Severance Agreement

Amendment to Severance Agreement

 

 

 

 

EX-10.1 2 dex101.htm EMPLOYMENT AGREEMENT BY AND BETWEEN THE COMPANY AND GREGORY F. MILZCIK

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

(As amended and restated as of December 31, 2008)

AGREEMENT initially made as of the 19th day of October 2006, by and between Barnes Group Inc., a Delaware corporation (the “Company”), and Gregory F. Milzcik (the “Executive”), as amended and restated as of December 31, 2008, and as subsequently restated to correct the allowance referenced in Section 4.6(c).

WHEREAS, the Company desires to retain the services and employment of the Executive as the President and Chief Executive Officer of the Company and the Executive is willing to render such services in such positions, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties hereto agree as follows:

1. Employment Term. Subject to the terms and provisions of this Agreement, the Company hereby agrees to employ the Executive and the Executive hereby agrees to be employed by the Company for the period commencing on October 19, 2006 (the “Commencement Date”) and ending on October 19, 2011, unless extended as provided below or terminated sooner as provided in Section 6 hereof (the “Employment Term”); provided, however, that on October 19, 2009 and on each October 19 thereafter, the Employment Term shall be automatically extended for an additional one (1) year period so long as neither the Company nor the Executive has provided the other party with not less than ninety (90) days prior written notice that the Employment Term shall not be so extended. Notwithstanding the foregoing, in no event shall the Employment Term extend beyond October 19 of the calendar year in which the Executive attains age 65.

2. Position and Duties. During the Employment Term the Executive shall be employed and shall serve as the President and Chief Executive Officer of the Company and shall have complete responsibility for the day-to-day management and operations of the Company and such duties as are specified for such position in the Company’s By-Laws and such other duties consistent with the position of chief executive officer of a publicly-held company as are reasonably assigned to him by the Board of Directors of the Company (the “Board”). The Executive shall report solely and directly to the Board and shall perform such other duties, services and responsibilities as may from time to time be requested by the Board. As of the Commencement Date and thereafter during the Employment Term, all other officers of the Company and any of its subsidiaries shall report to the Executive or to one of his


designees, except that (i) the leader of the Company’s Internal Audit Department shall report directly to the Audit Committee of the Board, (ii) the Secretary of the Company shall, upon request of the Chairman of the Board, report directly to the Chairman, and (iii) any other Company officer required under applicable rules of the Securities and Exchange Commission or the New York Stock Exchange to report to another person or body shall report to such person or body. The Executive shall devote his full business time, attention and skill to the performance of his duties, services and responsibilities hereunder, and shall use his best efforts to promote the interests of the Company; provided, however, that the Executive may (a) serve on the board of directors of not more than two corporations with the prior written approval of the Corporate Governance Committee of the Board (the “Governance Committee”), it being understood that such approval shall be at the Governance Committee’s sole discretion, (b) serve on civic or charitable boards or committees, with the prior written approval of the Governance Committee, which approval shall not be unreasonably withheld, (c) deliver lectures, fulfill speaking engagements or teach at educational institutions, and (d) manage his and his family’s private investments, so long as such activities do not, individually or in the aggregate, materially interfere with the performance of Executive’s duties hereunder.

During the Employment Term, the Company shall (i) use its reasonable best efforts to cause the Executive to serve as a member of the Board, and (ii) appoint the Executive to serve as a member of the boards of directors of the Company’s subsidiaries on which the Executive desires to serve (each a “Subsidiary Board”).

3. Location. The Executive shall perform his duties hereunder primarily at the Company’s executive office in Bristol, Connecticut, and shall perform duties at such other locations as are reasonably designated by the Board. During the Employment Term, the Executive shall maintain his principal residence within 50 miles of Bristol, Connecticut.

4. Compensation and Benefits.

4.1 Base Salary. In consideration of the performance of all of the Executive’s obligations during the Employment Term (including any services as an officer, director, employee, member of the Board or Subsidiary Board or any committee thereof, or otherwise), the Company shall during the Employment Term pay the Executive a base salary (the “Salary”) at an annual rate of $800,000. Commencing not later than March 1, 2009, the Compensation and Management Development Committee of the Board (the “Compensation Committee”) shall annually review the Executive’s Salary and may increase (but not decrease) such Salary, at its sole discretion. Any increased Salary shall then constitute the “Salary” for purposes of this Agreement. The Salary shall be payable in

 

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equal installments on the first working day of each month (or at such other times at, or in such other installments, in which the Company shall pay base salary to its other executive officers).

4.2 Annual Bonus. For each full calendar year during the Employment Term the Executive shall be eligible to receive an annual bonus pursuant to the Company’s Performance-Linked Bonus Plan for Selected Executive Officers or a successor plan thereto (the “Bonus Plan”). For 2007, the Executive shall have the opportunity under the Bonus Plan to receive an annual bonus equal to:

 

 

(i)

75% of Salary upon the attainment of the applicable performance goals established by the Compensation Committee as the target level:

 

 

(ii)

a maximum annual bonus of 225% of Salary upon the attainment of the applicable performance goals established by the Compensation Committee as the maximum level;

 

 

(iii)

18.75% of Salary upon the attainment of the applicable performance goals established by the Compensation Committee as the threshold level;

 

 

(iv)

$0, if the attainment of the applicable performance goals is at a level below that established by the Compensation Committee as the threshold level.

For years during the Employment Term after 2007, while the Compensation Committee shall have the discretion to change the structure and payment terms of the Executive’s awards under the Bonus Plan at threshold, target and maximum levels of performance, the Executive’s annual bonus opportunity for each calendar performance year, upon achieving target level performance for such year, shall not be less than 75% of his Salary as in effect on July 1 of such year (or such earlier date as may be required to assure that the amount payable can qualify as other performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”)).

The amount of any bonus actually payable to the Executive under the Bonus Plan with respect to any given year shall be determined by the Compensation Committee based upon its assessment of the level at which the performance goals established for that year have been attained, with such adjustments to actual performance results as the Compensation Committee may deem

 

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appropriate to achieve the objectives of the Bonus Plan. Upon attainment of performance goals in any year between the threshold and the target levels, or between the target and the maximum levels, established for such year by the Compensation Committee, the amount payable as an annual bonus shall be determined using mathematical interpolation between the percentages of Salary that would have been payable for such year at threshold and target, or target and maximum, as applicable.

4.3 Long-Term Incentive Compensation. During the Employment Term, the Executive shall be eligible to receive awards under the long-term incentive compensation plans, programs or arrangements maintained by the Company at such level and subject to such conditions as the Compensation Committee may determine from time to time in a manner consistent with the Company’s generally applicable compensation practices for its executive officers and giving due consideration to the Executive’s position and contribution to the Company.

4.4 Commencement Options. The Company granted the Executive on the Commencement Date options (the “Commencement Option”) to acquire 247,525 shares of Company Stock. Except as expressly otherwise set forth in this amended and restated Agreement, all of the original terms applicable to the Commencement Options shall remain in full force and effect.

4.5 Commencement Stock Grant. The Company granted the Executive on the Commencement Date 24,741 restricted stock units in relation to a corresponding number of shares of Company Stock (the “Commencement Units”). Except as expressly otherwise set forth in this amended and restated Agreement, all of the original terms applicable to the Commencement Units shall remain in full force and effect.

4.6 Other Benefits. During the Employment Term, the Executive (and his dependents, if eligible thereunder) shall participate in all existing and future employee benefit plans, programs and policies (other than severance plans) generally available to executive officers of the Company, including, but not limited to, the following:

(a) Life Insurance. Pursuant to the Executive’s participation in the Company’s Senior Executive Enhanced Life Insurance Program (the “SEELIP”), the Company shall pay all premiums for a life insurance policy on the life of the Executive. The insurance policy shall be owned by the Executive and shall have a death benefit equal to four (4) times the

 

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Salary. The Company shall fully gross up the Executive for any income tax attributable to the premiums paid by the Company in accordance with the SEELIP (but the effective rate of tax for this purpose shall not exceed 45%); such gross-up payment to be paid by the Company to the Executive no later than March 15 of the calendar year immediately following the calendar year in which any such SEELIP premium is paid by the Company.

(b) Financial Planning. The Company shall reimburse the Executive in an amount up to $5,000 for financial planning assistance and related services for each calendar year during the Employment Term, upon presentation of documentation reasonably acceptable to the Company, and, in each case, fully grossed-up for taxes (but the effective rate of tax for this purpose shall not exceed 45%); provided, however, that, in accordance with Treas. Reg. § 1.409A-3(i)(iv), the amount reimbursable hereunder in respect of one calendar year shall not affect the amount reimbursable in respect of any other calendar year. For purposes of the preceding sentence, “related services” means investment planning, estate planning, retirement planning, tax advice, tax return preparation, insurance planning and financial counseling services.

(c) Leased Automobile, Club Membership. During the Employment Term, the Company shall either (i) provide the Executive with (A) the use of a leased car with a monthly leasing cost to the Company not to exceed $1,131 per month, (B) reimbursement for other expenses associated with the use of such leased car, in either case, in accordance with the Company’s automobile policy as from time to time in effect, and (C) reimbursement (not grossed-up for taxes) in accordance with Company policy as in effect from time to time for membership in one (1) club, or (ii) provide an annual cash allowance of $25,000, payable in monthly installments, in lieu of providing the benefits described in subclauses (A), (B) and (C) of subclause (i) of this Section 4.6(c).

(d) Vacation. For each full calendar year during the Employment Term, the Executive shall be entitled to four (4) weeks of paid vacation (or such greater amount as shall be provided to executives in accordance with the vacation policy of the Company as in effect from time to time during the Employment Term).

(e) Additional Conditions in Respect to Reimbursements. For the avoidance of doubt, the Executive’s entitlement to be reimbursed for any expense as provided in this Section 4.6 is subject to the Executive’s continued employment with the

 

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Company on the date such expense is incurred. Unless such requirement shall be waived by the Company, with the consent of the Compensation Committee, any and all documentation required for the reimbursement of any expense incurred in accordance with this Section 4.6 must be provided to the Company on or before February 15 of the calendar year following the year in which such expenses were incurred, provided that, with respect to expenses incurred after 2007, documentation of expenses incurred prior to September 30 shall be required to be submitted by December 31 of the calendar year in which incurred. Any expense for which any required documentation is not timely received (or waived) by the Company shall not be reimbursed hereunder. The Company shall make all reimbursements of the Executive’s financial planning, leased automobile and club membership expenses for which appropriate documentation has been received (or waived) and all payments of any tax gross-up in respect of any reimbursable financial planning expenses within 90 days of the submission of the requisite documentation, but in all events on or before March 15 of the year following the year in which the related expense was incurred. The amount of expenses eligible for reimbursement, or in-kind benefits provided, during the Executive’s taxable year pursuant to any provision above of this Section 4.6 may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, within the meaning of Treasury Regulation 1.409A-3(i)(iv).

Notwithstanding anything else contained in this Agreement to the contrary, the Company may, at any time or from time to time, amend or terminate any of its employee benefit plans, programs or policies, in which event such amendments and terminations may be applied to the Executive in the same manner as to other Company executive officers, except that the Executive’s vacation benefit may not be reduced below the level described in Section 4.6(d).

4.7 Reimbursement of Legal Fees. Upon presentation of documentation reasonably acceptable to the Company, the Company shall reimburse the Executive for reasonable legal fees and expenses incurred in connection with (i) any good faith action brought by the Executive to enforce his rights under this Agreement (or to respond to any action commenced by the Company) but only those fees and expenses attributable to claims with respect to which there was a substantial likelihood that the Executive would prevail on the merits, and (ii) the negotiation and documentation of this Agreement and any other agreement referenced herein. Unless such requirement shall be waived by the Company, with the consent of the Compensation Committee, any and all documentation required for the reimbursement in accordance with this Section 4.7 of any legal fees incurred must be provided to the Company on or before March 15 of the calendar year following the year in which such expenses were incurred. Any expense for which any required documentation is not timely received (or waived) by the Company shall not be reimbursed hereunder. The

 

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Company shall make all required reimbursements of the Executive’s legal fees under this Section 4.7 for which appropriate documentation has been received (or waived) within 90 days of receipt of the required documentation, but in no event later than the end of the calendar year following the year in which such expenses were incurred. No expenses incurred more than ten (10) years after the date of the Executive’s termination of employment with the Company shall be subject to reimbursement under this Section 4.7. The amount of any expenses for legal fees incurred by the Executive in any given calendar year shall not affect the Executive’s right to be reimbursed for any expenses for legal fees incurred by the Executive in any other calendar year. In no event may the Executive’s right to have his legal fees reimbursed pursuant to this Section 4.7 be exchanged for any other benefit.

4.8 Expenses. The Company shall reimburse the Executive for all reasonable expenses incurred by the Executive in connection with the performance of his duties, services and responsibilities under this Agreement in accordance with the Company’s expense reimbursement policy then in effect.

4.9 Stock Ownership Guidelines. The Executive understands that compliance by the Company’s executive officers with the stock ownership guidelines it has established is of significant importance to the Company and the Executive agrees to comply with such guidelines as in effect from time to time, within the time frame established thereunder. The Executive further understands and acknowledges that the Commencement Options and Commencement Units, the commitment to make 2007 long-term incentive grants and the continued opportunity for the Executive to receive further long-term incentive grants are made or provided by the Company in reliance on the Executive’s commitment to comply with such share ownership guidelines.

4.10 Recovery of Amounts Related to Restatement The Executive agrees and acknowledges that, notwithstanding anything else contained in this Agreement or in any compensatory plan, agreement, program, policy or arrangement, the Executive shall be responsible for reimbursing the Company for some or all of any amounts paid or received (or to be paid or received) in respect of any annual incentive compensation or any long-term incentive compensation awarded to the Executive after the Commencement Date, whether awarded before or after termination of employment, if (I) payment of such compensation was contingent, in whole or in part, upon the achievement of one or more specified financial targets, and (ii) the Company implements a Mandatory Restatement (as hereinafter defined). For the avoidance of doubt, this Section 4.10 shall not relate to the gain recognized on any stock option, the compensation received in respect of any restricted stock or restricted stock unit grant, or any other variety of equity-based compensation, whether made on, before or after the Commencement Date, that has a vesting schedule based on the passage of time and the continued performance of services, and not on the achievement of any performance objectives. Similarly, this Section 4.10

 

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shall not apply to any award that has or had alternative vesting criteria unrelated to the performance objective affected by the Mandatory Restatement (an “Alternative Vesting Award”) that have otherwise been satisfied at the time of the Mandatory Restatement.

The amount which the Executive shall be obligated to reimburse the Company shall be the amount, if any, by which the compensation paid or received (or to be paid or received) exceeds the amount that would have been paid or received based on the financial results reported in the restated financial statements, in each case as determined in good faith by the Compensation Committee, as constituted at the time of the relevant action; provided, however, that (i) no repayment will be payable in respect of an Alternative Vesting Award where the alternative vesting criteria have not yet been, but can still be, satisfied and the Compensation Committee has determined in good faith that the likelihood that such criteria will be satisfied is not immaterial; provided that the amount that would otherwise have been repaid to the Company in respect of any portion of such Alternative Vesting Award that does not become vested based on such alternative vesting criteria shall be due and payable promptly after the opportunity to satisfy the alternative vesting criteria has expired; (ii) the amount that the Executive shall be required to reimburse the Company from previously received compensation shall be reduced by the Net Tax Cost (as hereinafter defined) to the Executive of such compensation and (iii) to the extent that the price of the Company’s common stock is or was a component of the performance objectives upon which the compensation was payable, the value of the stock taken into account for purposes of re-determining the level of achievement based on the restated financial results will be determined by reducing the reported stock prices during each accounting year affected by the Mandatory Restatement by an amount per share equal to the product of (A) the average weekly earnings per share multiples at which the Company’s common stock traded for the 52 week period for such accounting year multiplied by (B) the amount by which earnings per share for such accounting year was reduced as a result of the Mandatory Restatement. If the Executive concludes that the amount to be repaid to the Company in accordance with subclause (iii) of the immediately preceding sentence is excessive and inequitable, he may petition the Compensation Committee to review that determination. If the Compensation Committee agrees with the Executive’s conclusion, it shall, in its sole discretion, specify an amount to be repaid to the Company that it concludes is equitable and appropriate under the circumstances. If the Compensation Committee does not agree that the formula produces a result that is excessive and inequitable, no adjustment shall be made in the amount to be repaid to the Company. The determinations, conclusions and other actions of the Compensation Committee in accordance with the two immediately preceding sentences shall be final, binding and conclusive on the Company and the Executive, and all persons claiming an interest through either such party.

 

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A “Mandatory Restatement” shall mean a restatement of the Company’s financial statements for 2006 or any year thereafter which, in the good faith opinion of the Company’s Independent Registered Public Accounting Firm, is required to be implemented pursuant to generally accepted accounting principles, but excluding any restatement which is required with respect to a particular year as a consequence of a change in generally accepted accounting rules effective after the publication of the financial statements for such year. Notwithstanding the immediately preceding sentence, a Mandatory Restatement shall not include any restatement that (i) occurs more than three years following the date that the Employment Term ends pursuant to Section 5 hereof or (ii) in the good faith judgment of the Audit Committee of the Board (the “Audit Committee”), (A) is required due to a change in the manner in which the Company’s auditors interpret the application of generally accepted accounting principles (as opposed to a change in a prior accounting conclusion due to a change in the facts upon which such conclusion was based), or (B) is otherwise required due to events, facts or changes in law or practice that the Audit Committee concludes were beyond the control and responsibility of the Executive and that occurred regardless of the Executive’s diligent and thorough performance of his duties and responsibilities. In addition, in determining the amounts, if any, that the Executive shall be required to reimburse the Company pursuant to this Section 4.10 (or that would be payable to the Executive in respect of any then in progress awards), all effects, whether positive or negative, of any change in the manner of reporting any transaction or class of transactions that the Audit Committee shall specifically agree to exclude for this purpose shall be disregarded.

“Net Tax Cost” shall mean the net amount of any federal, foreign, state or local income and employment taxes paid by the Executive in respect of the compensation received that is subject to reimbursement, after taking into account any and all available deductions, credits or other offsets allowable to the Executive (including, without limitation, any deduction permitted under the claim of right doctrine), and regardless of whether the Executive would be required to amend any prior income or other tax returns. The Executive agrees that, to the extent permitted under applicable law, the Company may seek reimbursement of such amounts from the Executive and may recapture such amounts by retaining the compensation or other amounts that would otherwise be due or payable to the Executive.

5. Termination. The Executive’s employment with the Company and the Employment Term shall terminate upon the expiration of the Employment Term, as specified in Section 1 hereof, or upon the earlier occurrence of any of the following events of termination:

(a) By the Company (other than for Cause), immediately upon delivery of written notice to the Executive.

 

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(b) By the Company for Cause upon thirty (30) days prior written notice (the “Cause Notice”) to the Executive. The Company may not terminate the Executive’s employment for Cause unless such written notice is delivered to the Executive within ninety (90) days of the Board having actual knowledge of the action or omission constituting Cause (it being understood that knowledge by the Executive or any officer who reports to the Executive shall not constitute knowledge by the Board). Notwithstanding the foregoing, following receipt of such notice the Company may place the Executive on an administrative leave pending completion of the process established under this Section 5(b). During the term of such leave, the Executive shall be entitled to receive all compensation and benefits due under this Agreement pending completion of the process described herein, and the consequences of placing the Executive on such leave shall not constitute a breach of this Agreement or Good Reason for the Executive to terminate his employment hereunder. “Cause” shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise, (iii) the Executive’s conviction for the commission of (A) a felony or (B) any other crime involving moral turpitude, (iv) a willful and material breach by the Executive of any provision of this Agreement which is not cured within twenty (20) days of receipt of written notice thereof from the Board which specifies the nature of such breach, (v) a violation by the Executive of any policy of the Company that is generally applicable to all employees or all officers of the Company including, but not limited to, policies concerning insider trading or sexual harassment, or the Company’s code of conduct, that the Executive knows or reasonably should know could reasonably be expected to result in a material adverse effect on the Company or material damage to its business reputation; and (vi) the Executive’s failure to cooperate, if requested by the Board, with any investigation or inquiry into his or the Company’s business practices, whether internal or external, including, but not limited to, the Executive’s refusal, after a written request by the Company’s internal or external legal counsel, to be deposed or to provide testimony at any trial or inquiry, which is not cured within twenty (20) days of written notice from the Board which specifies such failure. For purposes of clauses (i), (ii) and (iv) of this definition, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company. The Executive shall have the right to appear before the Board, with his counsel present if he so elects, prior to any

 

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final determination by the Board to terminate his employment for Cause. The Executive may request a meeting with the Board by submitting a written request to the Board within ten (10) days of receipt of the Cause Notice. Such meeting with the Board shall be fixed and shall occur on a date selected by the Board (such date being not less than five (5) nor more than twenty (20) days after the Board receives the Executive’s written request). Such meeting shall take place at the executive offices of the Company and the Executive shall have the right to address the Board for such period of time as established by the Board, but in no event less than thirty (30) minutes. For all purposes of this Agreement, if the Executive’s employment is terminated for Cause, the effective date of such termination shall be the date of delivery of the Cause Notice.

