-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QbwVLIJZXs3w2y0CnkelJ7E5R70S7V2VIJBWqEEgNW0tgCIG5WcdJZ5xHQevYtrk EJ3gGu42LoL7WqlIvvgkUA== 0000009984-96-000026.txt : 19960312 0000009984-96-000026.hdr.sgml : 19960312 ACCESSION NUMBER: 0000009984-96-000026 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960311 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BARNES GROUP INC CENTRAL INDEX KEY: 0000009984 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 060247840 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-04801 FILM NUMBER: 96533463 BUSINESS ADDRESS: STREET 1: 123 MAIN ST CITY: BRISTOL STATE: CT ZIP: 06011 BUSINESS PHONE: 2035837070 FORMER COMPANY: FORMER CONFORMED NAME: ASSOCIATED SPRING CORP DATE OF NAME CHANGE: 19760518 10-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-K FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 OR ----------------- [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM _____________ TO __________________ Commission file number 1-4801 ------ BARNES GROUP INC. ----------------- (Exact name of registrant as specified in its charter) Delaware 06-0247840 ----------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 123 Main St., Bristol, Connecticut 06011-0489 ----------------------------------- -------------------- (Address of Principal Executive Office) (Zip Code) Registrant's telephone number, including area code 860/583-7070 ------------ Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which ------------------- registered ------------------------------ Common Stock par value ------------------------------ $1.00 per share New York Stock Exchange ------------------------------ ----------------------- Securities registered pursuant to Section 12(g) of the Act: NONE. Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the registrant's voting stock held by non-affiliates amounted to $227,402,420 as of February 6, 1996. The registrant had outstanding 6,570,733 shares of common stock as of February 6, 1996. Parts I and II incorporate information by reference from the registrant's 1995 Annual Report to Stockholders. Part III incorporates information by reference from the registrant's Proxy Statement dated March 1, 1996. Exhibit Index located at pages 16-18. PART I Item 1. Business. --------- The Company is in three businesses: Bowman Distri- bution, a distributor of consumable repair and replacement products for industrial, heavy equipment, and transportation maintenance markets; Associated Spring, a manufacturer and distributor of custom-made springs and other close -tolerance engineered metal components; and Barnes Aerospace, a manufacturer of precision machined and fabricated assemblies for the aircraft and aerospace industries and a refurbisher of jet engine components.* Bowman Distribution. Bowman Distribution is engaged in ------------------- distributing in the United States, Canada, the United Kingdom and France a variety of replacement parts and other products, including fasteners and special purpose hardware, automotive parts, automotive specialties and accessories, general purpose electric and gas welding supplies, industrial maintenance supplies, and industrial aerosols such as adhesives, lubricants, and sealants. The products sold by Bowman Distribution are, for the most part, not manufactured by the Company, but are obtained from a number of outside suppliers. The vast majority of the products are repackaged and sold under Bowman's labels. Sales by Bowman Distribution in the United States and Canada are primarily to industrial and food processing plants, chemical and petrochemical process industries, contractors, new car dealers, garages, service stations, operators of vehicle fleets, railroads, electric utilities, and airline ground maintenance facilities. In 1992, the Company sold substantially all of the assets of the Pioneer division of Bowman. Associated Spring. Associated Spring manufactures and ----------------- distributes a wide variety of custom metal parts for mechanical purposes. It is equipped to produce practically every type of spring requiring precision engineering, as well as an extensive variety of precision metal components and assemblies. Its ----------------------- *As used in this annual report, "Company" refers to the registrant and its consolidated subsidiaries except where the context requires otherwise, and "Associated Spring," "Barnes Aerospace," and "Bowman Distribution" refer to the above-defined businesses, but not to separate corporate entities. - 1 - products range in size from fine hairsprings for instruments to large springs for heavy machinery, and its output of a given metal part may vary in amount from a few units to several million. Associated Spring does not produce leaf springs or bed springs. Associated Spring's custom metal parts are sold in the United States and through the Company's foreign subsidiaries to manufacturers in many industries, chiefly for use as components in their own products. Custom metal parts are sold primarily through Associated Spring's sales employees. In view of the diversity of functions which Associated Spring's custom metal parts perform, Associated Spring's output is characterized by little standardization, with the major portion being manufactured to customer specifications. The automotive and automotive parts industries constitute Associated Spring's largest single custom metal parts market. Other important outlets include manufacturers of industrial and textile machinery, motors, generators, electronic equipment, aircraft, diesel and other internal combustion engines, household appliances and fixtures, hardware, office equipment, agricultural equipment, railroad equipment, general machinery, and scientific instruments. The Associated Spring Distribution division is engaged in the distribution of industrial products to the tool and die market, of which die springs manufactured primarily by Associated Spring are the principal item. It also distributes certain standard parts manufactured by Associated Spring consisting primarily of stock wire and flat springs which are sold under the Company's SPEC registered trademark. Associated Spring also has manufacturing operations in Brazil, Canada, Mexico, and Singapore, and distribution operations in the United Kingdom and France. In 1993, the Company closed its spring manufacturing plant in Memphis, Tennessee and transferred the warehouse operations conducted in Corry, Pennsylvania to a new warehouse facility located in Ypsilanti, Michigan. In 1994, it closed its spring manufacturing plants in Gardena, California, and Monterrey, Mexico. The Company has retained a minority interest of 15% in its former subsidiary in Argentina. The Company is a partner in a joint venture corporation in the United States with NHK Spring Co., Ltd. of Japan. The joint venture corporation, NHK-Associated Spring Suspension Components Inc. ("NASCO"), has a manufacturing facility in Bowling Green, Kentucky. It manufactures and sells hot-wound coil springs for automotive suspension systems and counterbalance torque bars for trunk lids. Barnes Group owns a minority interest of 45% in NASCO. - 2 - Barnes Aerospace. Barnes Aerospace is engaged in the ---------------- advanced fabrication and precision machining of components for jet engines and airframes as well as the repair and overhaul of jet engine components. Windsor Manufacturing, Windsor Airmotive, and Advanced Fabrications constitute the Barnes Aerospace Group. Windsor Manufacturing manufactures machined and fabricated parts as well as assemblies. It specializes in the machining of difficult-to-process aircraft engine superalloys. Manufacturing processes include computer numerically controlled machining, electrical discharge machining, laser drilling, creep-feed grinding, and automated deburring. Customers include gas turbine engine manufacturers for commercial and military jets as well as land-based turbines. In 1993, the operations of the Company's Central Metal Products plant were consolidated with Windsor Manufacturing. Windsor Airmotive specializes in refurbishing jet engine components. Electron beam welding and plasma spray are two of the major processes used in this division, and customers include approximately 30 airlines worldwide and the military. In 1995, Windsor Airmotive's Singapore operations moved into a larger facility. Advanced Fabrications, through its Jet Die and Flameco plants, specializes in hot forming and fabricating titanium and other high-temperature alloys such as hastelloy and inconel for use in precision details and assemblies for aircraft engine and airframe applications. It utilizes advanced manufacturing processes including superplastic forming and diffusion bonding. Segment Analysis. The analysis of the Company's ----------------- revenue from sales to unaffiliated customers, operating income, and identifiable assets by industry segments and geographic areas appearing on pages 26 and 27 of the Company's 1995 Annual Report to Stockholders, included as Exhibit 13 to this report, is incorporated by reference. Competition. The Company competes with many other ----------- companies, large and small, engaged in the manufacture and sale of custom metal parts (including aerospace components). The Company believes Associated Spring is the largest domestic manufacturer of precision springs used for mechanical purposes. The Company also faces active competition in the products sold by Bowman Distribution. The principal methods of competition for the Company's three businesses include service, quality, price, reliability of supply, and also, in the case of Associated Spring and Barnes Aerospace, technology and design. - 3 - Backlog. The backlog of the Company's orders believed ------- to be firm amounted to $111,125,000 at the end of 1995, as compared with $108,143,000 at the end of 1994. Of the 1995 year- end backlog, $54,411,000 is attributable to the Barnes Aerospace Group and all of