EXHIBIT 10.6
1991 BARNES GROUP STOCK INCENTIVE PLAN
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As Amended and Restated as of February 21, 1997
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1. Purpose
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The purpose of the Plan is to authorize the grant to Key
Employees of the Company or any Subsidiary of (i)
nonqualified options to purchase shares of Common Stock, (ii)
Stock Appreciation Rights, (iii) Incentive Stock Rights, and
(iv) Performance Unit Awards, and thus benefit the Company by
giving such employees a greater personal interest in the
success of the enterprise and an added incentive to continue
and advance their employment. An additional purpose of the
Plan is to provide "qualified performance-based compensation"
(within the meaning of Section 162(m) of the Internal Revenue
Code of 1986, as amended, and the regulations thereunder
("Section 162(m)") to Key Employees.
2. Definitions
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The following terms, when used in the Plan, shall mean:
1981 Plan: The Barnes Group Inc. Stock Incentive Plan
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adopted by the stockholders of the Company in 1981.
Board: The Board of Directors of the Company.
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CEO: The Chief Executive Officer of the Company.
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Committee: Such committee as shall be appointed by the
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Board pursuant to the provisions of Section 11.
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Common Stock: The Common Stock of the Company, par
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value $1.00 per share, or such other class
of shares or other securities as may be applicable
pursuant to the provisions of Section 9.
Company: Barnes Group Inc.
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Disability: Inability to perform the services normally
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rendered by the employee due to any physical or mental
impairment that can be expected either to be of indefinite
duration or to result in death, as determined by the
Committee on the basis of appropriate
medical evidence.
Fair Market Value: As applied to the Common Stock on
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any day, the closing market price of such stock as reported
in the New York Stock Exchange Composite Transactions Index
for such day, or if the Common Stock was not traded on such
day, for the last preceding day on which the Common Stock
was traded.
Incentive: An incentive granted under the Plan in one
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of the forms provided for in Section 3.
Key Employee: An employee of the Company or of a
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Subsidiary, including an officer or director who is an
employee, who in the Committee's or CEO's judgment can
contribute significantly to the growth and successful
operations of the Company or a Subsidiary.
Option: An option to purchase shares of Common Stock.
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Plan: The 1991 Barnes Group Stock Incentive Plan herein
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set forth, as amended from time to time.
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Subsidiary: A corporation in which the Company owns,
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directly or indirectly, at least 50% of the voting stock.
3. Grants of Incentives
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(a) Subject to the provisions of the Plan, the
Committee may at any time, or from time to time, grant
Incentives under the Plan to, and only to, Key Employees. In
addition, subject to the provisions of the Plan, the CEO may
also grant Options to Key Employees, but only in connection
with the hiring or promotion of such Key Employees and only
if such Key Employees are not (or, by virtue of such hiring
or promotion, would not become) subject to the reporting
requirements under Rule 16a promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Any
Options granted by the CEO shall be (i) evidenced by a
written instrument in the form most recently approved by the
Committee for such Option and (ii) subject to, if applicable,
the performance targets and incentive periods most recently
set forth by the Committee for such Option. For purposes of
the Plan, grants by the CEO complying with this Section 3(a)
shall be deemed to have been effected by the Committee.
(b) Incentives may be in the following forms:
(i) an Option, in accordance with Section 5;
(ii) a Stock Appreciation Right, in accordance with
Section 6;
(iii) an Incentive Stock Right, in accordance with
Section 7;
(iv) a Performance Unit Award, in accordance with
Section 8; or
(v) a combination of two or more of the foregoing.
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4. Stock Subject to the Plan
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(a) Subject to adjustment as provided in Section 9, the
aggregate number of shares of Common Stock which
may be issued subject to Incentives granted under
the Plan shall not exceed the sum of (i) 1,000,000
shares and (ii) the number of shares of stock
covered by outstanding options (or installments
thereof) granted under the 1981 Plan which, after
its expiration, shall terminate or expire in whole
or in part without being exercised. Charges
against such aggregate number are governed by the
provisions of paragraph (c) of this Section 4,
paragraph (k) of Section 5, paragraph (e) of
Section 6, paragraph (c) of Section 7, and
paragraph (e) of Section 8. No Key Employee may
receive grants of Options, Stock Appreciation
Rights or Incentive Stock Rights in any year
relating to shares of Common Stock which in the
aggregate exceed 50,000 shares, which number shall
be adjusted pursuant to the terms hereof.
(b) Such shares may be either authorized but unissued
shares or shares issued and thereafter acquired by
the Company.