(c) By the Executive for Good Reason upon thirty (30) days prior written notice to the Board. The Executive may not terminate his employment for Good Reason by reason of any event or action unless such written notice is delivered within ninety (90) days of the Executive having actual knowledge of such event or action. “Good Reason” shall mean the occurrence of any of the following, unless specifically approved by the Executive in writing prior to the event or action: (i) a materially adverse change in the Executive’s title, position, duties, responsibilities or reporting relationships, (ii) a reduction in the Salary or failure to pay compensation or benefits, (iii) a change in location of the Company’s executive offices to a location which is more than fifty (50) miles away from both the location of the Company’s current executive offices and the Executive’s residence, (iv) the assignment to the Executive of duties materially inconsistent with the Executive’s status as Chief Executive Officer of the Company, (v) if the Company purports to terminate the Executive under Section 5(b) hereof, the Company’s failure to provide the Executive (A) thirty (30) days prior written notice of its intention to terminate his employment for Cause in accordance with Section 5(b) hereof or (B) the opportunity to appear before the Board in accordance with Section 5(b) hereof, (vi) the Company notifies the Executive of its intention not to extend the Employment Term pursuant to Section 1 hereof, (vii) at any time during the Employment Term, the Company does not nominate the Executive for re-election to the Board or fails to use its reasonable best efforts to cause the Executive to be re-elected to the Board, in either case, in accordance with Section 2 hereof, and/or (viii) any other material breach of this Agreement by the Company. The Company shall be afforded twenty (20) days following receipt of written notice from the Executive of his intention to terminate his employment for Good Reason in which to cure any of the foregoing actions or events.

 

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(d) By reason of the Disability of the Executive. The Executive shall be considered to be disabled (i) after he has been unable fully to perform the substantial portion of his duties hereunder, with reasonable accommodation as required by law, by reason of physical or mental illness for 180 days during any 360 day period or (ii) if in the written medical opinion of a medical doctor mutually acceptable to the Executive and the Company, the Executive has a condition that makes it reasonably likely that the Executive will be unable to perform the substantial portion of his duties hereunder for a period of at least 180 days (either such circumstance shall hereafter be called a “Disability”). In the event that the Executive and the Company cannot agree upon a medical doctor to provide an opinion of the kind contemplated in the immediately preceding sentence, each shall appoint a medical doctor of its or his choice and those two medical doctors shall then appoint a third medical doctor to make the determination.

(e) By reason of the death of the Executive (“Death”).

In the event of termination of the Employment Term, for whatever reason other than Death, (i) the Executive shall cooperate with the Company and be reasonably available to the Company with respect to continuing and/or future matters arising out of the Executive’s employment or any other relationship with the Company (but not to unreasonably interfere with any employment or other business services or activities then being conducted by the Executive), whether such matters are business-related, legal or otherwise and (ii) the Executive shall resign immediately from his membership on the Board and each Subsidiary Board.

6. Termination Payments. The following termination payments and benefits shall be provided to the Executive in lieu of any benefits provided in the Company’s Executive Separation Pay Plan and such payments and benefits shall be paid or provided in accordance with the terms of the applicable Company plan, program or policy. Subject to Sections 9 and 14 hereof, the following payments upon termination shall constitute the exclusive payments and benefits due the Executive upon termination of Executive’s employment, but shall have no effect on (i) any benefits which may be due the Executive under any plan, program or policy of the Company which provides benefits after termination of employment, other than any severance pay or salary continuation plan, which shall be inapplicable (the “Accrued Benefits”), and/or (ii) the Executive’s entitlement to reimbursements under Section 4.7 and 4.8 hereof.

6.1 Termination for Cause or other than Good Reason. Upon termination of the Executive’s employment and the Employment Term by the Company for Cause or by the Executive other than for Good Reason, the Company shall pay the Executive the Salary earned and unpaid as of the date of termination and provide the Executive the Accrued Benefits.

 

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6.2 Termination without Cause or for Good Reason. If the Executive’s employment and the Employment Term are terminated by the Company without Cause (except by reason of the Executive’s Death or Disability) or by the Executive for Good Reason, the Company shall

 

 

(i)

pay the Executive the Salary earned and unpaid as of the date of termination and provide the Executive the Accrued Benefits,

 

 

(ii)

if at the Executive’s date of termination, the annual bonuses, if any, payable for services rendered in the Company’s last completed fiscal year have not yet been paid, pay the Executive the annual bonus amount that would be payable to him for such prior fiscal year, on the same terms and conditions (including, without limitation, the satisfaction of any applicable performance objectives, but excluding any requirement of continued employment) as would have applied had he continued in the Company’s employment until the date of payment;

 

 

(iii)

pay the Executive a bonus amount for the calendar year in which his termination of employment occurs equal to the annual bonus that would have been payable to him for such year had his employment continued, but pro-rated to reflect Executive’s actual period of employment during such calendar year. The amount of such bonus shall be determined on the same terms and conditions (including, without limitation, the satisfaction of any applicable performance objectives, but excluding any requirement of continued employment) as would have applied had he continued in the Company’s employment until the date of payment. Executive agrees and acknowledges that, in determining the amount of such bonus, the Compensation Committee shall have all of the rights afforded to it pursuant to the applicable bonus plan (including the right to exercise negative discretion in determining such amount) and may treat Executive less favorably than the Company’s other executive officers participating in such plan;

 

 

(iv)

pay the Executive an aggregate amount equal to two times his Salary at the date of termination;

 

 

(v)

pay the Executive in December of each of the first and second calendar years beginning after the date of his termination of employment, an amount equal to his target bonus amount in effect for the year of termination,

 

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(vi)

during the Severance Period (as defined below), continue to provide the Executive coverage under those Company-sponsored welfare benefit plans (other than severance plans) in which he participated immediately prior to such termination, but only to the extent such continued coverage can be provided pursuant to the terms and conditions of any such plan and without adverse tax consequences to the Executive, the Company or any other participant in such plans and subject to the Executive’s continued payment of any premiums or other amounts for such benefits that he was paying for participation in any such plan immediately prior to such termination,

 

 

(vii)

provide that any outstanding option to purchase Company Stock held by the Executive as of the date of termination and granted to him on or after the Commencement Date (including, but not limited to, the Commencement Option) shall continue to vest in accordance with its regular vesting schedule through the expiration of the Severance Period and shall remain exercisable for one year following the expiration of the Severance Period (or, if less, for the remaining term of such option), after which all such outstanding options shall expire and

 

 

(viii)

provide that any unvested restricted stock unit or performance share or performance unit award (including, but not limited to, the Commencement Units) outstanding at the date of Executive’s termination and granted on or after the Commencement Date, shall vest as of the date of such termination, to the extent such awards would have become vested in accordance with their regular vesting schedule had the Executive’s employment continued through the expiration of the Severance Period, and, in the case of any performance shares or performance units that are not Post January 1, 2009 Awards (as defined below), assuming that the applicable performance goal had been achieved at target; provided, however, that, an unvested Post January 1, 2009 Award shall only vest in accordance with the foregoing provisions of this sentence if and when such award would otherwise have vested in accordance with the performance goals applicable thereto. For purposes of clause (viii) of the preceding sentence, a “Post January 1, 2009 Award” shall mean an award intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code with a performance period beginning after January 1, 2009.

For purposes of this Section 6.2, the “Severance Period” shall mean the period commencing on the date of termination and ending on the day before the second anniversary of such termination date. Except as otherwise expressly provided in subclause

 

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(v) above, in the immediately following sentence with respect to any award referenced in subclause (vii) or (viii) or in Section 6.5, all payments to be made or benefits provided under this Section 6.2 shall be made and benefits provided when such payments or other benefits would have been made or provided if the Executive’s employment had not terminated (e.g., so that the Executive shall be paid the amounts payable in respect of Salary in equal installments on the first working day of each month following the date of the Executive’s termination of employment and the annual bonus amount related to the year in which the Executive’s employment terminates shall be paid at the same time as annual bonuses are payable to other executives of the Company (and in no event later than March 15 of the year following the year of the Executive’s termination)); provided, however, that any payment due under clause (iv) of the immediately preceding paragraph of this Section 6.2 during the six month period following the date of termination shall be paid on the date which is six months and one day following the date of termination. With respect to any award referenced in subclause (vii) or (viii) of the preceding paragraph, the timing of payment in respect of such awards shall be determined in accordance with the terms of the applicable award agreements. Each monthly payment to made under this Section 6.2 corresponding to the Executive’s Salary, each payment in respect of the Executive’s annual bonus and each other payment or provision of taxable benefits pursuant to Section 6.2(iii) hereof (including, without limitation, SEELIP premium payments and any related income tax gross-ups) shall be treated as a right to a series of separate payments in accordance with the provisions of Treas. Reg. §§1.409A-2(b)(2)(iii) and (iv). Notwithstanding anything else contained in this Section 6.2 or elsewhere in this Agreement to the contrary, the term “termination of employment” or any similar phrase or terms shall be interpreted to mean a “separation from service with the employer” within the meaning of Treas. Reg. Section 1.409A-1(h)(1) , where the “employer” means the Company and all corporations and trades or businesses with which the Company would be considered a single employer under Section 414(b) or Section 414(c) of the Code (as determined in accordance with the first sentence of Treasury Regulation Section 1.409A-1(h)(3)).

6.3 Termination upon Death or Disability. If the Executive’s employment and the Employment Term are terminated by reason of the Executive’s Death or Disability, the Company shall (i) pay the Executive the Salary earned and unpaid as of the date of termination and provide the Executive the Accrued Benefits and (ii) provide the Executive or his beneficiary, as applicable, the compensation and benefits made available generally to executive officers of the Company in the event of death or disability under the terms and conditions of the Company’s applicable plans, policies, programs or arrangements applicable to executive officers.

6.4 Change of Control. Upon the occurrence of a Change of Control (as defined below), all outstanding stock options, and upon the occurrence of a “Change in Control Event” with respect to Executive within the meaning set forth in Treasury

 

15


Reg. §1.409A-3(i)(5) on or after the date on which a Change of Control (as defined below) occurs, all outstanding restricted stock unit and performance share or performance unit awards then held by the Executive that were granted on or after the Commencement Date (including, but not limited to, the Commencement Options and the Commencement Units) that are not then vested shall immediately become vested and, in the case of performance share or performance units, assuming that the applicable performance objectives were achieved at the target level of performance. The Executive’s rights and entitlements upon a Change of Control shall be governed exclusively pursuant to the terms of this Agreement (and any prior agreements concerning his rights under a Change of Control, or any similar event, shall be of no further force and effect). Without limiting the generality of the foregoing, the Executive’s rights and entitlements with respect to any equity-based grants awarded prior to the Commencement Date shall be determined in accordance with the terms of the plan under which such award was granted and, if applicable, the agreements between the Executive and the Company governing the terms and conditions of such award. In the event that, within two years following a Change of Control that also is a “Change in Control Event” with respect to the Executive within the meaning set forth in Treasury Reg. §1.409A-3(i)(5), the Executive is terminated by the Company (or its successor) without Cause, or terminates his employment for Good Reason, the Executive shall receive the severance benefits and other termination benefits described in Section 6.2, but modified or supplemented as follows:

 

 

(i)

the amounts payable in lieu of Salary and annual bonus under subclause (iv) and (v) of Section 6.2 shall be paid in a single lump sum payment on the first day of the seventh month following the Executive’s termination;

 

 

(ii)

the amount payable in respect of annual bonus under such subclause (v) of Section 6.2 shall be equal to the greater of (A) the annual bonus that would have been payable to him for the year of termination at the target level of performance, and (B) the average of the last three bonuses paid to the Executive by the Company (such greater amount hereafter called the “Applicable Bonus Amount”), and shall be paid on the first day of the seventh month following the Executive’s termination; and

 

 

(iii)

the Executive shall also be paid an amount equal to the product of (A) the Applicable Bonus Amount, and (B) a fraction, the numerator of which is the number of days during such year elapsed prior to and including the Executive’s date of termination and the denominator of which is 365, such payment to be made to the Executive within 10 days following the Executive’s termination.

 

16


For the avoidance of doubt, no severance benefits shall be payable to the Executive under this Section 6.4 to the extent that, following a Change of Control, his employment is terminated by reason of his death or his Disability.

For purposes of this Agreement, a “Change in Control” shall be deemed to have occurred if any event set forth in any one of the following paragraphs shall have occurred: (i)”any person” (as defined herein) is or becomes the beneficial owner (within the meaning of Rule 13d-3 as promulgated under the Securities Exchange Act of 1934, as amended (a “Beneficial Owner”), directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such person any securities acquired directly from the Company or its affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities, but excluding any person who becomes such a Beneficial Owner in connection with a transaction described in clause (a) of paragraph (iii) below; (ii) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the Commencement Date, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds ( 2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or (iii) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (a) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 60% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (b) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities Beneficially Owned by such person any securities acquired directly from the Company or its affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities; or (iv) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or (v) there is consummated an

 

17


agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. For purposes hereof, “person” shall have the meaning given in Section 3(a)(9) of the Securities Exchange Act of 1934, as modified amended from time to time and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) any member of the Barnes family (by blood or marriage) or any entity for the benefit of, or controlled by, a member of the Barnes family (by blood or marriage), (ii) the Company or any of its subsidiaries, (iii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iv) an underwriter temporarily holding securities pursuant to an offering of such securities, or (v) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company. Notwithstanding the foregoing, no payment or other distribution shall be made upon a Change in Control with respect to any payment or benefit provided hereunder which constitutes “deferred compensation” for purposes of Section 409A of the Code and which is not otherwise grandfathered or exempt from the imposition of penalty tax thereunder, unless the event that constitutes a Change in Control also is a “Change in Control Event” with respect to Executive within the meaning set forth in Treasury Reg. §1.409A-3(i)(5).

6.5 Compliance with Section 409A. Notwithstanding anything contained in this Agreement, any payment to be made to the Executive in accordance with this Section 6 may be delayed or deferred by the Company in order to comply with all applicable laws, regulations and rules (including, without limitation, rules of any stock exchange on which the Company’s shares are listed), so long as such action would not subject such payment to an additional tax pursuant to the provisions of Section 409A of the Code and such delay or deferral is administered in accordance with Treas. Reg. § 1.409A-2(b)(7)(ii). Without limiting the generality of the foregoing sentence, any payments due under this Section 6 within six months following the date of the Executive’s termination of employment that are treated as deferred compensation subject to Section 409A of the Code or any successor or similar tax law or regulation, shall, if and solely to the extent necessary to cause the Executive not to be subject to the additional tax thereunder, be made six months and one day following such termination (or, if earlier, within ten (10) business days following the date of the Executive’s death). If (i) any payment or provision of taxable benefits pursuant to Section 6.2(vi) hereof is delayed for six months following Executive’s separation from service in order to avoid the penalty tax under Section 409A of the Code as provided in the immediately preceding sentence and (ii) the Executive pays to an insurance carrier or, if applicable, to the Company, the applicable premiums that the Company would otherwise have paid during that six month period, Executive shall be reimbursed by the Company for any such premium payments

 

18


that he has made during such six-month period, such reimbursement to be made on the date which is six months and one day following the Executive’s separation from service with the Company. The amount of premiums eligible for reimbursement during a taxable year of the Executive may not affect the premiums eligible for reimbursement in any other taxable year. Any amount or benefit deferred shall bear interest for the period of the deferral at the applicable federal rate determined in accordance with Section 1274 of the Code, and such interest shall be paid with and as part of the deferred payment on the six month and one day anniversary of the date of the Executive’s termination of employment. For the avoidance of doubt, this Section 6.5 shall not apply to any amounts which were earned and vested as of December 31, 2004 and not treated as subject to Section 409A of the Code by reason of the grandfathering provisions thereof and Treas. Reg. §1-409A-6 promulgated thereunder. Nothing in this Section 6.5 or in any other provision of this Agreement is intended to amend, revoke or limit in any way (a) the written consents the Executive gave in 2006, 2007 and 2008 to certain Code Section 409A-related amendments of his “Non-Grandfathered Compensation Arrangements” as defined in the award agreements issued to the Executive in those years under the Company’s Stock and Incentive Award Plan, or (b) the Executive’s agreement to the provisions of such award agreements relating to the use of an alternative method for identifying the “specified employees” who are subject to the six month delay required by Section 409A(a)(2)(B)(i) of the Code and to the use of a December 31 “specified employee identification date” and January 1 “specified employee effective date” for identifying the “specified employees” who are subject to that six month delay. Any payments that may be made and benefits that may be provided pursuant to this Agreement are intended to qualify for an exclusion from Section 409A of the Code (including without limitation the exclusion for certain welfare benefits under Treasury Regulation section 1.409A-1(a)(5), the exclusion for short-term deferrals under Treasury Regulation section 1.409A-1(b)(4), and the exclusions for separation pay plans under Treasury Regulation section 1.409A-1(b)(9)), and/or are intended to meet the requirements of Section 409A(a)(2), (3) and (4) of the Code, so that none of the payments that may be made and benefits that may be provided pursuant to this Agreement will be includible in the Executive’s federal gross income pursuant to Section 409A(a)(1)(A) of the Code. This Agreement shall be administered, interpreted and construed to carry out such intentions, and any provision of this Agreement that cannot be so administered, interpreted and construed shall to that extent be disregarded. However, any provision of this Agreement to the contrary notwithstanding, the Company does not represent, warrant or guarantee that the payments and benefits that may be paid or provided pursuant to this Agreement will not be includible in the Executive’s federal gross income pursuant to Section 409A(a)(1)(A) of the Code, nor does the Company make any other representation, warranty or guaranty to the Executive as to the tax consequences of this Agreement.

 

19


6.6 No Mitigation or Offset. Upon termination of the Executive’s employment hereunder, he shall have no mitigation obligation hereunder; it being expressly agreed that if the Executive receives any income, payment or other benefit from a third party after any such termination, such income, payment or benefit shall not be set off against any payments or benefits to be made or provided to the Executive by the Company pursuant to this Section 6.

6.7 No Impact on Prior Grants. Nothing in this Section 6 shall be construed to accelerate the vesting of, extend the term of or otherwise modify any option or other equity-based or long-term incentive award granted to the Executive prior to the Commencement Date. The terms and conditions of any such awards shall be governed by the terms of the agreements pertaining thereto and the underlying plan documents.

7. Excise Tax Limitation.

(a) Notwithstanding anything contained in this Agreement to the contrary, to the extent that any payment or distribution of any type to or for the benefit of the Executive by the Company, any affiliate of the Company, any person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company’s assets (within the meaning of Section 280G of the Code, and the regulations thereunder), or any affiliate of such person, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”) is or will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then the Total Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Total Payments would result in the Executive retaining a larger amount, on an after-tax basis (taking into account Executive’s applicable federal, state and local income taxes and the Excise Tax), than if the Executive received the entire amount of such Total Payments. The Company shall reduce or eliminate the Total Payments by first reducing or eliminating compensation or benefits that are treated as being entirely subject to the Excise Tax, starting with the portion thereof which is to be paid the farthest in time from the Determination (as hereinafter defined) and otherwise prioritizing the reduction or elimination of compensation or benefits based upon which elements of such compensation or benefits confer the least after-tax benefit on the Executive or his dependents (as applicable), taking into account the provisions of Treas. Reg. §1.280G-1. The Company shall make such determination after consultation with the Executive (or his financial and tax advisors if he so elects); provided, however, that the Company’s determination shall be final and binding.

 

20


(b) The determination of whether the Total Payments shall be reduced as provided in Section 7(a) and the amount of such reduction shall be made at the Company’s expense by an accounting firm selected by the Company from among the four (4) largest accounting firms in the United States (the “Accounting Firm”). The Accounting Firm shall provide its determination (the “Determination”), together with detailed supporting calculations and documentation, to the Company and the Executive within ten (10) days of the Termination Date. Absent manifest error, such Determination shall be binding, final and conclusive upon the Company and the Executive.