the balance is attributable to the Associated Spring Group. $3,601,000 of Barnes Aerospace's backlog is not expected to be shipped in 1996. Substantially all of the remainder of the Company's backlog is expected to be shipped during 1996. Raw Materials and Customers. None of the Company's --------------------------- divisions or groups are dependent upon any single source for any of their principal raw materials or products for resale, and all such materials and products are readily available. No one customer accounted for more than 10% of total sales in 1995. Automotive manufacturers and manufacturers of electronic products are important customers of Associated Spring. Sales by Barnes Aerospace to two domestic jet engine manufacturers accounted for approximately 52% of its business. Bowman Distribution is not dependent on any one or a few customers for a significant portion of its sales. Research and Development. Although most of the products ------------------------ manufactured by the Company are custom parts made to the customers' specifications, the Company is engaged in continuing efforts aimed at discovering and implementing new knowledge that is useful in developing new products or services or improving significantly an existing product or service. The Company spent approximately $3,087,000 on its research and development activities in 1995, as compared to expenditures of approximately $2,640,000 in 1994 and $1,846,000 in 1993. There were no significant customer-sponsored research and development activities in 1995 and 1994. Barnes Aerospace divisions spent approximately $495,000 in 1993 on customer-sponsored research and development activities. Patents and Trademarks. Patents, licenses, franchises ---------------------- and concessions are not material to any of the Company's businesses. Employees. As of the date of this report, the Company --------- employs approximately 3,900 persons. Environmental Laws. Compliance with federal, state, and ------------------ local laws which have been enacted or adopted regulating the discharge of materials into the environment or otherwise relating to the protection of the environment has not had a material effect and is not expected to have a material effect upon the capital expenditures, earnings, or competitive position of the Company. - 4 - Item 2. Properties. ---------- The Company and its Canadian subsidiary operate 12 manufacturing plants and 15 warehouses at various locations throughout the United States and Canada, of which all of the plants and 6 of the warehouses are owned in fee, and the others are leased. Of the properties which are owned, none is subject to any encumbrance. The Company's other foreign subsidiaries own or lease plant or warehouse facilities in the countries where their operations are conducted. The listing of the facility locations of each of the Company's businesses contained in the Directory of Operations on the inside back cover of the 1995 Annual Report to Stockholders, included as Exhibit 13 to this report, is incorporated by reference. The Company believes that its owned and leased properties have been adequately maintained, are in satisfactory operating condition, are suitable and adequate for the business activities conducted therein, and have productive capacities sufficient to meet current needs. Item 3. Legal Proceedings. ----------------- There are no material pending legal proceedings to which the Company or any of its subsidiaries is a party, or of which any of their property is the subject. Item 4. Submission of Matters to a Vote of Security Holders. --------------------------------------------------- No matter was submitted during the fourth quarter of 1995 to a vote of security holders. The following information is included in accordance with the provisions of Item 401(b) of Regulation S-K:
Executive Officers of the Company --------------------------------- Age as of December 31, Executive Officer Position 1995 ----------------- -------- ------------ Theodore E. Martin President and Chief Executive 56 Officer (since 1995) Thomas O. Barnes Chairman of the Board of 46 Directors (since 1995) and Senior Vice President- Administration (since 1993) Mary Louise Beardsley Associate General Counsel 41 and Secretary (since 1994)
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Age as of December 31, Executive Officer Position 1995 ----------------- -------- ------------ John E. Besser Senior Vice President-Finance 53 and Law (since 1993) Francis C. Boyle, Jr. Assistant Controller 45 (since 1987) Leonard M. Carlucci Vice President, Barnes Group 49 Inc. (since 1994) and President, Bowman Distribution (since 1995) Ali A. Fadel Vice President, Barnes Group 40 Inc. and President, Associated Spring (since 1994) Joseph R. Kowalchik Senior Vice President- 48 Human Resources (since 1995) John J. Locher Vice President, Treasurer 51 (since 1992)
Except for Messrs. Barnes, Fadel, and Kowalchik, each of the Company's executive officers has been employed by the Company or its subsidiaries in an executive or managerial capacity for at least the past five years. Each officer holds office until his or her successor is chosen and qualified, or otherwise as provided in the By-Laws. No family relationships exist among the executive officers of the Company. Mr. Barnes was elected Senior Vice President- Administration effective December 16, 1993. From 1982 to 1993, Mr. Barnes was employed by The Olson Brothers Company as Executive Vice President and President, which position he held since 1983. Prior to joining Olson Brothers, Mr. Barnes held a variety of management positions with The Connecticut Bank and Trust Company, The S. Carpenter Construction Company, and the Company's Bowman Distribution division. Mr. Fadel was elected Vice President of Barnes Group Inc. and President, Associated Spring effective January 21, 1994. Mr. Fadel joined the Company in 1991 as Group Director of Advanced Engineering and Technology for Associated Spring. In addition, Mr. Fadel served as Division Manager at the Associated Spring plant in Saline, Michigan from 1992 to 1994. From 1989 to 1991, Mr. Fadel was employed by Herman Miller, Inc. as Manager of Chemical - 6 - Engineering and Senior Project Manager. Prior to joining Herman Miller, he held industrial and manufacturing engineering positions at Chrysler Corp., General Dynamics Corp. and the former Burroughs Corporation. Mr. Kowalchik was elected Senior Vice President-Human Resources effective July 17, 1995. Prior to joining the Company, Mr. Kowalchik held various human resources positions during his 23 year career with Combustion Engineering and its successor, Asea Brown Boveri, Inc. ("ABB"), most recently serving as Vice President of Human Resources for ABB's U.S. Power Generation Business. PART II Item 5. Market for the Registrant's Common Stock and Related ---------------------------------------------------- Stockholder Matters. ------------------- The information regarding the Company's common stock contained on pages 22 and 29 of the Company's 1995 Annual Report to Stockholders is incorporated by reference. As of February 6, 1996, the Company's common stock was held by 4,944 stockholders of record. The Company's common stock is traded on the New York Stock Exchange. Item 6. Selected Financial Data. ----------------------- The selected financial data for the last five years contained on pages 30 and 31 of the Company's 1995 Annual Report to Stockholders is incorporated by reference. Item 7. Management's Discussion and Analysis of Financial ------------------------------------------------- Condition and Results of Operations. ----------------------------------- The financial review and management's analysis thereof appearing on pages 11 through 13 of the Company's 1995 Annual Report to Stockholders are incorporated by reference. Item 8. Financial Statements and Supplementary Data. ------------------------------------------- The financial statements and report of independent accountants appearing on pages 14 through 28 of the Company's 1995 Annual Report to Stockholders are incorporated by reference. See also the reports of independent accountants included on pages 13 and 14 below pursuant to Item 302(a) of Regulation S-K. The material under "Quarterly Data" on page 29 of the Company's 1995 Annual Report to Stockholders is also incorporated by reference. - 7 - Item 9. Changes and Disagreements with Accountants on Accounting -------------------------------------------------------- and Financial Disclosure. ------------------------ The material under "Approval of Selection of Independent Accountants" on pages 13 and 14 of the Company's Proxy Statement dated March 1, 1996 is incorporated by reference. PART III Item 10. Directors and Executive Officers of the Company. ----------------------------------------------- The material under "Election of Directors" on pages 1 through 3 of the Company's Proxy Statement dated March 1, 1996 is incorporated by reference. See also "Executive Officers of the Company," included above pursuant to Item 401(b) of Regulation S-K. Item 11. Executive Compensation. ---------------------- The material under "Compensation of Directors" appearing on page 4, the material under "Non-Employee Director Deferred Stock Plan" appearing on page 6, and the information appearing on pages 7 through 12 of the Company's Proxy Statement dated March 1, 1996 is incorporated by reference. Item 12. Security Ownership of Certain Beneficial Owners and --------------------------------------------------- Management. ---------- The information concerning this item appearing on pages 5 and 6 of the Company's Proxy Statement dated March 1, 1996 is incorporated by reference. Item 13. Certain Relationships and Related Transactions. ---------------------------------------------- The information concerning this item appearing on page 4 of the Company's Proxy Statement dated March 1, 1996 is incorporated by reference. - 8 - PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on ------------------------------------------------------ Form 8-K. -------- (a) The reports of Price Waterhouse LLP and Ernst & Young LLP, independent accountants, and the following financial statements and financial statement schedules are filed as part of this report: Reference ---------------------------- Annual Report Form 10-K to Stockholders (page) (page) --------- ---------------- Reports of independent accountants 13 & 14 28 Consolidated balance sheets at 15 December 31, 1995 and 1994 Consolidated statements of income 14 for the years ended December 31, 1995, 1994 and 1993 Consolidated statements of changes 17 in stockholders' equity for the years ended December 31, 1995, 1994 and 1993 Consolidated statements of cash 16 flows for the years ended December 31, 1995, 1994 and 1993 Notes to consolidated financial 18 - 28 statements Supplementary information 29 Quarterly data (unaudited) Consolidated schedules for the years ended December 31, 1995, 1994 and 1993 VIII - Valuation and qualifying 15 accounts
