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EXHIBIT 10.10
SEVERANCE
AGREEMENT
(as amended December 31,
2007)
THIS AGREEMENT, dated [
] , is made by and between Barnes Group Inc., a Delaware
corporation (the “Company”), and [
] (the “Executive”), and is amended on
December 31, 2007 to read in its entirety as
follows.
WHEREAS, the Company
considers it essential to the best interests of its shareholders to
foster the continued employment of key management personnel;
and
WHEREAS, the Board recognizes
that, as is the case with many publicly held corporations, the
possibility of a Change in Control exists and that such
possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its
shareholders; and
WHEREAS, the Board has
determined that appropriate steps should be taken to reinforce and
encourage the continued attention and dedication of members of the
Company’s management, including the Executive, to their
assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a Change
in Control;
NOW, THEREFORE, in
consideration of the premises and the mutual covenants herein
contained, the Company and the Executive hereby agree as
follows:
1. Defined Terms . The
definitions of capitalized terms used in this Agreement are
provided in the last Section hereof.
2. Term of Agreement .
The Term of this Agreement shall commence on the date hereof and
shall continue in effect through December 31, [
] ; provided , however , that commencing on
January 1, [
] and each January 1 thereafter, the Term shall automatically
be extended for one additional year unless, not later than
September 30 of the preceding year, the Company or the
Executive shall have given notice not to extend the Term; and
further provided , however , that if a Change
in Control shall have occurred during the Term, the Term shall
expire no
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earlier than twenty-four
(24) months beyond the month in which such Change in Control
occurred.
3. Company’s
Covenants Summarized . In order to induce the Executive to
remain in the employ of the Company and in consideration of the
Executive’s covenants set forth in Section 4 hereof, the
Company agrees, under the conditions described herein, to pay the
Executive the Severance Payments and the other payments and
benefits described herein. Except as provided in Section 9.1
hereof, no Severance Payments shall be payable under this Agreement
unless the Executive has a Separation from Service following a
Change in Control and during the Term. This Agreement shall not be
construed as creating an express or implied contract of employment
and, except as otherwise agreed in writing between the Executive
and the Company, the Executive shall not have any right to be
retained in the employ of the Company.
4. The Executive’s
Covenants . The Executive agrees that, subject to the terms and
conditions of this Agreement, in the event of a Potential Change in
Control during the Term, the Executive will remain in the employ of
the Company until the earliest of (i) a date which is six
(6) months from the date of such Potential Change of Control,
(ii) the date of a Change in Control, (iii) the date of
termination by the Executive of the Executive’s employment
for Good Reason or by reason of death, Disability or Retirement, or
(iv) the termination by the Company of the Executive’s
employment for any reason.
5. Compensation Other Than
Severance Payments .
5.1 Following a Change in
Control and during the Term, during any period that the Executive
fails to perform the Executive’s full-time duties with the
Company as a result of incapacity due to physical or mental
illness, the Company shall pay the Executive’s full salary to
the Executive at the rate in effect at the commencement of any such
period, together with all compensation and benefits payable to the
Executive under the terms of any compensation or benefit plan,
program or arrangement maintained by the Company during such
period, until the Executive’s employment is terminated by the
Company for Disability; provided, however, that the amounts
received under this Section 5.1 shall be reduced by any
amounts received by the Executive with respect to the same period
of time under any long term disability plan of the
Company.
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5.2 If the Executive’s
employment shall be terminated for any reason following a Change in
Control and during the Term, the Company shall pay the
Executive’s full salary to the Executive through the Date of
Termination at the rate in effect immediately prior to the Date of
Termination or, if higher, the rate in effect immediately prior to
the first occurrence of an event or circumstance constituting Good
Reason, together with all compensation and benefits payable to the
Executive through the Date of Termination under the terms of the
Company’s compensation and benefit plans, programs or
arrangements as in effect immediately prior to the Date of
Termination or, if more favorable to the Executive, as in effect
immediately prior to the first occurrence of an event or
circumstance constituting Good Reason.
5.3 If the Executive’s
employment shall be terminated for any reason following a Change in
Control and during the Term, the Company shall pay to the Executive
the Executive’s normal post-termination compensation and
benefits as such payments become due. Such post-termination
compensation and benefits shall be determined under, and paid in
accordance with, the Company’s retirement, insurance and
other compensation or benefit plans, programs and arrangements as
in effect immediately prior to the Date of Termination or, if more
favorable to the Executive, as in effect immediately prior to the
occurrence of the first event or circumstance constituting Good
Reason.