8. Executive Covenants.

(a) Unauthorized Disclosure. The Executive agrees and understands that in the Executive’s position with the Company, the Executive has been and will be exposed to and receive information relating to the business affairs of the Company, including but not limited to technical information, business and marketing plans, strategies, customer information, other information concerning the Company’s products, promotions, development, financing, expansion plans, business policies and practices, and other forms of information considered by the Company to be confidential and in the nature of trade secrets. The Executive agrees that during the Employment Term and thereafter, the Executive shall keep such information confidential and not disclose such information, either directly or indirectly, to any third person or entity without the prior written consent of the Company (unless such information is otherwise in the public domain through no fault of the Executive); provided, however, that nothing in this Section 8(a) shall prevent the Executive, with or without the Company’s consent, from (i) providing truthful testimony or otherwise cooperating in good faith with any investigation related to the business activities and practices of the Company and its officers and agents being conducted by a duly authorized agency of the federal or any state or local government or any duly appointed agent of the Board or any committee thereof or (ii) disclosing documents or information (A) in the performance of his duties hereunder to persons having commercial relationships or dealings with the Company, so long as such disclosure is made by the Executive (or at his direction) in the good faith belief that it is in the best interests of the Company and such disclosure is not contrary to any direction of the Board or any committee thereof or internal or external legal counsel to the Company and (B) in connection with any judicial or administrative investigation, inquiry or proceeding, provided that the Executive is compelled to do so by court order or subpoena and notifies the Company as soon as practicable after the receipt of such court order or subpoena (it being understood and agreed that no such order or subpoena shall be required in connection with an inquiry or proceeding that is described in subclause (i) above). This confidentiality covenant has no temporal, geographical or

 

21


territorial restriction. Upon termination of the Employment Term, the Executive shall promptly supply to the Company all property, keys, notes, memoranda, writings, lists, files, reports, customer lists, correspondence, tapes, disks, cards, surveys, maps, logs, machines, technical data or any other tangible product or document in the actual or constructive possession of the Executive at the end of the Employment Term.

(b) Non-competition. By and in consideration of the Company’s entering into this Agreement and the Salary, other compensation and benefits to be provided by the Company hereunder (including, but not limited to, the Commencement Option and the Commencement Units), and further in consideration of the Executive’s exposure to the proprietary information of the Company, the Executive agrees that the Executive shall not, during the Employment Term and for a period of two (2) years thereafter (the “Restriction Period”), directly or indirectly, own, manage, operate, join, control, be employed by, or participate in the ownership, management, operation or control of, or be connected in any manner, including but not limited to, holding the position of shareholder, director, officer, consultant, independent contractor, employee, partner, or investor, with any Competing Enterprise. For purposes of this paragraph, the term “Competing Enterprise” shall mean any person, corporation, partnership or other entity engaged in a business which is in direct competition with any material or significant business of the Company or any of its affiliates at the relevant time (or, during the Restriction Period, at the date of termination of employment); provided that, the direct or indirect parent of any entity that is in direct competition with the Company shall be considered to be in direct competition with the Company, but that nothing herein shall preclude the Executive from providing services to an entity affiliated with, but not directly or indirectly controlling or controlled by an entity that is in direct competition with the Company so long as the Executive does not, directly or indirectly, provide any services, advice or other assistance to such competing entity. For the avoidance of doubt, the Company and the Executive agree that as of the Commencement Date, the material or significant businesses of the Company are:

 

 

(1)

Barnes Distribution, an international, full-service distributor of C class maintenance, repair, operating and production supplies;

 

 

(2)

Associated Spring, an international manufacturer of precision mechanical and nitrogen gas products, fine blanking products and a global supplier of retaining rings, reed valves, shock discs and injection-molded plastic components and assemblies; and

 

22


 

(3)

Barnes Aerospace, an international manufacturer and repairer of highly engineered original equipment structural aircraft engine and industrial gas turbines components.

Following termination of the Employment Term, upon request, the Executive shall notify the Company of the Executive’s then current employment status. Notwithstanding the foregoing, this Section 8(b) shall not preclude the Executive from owning, solely as a passive investor, up to 2% of any class of equity securities of any Competing Entity which is publicly traded on an established securities market.

(c) Non-solicitation of Customers. The Executive agrees that during the Restriction Period, he shall not intentionally or knowingly, directly or indirectly, (i) interfere with the Company’s or any of its affiliates’ relationship with, or endeavor to entice away from the Company or any of its affiliates, any individual, person, firm, corporation or other business entity who at any time during the Employment Term was a customer of the Company or any of its affiliates or otherwise had a material business relationship with the Company or any of its affiliates, or (ii) discourage, or attempt to discourage, any individual, person, firm, corporation or business entity from doing business with the Company or any of its affiliates.

(d) Non-solicitation of Employees. The Executive agrees that during the period commencing on the date his employment terminates for whatever reason other than Death, and ending on the third anniversary thereof, he shall not intentionally or knowingly, directly or indirectly, (i) interfere with the Company’s or any of its affiliates’ relationships with, or endeavor to entice away from the Company or any of its affiliates, (ii) solicit for employment, or (iii) hire any person who is an employee (or, within the immediately preceding 90 days, was an employee) of the Company or any of its affiliates and who was an employee of the Company or any of its affiliates at the date of the Executive’s termination of employment (or during the 90-day period immediately prior thereto).

(e) Non-disparagement. The Executive agrees that the Executive shall not disparage the Company or its affiliates, or its or their current or former officers, directors, and key employees in any way; further, the Executive shall not make or solicit any comments, statements, or the like to the media or to others that would be considered derogatory or detrimental to the good name or business reputation of any of the aforementioned entities or individuals; provided, that this Section 8(e) shall not prohibit statements which the Executive is required to make under oath or which are otherwise required by law, provided that such statements are truthful and made in a professional manner. The Company agrees that neither it, nor any of its authorized

 

23


representatives, shall disparage the Executive in any way, and that neither the Company nor any of its authorized representatives shall make or solicit any comments, statements, or the like to the media or to others that would be considered derogatory or detrimental to the good name or business reputation of the Executive; provided, that this Section 8(e) does not prohibit statements which (i) the Company or any of its officers, directors, employees, affiliates or advisors are required to make under oath or are otherwise required by law, (ii) are required to comply with the rules of the New York Stock Exchange or any other similar exchange or automated trading system on which any of the Company’s securities are listed, or (iii) are, in the opinion of counsel for the Company, necessary to comply with the Company’s disclosure obligations to its stockholders, provided that in any case such statements are truthful and made in a professional manner; and, provided further, that the limitations applicable to the Company under this Section 8(e) shall not apply in the event the Executive has been terminated for Cause or circumstances existed such that the Company could have terminated the Executive for Cause

(f) Remedies. The Executive agrees that (i) any breach of the terms of this Section 8 would result in irreparable injury and damage to the Company for which the Company would have no adequate remedy at law; (ii) in the event of said breach or any threat of breach, the Company shall be entitled to an immediate injunction and restraining order to prevent such breach and/or threatened breach and/or continued breach by the Executive and/or any and all persons and/or entities acting for and/ or with the Executive, without having to prove damages, and to all costs and expenses, including reasonable attorneys’ fees and costs, in addition to any other remedies to which the Company may be entitled at law or in equity and (iii) notwithstanding any other terms in this Agreement or applicable stock plans, in the event of said breach, all (A) vested and unvested stock options, and (B) restricted shares or restricted stock units which have not yet been earned, in each case were granted to the Executive after the Commencement Date, shall immediately expire and shall no longer be exercisable after such breach. The terms of this paragraph shall not prevent the Company from pursuing any other available remedies for any breach or threatened breach hereof, including but not limited to the recovery of damages from the Executive. The Executive and the Company further agree that the provisions of this Section 8 are reasonable and the Company would not have entered into this Agreement but for their inclusion herein. Should a court or arbitrator determine that any provision of the covenant not to compete is unreasonable, either in period of time, geographical area, or otherwise, the parties hereto agree that the covenant should be interpreted and enforced to the maximum extent which such court or arbitrator deems reasonable.

 

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(g) Survival; Breach Not a Defense. The provisions of this Section 8 shall survive any termination of the Employment Term, and the existence of any claim or cause of action by the Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements of this Section 8.

9. Indemnification and Insurance. During the Employment Term and at all times thereafter, the Company shall cause the Executive to be covered and named as an insured under any policy or contract of insurance obtained by it to insure its officers and directors against personal liability for acts or omissions in connection with service as an officer or director of the Company or service in other capacities at the request of the Company. The coverage provided to the Executive pursuant to this Section 9 shall be of the same scope and on the same terms and conditions as the coverage provided to other officers or directors of the Company. The Executive shall be entitled to indemnification for liabilities and expenses to the fullest extent permitted under Delaware law to the extent consistent with the Company’s Articles of Incorporation and By-Laws.

10. Non-Waiver of Rights. The failure to enforce at any time the provisions of this Agreement or to require at any time performance by the other party of any of the provisions hereof shall in no way be construed to be a waiver of such provisions or to affect either the validity of this Agreement or any part hereof, or the right of either party to enforce each and every provision in accordance with its terms.

11. Notices. All notices required or permitted under this Agreement shall be in writing and shall be deemed effective upon personal delivery or upon deposit in the United States Post Office, by registered or certified mail, postage prepaid, addressed to the other party at the address shown below, or at such other address or addresses as either party shall designate to the other in accordance with this Section 11.

 

25


If to the Company:

Barnes Group, Inc.

123 Main Street

Bristol, Connecticut

ATTN: Senior Vice President, General Counsel and Secretary

If to the Employee:

Gregory F. Milzcik

4 Atwater Terrace

Farmington, CT 06032

12. Binding Effect/Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, personal representatives, estates, successors (including, without limitation, by way of merger) and permitted assigns. Notwithstanding the provisions of the immediately preceding sentence, the Executive shall not assign all or any portion of this Agreement without the prior written consent of the Company.

13. Agreement to Arbitrate; Injunctive Relief. THE PARTIES HERETO AGREE THAT ANY CLAIM, DEMAND, DISPUTE, ACTION OR CAUSE OF ACTION ARISING UNDER OR RELATING TO THIS AGREEMENT, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE (COLLECTIVELY, THE “PARTIES’ DISPUTES”), SHALL BE DECIDED BY A SINGLE ARBITRATOR PURSUANT TO AN ARBITRATION UNDER THE NATIONAL RULES FOR THE RESOLUTION OF EMPLOYMENT DISPUTES OF THE AMERICAN ARBITRATION ASSOCIATION (“AAA RULES”) AS MODIFIED HEREBY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT INCLUDING THIS SECTION WITH THE AMERICAN ARBITRATION ASSOCIATION (THE “AAA”) AS WRITTEN EVIDENCE OF THE AGREEMENT OF THE PARTIES TO SO ARBITRATE. THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT THEY FULLY UNDERSTAND ITS TERMS, CONTENT AND EFFECT, AND THAT THEY VOLUNTARILY AND KNOWINGLY AGREE TO THE TERMS OF THIS SECTION AND AGREE TO ARBITRATE ALL PARTIES’ DISPUTES. Any arbitration pursuant to this Agreement shall take place in Hartford, Connecticut (or in such other location as the parties shall mutually agree in writing) before a single arbitrator having no less than ten years experience in employment matters appointed in

 

26


accordance with the AAA Rules or, if the parties to the arbitration agree, a single retired judge. Notice of any demand for arbitration shall be provided in writing to the other party pursuant to Section 11 hereof and to the AAA (the “Arbitration Notice”). For the purposes of this Agreement, an arbitration shall be deemed to have been commenced at such time as the Arbitration Notice has been delivered to all the other parties pursuant to the provisions of Section 11. The parties shall be entitled to discovery in conjunction with such arbitration (with the scope of discovery to be co-extensive with discovery rights applicable to an equivalent civil action in state court). Any award rendered by the arbitrators (or, if applicable, retired judge) shall be final and binding and may be enforced in the courts of the state in which the arbitration takes place. Each party shall pay half of the fees and expenses of the arbitrator.

14. Withholding. All payments and benefits hereunder shall be reduced, as necessary, by the amount of all applicable income, employment, excise or other taxes required to be withheld by the Company pursuant to federal, state or local law.

15. Entire Agreement. This Agreement sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and plans, written or oral between them as to such subject matter, including, but not limited to, the Company’s Executive Severance Pay Plan and the Severance Agreement (except to the extent otherwise expressly provided in Section 6.4 hereof).

16. Severability. If any provision of this Agreement, or any application thereof to any circumstances, is invalid, in whole or in part, such provision or application shall to that extent be severable and shall not affect other provisions or applications of this Agreement.

17. Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Connecticut, without reference to the principles of conflict of laws.

18. Modifications and Waivers. No provision of this Agreement may be modified, altered or amended except by an instrument in writing executed by the parties hereto. No waiver by either party hereto of any breach by the other party hereto of any provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions at the time or at any prior or subsequent time.

 

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19. Headings. The headings contained herein are solely for the purposes of reference, are not part of this Agreement and shall not in any way affect the meaning or interpretation of this Agreement.

20. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument.

21. Executive Representation. The Executive represents and warrants to the Company that he is not subject to any agreement, written or oral, any law, regulation or similar enactment, or any decree, order or similar action by any tribunal or government authority, which could, in any way, restrict his ability to negotiate, enter into or fully perform his obligations hereunder.

 

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IN WITNESS WHEREOF, the Company has caused this amended and restated Agreement to be executed by authority of its Board of Directors, and the Executive has hereunto set his hand, as of December 31, 2008.

 

 

 

 

BARNES GROUP INC.

 

 

By:

 

/s/ Gary G. Benanav

Name:

 

Gary G. Benanav

Title:

 

Chairman, Compensation and Management Development Committee of the Board of Directors

 

EXECUTIVE

 

 

By:

 

/s/ Gregory F. Milzcik

 

 

Gregory F. Milzcik

 

29

 

 

 

 

 

 

 

EX-10.10 11 dex1010.htm EXECUTIVE OFFICER SEVERANCE AGREEMENT

Exhibit 10.10

SEVERANCE AGREEMENT

(as amended December 31, 2008)

THIS AGREEMENT, dated [                ], is made by and between Barnes Group Inc., a Delaware corporation (the “Company”), and [                ] (the “Executive”), and is amended on December 31, 2008 to read in its entirety as follows.

WHEREAS, the Company considers it essential to the best interests of its shareholders to foster the continued employment of key management personnel; and

WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders; and

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof.

2. Term of Agreement. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, [        ]; provided, however, that commencing on January 1, [        ] and each January 1 thereafter, the Term shall automatically be extended for one additional year unless, not later than September 30 of the preceding year, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire no earlier than twenty-four (24) months beyond the month in which such Change in Control occurred.


3. Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless the Executive has a Separation from Service following a Change in Control and during the Term and such Separation from Service is described in the first sentence of Section 6.1. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

4. The Executive’s Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six (6) months from the date of such Potential Change of Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

5. Compensation Other Than Severance Payments.

5.1 Following a Change in Control and during the Term, during any period that the Executive fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to physical or mental illness, the Company shall pay the Executive’s full salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period, until the Executive’s employment is terminated by the Company for Disability; provided, however, that the amounts received under this Section 5.1 shall be reduced by any amounts received by the Executive with respect to the same period of time under any long term disability plan of the Company. For the avoidance of doubt, payments pursuant to this Section 5.1 are contingent on the Executive’s continued full-time employment until such time as (a) a Change in Control occurs during the Term, and

 

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(b) the Executive fails to perform full-time duties as a result of incapacity due to physical or mental illness, and are payable only for so long as the Executive continues to fail to perform full-time duties as a result of incapacity due to physical or mental illness or, if sooner, until the earlier of (i) the end of the Term, or (ii) the Executive’s employment is terminated by the Company for Disability.

5.2 For the Executive’s services following a Change in Control and during the Term, the Company shall pay the Executive’s full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Change in Control or, if higher, the rate in effect from time to time after the Change in Control and prior to any reduction thereof, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Change in Control or, if more favorable to the Executive, as in effect from time to time after the Change in Control and prior to any reduction thereof.

5.3 If the Executive has a Separation from Service following a Change in Control and during the Term, and such Separation from Service is (A) an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability, or (B) a Separation from Service by the Executive for Good Reason, the Company shall pay to the Executive after the Separation from Service the Executive’s normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to any adverse change therein after the Change in Control; provided that nothing in this Section 5.3 shall alter the terms of any stock option or any equity-based award. Nothing herein shall reduce or otherwise adversely affect any compensation and benefits to which the Executive may be entitled after Separation from Service under any of the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect from time to time before or after a Change in Control.

5.4 In the event that a Change in Control occurs during the Term, (A) the Company shall, within five (5) days after such Change in Control, pay to the Executive a lump sum cash amount equal to the product of (i) the target annual bonus or incentive award applicable to the Executive under each of the Company’s annual

 

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bonus or incentive compensation plans (such target award to be determined pursuant to the provisions of each such plan or, if no such provisions exist in the case of any such plan, as determined by the Compensation Committee of the Board, as constituted immediately prior to the Change in Control, in its sole discretion), in respect of the year in which such Change in Control occurs and (ii) a fraction, the numerator of which shall be the number of months (including fractions thereof) from the first day of the year in which the Change in Control occurs to the date on which the Change in Control occurs, and the denominator of which shall be twelve (12); and (B) all options held by the Executive to acquire Company stock shall immediately become vested and exercisable in full, and all other Company stock-based awards held by the Executive shall vest and be paid at such time or times on or after the date on which such Change in Control occurs, and to such extent, as shall be set forth in the award agreement documenting such awards (it being understood and agreed that any stock-based award agreements will provide for vesting and payment of such awards in connection with a Change in Control at such time or times and on such terms and conditions as the Committee deems advisable to comply with or qualify for an exclusion from Section 409A of the Code). The lump sum cash amount payable pursuant to Section 5.4(A) above shall be credited against any annual bonus or incentive award to which the Executive may be entitled for the year in which the Change in Control occurs pursuant to the Performance-Linked Bonus Plan for Selected Executive Officers or any other annual bonus or incentive plan in which the Executive participates in such year, provided that such annual bonus or incentive award qualifies (or will qualify) for treatment as a short-term deferral under Treasury Regulation section 1.409A-1(b)(4) or is otherwise not subject to Section 409A of the Code, it being the intention hereof that, between Section 5.4(A) above and any annual bonus or incentive award plan pursuant to which the Executive is entitled to an annual bonus or incentive award for the year in which the Change in Control occurs, the Executive will receive any annual bonus or incentive award to which the Executive may be entitled for the year in which the Change in Control occurs but not less than the lump sum cash amount payable pursuant to Section 5.4(A) above.

6. Severance Payments.

6.1 Subject to Section 6.2 and Section 12(B) hereof, if the Executive has a Separation from Service following a Change in Control and during the Term, and such Separation from Service is an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability, or is a Separation from Service by the Executive for Good Reason, then the Company shall pay the Executive the amounts, and provide

 

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the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. Notwithstanding the foregoing, the Executive shall not be eligible to receive any payment or benefit provided for in this Section 6.1 unless the Executive shall have executed and delivered to the Company within 45 days after the Separation from Service a release (substantially in the form of Exhibit A hereto) in favor of the Company and others set forth on said Exhibit A, relating to all claims or liabilities of any kind relating to the Executive’s employment and termination of employment with the Company, and the Executive shall not have revoked such release within 7 days after executing it. Subject to Section 12(B) hereof, any payments and benefits that, but for the preceding sentence, would be paid or provided pursuant to this Section 6.1 before the 8th day after the Executive executes the release shall be paid or provided on the 8th day after the Executive executes the release (or, if such 8th day is on a weekend or a holiday, on the next business day), provided that the Executive did not revoke the release.

(A) Cash Severance Payments.

(i) The Company shall pay to the Executive an amount, in cash, equal to the severance pay to which the Executive would be entitled under the Barnes Group Inc. Executive Separation Pay Plan as amended on December       , 2008 (the “Executive Separation Pay Plan”) if the Separation from Service were a Separation from Service for which severance benefits were payable under that Plan and the provisions of Section 4.5 thereof did not apply. For the avoidance of doubt, the severance pay to which the Executive would be entitled if the Separation from Service were a Separation from Service for which severance benefits were payable under the Executive Separation Pay Plan and the provisions of Section 4.5 thereof did not apply is twelve months of base salary as in effect immediately prior to the Separation from Service. Such amount shall be paid at the same times at which it would be paid under the Executive Separation Pay Plan if the provisions of Section 4.5 thereof did not apply, and in the same installments. However, if the Separation from Service for which the amount described in this Section 6.1(A)(i) is payable takes place during the two years following the occurrence of a “change in control event” with respect to the Executive (within the meaning of Treasury Regulation section 1.409A-3(i)(5)(i) & (ii)), then in that event the Company shall pay the Executive the aforementioned amount in a lump sum within five (5) days of such Separation from Service; and

 

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(ii) The Company shall pay to the Executive within five (5) days of such Separation from Service a lump sum amount, in cash, equal to the excess of (a) over (b) where (a) is 2 times the sum of (I) the Executive’s annual base salary as in effect immediately prior to the Separation from Service or, if higher, in effect immediately prior to any reduction thereof, and (II) the highest of (A) the average annual bonus earned by the Executive in respect of the three fiscal years ending immediately prior to the fiscal year in which occurs the Separation from Service, (B) the average annual bonus earned by the Executive in respect of the three fiscal years ending immediately prior to the fiscal year in which occurs the Change in Control or (C) the target bonus in respect of the fiscal year in which occurs the Separation from Service, and (b) is the amount payable pursuant to Section 6.1(A)(i) above.

