Document:

ex10-3.htm

Exhibit 10.3

 

 

 

STOCK OPTION AGREEMENT 

 

 

STOCK OPTION AGREEMENT, dated as of June 6, 2017, between Solee Science & Technology, USA, Ltd., Inc., a Delaware corporation (the “Grantor”), and  Milestone Scientific Inc., a Delaware corporation (the “Grantee”). 

 

WHEREAS, Grantor and Grantee are simultaneously with the execution and delivery of this Agreement entering into a Stock Purchase Agreement (the “Purchase Agreement”) pursuant to which Grantor will, upon the terms and subject to the conditions stated therein, (a) purchase from Grantee 1,000,000 shares of common stock (“Common Stock”) of Milestone (China) Company Limited, a Hong Kong corporation (the “Company”), representing forty percent (40%) of the issued and outstanding shares of the Company, and (b) deliver its promissory note to Grantee in the principal amount of $1,275,000 (the “Note”) in full payment for such shares purchased (the “Shares”);and 

 

WHEREAS, in order to induce Grantee to enter into the Purchase Agreement, Grantor has agreed to grant to Grantee the Stock Option (as hereinafter defined) upon the terms and subject to the conditions set forth herein; 

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and in the Purchase Agreement, and for other good and valuable consideration, the adequacy of which is hereby acknowledged, the parties agree as follows: 

 

1.         Grant of Stock Option. Grantor hereby grants to Grantee an irrevocable option (the “Stock Option”) to purchase all but not less than all of the Shares (and securities and other property as shall have been received in respect of such Shares pursuant to Section 5 of this Agreement), for an amount equal to the following: 

 

(a)     if exercised at any time through and including the second anniversary of the date hereof, U.S. $0.7143 per Share (corresponding to an aggregate Exercise Price of $1,400,000); or

 

(b)     if exercised at any time after the second anniversary of the date hereof, the fair market value of the Shares to be purchased, determined utilizing the same valuation model, methods and assumptions as have been used in that certain valuation of the Shares prepared by Sobel & Co., LLC, certified public accountants, Livingston New Jersey, by such firm or such other firm as shall be engaged by Grantee to provide such valuation.

 

2.         Exercise of Stock Option. (a) Grantee may, subject to the provisions of this Section, exercise the Stock Option, in whole but not in part, at any time or from time to time, after the date hereof and prior to the tenth (10th) annual anniversary of the date hereof (the “Termination Date”).  Notwithstanding the occurrence of the Termination Date, Grantee shall be entitled to purchase those Shares with respect to which it has properly exercised this Stock Option prior to the occurrence of the Termination Date. 

 

 

 

 

(b)     If Grantee wishes to exercise the Stock Option, it shall do so by giving Grantor written notice to such effect, specifying a closing date not earlier than one business day nor later than twenty (20) business days from the date of the notice. The place of the closing shall be at the offices of counsel to the Grantee.

 

(e)     At the closing, (i) Grantee shall make payment to Grantor of the aggregate purchase price for the Shares in immediately available funds by wire transfer to a bank account designated by the Grantor or otherwise as mutually agreed, and (ii) Grantor shall deliver to Grantee a certificate representing the Shares, registered in the name of Grantee and such other securities or property as shall have been received in respect of the Shares pursuant to Section 5 in form appropriate for transfer to Grantee, and (iii) such other closing documents consistent with the terms hereof as may be reasonably requested by Grantee. The closing may occur by exchange of electronic files, and the originals of the instruments referred to in clause (ii).

 

3.         Representations and Warranties of Grantor.  Grantor hereby represents and warrants to Grantee as follows

 

(a)      Grantor is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The execution, delivery and performance by Grantor of this Agreement and the consummation of the transactions contemplated hereby (i) are within Company’s corporate powers, (ii) have been duly authorized by all necessary corporate action, (iii) require no action by or in respect of, or filing with, any governmental body, agency or official, 

 

(b)     Upon exercise of the Stock Option and upon transfer of the Shares to Grantee, Grantee will acquire good and valid title to the Shares, free and clear of all liens, claims, encumbrances, voting agreements, proxies, and other charges of any nature whatsoever, and the Shares will not be subject to any preemptive or similar rights. 

 

(c)     The representations and warranties of Grantor contained in the Purchase Agreement are true and correct. 

 

4.         Representations and Warranties of Grantee. Grantee hereby represents and warrants to Grantor that the Stock Option and the Shares acquired upon exercise of the Stock Option will not be taken with a view to the public distribution thereof and will not be sold or otherwise disposed of by Grantee except in compliance with the Securities Act of 1933, as amended (the “Securities Act”).