All other schedules have been omitted since the required information is not present or not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements or notes thereto. - 9 - The consolidated financial statements listed in the above index which are included in the Annual Report to Stock- holders of Barnes Group Inc. for the year ended December 31, 1995 are hereby incorporated by reference. With the exception of the pages listed in the above index and in Items 1, 2, 5, 6, 7, and 8, the 1995 Annual Report to Stockholders is not to be deemed filed as part of this report. (b) No reports on Form 8-K were filed during the last quarter of the period covered by this report. (c) The Exhibits required by Item 601 of Regulation S-K are filed as Exhibits to this Annual Report and indexed at pages 16 through 18 of this report. - 10 - SIGNATURES ---------- Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: February 16, 1996 BARNES GROUP INC. By /s/ Theodore E. Martin -------------------------------------- Theodore E. Martin President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below as of the above date by the following persons on behalf of the Company in the capacities indicated. /s/ Theodore E. Martin ----------------------------- Theodore E. Martin President and Chief Executive Officer (the principal executive officer) and Director /s/ John E. Besser --------------------------- John E. Besser Senior Vice President-Finance and Law (the principal financial officer) /s/ Francis C. Boyle, Jr. --------------------------- Francis C. Boyle, Jr. Assistant Controller (the principal accounting officer) /s/ Thomas O. Barnes --------------------------- Thomas O. Barnes Director /s/ Wallace Barnes -------------------------- Wallace Barnes Director - 11 - /s/ Gary G. Benanav --------------------------- Gary G. Benanav Director /s/ William S. Bristow, Jr. --------------------------- William S. Bristow, Jr. Director /s/ Robert J. Callander -------------------------- Robert J. Callander Director /s/ George T. Carpenter --------------------------- George T. Carpenter Director /s/ Donna R. Ecton --------------------------- Donna R. Ecton Director /s/ Marcel P. Joseph --------------------------- Marcel P. Joseph Director /s/ Juan M. Steta --------------------------- Juan M. Steta Director /s/ K. Grahame Walker --------------------------- K. Grahame Walker Director /s/ A. Stanton Wells -------------------------- A. Stanton Wells Director - 12 - REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors of Barnes Group Inc. Our audits of the consolidated financial statements for the years ended December 31, 1995 and 1994 referred to in our report dated January 23, 1996 appearing on page 28 of the 1995 Annual Report to Stockholders of Barnes Group Inc. (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule for the years ended December 31, 1995 and 1994 listed in Item 14(a) of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. The financial statements of Barnes Group Inc. for the year ended December 31, 1993 were audited by other independent accountants whose report dated January 28, 1994 expressed an unqualified opinion on those statements. /s/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP Hartford, Connecticut January 23, 1996 - 13 - REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS The Stockholders and Board of Directors Barnes Group Inc. We have audited the consolidated statements of income, stockholders' equity and cash flows of Barnes Group Inc. for the year ended December 31, 1993. Our audit also included the financial statement schedule listed in the Index at Item 14(a) for the year ended December 31, 1993. These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated results of operations and cash flows of Barnes Group Inc. for the year ended December 31, 1993, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. /s/ Ernst & Young LLP Ernst & Young LLP Hartford, Connecticut January 28, 1994 - 14 - BARNES GROUP INC. SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS Years ended December 31, 1995, 1994 and 1993 (in thousands)
Provision Balance at charged to Balance at beginning costs and end of of year expenses Deductions(1) year ---------- ---------- ------------- ---------- 1995 Allowance for doubtful accounts $3,222 $1,577 $1,164 $3,635 1994 Allowance for doubtful accounts $2,217 $1,523 $ 518 $3,222 1993 Allowance for doubtful accounts $2,332 $1,095 $1,210 $2,217 (1) Write-offs, net of recoveries
- 15 - EXHIBIT INDEX ------------- Barnes Group Inc. Annual Report on Form 10-K for year ended December 31, 1995 --------------------------------
Exhibit No. Description Reference ----------- ----------- --------- 3.1 Restated Certificate of Incorporated by reference Incorporation, as amended. to Exhibit 3.1 to the Company's report on Form 10-K for the year ended December 31, 1992. 3.2 By-Laws. Filed with this report. 4.1 Revolving Credit Agreement Incorporated by reference dated as of December 1, to Exhibit 4.1 to the 1991 among the Company and Company's report on Form several commercial banks. 10-K for the year ended December 31, 1991. 4.2 First Amendment to Credit Incorporated by reference Agreement set forth in to Exhibit 4.2 to the Exhibit 4.1 dated as of Company's report on Form December 1, 1992. 10-K for the year ended December 31, 1992. 4.3 Second Amendment to Credit Incorporated by reference Agreement set forth in to Exhibit 4.3 to the Exhibit 4.1 dated as of Company's report on Form December 1, 1993. 10-K for the year ended December 31, 1993. 4.4 Third Amendment to Credit Incorporated by reference Agreement set forth in to Exhibit 4.4 to the Exhibit 4.1 dated as of Company's report on Form December 1, 1994. 10-K for the year ended December 31, 1994. 4.5 Fourth Amendment to Credit Filed with this report. Agreement set forth in Exhibit 4.1 dated as of December 1, 1995. 4.6 Rights Agreement dated as Incorporated by reference of July 16, 1986 between to Exhibit 4.2 to the the Company and The Company's report on Form Connecticut Bank & Trust 10-K for the year ended Company, National December 31, 1991. Association.
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Exhibit No. Description Reference ----------- ----------- --------- 4.7 Amendment to the Rights Filed with this report. Agreement set forth in Exhibit 4.6 dated July 15, 1990. 4.8 Note Agreement dated as of Incorporated by reference September 16, 1991 among to Exhibit 4.4 to the the Company and several Company's report on Form insurance companies. 10-K for the year ended December 31, 1991. 4.9 Note Purchase Agreement Filed with this report. dated as of December 1, 1995 between the Company and several insurance companies. 10.1 The Company's Management Filed with this report. Incentive Compensation Plan. 10.2 The Company's Long Term Filed with this report. Incentive Plan. 10.3 The Company's Retirement Filed with this report. Benefit Equalization Plan. 10.4 The Company's Supplemental Filed with this report. Executive Retirement Plan. 10.5 The Company's 1981 Stock Incorporated by reference Incentive Plan. to Exhibit 10.5 to the Company's report on Form 10-K for the year ended December 31, 1991. 10.6 The Company's 1991 Stock Incorporated by reference Incentive Plan. to Exhibit 10.6 to the Company's report on Form 10-K for the year ended December 31, 1994. 10.7 The Company's Non-Employee Incorporated by reference Director Deferred Stock Plan. to Exhibit 10.7 to the Company's report on Form 10-K for the year ended December 31, 1994.
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Exhibit No. Description Reference ----------- ----------- --------- 10.8 The Company's Directors' Incorporated by reference Deferred Compensation Plan. to Exhibit 10.8 to the Company's report on Form 10-K for the year ended December 31, 1992. 10.9 Consulting Agreement dated Incorporated by reference as of April 1, 1994 to Exhibit 10.9 to the between the Company and Company's report on Form Wallace Barnes. 10-K for the year ended December 31, 1994. 10.10 Addendum to Consulting Filed with this report. Agreement set forth in Exhibit 10.9 dated as of May 22, 1995. 10.11 The Company's Officer Incorporated by reference Enhanced Life Insurance to Exhibit 10.11 to the Program. Company's report on Form 10-K for the year ended December 31, 1993. 10.12 The Company's Enhanced Incorporated by reference Life Insurance Program. to Exhibit 10.12 to the Company's report on Form 10-K for the year ended December 31, 1993. 13 Portions of the 1995 Annual Filed with this report. Report to Stockholders. 16 Letter from Ernst & Young Incorporated by reference LLP Regarding Change in to Exhibit 16 to the Certifying Accountant. Company's report on Form 8-K filed on March 4, 1994. 22 List of Subsidiaries. Filed with this report. 23.1 Consent of Independent Filed with this report. Accountants. 23.2 Consent of Independent Filed with this report. Auditors.