(B) Pro-Rata Bonus for Year of Termination. Within five (5) days of such Separation from Service, the Company shall pay to the Executive a lump sum cash amount (the “Pro-Rata Bonus”) equal to the product of (i) the target annual bonus or incentive award applicable to the Executive under each of the Company’s annual bonus or incentive compensation plans (such target award to be determined pursuant to the provisions of each such plan or, if no such provisions exist in the case of any such plan, as determined by the Board in its sole discretion), in respect of the year in which such Separation from Service occurs and (ii) a fraction, the numerator of which shall be the number of months (including fractions thereof) from the first day of the year during which such Separation from Service occurs to the date on which such Separation from Service occurs, and the denominator of which shall be twelve (12); provided, however, that if such Separation from Service occurs during the same year in which the Change in Control occurs, the Pro Rata Bonus shall be offset by any payments received by the Executive pursuant to Section 5.4(A) hereof.

(C) Vesting of Unvested Non-Qualified Plan Accruals Prior to the Date of Termination. If the Executive was participating immediately prior to the Date of Termination or the Change in Control in any of the Company’s non-qualified employee pension benefit plans (including without limitation the Company’s Supplemental Senior Officer Retirement Plan and Supplemental Executive Retirement Plan and any non-qualified defined contribution employee pension benefit plan but excluding any severance pay plan) and on the Date of Termination was not fully vested in benefits accrued through the Date of Termination under any such plan in

 

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which s/he was so participating, then the Executive shall be entitled to receive pursuant to this Section 6.1(C) benefits equal to the benefits accrued by the Executive under those plans prior to the Date of Termination that are not vested on that date that would vest under those plans if the Executive’s age and service credit for vesting purposes were equal to the Executive’s age and service credit as calculated under the provisions of such plans as of the Date of Termination plus the lesser of (i) 24 months, or (ii) the number of months (including fractions of a month) from the Date of Termination to the date of death of the Executive. The intent of this provision is to give the Executive 24 months of age and service credit for vesting under such non-qualified employee pension benefit plans in excess of the Executive’s actual age and service credit as of the Date of Termination as determined under such plans, if and to the extent that such plans do not otherwise give the Executive age and service credit for vesting for the 24 month period following the Date of Termination and if and to the extent that the Executive survives during that 24 month period. Any benefits resulting from the additional age and service credit for vesting provided hereby shall be payable at the time and in the form of payment applicable to the Executive’s benefits under the non-qualified employee pension benefit plan(s) in question. For the avoidance of doubt, any benefits payable pursuant to the foregoing provisions of this Section 6.1(C) in respect of the Executive’s unvested benefits under the Supplemental Senior Officer Retirement Plan shall be payable at the time and in the form of payment that would apply if such benefits were payable under the Supplemental Senior Officer Retirement Plan, any benefits payable pursuant to the foregoing provisions of this Section 6.1(C) in respect of the Executive’s unvested benefits under the Supplemental Executive Retirement Plan shall be payable at the time and in the form of payment that would apply if such benefits were payable under the Supplemental Executive Retirement Plan, and so on.

(D) Payments in Respect of Unvested Qualified Defined Benefit Plan Accruals Prior to the Date of Termination. If the Executive was participating immediately prior to the Date of Termination or the Change in Control in any of the Company’s qualified defined benefit employee pension benefit plans (including without limitation the Company’s Salaried Retirement Income Plan)(“Qualified Plan”) and on the Date of Termination was not fully vested in benefits accrued through the Date of Termination under any such plan in which s/he was so participating, then the Executive shall be entitled to receive pursuant to this Section 6.1(D) benefits equal to the benefits accrued by the Executive under those plans prior to the

 

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Date of Termination that are not vested on that date that would vest under those plans if the Executive’s age and service credit for vesting purposes were equal to the Executive’s age and service credit as calculated under the provisions of such plans as of the Date of Termination plus 24 months. The intent of this provision is to give the Executive 24 months of age and service credit for vesting under such qualified defined benefit employee pension benefit plans in excess of the Executive’s actual age and service credit as of the Date of Termination as determined under such plans, if and to the extent that such plans do not otherwise give the Executive age and service credit for vesting for the 24 month period following the Date of Termination, and provided that the Executive survives to the payment date set forth in the next sentence. Any benefits resulting from the additional age and service credit for vesting provided by the preceding provisions of this Section 6.1(D) shall be paid in an actuarial equivalent lump sum on March 1 of the calendar year following the calendar year in which the Date of Termination occurs, but only if the Executive survives to that March 1 date. Nothing herein shall alter any Qualified Plan or any rights the Executive may have under any Qualified Plan.

(E) Payments in Respect of Unvested Account Balances as of the Date of Termination under Qualified Defined Contribution Plans. If the Executive was participating immediately prior to the Date of Termination or the Change in Control in any of the Company’s qualified defined contribution employee pension benefit plans (including without limitation a 401(k) plan or a qualified profit-sharing plan) and on the Date of Termination was not fully vested in any amount (including without limitation investment gains and losses) that had been credited to the Executive through the Date of Termination (the “Unvested Account Balance”) under any such plan in which s/he was so participating, then, on March 1 of the calendar year following the calendar year in which the Date of Termination occurs, the Company shall pay the Executive, if s/he is then surviving, an amount equal to the portion of the Unvested Account Balance that would vest during the 24 month period following the Date of Termination (and that will not in fact vest under the qualified defined contribution plan in question), if such plan were to remain in effect during such 24 month period and the Executive were able to and did continue to earn age credit and service credit for vesting purposes under such plan until the last day of such 24 month period; provided that, if and to the extent necessary to comply with the contingent benefit rule set forth in Treasury Regulation section 1.401(k)-1(e)(6), this sentence shall not apply to the Executive’s Unvested Account Balance under a 401(k) plan

 

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unless the Executive made the maximum elective deferrals under Section 402(g) of the Code or the maximum elective contributions permitted under the terms of such 401(k) plan in the years for which the employer contributions from which the Unvested Account Balance was derived were credited. The intent of this provision is to pay the Executive the portion of the Unvested Account Balance that, disregarding any investment gains or losses and any plan amendment or termination that may occur after the Date of Termination, would vest if the Executive were able to and did continue to earn age credit and vesting service credit under the qualified defined contribution plan in question during the 24 month period following the Date of Termination, provided that the Executive survives to the March 1 payment date set forth above in this Section 6.1(E) and, in the case of any Unvested Account Balance in a 401(k) plan, provided that the contingent benefit rule set forth in Treasury Regulation section 1.401(k)-1(e)(6) is satisfied. Nothing herein shall alter any qualified defined contribution employee pension benefit plan or any rights the Executive may have under any such plan.

(F) Defined Benefit Plan Accruals for 24 Months After Date of Termination.

(i) If the Executive was participating immediately prior to the Date of Termination or the Change in Control in any of the Company’s qualified or non-qualified defined benefit employee pension benefit plans (including without limitation the Company’s Salaried Retirement Income Plan, Supplemental Senior Officer Retirement Plan and Supplemental Executive Retirement Plan but excluding any severance pay plan), then, on March 1 of the calendar year following the calendar year in which the Date of Termination occurs, the Company shall pay the Executive, if s/he is then surviving, a lump sum amount which is actuarially equivalent to the vested benefits which the Executive would accrue during the 24 month period following the Date of Termination under the qualified and non-qualified defined benefit employee pension benefit plans in which the Executive was participating immediately prior to the Separation from Service or, if more favorable to the Executive, immediately prior to the Change in Control (the “Relevant Plans”), if — (a) the Relevant Plans were to remain in effect during such 24 month period and the Executive were able to and did continue to earn age credit, service credit and compensation credit for benefit accrual and vesting purposes under such plans during such 24 month

 

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period (in addition to the Executive’s age, service credit and compensation credit through the Date of Termination), and (b) the Executive’s compensation for purposes of those plans for the year in which the Change in Control occurred included, if and to the extent it is not otherwise included (but only if and to the extent that bonuses are pensionable pursuant to those plans) a bonus in the amount payable pursuant to Section 5.4 hereof paid in equal installments ratably over the portion of that year that precedes the Change in Control, and (c) the Executive’s compensation for purposes of those plans for the year in which the Date of Termination occurs included, if and to the extent it is not otherwise included (but only if and to the extent that bonuses are pensionable pursuant to those plans) a bonus in the amount payable pursuant to Section 6.1(B) hereof paid in equal installments ratably over the portion of the year in which the Date of Termination occurs that precedes the Date of Termination, and (d) the Executive’s compensation during the 24 month period following the Date of Termination for purposes of those plans consisted of salary equal to 2 times the amount referred to in Section 6.1(A)(ii)(a)(I) hereof paid in equal installments ratably over that 24 month period and (if and to the extent that bonuses are pensionable pursuant to those plans) a bonus equal to 2 times the amount referred to in Section 6.1(A)(ii)(a)(II) hereof paid in equal installments ratably over that 24 month period. Actuarial equivalence shall be determined using the actuarial factors and assumptions applicable to the plan in question.

(ii) In calculating the vested benefits which the Executive would accrue during the 24 month period following the Date of Termination under the Company’s Supplemental Senior Officer Retirement Plan (“SSORP”) pursuant to Section 6.1(F)(i) above, the offset for Qualified Plan benefits under the SSORP shall take into account (as if they were payable under the Qualified Plan) any benefits payable pursuant to this Section 6.1(F) in respect of Qualified Plan benefits. “Qualified Plan” as used in this Section 6.1(F) shall have the same meaning as in the SSORP. The intent of the preceding provisions of this Section 6.1(F)(ii) is to ensure that the Qualified Plan benefits that are offset in determining the SSORP benefits that would be accrued during the 24 month period following the Date of Termination pursuant to Section 6.1(F)(i) above take into account the Executive’s Qualified Plan benefits as enhanced by the benefits payable in respect of the Qualified Plan pursuant to this Section 6.1(F).

 

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(iii) In calculating the vested benefits which the Executive would accrue during the 24 month period following the Date of Termination under the Company’s Supplemental Executive Retirement Plan (“SERP”) pursuant to Section 6.1(F)(i) above, any benefits payable pursuant to this Section 6.1(F) in respect of the Qualified Plan, the Retirement Benefit Equalization Plan (“RBEP”) or the SSORP shall be taken into account. The intent of the preceding sentence is to ensure that the vested SERP benefits that would be accrued during the 24 month period following the Date of Termination pursuant to Section 6.1(F)(i) above are based on the Executive’s Qualified Plan benefits, RBEP benefits and SSORP benefits as enhanced by the benefits payable in respect of those plans pursuant to this Section 6.1(F).

(G) Defined Contribution Plan Accruals for 24 Months After Date of Termination. If the Executive was participating immediately prior to the Date of Termination or the Change in Control in any of the Company’s qualified or non-qualified defined contribution employee pension benefit plans (including without limitation a 401(k) plan or a qualified profit-sharing plan), then, on March 1 of the calendar year following the calendar year in which the Date of Termination occurs, the Company shall pay the Executive, if s/he is then surviving, an amount equal to the employer contributions (if any) that would have been credited to the Executive and would have vested during the 24 month period following the Date of Termination (but are not so credited or vested) under any qualified or non-qualified defined contribution employee pension benefit plan in which the Executive was participating immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control, if (i) the Executive were able to and did continue to earn age credit, service credit and compensation credit for benefit accrual and vesting purposes under such plan during that 24 month period, and (ii) the Executive’s compensation for purposes of that plan for the year in which the Change in Control occurred included, if and to the extent it is not otherwise included, a bonus (but only if and to the extent that bonuses are eligible for employer contributions under such plan) in the amount payable pursuant to Section 5.4 hereof paid in equal installments ratably over the portion of that year that precedes the Change in Control, and (iii) the Executive’s

 

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compensation during the 24 month period following the Date of Termination for purposes of that plan consisted of salary equal to 2 times the amount referred to in Section 6.1(A)(ii)(a)(I) hereof paid in equal installments ratably over that 24 month period and bonus (if and to the extent that bonuses are eligible for employer contributions under such plan) equal to 2 times the amount referred to in Section 6.1(A)(ii)(a)(II) hereof paid in equal installments ratably over that 24 month period, and (iv) in the case of any contributory defined contribution employee pension benefit plan such as a 401(k) plan, the Executive were able to and did contribute the maximum matchable employee contributions to the plan during the 24 month period after the Date of Termination, and (v) the same employer contributions were made to the plan during that 24 month period as a percentage of Compensation and, in the case of a contributory plan, as a percentage of employee contributions, as were made in respect of the last full plan year preceding the Date of Termination or, if more favorable to the Executive, preceding the Change in Control, and (vi) the same qualified plan limits on compensation, contributions and benefits that applied in respect of such last full plan year continued to apply during the 24 months following the Date of Termination. No payment shall be made pursuant to the preceding sentence in respect of the employer contributions that would have been credited to the Executive and would have vested under a 401(k) plan unless the Executive made the maximum elective deferrals under Section 402(g) of the Code or the maximum elective contributions permitted under the terms of the 401(k) plan in which the Executive was participating immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control, in the year in which the Date of Termination occurs or, if the 401(k) plan in which the Executive was participating immediately prior to the Change in Control was more favorable to the Executive than the 401(k) plan in which the Executive was participating immediately prior to the Date of Termination, in the year in which the Change in Control occurred. The preceding sentence is intended to apply only if and to the extent the preceding sentence is necessary to comply with the contingent benefit rule set forth in Treasury Regulation section 1.401(k)-1(e)(6), and it shall be administered, interpreted and construed accordingly.

(H) Perquisite Allowance. If immediately prior to the Date of Termination or the Change in Control the Company was paying the Executive a cash allowance in lieu of a company-provided car, cell phone usage, club membership or other perquisites (a “Perquisite Allowance”), then, on March 1 of the calendar year following the calendar year in which the Date

 

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of Termination occurs, the Company shall pay the Executive, if s/he is then surviving, an amount equal to 24 times the average monthly Perquisite Allowance the Company was paying the Executive immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control.

(I) Health Care Benefits. For the twenty-four month period immediately following the Date of Termination or until the earlier death of the Executive (the “Benefits Period”), the Company shall continue to provide the Executive with the same medical and dental coverage which the Executive was receiving immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control (the “Health Care Benefits”). For the avoidance of doubt, the Company shall pay or reimburse the Executive for the same medical and dental expenses which were subject to payment or reimbursement under the medical and dental insurance coverage which the Executive was receiving immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control. The Health Care Benefits shall be provided in such a manner that such benefits will be excluded from the Executive’s income for federal income tax purposes. The receipt of the Health Care Benefits shall be conditioned on the Executive continuing to pay the applicable premiums for such Health Care Benefits during the Benefits Period. The applicable monthly premium shall be the monthly COBRA premium as in effect at the Company from time to time with respect to the coverage provided under Section 4980B of the Code. Except as permitted by Treasury Regulation section 1.409A-3(i)(4)(B), the amount of medical and dental expenses that are subject to Section 409A of the Code and not excluded therefrom as involuntary separation pay or otherwise and that are subject to reimbursement pursuant to this Section 6.1(I) during any taxable year of the Executive may not affect the expenses eligible for reimbursement in any other taxable year, and shall be reimbursed at the time required by the plan applicable to the Executive immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control but in no event later than the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.

(J) Additional Payments. During the Benefits Period, and subject to Section 12(B) below (relating to the six month delay applicable to Specified Employees), the Company shall pay to the Executive an amount equal to the monthly premium cost set forth in Section 6.1(I) above, minus an

 

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amount equal to the monthly employee contribution rate that is paid by Company employees for the applicable level of such coverage immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control, which payment shall be paid in advance on the first payroll day of each month, commencing with the first such payroll day that coincides with or next follows the Date of Termination. Each month, when the Company pays the amount required by the preceding sentence, the Company shall also pay the Executive a tax gross-up on the amount paid pursuant to the preceding sentence, i.e., an amount sufficient after taxes on the tax gross-up paid pursuant to this sentence to reimburse the Executive for any Federal, state, local or foreign taxes imposed upon the Executive as a result of the Company’s payment of the amount required by the preceding sentence. For purposes of determining the amount of the tax gross-up to be paid pursuant to this Section 6.1(J) or pursuant to any other provision of this Agreement or any other plan or arrangement pursuant to which the Executive is entitled to receive a tax gross-up after a Change in Control and during the Term, the Executive shall notify the Company from time to time of the highest effective marginal rates at which the Executive’s income is taxed under any applicable Federal, state, local and foreign laws and such rates shall be conclusive on the Company for purposes of determining the amount of the tax gross-up to be paid, and in no event shall the Executive be required to disclose his tax returns to the Company or otherwise for the purpose of determining the amount of the tax gross-up to be paid.

(K) SEELIP Benefits. If the Executive was a participant in the Company’s Senior Executive Enhanced Life Insurance Program immediately prior to the Date of Termination or the Change in Control, then during the Benefits Period the Company shall provide the Executive with the same benefits, if any, under the Company’s Senior Executive Enhanced Life Insurance Program as in effect immediately prior to the Separation from Service or, if more favorable to the Executive, immediately prior to the Change in Control (the “SEELIP”), at the same times, that the Company would have provided if the SEELIP had remained in effect and the Executive’s active employment and participation in the SEELIP had continued (and no Separation from Service had occurred) until the end of the Benefits Period and the Executive’s annual base salary during the Benefits Period for purposes of the SEELIP had been equal to the amount referred to in Section 6.1(A)(ii)(a)(I) hereof. In no event shall this Section 6.1(K) entitle the Executive to benefits that duplicate any SEELIP benefits

 

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that the Executive is entitled to receive at the same time other than pursuant to this Section (K). If any premiums or other “Reimbursements” (as such term is defined in the SEELIP as amended in December 2008) that would be payable by the Company pursuant to the preceding provisions of this Section 6.1(K) during the six month period following the Separation from Service are not paid during that six month period due to the six month delay imposed by Section 12(B) hereof, then (i) the Company shall timely provide the Executive with the opportunity to pay the SEELIP premiums during that six month period and, if the Executive chooses to do so, the Company shall cooperate as needed to enable the Executive to do so, and (ii) at the time provided by Section 12(B) hereof (i.e., the first day of the seventh month following the Separation from Service) the Company shall pay such premiums or other Reimbursements in accordance with the SEELIP. Premiums and other Reimbursements eligible for reimbursement pursuant to the preceding provisions of this Section 6.1(K) during the Executive’s taxable year may not affect the premiums and other Reimbursements eligible for reimbursement in any other taxable year, and any in-kind benefits provided pursuant to this Section 6.1(K) or otherwise during a taxable year of the Executive may not affect the in-kind benefits to be provided pursuant to this Section 6.1(K) or otherwise in any other taxable year. For the avoidance of doubt, in accordance with the SEELIP, (a) all income taxes that are attributable to the premiums that are required to be paid by the Company during the Benefits Period pursuant to the preceding provisions of this Section 6.1(K) shall be fully grossed up by the Company, and (b) such tax gross ups shall be paid in the calendar year in which the Company pays the related premiums and, in the case of premiums paid in the last calendar year that commences during the Benefits Period, may be paid during the portion of that last calendar year that falls after the Benefits Period).

(L) Death and Disability Benefits. During the Benefits Period, the Company shall cause the Executive to continue to participate in all death benefit plans (other than the SEELIP, which is already addressed above) and disability benefit plans in which the Executive was participating immediately prior to the Separation from Service or, if more favorable to the Executive, immediately prior to the Change in Control; provided that to the extent such participation in any such plan is barred or otherwise not feasible, the Company shall arrange to provide substantially similar benefits to the Executive (and, if applicable, the Executive’s dependents) outside such plan.

 

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(M) Tax-Free Benefits. If immediately prior to the Date of Termination or the Change in Control the Executive was participating in any welfare benefit plan or perquisite plan not addressed above (including without limitation the Executive Health Exams Policy), and during the Benefits Period benefits may be provided to the Executive under such plan as in effect immediately prior to the Separation from Service or, if more favorable to the Executive, immediately prior to the Change in Control, (or may be provided to the Executive outside of such plan), that would be excludable from income when and if received, then the Company shall continue to provide such benefits to the Executive during the Benefits Period.

(N) In-Kind Benefit and Reimbursement Plans and Tax Gross-Ups. If immediately prior to the Separation from Service or the Change in Control the Executive was receiving in-kind benefits within the meaning of Treasury Regulation section 1.409A-1(p) or reimbursements pursuant to any Company plan not addressed above in this Section 6.1, other than reimbursements of direct business expenses (such as automobile mileage and travel, entertainment and other business expenses), or was receiving tax gross-ups within the meaning of Treasury Regulation 1.409A-3(i)(1)(v) under any Company plan not addressed above in this Section 6.1, then in accordance with such plan (other than continued service requirements) as in effect immediately prior to the Separation from Service or, if more favorable to the Executive, immediately prior to the Change in Control, the Executive shall continue to receive in-kind benefits, and reimbursements for expenses incurred, during the Benefits Period and to receive tax gross-ups for taxes incurred during the Benefits Period; provided that, with respect to any such in-kind benefits and reimbursements, other than reimbursements that pursuant to Treasury Regulation section 1.409A-1(b)(9)(v) or otherwise do not provide for a deferral of compensation that is subject to Section 409A of the Code, the amount of expenses eligible for reimbursement, or in-kind benefits provided, during the Executive’s taxable year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year (within the meaning of Treasury Regulation 1.409A-3(i)(1)(iv)), and the reimbursement of an eligible expense shall be made on or before (a) the last day of the Executive’s taxable year following the taxable year in which the expense was incurred, or (b) such earlier date as the reimbursement plan may require, and any such tax gross-up shall be paid by the end of the Executive’s taxable year next following the Executive’s taxable year in which the Executive remits the related taxes or by such earlier date as the plan which provides for such tax gross-up may require. For the avoidance

 

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of doubt, for purposes of this agreement the term “plan” shall include the Company’s perquisite policies (including, without limitation, the Financial Planning Assistance Policy) and any other “plan” as defined in Treasury Regulation section 1.409A-1(c)(1).