 

5.          Adjustment Upon Changes in Capitalization or Merger. The number of shares of Common Stock of the Company and other securities or property comprising the Shares deliverable to Grantee upon exercise of the Stock Option shall be subject to adjustment from time to time as follows:

 

(a)     In case the Company after the date hereof shall (i) pay a dividend in shares of any class or series to the holders of its Common Stock, (ii) subdivide its outstanding Common Stock, (iii) combine its outstanding Common Stock into a smaller number of shares, or (iv) issue any securities by recapitalization or reclassification of its Common Stock, then the number of shares of Common Stock or other securities of the Company subject to the Stock Option immediately after the happening of any of the events described above in this subsection (a) shall be adjusted so as to consist of the number of shares or other securities of the Company which a record holder of a number of shares of the Company subject to the Stock Option immediately prior to the happening of such event would own or be entitled to receive after the happening of such event and the Exercise Price adjusted accordingly to maintain the economic attributes of the Stock Option. 

 

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(b)     In case of any recapitalization or reclassification of the Company’s capital stock or any other capital reorganization to which subsection (a) above does not apply, or in the case of any consolidation of the Company with, or merger of the Company into, any other corporation (other than a merger in which the Company is the continuing corporation and in which no change is made in the outstanding shares of Common Stock of the Company other than a reclassification to which such subsection (a) would apply), then lawful and adequate provision shall be made whereby the shares subject to the Stock Option shall thereafter include the kind and amount of shares of stock or other securities or property receivable upon such transaction by a holder of the number of shares of Common Stock or other securities of the Company subject to the Stock Option immediately prior to such transaction; and, in any such case, appropriate provision shall be made to the end that the provisions of this Agreement shall thereafter by applicable (as nearly as may be practicable) with respect to any shares of stock, securities or property, thereafter deliverable upon exercise of the Stock Option. The provisions of this subsection (b) shall similarly apply to successive recapitalizations, reclassifications, reorganizations, consolidations and mergers.

 

(c)     Whenever the composition of the shares or other securities subject to the Stock Option deliverable hereunder shall be adjusted as provided in this Section 5, then in such case Grantor as soon as practicable thereafter (subject to the provisions of Section 5 hereof) shall give written notice thereof to Grantee, which notice shall state the new content of the Stock Option and new Exercise Price resulting from such adjustment and shall set forth in reasonable detail the method of calculation and the facts upon which such calculations are based.

 

(d)     In the event that Company enters into an agreement (i) to consolidate with or merge into any person, other than Grantee or one of its subsidiaries, and the Company will not be the continuing or surviving corporation in such consolidation or merger, (ii) to permit any person, other than Grantee or one of its subsidiaries, to merge into the Company and the Company will be the continuing or surviving corporation, but in connection with such merger, the shares of Common Stock outstanding immediately prior to the consummation of such merger will be changed into or exchanged for stock or other securities of the Company or any other person or cash or any other property, or the shares of Common Stock outstanding immediately prior to the consummation of such merger will, after such merger, represent less than 50% of the outstanding voting securities of the merged company, or (iii) to sell or otherwise transfer all or substantially all of its assets to any person, other than Grantee or one of its subsidiaries, or in the case of any other capital reorganization to which Section 5(a) does not apply, then, and in each such case, the agreement governing such transaction will make proper provision so that the Stock Option will, upon the consummation of any such transaction and upon the terms and conditions set forth herein, be converted into, or exchanged for, (A) an option with identical terms appropriately adjusted to acquire the number and class of shares or other securities or property that Grantee would have received in respect of Common Stock if the Stock Option had been exercised immediately prior to such consolidation, merger, sale or transfer or the record date therefor, as applicable and make any other necessary adjustments or (B) at the option of Grantee, the right to receive the shares or other securities or property that Grantee would have received in respect of Common Stock if the Stock Option had been exercised immediately prior to such event (less the exercise price thereof not paid).

 

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6.         Further Assurances; Remedies. (a) The Company and Grantor each agrees to execute and deliver such other documents and instruments and take such further actions as may be necessary or appropriate or as Grantee may reasonably request in order to ensure that Grantee receives the full benefits of this Agreement.      

 

(b)     The parties agree that Grantee would be irreparably damaged if for any reason Grantor failed to deliver any of the Shares (or other securities or property deliverable pursuant to Section 5) upon exercise of the Stock Option or to perform any of its other obligations under this Agreement, and that Grantee would not have an adequate remedy at law for money damages in such event. Accordingly, Grantee shall be entitled to specific performance and injunctive and other equitable relief to enforce the performance of this Agreement by Grantor and the Company. This provision is without prejudice to any other rights that Grantee may have against Grantor or the Company for any failure to perform any of its obligations under this Agreement. 

 

7.         Notice of Certain Events. 

 

In case Grantor after the date hereof shall be offered the opportunity or right to subscribe to or purchase any additional shares of any class or any other rights, warrants or options or securities convertible into shares of Common Stock, rights, warrants or options, Grantor shall forward to Grantee a copy thereof within thirty (30) days, including written notice of the date on which the Company's books shall close or records shall be taken for such subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding up.

 

8.         Miscellaneous. (a) Amendments. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement executed by the parties hereto.      

 

(b)     Transfer Taxes. All transfer taxes payable in respect of the transfer of Common Stock or other securities or property upon the exercise of the Stock Option or delivered pursuant hereto shall be borne by Grantee.

 

(c)     Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly received if so given) by delivery in person or by email (with copies by registered or certified mail, postage prepaid, return receipt requested) to the respective parties as follows: 

 

To Grantee:

Milestone Scientific Inc.

