Exhibit 10.2
BARNES GROUP INC.
AMENDED EMPLOYEE STOCK
AND OWNERSHIP PROGRAM
AS FURTHER AMENDED
1. PURPOSE
The purpose of the Plan is to provide a means through which the Company may
attract able persons to provide services to or enter and remain in the employ
with the Company and its Subsidiaries and to provide a means whereby they can
acquire and maintain Common Stock ownership, or be paid incentive
compensation measured by reference to the value of Common Stock, thereby
strengthening their commitment to the welfare of the Company and promoting an
identity of interest between stockholders of the Company and these service
providers and employees.
So that the appropriate incentive can be provided, the Plan provides for
granting Incentive Stock Options, Nonqualified Stock Options, Restricted
Stock Awards, Restricted Stock Unit Awards, Performance Share or Cash Unit
Awards, and SARs or any combination of the foregoing.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan.
(a) "Acceleration Event" shall have the meaning set forth in Section
8(e).
(b) "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
(c) "Award" means, individually or collectively, any Incentive Stock
Option, Nonqualified Stock Option, Restricted Stock Award, Restricted Stock
Unit Award, Performance Share or Cash Unit Award, or SAR under the Plan.
(d) "Award Agreement" means the agreement between the Company and a
Participant who has been granted an Award which defines the rights and
obligations of the parties with respect to such Award.
(e) "Award Period" means a period of time within which performance is
measured for the purpose of determining whether an Award of Performance Share
or Cash Units has been earned.
(f) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3
under the Exchange Act.
(g) "Board" means the Board of Directors of the Company.
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(h) "Change-in-Control" shall have the meaning set forth in Section
11(p).
(i) "Code" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under
such section.
(j) "Committee" means the committee appointed by the Board to administer
the Plan as described in Section 4.
(k) "Common Stock" means the common stock of the Company.
(l) "Company" means Barnes Group Inc.
(m) "Date of Grant" means the date on which the granting of an Award is
authorized or such other date as may be specified in such authorization.
(n) "Disability" means, with respect to Incentive Stock Options,
"permanent and total disability" as defined in Section 22(e)(3) of the Code,
and, for all other purposes shall have the meaning set forth in the Company's
long-term disability plan.
(o) "Eligible Person" means any person regularly employed by or providing
consulting or other services to the Company or a Subsidiary. An Award other
than an Incentive Stock Option may be granted to an Eligible Person, in
connection with hiring, retention or otherwise, prior to the date the
Eligible Person first performs services for the Company or a Subsidiary,
provided that such Award shall not become vested prior to the date on which
the Eligible Person completes one continuous year of employment/service with
the Company and/or Subsidiaries.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(q) "Fair Market Value" on a given date means (i) if the Stock is listed
on a national securities exchange, the closing sale prices reported as having
occurred on the primary exchange on which the Stock is listed and traded on
the date prior to such date, or, if there is no such sale on that date, then
on the last preceding date on which such a sale was reported; (ii) if the
Stock is not listed on any national securities exchange but is quoted in the
National Market System of The Nasdaq Stock Market on a last sale basis, the
average between the high bid price and low ask price reported on the date
prior to such date, or, if there is no such sale on that date, then on the
last preceding date on which a sale was reported; or (iii) if the Stock is
not listed on a national securities exchange nor quoted in the National
Market System of The Nasdaq Stock Market on a last sale basis, the amount
determined by the Committee to be the fair market value based upon a good
faith attempt to value the Stock accurately.
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(r) "Group" means a principal business segment of the Company, including
by way of example and not limitation, Associated Spring, Barnes Aerospace,
and Barnes Distribution.
(s) "Holder" means a Participant who has been granted an Award, or a
permitted transferee of such a Participant.
(t) "Incentive Stock Option" means an Option granted by the Committee to
a Participant under the Plan which is designated by the Committee as an
"incentive stock option" within the meaning of Section 422 of the Code.
(u) "Nonqualified Stock Option" means an Option granted under the Plan
which is not designated as an Incentive Stock Option.
(v) "Normal Termination" means termination of employment or service with
the Company or a Subsidiary other than by reason of death or Disability.
(w) "Option" means an Award granted under Section 7 of the Plan.
(x) "Option Period" means the period described in Section 7(c).
(y) "Option Price" means the exercise price set for an Option described
in Section 7(a).
(z) "Participant" means an Eligible Person who has been selected by the
Committee to participate in the Plan and to receive an Award pursuant to
Section 6.
(aa) "Performance Goals" means the performance objectives established by
the Committee with respect to an Award Period, Restricted Period, or Option
Period with respect to Performance Share or Cash Units, Restricted Stock,
Restricted Stock Units, Options or SARs respectively, established for the
purpose of determining whether, and to what extent, such Awards will be
earned for an Award Period, Restricted Period or Option Period.
(bb) "Performance Cash Unit" means a hypothetical equivalent to a number
of dollars established by the Committee and granted in connection with an
Award made under Section 8 of the Plan.
(cc) "Performance Share Unit" means a hypothetical investment equivalent
equal to one share of Stock granted in connection with an Award made under
Section 8 of the Plan.
(dd) "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 a
Subsidiary, (iii) a trustee or other fiduciary holding
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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 stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.
(ee) "Plan" means the Company's Employee Stock And Ownership Program, as
amended.
(ff) "Restricted Period" means, with respect to any share of Restricted
Stock, the period of time determined by the Committee during which such Award
is subject to the restrictions set forth in Section 9 of the Plan, and, with
respect to any Restricted Stock Unit, the period of time determined by the
Committee during which such Award is subject to the restrictions, terms and
conditions referred to in Section 9A of the Plan.
(gg) "Restricted Stock" means shares of Stock issued or transferred to a
Participant subject to forfeiture and the other restrictions set forth in
Section 9 of the Plan.
(gg-A) "Restricted Stock Units" means shares of Stock that will be issued
or transferred to a Participant at a future time or times if the Restricted
Stock Units are not forfeited and the other restrictions, terms and
conditions referred to in Section 9A of the Plan are satisfied.
(hh) "Restricted Stock Award" means an Award of Restricted Stock granted
under Section 9 of the Plan.
(hh-A) "Restricted Stock Unit Award" means an Award of Restricted Stock
Units granted under Section 9A of the Plan.
(ii) "SAR" means a stock appreciation right which entitles a Participant
to receive, in cash or Stock (valued at Fair Market Value), at the discretion
of the Committee, an amount equal to the excess of the Fair Market Value of a
specified number of shares of Stock at the time of exercise over the Option
Price established by the Committee.
(jj) "Securities Act" means the Securities Act of 1933, as amended.
(kk) "SEC" means Securities and Exchange Commission.
(ll) "Stock" means the Common Stock of the Company or such other
authorized shares of stock of the Company as from time to time may be
authorized for use under the Plan.
(mm) "Subsidiary" means any corporation or other business entity in which
the Company owns a significant equity interest, as determined in the
discretion of the Committee; provided, that, with respect to Incentive Stock
Options, the term "Subsidiary" shall mean a "subsidiary corporation" as
defined in Section 424(f) of the Code.
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3. EFFECTIVE DATE, DURATION AND STOCKHOLDER APPROVAL
The Plan is effective as of February 1, 2000. The validity of any and all
Awards granted pursuant to the Plan is contingent upon approval of the Plan
by the stockholders of the Company in a manner which complies with Section
422(b)(1) of the Code and Section 162(m)(4)(C)(ii) of the Code.