(O) Other Welfare Plans, Benefits and Perquisites. If immediately prior to the Date of Termination or the Change in Control the Executive participated in any welfare benefit plan not addressed above (other than a severance pay plan) or was receiving benefits or perquisites not addressed above, and the Executive is not otherwise entitled to participate in such welfare benefit plan or to receive such benefits or perquisites during the Benefits Period, then during the Benefits Period the Executive shall continue to participate in the welfare benefit plan in which s/he was participating or to receive the benefits or perquisites s/he was receiving immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control, in accordance with the terms of such welfare benefit plan or plan providing such benefits or perquisites (other than continued service requirements); provided that if the Executive’s continued participation in such welfare benefit plan or in the plan providing such benefits or perquisites is barred or otherwise not feasible, the Company shall provide such benefits outside the plan; and, provided further, that this sentence shall not apply if and to the extent that any payments to be made and benefits to be provided pursuant to this sentence would not qualify for an exclusion from Section 409A of the Code (including without limitation an exclusion provided by Treasury Regulation section 1.409A-1(b)(9)) or comply with Section 409A of the Code.

Neither the Company nor any Affiliate shall be required by any of the foregoing provisions of this Section 6.1 to grant stock options or other stock-based awards to the Executive after the Date of Termination. Benefits receivable by the Executive pursuant to Sections 6.1(F) through (O) hereof shall be forfeited to the extent benefits of the same type are made available to the Executive during the twenty-four (24) month period following the Date of Termination, other than by the Company or an Affiliate, in connection with the Executive’s performance of services for an enterprise (including without limitation a non-profit enterprise) not affiliated with the Company (and any such benefits made available to the Executive shall be reported to the Company by the Executive). In the event that payment is made pursuant to Section 6.1(F), 6.1(G) or 6.1(H) hereof and benefits of the same type are thereafter made available to the Executive during the twenty-four (24) month period following the Date of Termination, other than by the Company or an Affiliate, in connection

 

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with the Executive’s performance of services for an enterprise not affiliated with the Company, the Executive shall repay to the Company the portion of the payment previously made in respect of benefits of the same type, that corresponds to the portion of the 24 month period during which benefits of the same type are so made available to the Executive. For the avoidance of doubt, if any of the perquisites in lieu of which a Perquisite Allowance is paid pursuant to Section 6.1(H) hereof are made available to the Executive during the twenty-four (24) month period following the Date of Termination, other than by the Company or an Affiliate, in connection with the Executive’s performance of services for an enterprise not affiliated with the Company, and repayment is required pursuant to the preceding sentence, the Perquisite Allowance shall be allocated among the perquisites in lieu of which it was paid in a reasonable manner such that repayment is required only of the portion of the Perquisite Allowance that is reasonably allocable to the perquisite(s) that are so made available to the Executive.

6.2 (A) Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter called “Total Payments”) would be subject (in whole or part), to the Excise Tax, then, the Severance Payments shall first be reduced in the following order: (i) Section 6.1(A)(ii), (ii) Section 6.1(F), (iii) Section 6.1(G), (iv) Section 6.1(H), (v) Section 6.1(L), (vi) Section 6.1(M), (vii) Section 6.1(A)(i), (viii) Section 6.1(O), (ix) Section 6.1(N), (x) Section 6.1(K), (xi) Section 6.1(J), (xii) Section 6.1(I), (xiii) Section 6.1(D), (xiv) Section 6.1(E), (xv) Section 6.1(B), and (xvi) Section 6.1(C), and the payments pursuant to Section 5.4(B) above that are deemed to be contingent on the Change in Control for purposes of the Excise Tax shall thereafter be reduced in the order of those payments the highest proportion of which is deemed to be contingent on the Change in Control (i.e., reducing first those payments that are deemed to be entirely contingent on the Change in Control and reducing last those payments the smallest proportion of which is deemed to be contingent on the Change in Control), to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax, but only if (A) is greater than or equal to (B), where (A) equals the reduced amount of such Total Payments minus the aggregate amount of federal, state and local income taxes on such reduced Total Payments and (B) equals the unreduced amount of such Total Payments minus the sum of (1) the aggregate amount of federal, state and local income taxes on such Total Payments and (2) the

 

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amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments; provided, however, that the Executive may elect to change the order in which any of the foregoing payments is reduced as long as both payments being changed (I) are short-term deferrals within the meaning of Treasury Regulation section 1.409A-1(b)(4) the “applicable 2 1/2 month period” of which (within the meaning of that Treasury Regulation) end on the same date, or (II) are not short-term deferrals but are otherwise not deferred compensation subject to Section 409A of the Code (whether due to Treasury Regulation section 1.409A-1(b)(9) or otherwise), and as long as such change in order does not affect the time at which any payment that constitutes deferred compensation that is subject to Section 409A of the Code would be reduced or the amount by which any payment that constitutes deferred compensation that is subject to Section 409A of the Code would be reduced at any time.

(B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm (the “Auditor”) which was, immediately prior to the Change in Control, the Company’s independent auditor, does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.

(C) At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

 

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6.3 The payments provided in subsections (A)(ii) and (B) of Section 6.1 hereof and, if applicable, the last sentence of subsection (A)(i) of Section 6.1 hereof, shall be made on the fifth (5th) day following the Separation from Service or, if such 5th day is a weekend or a holiday, on the next business day; provided, however, that if the amounts of such payments, and the limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Separation from Service. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(B) of the Code).

7. Termination Procedures and Compensation During Dispute.

7.1 Notice of Termination. After a Change in Control and during the Term, any termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. In the event of an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability following a Change in Control and during the Term, the Company will provide the Executive with a Notice

 

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of Termination at least thirty (30) days in advance of the Date of Termination and, if it fails to do so, will pay the Executive’s salary in lieu of notice on the Date of Termination or within ten (10) days thereafter, in addition to all other amounts payable to the Executive hereunder. In the event of a Separation from Service by the Executive following a Change in Control and during the Term, the Executive will provide the Company with a Notice of Termination at least fifteen (15) days and not more than sixty (60) days in advance of the Date of Termination.

7.2 Date of Termination. “Date of Termination” means the date on which the Executive has a Separation from Service.

7.3 Certain Disputes Concerning Termination.

If the Executive has a Separation from Service following a Change in Control and during the Term, and such Separation from Service is (a) an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability, or (b) a Separation from Service by the Executive for Good Reason, and, in the case of (a), the Company disputes by its Notice of Termination or otherwise (including without limitation by its conduct or inaction) that the Executive has had an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability, or, in the case of (b), the Company disputes by written notice or otherwise (including without limitation by its conduct or inaction) that the Executive has had a Separation from Service for Good Reason, and the Executive pursues the resolution of such dispute with reasonable diligence, then in that event during the period from the Date of Termination until the earlier of (i) the date on which the Term ends, or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator (the “Continuation Period”), the Company shall continue to pay the Executive the salary at the rate in effect immediately prior to the Date of Termination, on the same payroll schedule that was in effect immediately prior to the Date of Termination, and shall pay the Executive on the first business day of each calendar month during the Continuation Period a bonus amount equal to one-twelfth of the amount described in Section 6.1(A)(ii)(a)(II) above, and shall pay the Executive at the end of each calendar month that ends during the Continuation Period a lump sum amount that is actuarially equivalent to the additional vested pension benefits the Executive would have accrued during such month under any qualified and non-qualified defined benefit employee pension benefit plans in which the Executive was participating immediately prior to the Date of Termination if the Executive had been able to and did continue to earn age credit, service credit for

 

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benefit accrual and vesting and compensation credit (based on the salary and bonus amounts paid through the end of such month pursuant to this sentence) during such month and all prior months during the Continuation Period under such plans (in addition to the Executive’s age, service credit and compensation credit under such plans through the Date of Termination and in addition to the 24 months of age credit, service credit and compensation credit referred to in Section 6.1(F) above), and shall continue to provide the Executive with the Perquisite Allowance, if any, that it was providing the Executive immediately prior to the Date of Termination, on the same schedule, and shall make monthly payments on the first payroll day of each month, commencing with the first such payroll day that coincides with or next follows the Date of Termination, equal to the monthly payments the Company is obligated to provide pursuant to Section 6.1(J) above. In addition, for a period immediately following the Benefits Period equal to the length of the Continuation Period, (A) the Company shall continue to provide the Executive with the Health Care Benefits described in Section 6.1(I) above, (B) the Company shall provide the Executive with the same benefits, if any, under the SEELIP, at the same times , that the Company would have provided if the SEELIP had remained in effect and the Executive’s active employment and participation in the SEELIP had continued (and no Separation from Service had occurred) until the end of the period immediately following the Benefits Period equal to the length of the Continuation Period and the Executive’s annual base salary during that period for purposes of the SEELIP had been equal to the Executive’s annual base salary as in effect immediately prior to the Separation from Service or, if higher, in effect immediately prior to any reduction thereof, and (C) the Company shall continue to provide the Executive with the death and disability coverage described in Section 6.1(L) above, the tax-free benefits described in Section 6.1(M) above, and the in-kind benefits and reimbursements and tax gross-ups described in Section 6.1(N) above, in each case on the same terms and conditions as apply during the Benefits Period. Amounts to be paid and benefits and perquisites to be provided under this Section 7.3 are in addition to all other amounts, benefits and perquisites due under this Agreement (including amounts, benefits and perquisites due under Section 6.1) and shall not be offset against or reduce any other amounts, benefits or perquisites due under this Agreement. For the avoidance of doubt, each payment to be made and benefit to be provided under the first sentence of this Section 7.3 is contingent on there having been, prior to the date on which the payment is to be made or the benefit is to be provided, (A) an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) of the Executive by the Company other than for Cause or Disability, or a Separation from Service by the Executive for Good Reason, (B) a dispute by the Company as described above, (C) the Executive’s pursuit of the resolution of such dispute with reasonable diligence, and (D) no final resolution of such dispute, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator.

 

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8. No Mitigation. The Company agrees that, if the Executive’s employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.1 or 7.3 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than Sections 6.1(F) through (O) hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

9. Successors; Binding Agreement.

9.1 In addition to any obligations imposed by law upon any successor to the Company, during the Term the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession during the Term shall be a material breach of this Agreement by the Company and, if such failure occurs before the Executive has a Separation from Service, shall entitle the Executive to compensation, benefits and perquisites from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive had an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability following a Change in Control and during the Term, provided that (A) the Executive notifies the Company that such failure has occurred within 90 days of the initial occurrence of such failure or, if later, within 90 days after the Executive first knows or should know of such failure (which notification may but need not be in the form of a Notice of Termination given in respect of such failure), (B) such failure is not corrected within 30 days after the Executive so notifies the Company, and (C) the Executive terminates employment (i.e., has a Separation from Service) after such 30 day period, within 2 years following the initial occurrence of such failure, and before the expiration of the Term.

 

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9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

10. Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address inserted below the Executive’s signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

 

 

 

 

To the Company:

 

 

 

 

Barnes Group Inc.

 

 

123 Main Street

 

 

P.O. Box 489

 

 

BristolCT 06011-0489

 

 

 

 

Attention: [                            ]

 

 

 

 

 

 

 

11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. Notwithstanding the preceding sentence, the Company may unilaterally amend this Agreement in whole or in part before a Change in Control or Potential Change in Control occurs and on or before December 31, 2008 or such later date (if any) to which the December 31, 2008 documentary compliance date set forth in paragraph .01 of Section 3 of IRS Notice 2006-79 as modified by Section 3.01(B)(1) of IRS Notice 2007-86 is hereafter extended, in such respects as the Company may determine to be to be necessary, advisable or expedient to plan for, respond to, comply with or reflect Section 409A of the Code, and the Executive hereby consents to any amendments that the Company may be make

 

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pursuant to this sentence. For the avoidance of doubt, the preceding sentence is not intended to authorize or constitute the Executive’s consent to any amendment that would constitute a modification or extension of a stock option within the meaning of Treasury Regulation section 1.409A-1(b)(5)(v), and, if and to the extent that, notwithstanding the foregoing, anything therein would be interpreted or construed to authorize or constitute the Executive’s consent to any such amendment, then to that extent the authorization or consent is hereby rescinded. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive has a Separation from Service following a Change in Control, and such Separation from Service is an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability, or is a Separation from Service by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Connecticut. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration.

12. Code Section 409A.

(A) The Executive’s right to any series of payments, including without limitation taxable benefits, that are to be paid or provided under this Agreement and that is eligible to be treated as a right to a series of separate payments under Treasury Regulation section 1.409A-2(b)(2)(iii), including in particular but not limited to the Executive’s right to the series of benefits under Sections 6.1(I) through 6.1(O), shall be treated as a right to a series of separate payments for purposes of Section 409A of the Code, including without limitation for purposes of the short-term deferral rule set forth in Treasury Regulation section 1.409A-1(b)(4).

 

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(B) Any provision of this Agreement to the contrary notwithstanding, if the Executive is a Specified Employee on the date of a Separation from Service, any payment or benefit to be paid or provided pursuant to this Agreement that constitutes deferred compensation that is subject to Section 409A of the Code and that is payable due to a Separation from Service during the six month period following the Separation from Service shall not be paid before the date that is six months after the date of Separation from Service (or, if earlier, the date of death of the Executive) and shall instead be accumulated and paid on the first day of the seventh month following the date of the Separation from Service (or, if earlier, within 14 days after the death of the Executive), in accordance with Treasury Regulation section 1.409A-3(i)(2)(ii). The preceding sentence shall apply to any amount or benefit (and only to any amount or benefit) to be paid or provided pursuant to this Agreement to which Code Section 409A(a)(2)(B)(i) (relating to Specified Employees) applies, and shall not apply to any amount or benefit if and to the extent that such amount or benefit is not subject to Section 409A of the Code as a result of Treasury Regulation section 1.409A-1(a)(5) (relating to welfare benefit plans), Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals), Treasury Regulation Section 1.409A-1(b)(9) (relating to separation pay plans), or otherwise.

(C) If at any time during the 12-month period ending on any “specified employee identification date”, which shall be December 31, the Executive is in Salary Grade 20 or above or meets the requirements of Code section 416(i)(1)(A)(ii) or (iii) (applied in accordance with the Treasury Regulations thereunder and disregarding Code section 416(i)(5)), then the Executive shall be treated as a Specified Employee for purposes of Section 12(B) above for the entire 12-month period beginning on the “specified employee effective date”, which shall be the January 1 that immediately follows such specified employee identification date, unless the Board or the Committee at any time prescribes a different method of identifying service providers who will be subject to the six month delay required by Section 409A(a)(2)(B)(i) of the Code (the “Six Month Delay”) in accordance with Treasury Regulation section 1.409A-1(i) or the transition rules and official guidance under Code Section 409A (a “Different Identification Method”) or elects a different specified employee identification date or specified employee effective date or makes any other election that may be made in accordance with Treasury Regulation section 1.409A-1(i) or the transition rules and official guidance under Code Section 409A (a “Different Election”), in which case whether the Executive shall be treated as a Specified Employee for purposes of Section 12(B) above shall be determined in accordance with any such Different Identification Method so prescribed and any such Different Election so made by the Board or Committee. The Executive hereby

 

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irrevocably (i) consents to any such Different Identification Method that the Board or Committee may prescribe at any time and any such Different Election that the Board or Committee may make at any time for purposes of identifying the service providers who will be subject to the Six Month Delay with respect to payments under this Agreement, and (ii) agrees that the Executive’s consent to any such Different Identification Method or Different Election shall be as effective as if such Different Identification Method or Different Election were fully set forth herein, and (iii) waives any right he or she may have to consent to the Different Identification Method or Different Election in question if for any reason the Executive’s consent to such Different Identification Method or Different Election is not legally effective.

(D) Any payments that may be made and benefits that may be provided pursuant to this Agreement are intended to qualify for an exclusion from Section 409A of the Code (including without limitation the exclusion for certain welfare benefits under Treasury Regulation section 1.409A-1(a)(5), the exclusion for short-term deferrals under Treasury Regulation section 1.409A-1(b)(4), and the exclusions for separation pay plans under Treasury Regulation section 1.409A-1(b)(9)), and/or are intended to meet the requirements of Section 409A(a)(2), (3) and (4) of the Code, so that none of the payments that may be made and benefits that may be provided pursuant to this Agreement will be includible in the Executive’s federal gross income pursuant to Section 409A(a)(1)(A) of the Code. This Agreement shall be administered, interpreted and construed to carry out such intentions, and any provision of this Agreement that cannot be so administered, interpreted and construed shall to that extent be disregarded. However, any provision of this Agreement to the contrary notwithstanding, the Company does not represent, warrant or guarantee that the payments and benefits that may be paid or provided pursuant to this Agreement will not be includible in the Executive’s federal gross income pursuant to Section 409A(a)(1)(A) of the Code, nor does the Company make any other representation, warranty or guaranty to the Executive as to the tax consequences of this Agreement.

13. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

15. Settlement of Disputes; Arbitration.

 

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15.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied.

15.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Hartford, Connecticut in accordance with the rules of the American Arbitration Association then in effect; provided, however, that the evidentiary standards set forth in this Agreement shall apply. The arbitrator shall have the authority to require that the Company reimburse the Executive for the payment of all or any portion of the reasonable legal fees and expenses incurred by the Executive during the Term of this Agreement or at any time within ten years thereafter in connection with such dispute or controversy. The amount of legal fees and expenses eligible for reimbursement during a taxable year of the Executive may not affect the legal fees and expenses eligible for reimbursement in any other taxable year. Unless the arbitrator provides otherwise, any legal fees and expenses incurred by the Executive that the arbitrator requires the Company to reimburse shall be reimbursed on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to be paid amounts and benefits due under this Agreement during the pendency of any dispute or controversy arising under or in connection with this Agreement.

16. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:

(A) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

(B) “Auditor” shall have the meaning set forth in Section 6.2 hereof.

 

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(C) “Base Amount” shall have the meaning set forth in section 280G(b)(3) of the Code.

(D) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

(E) “Benefits Period” shall have the meaning set forth in Section 6.1(I) hereof.

(F) “Board” shall mean the Board of Directors of the Company.

(G) “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, (ii) the engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise or (iii) the Executive’s conviction for the commission of (a) a felony or (b) any other crime involving moral turpitude. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company.

(H) A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(I) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (III) below; or

 

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(II) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or

(III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 60% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

(IV) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

 

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(I) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(J) “Committee” shall mean the Compensation and Management Development Committee of the Board or a successor committee of the Board.

(K) “Company” shall mean Barnes Group Inc. and, except in determining under Section 16(H) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(L) “Date of Termination” shall have the meaning set forth in Section 7.2 hereof.

(M) “Disability” shall be deemed the reason for a Separation from Service, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.

(N) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(O) “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.

(P) “Executive” shall mean the individual named in the first paragraph of this Agreement.

(Q) “Good Reason” for a Separation from Service by the Executive shall mean the occurrence (without the Executive’s express written consent) after any Change in Control, of any one of the following acts by the Company, or failures by the Company to act, if the Executive notifies the Company that such act or failure to

 

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act has occurred within 90 days of the initial occurrence of such act or failure to act (which notification may but need not be in the form of a Notice of Termination given in respect of such act or failure to act), and if such act or failure to act is not corrected within 30 days after the Executive so notifies the Company:

(I) the assignment to the Executive of any duties materially inconsistent with the Executive’s status as an executive officer of the Company, or a material adverse alteration in the nature or status of the Executive’s responsibilities from those in effect immediately prior to the Change in Control;

(II) a reduction by the Company in the Executive’s annual base salary as in effect on the date hereof or as the same may be increased from time to time, by five percent (5%) or more or by $20,000 or more;

(III) the relocation of the Executive’s principal place of employment to a location more than 50 miles from the Executive’s principal place of employment immediately prior to the Change in Control, provided that such relocation increases the Executive’s round trip commuting time by 25% or more, or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

(IV) any termination of the Executive’s employment for Cause which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 7.1 hereof.

The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

(R) “Notice of Termination” shall have the meaning set forth in Section 7.1 hereof.

(S) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) any member of the Barnes family (by blood or marriage) or any entity for the benefit of, or controlled by, a member of the Barnes family (by blood or

 

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marriage), (ii) the Company or any of its subsidiaries, (iii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iv) an underwriter temporarily holding securities pursuant to an offering of such securities, or (v) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(T) “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(ii) the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(iii) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or

(iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(U) “Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

(V) “Separation from Service” means a “separation from service with the employer” within the meaning of Treasury Regulation Section 1.409A-1(h), where the “employer” means Barnes Group Inc. and all corporations and trades or businesses with which Barnes Group Inc. would be considered a single employer under Section 414(b) or Section 414(c) of the Code (as determined in accordance with the first sentence of Treasury Regulation section 1.409A-1(h)(3)).