 

220 S. Orange Avenue

Livingston, NJ 07039

Attention: Len Osser

Email: lenosser@aol.com

 

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To Grantor:

Solee Science & Technology, USA, Ltd., Inc.

100 Connell Drive #2300

Berkeley Heights, NJ 07922

Attention:

Email:

 

with a copy to:

 

______________________

______________________

______________________

______________________

 

or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall only be effective upon receipt.

 

(d)     Severability. If any term, provision, covenant or restriction of this Agreement is held to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 

 

(e)     Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflict of laws. Any legal action, suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby shall only be instituted, heard and adjudicated (excluding appeals) in a state or federal court located in the County of New York, State of New York, and each party hereto knowingly, voluntarily and intentionally waives any objection which such party may now or hereafter have to the laying of the venue of any such action, suit or proceeding, and irrevocably submits to the exclusive personal jurisdiction of any such court in any such action, suit or proceeding. Service of process in connection with any such action, suit or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. 

 

(f)     Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but all of which together shall constitute one and the same agreement. 

 

(g)     Headings. The section headings herein are for convenience only and shall not affect the construction hereof. 

 

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(h)     Assignment. This Agreement shall be binding upon each party hereto and such party’s successors and permitted assigns. This Agreement shall not be assignable by Company, except by operation of law, but may be assigned by Grantee in whole or in part to any affiliate of Grantee. Except as provided in the preceding sentence, Grantee may not, without the prior written consent of Company, assign this Agreement to any other person.

 

(i)     Survival. All representations, warranties and covenants contained herein shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, including the exercise of the Stock Option. 

 

(j)     Time of the Essence. The parties agree that time shall be of the essence in the performance of obligations hereunder. 

 

(k)     Counsel. Each party acknowledges that it has retained legal counsel in connection with this Agreement and has reviewed this Agreement with such counsel to the extent it deems necessary.

 

IN WITNESS WHEREOF, Grantor and Grantee have caused this Agreement to be duly executed as of the date first above written. 

 

MILESTONE SCIENTIFIC, INC.

 

By:                                                                                

         Name:

         Title:

 

 

SOLEE SCIENCE & TECHNOLOGY, USA, LTD.

 

 

By:                                                                                  

        Name:

        Title:

 

Accepted and Agreed

with respect to Section 6:

 

MILESTONE (CHINA) COMPANY LIMITED

 

 

By: ___________________________________

        Name:

        Title:

 

6Exhibit 10.1

 

RESTATED AND AMENDED EMPLOYMENT AGREEMENT

WITH

MICHAEL J. HARTNETT

 

This Employment Agreement (the “Employment Agreement”)
is amended and restated effective as of this 2nd day of April, 2017 (the “Commencement Date”) and made between
RBC Bearings Incorporated, a Delaware corporation (“Employer” or the “Company”) and Michael J. Hartnett
Ph.D. (“Employee”). Prior to and through the time of their entry into this Agreement, Employee has served as Employer’s
President, Chief Executive Officer and Chairman of its Board of Directors pursuant to an Employment Agreement dated April 1, 2013
(“Prior Employment Agreement”). Both parties wish to continue this employment relationship under the terms reflected
in this Agreement.

 

Therefore, Employer hereby employs Employee and Employee hereby
accepts employment, on the terms and conditions hereinafter set forth.

 

		1.	DEFINITIONS.

 

As used in this Agreement, and unless the context requires a
different meaning, the following terms shall be defined as follows:

 

“Change in Control” is as defined
in the RBC 2005 or 2013 Long-Term Equity Incentive Plan as amended or any subsequent long –term equity incentive plan approved
by and on behalf of the Company.

 

“Competing Business” means any business (including,
without limitation, research and development) that is carried on by Employer in any material respect, and with which Employee is
actively involved, during the Term.

 

“EBITDA” shall mean the income of the Employer increased
by interest, taxes, depreciation and amortization, calculated in a manner consistent with the calculation of the Plan.

 

“Good Reason” shall mean for the 24 month period
following a Change in Control any of the following which occur subsequent to the Commencement Date without your express written
consent:

 

(i)           
a substantial reduction in the Employee’s title, position, duties, responsibilities and status with the Company inconsistent
with the Employee’s title, duties, responsibilities and status immediately prior to a change in the Employee’s titles
or offices, or any removal of the Employee from or any failure to reelect the Employee to any of such positions, except in connection
with the termination of his employment for disability, retirement or Cause or by the Employee other than for Good Reason;

 

(ii)          
a relocation of Employee’s principal work location without his consent to a location more than 25 miles from the Company’s
headquarters at Oxford, Connecticut;

 

(iii)         
any material breach by the Company of any provision of this Agreement; or (iv) any failure by the Company to obtain the assumption
of this Agreement by any successor or assign of the Company.

 

“Plan” shall mean the operating plan established
by the Employee, in his status as CEO of Employer and as approved by the Board within ninety (90) days following the beginning
of each fiscal year, as applicable to Employer and as applicable to the determination of bonuses payable to others of Employer’s
employees to the extent such bonuses are calculated by reference to operating results.