The expiration date of the Plan, after which no Awards may be granted
hereunder, shall be January 31, 2005; provided, however, that the
administration of the Plan shall continue in effect until all matters
relating to the payment of Awards previously granted have been settled.
4. ADMINISTRATION
The Plan shall be administered by the Committee, which shall be composed of
at least two persons, each member of which, at the time he or she takes any
action with respect to an Award under the Plan, shall be a "Non-Employee
Director", as defined in Rule 16b-3 under the Exchange Act, or any successor
rule or regulation, and an "outside director", as defined in Treasury
Regulations Section 1.162-27(e)(3), or any successor regulation, unless the
Board determines otherwise. The majority of the members of the Committee
shall constitute a quorum. The acts of a majority of the members present at
any meeting at which a quorum is present or acts approved in writing by a
majority of the Committee shall be deemed the acts of the Committee.
Subject to the provisions of the Plan, the Committee shall have exclusive
power to:
(a) Select the Eligible Persons to participate in the Plan;
(b) Determine the nature and extent of the Awards to be made to each
Participant, and determine whether an Award is intended to qualify as
performance-based compensation within the meaning of Section 162(m)(4)(C) of
the Code;
(c) Determine the time or times when Awards will be made to Eligible
Persons;
(d) Determine the duration of each Award Period and Restricted Period;
(e) Determine the conditions to which the payment of Awards may be
subject;
(f) Establish the Performance Goals, if any, for each Award Period;
(g) Prescribe the form of Award Agreement or other form or forms
evidencing Awards; and
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(h) Cause records to be established in which there shall be entered, from
time to time as Awards are made to Eligible Persons, the date of each Award,
the number of Incentive Stock Options, Nonqualified Stock Options,
Performance Share or Cash Units, shares of Restricted Stock, Restricted Stock
Units and SARs awarded by the Committee to each Eligible Person, and the
expiration date and the duration of any applicable Award Period or Restricted
Period.
The Committee shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make
all such determinations relating to the Plan as it may deem necessary or
advisable for the administration of the Plan. Without limiting the generality
of the foregoing, the Committee shall have the authority to establish and
administer performance goals applicable to Awards under the Plan, and the
authority to certify that such performance goals are attained, within the
meaning of Treasury Regulation Section 1.162-27(c)(4). The Committee's
interpretation of the Plan or any documents evidencing Awards granted
pursuant thereto and all decisions and determinations by the Committee with
respect to the Plan shall be final, binding, and conclusive on all parties.
Any provision of the Plan to the contrary notwithstanding, the Committee
shall not have the authority to reduce the exercise price of outstanding
Options, whether by canceling the Options and issuing substitute Awards in
replacement thereof or otherwise.
Any provision of the Plan to the contrary notwithstanding, to the extent
permitted by, and on the terms and subject to the conditions of, applicable
law, including in particular but not limited to Sections 141(c) and 157(c) of
the General Corporation Law of Delaware, the power and authority of the
Committee under the Plan, including but not limited to its power and
authority to make, administer and interpret Awards, may be exercised by the
Chief Executive Officer of the Company and the chairperson of the Committee,
but only with respect to Eligible Persons and Participants who are not and
have never been (i) officers or directors of the Company within the meaning
of Section 16(b) of the Exchange Act and the related SEC regulations, or (ii)
"covered employees" within the meaning of Section 162(m)(3) of the Code, and
only if and to the extent that the Committee expressly authorizes the Chief
Executive Officer and the chairperson of the Committee to exercise such power
and authority. If and to the extent that the Chief Executive Officer of the
Company and the chairperson of the Committee exercise the power and authority
of the Committee in accordance with the preceding sentence, the term
"Committee" as used in this Plan shall include the Chief Executive Officer of
the Company and the chairperson of the Committee.
5. GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN
The Committee may, from time to time, grant Awards of Options, Restricted
Stock, Restricted Stock Units, Performance Share or Cash
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Units and/or SARs to one or more Eligible Persons; provided, however, that:
(a) The aggregate number of shares of Stock that may be issued or
transferred pursuant to all Awards may not exceed 3,450,000, subject to
Section 12; provided, however, that no more than 25% of the foregoing number
of shares of Stock may be issued or transferred in respect of Restricted
Stock, Restricted Stock Units, Performance Share Units and Performance Cash
Units, collectively; and provided, further, that the maximum number of shares
of Stock with respect to which Options or SARs or Performance Share Unit or
Restricted Stock Awards or Restricted Stock Unit Awards, or any combination
of Options, SARs, Performance Share Unit Awards, Restricted Stock Unit Awards
or Restricted Stock Awards, may be granted during any calendar year to any
Eligible Person is 500,000. The maximum amount that may be paid in respect of
Performance Cash Units that are granted in any one calendar year to any
Eligible Person is $7 million (or the equivalent thereof in Shares based on
the Fair Market Value of the shares on the payment date). If, after
Performance Share Units or Performance Cash Units are earned, the delivery of
shares of Stock or cash is deferred, any additional shares of Stock or
amounts attributable to Dividend Equivalents or earnings during the deferral
period shall be disregarded in applying the foregoing per Eligible Person
limitations.
(b) In the event any Option, Restricted Stock Award, Restricted Stock
Unit Award, Performance Share or Cash Unit or SAR shall be surrendered,
terminate, expire, or be forfeited, the number of shares of Stock no longer
subject thereto shall thereupon be released and shall thereafter be available
for new Awards under the Plan. If the person exercising an Option pays the
purchase price of the shares subject to such Option by delivering shares of
Common Stock to the Company (either through actual delivery or by
attestation) in accordance with the provisions of Section 7(b) below, or pays
the withholding taxes due in connection with the grant, exercise, vesting,
distribution, or payment of any Award or the shares subject thereto
(including without limitation any withholding taxes due as a result of an
election made by an Eligible Person under Section 83(b) of the Code) by
delivering shares of Common Stock to the Company or having the Company
withhold shares of Common Stock otherwise issuable in connection with the
Award in accordance with the provisions of Section 11(d) below, the number of
shares so delivered or withheld shall be added back to the aggregate number
of shares available for issuance or transfer under the Plan so that the
aggregate number of shares that may be issued or transferred under the Plan
pursuant to Section 5(a) above shall have been charged only for the net
number of shares issued or transferred by the Company in connection with the
Award; provided, however, that none of the surrendered or withheld shares
shall be available for issuance under Incentive Stock Options.
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(c) Stock delivered by the Company in settlement of Awards under the Plan
may be authorized and unissued Stock or Stock held in the treasury of the
Company or may be purchased on the open market or by private purchase.
(d) The Committee may, in its sole discretion, require a Participant to
pay consideration for an Award in an amount and in a manner as the Committee
deems appropriate.
(e) The Committee may only grant Incentive Stock Options to Eligible
Persons who are employees of the Company or a subsidiary corporation as
defined in Section 424 of the Code.
(f) Under the Plan, the Committee may grant Awards that qualify as
performance-based compensation within the meaning of Section 162(m)(4)(C) of
the Code, as well as Awards that do not so qualify. Awards that the Committee
intends to qualify as performance-based compensation within the meaning of
Section 162(m)(4)(C) shall be granted and administered in a manner that will
enable such Awards to qualify as performance-based compensation. Any
provision of the Plan to the contrary notwithstanding, the Plan shall be
interpreted, administered and construed to permit the Committee to grant
Awards that qualify as performance-based compensation as well as Awards that
do not so qualify, and any provision of the Plan that cannot be so
interpreted, administered or construed shall to that extent be disregarded.
6. ELIGIBILITY
Participation shall be limited to Eligible Persons selected by the Committee.
