Document:

<PAGE>

                                                                    Exhibit 10.2

PART II. OTHER INFORMATION

                      CHANGE OF CONTROL SEVERANCE AGREEMENT

               This Change of Control Severance Agreement ("Agreement") dated as
of September 20, 2001, is entered into by and among BSB Bancorp, Inc., a
Delaware corporation ("Corporation"), BSB Bank & Trust Company, a New York
chartered bank and trust company ("Employer") and Mark W. Louer ("Executive").
Capitalized terms that are not otherwise defined in this Agreement are defined
in Section 7 hereof.

                                   WITNESSETH:

               Whereas, Executive has accepted employment by Employer as its
Administrative Vice President;

               Whereas, Corporation and Employer desire to provide certain
security to Executive in connection with Executive's employment with Employer;

               Whereas, Executive, Corporation and Employer desire to enter into
this Agreement pertaining to the terms of the security Corporation and Employer
are providing to Executive with respect to his employment;

               Whereas, the Boards of Directors of Corporation and Employer (the
"Boards") have approved and authorized the execution and delivery of this
Agreement by and on behalf of Corporation and Employer;

               Now, therefore, in consideration of the mutual covenants and
promises contained herein, and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties agree to this Agreement as
follows:

               1. Term. The initial term of this Agreement extends for a period
                  ----
of two years from September 20, 2001, provided that the term of the Agreement
shall be extended automatically for one additional year on each annual
anniversary date of this Agreement, unless either the Boards or Executive
provide(s) contrary written notice to the other not less than 180 days in
advance of any such anniversary date. In the event either the Boards or
Executive provide such written notice, then the term hereof shall not be
extended, but the then current term shall continue for the period remaining
thereunder. Notwithstanding the foregoing, this Agreement shall automatically
expire and terminate on Executive's normal retirement date at age 65 or on
Executive's early retirement under the Special Service Retirement provision of
Employer's pension plan if Executive elects to take such early retirement. The
initial term of employment and all such renewed terms of employment under this
Agreement are collectively referred to herein as the "term of this Agreement."

               2. Termination of Employment at the request of an Acquiror or
                  ----------------------------------------------------------
after a Change in Control. Subject to Section 6 hereof, if during the term of
-------------------------
this Agreement, before a Change in Control at the request or direction of the
acquiring party, or at any time during the 12-month period following a Change in
Control (1) the employment of Executive with Employer is terminated by Employer
for any reason other than Good Cause, or (2) Executive terminates his employment
with Employer for Good Reason, Employer shall, during the Severance Period,
continue to pay Executive's Base Salary to Executive. Such Base Salary will be
paid during the Severance Period in monthly or other installments, similar to
those being received by Executive at the date of the Change in Control, and will
commence as soon as practicable following the date of termination of employment.
Executive shall receive any and all vested benefits accrued under any Incentive
Plans and Retirement Plans to the date of termination of employment, the amount,
form and time of payment of such benefits to be determined by the terms of such
Incentive Plans and Retirement Plans and such benefits shall not be reduced by
amounts payable under this Agreement.

               3. No Setoff. No payment or benefits payable to or with respect
                  ---------
to Executive pursuant to this Agreement shall be reduced by any amount Executive
or his spouse may earn or receive from employment with another employer or from
any other source.

                                       29

<PAGE>

           4.  Death. If Executive dies during the Severance Period, all amounts
               -----
payable hereunder to Executive shall, during the remainder of the
Severance Period, be paid to the person designated from time to time by the
Executive as his beneficiary for purposes of this Agreement by written notice to
the Employer, or, if no such designation is in effect at the time of his death,
to his surviving spouse, if any, or otherwise to Matthew O. Louer.

           5.  Termination before a Change in Control or after a Change in
               -----------------------------------------------------------
Control for Good Cause or Without Good Reason. If the employment of Executive
---------------------------------------------
with Employer is terminated (a) for any reason or for no reason before a Change
in Control other than at the request or direction of an acquiror in connection
with a Change in Control, or (b) after a Change in Control by Employer for Good
Cause, or by the voluntary action of Executive without Good Reason, Executive's
base salary (at the rate in effect on the date of termination) shall be paid
through the date of termination, and Employer shall have no further obligation
to Executive or his spouse under this Agreement, except for benefits accrued
before such termination under Incentive Plans and Retirement Plans.