  

“Person” means any natural person, partnership,
corporation, trust, company or other entity.

 

“Territory” means the geographical area in which
the Employer engages in any business (other than an insignificant amount of business), with which Employee is actively involved,
during the Term.

 

“Equity Vesting Triggering Event” means the occurrence
of any of the following:

 

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(i)            the
expiration of the Term of this Agreement pursuant to Section 2;

 

(ii)           the
termination of this Agreement pursuant to Section 8(a) upon Employee’s death or Total Disability;

 

(iii)          the
termination of this Agreement by the Employer pursuant to Section 8(c) without Cause; or

 

(iv)          the termination
of this Agreement by the Employee pursuant to Section 8(d) for other than Good Reason.

  

		2.	TERM.

 

Subject to the terms and conditions of this Agreement, the Company
shall employ Employee as its President, Chief Executive Officer, and Chairman of its Board of Directors for a term commencing on
the Commencement Date hereof and continuing until March 31, 2020 or until earlier terminated pursuant to the provisions of Section 8
hereof (the “Initial Term”). Upon expiration of the Initial Term, this Agreement will automatically renew for additional
one (1) year periods (each a “Renewal Term”) unless either party notifies the other of its intent not to so renew within
ninety (90) days prior to the expiration of the Initial Term or any Renewal Term. (The Initial Term and all Renewal Terms shall
collectively be referred to as the “Term”).

 

		3.	DUTIES.

 

(a)          During
the Term, Employee agrees to serve Employer as its President, Chief Executive Officer and Chairman of its Board of Directors (the
“Board”) reporting to the Board, and in such other executive capacities as may be agreed from time to time by the Board
(or a duly authorized committee thereof) and Employee; provided that (i) Employee’s duties shall at all times be limited
to those commensurate with the foregoing offices, and (ii) Employee shall not be obligated, without his consent, to relocate
his principal office location from Oxford, Connecticut (or the surrounding reasonable commuting area), although the foregoing limitation
is not intended to limit Employee’s requirement, in the normal course of business, to travel to the Employer’s other
business locations. Employee shall serve, if elected, as a director of, and if agreed by Employee and the board of directors of
the organization in question, shall serve as an officer and render appropriate services to, corporations directly or indirectly
controlled by Employer (“Employer’s Affiliates”) as Employer may from time to time reasonably request (but only
such services as shall be consistent with the duties Employee is to perform for Employer and with Employee’s stature and
experience). All duties and services contemplated by this Section 3 are hereinafter referred to as the “Services.”

 

(b)          During
the Term, Employee will devote his full business time and attention to, and use his good faith efforts to advance, the business
and welfare of Employer; provided that the foregoing shall not restrict Employee’s rights to engage in passive investment
activities, to serve on the boards of directors of other entities (so long as such activities are not violative of Section 4
below), or to engage in civic, charitable and other similar activities.

 

		4.	CONFIDENTIAL INFORMATION AND COVENANT NOT TO COMPETE.

 

(a)          Employee
hereby agrees that, during the Term and thereafter, he will not disclose to any Person, or otherwise use or exploit in competition
with Employer or Employer’s Affiliates, any of the proprietary or confidential information or knowledge treated by the Employer
or Employer’s Affiliates as confidential, including without limitation, trade secrets, processes, records of research, information
included in proposals, reports, methods, processes, techniques, computer software or programming, or budgets or other financial
information, regarding Employer or Employer’s Affiliates, its or their business, properties or affairs obtained by him at
any time (i) during the Term or (ii) during any employment of Employee with the Employer or any of Employer’s Affiliates
prior to the Commencement Date (“Prior Employment”), except to the extent required to perform the Services; PROVIDED
that the foregoing shall not apply to: (A) information in the public domain other than by reason of a violation of this Agreement
by Employee, or (B) information that Employee is compelled to disclose by operation of law or legal process (so long as Employee
provides Employer with prior notice of any such compelled disclosure and an opportunity to defend against such disclosure), or
(C) information generally known to Employee by reason of his particular expertise that is not specific to the Employer.

 

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(b)          Employee
hereby agrees that during the Term and for a period of two years thereafter (the “Non-Compete Term”), he will not (i) engage
in or carry on, directly or indirectly, any Competing Business in any Territory in which such Competing Business is then engaged
in by the Employer, (ii) allow his name to be used by any Person engaged in any Competing Business, (iii) invest in,
directly or indirectly, any Person engaged in any Competing Business, or (iv) serve as an officer or director, employee, agent,
associate or consultant of any Person engaged in a Competing Business (other than Employer or any Employer’s Affiliate).
Notwithstanding the foregoing, the Non-Compete Term shall be only for the Term hereof in the event Employee’s employment
hereunder is terminated by the Employer hereunder without Cause (as provided in Section 8(c) below) and shall be for
a period of twelve (12) months following such termination by the Employee with Good Reason (as provided in Section 8(d) below).
Subject to Section 3 (b) hereof, nothing herein shall prohibit the Employee from (A) investing in any business that
is not a Competing Business or (B) investing in a publicly-held entity if such investment (individually or as part of a group)
is limited to not more than five percent (5%) of the outstanding equity issue of such entity.