7. STOCK OPTIONS AND SARS
Subject to Section 5(e), the Committee is authorized to grant one or more
Incentive Stock Options, Nonqualified Stock Options or SARs to any Eligible
Person. Each Option or SAR so granted shall be subject to the following
conditions or to such other conditions as may be reflected in the applicable
Award Agreement.
(a) Option Price. The exercise price ("Option Price") per share of
Stock for each Option or SAR shall be set by the Committee at the time of
grant but shall not be less than the Fair Market Value of a share of Stock at
the Date of Grant or, other than with respect to Incentive Stock Options, at
a date subsequent to the Date of Grant as specified in the Option Award
Agreement.
(b) Manner of Exercise and Form of Payment. SARs which have become
exercisable may be exercised by delivery of written notice of exercise to the
Committee. Options which have become exercisable may
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be exercised by delivery of written notice of exercise to the Committee
accompanied by payment of the Option Price. The Option Price shall be payable
either (i) by United States dollars in cash or by check, (ii) at the
discretion of the Committee, by either actual delivery of shares or by
attestation, through shares of Stock valued at the Fair Market Value at the
time the Option is exercised (provided that such Stock has been held by the
Participant for at least six months unless such Stock was acquired through an
open market purchase within six months before actual delivery or
attestation), or (iii) at the discretion of the Committee, by a cashless
exercise procedure that the Company determines satisfies the provisions of
section 220.3(e)(4) (or a successor provision) of Regulation T promulgated by
the Board of Governors of the Federal Reserve System(1), or (iv) at the
discretion of the Committee, by any combination of (i), (ii) and (iii) above.
(c) Option Period and Expiration. Options and SARs shall vest and
become exercisable in such manner and on such date or dates determined by the
Committee and shall expire after such period, not to exceed ten years, as may
be determined by the Committee (the "Option Period"); provided, however, that
notwithstanding any vesting dates set by the Committee, the Committee may, in
its sole discretion, accelerate the exercisability of any Option or SAR,
which acceleration shall not affect the terms and conditions of any such
Option or SAR other than with respect to exercisability. If an Option or SAR
is exercisable in installments, such installments or portions thereof which
become exercisable shall remain exercisable until the Option or SAR expires.
In granting any Option or SAR, the Committee may specify such termination and
cancellation provisions as the Committee may determine; provided, however,
that in the event a Participant terminates service or employment due to
death, Disability, retirement (as defined in any qualified retirement plan
maintained by the Company), or, in the case of a non-employee director, after
attaining age 55, termination of the Option Period shall occur no later than
the fifth anniversary of such date of termination, and in the event of any
other termination, termination of the Option Period shall occur no later than
the third anniversary of such date of termination. Any Incentive Stock Option
that is exercised three months after the Participant's employment with the
Company and any Subsidiary terminates (or one year after such employment
terminates, if the Participant is disabled within the meaning of Section
22(e)(3)) of the Code, or at any time after such three months' or one year
period, will not be eligible for federal tax treatment as an Incentive Stock
Option unless the exercise takes place after the death of the Participant by
the estate of the Participant or by a person who acquired the right to
exercise such option by bequest or inheritance or by reason of the death of
the Participant.
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(1) 12 C.F.R. Section 220.3(e)(4).
(d) Other Terms and Conditions. In addition, each Option or SAR
granted under the Plan shall be evidenced by an Award Agreement, which shall
contain such provisions as may be determined by the Committee and, except as
may be specifically stated otherwise in such Award Agreement, which shall be
subject to the following terms and conditions:
(i) Each Option or SAR issued pursuant to this Section 7 or portion
thereof that is exercisable shall be exercisable for the full amount or
for any part thereof.
(ii) Each share of Stock purchased through the exercise of an Option
issued pursuant to this Section 7 shall be paid for in full at the time of
the exercise. Each Option shall cease to be exercisable, as to any share
of Stock, when the Holder purchases the share or when the Option expires.
(iii) Subject to Section 11(k), Options and SARs issued pursuant to
this Section 7 shall not be transferable by the Holder except by will or
the laws of descent and distribution and shall be exercisable during the
Holder's lifetime only by the Holder.
(iv) Each Option and SAR issued pursuant to this Section 7 shall vest
and become exercisable by the Holder in accordance with the vesting
schedule established by the Committee and set forth in the Award
Agreement; provided, however, that no Option or SAR shall be exercisable
prior to the date on which the Participant completes both (A) six months
of continuous service with the Company or a Subsidiary after the date on
which the Option or SAR was granted, and (B) one year of continuous
service with the Company or a Subsidiary, unless termination of service
occurs due to death, Disability, retirement (as defined in any qualified
retirement plan maintained by the Company), after a Change-in-Control, or,
in the case of a non-employee director, after attaining age 55.
(v) Each Award Agreement may contain a provision that, upon demand by
the Committee for such a representation, the Holder shall deliver to the
Committee at the time of any exercise of an Option issued pursuant to this
Section 7 a written representation that the shares to be acquired upon
such exercise are to be acquired for investment and not for resale or with
a view to the distribution thereof. Upon such demand, delivery of such
representation prior to the delivery of any shares issued upon exercise of
an Option issued pursuant to this Section 7 shall be a condition precedent
to the right of the Holder to purchase any shares. In the event
certificates for Stock are delivered under the Plan with respect to which
such investment representation has been obtained, the Committee may cause
a legend or legends to be placed on such certificates to make appropriate
reference to such representation and to restrict transfer in the absence
of compliance with applicable federal or state securities laws.
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(vi) Each Incentive Stock Option Award Agreement shall contain a
provision requiring the Holder to notify the Company in writing
immediately after the Holder makes a disqualifying disposition of any
Stock acquired pursuant to the exercise of such Incentive Stock Option. A
disqualifying disposition is any disposition (including any sale) of such
Stock before the later of (a) two years after the Date of Grant of the
Incentive Stock Option or (b) one year after the date the Holder acquired
the Stock by exercising the Incentive Stock Option.
(e) Incentive Stock Option Grants to 10% Stockholders. Notwithstanding
anything to the contrary in this Section 7, if an Incentive Stock Option is
granted to a Participant who owns stock representing more than ten percent of
the voting power of all classes of stock of the Company or of a Subsidiary,
the Option Period shall not exceed five years from the Date of Grant of such
Option and the Option Price shall be at least 110 percent of the Fair Market
Value (on the Date of Grant) of the Stock subject to the Option.
(f) $100,000 Per Year Limitation for Incentive Stock Options. To the
extent the aggregate Fair Market Value (determined as of the Date of Grant)
of Stock for which Incentive Stock Options are exercisable for the first time
by any Participant during any calendar year (under all plans of the Company
and its Subsidiaries) exceeds $100,000, such excess Incentive Stock Options
shall be treated as Nonqualified Stock Options.
(g) Conversion of Incentive Stock Options into Nonqualified Stock
Options; Termination of Incentive Stock Options. The Committee, at the
written request of any Holder, may in its discretion, take such actions as
may be necessary to convert such Holder's Incentive Stock Options (or any
installments or portions of installments thereof) that have not been
exercised on the date of conversion into Nonqualified Stock Options at any
time prior to the expiration of such Incentive Stock Options, regardless of
whether the Holder is an employee of the Company or a Subsidiary at the time
of such conversion. Such actions may not, however, include extending the
Option Period or reducing the exercise price of such Incentive Stock Options.
At the time of such conversion, the Committee (with the consent of the
Holder) may impose such conditions on the exercise of the resulting
Nonqualified Stock Options as the Committee in its discretion may determine,
provided that such conditions shall not be inconsistent with the Plan.