 

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(W) “Severance Payments” shall have the meaning set forth in Section 6.1 hereof.

(X) “Specified Employee” shall mean a specified employee within the meaning of Treasury Regulation Section 1.409A-1(i), as determined in accordance with Section 12(C) above.

(Y) “Tax Counsel” shall have the meaning set forth in Section 6.2 hereof.

(Z) “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

(AA) “Total Payments” shall mean those payments so described in Section 6.2 hereof.

 

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IN WITNESS WHEREOF, the Company, with the consent of the Executive, has amended this Agreement to read as set forth above on December       , 2008.

 

 

 

 

BARNES GROUP INC.

 

 

By: 

 

 

Name:

Title:

 

 

Name

EXECUTIVE

 

Address: (Home)

 

 

 

 

 

 

(Please print carefully)

 

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EXHIBIT A - COMPLETE AND PERMANENT RELEASE

TO:                                                       (the “Executive”)

DATE:                                                 

The Executive is hereby offered severance payments and benefits in accordance with and subject to the terms of the Severance Agreement between the Executive and the Company (the “Agreement”) dated as of                     , as amended December       , 2008, in consideration of the Executive’s execution and return of this Complete and Permanent Release (the “Release”).

The Executive’s severance payments and benefits pursuant to the Agreement will be paid and provided only if the Executive executes this release and returns the signed release to the Company within 45 days after the Date of Termination as defined in the Agreement, and if the Executive does not revoke the release. The severance payments and benefits will commence on the 8th day after the execution and return to the Company of this Release (or, if such 8th day is on a weekend or a holiday, on the next business day), provided that the Executive has not revoked this Release as hereinafter described. The Executive has seven (7) calendar days from the date that the Executive signs this Release to revoke this Release by giving written notice of the Executive’s intent to do so to the Company. This Release shall not become effective or enforceable until this seven (7) day period has expired. If the Executive revokes this Release, the Executive will not receive the severance payments and benefits described in the Agreement.

By signing below, the Executive agrees that execution of this Release operates to, and hereby does, release the Company, its subsidiaries and affiliates, its (and its subsidiaries’ and affiliates’) present or former employees, officers, directors, shareholders, representatives and agents (the “Released Parties”) from all claims or demands (the “Claims”) the Executive has had, presently has or may have, based on the Executive’s employment with the Company or the termination of that employment, including any rights or claims the Executive may have based on any facts or events, whether known or unknown by the Executive, including, without limitation, a release of any rights or claims the Executive may have based on the Civil Rights Act of 1966, as amended; the Civil Rights Act of 1991, as amended; the Age Discrimination in Employment Act of 1967, as amended; Title VII of the Civil Rights Act of 1964, as amended; the Americans with Disabilities Act of 1990; the Equal Pay Act of 1963; any and all laws of any state concerning wages, employment

 

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and discharge; any state or local municipality fair employment statutes or laws; or any other law, rule, regulation or ordinance pertaining to employment, terms and conditions of employment, or termination of employment; provided, however, that execution of this Release shall not adversely affect (i) the Executive’s rights to receive benefits under the employee benefit plans and arrangements of the Company, following termination of the Executive’s employment or Separation from Service (as defined in the Agreement); (ii) the Executive’s rights under the Agreement; or (iii) the Executive’s rights to indemnification or advancement of expenses under applicable law, the Certificate of Incorporation or by-laws of the Company, any agreement between the Executive and the Company, or the Company’s officers’ and directors’ liability insurance policies. The Executive is advised to consult with an attorney before signing the Release.

The Executive has forty-five (45) calendar days from the date of Separation from Service (as defined in the Agreement) in which to sign and return this Release to the Company.

 

 

For the Company:

 

  

 

  

 

  

 

 

ACCEPTED THIS          DAY OF                         ,                 

 

 

 

  

Executive

 

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EX-10.10 2 dex1010.htm SEVERANCE AGREEMENT AS AMENDED MARCH 31, 2010

Exhibit 10.10

 

SEVERANCE AGREEMENT

 

THIS AGREEMENT, dated [            ], is made by and between Barnes Group Inc., a Delaware corporation (the “Company”), and [            ] (the “Executive”).

 

WHEREAS, the Company considers it essential to the best interests of its shareholders to foster the continued employment of key management personnel; and

 

WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders; and

 

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control;

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

 

1. Defined Terms. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof.

 

2. Term of Agreement. The Term of this Agreement shall commence on the date hereof and shall continue in effect through December 31, [            ]; provided, however, that commencing on January 1, [            ] and each January 1 thereafter, the Term shall automatically be extended for one additional year unless, not later than September 30 of the preceding year, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire no earlier than twenty-four (24) months beyond the month in which such Change in Control occurred.

 

3. Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless the Executive has a Separation from Service following a Change in Control and during the Term and such Separation from Service is described in the first sentence of Section 6.1. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

 

4. The Executive’s Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six (6) months from the date of such Potential Change of Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

 

5. Compensation Other Than Severance Payments.

 

5.1 Following a Change in Control and during the Term, during any period that the Executive fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to physical or mental

 

1


illness, the Company shall pay the Executive’s full salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period, until the Executive’s employment is terminated by the Company for Disability; provided, however, that the amounts received under this Section 5.1 shall be reduced by any amounts received by the Executive with respect to the same period of time under any long term disability plan of the Company. For the avoidance of doubt, payments pursuant to this Section 5.1 are contingent on the Executive’s continued full-time employment until such time as (a) a Change in Control occurs during the Term, and (b) the Executive fails to perform full-time duties as a result of incapacity due to physical or mental illness, and are payable only for so long as the Executive continues to fail to perform full-time duties as a result of incapacity due to physical or mental illness or, if sooner, until the earlier of (i) the end of the Term, or (ii) the Executive’s employment is terminated by the Company for Disability.

 

5.2 For the Executive’s services following a Change in Control and during the Term, the Company shall pay the Executive’s full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Change in Control or, if higher, the rate in effect from time to time after the Change in Control and prior to any reduction thereof, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Change in Control or, if more favorable to the Executive, as in effect from time to time after the Change in Control and prior to any reduction thereof.

 

5.3 If the Executive has a Separation from Service following a Change in Control and during the Term, and such Separation from Service is (A) an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability, or (B) a Separation from Service by the Executive for Good Reason, the Company shall pay to the Executive after the Separation from Service the Executive’s normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to any adverse change therein after the Change in Control; provided that nothing in this Section 5.3 shall alter the terms of any stock option or any equity-based award. Nothing herein shall reduce or otherwise adversely affect any compensation and benefits to which the Executive may be entitled after Separation from Service under any of the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect from time to time before or after a Change in Control.

 

5.4 In the event that a Change in Control occurs during the Term, (A) the Company shall, within five (5) days after such Change in Control, pay to the Executive a lump sum cash amount equal to the product of (i) the target annual bonus or incentive award applicable to the Executive under each of the Company’s annual bonus or incentive compensation plans (such target award to be determined pursuant to the provisions of each such plan or, if no such provisions exist in the case of any such plan, as determined by the Compensation Committee of the Board, as constituted immediately prior to the Change in Control, in its sole discretion), in respect of the year in which such Change in Control occurs and (ii) a fraction, the numerator of which shall be the number of months (including fractions thereof) from the first day of the year in which the Change in Control occurs to the date on which the Change in Control occurs, unless the Change in Control occurs during the year in which the Executive’s first day of employment by the Company occurs, in which case the numerator shall be the number of months (including fractions thereof) from the first day of employment by the Company to the date on which the Change in Control occurs, and the denominator of which shall be twelve (12); and (B) all options held by the Executive to acquire Company stock shall immediately become vested and exercisable in full, and all other Company stock-based awards held by the Executive shall vest and be paid at such time or times on or after the date on which such Change in Control occurs, and to such extent, as shall be set forth in the award agreement documenting such awards (it being understood and agreed that any stock-based award agreements will provide for vesting and payment of such awards in connection with a Change in Control at such time or times and on

 

2


such terms and conditions as the Committee deems advisable to comply with or qualify for an exclusion from Section 409A of the Code). The lump sum cash amount payable pursuant to Section 5.4(A) above shall be credited against any annual bonus or incentive award to which the Executive may be entitled for the year in which the Change in Control occurs pursuant to the Performance-Linked Bonus Plan for Selected Executive Officers or any other annual bonus or incentive plan in which the Executive participates in such year, provided that such annual bonus or incentive award qualifies (or will qualify) for treatment as a short-term deferral under Treasury Regulation section 1.409A-1(b)(4) or is otherwise not subject to Section 409A of the Code, it being the intention hereof that, between Section 5.4(A) above and any annual bonus or incentive award plan pursuant to which the Executive is entitled to an annual bonus or incentive award for the year in which the Change in Control occurs, the Executive will receive any annual bonus or incentive award to which the Executive may be entitled for the year in which the Change in Control occurs but not less than the lump sum cash amount payable pursuant to Section 5.4(A) above.

 

6. Severance Payments.

 

6.1 Subject to Section 6.2 and Section 12(B) hereof, if the Executive has a Separation from Service following a Change in Control and during the Term, and such Separation from Service is an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability, or is a Separation from Service by the Executive for Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”), in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. Notwithstanding the foregoing, the Executive shall not be eligible to receive any payment or benefit provided for in this Section 6.1 unless the Executive shall have executed and delivered to the Company within 45 days after the Separation from Service a release (substantially in the form of Exhibit A hereto) in favor of the Company and others set forth on said Exhibit A, relating to all claims or liabilities of any kind relating to the Executive’s employment and termination of employment with the Company, and the Executive shall not have revoked such release within 7 days after executing it. Subject to Section 12(B) hereof, any payments and benefits that, but for the preceding sentence, may be paid or provided pursuant to the provisions below of this Section 6.1 before the 56th day following the Separation from Service shall be paid or provided on the 56th day following the Separation from Service, unless such payment or benefit may be paid or provided pursuant to the provisions below of this Section 6.1 within a designated period following the Separation from Service that ends more than 56 days following the Separation from Service, in which case such payment or benefit shall be paid or provided within the portion of such designated period that begins on the 56th day following the Separation from Service and ends on the last day of such designated period, provided in each case that the Executive executed the release and delivered it to the Company within the aforementioned 45-day period and did not revoke the release within 7 days after executing it.

 

(A) Cash Severance Payments.

 

(i) The Company shall pay to the Executive an amount, in cash, equal to the severance pay to which the Executive would be entitled under the Barnes Group Inc. Executive Separation Pay Plan as amended on December 31, 2008 (the “Executive Separation Pay Plan”) if the Separation from Service were a Separation from Service for which severance benefits were payable under that Plan and the provisions of Sections 4.3, 4.4 and 4.5 thereof did not apply. For the avoidance of doubt, the severance pay to which the Executive would be entitled if the Separation from Service were a Separation from Service for which severance benefits were payable under the Executive Separation Pay Plan and the provisions of Sections 4.3, 4.4 and 4.5 thereof did not apply is twelve months of base salary as in effect immediately prior to the Separation from Service. Such amount shall be paid at the same times at which it would be paid under the Executive Separation Pay Plan if the provisions of Sections 4.3, 4.4 and 4.5 thereof did not apply, and in the same installments. However, if the Separation from Service for which the amount described in this Section 6.1(A)(i) is payable takes place during the two years following the occurrence of a “change in control event” with respect to the Executive (within the meaning of Treasury Regulation section

 

3


1.409A- 3(i)(5)(i) & (ii)), then in that event the Company shall pay the Executive the aforementioned amount in a lump sum within five (5) days of such Separation from Service; and

 

(ii) The Company shall pay to the Executive within five (5) days of such Separation from Service a lump sum amount, in cash, equal to the excess of (a) over (b) where (a) is 2 times the sum of (I) the Executive’s annual base salary as in effect immediately prior to the Separation from Service or, if higher, in effect immediately prior to any reduction thereof, and (II) the highest of (A) the average annual bonus earned by the Executive in respect of the three fiscal years ending immediately prior to the fiscal year in which occurs the Separation from Service, or, if the Executive was not employed by the Company throughout that three fiscal year period, the average annual bonus earned by the Executive in respect of the portion of such three fiscal year period during which the Executive was employed by the Company (annualizing any bonus earned for less than a full fiscal year of employment), (B) the average annual bonus earned by the Executive in respect of the three fiscal years ending immediately prior to the fiscal year in which occurs the Change in Control, or, if the Executive was not employed by the Company throughout that three fiscal year period, the average annual bonus earned by the Executive in respect of the portion of such three fiscal year period during which the Executive was employed by the Company (annualizing any bonus earned for less than a full fiscal year of employment), or (C) the target bonus in respect of the fiscal year in which occurs the Separation from Service, and (b) is the amount payable pursuant to Section 6.1(A)(i) above.

 

(B) Pro-Rata Bonus for Year of Termination. Within five (5) days of such Separation from Service, the Company shall pay to the Executive a lump sum cash amount (the “Pro-Rata Bonus”) equal to the product of (i) the target annual bonus or incentive award applicable to the Executive under each of the Company’s annual bonus or incentive compensation plans (such target award to be determined pursuant to the provisions of each such plan or, if no such provisions exist in the case of any such plan, as determined by the Board in its sole discretion), in respect of the year in which such Separation from Service occurs and (ii) a fraction, the numerator of which shall be the number of months (including fractions thereof) from the first day of the year during which such Separation from Service occurs to the date on which such Separation from Service occurs, unless the Separation from Service occurs during the year in which the Executive’s first day of employment by the Company occurs, in which case the numerator shall be the number of months (including fractions thereof) from the first day of employment by the Company to the date on which the Separation from Service occurs, and the denominator of which shall be twelve (12); provided, however, that if such Separation from Service occurs during the same year in which the Change in Control occurs, the Pro Rata Bonus shall be offset by any payments received by the Executive pursuant to Section 5.4(A) hereof.

 

(C) Vesting of Unvested Non-Qualified Plan Accruals Prior to the Date of Termination. If the Executive was participating immediately prior to the Date of Termination or the Change in Control in any of the Company’s non-qualified employee pension benefit plans (including without limitation the Company’s Supplemental Senior Officer Retirement Plan and Supplemental Executive Retirement Plan and any non-qualified defined contribution employee pension benefit plan but excluding any severance pay plan) and on the Date of Termination was not fully vested in benefits accrued through the Date of Termination under any such plan in which s/he was so participating, then the Executive shall be entitled to receive pursuant to this Section 6.1(C) benefits equal to the benefits accrued by the Executive under those plans prior to the Date of Termination that are not vested on that date that would vest under those plans if the Executive’s age and service credit for vesting purposes were equal to the Executive’s age and service credit as calculated under the provisions of such plans as of the Date of Termination plus 24 months. The intent of this provision is to give the Executive 24 months of age and service credit for vesting under such non-qualified employee pension benefit plans in excess of the Executive’s actual age and service credit as of the Date of Termination as determined under such plans, if and to the extent that such plans do not otherwise give the Executive age and service credit for vesting for the 24 month period following the Date of Termination. Any benefits resulting from the additional age and service credit for vesting provided hereby shall be payable at the time and in the form of payment applicable to the Executive’s benefits under the non-qualified employee pension benefit plan(s) in question, and to the person or persons (e.g., surviving

 

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spouse under a joint and survivor annuity form of payment) to whom such benefits would be paid under such plan(s). For the avoidance of doubt, any benefits payable pursuant to the foregoing provisions of this Section 6.1(C) in respect of the Executive’s unvested benefits under the Supplemental Senior Officer Retirement Plan shall be payable at the time and in the form of payment that would apply if such benefits were payable under the Supplemental Senior Officer Retirement Plan, and to the person or persons to whom such benefits would be paid thereunder, any benefits payable pursuant to the foregoing provisions of this Section 6.1(C) in respect of the Executive’s unvested benefits under the Supplemental Executive Retirement Plan shall be payable at the time and in the form of payment that would apply if such benefits were payable under the Supplemental Executive Retirement Plan, and to the person or persons to whom such benefits would be paid thereunder, and so on.

 

(D) Payments in Respect of Unvested Qualified Defined Benefit Plan Accruals Prior to the Date of Termination. If the Executive was participating immediately prior to the Date of Termination or the Change in Control in any of the Company’s qualified defined benefit employee pension benefit plans (including without limitation the Company’s Salaried Retirement Income Plan)(“Qualified Plan”) and on the Date of Termination was not fully vested in benefits accrued through the Date of Termination under any such plan in which s/he was so participating, then the Executive shall be entitled to receive pursuant to this Section 6.1(D) benefits equal to the benefits accrued by the Executive under those plans prior to the Date of Termination that are not vested on that date that would vest under those plans if the Executive’s age and service credit for vesting purposes were equal to the Executive’s age and service credit as calculated under the provisions of such plans as of the Date of Termination plus 24 months. The intent of this provision is to provide the Executive with benefits equivalent to the benefits accrued prior to the Date of Termination under any Qualified Plan which would vest with 24 months of age and service credit for vesting under such qualified defined benefit employee pension benefit plans in excess of the Executive’s actual age and service credit as of the Date of Termination as determined under such plans, if and to the extent that such plans do not otherwise give the Executive age and service credit for vesting for the 24 month period following the Date of Termination, and provided that the Executive survives to the payment date set forth in the next sentence. Any benefits resulting from the additional age and service credit for vesting provided by the preceding provisions of this Section 6.1(D) shall be paid in an actuarial equivalent lump sum on March 1 of the calendar year following the calendar year in which the Date of Termination occurs, but only if the Executive survives to that March 1 date. Nothing herein shall alter any Qualified Plan or any rights the Executive may have under any Qualified Plan.

 

(E) Payments in Respect of Unvested Account Balances as of the Date of Termination under Qualified Defined Contribution Plans. If the Executive was participating immediately prior to the Date of Termination or the Change in Control in any of the Company’s qualified defined contribution employee pension benefit plans (including without limitation a 401(k) plan or a qualified profit-sharing plan) and on the Date of Termination was not fully vested in any amount (including without limitation investment gains and losses) that had been credited to the Executive through the Date of Termination (the “Unvested Account Balance”) under any such plan in which s/he was so participating, then, on March 1 of the calendar year following the calendar year in which the Date of Termination occurs, the Company shall pay the Executive, if s/he is then surviving, an amount equal to the portion of the Unvested Account Balance that would vest during the 24 month period following the Date of Termination (and that will not in fact vest under the qualified defined contribution plan in question), if such plan were to remain in effect during such 24 month period and the Executive were able to and did continue to earn age credit and service credit for vesting purposes under such plan until the last day of such 24 month period. However, the Company shall not pay an amount pursuant to the preceding sentence equal to any portion of the Executive’s Unvested Account Balance under a 401(k) plan that is attributable to (i) the Executive’s elective contributions (as defined in Treasury Regulation 1.401(k)-6) under that plan, or to (ii) employer contributions that were conditioned (directly or indirectly) upon the Executive’s electing to make or not to make elective contributions under that plan, or to (iii) income, expenses, gains and losses on such elective contributions and employer contributions, (such amount being hereafter referred to as a “Potentially Contingent Amount”) unless the Executive made the maximum elective deferrals under Section 402(g) of the Code or the maximum elective contributions

 

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permitted under the terms of such 401(k) plan (a) in the year(s) in which the Executive made such elective contributions, or in the year(s) (if any) in which such employer contributions were conditioned upon the Executive’s electing to make or not to make elective contributions under that plan, or (b) in such other or additional year(s) (or other period(s)) as may be necessary for the Potentially Contingent Amount to not be treated as contingent for purposes of Treasury Regulation 1.401(k)-1(e)(6) by reason of the application of the second sentence of Treasury Regulation 1.401(k)-1(e)(6)(iii). The intent of this provision is to pay the Executive an amount equal to the portion of the Unvested Account Balance that, disregarding any investment gains or losses and any plan amendment or termination that may occur after the Date of Termination, would vest if the Executive were able to and did continue to earn age credit and vesting service credit under the qualified defined contribution plan in question during the 24 month period following the Date of Termination, provided that the Executive survives to the March 1 payment date set forth above in this Section 6.1(E) and, in the case of any Unvested Account Balance in a 401(k) plan, provided that the exclusion from the contingent benefit rule set forth in Treasury Regulation section 1.401(k)-1(e)(6) for deferred compensation that is dependent on an employee’s having made the maximum elective deferrals under Code section 402(g) or the maximum elective contributions permitted under the terms of the plan is satisfied. Nothing herein shall alter any qualified defined contribution employee pension benefit plan or any rights the Executive may have under any such plan.

 

(F) Defined Benefit Plan Accruals for 24 Months After Date of Termination.