 

(c)          All
intellectual properties developed by Employee during the Term or during any Prior Employment and that is related to the business
(or foreseeable business prospects) of the Employer with which Employee is actively involved shall be for the account of the Employer.
Employee agrees to enter into such agreements (including transfer documents) as may be reasonably required by Employer to confirm
the foregoing.

 

(d)          Employee shall not,
during the Non-Compete Term, directly or indirectly, solicit or induce or attempt to solicit or induce any affiliate, director,
agent, or employee of Employer or contractor then under contract to the Employer, to terminate his, her or its employment or other
relationship with Employer for the purpose of entering into a similar relationship with any Employer’s competitors or for
any other purpose or no purpose. Employee shall not, during the Non-Compete Term, directly or indirectly, solicit or induce or
attempt to solicit or induce any customer or supplier of Employer to terminate his, her or its relationship with Employer for the
purpose of entering into a similar relationship with any competitors of Employer or Employer’s Affiliates or for any other
purpose or no purpose.

 

(e)          Employee
agrees that the remedy at law for any breach by him of any of any of the covenants and agreements set forth in this Section 4
will be inadequate and will cause immediate and irreparable injury to Employer and that in the event of any such breach, Employer,
in addition to the other remedies which may be available to it at law, shall be entitled to seek injunctive relief prohibiting
him from the breach of such covenants and agreements.

 

(f)          
The parties hereto intend that the covenants and agreements contained in this Section 4 shall be deemed to include a series
of separate covenants and agreements, one for each and every county of the states in which the Employer does business. If, in any
judicial proceeding, the duration or scope of any covenant or agreement of Employee contained in this Section 4 shall be adjudicated
to be invalid or unenforceable, the parties agree that this Agreement shall be deemed amended to reduce such duration or scope
to the extent necessary to permit enforcement of such covenant or agreement.

 

		5.	INDEMNIFICATION.

 

Employer hereby agrees to indemnify Employee to the maximum
extent permitted by Delaware law at the time of the assertion, against any liability against Employee arising out of or relating
to his status as an employee, officer or director acting within the course and scope of employment, office or director responsibility
of Employer or any Employer’s Affiliate at any time during the Term, whether such liability is asserted during or after the
Term.

 

		6.	COMPENSATION AND BENEFITS.

 

(a)          Commencing
April 2, 2017, Employer shall pay Employee a salary at the rate of sixty four thousand five hundred and eighty five dollars ($
64,585) per month payable at least as frequently as monthly and subject to payroll deductions as may be necessary or customary
in respect of Employer’s salaried employees (“Base Salary”). Commencing not later than December 1, 2017 , the
Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) shall annually review
the Employee’s performance and Base Salary and may increase (but not decrease) such Base Salary, at its sole discretion.
Any increased Base Salary shall then constitute the “Base Salary” for purposes of this Agreement. During the term,
Employee shall also be entitled to receive the benefits set forth in Schedule A hereto (the “Additional Benefits”)
as well as any normal executive benefits of Employer not enumerated in that Schedule.

 

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(b)          During
the Term, Employee shall also be entitled to receive annual-performance bonuses in amounts and at times as follows:

 

Employee shall be entitled to an annual performance bonus with
respect to each fiscal year of the Employer during which Employee remains an employee of the Company beginning with the fiscal
year ending March 31, 2018, in an amount determined as a percentage of Employee’s Base Salary, based on the following criteria:

 

	Percentage of Actual EBITDA to Plan	 	Amount of Bonus	 
	80% to 89.9%	 	75% of Base Salary	 
	90% to 99.9%	 	100% of Base Salary	 
	100% to 109.9%	 	150% of Base Salary	 
	110% to 119.9%	 	200% of Base Salary	 
	120% or higher	 	250% of Base Salary	 

 

The amount payable under this formula, if any, shall be paid
to Employee within fifteen (15) days following the publication of the Company’s financial statements for each fiscal year
of the Employer during the Term, but in no event later than one hundred twenty (120) days following the end of such fiscal year.

 

(c)          Employee
shall be designated as an Eligible Executive under the Company’s Executive Officer Performance Based Compensation Plan

 

		7.	EXPENSES.

 

Employer will pay or reimburse Employee for such reasonable
travel, entertainment, educational and other expenses as he may incur on behalf of Employer during the Term in connection with
the performance of his duties hereunder.

 

		8.	TERMINATION OF EMPLOYMENT.

 

Notwithstanding Section 1 hereof, the Initial Term may
be terminated prior to March 31, 2020, and any Renewal Term may be terminated under the following circumstances:

 

(a)          DEATH
OR TOTAL DISABILITY. The Term shall automatically and immediately terminate upon Employee’s death or “Total Disability.”
For purposes of this Agreement, “Total Disability” shall mean Employee’s physical or mental incapacitation or
disability that renders Employee unable to substantially perform the Services as performed prior to such incapacitation or disability
for the period of twenty-six (26) consecutive weeks or during anyone hundred fifty (150) business days (whether or not consecutive)
during any twelve (12) month period during the Term.