Nothing in the Plan shall be deemed to give any Holder the right to have such
Holder's Incentive Stock Options converted into Nonqualified Stock Options,
and no such conversion shall occur until and unless the Committee takes
appropriate action. The Committee, with the consent of the Holder, may also
terminate any portion of any Incentive Stock Option that has not been
exercised at the time of such termination.
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(h) Substitution of Options. The Committee may grant Options and/or
SARs in substitution for options or stock appreciation rights held for stock
in corporations acquired by the Company with terms in accordance with the
terms for such previous options, but with an appropriate adjustment in the
exercise price and number of shares subject to the options in compliance with
the requirements of Section 424 of the Code.
8. PERFORMANCE SHARE OR CASH UNITS
(a) Award Grants. The Committee is authorized to establish performance
programs to be effective over designated Award Periods determined by the
Committee. Award Periods applicable to Performance Share or Cash Unit Awards
shall be at least three years in length; provided that payment of such Awards
may be made before the completion of the applicable Award Period in the
circumstances set forth in Sections 8(c), 8(e) and 11(p) below. The Committee
may grant Awards of Performance Share or Cash Units to Eligible Persons in
accordance with such performance programs. Before or within 90 days after the
beginning of each Award Period, the Committee will establish written
Performance Goals based upon financial objectives for the Company for such
Award Period and a schedule relating the accomplishment of the Performance
Goals to the Awards to be earned by Participants. Performance Goals may
include absolute or relative growth in earnings per share or rate of return
on stockholders' equity or other measurement of corporate performance and may
be determined on an individual basis or by categories of Participants.
However, with respect to Performance Share or Cash Unit Awards which the
Committee intends to qualify as performance-based compensation within the
meaning of Section 162(m)(4)(C) of the Code, the Performance Goals shall
consist of targeted levels of, targeted levels of return on, or targeted
levels of growth for, one or more of the following on a consolidated Company,
consolidated Group, business unit or divisional level, as the Committee may
specify: earnings per share, net income, operating income, performance profit
(operating income minus an allocated charge approximating the Company's cost
of capital, before or after tax), gross margin, revenue, working capital,
total assets, net assets, stockholders' equity, or cash flow. The foregoing
Performance Goals shall be determined in accordance with generally accepted
accounting principles, except to the extent the Committee directs otherwise
within the earlier of (i) 90 days after the start of the Award Period or (ii)
a date on which no more than one fourth of the Award Period has elapsed, and
may include or exclude any or all of the following items, as the Committee
may specify: extraordinary, unusual or non-recurring items; discontinued
operations; effects of accounting changes; effects of currency fluctuations;
effects of financing activities (by way of example, without limitation,
effect on earnings per share of issuing convertible debt securities);
expenses for restructuring or productivity initiatives; non-operating items;
effects of acquisitions and acquisition expenses; and effects of divestitures
and divestiture expenses. Any such Performance
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Goal or combination of such Performance Goals may apply to the Participant's
Award in its entirety or to any designated portion or portions of the Award,
as the Committee may specify. The Committee shall determine the number of
Performance Share or Cash Units to be awarded, if any, to each Eligible
Person who is selected to receive such an Award.
(b) Determination of Award. At the completion of a Performance Award
Period, or at other times as specified by the Committee, the Committee shall
calculate the number of shares of Stock or amount of cash earned with respect
to each Participant's Performance Share or Cash Unit Award by multiplying the
number of Performance Units granted to the Participant by a performance
factor representing the degree of attainment of the Performance Goals.
(c) Payment of Performance Share or Cash Unit Awards. Performance
Share or Cash Unit Awards shall be payable in that number of shares of Stock
or that amount of cash determined in accordance with Section 8(b); provided,
however, that, at its discretion, the Committee may make payment to any
Participant of Performance Share Units in the form of cash upon the specific
request of such Participant. The amount of any payment made in cash shall be
based upon the Fair Market Value of the Stock on the business day prior to
payment. Payments of Performance Share or Cash Unit Awards shall be made as
soon as practicable after the completion of an Award Period; provided,
however, that if the Performance Goals for an Award Period are attained
before the completion of such Award Period, payment of Performance Share or
Cash Unit Awards granted with respect to such Award Period may be made at
such time or times after the first year of the Award Period and before the
completion of such Award Period as the Committee may direct, and, provided
further, that if a Participant makes the election described below,
Performance Share or Cash Units (with any Cash Units being converted into
equivalent Performance Share Units) shall instead be credited to the
Participant's Performance Share Account. Such credit of Performance Shares to
a Participant's Performance Share Account shall be made as of the same date
as payment of the Award would have been made to the Participant had no prior
election been made.
(i) Elections.
Any election to have an Award or a portion of an Award credited to
a Performance Share Account shall be made on a written form provided by
the Company for such purpose and shall only be effective with respect
to Awards that may be made on and after the January 1 following the
Company's receipt of such form, provided that such form is received by
the December 24 prior to the applicable January 1. Any such election
shall be made only in increments of ten percent (10%) of the Award
(rounded to the
13
nearest whole share) and shall be effective only for Awards made during
the year in which the election becomes effective.
(ii) Performance Share Account.
The Company shall maintain on its books and records a Performance
Share Account to record its liability for future payments to the
Participant or his or her beneficiary pursuant to the Plan. However, a
Performance Share Account under the Plan shall constitute an unfunded
arrangement; the Company shall not be required to segregate or earmark
any of its assets for the benefit of the Participant or his or her
beneficiary, and the amount reflected in a Performance Share Account
shall be available for the Company's general corporate purposes and
shall be available to the Company's general creditors. The amount
reflected in a Performance Share Account shall not be subject in any
manner to anticipation, alienation, transfer or assignment by the
Participant or his or her beneficiary, and any attempt to anticipate,
alienate, transfer or assign the same shall be void. Neither the
Participant nor his or her beneficiary may assert any right or claim
against any specific assets of the Company in respect of a Performance
Share Account, and the Participant and his or her beneficiary shall
have only a contractual right against the Company for the amount
reflected in a Performance Share Account.
Notwithstanding the foregoing, in order to pay amounts which may
become due under the Plan in respect of a Participant's Performance
Share Account, the Company may establish a grantor trust (hereinafter
the "Trust") within the meaning of Section 671 of the Code. Some or all
of the assets of the Trust may be dedicated to providing benefits to
the Participants pursuant to the Plan, but, nevertheless, all assets of
the Trust shall at all times remain subject to the claims of the
Company's general creditors in the event of the Company's bankruptcy or
insolvency.
(iii) Dividend Equivalents.
On every date on which a dividend or other distribution is paid
with respect to Common Stock, commencing with the first such payment
date after the date on which a Performance Share is credited to a
Participant's Performance Share Account and continuing until such
Performance Share is either forfeited or paid out, there shall be
credited to the Participant's Performance Share Account a Dividend
Equivalent in respect of such Performance Share. A Dividend Equivalent
shall mean, with respect to a whole Performance Share credited to a
Participant's Performance Share Account, a measure of value equal to
the fractional share of Common Stock that could be purchased with the
amount that would have been paid to the Participant as a dividend or
other distribution
14
if the Participant had owned a whole share of Common Stock in lieu of
said whole Performance Share, the date of such deemed purchase being
the dividend payment date. Dividend Equivalents are expressed in the
form of Performance Shares. Notwithstanding the foregoing, the
Committee may decide when granting a Performance Share that Dividend
Equivalents with respect to such Performance Share shall be paid to a
Participant as accrued, rather than credited to the Participant's
Performance Share Account.