(c) If any shares subject to an Incentive shall cease
to be subject thereto because of the termination
without exercise or payment, in whole or in part,
of such Incentive, the shares as to which the
Incentive was not exercised or paid shall no longer
be charged against the limits in paragraph (a) of
this Section 4 and may again be made subject to
Incentives.
(d) The Committee may permit the voluntary surrender of
all or a portion of any Incentive granted under
this Plan conditioned upon the granting to the
employee of a new Incentive for the same or a
different number of shares or amount of other
payment as the Incentive surrendered, or it may
require such voluntary surrender as a condition to
a grant of a new
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Incentive to such employee. Such new Incentive
shall be exercisable at the price, during the
period, and in accordance with any other terms or
conditions specified by the Committee at the time
the new Incentive is granted, all determined in
accordance with the provisions of this Plan without
regard to the price, period of exercise, or any
other terms or conditions of the Incentive
surrendered.
5. Options
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Incentives, in the form of options to purchase shares of
Common Stock, shall be subject to the following provisions:
(a) The Option price per share shall be determined as
of the effective date of the grant and shall not be
less than 85% of the Fair Market Value of the
Common Stock at the time of the grant of the
Option. In no event shall the Option price be less
than the par value of the stock which is the
subject of the Option.
(b) Each Option shall expire at such time as the
Committee may determine at the time the Option is
granted; provided, however, that no Option may,
under any circumstances, expire later than ten
years from the date such Option shall have been
granted.
(c) Any Option granted under the Plan may be exercised
solely by the person to whom granted, by his/her
guardian or legal representative, or, in the case
of death, by an estate.
(d) No Option may be exercised less than 12 months from
the date it is granted. After completion of any
additional required period of employment specified
in the Option grant, the Option may be exercised,
in whole or in part, at any time or from time to
time during the balance of
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the term of the Option, except as limited by
provisions contained in the Option (including
provisions regarding exercise in installments).
(e) If the optionee terminates employment prior to
attaining age 55, the Option shall terminate 90
days after termination of employment, except in the
case of death or disability.
(f) If employment terminates as a result of death or
disability, or if the Optionee terminates
employment after attaining age 55, the Option shall
terminate five years after termination of
employment; provided, however, if the Optionee's
employment is terminated upon the request of the
Company after the Optionee attains age 55, the
Option may be terminated by the Committee effective
90 days after termination of employment.
(g) Notwithstanding anything else in this Section 5 to
the contrary, (1) the Committee may provide that an
Option will terminate prior to time periods
specified in paragraphs 5(e) and 5(f) on conditions
specified by the Committee and incorporated in an
Option Agreement between the Company and the person
receiving the option; and (2) in no event may any
Option be exercised after the expiration date
thereof.
(h) Shares purchased upon exercise of an Option shall
be paid for in full within twenty days of the date
of exercise in cash or, with the consent of the
Committee, in whole or in part in shares of Common
Stock based on their Fair Market Value on the date
of exercise.
(i) If so authorized by the Committee, the Company may,
with the consent of the optionee, and at any time
or from time to time, cancel all or a portion of
any Option granted under the Plan then subject to
exercise and discharge its obligation in respect of
the Option either by payment to the
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optionee of an amount of cash equal to the excess,
if any, of the Fair Market Value, at such time, of
the shares subject to the portion of the Option so
cancelled over the aggregate option price of such
shares, or by issuance or transfer to the optionee
of shares of Common Stock with a Fair Market Value,
at such time, equal to any such excess, or by a
combination of cash and shares.
(j) The forms of Option authorized by the Plan may
contain such other provisions as the Committee
shall deem advisable.
(k) Upon the exercise of an Option there shall be
charged against the limits in paragraph (a) of
Section 4 the number of shares issued to the
optionee. Upon the cancellation of any Option
pursuant to paragraph (i) of Section 5, there shall
be charged against the limitations in paragraph (a)
of Section 4 a number of shares equal to (A) the
number of any shares issued to the optionee plus
(B) the number of shares purchasable with the
amount of any cash paid to the optionee on the
basis of the Fair Market Value as of the date of
payment; and the number of shares subject to the
portion of the Option so cancelled, less the number
of shares so charged against such limitations,
shall thereafter be available for other grants of
Incentives.
(l) An Option will not be treated as an Incentive Stock
Option within the meaning of section 422 of the
Internal Revenue Code of 1986, as amended.
6. Stock Appreciation Rights
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(a) A Stock Appreciation Right ("SAR") may be granted
in connection with any Option granted under the
Plan, either at the time of the grant of such
Option or at any time thereafter during the term of
the Option, or independently of the grant of an
Option.