           6.  Parachute Payments.
               ------------------

               (a)  Notwithstanding any other provision of this Agreement or of
any other agreement, contract or understanding heretofore or hereafter entered
into by Executive with Corporation or Employer or any subsidiary or affiliate
thereof, except an agreement, contract or understanding hereafter entered into
that expressly modifies or excludes application of this Section 6 (the "Other
Agreements"), and notwithstanding any formal or informal plan or other
arrangement heretofore or hereafter adopted by Corporation or Employer (or any
subsidiary or affiliate thereof) for the direct or indirect compensation of
Executive (including groups or classes of participants or beneficiaries of which
Executive is a member), whether or not such compensation is deferred, is in
cash, or is in the form of a benefit to or for Executive (a "Benefit Plan"), if
Executive is a "disqualified individual" (as defined in Section 280G of the
Code), Executive shall not have any right to receive any payment or benefit
under this Agreement, any Other Agreement or any Benefit Plan (i) to the extent
that such payment or benefit, taking into account all other rights, payments or
benefits to or for Executive under this Agreement, all Other Agreements and all
Benefit Plans, would cause any payment or benefit to Executive under this
Agreement, any Other Agreement or any Benefit Plan to be considered a "parachute
payment" within the meaning of Section 280G(b)(2) of the Code as then in effect
(a "Parachute Payment") and (ii) if, as a result of receiving a Parachute
Payment, the aggregate after-tax amount received by Executive under this
Agreement, all Other Agreements and all Benefit Plans would be less than the
maximum after-tax amount that could be received by Executive without causing any
such payment or benefit to be considered a Parachute Payment. In the event that
the receipt of any such payment or benefit under this Agreement, any Other
Agreement or any Benefit Plan would cause Executive to be considered to have
received a Parachute Payment that would have the adverse after-tax effect
described in clause (ii) of the preceding sentence, then Executive shall have
the right, in Executive's sole discretion, to designate those rights, payments
or benefits under this Agreement, any Other Agreement and any Benefit Plan that
should be reduced or eliminated so as to avoid having the payment or benefit to
Executive under this Agreement be deemed to be a Parachute Payment.

               (b)  All determinations required to be made under this Section 6,
including whether and when a reduction described in Section 6(a) is required and
the amount of such reduction and the assumptions to be utilized in arriving at
such determination, shall be made by PricewaterhouseCoopers LLP or such other
certified public accounting firm reasonably acceptable to Corporation and
Employer as may be designated in writing by Executive (the "Accounting Firm")
which shall provide detailed supporting calculations both to Corporation and
Employer and Executive as requested by Corporation and Employer. In the event
that the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change of Control, Executive shall appoint another
nationally recognized accounting firm reasonably acceptable to Corporation and
Employer to make the determinations required hereunder (which accounting firm
shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by Corporation and
Employer. Any determination by the Accounting Firm shall be binding upon
Corporation and Employer and Executive.

           7.  Definitions. For purposes of this Agreement:
               -----------

               (a)  "Base Salary" shall mean the higher of Executive's annual
base salary at the rate in effect on the date of a Change in Control or the rate
in effect on the date of termination of employment.

                                       30

<PAGE>

PART II. OTHER INFORMATION

               (b) "Change in Control" shall be deemed to have occurred if there
has been a change of control of a nature that would be required to be reported
in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"), or such item
thereof which may hereafter pertain to the same subject; provided that, and
notwithstanding the foregoing, a Change in Control shall be deemed to have
occurred if (i) any "person" (as that term is used in Sections 13(d) and
14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of Corporation or Employer representing 25% or more of
the combined voting power of Corporation's then outstanding securities, (ii)
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Boards of Directors of Corporation and Employer
cease for any reason to constitute at least a majority thereof unless the
election of each Director, who was not a Director at the beginning of the
period, was approved by a vote of at least two-thirds of the Directors then
still in office who were Directors at the beginning of the period, (iii)
Corporation shall cease to be a publicly owned corporation, or (iv) any merger
or consolidation of Corporation with or into another entity shall occur as a
result of which the stockholders of Corporation do not retain or acquire 75% or
more of the capital stock of the resulting entity.

               (c) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

               (d) "Good Cause" shall be deemed to exist if, and only if: (1)
Executive engages in acts or omissions constituting dishonesty, intentional
breach of fiduciary obligation or intentional wrongdoing or malfeasance; (2)
Executive is convicted of a criminal violation involving fraud or dishonesty; or
(3) Executive materially breaches the Agreement (other than by engaging in acts
or omissions enumerated in paragraphs (1) and (2) above), or materially fails to
satisfy the conditions and requirements of his employment with Employer, and
such breach or failure by its nature is incapable of being cured, or such breach
or failure remains uncured for more than 30 days following receipt by Executive
of written notice from Employer specifying the nature of the breach of this
paragraph (3), provided, that, inattention by Executive to his duties shall be
deemed a breach or failure capable of cure.

          Without limiting the generality of the foregoing, the following shall
not constitute Good Cause: any personal or policy disagreement between Executive
and Employer or any member of the Board of Directors of Employer; or any action
taken by Executive in connection with his duties if Executive acted in good
faith and in a manner he reasonably believed to be in, and not opposed to, the
best interest of Employer and had no reasonable cause to believe his conduct was
unlawful.

          Notwithstanding anything herein to the contrary, in the event Employer
shall terminate the employment of Executive for Good Cause hereunder, Employer
shall give at least 30 days prior written notice to Executive specifying in
detail the reason or reasons for Executive's termination.

               (e) "Good Reason" shall exist if:

                   (1)  there is a significant change in the nature or the
scope of Executive's authority;

                   (2)  There is a reduction in Executive's base salary from the
rate in effect during the fiscal year before the Change in Control;

                   (3)  Employer changes the principal location in which
Executive is required to perform services to one which is more than 30 miles
from his current location; or

                   (4)  There is a reasonable determination by Executive that,
as a result of a change in circumstances significantly affecting his position,
he is unable to exercise the authority, powers, function or duties attached to
his position.