(iv) Participant not a Stockholder.
The Participant shall have no stockholder's rights with respect
to any shares of Common Stock in respect of which Performance Shares
are credited to his or her Performance Share Account.
(v) Payments in Respect of Performance Shares.
(1) Termination of Employment or Provision of Services: In the
event of a Participant's Normal Termination and without a payment date
having been specified as provided below, such Participant shall
be entitled to receive payment in respect of the entire amount then
credited to his or her Performance Share Account. Such payment shall be
made in the form of the number of shares of Common Stock equal to the
number of whole Performance Shares then credited to the Participant's
Performance Share Account, with any fractional Performance Share being
paid in cash determined on the basis of the value of a corresponding
fractional share of Common Stock on the business day preceding the date
of payment. Said shares of Common Stock and any cash amount shall be
transferred to the Participant within sixty (60) days after the
Participant's Normal Termination.
(2) Election of Participant: Upon prior written election by a
Participant, the Participant shall be entitled to receive payment in
respect of an Award of Performance Shares, to the extent then vested,
and any Dividend Equivalents earned on such Award on the date or dates
specified in such written election. Such election must either be made
as part of the election to have such Award of Performance Shares
credited to a Performance Share Account as provided above, or at any
time at least one year prior to the date on which such payment would
otherwise be made. Such payment shall be made in the form of the number
of shares of Common Stock equal to the number of whole Performance
Shares, including related Dividend Equivalents, then credited to the
Participant's Performance Share Account with respect to such Award,
with any fractional Performance Share being paid in cash determined on
the basis of the value of a corresponding fractional share of Common
Stock on the business day preceding the date of payment. The
Participant's Performance Share Account thereafter shall be reduced to
reflect
15
the foregoing payment. Nothing herein shall preclude separate
elections with respect to separate Awards.
(3) Disability or Death While Employed by or Providing Services to
the Company: Notwithstanding an election made pursuant to the
preceding section, in the event of a Participant's termination of
employment or provision of services for reasons of Disability or death,
the Participant or his or her beneficiary, as the case may be, shall be
entitled to receive payment in respect of the entire amount then
credited to his or her Performance Share Account. Such payment shall be
made in the form of the number of shares of Common Stock equal to the
number of whole Performance Shares then credited to the Participant's
Performance Share Account, with any fractional Performance Share being
paid in cash determined on the basis of the value of a corresponding
fractional share of Common Stock on the business day preceding the date
of payment. Said shares of Common Stock and any cash amount shall be
transferred to the Participant or his or her beneficiary within sixty
(60) days after the Company has been notified in writing of the
Disability or death of the Participant and has been provided with any
additional information, forms or other documents it may reasonably
request.
(4) Hardship Payment: Notwithstanding an election made pursuant
to the Plan or the Participant's continued employment with or provision
of services to the Company, if the Committee, upon written petition of
the Participant, determines, in the Committee's sole discretion, that
the Participant has suffered an unforeseeable financial emergency, the
Participant shall be entitled to receive, as soon as practicable
following such determination, payment sufficient to meet the cash needs
arising from the unforeseeable financial emergency, not in excess of
the number of whole Performance Shares then credited to the
Participant's Performance Share Account. Such payment shall be made, at
the election of the Participant, either (i) in the form of the number
of whole shares of Common Stock, the proceeds from the sale of which
would be sufficient to meet the cash needs arising from the
unforeseeable financial emergency, not in excess of the number of whole
Performance Shares then credited to the Participant's Performance Share
Account; (ii) in cash equal to the value on the business day preceding
the date of payment of the number of whole shares of Common Stock
available for payment under clause (i) of this sentence; or (iii) in
any combination of the methods of payment provided for in clauses (i)
and (ii) of this sentence. In the event of a hardship payment in
respect of the Participant's entire Performance Share Account, any
fractional Performance Share shall be paid in cash determined on the
basis of the value of a corresponding fractional share of Common Stock
on the business day preceding
16
the date of payment. For purposes of the foregoing, an unforeseeable
financial emergency is an unexpected need for cash arising from an
illness, casualty loss, sudden financial reversal, or other such
unforeseeable occurrence. Cash needs arising from foreseeable events
such as generally the purchase of a house or educational expenses for
children shall not be considered to be the result of an unforeseeable
financial emergency. Said shares of Common Stock and any cash amount
shall be transferred to the Participant as soon as practicable after
the Committee determines that the Participant has suffered an
unforeseeable financial emergency. The Participant's Performance Share
Account thereafter shall be reduced to reflect the foregoing payment.
(5) Early Withdrawal: Notwithstanding an election made pursuant
to the Plan or the Participant's continued employment with or provision
of services to the Company, the Participant, upon written petition to
the Committee at any time, shall be entitled to receive payment in
respect of all or any portion of the amount then credited to his or her
Performance Share Account, subject to a forfeiture penalty of six
percent (6%) of the amount of the payment requested by the Participant.
Such payment shall be made, at the election of the Participant, either
(i) in the form of the number of shares of Common Stock equal to the
number of whole Performance Shares requested by the Participant in the
written petition and then credited to the Participant's Performance
Share Account; (ii) in cash equal to the value on the business day
preceding the date of payment of the number of whole shares of Common
Stock available for payment under clause (i) of this sentence; or (iii)
in any combination of the methods of payment provided for in clauses
(i) and (ii) of this sentence. In the event of an early withdrawal in
respect of the Participant's entire Performance Share Account, any
fractional Performance Share shall be paid in cash determined on the
basis of the value of a corresponding fractional share of Common Stock
on the business day preceding the date of payment. Said shares of
Common Stock and any cash amount shall be transferred to the
Participant within sixty (60) days after the Company has received the
Participant's written petition. The Participant's Performance Share
Account thereafter shall be reduced to reflect the foregoing payment
and the six percent (6%) forfeiture penalty.
(d) Adjustment of Performance Goals. The Committee may, during the
Award Period, make such adjustments to Performance Goals as it may deem
appropriate, to compensate for, or reflect, (i) extraordinary or non-
recurring events experienced during an Award Period by the Company or by any
other corporation whose performance is relevant to the determination of
whether Performance Goals have been attained; (ii) any significant changes
that may have occurred during such Award Period
17
in applicable accounting rules or principles or changes in the Company's
method of accounting or in that of any other corporation whose performance is
relevant to the determination of whether an Award has been earned; (iii) any
significant changes that may have occurred during such Award Period in tax
laws or other laws or regulations that alter or affect the computation of the
measures of Performance Goals used for the calculation of Awards; or (iv) any
other factors which the Committee deems appropriate. However, the Committee
may exercise only negative discretion with respect to awards that are
intended to qualify as performance-based compensation under Section
162(m)(4)(C) of the Code. With respect to such awards, unless the Committee
determines otherwise at any time prior to payment of a Participant's award
under the Plan for any Award Period, and subject to the Committee's right to
exercise negative discretion, extraordinary, unusual or non-recurring items,
discontinued operations, effects of accounting changes, effects of currency
fluctuations, effects of financing activities, expenses for restructuring or
productivity initiatives, non-operating items, effects of acquisitions and
acquisition expenses, and effects of divestitures and divestiture expenses,
any of which affect any Performance Goal applicable to such awards (including
but not limited to earnings per share) shall be automatically excluded or
included in determining the extent to which the Performance Goal has been
achieved, whichever will produce the higher award.