 

(i) If the Executive was participating immediately prior to the Date of Termination or the Change in Control in any of the Company’s qualified or non-qualified defined benefit employee pension benefit plans (including without limitation the Company’s Salaried Retirement Income Plan, Supplemental Senior Officer Retirement Plan and Supplemental Executive Retirement Plan but excluding any severance pay plan), then, on March 1 of the calendar year following the calendar year in which the Date of Termination occurs, the Company shall pay the Executive, if s/he is then surviving, a lump sum amount which is actuarially equivalent to the vested benefits which the Executive would accrue during the 24 month period following the calendar year in which the Date of Termination occurs under the qualified and non-qualified defined benefit employee pension benefit plans in which the Executive was participating immediately prior to the Separation from Service or, if more favorable to the Executive, immediately prior to the Change in Control (the “Relevant Plans”), if -- (a) the Relevant Plans were to remain in effect during such 24 month period and the Executive were able to and did continue to earn age credit, service credit and compensation credit for benefit accrual and vesting purposes under such plans during such 24 month period (in addition to the Executive’s age, service credit and compensation credit through the Date of Termination), and (b) the Executive’s compensation for purposes of those plans for the year in which the Change in Control occurred included, if and to the extent it is not otherwise included (but only if and to the extent that bonuses are pensionable pursuant to those plans) a bonus in the amount payable pursuant to Section 5.4(A) hereof earned and paid ratably over the portion of that year that precedes the Change in Control, or if the Change in Control occurred during the year in which the Executive’s first day of employment by the Company occurred, earned and paid ratably over the period from the Executive’s first day of employment by the Company to the date on which the Change in Control occurred, and (c) the Executive’s compensation for purposes of those plans for the year in which the Date of Termination occurs included, if and to the extent it is not otherwise included (but only if and to the extent that bonuses are pensionable pursuant to those plans) a bonus in the amount payable pursuant to Section 6.1(B) hereof earned and paid ratably over the portion of the year in which the Date of Termination occurs that precedes the Date of Termination, or if the Date of Termination occurs during the year in which the Change in Control occurred, earned and paid ratably over the period from the date on which the Change in Control occurred to the Date of Termination, and (d) the Executive’s compensation during the 24 month period in question for purposes of those plans consisted of salary equal to 2 times the amount referred to in Section 6.1(A)(ii)(a)(I) hereof earned and paid ratably over that 24 month period and (if and to the extent that bonuses are pensionable pursuant to those plans) a bonus equal to 2 times the amount referred to in Section 6.1(A)(ii)(a)(II) hereof earned and paid ratably

 

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over that 24 month period. Actuarial equivalence shall be determined using the actuarial factors and assumptions applicable to the plan in question.

 

(ii) In calculating the vested benefits which the Executive would accrue during the 24 month period following the calendar year in which the Date of Termination occurs under the Company’s Supplemental Senior Officer Retirement Plan (“SSORP”) pursuant to Section 6.1(F)(i) above, the offset for Qualified Plan benefits under the SSORP shall take into account (as if they were payable under the Qualified Plan) any benefits payable pursuant to this Section 6.1(F) in respect of Qualified Plan benefits. “Qualified Plan” as used in this Section 6.1(F) shall have the same meaning as in the SSORP. The intent of the preceding provisions of this Section 6.1(F)(ii) is to ensure that the Qualified Plan benefits that are offset in determining the SSORP benefits that would be accrued during the 24 month period following the calendar year in which the Date of Termination occurs pursuant to Section 6.1(F)(i) above take into account the Executive’s Qualified Plan benefits as enhanced by the benefits payable in respect of the Qualified Plan pursuant to this Section 6.1(F).

 

(iii) In calculating the vested benefits which the Executive would accrue during the 24 month period following the calendar year in which the Date of Termination occurs under the Company’s Supplemental Executive Retirement Plan (“SERP”) pursuant to Section 6.1(F)(i) above, any benefits payable pursuant to this Section 6.1(F) in respect of the Qualified Plan, the Retirement Benefit Equalization Plan (“RBEP”) or the SSORP shall be taken into account. The intent of the preceding sentence is to ensure that the vested SERP benefits that would be accrued during the 24 month period following the calendar year in which the Date of Termination occurs pursuant to Section 6.1(F)(i) above are based on the Executive’s Qualified Plan benefits, RBEP benefits and SSORP benefits as enhanced by the benefits payable in respect of those plans pursuant to this Section 6.1(F).

 

(G) Defined Contribution Plan Accruals for 24 Months After Date of Termination. If the Executive was participating immediately prior to the Date of Termination or the Change in Control in any of the Company’s qualified or non-qualified defined contribution employee pension benefit plans (including without limitation a 401(k) plan or a qualified profit-sharing plan), then, on March 1 of the calendar year following the calendar year in which the Date of Termination occurs, the Company shall pay the Executive, if s/he is then surviving, an amount equal to the employer contributions (if any) that would have been credited to the Executive and would have vested during the 24 month period following the Date of Termination (but are not so credited or vested) under any qualified or non-qualified defined contribution employee pension benefit plan in which the Executive was participating immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control, if (i) the Executive were able to and did continue to earn age credit, service credit and compensation credit for benefit accrual and vesting purposes under such plan during that 24 month period, and (ii) the Executive’s compensation during the 24 month period following the Date of Termination for purposes of that plan consisted of salary equal to 2 times the amount referred to in Section 6.1(A)(ii)(a)(I) hereof earned and paid ratably over that 24 month period and bonus (if and to the extent that bonuses are eligible for employer contributions under such plan) equal to 2 times the amount referred to in Section 6.1(A)(ii)(a)(II) hereof earned and paid ratably over that 24 month period, and (iii) in the case of any contributory defined contribution employee pension benefit plan such as a 401(k) plan, the Executive were able to and did contribute the maximum matchable employee contributions to the plan during the 24 month period after the Date of Termination, and (iv) the same employer contributions were made to the plan during that 24 month period as a percentage of Compensation and, in the case of a contributory plan, as a percentage of employee contributions, as were made in respect of the last full plan year preceding the Date of Termination or, if more favorable to the Executive, preceding the Change in Control, and (v) the same qualified plan limits on compensation, contributions and benefits that applied in respect of such last full plan year continued to apply during the 24 months following the Date of Termination. No payment shall be made pursuant to the preceding sentence in respect of the employer contributions that would have been credited to the Executive and would have vested under a 401(k) plan unless the Executive made the maximum elective deferrals under Section 402(g) of the Code or the maximum elective contributions permitted under the terms of the

 

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401(k) plan in which the Executive was participating immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control, in the year in which the Date of Termination occurs (or in such portion of such year as will result in the payment being not treated as contingent pursuant to the second sentence of Treasury Regulation 1.401(k)-1(e)(6)(iii)) or, if the 401(k) plan in which the Executive was participating immediately prior to the Change in Control was more favorable to the Executive than the 401(k) plan in which the Executive was participating immediately prior to the Date of Termination, in the year in which the Change in Control occurred. The preceding sentence is intended to apply only if and to the extent the preceding sentence is necessary to comply with the contingent benefit rule set forth in Treasury Regulation section 1.401(k)-1(e)(6), and it shall be administered, interpreted and construed accordingly.

 

(H) Perquisite Allowance. If immediately prior to the Date of Termination or the Change in Control the Company was paying the Executive a cash allowance in lieu of a company-provided car, cell phone usage, club membership or other perquisites (a “Perquisite Allowance”), then, on March 1 of the calendar year following the calendar year in which the Date of Termination occurs, the Company shall pay the Executive, if s/he is then surviving, an amount equal to 24 times the average monthly Perquisite Allowance the Company was paying the Executive immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control.

 

(I) Health Care Benefits. For the twenty-four month period immediately following the Date of Termination or until the earlier death of the Executive (the “Benefits Period”), the Company shall continue to provide the Executive with the same medical and dental coverage which the Executive was receiving immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control (the “Health Care Benefits”). For the avoidance of doubt, the Company shall pay or reimburse the Executive for the same medical and dental expenses which were subject to payment or reimbursement under the medical and dental insurance coverage which the Executive was receiving immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control. The Health Care Benefits shall be provided in such a manner that such benefits will be excluded from the Executive’s income for federal income tax purposes. The receipt of the Health Care Benefits shall be conditioned on the Executive continuing to pay the applicable premiums for such Health Care Benefits during the Benefits Period. The applicable monthly premium shall be the monthly COBRA premium as in effect at the Company from time to time with respect to the coverage provided under Section 4980B of the Code. Except as permitted by Treasury Regulation section 1.409A-3(i)(4)(B), the amount of medical and dental expenses that are subject to Section 409A of the Code and not excluded therefrom as involuntary separation pay or otherwise and that are subject to reimbursement pursuant to this Section 6.1(I) during any taxable year of the Executive may not affect the expenses eligible for reimbursement in any other taxable year, and shall be reimbursed at the time required by the plan applicable to the Executive immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control but in no event later than the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.

 

(J) Additional Payments. During the Benefits Period, and subject to Section 12(B) below (relating to the six month delay applicable to Specified Employees), the Company shall pay to the Executive an amount equal to the monthly premium cost set forth in Section 6.1(I) above, minus an amount equal to the monthly employee contribution rate that is paid by Company employees for the applicable level of such coverage immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control, which payment shall be paid in advance on the first payroll day of each month, commencing with the first such payroll day that coincides with or next follows the Date of Termination. Each month, when the Company pays the amount required by the preceding sentence, the Company shall also pay the Executive a tax gross-up on the amount paid pursuant to the preceding sentence, i.e., an amount sufficient after taxes on the tax gross-up paid pursuant to this sentence to reimburse the Executive for any Federal, state, local or foreign taxes imposed upon the Executive as a result of the Company’s payment of the amount required by the preceding sentence. For purposes of determining the amount of the tax gross-up

 

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to be paid pursuant to this Section 6.1(J) or pursuant to any other provision of this Agreement or any other plan or arrangement pursuant to which the Executive is entitled to receive a tax gross-up after a Change in Control and during the Term, the Executive shall notify the Company from time to time of the highest effective marginal rates at which the Executive’s income is taxed under any applicable Federal, state, local and foreign laws and such rates shall be conclusive on the Company for purposes of determining the amount of the tax gross-up to be paid, and in no event shall the Executive be required to disclose his tax returns to the Company or otherwise for the purpose of determining the amount of the tax gross-up to be paid.

 

(K) SEELIP Benefits. If the Executive was a participant in the Company’s Senior Executive Enhanced Life Insurance Program immediately prior to the Date of Termination or the Change in Control, then during the Benefits Period the Company shall provide the Executive with the same benefits, if any, under the Company’s Senior Executive Enhanced Life Insurance Program as in effect immediately prior to the Separation from Service or, if more favorable to the Executive, immediately prior to the Change in Control (the “SEELIP”), at the same times, that the Company would have provided if the SEELIP had remained in effect and the Executive’s active employment and participation in the SEELIP had continued (and no Separation from Service had occurred) until the end of the Benefits Period and the Executive’s annual base salary during the Benefits Period for purposes of the SEELIP had been equal to the amount referred to in Section 6.1(A)(ii)(a)(I) hereof. In no event shall this Section 6.1(K) entitle the Executive to benefits that duplicate any SEELIP benefits that the Executive is entitled to receive at the same time other than pursuant to this Section (K). If any premiums or other “Reimbursements” (as such term is defined in the SEELIP as amended in December 2008) that would be payable by the Company pursuant to the preceding provisions of this Section 6.1(K) during the six month period following the Separation from Service are not paid during that six month period due to the six month delay imposed by Section 12(B) hereof, then (i) the Company shall timely provide the Executive with the opportunity to pay the SEELIP premiums during that six month period and, if the Executive chooses to do so, the Company shall cooperate as needed to enable the Executive to do so, and (ii) at the time provided by Section 12(B) hereof (i.e., the first day of the seventh month following the Separation from Service) the Company shall pay such premiums or other Reimbursements in accordance with the SEELIP. Premiums and other Reimbursements eligible for reimbursement pursuant to the preceding provisions of this Section 6.1(K) during the Executive’s taxable year may not affect the premiums and other Reimbursements eligible for reimbursement in any other taxable year, and any in-kind benefits provided pursuant to this Section 6.1(K) or otherwise during a taxable year of the Executive may not affect the in-kind benefits to be provided pursuant to this Section 6.1(K) or otherwise in any other taxable year. For the avoidance of doubt, in accordance with the SEELIP, (a) all income taxes that are attributable to the premiums that are required to be paid by the Company during the Benefits Period pursuant to the preceding provisions of this Section 6.1(K) shall be fully grossed up by the Company, and (b) such tax gross ups shall be paid in the calendar year in which the Company pays the related premiums and, in the case of premiums paid in the last calendar year that commences during the Benefits Period, may be paid during the portion of that last calendar year that falls after the Benefits Period).

 

(L) Death and Disability Benefits. During the Benefits Period, the Company shall cause the Executive to continue to participate in all death benefit plans (other than the SEELIP, which is already addressed above) and disability benefit plans in which the Executive was participating immediately prior to the Separation from Service or, if more favorable to the Executive, immediately prior to the Change in Control; provided that to the extent such participation in any such plan is barred or otherwise not feasible, the Company shall arrange to provide substantially similar benefits to the Executive (and, if applicable, the Executive’s dependents) outside such plan.

 

(M) Tax-Free Benefits. If immediately prior to the Date of Termination or the Change in Control the Executive was participating in any welfare benefit plan or perquisite plan not addressed above (including without limitation the Executive Health Exams Policy), and during the Benefits Period benefits may be provided to the Executive under such plan as in effect immediately prior to the Separation from Service or, if more favorable to the Executive, immediately prior to the Change in Control, (or may be provided to the

 

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Executive outside of such plan), that would be excludable from income when and if received, then the Company shall continue to provide such benefits to the Executive during the Benefits Period.

 

(N) In-Kind Benefit and Reimbursement Plans and Tax Gross-Ups. If immediately prior to the Separation from Service or the Change in Control the Executive was receiving in-kind benefits within the meaning of Treasury Regulation section 1.409A-1(p) or reimbursements pursuant to any Company plan not addressed above in this Section 6.1, other than reimbursements of direct business expenses (such as automobile mileage and travel, entertainment and other business expenses), or was receiving tax gross-ups within the meaning of Treasury Regulation 1.409A-3(i)(1)(v) under any Company plan not addressed above in this Section 6.1, then in accordance with such plan (other than continued service requirements) as in effect immediately prior to the Separation from Service or, if more favorable to the Executive, immediately prior to the Change in Control, the Executive shall continue to receive in-kind benefits, and reimbursements for expenses incurred, during the Benefits Period and to receive tax gross-ups for taxes incurred during the Benefits Period; provided that, with respect to any such in-kind benefits and reimbursements, other than reimbursements that pursuant to Treasury Regulation section 1.409A-1(b)(9)(v) or otherwise do not provide for a deferral of compensation that is subject to Section 409A of the Code, the amount of expenses eligible for reimbursement, or in-kind benefits provided, during the Executive’s taxable year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year (within the meaning of Treasury Regulation 1.409A-3(i)(1)(iv)), and the reimbursement of an eligible expense shall be made on or before (a) the last day of the Executive’s taxable year following the taxable year in which the expense was incurred, or (b) such earlier date as the reimbursement plan may require, and any such tax gross-up shall be paid by the end of the Executive’s taxable year next following the Executive’s taxable year in which the Executive remits the related taxes or by such earlier date as the plan which provides for such tax gross-up may require. For the avoidance of doubt, for purposes of this agreement the term “plan” shall include the Company’s perquisite policies (including, without limitation, the Financial Planning Assistance Policy) and any other “plan” as defined in Treasury Regulation section 1.409A-1(c)(1).

 

(O) Other Welfare Plans, Benefits and Perquisites. If immediately prior to the Date of Termination or the Change in Control the Executive participated in any welfare benefit plan not addressed above (other than a severance pay plan) or was receiving benefits or perquisites not addressed above, and the Executive is not otherwise entitled to participate in such welfare benefit plan or to receive such benefits or perquisites during the Benefits Period, then during the Benefits Period the Executive shall continue to participate in the welfare benefit plan in which s/he was participating or to receive the benefits or perquisites s/he was receiving immediately prior to the Date of Termination or, if more favorable to the Executive, immediately prior to the Change in Control, in accordance with the terms of such welfare benefit plan or plan providing such benefits or perquisites (other than continued service requirements); provided that if the Executive’s continued participation in such welfare benefit plan or in the plan providing such benefits or perquisites is barred or otherwise not feasible, the Company shall provide such benefits outside the plan; and, provided further, that this sentence shall not apply if and to the extent that any payments to be made and benefits to be provided pursuant to this sentence would not qualify for an exclusion from Section 409A of the Code (including without limitation an exclusion provided by Treasury Regulation section 1.409A-1(b)(9)) or comply with Section 409A of the Code.

 

Neither the Company nor any Affiliate shall be required by any of the foregoing provisions of this Section 6.1 to grant stock options or other stock-based awards to the Executive after the Date of Termination. Benefits receivable by the Executive pursuant to Sections 6.1(F) through (O) hereof shall be forfeited to the extent benefits of the same type are made available to the Executive during the twenty-four (24) month period following the Date of Termination, other than by the Company or an Affiliate, in connection with the Executive’s performance of services for an enterprise (including without limitation a non-profit enterprise) not affiliated with the Company (and any such benefits made available to the Executive shall be reported to the Company by the Executive). In the event that payment is made pursuant to Section 6.1(F), 6.1(G) or 6.1(H) hereof and benefits of the same type are thereafter made available to the Executive during the twenty-four (24) month period following the Date of Termination, other than by the Company or an Affiliate, in connection with the Executive’s

 

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performance of services for an enterprise not affiliated with the Company, the Executive shall repay to the Company the portion of the payment previously made in respect of benefits of the same type, that corresponds to the portion of the 24 month period during which benefits of the same type are so made available to the Executive. For the avoidance of doubt, if any of the perquisites in lieu of which a Perquisite Allowance is paid pursuant to Section 6.1(H) hereof are made available to the Executive during the twenty-four (24) month period following the Date of Termination, other than by the Company or an Affiliate, in connection with the Executive’s performance of services for an enterprise not affiliated with the Company, and repayment is required pursuant to the preceding sentence, the Perquisite Allowance shall be allocated among the perquisites in lieu of which it was paid in a reasonable manner such that repayment is required only of the portion of the Perquisite Allowance that is reasonably allocable to the perquisite(s) that are so made available to the Executive.

 

6.2 (A) Notwithstanding any other provisions of this Agreement, in the event that any payment or benefit received or to be received by the Executive in connection with a Change in Control or the termination of the Executive’s employment (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any Person whose actions result in a Change in Control or any Person affiliated with the Company or such Person) (all such payments and benefits, including the Severance Payments, being hereinafter called “Total Payments”) would be subject (in whole or part), to the Excise Tax, then, the Total Payments shall be reduced in the following order: (i) cash payments that are not deferred compensation subject to Section 409A of the Code, (ii) non-cash payments and benefits, other than payments pursuant to Section 5.4(B) above, that are not deferred compensation subject to Section 409A of the Code, (iii) the payments pursuant to Section 5.4(B) above that are not deferred compensation subject to Section 409A of the Code, (iv) cash payments that are deferred compensation subject to Section 409A of the Code, (v) non-cash payments and benefits, other than payments pursuant to Section 5.4(B) above, that are deferred compensation subject to Section 409A of the Code, and (vi) the payments pursuant to Section 5.4(B) above that are deferred compensation subject to Section 409A of the Code, to the extent necessary so that no portion of the Total Payments is subject to the Excise Tax, but only if (A) is greater than or equal to (B), where (A) equals the reduced amount of such Total Payments minus the aggregate amount of federal, state and local income taxes on such reduced Total Payments and (B) equals the unreduced amount of such Total Payments minus the sum of (1) the aggregate amount of federal, state and local income taxes on such Total Payments and (2) the amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total Payments; provided, however, that within each of the foregoing categories (i) through (vi) the first payment or benefit to be reduced shall be the payment or benefit the highest percentage of which is included in the aggregate present value of all payments in the nature of compensation to or for the benefit of the Executive that are contingent on the change in ownership or control within the meaning of Treasury Regulation 1.280G-1 (i.e., is included in such aggregate present value for purposes of determining whether such aggregate present value equals or exceeds 3 times the Executive’s base amount), and the last payment or benefit to be reduced shall be the payment or benefit the lowest percentage of which is included in such aggregate present value, and, provided further, that the Executive may elect to change the order in which any of the payments or benefits in categories (i), (ii) and (iii) is reduced as long as both payments and benefits being changed (I) are short-term deferrals within the meaning of Treasury Regulation section 1.409A-1(b)(4) the “applicable 2 1/2 month period” of which (within the meaning of that Treasury Regulation) end on the same date, or (II) are not short-term deferrals but are otherwise not deferred compensation subject to Section 409A of the Code (whether due to Treasury Regulation section 1.409A-1(b)(9) or otherwise), and as long as such change in order does not affect the time at which any payment that constitutes deferred compensation that is subject to Section 409A of the Code would be reduced or the amount by which any payment that constitutes deferred compensation that is subject to Section 409A of the Code would be reduced at any time.