               (f) "Incentive Plans" shall mean any incentive, bonus deferred
compensation or similar plan or arrangement currently or hereafter made
available by Corporation or Employer in which Executive is eligible to
participate.

                                      31

<PAGE>

PART II OTHER INFORMATION

               (g)   "Retirement Plans" shall mean any qualified or supplemental
defined benefit retirement plan or defined contribution retirement plan,
currently or hereinafter made available by Corporation or Employer in which
Executive is eligible to participate.

               (h)   "Severance Period" shall mean the period beginning on the
date Executive's employment with Employer terminates under circumstances
described in Section 2 above and ending on the first to occur of: (1) the date
24 months thereafter, or (2) the date Executive attains or would have attained
age 65.

          8.   Unfunded Rights. All rights of Executive and his spouse or other
               ---------------
beneficiary under this Agreement shall at all times be entirely unfunded and no
provision shall at any time be made with respect to segregating any assets of
Corporation or Employer for payment of any amounts due hereunder. Neither
Executive nor his spouse or other beneficiary shall have any interest in or
rights against any specific assets of Corporation or Employer, and Executive and
his spouse or other beneficiary shall have only the rights of a general
unsecured creditor of Employer.

          9.   Applicable Law. This Agreement shall be construed and interpreted
               --------------
pursuant to the laws of the State of New York applicable to contracts entered
into and to be performed wholly within its borders.

          10.  Entire Agreement. This Agreement contains the entire Agreement
               ----------------
between Employer and Executive and supersedes any and all previous agreements,
written or oral, among the parties relating to his employment by Employer. No
amendment or modification of the terms of this Agreement shall be binding upon
the parties hereto unless reduced to writing and signed by Corporation, Employer
and Executive. This Agreement is the exclusive agreement between Corporation,
Employer and Executive regarding payments to Executive in the event of a change
in control of Corporation or Employer. During the term of this Agreement,
Executive shall not participate in or benefit from any other change of control
severance plan or policy which may be adopted by Corporation or Employer.

          11.  No Employment Contract. Nothing contained in this Agreement shall
               ----------------------
be construed to be an employment contract between Executive and Employer.
Executive is employed at will and Employer may terminate his employment at any
time, with or without cause.

          12.  Counterparts. This Agreement may be executed in counterparts,
               ------------
each of which shall be deemed an original.

          13.  Severability. In the event any provision of this Agreement is
               ------------
held illegal or invalid, the remaining provisions of this Agreement shall not be
affected thereby.

          14.  Successors. This Agreement shall be binding upon and inure to the
               ----------
benefit of the parties hereto and their respective heirs, representatives and
successors.

          15.  Notice. Notices required under this Agreement shall be in writing
               ------
and sent by registered mail, return receipt requested, to the following
addresses or to such other address as the party being notified may have
previously furnished to the others by written notice.

               If to Employer or Corporation:

               Attention: Howard W. Sharp
               BSB Bancorp, Inc.
               BSB Bank & Trust Company
               58-68 Exchange Street
               Binghamton, New York  13902

               If to Executive:

               Mark W. Louer
               321 West High Terrace
               Syracuse, New York  13219

                                        32

<PAGE>

PART II. OTHER INFORMATION

          In Witness Whereof, Executive has hereunto set his hand, and
Corporation and Employer have caused this agreement to be executed in their
names and on their behalf, all as of the day and year first above written.

                                       BSB BANCORP, INC.

ATTEST: /s/ Larry G. Denniston         By: /s/ Howard W. Sharp
        -----------------------------      -------------------------------------
              (Secretary)                       Howard W. Sharp
                                                President and Chief
                                                Executive Officer

                                       BSB BANK & TRUST COMPANY

ATTEST: /s/ Larry G. Denniston         By: /s/ Howard W. Sharp
        -----------------------------     --------------------------------------
              (Secretary)                       Howard W. Sharp
                                                President and Chief
                                                Executive Officer

                                                /s/  Mark W. Louer
                                       -----------------------------------------
                                                Mark W. Louer
                                                Administrative Vice President

                                        33

<PAGE>

PART II. OTHER INFORMATION

                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                                BSB Bancorp, Inc.

Date:  November 9, 2001                  By:   /s/ Howard W. Sharp
      -----------------------------          ---------------------------------
                                             HOWARD W. SHARP
                                             President
                                               and Chief Executive Officer

Date:  November 9, 2001                  By:   /s/ Rexford C. Decker
      -----------------------------          ----------------------------------
                                             REXFORD C. DECKER
                                             Senior Vice President
                                               and Chief Financial Officer

                                       34<PAGE>

                                                                    Exhibit 10.1

                              EMPLOYMENT AGREEMENT
                              --------------------

     THIS EMPLOYMENT AGREEMENT ("Agreement") is made effective as of the 10th
day of June, 1996, by and between Bolt Technology Corporation, a Connecticut
corporation having an office at Four Duke Place, Norwalk, Connecticut 06854,
(the "Company"), and RAYMOND M. SOTO, (the "Executive").