(e) Acceleration. Any provision of the Plan to the contrary
notwithstanding, the Committee may (but need not) provide that Performance
Share or Cash Unit Awards will be earned and paid in whole or in part (as the
Committee may specify) if an "Acceleration Event" (as hereafter defined)
occurs during the Award Period to which such Units relate, whether or not the
Performance Goal applicable to such Units is thereafter attained. For this
purpose, an "Acceleration Event" means (i) the Participant's employment by
the Company and its Subsidiaries terminates by reason of death, Disability or
for other reason(s) specified by the Committee, or (ii) a Change-in-Control
(as defined in Section 11(p) below) occurs; provided that, with respect to
Performance Share Units and Performance Cash Units that are intended to
qualify as performance-based compensation under Section 162(m)(4)(C) of the
Code, Acceleration Events shall be limited to such events (including without
limitation death, Disability and Change-in-Control) as will not prevent such
Performance Share Units and Performance Cash Units from qualifying as
performance-based compensation under Section 162(m)(4)(C) of the Code if the
Performance Goal applicable to such Performance Share and Cash Units is
attained and no Acceleration Event occurs.
9. RESTRICTED STOCK AWARDS
(a) Award of Restricted Stock.
18
(i) The Committee shall have the authority (1) to grant Restricted
Stock Awards, (2) to issue or transfer Restricted Stock to Eligible
Persons, and (3) to establish terms, conditions and restrictions
applicable to such Restricted Stock, including the Restricted Period,
which may differ with respect to each grantee, the time or times at which
Restricted Stock shall be granted or become vested and the number of
shares to be covered by each grant.
(ii) The Holder of a Restricted Stock Award shall execute and deliver
to the Company an Award Agreement with respect to the Restricted Stock
setting forth the restrictions applicable to such Restricted Stock. If the
Committee determines that the Restricted Stock shall be held in escrow
rather than delivered to the Holder pending the release of the applicable
restrictions, the Holder additionally shall execute and deliver to the
Company (1) an escrow agreement satisfactory to the Committee and (2) the
appropriate blank stock powers with respect to the Restricted Stock
covered by such agreements. If a Holder shall fail to execute a Restricted
Stock Award Agreement and, if applicable, an escrow agreement and stock
powers, the Award shall be null and void. Subject to the restrictions set
forth in Section 9(b), the Holder shall generally have the rights and
privileges of a stockholder as to such Restricted Stock, including the
right to vote such Restricted Stock, and to receive dividends paid
thereon.
(iii) Upon the Award of Restricted Stock, the Committee shall cause a
Stock certificate registered in the name of the Holder to be issued and,
if it so determines, deposited together with the Stock powers with an
escrow agent designated by the Committee. If an escrow arrangement is
used, the Committee shall cause the escrow agent to issue to the Holder a
receipt evidencing any Stock certificate held by it registered in the name
of the Holder.
(b) Restrictions.
(i) Restricted Stock awarded to a Participant shall be subject to the
following restrictions until the expiration of the Restricted Period, and
to such other terms and conditions as may be set forth in the applicable
Award Agreement: (1) if an escrow arrangement is used, the Holder shall
not be entitled to delivery of the Stock certificate; (2) the shares shall
be subject to the restrictions on transferability set forth in the Award
Agreement; and (3) the shares shall be subject to forfeiture to the extent
provided in Section 9(d) and the Award Agreement and, to the extent such
shares are forfeited, the Stock certificates shall be returned to the
Company, and all rights of the Holder to such shares and as a stockholder
shall terminate without further obligation on the part of the Company.
(ii) The Committee shall have the authority to remove any or all of
the restrictions on the Restricted Stock whenever it may determine that,
19
by reason of changes in applicable laws or other changes in circumstances
arising after the date of the Restricted Stock Award, such action is
appropriate.
(c) Restricted Period. The Restricted Period of Restricted Stock shall
commence on the Date of Grant and shall expire from time to time as to that
part of the Restricted Stock Award indicated in a schedule established by the
Committee and set forth in the written Award Agreement. The Restricted Period
shall be at least two years; provided, however, that it may be as short as
one year if vesting is based on achievement of Performance Goals.
(d) Forfeiture Provisions. Except to the extent determined by the
Committee and reflected in the underlying Award Agreement, in the event a
Participant terminates employment with or ceases to provide services to the
Company during a Restricted Period for any reason, that portion of the Award
with respect to which restrictions have not expired shall be completely
forfeited to the Company. Except as otherwise determined by the Committee, in
the event of such a forfeiture, the amount of an Award that would otherwise
be payable shall be reduced, but not below zero, by the amount of any
dividends previously paid to the Holder with respect to the forfeited
Restricted Stock.
(e) Delivery of Restricted Stock. Upon the expiration of the
Restricted Period with respect to any shares of Stock covered by a Restricted
Stock Award, the restrictions set forth in Section 9(b) and the Award
Agreement shall be of no further force or effect with respect to shares of
Restricted Stock which have not then been forfeited. If an escrow arrangement
is used, upon such expiration, the Company shall deliver to the Holder, or
his or her beneficiary, without charge, the Stock certificate evidencing the
shares of Restricted Stock which have not then been forfeited and with
respect to which the Restricted Period has expired (to the nearest full
share) and any cash dividends or Stock dividends credited to the Holder's
account with respect to such Restricted Stock and the interest thereon, if
any.
(f) Stock Restrictions. Each certificate representing Restricted Stock
awarded under the Plan shall bear the following legend until the end of the
Restricted Period with respect to such Stock:
"Transfer of this certificate and the shares represented hereby is
restricted pursuant to the terms of a Restricted Stock Agreement, dated as
of , between Barnes Group Inc. and . A copy of
such Agreement is on file at the offices of the Company."
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities.
(g) Deferral. Upon election by a Participant, a whole share of
Restricted Stock that would otherwise have been granted to the
20
Participant shall instead be made in the form of Performance Shares, and such
Performance Shares shall be credited to the Participant's Performance Share
Account, subject to the provisions of Section 8. Such credit of Performance
Shares shall be made as of the same date as Restricted Stock would have been
awarded to the Participant had no prior election been made. Any such election
shall be made by December 24 prior to the year in which the Award for which
the election is made will be made, and shall otherwise comply with the
requirements for elections in Section 8(c). If an event occurs which would
have caused forfeiture of the Restricted Stock for which an election pursuant
to this paragraph is made, then the equivalent Performance Shares, along with
any related Dividend Equivalents, shall be forfeited.
9A. RESTRICTED STOCK UNIT AWARDS
(a) Award of Restricted Stock Units.
(i) The Committee shall have the authority (1) to grant Restricted
Stock Unit Awards, (2) to issue or transfer Stock to Eligible Persons in
payment of Restricted Stock Unit Awards, and (3) to establish terms,
conditions and restrictions applicable to such Restricted Stock Units,
including the Restricted Period, which may differ with respect to each
grantee, the time or times at which Restricted Stock Units shall be
granted or become vested and the number of shares to be covered by each
grant.
(ii) The Holder of a Restricted Stock Unit Award shall execute and
deliver to the Company an Award Agreement with respect to the Restricted
Stock Units setting forth the restrictions, terms and conditions
applicable to such Restricted Stock Units. If a Holder shall fail to
execute a Restricted Stock Unit Award Agreement, the Award shall be null
and void.
(b) Restrictions.
(i) Restricted Stock Units awarded to a Participant shall be subject
to the following restrictions until the expiration of the Restricted
Period, and to such other terms and conditions as may be set forth in the
applicable Award Agreement: the Restricted Stock Units shall be subject to
forfeiture to the extent provided in Section 9A(d) and the Award Agreement
and, to the extent such Restricted Stock Units are forfeited, all rights
of the Holder in and to such Restricted Stock Units shall terminate
without further obligation on the part of the Company.
