------------------------------------------------------
or Disability.  If, during the Employment Period, the Company shall terminate
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the Executive's employment other than for Cause or Disability or the Executive
shall terminate employment either for Good Reason or without any reason during
the Window Period:

     (i) the Company shall pay to the Executive in a lump sum in cash within 30
days after the Date of Termination the aggregate of the following amounts:

     A.  the sum of (1) the Executive's Annual Base Salary through the Date of
     Termination to the extent not theretofore paid, (2) the product of (x) the
     Highest Annual Bonus and (y) a fraction, the numerator of which is the
     number of days in the current fiscal year through the Date of Termination,
     and the denominator of which is 365 and (3) the Special Bonus, if due to
     the Executive pursuant to Section 4(b) (iii), to the extent not theretofore
     paid and (4) any compensation previously deferred by the Executive
     (together with any accrued interest or earnings thereon) and any accrued
     vacation pay, in each case to the extent not theretofore paid (the sum of
     the amounts described in clauses (1), (2), (3) and (4) shall be hereinafter
     referred to as the "Accrued Obligations"); and

     B.  the amount (such amount shall be hereinafter referred to as the
     "Severance Amount") equal to 2.9 times the Executive's "Base Amount" (the
     average annual taxable compensation for the five years preceding the Change
     in Control Date; and

     C.  a separate lump-sum supplemental retirement benefit (the amount of such
     benefit shall be hereinafter referred to as the "Supplemental Retirement
     Amount") equal to the difference between (1) the actuarial equivalent
     (utilizing for this purpose the actuarial assumptions utilized with respect
     to the [Company's Retirement Plan] (or any successor plan thereto) (the
     "Retirement Plan") during the 90-day period immediately preceding the
     Effective Date) of the benefit payable under the Retirement Plan and any
     supplemental and/or excess retirement plan of the Company and its
     affiliated companies providing benefits for the Executive (the "SERP")
     which the Executive would receive if the Executive's employment continued
     at the compensation level provided for in Sections 4(b)(i) and 4(b)(ii) for
     the remainder of the
<PAGE>
 
     Employment Period, assuming for this purpose that all accrued benefits are
     fully vested and that benefit accrual formulas are no less advantageous to
     the Executive than those in effect during the 90-day period immediately
     proceeding the Effective Date, and (2) the actuarial equivalent (utilizing
     for this purpose the actuarial assumptions utilized with respect to the
     Retirement Plan during the 90-day period immediately preceding the
     Effective Date) of the Executive's actual benefit (paid or payable), if
     any, under the Retirement Plan and the SERP; and

     (ii) for the remainder of the Employment Period, or such longer period as
any plan, program, practice or policy may provide, the Company shall continue
benefits to the Executive and/or the Executive's family at least equal to those
which would have been provided to them in accordance with the plans, programs,
practices and policies described in Section 4(b)(v) if the Executive's
employment had not been terminated in accordance with the most favorable plans,
practices, programs or policies of the Company and its affiliated companies as
in effect and applicable generally to other peer executives and their families
during the 90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies and
their families, provided, however, that if the Executive becomes reemployed with
another employer and is eligible to receive medical or other welfare benefits
under another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan
during such applicable period of eligibility (such continuation of such benefits
for the applicable period herein set forth shall be hereinafter referred to as
"Welfare Benefit Continuation"). For purposes of determining eligibility of the
Executive for retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed until the
end of the Employment Period and to have retired on the last day of such period;

     (iii)  to the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive and/or the Executive's family any other
amounts or benefits required to be paid or provided or which the Executive
and/or the Executive's family is eligible to receive pursuant to this Agreement
and under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies as in effect and applicable generally to
other peer executives and their families during the 90-day period immediately
preceding the Effective Date or, if more favorable to the Executive, as in
effect generally thereafter with respect to other peer executives of the Company
and its affiliated companies and their families (such other amounts and benefits
shall be hereinafter referred to as the "Other Benefits"); and

     (iv) each Company stock option held by the Executive that is outstanding
immediately prior to such termination shall, pursuant to its terms and without
any further action on the part of the Board of Directors or the Compensation
Committee of the Company, become fully vested and exercisable as of such
termination.