- 18 - The Company agrees to furnish to the Commission, upon request, a copy of each instrument with respect to which there are outstanding issues of unregistered long-term debt of the Company and its subsidiaries the authorized principal amount of which does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis. Except for Exhibit 13, which will be furnished free of charge, and Exhibits 22, 23.1 and 23.2, which are included herein, copies of exhibits referred to above will be furnished at a cost of twenty cents per page to security holders who make written request therefor to The Secretary, Barnes Group Inc., Executive Office, 123 Main Street, P.O. Box 489, Bristol, Connecticut 06011-0489. - 19 - EX-22 2 EXHIBIT 22 BARNES GROUP INC. LIST OF SUBSIDIARIES --------------------
Operating Subsidiaries of the Company: -------------------------------------- Jurisdiction of Name Incorporation ---- --------------- Associated Spring-Asia PTE. LTD. Singapore Associated Spring SPEC Limited United Kingdom Barnes Group (Bermuda) Limited Bermuda Barnes Group Canada Inc. Canada Barnes Group Holding B.V. Netherlands Bowman Distribution Europe Limited United Kingdom Bowman Distribution France S.A. France Resortes Mecanicos, S.A. Mexico Ressorts SPEC, EURL France Stumpp & Schuele do Brasil Industria e Brazil Comercio Limitada Windsor Airmotive Asia PTE. LTD. Singapore
Associated Spring SPEC Limited is wholly-owned by Bowman Distribution Europe Limited. Ressorts SPEC, EURL is wholly-owned by Bowman Distribution France S.A. Windsor Airmotive Asia PTE. LTD. is wholly-owned by Barnes Group Canada Inc. Associated Spring-Asia PTE. LTD., and Stumpp & Schuele do Brasil Industria e Comercio Limitada are wholly-owned by Barnes Group (Bermuda) Limited. Resortes Mecanicos, S.A. is owned by Barnes Group (Bermuda) Limited (87%) and Barnes Group Canada Inc. (13%). Barnes Group Canada Inc., Bowman Distribution Europe Limited, and Bowman Distribution France S.A. are wholly-owned by Barnes Group Holding B.V. Barnes Group (Bermuda) Limited and Barnes Group Holding B.V. are wholly-owned by Barnes Group Inc. The Company's consolidated financial statements include all of the above-named subsidiaries. For a statement of the principles of consolidation applicable to these subsidiaries, see note 1 of the Notes to Consolidated Financial Statements on page 18 of the 1995 Annual Report to Stockholders. EX-23.1 3 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 2-56437, pertaining to the Employee Stock Purchase Plan, No. 2-91285, pertaining to the 1981 Stock Incentive Plan, Nos. 33-20932 and 33-30229, pertaining to the Guaranteed Stock Plan, and the registration statement filed on July 18, 1994 pertaining to the 1991 Stock Incentive Plan) of Barnes Group Inc. of our report dated January 23, 1996 appearing on page 28 of the Annual Report to Stockholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears on page 13 of this Form 10-K. /s/ PRICE WATERHOUSE LLP PRICE WATERHOUSE LLP Hartford, Connecticut March 4, 1996 EX-23.2 4 EXHIBIT 23.2 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 2 -56437, pertaining to the Employee Stock Purchase Plan, No. 2-91285, pertaining to the 1981 Stock Incentive Plan, Nos. 33-20932 and 33-30229, pertaining to the Guaranteed Stock Plan, and the unnumbered one filed on July 18, 1994 pertaining to the 1991 Stock Incentive Plan) of Barnes Group Inc. of our report dated January 28, 1994 with respect to the consolidated financial statements of Barnes Group Inc. for the year ended December 31, 1993, included in the Annual Report on Form 10-K for the year ended December 31, 1995. /s/ ERNST & YOUNG LLP ERNST & YOUNG LLP Hartford, Connecticut March 4, 1996 EX-3.2 5 EXHIBIT 3.2 BARNES GROUP INC. BY-LAWS ------- ARTICLE I: MEETINGS OF STOCKHOLDERS SECTION 1. Annual Meetings. The annual meeting of the stockholders of the Corporation for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held at 10:30 A.M. on the first Wednesday in April of each year or on such other date or time as may be designated by the Board of Directors. SEC. 2. Special Meetings. Special meetings of the stockholders may be called at any time by the Chairman, the President or the Board of Directors. (As used in these by-laws, the term "Chairman" means the Chairman of the Company appointed pursuant to Article IV Section 1 unless otherwise specified). SEC. 3. Place of Meetings. All meetings of the stockholders shall be held at such place, within or without the State of Delaware, as may be designated by the Board of Directors and specified in the notice to be given to the stockholders in the manner provided in Section 4 of this Article I. 1 SEC. 4. Notice of Meetings. Except as otherwise provided by statute, notice of each meeting of the stockholders, whether annual or special, shall be given to each stockholder of record entitled to vote thereat, not less than ten days before the day on which the meeting is to be held, by delivering a written or printed notice thereof to him personally or by posting such notice in a postage prepaid envelope addressed to him at his last known post-office address. Except as otherwise provided by statute, no publication of any notice of a meeting of the stockholders shall be required. Every notice of a special meeting of stockholders, besides stating the time and place of the meeting, shall state briefly the objects thereof and no business other than that specified in such notice and matters germane thereto shall be presented at such meeting, except with the unanimous consent in writing of the holders of all the outstanding shares of the Corporation entitled to vote thereon. Nevertheless, notice of any meeting shall not be required to be given to any stockholder who shall attend such meeting in person or by proxy; and if any stockholder shall waive notice of any meeting in person or by attorney thereunto authorized in writing or by telegraph, notice thereof need not be given to him. Notice of any adjourned meeting of stockholders shall not be required to be given. SEC. 5. Quorum. At each meeting of stockholders the holders of record of a majority of the shares outstanding and entitled to vote 2 at such meeting, present in person or represented by proxy, shall be necessary and sufficient to constitute a quorum for the transaction of business; provided that any number of stockholders entitled to vote, present in person or represented by proxy at any annual election of directors, though holding less than a majority of the shares out- standing and entitled to vote at such election, may elect the directors. In the absence of a quorum, a majority in interest of the stockholders entitled to vote, present in person or represented by proxy, or, if no such stockholder is present or represented, any officer entitled to preside or act as Secretary of such meeting, may adjourn the meeting from time to time. At any such adjourned meeting at which a quorum may be present, any business may be transacted which might have been transacted at the meeting as originally called. SEC. 6. Voting. The Secretary or other officer who has charge of the stock ledger shall prepare and make, at least ten days before every election of directors, a complete list of the stockholders entitled to vote at said election, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder during ordinary business hours, for a period of at least ten days prior to the election, either at a place within the city, town or village where the election is to be held and which place shall be 3 specified in the notice of the meeting, or, if not so specified, at the place where said meeting is to be held, and the list shall be produced and kept at the time and place of election during the whole time thereof, and subject to the inspection of any stockholder who may be present. Unless otherwise provided in the Certificate of Incorporation or these By-Laws, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of stock held by such stockholder, but no proxy shall be voted on after three years from its date unless the proxy provides for a longer period. Except where the transfer books of the Corporation shall have been closed or a date shall have been fixed as a record date for the determination of its stockholders entitled to vote, as provided in Section 5 of Article VII of these By-Laws, no share of stock shall be voted on at any election for directors which shall have been transferred on the books of the Corporation within twenty days next pre- ceding such election. Persons holding shares in a fiduciary capacity shall be entitled to vote the shares so held. At all meetings of the stockholders all matters, other than those the manner of deciding which is expressly regulated by statute, by the Certificate of Incorporation, or by these By-Laws, shall be decided by the vote of a majority in interest of the stockholders present in person or represented by proxy and entitled to vote, a quorum being present. The vote for directors shall be by ballot. 4 SEC. 7. Nominations. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Certificate of Incorporation of the Corporation with respect to the right of holders of preferred stock of the Corporation to nominate and elect a specified number of directors in certain circumstances. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of stockholders called for the purpose of electing directors, (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 7 of this Article I and on the record date for the determination of stockholders entitled to vote at such meeting and (ii) who complies with the notice procedures set forth in this Section 7 of this Article I. In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation (a) in the case of an annual meeting, not less than sixty (60) days nor more than ninety (90) days prior to the anniversary date of the 5 immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stock- holder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs; and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs. To be in proper written form, a stockholder's notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder; 6 and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stock- holder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 7 of this Article I. If the Chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded. 7 SEC. 8. Proposals. No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (c) otherwise properly brought before the annual meeting by any stockholder of the Corporation (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 8 of this Article I and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedures set forth in this Section 8 of this Article I. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Corporation. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting of stockholders; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, 8 notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, which-ever first occurs. To be in proper written form, a stockholder's notice to the Secretary must set forth as to each matter such stock- holder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such stockholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such stockholder, (iv) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business and (v) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting. No business shall be conducted at the annual meeting of stockholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 8 of this Article I; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 9 8 of this Article I shall be deemed to preclude discussion by any stockholder of any such business. If the Chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the Chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted. 10 ARTICLE II: BOARD OF DIRECTORS SECTION 1. General Powers. The property, affairs and business of the Corporation shall be managed by the Board of Directors. SEC. 2. Number, Classification, Term of Office, and Qualifications. The number of directors to constitute the whole Board of Directors shall be nine, but such number may from time to time be increased, or diminished to not less than three, by resolution adopted by the Board of Directors. The Board of Directors shall be divided into three classes as nearly equal in number as may be, with the term of office of one class expiring each year. At the annual meeting of stockholders in 1970, directors of the first class shall be elected to hold office for a term expiring at the next succeeding annual meeting, directors of the second class shall be elected to hold office for a term expiring at the second succeeding annual meeting and directors of the third class shall be elected to hold office for a term expiring at the third succeeding annual meeting. At each annual meeting of stockholders after 1970, successors to the directors whose terms shall then expire shall be elected to hold office for terms expiring at the third succeeding annual meeting, except that any director elected to a directorship newly created since the last annual meeting shall hold office for the same term as the other directors of the class to which such director has been assigned. When the number 11 of directors is changed, any newly created directorships or any decrease in directorships shall be so assigned among the classes by the Board of Directors as to make all classes as nearly equal in number as may be. Each director shall continue in office until his successor shall have been elected and qualified or until his death or until his resignation or removal in the manner hereinafter provided. No director need be a stockholder, nor a resident of the State of Delaware. SEC. 3. Election of Directors. At each meeting of the stockholders for the election of directors, the directors shall be elected by a plurality of the votes given at such election. SEC. 4. Place of Meetings, etc. The directors may hold their meetings and have one or more offices, and keep the books of the Corporation, outside of Delaware, at the office or place of business of the Corporation in the City of Bristol, Connecticut, or at such other places as they may from time to time determine. SEC. 5. Time of Meetings, Notices, etc. There shall be a meeting of the Board of Directors for organization, for the election of officers and for the transaction of such other business as may properly come before the meeting on the date of the annual meeting of stockholders or within thirty days thereafter upon the notice hereinafter provided for a special meeting. The 12 directors may, however, without notice, hold such meeting in the city where the annual meeting of stockholders is held and immediately following such annual meeting of stock- holders. At the organizational meeting, the Directors shall elect one of the directors as Chairman of the Board of Directors. The Chairman of the Board of Directors, or in his/her absence, the Chairman of the Board's Executive Committee, shall preside at all meetings of the Board of Directors. The Chairman of the Board of Directors, or in his/her absence, the chief executive officer of the Company, shall preside at all meetings of the stockholders. The Chairman of the Board of Directors may be removed as Chairman of the Board of Directors at any time by the Board of Directors. The Board of Directors by resolution may provide for the holding of regular meetings and may fix the time of holding such meetings. Such regular meetings of the Board of Directors may be held without notice. Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors, the Chairman, the President or any three directors. Unless otherwise specified in the notice or waiver of notice thereof, all meetings of the Board of Directors shall be held at the office of the Corporation in Bristol, Connecticut. Notice of each special meeting shall be mailed to each director addressed to him at his residence or usual place of business at least seven days before the day on which the meeting is to be held or shall be sent to him at such place by telegraph, or telephoned or delivered to him personally, not later than three days before the day on which the meeting is 13 to be held, unless the Chairman of the Board of Directors, the Chairman or the President determines that circumstances require that a meeting be held on shorter notice. Notice of any meeting need not be given to any director, however, if waived by him in writing or by telegraph. Any meeting of the Board of Directors shall be a legal meeting without any notice thereof having been given if all the directors shall be present thereat. SEC. 6. Quorum and Manner of Acting. A majority of the directors at the time in office (but not less than one-third of the number necessary to constitute the whole Board) at a meeting duly assembled shall be necessary and sufficient to constitute a quorum for the transaction of business, subject, however, to the provisions of Section 9 of this Article II. Except as otherwise provided by law or in these By-Laws, the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. In the absence of a quorum, a majority of the directors present at any meeting may adjourn the meeting from time to time until a quorum be had. Notice of any adjourned meeting need not be given. The directors shall act only as a Board and the individual directors shall have no power as such. SEC. 7. Resignations. Any director may resign at any time by giving written notice to the Chairman of the Board, the Chairman, the 14 President or the Secretary. Such resignation shall take effect at the time specified therein; and unless otherwise specified therein the acceptance of such resignation shall not be necessary to make it effective. SEC. 8. Removal of Directors. Any director may be removed at any time for cause, at a meeting of stockholders called for the purpose, by the affirmative vote of the holders of not less than two-thirds of the outstanding shares of stock of the Corporation entitled to vote in elections of directors, considered for the purposes of this Section 8 as one class. SEC. 9. Vacancies and Newly Created Directorships. Any vacancy occurring among the directors by death, resignation, removal or otherwise and any newly created directorships may be filled by a majority of the directors then in office, though less than a quorum, or, in the event such directors are unable to act, by the stockholders. Each director elected to fill a vacancy shall hold office for the unexpired term in respect of which such vacancy occurred. Each director elected to a newly created directorship shall hold office until the next annual meeting of stockholders. 15 ARTICLE III COMMITTEES OF THE BOARD OF DIRECTORS SECTION 1. How Constituted. The Board of Directors, by resolution or resolutions passed by a majority of the whole Board, may appoint an Executive Committee, an Audit Committee and such other committees as the Board of Directors may determine. The Executive Committee and Audit Committee shall consist of three or more directors, and each such other committee shall consist of two or more directors, as determined by the Board of Directors. The Executive Committee shall have the powers set out in Section 2 of this Article III; other committees shall have such powers as the Board of Directors delegates thereto. The Board of Directors may appoint alternate committee members who, at the invitation of the committee chairman, may attend a committee meeting in the place of a regular member who is unable to attend. When attending in the place of regular members, alternate members shall have all the powers of regular members and their presence shall be included in the determination of whether a quorum exists. SEC. 2. Powers of the Executive Committee. During the intervals between the meetings of the Board of Directors, the Executive Committee shall possess and may exercise the powers of the Board of Directors, in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. 16 SEC. 3. Proceedings. Each committee of the Board of Directors may appoint a secretary of such committee, may fix its own rules of procedure and may meet at such place or places and at such time or times as the committee from time to time shall determine. Each such committee shall cause its proceedings to be recorded, and the minutes of committee meetings shall be distributed to the Board of Directors. SEC. 4. Quorum and Manner of Acting. A majority of the number of regular members of any committee of the Board of Directors shall constitute a quorum thereof for the transaction of business and the act of a majority of those present at a meeting thereof at which a quorum shall be present shall be the act of such committee. The members of any such committee shall act only1 as a committee and the individual members thereof shall have no powers as such. SEC. 5. Removal. Any member of any committee of the Board of Directors, may be removed at any time by a vote of the majority of the directors then in office at any meeting of the Board of Directors at which a quorum is present. SEC. 6. Vacancies. Any vacancy in any committee of the Board of Directors shall be filled in the manner prescribed in these By-Laws for the original appointment of such committee. 