 

(b)          TERMINATION
BY EMPLOYER FOR CAUSE. Employer, at its election, shall have the right to terminate the Term, by written notice to Employee to
that effect, for “Cause”. The term “Cause” shall mean:

 

 

		(i)	any act of fraud, embezzlement, theft or conviction of
a crime involving moral turpitude;

 

		(ii)	any material breach by Employee of any material covenant, condition, or agreement in this Agreement (“Employee’s
Material Breach”); or

 

		(iii)	any chemical dependency by Employee (other than in connection with medicines prescribed for Employee).

 

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To terminate the Term pursuant to this Section 8(b), Employer
shall give written notice (“Cause Notice”) to the Employee specifying the claimed Cause. If Employee fails to cure
the same within thirty (30) days after the receipt of the applicable Cause Notice (or such longer period as may be reasonably required
if such actions are subject to cure), the Term shall terminate at the end of such thirty (30) day period or such longer reasonable
period, as the case may be. Notwithstanding anything that may be interpreted to the contrary, it is expressly agreed that no act
of the type contemplated by or described in Section 8(b) (i) shall be capable of being cured by Employee and the Employer
may terminate Employee immediately without the requirement for such cure period.

 

(c)          TERMINATION
BY EMPLOYER WITHOUT CAUSE. Employer shall have the right, at its election, to terminate the Term at any time for any reason other
than “Cause” upon not less than sixty (60) days prior written notice to Employee.

 

(d)          TERMINATION
BY EMPLOYEE. Employee shall have the right, at his election, to terminate the Term at any time by written notice to Employer upon
not less than one hundred and twenty (120) days prior written notice; provided, however, that (i) such notice period shall
be thirty (30) days in the case of a termination for “Good Reason”; and (ii) if such termination is other than
for Good Reason the Non-Compete Term, for purposes of Section 4(b) and (d), shall continue through March 31, 2020.

 

(e)          SALARY
AND BENEFITS IN EVENT OF TERMINATION. Upon termination of the Term, the following shall be applicable, notwithstanding anything
to the contrary elsewhere herein:

 

(i)           
If the Term is terminated by Employer for Cause pursuant to Section 8 (b) or by Employee pursuant to Section 8 (d) other
than for Good Reason, Employee shall thereafter be entitled to the Base Salary and all benefits, including the Special Benefits
for six months following the effective date of such termination, unless otherwise agreed by Employer.

 

(ii)          
If the Initial Term is terminated (A) due to Employee’s death or Total Disability pursuant to Section 8 (a) hereof,
or (B) by the Employer without Cause pursuant to Section 8 (c) hereof, (x) Employer shall pay to Employee on the
date of termination the Base Salary due to Employee for the then remainder of the period ending March 31, 2020, net of any benefits
paid to Employee pursuant to any policy of disability insurance maintained by Employer, plus a PRO RATA portion of the Employee’s
annual bonus for the fiscal year of the Employer in which such termination occurs at your maximum target bonus percentage then
in effect (provided that in the case of Employee’s death or Total Disability such payment and benefits shall extend for no
longer than for the then remainder of the period ending March 31, 2020), and (y) Employee shall be entitled to all benefits including
the Special Benefits described in Section 6 (b) hereof for the then remainder of the period ending March 31, 2020.

 

(iii)          If
a Renewal Term is terminated (A) pursuant to Employee’s death or Total Disability pursuant to Section 8 (a) hereof,
or (B) by the Employer without Cause pursuant to Section 8 (c) hereof, (x) Employer shall pay to Employee (or Employee’s
estate or designated beneficiaries) on the date of termination the Base Salary due to Employee for the then remainder of the Renewal
Term, net of any benefits paid to Employee pursuant to any policy of disability insurance maintained by Employer, plus a PRO RATA
portion of the Employee’s annual bonus for the fiscal year of the Employer in which such termination occurs at your maximum
target bonus percentage then in effect (provided that in the case of Employee’s death or Total Disability such payment and
benefits shall extend for no longer then remainder of the Renewal Term), and (y) Employee shall be entitled to all benefits including
the Special Benefits described in Section 6 (b) hereof for the than remainder of the Renewal Term.

 

(iv)          If
a Change in Control occurs and if within 24 months after a Change in Control, Employee’s employment is either terminated
by the Company without Cause or by Employee for Good Reason, Employee shall be entitled to the compensation and benefits set forth
in Schedule B, Change in Control Provisions.

 

    	 	Page 5 of 10	 

     

    

  

(v)           If
an Equity Vesting Triggering Event occurs, all restricted stock and stock option awards that have been granted to Employee shall
immediately and fully vest and all stock options grants shall be exercisable by Employee on or before the day which is thirty nine
(39) months from the initial grant date, in the case of stock option grants with three (3) year vesting, and on or before the day
which is sixty three (63) months from the initial grant date in the case of stock option grants with five (5) year vesting. Approval
of this Agreement by the Company’s Board Compensation Committee shall be deemed approval of the amendments of the restricted
stock and stock option grants as provided in the immediately preceding sentence for all purposes under the RBC 2005 and 2013 Long-Term
Equity Incentive Plan as amended or any subsequent long –term equity incentive plan approved by and on behalf of the Company.
The vesting provisions contained in this subsection (v) shall take precedent over any vesting provisions contained in Schedule
B.