     (b) Death.  If the Executive's employment is terminated by reason of the
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Executive's death during the Employment Period, this Agreement shall terminate
without further obligations to the Executive's legal representatives under this
Agreement, other than for (i) payment of Accrued Obligations (which shall be
paid to the Executive's estate or beneficiary, as applicable, in a lump sum in
cash within 30 days of the Date of Termination) and the timely payment or
provision of the Welfare Benefit Continuation and Other Benefits (excluding, in
each case, Death Benefits (as defined below)) and (ii) payment to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination of an amount equal to the greater of (A) the
sum of the Severance Amount and the Supplemental Retirement Amount and (B) the
present value (determined as provided in
<PAGE>
 
Section 280G(d)(4) of the Code of any cash amount to be received by the
Executive or the Executive's family as a death benefit pursuant to the terms of
any plan, policy or arrangement of the Company and its affiliated companies but
not including any proceeds of life insurance covering the Executive to the
extent paid for directly or on a contributory basis by the Executive (which
shall be paid in any event as an Other Benefit) (the benefits included in this
clause (B) shall be hereinafter referred to as the "Death Benefits").

     (c) Disability.  If the Executive's employment is terminated by reason of
         ----------                                                           
the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for (i)
payment of Accrued Obligations (which shall be paid to the Executive in a lump
sum in cash within 30 days of the Date of Termination) and the timely payment or
provision of the Welfare Benefit Continuation and other Benefits (excluding, in
each case, Disability Benefits (as defined below)) and (ii) payment to the
Executive in a lump sum in cash within 30 days of the Date of Termination of an
amount equal to the greater of (A) the sum of the Severance Amount and the
Supplemental Retirement Amount and (B) the present value (determined as provided
in Section 280G(d)(4) of the Code) of any cash amount to be received by the
Executive as a disability benefit pursuant to the terms of any plan, policy or
arrangement of the Company and its affiliated companies, but not including any
proceeds of disability insurance covering the Executive to the extent paid for
directly or on a contributory basis by the Executive (which shall be paid in any
event as an Other Benefit).

     (d)  Cause; Other than for Good Reason.  If the Executive's employment
          ---------------------------------                                
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive Annual Base Salary through the Date of Termination plus
the amount of any compensation previously deferred by the Executive, in each
case to the extent theretofore unpaid.  If the Executive terminates employment
during the Employment Period, excluding a termination either for Good Reason or
without any reason during the Window Period, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits.  In such case, all
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination.

     7.  Reduction in Benefits Under Certain Circumstances.
         ------------------------------------------------- 

     (a) General.  Notwithstanding anything in this Agreement to the contrary,
         -------                                                              
in the event that the accounting firm which was serving as the independent
auditors for the Company immediately prior to the Effective Date (the
"Auditors") determines that any payment or distribution by the Company to or for
the benefit of the Executive, whether paid or payable (or distributed or
distributable) pursuant to the terms of this Agreement or otherwise  (a
"Payment"), excluding for this purpose any "Vesting Amount" (as hereinafter
defined), would not be deductible by the Company for federal income tax purposes
because of Section 280G of the Code, disregarding for purposes of this test the
effect of any "Vesting Amount", then the aggregate present value of the amounts
payable or distributable to or for the benefit of the Executive pursuant to this
Agreement,  (the "Agreement Payments") excluding the "Vesting Amount" shall be
reduced (but not below zero) to the Reduced Amount.  For purposes of this
Section 7(a), the "Reduced Amount" shall be an amount expressed in present value
which maximizes the aggregate present value of Agreement Payments (excluding for
this purpose any "Vesting Amount") without causing any Payment to be non-
deductible by the Company because of Section 280G of the Code disregarding for
purposes of this test the effect of any "Vesting Amount."  "Vesting Amount"
means any amount attributable to the vesting and exercisability of Company stock
options pursuant to Section 6(a)(iv) hereof.
<PAGE>
 