5.4 Upon a Change in Control
which occurs during the Term, (A) the Company shall, within
five (5) days after such Change in Control, pay to the
Executive a lump sum cash amount equal to the product of
(i) the target award to which the Executive would have been
entitled under each of the Company’s incentive compensation
plans, other than an award of the type described in
Section 5.4(B) or 5.4(C) hereof (such target award to be
determined pursuant to the provisions of each such plan or, if no
such provisions exist in the case of any such plan, as determined
by the Compensation Committee of the Board, as constituted
immediately prior to the Change in Control, in its sole
discretion), in respect of the year in which such Change in Control
occurs and (ii) a fraction, the numerator of which shall be
the number of months (including fractions thereof) from the first
day of the year in which the Change in Control occurs to the date
on which the Change in Control occurs, and the denominator of which
shall be twelve (12); (B) all options held by the Executive to
acquire Company stock shall immediately become vested and
exercisable in full, and all restrictions on restricted Company
stock and other Company stock-based awards held by the Executive
shall immediately lapse; and (C) the Company shall, within
five (5) days after such Change in Control, pay to the
Executive a lump sum cash amount equal to the product of
(i) the target award to which the Executive
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would have been entitled for the then
uncompleted cycle under the Company’s Long Term Incentive
Plan, regardless of whether the Executive is vested in such award,
and (ii) a fraction, the numerator of which shall be the
number of months (including fractions thereof) from the first day
of the cycle in which the Change in Control occurs to the date on
which the Change in Control occurs, and the denominator of which
shall be the total of months in the cycle.
6. Severance Payments
.
6.1 Subject to
Section 6.2 hereof, if the Executive has a Separation from
Service following a Change in Control and during the Term, other
than (A) by the Company for Cause, (B) by reason of death
or Disability, or (C) by the Executive without Good Reason,
and, in the case of a Separation from Service by the Company, the
Executive is willing and able to continue performing services
(within the meaning of Treasury Regulation section 1.409A-1(n)(1)),
then the Company shall pay the Executive the amounts, and provide
the Executive the benefits, described in this Section 6.1
(“Severance Payments”), in addition to any payments and
benefits to which the Executive is entitled under Section 5
hereof. Notwithstanding the foregoing, the Executive shall not be
eligible to receive any payment or benefit provided for in this
Section 6.1 unless the Executive shall have executed and
delivered to the Company within 45 days after the Separation from
Service a release (substantially in the form of Exhibit A hereto)
in favor of the Company and others set forth on said Exhibit A,
relating to all claims or liabilities of any kind relating to the
Executive’s employment and termination of employment with the
Company, and the Executive shall not have revoked such release
within 7 days after executing it. Any payments and benefits that,
but for the preceding sentence, would be paid or provided pursuant
to this Section 6.1 before the 8 th day after the
Executive executes the release shall be paid or provided on the 10
th business day after the Executive executes the
release, provided that the Executive did not revoke it.
(A) In lieu of any further
salary payments to the Executive for periods subsequent to the Date
of Termination and in lieu of any severance benefit otherwise
payable to the Executive, the Company shall pay to the Executive
within five (5) days of such Separation from Service an
amount, in cash, equal to 2 times the sum of (i) the
Executive’s base salary as in effect immediately prior to the
Separation from Service or, if higher, in effect immediately prior
to the first occurrence of an event or circumstance constituting
Good Reason, and (ii) the highest of (a) the average
annual bonus earned by the Executive in respect of the three fiscal
years ending
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immediately prior to the
fiscal year in which occurs the Separation from Service,
(b) the average annual bonus earned by the Executive in
respect of the three fiscal years ending immediately prior to the
fiscal year in which occurs the Change in Control or (c) the
target bonus in respect of the fiscal year in which occurs the
Separation from Service.
(B) For the twenty-four
(24) month period immediately following the Separation from
Service, the Company shall cause the Executive to continue to
participate in all employee pension and welfare benefit plans
(including, but not limited to, the Company’s executive life
insurance plan) in which the Executive was participating
immediately prior to the Separation from Service (or, if more
favorable to the Executive, immediately prior to the Change in
Control) and to continue to receive such other benefits and
perquisites as the Executive was receiving immediately prior to the
Separation from Service (or, if more favorable to the Executive,
immediately prior to the Change in Control); provided, however,
that neither the Company nor any affiliate shall be required by
virtue of this Section 6.1(B) to grant stock options or other
stock-based awards to the Executive during such period. To the
extent such participation in any such plan is barred or otherwise
not feasible, the Company shall arrange to provide substantially
similar benefits to the Executive (and, if applicable, the
Executive’s dependents) outside such plan. Benefits otherwise
receivable by the Executive pursuant to this Section 6.1
(B) shall be reduced to the extent benefits of the same type
are received by or made available to the Executive during the
twenty-four (24) month period following the Separation from
Service (and any such benefits received by or made available to the
Executive shall be reported to the Company by the Executive). If
the Severance Payments shall be decreased pursuant to
Section 6.2 hereof, and the Section 6.1(B) benefits are
thereafter reduced pursuant to the immediately preceding sentence,
the Company shall, no later than five (5) business days
following such reduction, pay to the Executive in cash the maximum
amount which can be paid to the Executive without being, or causing
any other payment to be, nondeductible by reason of section 280G of
the Code.