  

(f)           DELIVERY
OF RECORDS UPON TERMINATION. Upon termination of the Term, Employee will deliver to Employer all records of research, proposals,
reports, memoranda, computer software and programming, budgets and ether financial information, and ether materials or records
(including any copies thereof) made, used or obtained by Employee in connection with his employment by Employer and/or any Employer’s
Affiliate.

 

		9.	MISCELLANEOUS.

 

(a)          MODIFICATION
AND WAIVER OF BREACH. No. waiver or modification of this Employment Agreement shall be binding unless it is in writing signed
by the parties hereto and expressly stating that it is intended to modify this Agreement. No waiver of a breach hereof shall
be deemed to constitute a waiver of a future breach, whether of a similar or dissimilar nature.

 

(b)          NOTICES.
All notices and other communications required or permitted under this Employment Agreement shall be in writing, served personally
on, or made by certified or registered United States mail to, the party to be charged with receipt thereof. Notices and other communications
served in person shall be deemed delivered when so served. Notices and other communications served by mail shall be deemed delivered
hereunder 72 hours after deposit of such notice or communication in the United States Post Office as certified or registered mail
with postage prepaid and duly addressed to whom such notice or communications is to be given, in the case of

 

(i)            Employer:

RBC Bearings Incorporated

One Tribology Center

Oxford, CT 06478

ATTN : Chief Financial Officer

 

(ii)          
Employee:

Michael J. Hartnett

385 South Street

Middlebury, Connecticut 06762

 

Any party may change said party’s address for purposes
of this Section by giving to the party intended to be bound thereby, in the manner provided herein, a written notice of such
change.

 

(c)          COUNTERPARTS.
This instrument may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together
shall constitute one and the same Employment Agreement.

 

(d)          GOVERNING
LAW. Except as otherwise expressly provided herein, this Employment Agreement shall be construed in accordance with, and governed
by, the internal laws of the State of Connecticut applicable to agreements executed and to be performed in such state without regard
to principles of choice of law or conflicts of laws.

 

(e)          COMPLETE
EMPLOYMENT AGREEMENT. This Employment Agreement and its Exhibits and Schedules, together contain the entire agreement between the
parties hereto with respect to the subject matter of this Employment Agreement and supersedes all prior and contemporaneous oral
and written negotiations, commitments, writings, and understandings with respect to the subject matter of Employee’s relationship
with Employer, including Prior Employment Agreement which is terminated effective as of the Commencement Date.

 

    	 	Page 6 of 10	 

     

    

  

(f)           NON-TRANSFERABILITY
OF EMPLOYEE’S INTEREST. None of the rights of Employee to receive any form of compensation payable pursuant to this Employment
Agreement shall be assignable or transferable. Any attempted assignment, transfer, conveyance, or other disposition of any interest
in the rights of Employee hereunder shall be void.

 

In WITNESS WHEREOF, the undersigned have
executed this Employment Agreement on the day and year first above written.

 

	 	EMPLOYEE:
	 	 
	 	/s/ Michael J. Hartnett	 
	 	MICHAEL J. HARTNETT
	 	 
	 	EMPLOYER:
	 	 
	 	RBC BEARINGS INCORPORATED
	 	 
	 	By:
	 	 
	 	 /s/ Richard Crowell	 
	 	RICHARD CROWELL
	 	Chairman
	 	Compensation Committee

 

    	 	Page 7 of 10	 

     

    

 

SCHEDULE A TO EMPLOYMENT AGREEMENT
BETWEEN MICHAEL J.

HARTNETT AND RBC BEARINGS INCORPORATED,
APRIL 2, 2017

 

SPECIAL BENEFITS

 

1.           Employee shall be reimbursed by Employer, as valued, determined
and approved by the Vice President and Chief Financial Officer, for personal expenses up to a total of $50,000 in any fiscal year.
Such personal expenses may include, but not be limited to, use of the Employer’s aircraft facility.

 

2.           At Employer’s expense,

 

Executive Medical Coverage ($10,000 per
year supplemental coverage).

 

Dental insurance.

 

Prescription drug coverage.

 

The above medical, dental and prescription drug coverage benefits
are subject to change at any time at the discretion of the Board of Directors of Employer; provided that such coverages provided
to Employee shall at all times be at least as beneficial to Employee as are the coverages provided to other of Employer’s
executive employees and shall always be fully paid by the Employer.

 

The above medical, dental and prescription drug coverage shall
be in addition to Employee’s participation in any medical, hospitalization of related coverage maintained by Employer for
the benefit of all its employees.

 

3.           At Employer’s expense, disability insurance at least
as beneficial to Employee as the disability provided for Employee immediately preceding the Commencement Date of this Agreement,
provided that within that limitation, such insurance may be modified from time to time at the discretion of the Board of Directors
of Employer.