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(b) An SAR shall entitle the holder thereof, upon
exercise of the SAR, to receive a number of shares
of Common Stock or cash or a combination of cash
and shares (as the Committee in its discretion may
elect) determined pursuant to paragraph (d) of this
Section 6.
(c) An SAR shall be subject to the following terms and
conditions and to such other terms and conditions
not inconsistent with the Plan as shall from time
to time be approved by the Committee:
(i) If granted in connection with an Option, an
SAR shall be exercisable at such time or times
and by such person or persons and to the
extent, but only to the extent, that the
Option to which it relates shall be
exercisable; provided, however, that such SAR
shall be exercisable only during the ten-day
periods (the "Exercise Periods") beginning on
the third business day following the date of
release of a summary statement of the
Company's quarterly or annual sales and
earnings and ending on the twelfth business
day following such date of release.
(ii) If granted independently of an Option, an SAR
shall be subject to the following provisions:
(A) If a person terminates employment prior
to attaining age 55, the SAR shall
terminate 90 days after the termination
of employment, except in the case of
death or disability.
(B) If employment terminates as a result of
death or disability or if a person
terminates employment after attaining age
55,
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the SAR will terminate one year after the
termination of employment.
(d) Upon exercise of an SAR, the holder thereof shall
be entitled to receive a number of shares equal in
Fair Market Value to (1) the amount by which the
Fair Market Value of a share of Common Stock on the
date of such exercise shall exceed the Fair Market
Value of a share of Common Stock on the date of
grant of the related Option, or, in the case of any
SAR granted independently of an option, on the date
of grant of such SAR, multiplied by (2) the number
of shares in respect of which the SAR shall have
been exercised. Settlement for any fraction of a
share due shall be made in cash. The Committee may
settle all or any part of the Company's obligation
arising out of an exercise of any SAR by the
payment of cash equal to the aggregate value of the
shares of Common Stock that it would otherwise be
obligated to deliver under the provisions of this
paragraph (d).
(e) Upon exercise of any SAR, (i) there shall be
charged against the limitations in paragraph (a) of
Section 4 a number of shares equal to (A) the
number of shares issued to the grantee under
paragraph (d) of this Section 6 plus (B) the number
of shares purchasable with the amount of any cash
paid to the grantee on the basis of the Fair Market
Value as of the date of payment and (ii) the
portion of the Incentive in respect of which such
SAR shall have been exercised shall be cancelled
and the number of shares subject to such portion,
less the number of shares so charged against such
limitations, shall thereafter be available for
other grants of Incentives.
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7. Incentive Stock Rights
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(a) An Incentive Stock Right will consist of incentive
stock units, each of which will be equivalent to
one share of Common Stock. An Incentive Stock
Right will be evidenced by an agreement in form
approved by the Committee; will be nontransferable;
will entitle the holder to receive shares of Common
Stock, without payment to the Company, after the
lapse of the incentive period or periods
established by the Committee and subject to the
satisfaction of any performance goals established
by the Committee from the performance criteria set
forth in Section 14 hereof with respect to such
Incentive Stock Rights; and will be subject to the
limitations in paragraph (a) of Section 4. The
terms of the agreement evidencing an Incentive
Stock Right shall provide that holders of Incentive
Stock Rights will be entitled, from the date of the
award, either (1) to receive from the Company cash
payments equal to the amount of dividends declared
on the number of shares of Common Stock equal to
the number of incentive stock units held by them,
such payments to be made on or about the Company's
dividend payment dates or (2) to be credited with
dividend equivalents based upon dividends paid on
outstanding shares of Common Stock. Such dividend
equivalents, once credited, shall be converted into
a number of additional incentive stock units, as of
each dividend payment date, in accordance with the
following formula:
(A x B) /C
in which "A" equals the number of incentive stock
units credited to the holder on the dividend
payment date, "B" equals the dividend per share and
"C" equals the Fair Market Value per share of
Common Stock on the dividend payment date. If a
dividend is paid in property other than cash,
dividend equivalents shall be credited, as of the
dividend payment date, in accordance with the
formula set forth above, except that "B" shall
equal
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the fair market value per share of the property
which the holder would have received in respect of
the number of shares of Common Stock equal to the
number of incentive stock units credited to the
holder as of the dividend payment date, had such
shares been owned as of the record date for such
dividend.
(b) If an employee terminates employment prior to
attaining age 55, all Incentive Stock Rights will
terminate on the date employment terminates, except
in the case of death or disability. Except as
otherwise provided in the agreement evidencing the
Incentive Stock Right, if employment terminates as
a result of death or disability, or after
attainment of age 55, the Committee may elect, at
any time during or at the end of the Incentive
period, to award a portion of the shares of Common
Stock that would have been awarded, but for the
termination of employment, equal to the number of
months in the incentive period prior to the
termination date divided by the number of months in
the incentive period.