(C) Within five (5) days
of such Separation from Service, the Company shall pay to the
Executive a lump sum cash amount (the “Pro-Rata Bonus”)
equal to the product of (i) the target award to which the
Executive would have been entitled under each of the
Company’s incentive compensation plans, other than an award
of the type described in
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Section 5.4(B) or 5.4(C)
hereof (such target award to be determined pursuant to the
provisions of each such plan or, if no such provisions exist in the
case of any such plan, as determined by the Board in its sole
discretion), in respect of the year in which such Separation from
Service occurs and (ii) a fraction, the numerator of which
shall be the number of months (including fractions thereof) from
the first day of the year during which such Separation from Service
occurs to the date on which such Separation from Service occurs,
and the denominator of which shall be twelve (12); provided
, however , that if such Separation from Service occurs
during the same year in which the Change in Control occurs, the Pro
Rata Bonus shall be offset by any payments received by the
Executive pursuant to Section 5.4(A) hereof.
6.2 (A) Notwithstanding any
other provisions of this Agreement, in the event that any payment
or benefit received or to be received by the Executive in
connection with a Change in Control or the termination of the
Executive’s employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the
Company, any Person whose actions result in a Change in Control or
any Person affiliated with the Company or such Person) (all such
payments and benefits, including the Severance Payments, being
hereinafter called “Total Payments”) would be subject
(in whole or part), to the Excise Tax, then, the cash Severance
Payments shall first be reduced, and the other payments and
benefits hereunder shall thereafter be reduced, to the extent
necessary so that no portion of the Total Payments is subject to
the Excise Tax, but only if (A) is greater than or equal to
(B), where (A) equals the reduced amount of such Total
Payments minus the aggregate amount of federal, state and local
income taxes on such reduced Total Payments and (B) equals the
unreduced amount of such Total Payments minus the sum of
(1) the aggregate amount of federal, state and local income
taxes on such Total Payments and (2) the amount of Excise Tax
to which the Executive would be subject in respect of such
unreduced Total Payments; provided , however , that
the Executive may elect to have the other payments and benefits
hereunder reduced (or eliminated) prior to any reduction of the
cash Severance Payments.
(B) For purposes of
determining whether and the extent to which the Total Payments will
be subject to the Excise Tax, (i) no portion of the Total
Payments the receipt or enjoyment of which the Executive shall have
waived at such time and in such manner as not to constitute a
“payment” within the meaning of section 280G(b) of the
Code shall be taken into account, (ii) no portion of the Total
Payments shall be taken into account which, in the opinion of tax
counsel (“Tax Counsel”) reasonably acceptable to the
Executive and selected by the accounting firm
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(the “Auditor”)
which was, immediately prior to the Change in Control, the
Company’s independent auditor, does not constitute a
“parachute payment” within the meaning of section
280G(b)(2) of the Code (including by reason of section
280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no
portion of such Total Payments shall be taken into account which,
in the opinion of Tax Counsel, constitutes reasonable compensation
for services actually rendered, within the meaning of section
280G(b)(4)(B) of the Code, in excess of the Base Amount allocable
to such reasonable compensation, and (iii) the value of any
non-cash benefit or any deferred payment or benefit included in the
Total Payments shall be determined by the Auditor in accordance
with the principles of sections 280G(d)(3) and (4) of the
Code.
(C) At the time that payments
are made under this Agreement, the Company shall provide the
Executive with a written statement setting forth the manner in
which such payments were calculated and the basis for such
calculations including, without limitation, any opinions or other
advice the Company has received from Tax Counsel, the Auditor or
other advisors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement). If the
Executive objects to the Company’s calculations, the Company
shall pay to the Executive such portion of the Severance Payments
(up to 100% thereof) as the Executive reasonably determines is
necessary to result in the proper application of subsection A of
this Section 6.2.
6.3 The payments provided in
subsections (A) and (C) of Section 6.1 hereof shall
be made not later than the fifth (5 th ) day
following the Separation from Service; provided ,
however , that if the amounts of such payments, and the
limitation on such payments set forth in Section 6.2 hereof,
cannot be finally determined on or before such day, the Company
shall pay to the Executive on such day an estimate, as determined
in good faith by the Company of the minimum amount of such payments
to which the Executive is clearly entitled and shall pay the
remainder of such payments (together with interest on the unpaid
remainder (or on all such payments to the extent the Company fails
to make such payments when due) at 120% of the rate provided in
section 1274(b)(2)(B) of the Code) as soon as the amount thereof
can be determined but in no event later than the thirtieth
(30th) day after the Separation from Service. In the event
that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall
constitute a loan by the Company to the Executive, payable on the
fifth (5th) business day after demand by the Company (together
with interest at 120% of the rate provided in section 1274(b)(2)(B)
of the Code).
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7. Termination Procedures
and Compensation During Dispute .
7.1 Notice of
Termination . After a Change in Control and during the Term,
any purported termination of the Executive’s employment
(other than by reason of death) shall be communicated by written
Notice of Termination from one party hereto to the other party
hereto in accordance with Section 10 hereof. For purposes of
this Agreement, a “Notice of Termination” shall mean a
notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision
so indicated. Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the
entire membership of the Board at a meeting of the Board which was
called and held for the purpose of considering such termination
(after reasonable notice to the Executive and an opportunity for
the Executive, together with the Executive’s counsel, to be
heard before the Board) finding that, in the good faith opinion of
the Board, the Executive was guilty of conduct set forth in clause
(i) or (ii) of the definition of Cause herein, and
specifying the particulars thereof in detail.
7.2
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