     (b) Reduction of Payments.  If the Auditors determine that any Payment
         ---------------------                                             
would not be deductible by the Company because of Section 280G of the Code,
disregarding for purposes of this test the effect of any Vesting Amount, then
the Company shall promptly give the Executive both notice to that effect and a
detailed calculation thereof and of the Reduced Amount.  The Executive may then
elect, in his sole discretion, which and how much of the Agreement Payments
shall be eliminated or reduced (as long as after such election the aggregate
present value of the Agreement Payments equals the Reduced Amount) and shall
advise the Company in writing of his election within ten days of his receipt of
notice.  If no such election is made by the Executive within such ten-day
period, then the Company may elect which and how much of the Agreement Payments
shall be eliminated or reduced (as long as after such election the aggregate
present value of the Agreement Payments equals the Reduced Amount) and shall
notify the Executive promptly of such election.  For purposes of this Section 7,
present value shall be determined in accordance with Section 280G(d)(4) of the
Code.  All determinations made by the Auditors under this Section 7 shall be
binding upon the Company and the Executive and shall be made within thirty (30)
days of the Executive's termination of employment.

     As promptly as practicable following such determination and the elections
hereunder, the Company shall pay or distribute to or for the benefit of the
Executive such amounts as are then due to him under this Agreement and shall
promptly pay to or distribute for the benefit of the Executive in the future
such amounts as may become due to him under this Agreement.

     (c) Underpayment.  As a result of the uncertainty in the application of
         ------------                                                       
Section 280G of the Code at the time of the initial determination by the
Auditors hereunder, it is possible that additional Agreement Payments which will
not have been made by the Company should have been made (an "Underpayment"),
consistent with the calculation of the Reduced Amount hereunder.  In the event
that the Auditors, based upon controlling precedent, determine that any
Underpayment has occurred, such Underpayment shall promptly be paid by the
Company to or for the benefit of the Executive, together with interest at the
applicable federal rate provided for in Section 7872(f)(2)(A) of the Code.

     (d) Overpayment.  (i)  In the event it shall be determined that any
         -----------                                                    
Agreement Payment made is subject to the excise tax imposed by Section 4999 of
the Code, or any interest or penalties are incurred by the Executive with
respect to such excise tax (such excise tax, together with any such  interest
and penalties are collectively referred to herein as the "Excise Tax"), the
Company will pay the Executive an amount (a "Gross-Up Payment") such that after
payment by the Executive of all taxes (including, without limitation, income
taxes and Excise Tax) imposed on the Gross-Up Payment, the Executive retains a
portion of the Gross-Up Payment equal to the Excise Tax imposed on such
Agreement Payment, exclusive of any portion of such Excise Tax attributable to
the vesting and exercisability of Company stock options pursuant to Section
6(a)(iv).

     (ii)  The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of a Gross-Up Payment.  Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid.  The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:
<PAGE>
 
     (A)  give the Company any information reasonably requested by the Company
     relating to such claim,

     (B)  take such action, at the expense of the Company, in connection with
     contesting such claim as the Company shall reasonably request in writing
     from time to time, including, without limitation, accepting legal
     representation with respect to such claim by an attorney reasonably
     selected by the Company,

     (C)  cooperate with the Company in good faith in order effectively to
     contest such claim, and

     (D)  permit the Company to participate in any proceedings relating to such
     claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expense. Without limitation on the foregoing, the Company
shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any permissible manner,
and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a refund, the
Company shall advance the amount of such payment to the Executive, on an
interest-free basis and shall indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with
respect to any imputed income with respect to such advance; and further provided
that any extension of the statute of limitations relating to payment of taxes
for the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.

     (iii)  If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 7(d)(ii), the Executive receives any refund of
Excise Tax paid with the amount advanced, the Executive shall (subject to the
Company's complying with the requirements of Section 7(d)(ii)) promptly pay to
the Company the amount of such refund (with any interest paid or credited
thereon after taxes applicable thereto).  If, after the receipt by the Executive
of any amount advanced by the Company pursuant to Section 7(d)(ii), a final
determination is made that the Executive shall not be entitled to any refund
with respect to such claim, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.