(c) After the issuance of shares in respect of
Incentive Stock Rights, there will be charged
against the limitations in paragraph (a) of Section
4 a number of shares equal to the number of shares
so issued.
(d) To the extent not inconsistent with Section 162(m),
the Committee may make such adjustments to any
performance goals or to the Company's financial
results as it deems appropriate for changes in
accounting practices or principles, for material
acquisitions or dispositions of stock or property,
for recapitalizations or reorganizations or for any
other events with respect to which the Committee
determines such an adjustment to be appropriate in
order to avoid distortion in the operation of the
Plan.
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8. Performance Unit Awards
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(a) A Performance Unit Award will consist of
performance units granted to Key Employees selected
by the Committee which can be paid in cash or
shares of Common Stock. Performance units may be
granted alone or in conjunction with and related to
an Option. When granted in conjunction with an
Option, the number of performance units, unless
otherwise provided by the Committee, will be equal
to the number of shares under the related Option.
To the extent that the Committee elects to pay
performance units granted with a related Option,
there will be a proportionate reduction in the
number of shares available under such Option and
any related SAR. To the extent the related Option
or an SAR granted in connection with such Option is
exercised, the related number of performance units
will be proportionately reduced.
(b) The Committee will establish an initial value for
each performance unit at the time of grant. At
that time, the Committee will also establish
performance targets (from the performance criteria
set forth in Section 14 hereof) to be achieved
during the award period of not less than one year
set by the Committee. The value of the performance
units at the end of the award period will be
determined by the degree to which the performance
targets are achieved. Performance Unit Awards will
be subject to the limitations in paragraph (a) of
Section 4 and will be evidenced by agreements
setting forth the initial value for each
performance unit, the performance targets, the
award period and such other terms and conditions
not inconsistent with the Plan as the Committee may
determine.
(c) Payment, if any, at the end of the award period
will be made in cash, shares of Common Stock, or
both, as determined by the Committee. In no event
shall payment to an individual in respect of any
Performance
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Unit Award exceed $250,000 in value. A Performance
Unit Award granted alone, not in conjunction with
an Option, is automatically payable if the
conditions are met. A Performance Unit Award
granted in conjunction with an Option is payable
only if the conditions are met and then at the
election of the Committee, as an alternative to the
continuance of the related option and any related
SAR. The Committee may make this election to pay
only during the first two months after the end of
the award period. If the election to pay is not
made, the Performance Unit Award terminates and the
related Option and SAR continue in effect.
(d) In the event of termination of employment prior to
the end of the award period by reason of death,
disability, or termination of employment after
attainment of 55 years of age, a pro rata portion
of the value of the performance units at the end of
the award period will be paid to the employee (or
his/her estate in the case of death), unless the
Committee determines that a different portion
should be payable or elects to terminate the award.
Except as otherwise determined by the Committee,
upon termination of employment under any other
circumstances, the Performance Unit Award will
terminate.
(e) Upon payment of a Performance Unit Award, there
shall be charged against the aggregate limitations
in paragraph (a) of Section 4 a number of shares
equal to (i) the number of any shares issued to the
employee in respect of the Performance Unit Award
plus (ii) the number of shares purchasable with the
amount of any cash paid to the employee in respect
of the Performance Unit Award on the basis of the
Fair Market Value of the Common Stock as of the
date of payment.
(f) To the extent not inconsistent with Section 162(m),
the Committee may make such adjustments to the
performance goals or to the Company's
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financial results as it deems appropriate for
changes in accounting practices or principles, for
material acquisitions or disposition of stock or
property, for recapitalizations or reorganizations
or for any other events with respect to which the
Committee determines such an adjustment to be
appropriate in order to avoid distortion in the
operation of the Plan.
9. Adjustment Provisions
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The Options granted under the Plan shall contain such
provisions as the Committee may determine with respect to
adjustments to be made in the number and kind of shares
covered by such Options and in the Option price in the event
of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation,
rights offering, or any other change in the corporate
structure or shares of the Company, and in the event of any
such change, the aggregate number and kind of shares
available under the Plan and the maximum number of Options,
Stock Appreciation Rights, and Incentive Stock Rights which
can be granted to any individual shall be appropriately
adjusted. In the event of any such change, equitable
adjustments shall also be made by the Committee in its
discretion in the terms and conditions of any SAR, Incentive
Stock Right, or Performance Unit Award granted under the
Plan.