17 ARTICLE IV OFFICERS, COMMITTEES AND OTHER EXECUTIVES SECTION 1. Number. The officers of the Corporation shall be a President, one or more Vice Presidents, a Secretary and a Treasurer, and such other offices, including a Chairman, as may be determined by the Board of Directors. The Board of Directors may designate a Vice President as Senior Vice President or Executive Vice President. Any two of the offices established by or pursuant to this Section I may be held by the same person. SEC. 2. Election, Term of Office and Qualifications. Each officer shall be chosen by the Board of Directors and shall hold his/her office until his/her successor shall have been duly chosen and qualified or until death or until he/she shall resign or shall have been removed in the manner hereinafter provided. SEC. 3. Divisional Executives, Department Heads, Committees and Agents. The Board of Directors or the Executive Committee from time to time may appoint group and divisional executives, department heads, committees and agents (with such designations as may be determined in the resolution appointing them), each of whom shall act for such period, have such powers, and perform such duties as the Board of Directors or the Executive Committee from time to time may 18 determine; provided, however, that the Board of Directors or the Executive Committee may delegate to any officer or committee the power to appoint, or to provide for the appointment of, divisional executives, department heads, committees or agents authorized by the provisions of this Section 3, who shall have such designations, powers and duties as the person or committee appointing them may determine. SEC. 4. Removal. The Chairman, if any, and the President may be removed either with or without cause by a vote of a majority of the directors then in office at any meeting of the Board of Directors at which a quorum is present. Any other officer may be removed in a like manner or may be removed either with or without cause by the Chairman, or if there is no Chairman, by the President. SEC. 5. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors, the Chairman, the President or the Secretary. SEC. 6. Vacancies. A vacancy in any office because of death, resignation, removal or disqualification or any other cause, shall be filled for the unexpired portion of the term in the manner prescribed by these By-Laws for regular election or appointment to such office. 19 SEC. 7. The Chairman and the President. The Chairman, or if no Chairman is elected by the Board of Directors, the President shall be the chief executive officer of the Corporation and, subject to the instructions of the Board of Directors and the committees of the Board of Directors, he/she shall have general charge of the business, affairs and property of the Corporation and control over its several officers. The chief executive officer shall see that all orders and resolutions of the Board of Directors and of all committees of the Board of Directors are carried into effect. He/she may sign, with any other officer thereunto authorized, certificates of stock of the Corporation, and may sign and execute, in the name of the Corporation, deeds, mortgages, bonds and other instruments authorized by the Board of Directors or the Executive Committee, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or the Executive Committee to some other officer or agent. From time to time the chief executive officer shall report to the Board of Directors and to the committees of the Board of Directors all matters within his/her knowledge which the interests of the Corporation may require to be brought to their notice. He/she shall do and perform such other duties as from time to time may be assigned by the Board of Directors or any committee of the Board of Directors. 20 SEC. 8. The President. If a Chairman has been elected by the Board of Directors, the President shall have the powers and duties set forth in this Section 8. The President shall be the chief operating officer and shall have general supervision over the operations of the Corporation and the conduct of its business. In the absence of the Chairman, the President shall preside at all meetings of the stockholders, and shall perform the other duties assigned to the Chairman by Section 7 of this Article IV. The President may sign, with any other officer thereunto authorized, certificates of stock of the Corporation, and may sign and execute, in the name of the Corporation, deeds, mortgages, bonds and other instruments authorized by the Board of Directors or the Executive Committee, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or the Executive Committee to some other officer or agent. He/she shall do and perform such other duties as from time to time may be assigned to him/her by the Board of Directors, any committee of the Board of Directors, or the Chairman. SEC. 9. The Vice Presidents. At the request of the President or in his absence or disability, the Vice President designated by the President (or in the absence of such designation, the Vice President designated by the Chairman, or if there is no Chairman, the Chairman of the Board of Directors) shall perform all the duties of the President, and when so acting, he/she shall 21 have all the powers of, and be subject to all restrictions upon, the President. Any vice President may also sign, with any other officer thereunto authorized, certificates of stock of the Corporation, and may sign and execute, in the name of the Corporation, deeds, mortgages, bonds and other instruments authorized by the Board of Directors or the Executive Committee, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or the Executive Committee to some other officer or agent, and shall perform such other duties as from time to time may be assigned to him/her by the Board of Directors, the Executive Committee, the Chairman of the Board, the Chairman of the Executive Committee or the President. SEC. 10. The Secretary. The Secretary shall be sworn to the faithful discharge of his duties. He/she shall: (a) Keep the minutes of the meetings of the stockholders and of the Board of Directors and cause the same, together with the minutes of each meeting of any committee of the Board of Directors, to be recorded in books provided for that purpose. (b) See that all notices are duly given in accordance with the provisions of these By-Laws or as required by law. 22 (c) Whenever any committee shall be appointed in pursuance of a resolution of the Board of Directors, furnish the chairman of the committee with a copy of the resolution. (d) Be custodian of the records of the Corporation, the Board of Directors and the committees thereof, and of the seal of the Corporation and see that the seal is affixed to all stock certificates prior to their issuance and to all documents, the execution of which on behalf of the Corporation under its seal shall be duly authorized. (e) Sign, with the Chairman, the President or a Vice President, certificates of stock. (f) See that the books, reports, statements, certificates and the other documents and records required by law are properly kept and filed. (g) In general, perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him/her by the Board of Directors, the Executive Committee, the Chairman or the President. SEC. 11. Assistant Secretaries. At the request of the Secretary or in his/her absence or disability, the Assistant Secretary designated by him/her (or in the absence of such designation, the Assistant 23 Secretary designated by the Board of Directors or the Executive Committee) shall perform all the duties of the Secretary, and when so acting, he/she shall have all the powers of and be subject to all restrictions upon the Secretary. The Assistant Secretaries shall perform such other duties as from time to time may be assigned to them respectively by the Board of Directors, the Executive Committee or the Secretary, and shall be sworn to the faithful discharge of their duties. SEC. 12. The Treasurer. The Treasurer shall have supervision over the funds, securities, receipts and disbursements of the Corporation. He/she shall cause all moneys and other valuable effects to be deposited in the name and to the credit of the Corporation, in such banks or trust companies or with such bankers or other depositaries as shall be selected in accordance with the provisions of Section 3 of Article VI of these By-Laws. He/she shall cause the funds of the Corporation to be disbursed by checks or drafts upon the authorized depositaries of the Corporation. The Treasurer shall cause to be taken and preserved proper vouchers for all moneys disbursed. The Treasurer may also sign, with the Chairman, the President or a Vice President, certificates of stock of the Corporation. The Treasurer shall have the right and is hereby empowered from time to time to require from the officers or agents of the Corporation reports or statements giving such information as he/she may desire with 24 respect to any and all financial transactions of the Corporation. SEC. 13. Assistant Treasurers. At the request of the Treasurer or in his/her absence or disability, the Assistant Treasurer designated by him/her (or in the absence of such designation, the Assistant Treasurer designated by the Board of Directors or the Executive Committee) shall perform all the duties of the Treasurer, and when so acting, he shall have all the powers of and be subject to all restrictions upon the Treasurer. The Assistant Treasurers shall perform such other duties as from time to time may be assigned to them respectively by the Board of Directors, the Executive Committee or the Treasurer. SEC. 14. Surety Bonds. Any officer or agent of the Corporation from whom the Board of Directors or the Executive Committee may at any time think fit to require a bond shall execute to the Corporation the same in such sum and with such surety or sureties as the Board of Directors or the Executive Committee may direct, conditioned upon the faithful performance of his duties to the Corporation, including responsibility for negligence and for the accounting for all property, moneys or securities of the Corporation which may come into his hands. 