     WHEREAS, Company desires to secure the services of Executive, as
hereinafter set forth, and Executive desires to be employed by Company, as
hereinafter set forth.

     NOW, THEREFORE, IN VIEW OF THE FOREGOING AND IN CONSIDERATION OF THE MUTUAL
PROMISES HEREINAFTER SET FORTH, THE PARIES HERETO DO HEREBY AGREE AS FOLLOWS:

1.   EMPLOYMENT.
     ----------

     Company hereby employs Executive as its Chief Executive Officer and
President and Executive hereby accepts such employment, all upon and subject to
the terms and conditions hereinafter set forth.

2.   TERM.
     ----

     The term of employment of Executive under this Agreement shall commence on
June 10, 1996 and shall continue for a period of three (3) years and twenty (20)
days through June 30, 1999, subject to extension as set forth herein, (said
term, as the same may be extended, being referred to as the "Term"). The Term
shall be automatically extended for consecutive additional periods of twelve
(12) months each ending on June 30 of the applicable year, unless, at least
twenty four (24) months prior to the expiration of the then Term, Company gives
written notice to Executive pursuant to the Notice provisions herein of its
intention not to extend the Term.

3.   DUTIES AND POSITIONS.
     --------------------

     Executive shall be employed as the Chief Executive Officer and President of
the Company and shall perform such services of an executive and managerial
nature as are consistent with said positions. Executive shall report only to the
Board of Directors of Company. Executive's powers and authority shall be
superior to those of any other officer or employee of Company. Subject to
applicable law, the Company shall nominate Executive to serve as a director
during the Term. Executive shall not be required, without his consent, to render
services during the Term in any geographic area other than Fairfield County,
Connecticut provided

<PAGE>

Executive will be expected to travel to the extent reasonably necessary to
fulfill his responsibilities. During the Term, Executive agrees to devote his
time and energies during normal business hours to the business and affairs of
the Company.

4.   COMPENSATION.
     ------------

     (A)  BASE SALARY. Company shall pay to Executive, on the same periodic
          -----------
basis as Company pays its other employees (but in no event less frequently than
monthly), during the Term, as the same may be extended, a base salary in
substantially equal payments as follows:

          (i)  During the first (1st) twelve (12) months of the Term ending
June 30, 1997, a base salary of $206,000.00; and

         (ii)  During each subsequent twelve (12) month period during the Term,
a base salary equal to the greater of

               (a)  one hundred five (105%) of the prior twelve (12) month's
base salary, or

               (b)  the product obtained by multiplying the prior twelve (12)
month's base salary times a fraction, the numerator of which shall be the Price
Index (hereinafter defined) for April of the immediately preceding twelve (12)
month period and the denominator of which shall be the Price Index for April of
the twelve (12) month period immediately preceding the twelve (12) month period
used in determining the numerator. The "Price Index" shall mean the Consumer
Price Index for All Urban Consumers, New York-No.N.J.-Long Island, NY-NJ-CT, All
terms (1982-84=100) issued and published by the Bureau of Labor Statistics of
the United States Department of Labor. If, at any time, said Consumer Price
Index is no longer issued or available, then the term "Price Index" shall mean a
successor or comparable index selected by Company and Executive.

     It is understood that Company may, in the discretion of its Board of
Directors, increase such base salary above an amount provided for pursuant to
the foregoing without affecting any of the other terms of this Employment
Agreement.

     (B)  PERFORMANCE BONUS. Company shall pay to Executive, with respect to
          -----------------
each of Company's fiscal years during the Term, such performance bonus, if any,
as the Executive Compensation Committee of the Board of Directors of Company
may, in its discretion, determine. Notwithstanding the foregoing, Company agrees
that all such performance bonuses shall be based upon the performance of Company
and Executive and shall be consistent with the past practices of Company with
respect to bonuses paid to Executive. All such bonuses shall be paid within
thirty (30) days of the end of the fiscal year of Company to which the same
relate.

                                      -2-

<PAGE>

5.   REIMBURSEMENT EXPENSES.
     ----------------------

     Company shall pay or reimburse Executive for all travel, entertainment and
other expenses incurred by Executive in connection with the performance of his
duties under this Agreement. The foregoing shall include reimbursement for
country club dues and charges.

6.   OFFICE, ETC.
     -----------

     Company shall furnish Executive with a private office and a private
secretary and such assistance and accommodations as shall be suitable to the
character of Executive's position with Company and adequate for the performance
of his duties hereunder. During the Term, Company recognizes Executive's need
for an automobile for business purposes and shall provide Executive with the use
of an automobile (comparable to Executive's current automobile) and
reimbursement for all related expenses (e.g., gas, oil, insurance, maintenance,
repairs, etc.).