(ii) The Committee shall have the authority to remove any or all of
the restrictions on the Restricted Stock Units whenever it may determine
that, by reason of changes in applicable laws or other changes in
circumstances arising after the date of the Restricted Stock Unit Award,
such action is appropriate.
21
(c) Restricted Period. The Restricted Period of Restricted Stock Units
shall commence on the Date of Grant and shall expire from time to time as to
that part of the Restricted Stock Unit Award indicated in a schedule
established by the Committee and set forth in the written Award Agreement.
The Restricted Period shall be at least two years; provided, however, that it
may be as short as one year if vesting is based on achievement of Performance
Goals.
(d) Forfeiture Provisions. Except to the extent determined by the
Committee and reflected in the underlying Award Agreement, in the event a
Participant terminates employment with or ceases to provide services to the
Company during a Restricted Period for any reason, that portion of the Award
with respect to which restrictions have not expired shall be completely
forfeited to the Company. Except as otherwise determined by the Committee, in
the event of such a forfeiture, the amount of an Award that would otherwise
be payable shall be reduced, but not below zero, by the amount of any
dividend equivalents previously paid to the Holder with respect to the
forfeited Restricted Stock Units.
(e) Delivery of Stock. Upon the expiration of the Restricted Period with
respect to any portion of a Restricted Stock Unit Award, the restrictions set
forth in Section 9A(b) and the Award Agreement shall be of no further force
or effect with respect to that portion of the Restricted Stock Units, if such
portion of the Award has not theretofore been forfeited. Upon such
expiration, or at such later time or times as the Committee may provide in
the Award Agreement, the Company shall deliver to the Holder, or his or her
beneficiary, without charge, a Stock certificate evidencing the shares of
Stock that the Holder is entitled to receive in payment of that portion of
the Restricted Stock Units (to the nearest full share) and any cash dividend
equivalents or Stock dividend equivalents to which the Holder may be entitled
in accordance with Section 9A(g). In lieu of delivering a Stock certificate,
the Company may, either at the election of the Company or the Holder, as the
Committee may provide, credit the shares which would otherwise have been
certificated to a book entry account in the name of the Holder.
(f) Restricted Stock Unit Restrictions. Each Restricted Stock Unit Award
shall be subject to the restrictions set forth in Section 11(k) of the Plan.
(g) Dividend Equivalents.
(i) The Committee may (but need not) provide in the Award Agreement
relating to an Award of Restricted Stock Units that, on each date on which
a dividend is paid to the holders of Common Stock the record date of which
falls during the period commencing on the Date of Grant of such Restricted
Stock Units and ending on the first date on which all of the Restricted
Stock Units have either been forfeited or
22
paid, the Company will pay the Holder an amount of money determined by
multiplying the number of the Restricted Stock Units that were neither
forfeited nor paid on or before such dividend record date times the
dividend per share paid on such dividend payment date, unless the dividend
is paid in property other than cash, in which case times the fair market
value on the dividend payment date of such property. Unless the Committee
provides otherwise in the Award Agreement, any money paid pursuant to this
Section 9A(g)(i) shall be non-forfeitable when paid.
(ii) In lieu of paying the Holder money on each dividend payment date
referred to in Section 9A(g)(i) above, the Committee may (but need not)
provide in the Award Agreement that on each such dividend payment date the
Company will credit the Holder on its books with a number of additional
stock units (representing the right to receive an equivalent number of
shares of Common Stock at the time or times and on the terms and subject
to the conditions set forth below and in the applicable Award Agreement)
determined in accordance with the following formula:
(A x B) /C
in which "A" equals the number of Restricted Stock Units that were neither
forfeited nor paid on or before such dividend record date plus the number
of additional stock units credited pursuant to this Section 9A(g)(ii)
before such dividend payment date that were neither forfeited nor paid on
or before such dividend record date, "B" equals the dividend per share
paid on such dividend payment date or, if the dividend is paid in property
other than cash, the fair market value on the dividend payment date of
such property, and "C" equals the Fair Market Value of a share of Common
Stock on such dividend payment date. Any additional stock units credited
pursuant to this Section 9A(g)(ii): (I) may be non-forfeitable when
credited or may be subject to forfeiture until, and become non-forfeitable
at, such time or times, on such terms and conditions and in such
proportions, as the Committee may provide in the Award Agreement, which
may (but need not) be the same time or times, terms and conditions and
proportions as apply to the Restricted Stock Units in respect of which
such additional stock units are credited, (II) may be paid at such time or
times as the Committee may provide in the Award Agreement, which may but
need not be the same time or times when the Restricted Stock Units in
respect of which such additional stock units are credited will be paid,
(III) shall be paid in shares of Stock, which may be certificated or
credited to a book entry account in the name of the Holder, as the
Committee may specify, and (IV) shall be deemed to be Restricted Stock
Units for purposes of applying the limitations set forth in and the other
provisions of Section 5 of the Plan.
23
10. NON-COMPETITION PROVISIONS
In addition to such other conditions as may be established by the Committee,
in consideration of the granting of Awards under the terms of the Plan, the
Committee, in its discretion, may include non-competition provisions in the
applicable Award Agreement.
11. GENERAL
(a) Additional Provisions of an Award. Awards under the Plan also may
be subject to such other provisions (whether or not applicable to the benefit
awarded to any other Participant) as the Committee determines appropriate
including, without limitation, provisions to assist the Participant in
financing the purchase of Stock upon the exercise of Options, provisions for
the forfeiture of or restrictions on resale or other disposition of shares of
Stock acquired under any Award, provisions giving the Company the right to
repurchase shares of Stock acquired under any Award in the event the
Participant elects to dispose of such shares, and provisions to comply with
Federal and state securities laws and Federal and state tax withholding
requirements. Any such provisions shall be reflected in the applicable Award
Agreement.
(b) Privileges of Stock Ownership. Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of stock
ownership in respect of shares of Stock which are subject to Awards hereunder
until such shares have been issued to that person.
(c) Government and Other Regulations. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by
governmental agencies as may be required. Notwithstanding any terms or
conditions of any Award to the contrary, the Company shall be under no
obligation to offer to sell or to sell and shall be prohibited from offering
to sell or selling any shares of Stock pursuant to an Award unless such
shares have been properly registered for sale pursuant to the Securities Act
with the SEC or unless the Company has received an opinion of counsel,
satisfactory to the Company, that such shares may be offered or sold without
such registration pursuant to an available exemption therefrom and the terms
and conditions of such exemption have been fully complied with. The Company
shall be under no obligation to register for sale under the Securities Act
any of the shares of Stock to be offered or sold under the Plan. If the
shares of Stock offered for sale or sold under the Plan are offered or sold
pursuant to an exemption from registration under the Securities Act, the
Company may restrict the transfer of such shares and may legend the Stock
certificates representing such shares in such manner as it deems advisable to
ensure the availability of any such exemption.
24
(d) Tax Withholding. Notwithstanding any other provision of the Plan,
the Company or a Subsidiary, as appropriate, shall have the right to deduct
from all Awards cash and/or Stock, valued at Fair Market Value on the date of
payment, in an amount necessary to satisfy all Federal, state or local taxes
as required by law to be withheld with respect to such Awards and, in the
case of Awards paid in Stock, the Holder may be required to pay to the
Company prior to delivery of such Stock, the amount of any such taxes which
the Company is required to withhold, if any, with respect to such Stock. The
Company shall accept shares of Stock of equivalent Fair Market Value in
payment of such withholding tax obligations if the Holder of the Award elects
to make payment in such manner.