 

(B) For purposes of determining whether and the extent to which the Total Payments will be subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which the Executive shall have waived at such time and in such manner as not to constitute a “payment” within the meaning of section 280G(b) of the Code shall be taken into account, (ii) no portion of the Total Payments shall be taken into account which, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm (the “Auditor”) which was, immediately prior to the Change in Control, the

 

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Company’s independent auditor, does not constitute a “parachute payment” within the meaning of section 280G(b)(2) of the Code (including by reason of section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no portion of such Total Payments shall be taken into account which, in the opinion of Tax Counsel, constitutes reasonable compensation for services actually rendered, within the meaning of section 280G(b)(4)(B) of the Code, in excess of the Base Amount allocable to such reasonable compensation, and (iii) the value of any non-cash benefit or any deferred payment or benefit included in the Total Payments shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.

 

(C) At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

 

6.3 The payments provided in subsections (A)(ii) and (B) of Section 6.1 hereof and, if applicable, the last sentence of subsection (A)(i) of Section 6.1 hereof, shall be made on the fifth (5th) day following the Separation from Service or, if such 5th day is a weekend or a holiday, on the next business day; provided, however, that if the amounts of such payments, and the limitation on such payments set forth in Section 6.2 hereof, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Company of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Separation from Service. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(B) of the Code).

 

7. Termination Procedures and Compensation During Dispute.

 

7.1 Notice of Termination. After a Change in Control and during the Term, any termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated. Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail. In the event of an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability following a Change in Control and during the Term, the Company will provide the Executive with a Notice of Termination at least thirty (30) days in advance of the Date of Termination and, if it fails to do so, will pay the Executive’s salary in lieu of notice on the Date of Termination or within ten (10) days thereafter, in addition to all other amounts payable to the Executive hereunder. In the event of a Separation from Service by the Executive following a Change in Control and during the Term, the Executive will provide the Company with a Notice of Termination at least fifteen (15) days and not more than sixty (60) days in advance of the Date of Termination.

 

 

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7.2 Date of Termination. “Date of Termination” means the date on which the Executive has a Separation from Service.

 

7.3 Certain Disputes Concerning Termination.

 

If the Executive has a Separation from Service following a Change in Control and during the Term, and such Separation from Service is (a) an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability, or (b) a Separation from Service by the Executive for Good Reason, and, in the case of (a), the Company disputes by its Notice of Termination or otherwise (including without limitation by its conduct or inaction) that the Executive has had an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability, or, in the case of (b), the Company disputes by written notice or otherwise (including without limitation by its conduct or inaction) that the Executive has had a Separation from Service for Good Reason, and the Executive pursues the resolution of such dispute with reasonable diligence, then in that event during the period from the Date of Termination until the earlier of (i) the date on which the Term ends, or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator (the “Continuation Period”), the Company shall continue to pay the Executive the salary at the rate in effect immediately prior to the Date of Termination, on the same payroll schedule that was in effect immediately prior to the Date of Termination, and shall pay the Executive on the first business day of each calendar month during the Continuation Period a bonus amount equal to one-twelfth of the amount described in Section 6.1(A)(ii)(a)(II) above, and shall pay the Executive at the end of each calendar month that ends during the Continuation Period a lump sum amount that is actuarially equivalent to the additional vested pension benefits the Executive would have accrued during such month under any qualified and non-qualified defined benefit employee pension benefit plans in which the Executive was participating immediately prior to the Date of Termination if the Executive had been able to and did continue to earn age credit, service credit for benefit accrual and vesting and compensation credit (based on the salary and bonus amounts paid through the end of such month pursuant to this sentence) during such month and all prior months during the Continuation Period under such plans (in addition to the Executive’s age, service credit and compensation credit under such plans through the Date of Termination and in addition to the 24 months of age credit, service credit and compensation credit referred to in Section 6.1(F) above), and shall continue to provide the Executive with the Perquisite Allowance, if any, that it was providing the Executive immediately prior to the Date of Termination, on the same schedule, and shall make monthly payments on the first payroll day of each month, commencing with the first such payroll day that coincides with or next follows the Date of Termination, equal to the monthly payments the Company is obligated to provide pursuant to Section 6.1(J) above. In addition, for a period immediately following the Benefits Period equal to the length of the Continuation Period, (A) the Company shall continue to provide the Executive with the Health Care Benefits described in Section 6.1(I) above, (B) the Company shall provide the Executive with the same benefits, if any, under the SEELIP, at the same times , that the Company would have provided if the SEELIP had remained in effect and the Executive’s active employment and participation in the SEELIP had continued (and no Separation from Service had occurred) until the end of the period immediately following the Benefits Period equal to the length of the Continuation Period and the Executive’s annual base salary during that period for purposes of the SEELIP had been equal to the Executive’s annual base salary as in effect immediately prior to the Separation from Service or, if higher, in effect immediately prior to any reduction thereof, and (C) the Company shall continue to provide the Executive with the death and disability coverage described in Section 6.1(L) above, the tax-free benefits described in Section 6.1(M) above, and the in-kind benefits and reimbursements and tax gross-ups described in Section 6.1(N) above, in each case on the same terms and conditions as apply during the Benefits Period. Amounts to be paid and benefits and perquisites to be provided under this Section 7.3 are in addition to all other amounts, benefits and perquisites due under this Agreement (including amounts, benefits and perquisites due under Section 6.1) and shall not be offset against or reduce any other amounts, benefits or perquisites due under this Agreement. For the avoidance of doubt, each payment to be made and benefit to be provided under the first sentence of this Section 7.3 is contingent on there having been, prior to the date on which the payment is to be made or the benefit is to be provided, (A) an involuntary Separation from Service (within the meaning of

 

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Treasury Regulation section 1.409A-1(n)(1)) of the Executive by the Company other than for Cause or Disability, or a Separation from Service by the Executive for Good Reason, (B) a dispute by the Company as described above, (C) the Executive’s pursuit of the resolution of such dispute with reasonable diligence, and (D) no final resolution of such dispute, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator.

 

8. No Mitigation. The Company agrees that, if the Executive’s employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.1 or 7.3 hereof. Further, the amount of any payment or benefit provided for in this Agreement (other than Sections 6.1(F) through (O) hereof) shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

 

9. Successors; Binding Agreement.

 

9.1 In addition to any obligations imposed by law upon any successor to the Company, during the Term the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession during the Term shall be a material breach of this Agreement by the Company and, if such failure occurs before the Executive has a Separation from Service, shall entitle the Executive to compensation, benefits and perquisites from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive had an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability following a Change in Control and during the Term, provided that (A) the Executive notifies the Company that such failure has occurred within 90 days of the initial occurrence of such failure or, if later, within 90 days after the Executive first knows or should know of such failure (which notification may but need not be in the form of a Notice of Termination given in respect of such failure), (B) such failure is not corrected within 30 days after the Executive so notifies the Company, and (C) the Executive terminates employment (i.e., has a Separation from Service) after such 30 day period, within 2 years following the initial occurrence of such failure, and before the expiration of the Term.

 

9.2 This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

 

 

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10. Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address inserted below the Executive’s signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

 

To the Company:

 

Barnes Group Inc.

123 Main Street

Bristol, CT 06010

 

Attention: Dawn N. Edwards

Senior Vice President, Human Resources

 

11. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. Notwithstanding the preceding sentence, the Company may unilaterally amend this Agreement in whole or in part before a Change in Control or Potential Change in Control occurs, in such respects as the Company may determine to be to be necessary, advisable or expedient to plan for, respond to, comply with or reflect Section 409A of the Code, and the Executive hereby consents to any amendments that the Company may make pursuant to this sentence. For the avoidance of doubt, the preceding sentence is not intended to authorize or constitute the Executive’s consent to any amendment that would constitute a modification or extension of a stock option within the meaning of Treasury Regulation section 1.409A-1(b)(5)(v), and, if and to the extent that, notwithstanding the foregoing, anything therein would be interpreted or construed to authorize or constitute the Executive’s consent to any such amendment, then to that extent the authorization or consent is hereby rescinded. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive has a Separation from Service following a Change in Control, and such Separation from Service is an involuntary Separation from Service (within the meaning of Treasury Regulation section 1.409A-1(n)(1)) by the Company other than for Cause or Disability, or is a Separation from Service by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Connecticut. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration.

 

12. Code Section 409A.

 

(A) The Executive’s right to any series of payments, including without limitation taxable benefits, that are to be paid or provided under this Agreement and that is eligible to be treated as a right to a series of separate payments under Treasury Regulation section 1.409A-2(b)(2)(iii), including in particular but not limited to the Executive’s right to the series of benefits under Sections 6.1(I) through 6.1(O), shall be treated as a right to a series of separate payments for purposes of Section 409A of the Code, including without limitation for purposes of the short-term deferral rule set forth in Treasury Regulation section 1.409A-1(b)(4).

 

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(B) Any provision of this Agreement to the contrary notwithstanding, if the Executive is a Specified Employee on the date of a Separation from Service, any payment or benefit to be paid or provided pursuant to this Agreement that constitutes deferred compensation that is subject to Section 409A of the Code and that is payable due to a Separation from Service during the six month period following the Separation from Service shall not be paid before the date that is six months after the date of Separation from Service (or, if earlier, the date of death of the Executive) and shall instead be accumulated and paid on the first day of the seventh month following the date of the Separation from Service (or, if earlier, within 14 days after the death of the Executive), in accordance with Treasury Regulation section 1.409A-3(i)(2)(ii). The preceding sentence shall apply to any amount or benefit (and only to any amount or benefit) to be paid or provided pursuant to this Agreement to which Code Section 409A(a)(2)(B)(i) (relating to Specified Employees) applies, and shall not apply to any amount or benefit if and to the extent that such amount or benefit is not subject to Section 409A of the Code as a result of Treasury Regulation section 1.409A-1(a)(5) (relating to welfare benefit plans), Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals), Treasury Regulation Section 1.409A-1(b)(9) (relating to separation pay plans), or otherwise.

 

(C) If at any time during the 12-month period ending on any “specified employee identification date”, which shall be December 31, the Executive is in Salary Grade 20 or above or meets the requirements of Code section 416(i)(1)(A)(ii) or (iii) (applied in accordance with the Treasury Regulations thereunder and disregarding Code section 416(i)(5)), then the Executive shall be treated as a Specified Employee for purposes of Section 12(B) above for the entire 12-month period beginning on the “specified employee effective date”, which shall be the January 1 that immediately follows such specified employee identification date, unless the Board or the Committee at any time prescribes a different method of identifying service providers who will be subject to the six month delay required by Section 409A(a)(2)(B)(i) of the Code (the “Six Month Delay”) in accordance with Treasury Regulation section 1.409A-1(i) or the transition rules and official guidance under Code Section 409A (a “Different Identification Method”) or elects a different specified employee identification date or specified employee effective date or makes any other election that may be made in accordance with Treasury Regulation section 1.409A-1(i) or the transition rules and official guidance under Code Section 409A (a “Different Election”), in which case whether the Executive shall be treated as a Specified Employee for purposes of Section 12(B) above shall be determined in accordance with any such Different Identification Method so prescribed and any such Different Election so made by the Board or Committee. The Executive hereby irrevocably (i) consents to any such Different Identification Method that the Board or Committee may prescribe at any time and any such Different Election that the Board or Committee may make at any time for purposes of identifying the service providers who will be subject to the Six Month Delay with respect to payments under this Agreement, and (ii) agrees that the Executive’s consent to any such Different Identification Method or Different Election shall be as effective as if such Different Identification Method or Different Election were fully set forth herein, and (iii) waives any right he or she may have to consent to the Different Identification Method or Different Election in question if for any reason the Executive’s consent to such Different Identification Method or Different Election is not legally effective.

 

(D) Any payments that may be made and benefits that may be provided pursuant to this Agreement are intended to qualify for an exclusion from Section 409A of the Code (including without limitation the exclusion for certain welfare benefits under Treasury Regulation section 1.409A-1(a)(5), the exclusion for short-term deferrals under Treasury Regulation section 1.409A-1(b)(4), and the exclusions for separation pay plans under Treasury Regulation section 1.409A-1(b)(9)), and/or are intended to meet the requirements of Section 409A(a)(2), (3) and (4) of the Code, so that none of the payments that may be made and benefits that may be provided pursuant to this Agreement will be includible in the Executive’s federal gross income pursuant to Section 409A(a)(1)(A) of the Code. This Agreement shall be administered, interpreted and construed to carry out such intentions, and any provision of this Agreement that cannot be so administered, interpreted and construed shall to that extent be disregarded. However, any provision of this Agreement to the contrary notwithstanding, the Company does not represent, warrant or guarantee that the payments and benefits that may be paid or provided pursuant to this Agreement will not be includible in the Executive’s federal gross income

 

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pursuant to Section 409A(a)(1)(A) of the Code, nor does the Company make any other representation, warranty or guaranty to the Executive as to the tax consequences of this Agreement.

 

13. Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

 

14. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

15. Settlement of Disputes; Arbitration.

 

15.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied.

 

15.2 Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Hartford, Connecticut in accordance with the rules of the American Arbitration Association then in effect; provided, however, that the evidentiary standards set forth in this Agreement shall apply. The arbitrator shall have the authority to require that the Company reimburse the Executive for the payment of all or any portion of the reasonable legal fees and expenses incurred by the Executive during the Term of this Agreement or at any time within ten years thereafter in connection with such dispute or controversy. The amount of legal fees and expenses eligible for reimbursement during a taxable year of the Executive may not affect the legal fees and expenses eligible for reimbursement in any other taxable year. Unless the arbitrator provides otherwise, any legal fees and expenses incurred by the Executive that the arbitrator requires the Company to reimburse shall be reimbursed on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred. Judgment may be entered on the arbitrator’s award in any court having jurisdiction. Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to be paid amounts and benefits due under this Agreement during the pendency of any dispute or controversy arising under or in connection with this Agreement.

 

16. Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:

 

(A) “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

 

(B) “Auditor” shall have the meaning set forth in Section 6.2 hereof.

 

(C) “Base Amount” shall have the meaning set forth in section 280G(b)(3) of the Code.

 

(D) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

 

(E) “Benefits Period” shall have the meaning set forth in Section 6.1(I) hereof.

 

(F) “Board” shall mean the Board of Directors of the Company.

 

(G) “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or

 

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anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, (ii) the engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise or (iii) the Executive’s conviction for the commission of (a) a felony or (b) any other crime involving moral turpitude. For purposes of clauses (i) and (ii) of this definition, no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in the best interest of the Company.

 

(H) A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

 

(I) any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (III) below; or

 

(II) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date hereof, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or

 

(III) there is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit plan of the Company or any subsidiary of the Company, at least 60% of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing 25% or more of the combined voting power of the Company’s then outstanding securities; or

 

(IV) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale.

 

(I) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

(J) “Committee” shall mean the Compensation and Management Development Committee of the Board or a successor committee of the Board.

 

(K) “Company” shall mean Barnes Group Inc. and, except in determining under Section 16(H) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its

 

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business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

 

(L) “Date of Termination” shall have the meaning set forth in Section 7.2 hereof.

 

(M) “Disability” shall be deemed the reason for a Separation from Service, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.

 

(N) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

 

(O) “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.

 

(P) “Executive” shall mean the individual named in the first paragraph of this Agreement.

 

(Q) “Good Reason” for a Separation from Service by the Executive shall mean the occurrence (without the Executive’s express written consent) after any Change in Control, of any one of the following acts by the Company, or failures by the Company to act, if the Executive notifies the Company that such act or failure to act has occurred within 90 days of the initial occurrence of such act or failure to act (which notification may but need not be in the form of a Notice of Termination given in respect of such act or failure to act), and if such act or failure to act is not corrected within 30 days after the Executive so notifies the Company:

 

(I) the assignment to the Executive of any duties materially inconsistent with the Executive’s status as an executive officer of the Company, or a material adverse alteration in the nature or status of the Executive’s responsibilities from those in effect immediately prior to the Change in Control;

 

(II) a reduction by the Company in the Executive’s annual base salary as in effect on the date hereof or as the same may be increased from time to time, by five percent (5%) or more or by $20,000 or more;

 

(III) the relocation of the Executive’s principal place of employment to a location more than 50 miles from the Executive’s principal place of employment immediately prior to the Change in Control, provided that such relocation increases the Executive’s round trip commuting time by 25% or more, or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

 

(IV) any termination of the Executive’s employment for Cause which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 7.1 hereof.

 

The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

 

(R) “Notice of Termination” shall have the meaning set forth in Section 7.1 hereof.

 

(S) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) any member of the Barnes family (by blood or marriage) or any entity for the benefit of, or controlled by, a member of the Barnes family (by blood or marriage), (ii) the Company or any of its subsidiaries, (iii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iv) an underwriter temporarily holding securities pursuant to an offering of such securities, or (v) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company.

 

 

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(T) “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

 

(i) the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

 

(ii) the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

 

(iii) any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or

 

(iv) the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

 

(U) “Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

 

(V) “Separation from Service” means a “separation from service with the employer” within the meaning of Treasury Regulation Section 1.409A-1(h), where the “employer” means Barnes Group Inc. and all corporations and trades or businesses with which Barnes Group Inc. would be considered a single employer under Section 414(b) or Section 414(c) of the Code (as determined in accordance with the first sentence of Treasury Regulation section 1.409A-1(h)(3)).

 

(W) “Severance Payments” shall have the meaning set forth in Section 6.1 hereof.

 

(X) “Specified Employee” shall mean a specified employee within the meaning of Treasury Regulation Section 1.409A-1(i), as determined in accordance with Section 12(C) above.

 

(Y) “Tax Counsel” shall have the meaning set forth in Section 6.2 hereof.

 

(Z) “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

 

(AA) “Total Payments” shall mean those payments so described in Section 6.2 hereof.

 

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IN WITNESS WHEREOF, the parties have executed this Agreement on             ,             , effective as of the date and year first above written.

 

BARNES GROUP INC.

By:

 

 

Name:

 

Gregory F. Milzcik

Title:

 

President and Chief Executive Officer

 

Name:

 

[                ]

EXECUTIVE

Address:

 

(Home)

 

 

 

(Please print carefully)

 

 

 

 

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EXHIBIT A – COMPLETE AND PERMANENT RELEASE

 

TO: [            ] (the “Executive”)

 

DATE:             

 

The Executive is hereby offered severance payments and benefits in accordance with and subject to the terms of the Severance Agreement between the Executive and the Company (the “Agreement”) dated as of August 3, 2009, in consideration of the Executive’s execution and return of this Complete and Permanent Release (the “Release”).

 

The Executive’s severance payments and benefits pursuant to the Agreement will be paid and provided only if the Executive executes this release and returns the signed release to the Company within 45 days after the Date of Termination as defined in the Agreement, and if the Executive does not revoke the release. The severance payments and benefits will commence on the 8th day after the execution and return to the Company of this Release (or, if such 8th day is on a weekend or a holiday, on the next business day), provided that the Executive has not revoked this Release as hereinafter described. The Executive has seven (7) calendar days from the date that the Executive signs this Release to revoke this Release by giving written notice of the Executive’s intent to do so to the Company. This Release shall not become effective or enforceable until this seven (7) day period has expired. If the Executive revokes this Release, the Executive will not receive the severance payments and benefits described in the Agreement.

 

By signing below, the Executive agrees that execution of this Release operates to, and hereby does, release the Company, its subsidiaries and affiliates, its (and its subsidiaries’ and affiliates’) present or former employees, officers, directors, shareholders, representatives and agents (the “Released Parties”) from all claims or demands (the “Claims”) the Executive has had, presently has or may have, based on the Executive’s employment with the Company or the termination of that employment, including any rights or claims the Executive may have based on any facts or events, whether known or unknown by the Executive, including, without limitation, a release of any rights or claims the Executive may have based on the Civil Rights Act of 1966, as amended; the Civil Rights Act of 1991, as amended; the Age Discrimination in Employment Act of 1967, as amended; Title VII of the Civil Rights Act of 1964, as amended; the Americans with Disabilities Act of 1990; the Equal Pay Act of 1963; any and all laws of any state concerning wages, employment and discharge; any state or local municipality fair employment statutes or laws; or any other law, rule, regulation or ordinance pertaining to employment, terms and conditions of employment, or termination of employment; provided, however, that execution of this Release shall not adversely affect (i) the Executive’s rights to receive benefits under the employee benefit plans and arrangements of the Company, following termination of the Executive’s employment or Separation from Service (as defined in the Agreement); (ii) the Executive’s rights under the Agreement; or (iii) the Executive’s rights to indemnification or advancement of expenses under applicable law, the Certificate of Incorporation or by-laws of the Company, any agreement between the Executive and the Company, or the Company’s officers’ and directors’ liability insurance policies. The Executive is advised to consult with an attorney before signing the Release.

 

The Executive has forty-five (45) calendar days from the date of Separation from Service (as defined in the Agreement) in which to sign and return this Release to the Company.

 

For the Company:

  

  

  

 

ACCEPTED THIS             DAY OF             ,             

 

Executive

 

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