7.   PARTICIPATION IN PLANS/LIFE INSURANCE.
     -------------------------------------

     (A)  PLANS. During the Term, Executive (and, where applicable, his family)
          -----
shall be entitled to receive, and shall receive, any and all rights, benefits
and privileges that are provided to any one or more executives of the Company,
including, without limitation, the presently maintained 401(k) Savings Plan,
stock option plan, disability plans, medical and dental plans, and/or any other
employee benefit other than the Company's Severance Compensation Plan adopted on
December 19, 1986, (collectively "Plans and/or Programs"), on a basis no less
favorable to Executive than the rights, benefits and privileges that are
currently in effect. To the extent that the foregoing benefits are not provided
to Executive under the Plans and/or Programs, Executive shall be entitled to
comparable benefits and be reimbursed for the costs thereof.

     Without limiting the generality of the foregoing:

     (i)  with respect to the 401(k) Savings Plan currently maintained by
Company, Company will, during the Term, continue to provide a matching
contribution in accordance with the terms of said Plan and, in any event, in a
manner consistent with Company's past practices; and

     (ii) with respect to Executive's participation in Company's stock option
plan/program, Executive's entitlement shall be consistent with past practices of
Company.

     Notwithstanding any termination of Executive's employment under this
Agreement for any reason, and without limitation of any of Executive's other
rights or entitlements under the terms of this Agreement, Executive shall in all
events be entitled to all accrued and vested benefits under any and all Plans
and/or Programs.

     (B)  EXECUTIVE LIFE INSURANCE. Company currently maintains a whole life
          ------------------------
insurance policy covering the life of Executive in the face amount of
$620,000.00 with respect to which Judith Soto is the beneficiary. Company agrees
to maintain, at all times during the Term, at Company's expense, said insurance
policy or comparable insurance, with an insurer reasonably

                                      -3-

<PAGE>

acceptable to Executive, on the life of Executive payable to a beneficiary or
beneficiaries chosen by Executive in an aggregate amount of at least
$620,000.00, (the "Executive Life Insurance"). The Company shall pay all
premiums that become due on the Executive Life Insurance at least 15 days before
the end of the applicable grace period and upon demand exhibit from time to time
to Executive due proof of such payment. If any premium shall remain unpaid 15
days before the end of the grace period, Executive may pay or cause the premium
to be paid, and thereupon Executive shall be entitled to reimbursement from the
Company. Company shall do everything necessary to maintain the Executive Life
Insurance in full force and effect and shall not borrow on the cash surrender
value of any Executive Life Insurance and/or pledge any Executive Life Insurance
as collateral for any corporate obligation. Upon the termination of Executive's
employment under this Agreement for any reason, Company shall, within 30 days
after such termination, transfer, free and clear of liens and security
interests, the ownership of the Executive Life Insurance (including, without
limitation, the full cash surrender value thereof) to Executive or his designee.

     (C)  DISABILITY INSURANCE. Company currently maintains a group long term
          --------------------
disability insurance program which provides a benefit equal to 60% of base pay
up to a maximum of $6,000.00 per month. Company agrees to maintain, at all times
during the Term, at Company's expense, and with an insurer reasonably acceptable
to Executive, a supplemental (individual) disability insurance policy covering
Executive as may be necessary to provide Executive with disability benefits
equal to a full 60% of Executive's then basic salary, without limitation on
amount, (the "Executive Disability Insurance"). The Company shall pay all
premiums that become due on the Executive Disability Insurance at least 15 days
before the end of the applicable grace period and upon demand exhibit from time
to time to Executive due proof of such payment. If any premium shall remain
unpaid 15 days before the end of the grace period, Executive may pay or cause
the premium to be paid, and thereupon Executive shall be entitled to
reimbursement from the Company. Company shall do everything necessary to
maintain the Executive Disability Insurance in full force and effect and shall
not pledge any Executive Disability Insurance as collateral for any corporate
obligation. Upon the termination of Executive's employment under this Agreement
for any reason, Company shall, within 30 days after such termination, transfer,
free and clear of liens and security interests, the ownership of the Executive
Disability Insurance (including, without limitation, the right to receive any
payments thereunder) to Executive or his designee.

8.   DEATH AND DISABILITY.
     --------------------

     (A)  DISABILITY. If, during the Term, Executive becomes physically or
          ----------
mentally disabled, whether totally or partially, so that he is prevented from
performing his duties specified herein for a period of twelve (12) consecutive
months, the Company will, nevertheless, continue to pay Executive his full
compensation hereunder when due, through the last day of the twelfth (12th)
consecutive month of such disability, (the "Disability Period"), after which the
payment of such compensation shall be suspended. If Executive thereafter returns
to full time employment he shall, with respect to periods thereafter commencing,
receive, and the Company shall pay, his compensation so long as Executive
remains employed hereunder on a full time basis. The Term will not be extended
or be deemed suspended by reason of any period of disability. Company shall be
entitled to a credit against its payment obligations under this Paragraph 8(A)
in the

                                      -4-

<PAGE>

amount of any disability insurance proceeds actually received by Executive on
account of disability insurance policies maintained and paid for by Company.
Notwithstanding anything contained herein to the contrary, Company may terminate
this Agreement after Executive shall have been absent from employment as the
result of such disability for a continuous period of twelve (12) consecutive
months. Upon any such termination, Company shall pay to Executive, on the date
of such termination, all accrued but unpaid amounts payable hereunder with
respect to the period prior to the date of termination (including, without
limitation, accrued bonus and unused vacation pay). In addition, after such
termination, Executive shall be entitled to receive any and all benefits payable
under any disability insurance coverage maintained by the Company with respect
to Executive, including, without limitation, the Executive Disability Insurance.