     (iv)  Notwithstanding the foregoing, if it is determined by the Auditors,
based upon controlling precedent, that no Excise Tax will be due if a portion of
an Agreement Payment is treated for all purposes as a loan to the Executive, the
smallest portion of the Agreement Payment necessary to eliminate the Excise Tax
(the "Loan Amount") shall be so treated, and the Executive shall promptly
<PAGE>
 
repay to the Company the Loan Amount, together with interest thereon from the
date the Agreement Payment was received by the Executive at the applicable
federal rate provided for in Section 7872(f)(2)(A) of the Code, and no Gross-Up
Payment will be made.

     8.  Non-exclusivity of Rights.  Except as provided in Sections 6(a)(ii),
         -------------------------                                           
6(b) and 6(c), nothing in this Agreement shall prevent or limit the Executive's
continuing or future participation in any plan, program, policy or practice
provided by the Company or any of its affiliated companies and for which the
Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the
Company or any of its affiliated companies.  Amounts which are vested benefits
or which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of
its affiliated companies at or subsequent to the Date of Termination shall be
payable in accordance with such plan, policy, practice or program or contract or
agreement except as explicitly modified by this Agreement.

     9.  Full Settlement; Resolution of Disputes.  (a)  The Company's obligation
         ---------------------------------------                                
to make the payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against the Executive or others in no event shall the Executive 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, except as provided in Section 6(a)(ii), such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to pay
promptly as incurred, to the full extent permitted by law, all legal fees and
expenses which the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a result of any
contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code.

     (b) If there shall be any dispute between the Company and the Executive (i)
in the event of any termination of the Executive's employment by the Company,
whether such termination was for Cause, or (ii) in the event of any termination
of employment by the Executive, whether Good Reason existed, then, unless and
until there is a final, nonappealable judgment by a court of competent
jurisdiction declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason was not made in
good faith, the Company shall pay all amounts, and provide all benefits, to the
Executive and/or the Executive's family or other beneficiaries, as the case may
be, that the Company would be required to pay or provide pursuant to Section
6(a) as though such termination were by the Company without Cause or by the
Executive with Good Reason; provided, however, that the Company shall not be
required to pay any disputed amounts pursuant to this paragraph except upon
receipt of an undertaking by or on behalf of the Executive to repay all such
amounts to which the Executive is ultimately adjudged by such court not to be
entitled.


     10.  Confidential Information.  The Executive shall hold in a fiduciary
          ------------------------                                          
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies and
their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement).  After termination of the Executive's employment with the
<PAGE>
 
Company, the Executive shall not, without the prior written consent of the
Company or as may otherwise be required by law or legal process, communicate or
divulge any such information, knowledge or data to anyone other than the Company
and those designated by it. In no event shall an asserted violation of the
provisions of this Section 10 constitute a basis for deferring or withholding
any amounts otherwise payable to the Executive under this Agreement.
<PAGE>
 
     11.  Successors.  (a)  This Agreement is personal to the Executive and
          ----------                                                       
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution.  This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

     (b) This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

     (c) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company 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 if no such succession had taken place.  As used in
this Agreement, "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to
perform this Agreement by operation of law, or otherwise.

     12.  Miscellaneous.   (a)  This Agreement shall be governed by and
          -------------                                                
construed in accordance with the laws of the State of Indiana, without reference
to principles of conflict of laws.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect.  This Agreement may
not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

     (b) All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

     If to the Executive:
     ------------------- 



     If to the Company:
     ----------------- 



     Attention:



or to such other address as either party shall have furnished to the other in
writing in accordance herewith.  Notice and communications shall be effective
when actually received by the addresses.

     (c) The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement.

     (d) The Company may withhold from any amounts payable under this Agreement
such Federal, state or local taxes as shall be required to be withheld pursuant
to any applicable law or regulation.
<PAGE>
 
     (e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v), shall not be deemed
to be a waiver of such provision or right or any other provision or right of
this Agreement.

     (f) The Executive and the Company acknowledge that, except as may otherwise
be provided be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, prior to the Effective Date, may be terminated by either the Executive or
the Company at any time.  Moreover, if prior to the Effective Date, the
Executive's employment with the Company terminates, then the Executive shall
have no further rights under this Agreement.

     IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and, pursuant to the authorization from its Board of Directors, the Company has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.

                                        Bruce D. Atkinson


                                 CONTROL DEVICES, INC.

                                 By____________________________
                                   Ralph R. Whitney, Jr.