(e) Claim to Awards and Employment or Service Rights. No employee or
other person shall have any claim or right to be granted an Award under the
Plan or, having been selected for the grant of an Award, to be selected for a
grant of any other Award. Neither the Plan nor any action taken hereunder
shall be construed as giving any Participant any right to be retained in the
employ or service of the Company or any Subsidiary.
(f) Designation and Change of Beneficiary. Each Participant may file
with the Committee a written designation of one or more persons as the
beneficiary who shall be entitled to receive the rights or amounts payable
with respect to an Award due under the Plan upon his or her death. A
Participant may, from time to time, revoke or change his or her beneficiary
designation without the consent of any prior beneficiary by filing a new
designation with the Committee. The last such designation received by the
Committee shall be controlling; provided, however, that no designation, or
change or revocation thereof, shall be effective unless received by the
Committee prior to the Participant's death, and in no event shall it be
effective as of a date prior to such receipt. If no beneficiary designation
is filed by the Participant, the beneficiary shall be deemed to be his or her
spouse or, if the Participant is unmarried at the time of death, his or her
estate.
(g) Payments to Persons Other Than Participants. If the Committee
shall find that any person to whom any amount is payable under the Plan is
unable to care for his or her affairs because of illness or accident, or is a
minor, or has died, then any payment due to such person or his or her estate
(unless a prior claim therefor has been made by a duly appointed legal
representative) may, if the Committee so directs the Company, be paid to his
or her spouse, child, relative, an institution maintaining or having custody
of such person, or any other person deemed by the Committee to be a proper
recipient on behalf of such person otherwise entitled to payment. Any such
payment shall be a complete discharge of the liability of the Committee and
the Company therefor.
25
(h) No Liability of Committee Members. No member of the Committee
shall be personally liable by reason of any contract or other instrument
executed by such member or on such member's behalf in such member's capacity
as a member of the Committee nor for any mistake of judgment made in good
faith, and the Company shall indemnify and hold harmless each member of the
Committee and each other employee, officer or director of the Company to whom
any duty or power relating to the administration or interpretation of the
Plan may be allocated or delegated, against any cost or expense (including
counsel fees) or liability (including any sum paid in settlement of a claim)
arising out of any act or omission to act in connection with the Plan unless
arising out of such person's own fraud or willful bad faith; provided,
however, that approval of the Board shall be required for the payment of any
amount in settlement of a claim against any such person. The foregoing right
of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company's
Certificate of Incorporation or By-Laws, as a matter of law, or otherwise, or
any power that the Company may have to indemnify them or hold them harmless.
(i) Governing Law. The Plan shall be governed by and construed in
accordance with the internal laws of the State of Delaware without regard to
the principles of conflicts of law thereof.
(j) Funding. No provision of the Plan shall require the Company, for
the purpose of satisfying any obligations under the Plan, to purchase assets
or place any assets in a trust or other entity to which contributions are
made or otherwise to segregate any assets, nor shall the Company maintain
separate bank accounts, books, records or other evidence of the existence of
a segregated or separately maintained or administered fund for such purposes.
Holders shall have no rights under the Plan other than as unsecured general
creditors of the Company, except that insofar as they may have become
entitled to payment of additional compensation by performance of services,
they shall have the same rights as other employees under general law.
(k) Nontransferability. A person's rights and interest under the Plan,
including amounts payable, may not be sold, assigned, donated, or transferred
or otherwise disposed of, mortgaged, pledged or encumbered except, in the
event of a Holder's death, to a designated beneficiary to the extent
permitted by the Plan, or in the absence of such designation, by will or the
laws of descent and distribution; provided, however, the Committee may, in
its sole discretion, allow in an Award Agreement for transfer of Awards other
than Incentive Stock Options to other persons or entities.
(l) Reliance on Reports. Each member of the Committee and each member
of the Board shall be fully justified in relying, acting or failing to act,
and shall not be liable for having so relied, acted or failed to act in good
faith, upon any report made by the independent public accountants of the
Company and its Subsidiaries and upon any other information
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furnished in connection with the Plan by any person or persons other than
such member.
(m) Relationship to Other Benefits. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company except
as otherwise specifically provided in such other plan.
(n) Expenses. The expenses of administering the Plan shall be borne by
the Company.
(o) Titles and Headings. The titles and headings of the sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
(p) Change-in-Control. Notwithstanding anything in the Plan to the
contrary, in the event of a "Change-in-Control", as defined below, all Awards
made pursuant to the Plan shall become fully vested immediately, and all
Options shall be immediately exercisable (provided that if the "Change-in-
Control" occurs with respect to a Subsidiary, only Awards and Options granted
to employees of such Subsidiary shall be affected), if the Committee so
provides in an Award Agreement, or if so provided in an employment, severance
or other agreement of an employee granted an Award. 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 such 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 (1) 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 stockholders 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
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(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 (1) 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 a Subsidiary, 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 (2) 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 stockholders 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 stockholders of the Company in
substantially the same proportions as their ownership of the Company
immediately prior to such sale.
12. CHANGES IN CAPITAL STRUCTURE
Awards granted under the Plan and any Award Agreements shall be subject to
equitable adjustment or substitution, as determined by the Committee in its
sole discretion, as to the number, price or kind of a share of Stock or other
consideration subject to such Awards (i) in the event of changes in the
outstanding Common Stock or in the capital structure of the Company by reason
of stock dividends, stock splits, reverse stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges, or other
relevant changes in capitalization occurring after the Date of Grant of any
such Award, (ii) in the event of any change in applicable laws or any change
in circumstances which results in or would result in any substantial dilution
or enlargement of the rights granted to, or available for, Participants in
the Plan, or (iii) upon the occurrence of any other event which otherwise
warrants equitable adjustment because it interferes with the intended
operation of the Plan. In addition, in the event of any such corporate or
other event, the aggregate number of shares of Stock available under the Plan
and the maximum
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number of shares of Stock with respect to which any one person may be granted
Awards shall be appropriately adjusted by the Committee, whose determination
shall be conclusive.
Notwithstanding the above, in the event of any of the following:
(1) The Company is merged or consolidated with another corporation or
entity and, in connection therewith, consideration is received by
stockholders of the Company in a form other than stock or other equity
interests of the surviving entity;
(2) All or substantially all of the assets of the Company are acquired by
another person;
(3) The reorganization or liquidation of the Company; or
(4) The Company shall enter into a written agreement to undergo an event
described in clauses (1), (2) or (3) above,
then the Committee may, in its sole discretion and upon at least 10 days
advance notice to the affected persons, cancel any outstanding Awards and pay
to the Holders thereof, in cash, the value of such Awards based upon the
price per share of Stock received or to be received by other stockholders of
the Company in the event. The terms of this Section 12 may be varied by the
Committee in any particular Award Agreement.
13. NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission of the Plan
to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific
cases.
14. AMENDMENT AND TERMINATION
The Board may at any time terminate the Plan. The Committee may, at any time,
or from time to time, amend or suspend and, if suspended, reinstate, the Plan
in whole or in part; provided, that any such amendment of the Plan shall be
contingent on obtaining the approval of the stockholders of the Company if
such amendment would materially increase benefits available to Participants
or the Committee determines that such approval is necessary to comply with
any requirement of law, including the requirements for qualification of
Incentive Stock Options or the rules of any stock exchange, stock market or
automated quotation system on which the Company's equity securities are
traded or quoted.
Effective: See 4/16/03 BOD resolutions.
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