     (B)  DEATH. The term of Executive's employment under this Agreement will
          -----
terminate automatically upon Executive's death. In the event of Executive's
death, his right to all further compensation hereunder shall cease, except that
his legal representative shall be entitled to receive, on a pro rata basis for
the period ending with the last day of the month in which death shall have
occurred, compensation hereunder at his then base salary, including, without
limitation, compensation payable during any Disability Period, accrued and
unused vacation pay and any accrued bonus. Notwithstanding the foregoing,
Executive's legal representative and/or his designated beneficiary shall be
entitled to receive and Company shall be obligated to pay an additional death
benefit in an amount equal to one (1) year's base salary at the rate in effect
at the time of Executive's death. Said death benefit shall be paid within thirty
(30) days of the Executive's death. The foregoing shall be in addition to the
proceeds of any life insurance covering Executive.

9.   TERMINATION. Subject to the provisions of this Paragraph 9, either Company
     -----------
or Executive may terminate this Agreement prior to the expiration of the Term,
as provided for hereinbelow.

     (A)  Company shall have the right to terminate this Agreement for Cause (as
hereinafter defined), whereupon the Term shall be at an end. Executive shall
have the right to terminate this Agreement for Good Reason (as hereinafter
defined), whereupon the Term shall be at an end, subject to the obligations of
the Company to pay and provide the payments and benefits set forth in this
Employment Agreement.

     (B)  If Company terminates this Agreement for other than Cause or Executive
terminates this Agreement for Good Reason, then Company shall be obligated to:

          (i)  pay to Executive, within thirty (30) days after the date of such
termination, all accrued but unpaid amounts payable hereunder with respect to
the period prior to the date of termination (including, without limitation,
accrued bonus and unused vacation pay); and

          (ii) pay to Executive any and all sums which would have become payable
to Executive under this Agreement during the three (3) year period following the
date of such termination (the "Severance Period"). Said sums are sometimes
hereinafter referred to as the "Severance Period Payments". Subject to
acceleration as hereinafter provided, the Severance Period Payments shall be
paid as and when the same would otherwise have been required to be

                                      -5-

<PAGE>

paid, assuming that Executive had remained employed under this Agreement during
the Severance Period. The Severance Period Payments shall be computed based upon
(a) base salary increasing at 105% per year, and (b) annual performance bonuses
based upon the average of the three (3) highest such bonuses during the five (5)
fiscal years preceding the date of such termination.

     Notwithstanding the foregoing, Executive shall have the continuing right,
at any time following the date of termination, to elect to have the Severance
Period Payments paid in a lump sum. Said right shall be exercised by Executive
giving written notice to Company, whereupon the Company shall, within thirty
(30) days after such a notice from Executive, pay to Executive a lump sum amount
equal to the total of all then outstanding and unpaid Severance Payments. Said
lump sum amount shall be computed without any discount for present value; and

          (iii) during the Severance Period, continue to provide Executive with
the Executive Life Insurance and the Executive Disability Insurance and with
participation in (or, if such participation is not permitted under the terms of
the applicable Plan or Program, the economic equivalent to Executive of
participation in) all Plans and/or Programs in accordance with Paragraph 7
above.

     (C)  If Company terminates this Agreement for Cause, or if Executive
terminates this Agreement for other than Good Reason, then Company shall pay to
Executive, within thirty (30) days after the date of such termination, all
accrued but unpaid amounts payable hereunder with respect to the period ending
on the date of termination (including, without limitation, accrued bonus and
unused vacation pay).

     (D)  For purposes of this Agreement, "Cause" shall mean:

          (i)   Executive's conviction of a felony other than arising out of a
motor vehicle incident; or

          (ii)  an intentional and material breach by Executive of his duties
and responsibilities hereunder which is not remedied within thirty (30) days
after receipt by Executive of written notice from the Chairman of the Board of
Directors of Company (or, if the nature of such breach is such that it cannot
reasonably be completely cured within 30 days, if Executive shall not have
commenced to cure said breach within said 30 day period and thereafter
diligently pursued said cure to completion).

     (E)  For purposes of this Agreement, "Good Reason" shall mean:

          (i)   the Company shall materially breach this Agreement, and fail to
cure such breach within thirty (30) days after the first notice by Executive to
the Company of the breach (or, if the nature of such breach is such that it
cannot reasonably be completely cured within 30 days, if Company shall not have
commenced to cure said breach within said 30 day period and thereafter
diligently pursued said cure to completion); or

          (ii)  the occurrence of a "Defined Corporate Change" as defined in
Schedule A
----------

                                      -6-

<PAGE>

attached.

     Any election by Executive to terminate for "Good Reason" shall be made
within twenty four (24) months after the occurrence of the event or events
constituting "Good Reason".