10. Term
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The Plan, as amended and restated as of February 16,
1996, shall become effective if and when approved by the
Company's stockholders at the 1996 Annual Meeting. In the
absence of such approval, the Plan, as in effect prior to
such amendment and restatement, shall remain in effect. No
Incentives shall be granted under the Plan after April 2,
2006.
11. Administration
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(a) The Plan shall be administered by the Committee, to
be appointed from time to time by the Board
consisting of not less than three members of the
Board. No member of the Committee shall be
eligible to participate in the
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Plan. Each member of the Committee shall qualify
as an "outside director" within the meaning of
Section 162(m) and as a "disinterested person"
within the meaning of Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(b) Incentives under the Plan shall be granted in
accordance with the Committee's determinations
pursuant to the Plan, by execution and prompt
delivery to the employee of instruments approved by
the Committee. Any such grant shall be effective
on the date of such determination or, if after, on
the date specified in the instrument evidencing the
grant.
(c) The interpretation and construction by the
Committee of any provision of the Plan and of any
Incentive granted thereunder shall, unless
otherwise determined by the Board, be final and
conclusive on all persons having any interest
thereunder.
12. General Provisions
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(a) Absence on leave because of military or
governmental service, or other reason, if such
absence is approved by the Committee, shall not be
considered an interruption or termination of
employment for any purpose of the Plan, or
Incentives granted thereunder, except that no
Incentive may be granted to an employee while
he/she is absent on leave.
(b) Nothing in the Plan or in any instrument executed
pursuant thereto shall confer upon any employee any
right to continue in the employ of the Company or a
Subsidiary.
(c) No shares of Common Stock shall be sold, issued, or
transferred pursuant to, or accepted as payment of
the Option price of, an Incentive unless and
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until there has been compliance, in the opinion of
the Company's General Counsel, with all applicable
legal requirements, including without limitation
those relating to securities laws and stock
exchange listings.
(d) No employee (individually or as a member of a
group), and no beneficiary or other person claiming
under or through him/her, shall have any right,
title, or interest in or to any shares of Common
Stock allocated or reserved for the Plan or subject
to any Incentive except as to such shares of Common
Stock, if any, as shall have been sold, issued, or
transferred to him/her.
(e) The Company or a Subsidiary may make such
provisions as it may deem appropriate for the
withholding of any taxes which the Company or
Subsidiary determines it is required to withhold in
connection with any Incentive.
(f) No Incentive and no rights under the Plan,
contingent or otherwise, (i) shall be assignable or
subject to any encumbrance, pledge, or charge of
any nature, whether by operation of law or
otherwise, (ii) shall be subject to execution,
attachment, or similar process, or (iii) shall be
transferable other than by will or the laws of
descent and distribution, and every Incentive and
all rights under the Plan shall be exercisable
during the employee's lifetime only by him/her or
by a guardian or legal representative.
(g) Nothing in the Plan is intended to be a substitute
for, or shall preclude or limit the establishment
or continuation of, any other plan, practice, or
arrangement for the payment of compensation or
fringe benefits to any employee which the Company
or any Subsidiary now has or may hereafter put into
effect, including without limitation any
retirement, pension,
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savings or thrift, insurance, death benefit, stock
purchase, incentive compensation, or bonus plan.
13. Amendment or Discontinuance of Plan
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(a) The Plan may be amended by the Board at any time,
provided that, without the approval of the
stockholders of the Company, no amendment shall be
made if stockholder approval is required in order
for the Plan to comply with Rule 16b-3 promulgated
under the Exchange Act or Section 162(m).
(b) The Board may discontinue the Plan at any time.
(c) No amendment or discontinuance of the Plan shall
adversely affect, except with the consent of the
holder, any Incentive theretofore granted.
14. Performance Goals
----------------------
The Committee may establish performance goals or targets
in connection with the grant of, and as a condition to
payment in respect of, Incentive Stock Rights and shall
establish performance goals or targets in connection with the
grant of, and as a condition to payment in respect of
Performance Unit Awards. Such goals or targets shall be
expressed in terms of one or more of the following financial
criteria or objectives of the Company: Net Income; Earnings
Per Share; Return on Equity; Return on Invested Capital; or
Performance Profit. For purposes of the Plan:
(a) "Return on Equity" shall mean net income divided by
stockholders' equity;
(b) "Return on Invested Capital" shall mean net income
before interest and taxes times one minus the tax
rate divided by interest-bearing debt plus equity;
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(c) "Performance Profit" shall mean operating income
minus the charge for the capital employed in the
unit's basic business that is used in the Company's
current operating plan.
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