25 ARTICLE V REIMBURSEMENT AND INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES SECTION 1. Reimbursement. Each director and officer of the Corporation shall be entitled to reimbursement for his reasonable expenses incurred in connection with his attention to the affairs of the Corporation, including attendance at meetings. Each employee of the Corporation other than an officer shall be entitled to such reimbursement for his reasonable expenses incurred in connection with his attention to the affairs of the Corporation as the Board of Directors, the Executive Committee or any person designated by one of them may authorize. SEC. 2. Indemnification. (a) Each person who was or is a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he/she, or a person of whom he/she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such 26 proceeding is alleged action or inaction in an official capacity or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the laws of Delaware, as the same exist or may hereafter be amended, against all costs, charges, expenses, liabilities and losses (including attorneys' fees, judgments, fines, employee benefit plan excise taxes or penalties and amounts paid or to be paid in settlement reasonably incurred or suffered by such person in connection therewith, and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his/her heirs, executors and administrators; provided, however, that, except as provided in subdivision (b) of this Section 2, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board. The right to indemnification conferred in this Section 2 shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, if the Delaware General Corporation Law requires, the payment of such expenses incurred by a director or officer in his/her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person 27 while a director or officer, including, without limitation, service to any employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this subdivision (a) or otherwise. The Corporation may, by action of the Board, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers. (b) If a claim under subdivision (a) of this Section 2 is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has failed to meet a standard of conduct which makes it permissible under the Delaware law for 28 the Corporation to indemnify the claimant for the amount claimed. Neither the failure of the Corporation (including the Board, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is permissible in the circumstances because he/she has met such standard of conduct, nor an actual determination by the Corporation (including the Board, independent legal counsel, or its stockholders) that the claimant has not met such standard of conduct, shall be a defense to the action or create a presumption that the claimant has failed to meet such standard of conduct. (c) The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Section 2 shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, By-Laws, agreement, vote of stockholders or disinterested directors or otherwise. (d) The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify 29 such person against such expense, liability or loss under Delaware law. (e) To the extent that any director, officer, employee or agent of the Corporation is by reason of such position, or a position with another entity at the request of the Corporation, a witness in any action, suit or proceeding, he shall be indemnified against all costs and expenses actually and reasonably incurred by him or on his behalf in connection therewith. (f) The Corporation may enter into agreements with any director, officer, employee or agent of the Corporation providing for indemnification to the full extent permitted by Delaware law. (g) For purposes of this Section 2, the term "Board" shall mean the Board of Directors of the Corporation or, to the extent permitted by the laws of Delaware, as the same exist or may hereafter be amended, its Executive Committee. On vote of the Board, the Corporation may assent to the adoption of this Article V by any subsidiary, whether or not wholly owned. (h) The rights provided by this Section 2 shall not be available with respect to any claim asserted against the director, officer, employee or agent which is based on matters which antedate the adoption of this Section 30 2; any such claim will be governed by the By-Laws in effect prior to April 2, 1987. (i) If any provision of this Section 2 shall for any reason be determined to be invalid, the remaining provisions hereof shall not be affected thereby but shall remain in full force and effect. 31 ARTICLE VI CONTRACTS, CHECKS, DRAFTS, BANK ACCOUNTS, ETC. SECTION 1. Contracts, etc. How Executed. Except as in these By-Laws otherwise provided, the Board of Directors or the Executive Committee may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances; and, unless so authorized, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable pecuniarily for any purpose or to any amount. SEC. 2. Loans. No loans or advances shall be contracted on behalf of the Corporation and no negotiable paper shall be issued in its name, unless and except as authorized by the Board of Directors or the Executive Committee. Any officer or agent of the Corporation thereto authorized by the Board of Directors or the Executive Committee may effect loans and advances for the Corporation from any bank, trust company or other institution, or from any firm, corporation or individual, and for such loans and advances may make, execute and deliver promissory notes, bonds or other evidences of indebtedness of the Corporation and, when authorized as aforesaid, may pledge, hypothecate or transfer as security for the payment of any and all loans, advances, 32 indebtedness and liabilities of the Corporation, any and all stocks, securities and other personal property at any time held by the Corporation and to that end may endorse, assign and deliver the same. Such authority may be general or confined to specific instances. But no mortgage (other than a purchase money mortgage) upon its property and franchises shall be created by the Corporation unless first there shall have been obtained the consent of the holders of not less than two-thirds of the shares of the capital stock of the Corporation then issued and outstanding, given by vote at a meeting of the stockholders called for the purpose. SEC. 3. Deposits. All funds shall be deposited from time to time to the credit of the Corporation in such banks or trust companies or with such bankers or other depositaries as the Board of Directors or the Executive Committee may select or as may be selected by any officer or officers, agent or agents of the Corporation to whom such power may from time to time be delegated by the Board of Directors or the Executive Committee. SEC. 4. Checks, Drafts, etc. All notes, drafts, acceptances, checks, endorsements, or other evidences of indebtedness, shall be signed by the Treasurer or an Assistant Treasurer and countersigned by the Chairman or the President, or shall be signed by one or more officers or agents of the Corporation as may from time to time be designated by resolution of the Board of Directors 33 or of the Executive Committee. Endorsements for deposit to the credit of the Corporation in any of its duly authorized depositaries may be made by the Treasurer or Assistant Treasurer, or by any other officer or agent who may be designated by resolution of the Board of Directors or the Executive Committee, without counter-signature, or by hand-stamped impression in the name of the Corporation. 34 ARTICLE VII SHARES AND THEIR TRANSFER SECTION 1. Certificate of Stock. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman, the President or a Vice President, and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, certifying the number of shares owned by him/her in the Corporation. Any of or all the signatures on the certificate may be a facsimile. In case of any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, the certificate may be issued by the Corporation with the same effect as if he/she were such officer, transfer agent or registrar at the date of issue. Certificates representing shares of stock of the Corporation shall be in such form as shall be approved by the Board of Directors. There shall be entered upon the stock books of the Corporation at the time of issuance of each share the number of the certificate issued, the name of the person owning the shares and the date of issuance thereof. SEC. 2. Transfer of Stock. Transfer of shares of stock of the Corporation shall be made on the books of the Corporation by the holder of record thereof, or by his/her attorney thereunto duly authorized by 35 a power of attorney duly executed in writing and filed with the Secretary of the Corporation or any of its transfer agents, and on surrender of the certificate or certificates representing such shares. The Corporation and its transfer agents and registrars, if any, shall be entitled to treat the holder of record of any share or shares of stock as the absolute owner thereof for all purposes, and accordingly shall not be bound to recognize any legal, equitable or other claim to or interest in such share or shares on the part of any other person whether or not it or they shall have express or other notice thereof, except as otherwise expressly provided by the statutes of the State of Delaware; provided, however, that whenever any transfer of shares shall be made for collateral security and not absolutely, and written notice thereof shall be given to the Secretary of the Corporation or to any of its transfer agents, such fact shall be expressed in the entry of the transfer. SEC. 3. Lost or Destroyed Certificates. The holder of any shares of the Corporation shall immediately notify the Corporation of any loss or destruction of the certificate therefor. The Corporation may issue a new certificate in the place of any certificate theretofore issued by it, alleged to have been lost or destroyed, but the Board of Directors or Executive Committee may require the owner of the lost or destroyed certificate or his/her legal representatives to give a bond in such sum, not exceeding double the value of the shares, and with such surety or sureties, as it may direct, to indemnify the 36 Corporation and its transfer agents and registrars of transfers, if any, against any claim that may be made against it on account of the alleged loss or destruction of any such certificate or the issuance of such new certificate. SEC. 4. Regulations. The Board of Directors may make such rules and regulations as it may deem expedient concerning the issuance, transfer and registration of certificates for shares of the stock of the Corporation. It may appoint transfer agents or registrars of transfers, or both, and may require all certificates of stock to bear the signature of either or both. SEC. 5. Closing of Transfer Books and Fixing of Record Date. The Board of Directors shall have power to close the stock transfer books of the Corporation for a period not exceeding seventy days preceding the date of any meeting of stockholders or the date for payment of any dividend or the date for the allotment of rights or the date when any change or conversion or exchange of capital stock shall go into effect; provided, however, that in lieu of closing the stock transfer books as aforesaid, the Board of Directors may fix in advance a date, not exceeding seventy days preceding the date of any meeting of stockholders or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, as a record 37 date for the determination of the stockholders entitled to notice of, and to vote at, any such meeting, or entitled to receive payment of any such dividend, or to any such allotment of rights, or to exercise the rights in respect of any such change, conversion or exchange of capital stock, and in such case only such stockholders as shall be stockholders of record on the date so fixed shall be enti- tled to such notice of, and to vote at, such meeting, or to receive payment of such dividend, or to receive such allotment or rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. 