     (F)  In the event that any payment to Executive hereunder shall remain
unpaid for a period of ten (10) days after its due date, interest shall, at
Executive's option, accrue on the unpaid portion thereof at the Prime Rate, but
not exceeding the maximum rate allowed by law and shall be payable on demand.
The "Prime Rate" is the Prime Rate as published in the "Money Rates" table of
the Wall Street Journal by Dow Jones & Company, Inc. If more than one Prime Rate
is published in the "Money Rates" table the highest of those Prime Rates will
apply. If the Wall Street Journal ceases publication, or ceases to publish a
Money Rates table or if a Prime Rate is no longer included among the rates
published therein, Executive will designate a comparable index.

     (G)  Notwithstanding anything to the contrary herein, in the event
Executive terminates this Agreement for Good Reason as defined in Paragraph
9(E)(ii) above, then the amount of the benefits payable pursuant to Paragraph
9(B) above shall be limited to the maximum amount which can be paid without
having any amount paid hereunder being treated as a "parachute payment" within
the meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as the
same may be amended, after giving effect to all other payments of compensation
described in Section 280G(b)(2)(A)(i) and (ii).

10.  RESTRICTIVE COVENANT.
     --------------------

     Executive agrees that if Executive's employment hereunder is terminated by
Company for Cause (as defined above) or Executive resigns for other than Good
Reason as defined in Paragraph 9(E)(i) above, he will not, for a period of one
(1) year after said termination of his employment by Company hereunder, without
the prior written approval of the Board of Directors of Company, as an
individual, stockholder, partner, officer, employee, agent or director, engage,
within the United States of America, in a business activity which is in
competition with the business of Company, as the business of Company may be
constituted at the termination hereof. Ownership of less than 1% of any class of
outstanding securities of a public company shall not be considered to be in
competition with the Company or any affiliate.

11.  VACATION TIME.
     -------------

     During the Term, as the same may be extended, Executive shall be entitled
to at least four (4) weeks vacation during every twelve (12) month period, to be
taken at such reasonable time or times as Executive may determine. Unused
vacation time may be carried over to succeeding periods.

12.  GENERAL PROVISIONS.
     ------------------

     (A)  NON-ASSIGNABILITY. Neither this Employment Agreement nor any right or
          -----------------
interest hereunder shall be assignable by Executive, his beneficiaries, or legal
representatives,

                                      -7-

<PAGE>

without Company's prior written consent; provided, however, that nothing in this
Paragraph shall preclude (i) Executive from designating a beneficiary to receive
any benefit payable hereunder upon his death, or (ii) the executors,
administrators, or other legal representatives of Executive or his estate from
receiving any payment or benefit hereunder or from assigning any rights
hereunder to the person or persons entitled thereunto.

     (B)   BENEFIT/BINDING EFFECT. This Employment Agreement shall be binding
           ----------------------
upon, and inure to the benefit of, Executive and Company and their respective
heirs, administrators, successors and assigns.

     (C)   MODIFICATION. This Employment Agreement may not be modified or
           ------------
amended except by an instrument in writing signed by the parties hereto.

     (D)   NON-WAIVER. No term or condition of this Employment Agreement shall
           ----------
be deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Employment Agreement, except by written
instrument of the party charged with such waiver or estoppel. No such written
waiver shall be deemed a continuing waiver unless specifically stated therein,
and each such waiver shall operate only as to the specific term or condition
waived and shall not constitute a waiver of such term or condition for the
future or as to any act other than that specifically waived.

     (E)   GOVERNING LAW. This Employment Agreement has been executed and
           -------------
delivered in the State of Connecticut, and its validity, interpretation,
performance, and enforcement shall be governed by the laws of said State.

     (F)   CAPTIONS. The headings and captions of paragraphs herein are included
           --------
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Employment Agreement.

     (G)   NOTICES. All notices and other communications hereunder shall be in
           -------
writing and shall be given by personal delivery, telecopier, recognized
overnight courier service or Certified Mail, Return Receipt Requested, to the
parties at their addresses set forth above, or to such other address as either
party hereto may pursuant to the provisions of this Paragraph provide to the
other party hereto.

     (H)   ARBITRATION. Any controversy, question, claim or alleged breach
           -----------
arising out of, or relating to, this Agreement shall be resolved by arbitration
as set forth hereinbelow. Any such controversy, question, claim or alleged
dispute shall be submitted to arbitration upon written notice of either party to
the other, which notice shall, in reasonable detail, set forth the controversy,
question, claim or alleged breach to be arbitrated.

     Within fifteen (15) days after such notice is given, each party shall
appoint one lawyer actively engaged in the full time practice of employment
and/or corporate law for a continuous period immediately preceding the date of
delivery of the notice of dispute of not less than ten (10) years.

                                      -8-

<PAGE>

     Within fifteen (15) days after such appointment and notice, such lawyers
shall appoint a third person (together with the first two lawyers, collectively,
"Arbitration Panel") who is a lawyer of such qualification and background as the
first two lawyers.

     In the event that either party fails to appoint an arbitrator within the
time set forth hereinabove, such dispute or disagreement shall automatically be
deemed to be resolved against such party.