 

4.           The Employer shall maintain an appropriate apartment or other
dwelling in Los Angeles for use by the Employee throughout the Term. The parties acknowledge that “appropriate” shall
mean of at least the quality and convenience of the dwelling maintained for this purpose immediately preceding the Commencement
date of the Agreement. .

 

5.           Employee shall be provided six weeks of paid vacation for
each twelve month period during the Term, to accrue PRO RATA during the course of each such twelve month period; and payable at
Employee’s then- effective base salary rate on termination if not used during the Term.

 

6.           Employee shall have unrestricted use of an appropriate automobile
throughout the Term at the Employer’s expense, including without limitation, fuel, insurance, maintenance and repair. When
the Agreement expires or otherwise terminates, Employee shall have the option to assume the lease or purchase the vehicle for its
book value as of the Termination date, such option to be exercised within two months of said Termination date. The parties acknowledge
that “appropriate” shall mean of at least the quality and convenience of the automobile used for this purpose immediately
preceding the Commencement date of the Agreement.

 

7.           During the Initial term and any Renewal Term, Employee shall
have the option of purchasing the condominium owned by the Company at 22432 Manacor in Mission Viejo, California for a price equal
to the Company’s then current book value.

 

    	 	Page 8 of 10	 

     

    

 

SCHEDULE B TO EMPLOYMENT AGREEMENT
BETWEEN MICHAEL J.

HARTNETT AND RBC BEARINGS INCORPORATED,
APRIL 2, 2017

 

CHANGE OF CONTROL PROVISIONS

 

1.           (a)           If
a Change in Control occurs and if within 24 months after a Change in Control, your employment is either terminated by the Company
without Cause or by you for Good Reason , the Company will pay you on your date of termination a single lump sum cash payment equal
to the sum of:

 

		·	The base salary, unused vacation and any annual bonus applicable to
a completed fiscal year, which have not yet been paid to you through the date of termination;

 

		·	A bonus equal to your annual base salary applicable to you on your
termination date, multiplied by your maximum target bonus percentage then in effect and prorated to account for the number of days
you were employed by the Company during the Fiscal Year in which you were terminated.

 

		·	A severance payment equal to the sum of (i) 250% of your annual base
salary, and (ii) 250% of your Target Bonus in effect on such date. “Target Bonus” shall mean the amount payable under
all annual incentive compensation plans of the Company in which you participate, waiving any condition precedent to the payment
to you and assuming that the performance goals for the period were achieved at the 100% level.

 

		·	A reimbursement for all documented expenses, up to $15,000, actually
incurred by you for professional outplacement services within 3 months after your termination. 

 

(b)          For
the 18 month period following the termination of the your employment, the Company (or the subsidiary that employed you) will continue
to provide coverage and participation to you at the same participation, coverage and benefit levels (or will provide their equivalent)
and pay the full cost of coverage and participation under the employee health and other welfare plans maintained by the Company
and applicable to you on your termination date.

 

(c)          Immediately
prior to a Change in Control, you will completely vest in all restricted stock and stock options that have been granted to you.
Approval of this Agreement by the Company’s Board Compensation Committee shall be deemed approval of the vesting of restricted
stock and stock options as provided in the immediately preceding sentence for all purposes under the RBC 2005 and 2013 Long-Term
Equity Incentive Plan as amended or any subsequent long –term equity incentive plan approved by and on behalf of the Company.
All stock options that have been granted to you will additionally be exercisable by you for a period of 18 months following the
termination of your employment.

 

(d)          All
amounts paid under these Change in Control provisions shall be subject to applicable tax withholding.

 

(e)           In
exchange for and prior to receipt of these benefits you agree to execute and deliver to the Company its general release agreement
applicable to severed employees.

 

2.            You
agree that in the event a third party (a) begins a tender or exchange offer; (b) circulates a proxy to stockholders; or (c) takes
other steps to effect a Change in Control, you will not voluntarily terminate employment with the Company (or the subsidiary that
employs you) unless you provide at least 3 months prior written notice to the Board of Directors of the Company, and you will
continue to render the services expected of your position, and you will represent the best interests of the stockholders of the
Company until the third party has abandoned or terminated the efforts to effect a Change in Control or until a Change in Control
has occurred and your employment has been terminated.

 

    	 	Page 9 of 10	 

     

    

 

3.            If you
die prior to the time all payments due to you under these Change in Control provisions have been made, then as soon as practicable
after your death (but in no event later than one month after), the Company shall pay in a lump sum all sums not paid to you prior
to your death. Payment shall be made to your designated beneficiary or beneficiaries named under the 401(k) plan maintained by
the Company on the date of your death. If no such beneficiary is named, such sums shall be paid to your estate.

 

4.            Payments
made pursuant to these Change in Control provisions are intended to be exempt from Code §409A as separation pay to the greatest
extent possible. Accordingly, all provisions herein shall be construed and interpreted consistent with that intent, but that, to
the extent necessary the Company shall amend any such provision pertaining to such payment to comply with Code §409A, and
the regulations thereunder, in the least restrictive manner necessary without any diminution in the value of the payments to you.

 

    	 	Page 10 of 10

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