     The Arbitration Panel, when duly selected, shall investigate the facts,
hold hearings in Stamford Connecticut, and permit the parties to present
evidence and arguments, and shall require both parties, at the end of such
evidence, to simultaneously deliver to such Arbitration Panel a written
statement of the exact award that such party requests that the Arbitration Panel
render.

     The members of the Arbitration Panel shall utilize their utmost skill and
shall apply themselves diligently so as to hear and decide, by majority vote,
the outcome and resolution of any dispute submitted to the Arbitration Panel as
promptly as possible, but in any event on or before the expiration of sixty (60)
days after the date upon which the statements of the requested award are
submitted by each party.

     The decision(s) of the Arbitration Panel shall be final and binding and may
not be appealed to any court of competent jurisdiction, or otherwise, except
upon claim of fraud or corruption as by law provided, provided, however, that
implementation of such decision(s) shall in no way be delayed or otherwise
impaired pending the outcome of any such appeal. Judgment upon the award
rendered in such arbitration may be entered by any court having jurisdiction
thereof.

     The nonprevailing party does hereby covenant and agree to promptly pay, and
the Arbitration Panel shall be obliged to award to the prevailing party, one
hundred (100%) percent of all reasonable legal fees and reasonable costs
incurred by the prevailing party. In addition, the nonprevailing party shall be
required to pay one hundred (100%) percent of the pre-agreed fees and costs of
each of the arbitrators.

     Legal counsel for the prevailing party shall certify in writing to the
Arbitration Panel (i) the total dollar amount of legal fees and costs, (ii) that
such legal fees and costs were incurred in good faith and in keeping with the
fee arrangements between the prevailing party and such counsel and (iii) that
the payment of such legal fees and costs in full by the prevailing party was and
is in no way contingent upon the outcome of the arbitration proceedings
hereunder. Such certification shall be accompanied by a reasonably detailed
itemization of the services rendered, the identity of the lawyer or lawyers who
renders such services and the hourly rate or rates charged for such services
(and/or any other basis employed to arrive at such legal fees and costs). The
Arbitration Panel shall decide the amount of fees and costs to be awarded to the
prevailing party. Neither the nonprevailing party nor its counsel shall be
permitted to argue or comment upon the amount of fees or costs to be awarded.

     (I)   INDEMNIFICATION. During the Term, the Company shall provide to
           ---------------

                                      -9-

<PAGE>

Executive, with respect to any capacity in which Executive shall serve,
indemnification and expense advancement to the fullest extent to which the
Company is permitted by law and to the fullest extent to which the Company is
obligated otherwise to provide such to any of its directors or officers.

     (J)   UNCONDITIONAL OBLIGATION. The Company's obligation to pay to or
           ------------------------
provide Executive with the payments, rights, benefits and privileges set forth
in this Employment Agreement shall be absolute and unconditional and shall not
be affected by any circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company may have
against him or anyone else. Executive shall not be obligated to seek or accept
other employment in mitigation of the amount payable and the obtaining of any
such other employment shall in no event effect any reduction of the Company's
obligations to make the payments or to provide the benefits required hereunder.

     (K)   ENTIRE AGREEMENT. This Agreement contains the entire agreement
           ----------------
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, written or oral, with respect thereto.

     (L)   SEVERABILITY. Any provision of this Employment Agreement which is
           ------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective only to the extent of such prohibition or unenforceability
without invalidating or affecting the remaining provisions, and any such
prohibition or unenforceability in any such jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

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

     IN WITNESS WHEREOF, Company and Executive have made and delivered this
Employment Agreement as of the day and year first above written.

                                       COMPANY:
                                       BOLT TECHNOLOGY CORPORATION

                                       By:    /s/ Bernard Luskin
                                              ----------------------------------
                                       Name:  Bernard Luskin
                                              ----------------------------------
                                       Title: Chairman
                                              ----------------------------------

                                       EXECUTIVE:

                                       /s/ Raymond M. Soto
                                       -----------------------------------------
                                       RAYMOND M. SOTO

                                      -10-

<PAGE>

                                   SCHEDULE A
                                   ----------

     For purposes hereof, a "Defined Corporate Change" shall mean the occurrence
of any of the following:

     (1)  the acquisition of beneficial ownership of 30% or more of the shares
of the common stock of the Company by or for any person (as such term is defined
in Section 14(d)(2) of the Securities Exchange Act of 1934), including for
purposes of calculating such person's ownership all shares beneficially owned by
the affiliates and associates (as such terms are defined in Rule 12b-2 of said
Act) of such person, or

     (2)  during any period of 24 consecutive months, individuals who at the
beginning of such period constitute the Board of Directors of the Company cease
for any reason to constitute a majority thereof, unless the election, or
nomination for election by the Company's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such period; or

     (3)  the Company's stockholders shall approve (a) the merger or
consolidation of the Company with or into another corporation and the Company
shall not be the surviving corporation or (b) an agreement to sell or otherwise
dispose of all or substantially all of the Company's assets (including a plan of
liquidation), or

     (4)  any other event of a nature that would be required to be reported in
response to Item 5(f) of Schedule 14A of Regulation 14A promulgated under the
aforesaid Act as in effect on December 19, 1985.

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