38 ARTICLE VIII CORPORATE SEAL The corporate seal shall be in the form of a circle and shall bear the words and figures "Barnes Group Inc., 1925, Delaware," or words and figures of similar import, provided that the form of such seal shall be subject to alteration by the Board of Directors. 39 ARTICLE IX FISCAL YEAR The fiscal year of the Corporation shall begin on the first day of January and end on the thirty-first day of the following December. 40 ARTICLE X AMENDMENTS All By-Laws of the Corporation shall be subject to alteration or repeal, and new By-Laws may be made, either (1) by the affirmative vote of the holders of record of a majority of the outstanding shares of the stock of the Corporation entitled to vote given at an annual meeting or at any special meeting, or (2) by the affirmative vote of at least a majority of the number of directors necessary to constitute the whole Board. * * * 2/16/96 A:\BY-LAWS 41 EX-4.5 6 EXHIBIT 4.5 FOURTH AMENDMENT TO CREDIT AGREEMENT THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of December 1, 1995, by and between BARNES GROUP, INC. (the "Borrower"), the Lenders parties to the Credit Agreement (as defined below) from time to time (the "Lenders"), and MELLON BANK, N.A., a national banking association, as Agent (in such capacity, the "Agent"). WHEREAS, the Agent, the Lenders and the Borrower are parties to a certain Credit Agreement dated as of December 1, 1991 (as amended, the "Credit Agreement"); and WHEREAS, the Borrower has requested that the Lenders extend the Revolving Credit Maturity Date for a period of one year; WHEREAS, the Agent, the Lenders and the Borrower desire to amend the Credit Agreement as set forth herein; and WHEREAS, all words and terms used in this Amendment which are defined in the Credit Agreement are used herein with the same meanings unless otherwise defined herein or required by the context; NOW, THEREFORE, in consideration of the foregoing premises and intending to be legally bound, the Agent, the Lenders and the Borrower hereby agree as follows: Section 1. Extension of Revolving Credit Maturity Date. ------------------------------------------- Pursuant to Section 2.03 of the Credit Agreement and as requested by the Borrower in a letter to the Agent dated October 2, 1995, the Lenders and the Agent hereby agree to extend the Revolving Credit Maturity Date for a period of one year. On and after December 6, 1995 (the "Effective Date"), as provided in Section 2.03 of the Credit Agreement, the Revolving Credit Maturity Date shall be December 6, 2000, as such date may be further extended by the Lenders pursuant to Section 2.03 of the Credit Agreement. Section 2. Conditions. The obligation of the Agent ---------- and the Lenders to extend the Revolving Credit Maturity Date shall be subject to satisfaction by the Borrower of the following conditions precedent: (a) The Agent shall have received (with a copy for each Lender) the following documents dated as of the date of the issuance of the Amendment (the "Closing Date") and in form and substance satisfactory to the Lenders: (i) An executed counterpart of this Amendment; and (ii) A certificate signed by a duly authorized officer of the Borrower stating that (A) the representations and warranties contained in Article III of the Credit Agreement (except for Section 3.06 which continues to be true as of the date set forth therein) are correct on and as of the Closing Date and as though made on and as of the Closing Date and (B) no Event of Default and no event, act or omission which, with the giving of notice or the lapse of time or both, would constitute such an Event of Default has occurred and is continuing or would result from the execution and delivery of the Amendment. (b) The Agent shall have received (with a copy for each Lender) such other approvals, certificates, opinions or documents, in form and substance satisfactory to the Lenders, as the Lenders may reasonably request. Section 3. Effect of Amendment. The Credit Agreement, ------------------- as amended by this Amendment, is in all respects ratified, approved and confirmed and shall, as so amended, remain in full force and effect. From and after the date hereof, all references in any document or instrument to the Credit Agreement shall mean and include the Credit Agreement, as amended by this Amendment. Section 4. Governing Law. This Amendment shall be ------------- governed by and shall be interpreted and enforced in accordance with the laws of the State of New York. Section 5. Counterparts. This Amendment may be ------------ executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute but one and the same Amendment. Section 6. Expenses. The Borrower shall reimburse the -------- Lenders for all costs and expenses (including fees and expenses of counsel to the Agent) incurred in connection with this Amendment. - 2 - IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized. BARNES GROUP, INC. By /s/ John J. Locher -------------------------- Title V.P. Treasurer ----------------------- MELLON BANK, N.A., individually and as Agent By /s/ J. Paul Marotta ----------------------------- Title Assistant Vice President -------------------------- CHEMICAL BANK By /s/ Scott S. Ward -------------------------- Title Vice President ----------------------- SHAMUT BANK, N.A. By /s/ Paul A. Veiga -------------------------- Title Vice President ----------------------- NBD BANK, N.A. By /s/ Carolyn J. Parks -------------------------- Title Vice President ----------------------- - 3 - SOCIETY NATIONAL BANK By /s/ Lawrence A. Mack -------------------------- Title Vice President ----------------------- FLEET BANK, N.A. By /s/ Marlene K. Haddad -------------------------- Title Vice President ----------------------- - 4 - EX-4.7 7 EXHIBIT 4.7 FIRST AMENDMENT TO RIGHTS AGREEMENT ----------------------------------- This Amendment, dated as of July 15, 1990, by and among Barnes Group Inc., a Delaware corporation (the "Company"), The Connecticut Bank and Trust Company, National Association ("CBT") and Mellon Bank, N.A. ("Mellon") to the Rights Agreement between the Company and CBT dated as of July 16, 1986, (the "Rights Agreement"). WHEREAS, the Company and the Rights Agent have heretofore executed and entered into the Rights Agreement under which CBT served as the Rights Agent; WHEREAS, pursuant to Section 26 of the Rights Agreement, the Company and CBT may from time to time supplement or amend the Rights Agreement in accordance with the provisions of Section 26 thereof; WHEREAS, the Company desires to appoint Mellon as the sole and successor Rights Agent to CBT effective as of August 1, 1990 (the "Appointment Time"); WHEREAS, the Company desires to make certain amendments to the Rights Agreement on account of the appointment of Mellon as Rights Agent; WHEREAS, the Company intends to provide notice to registered holders of the Rights Certificates pursuant to Section 21 of the Rights Agreement; and WHEREAS, the execution and delivery of this Amendment by the Company, CBT and Mellon have been in all respects duly authorized by each of them; - 1 - NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: Section 1. The Company hereby appoints Mellon as the sole Rights Agent, and Mellon hereby accepts such appointment, effective as of the Appointment Time. Section 2. Effective as of the Appointment Time, all references in the Rights Agreement (and in any Exhibit thereto) to "The Connecticut Bank and Trust Company, National Association" shall be deemed to be amended to be references to "Mellon Bank, N.A." Section 3. The legend set forth in Section 3(c) of the Rights Agreement is amended, effective as of the Appointment Time, to read in its entirety as follows: "This certificate also evidences and entitles the holder hereof to certain Rights as set forth in the Rights Agreement between Barnes Group Inc. (the 'Company') and Mellon Bank, N.A. (the 'Right Agent') dated as of July 16, 1986, as amended, (the 'Rights Agreement'), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal offices of the Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. The Company will mail to the holder of this certificate a copy of the Rights Agreement, as in effect on the date of mailing, without charge, promptly after receipt of a written request therefor." - 2 - Section 4. Section 21 of the Rights Agreement is amended, effective as of the Appointment Time, to add immediately after each use of the word "Connecticut" the phrase "or the Commonwealth of Pennsylvania." Section 5. Section 25 of the Rights Agreement is amended, effective as of the Appointment Time, by replacing the words: "The Connecticut Bank and Trust Company, National Association One Constitution Plaza Hartford, Connecticut 06115 Attention: Stock Transfer Department" with the words: "Mellon Bank, N.A. One Mellon Bank Center Pittsburgh, PA 15258-0001 Attention: Corporate Trust Group" Section 6. Effective as of the Appointment Time, CBT shall no longer be a Rights Agent for any purposes of the Rights Agreement, and its agreement or consent shall not be required for any amendment thereto or in connection with any action taken thereunder. The parties hereto agree that, effective as of the Appointment Time, Mellon shall be vested with the same powers, rights, duties, and responsibilities as if it had been originally named as a Rights Agent without further act or deed. CBT agrees to deliver and transfer to Mellon any and all books, records, funds, certificates, documents, instruments and other property of any kind held by it under the Rights Agreement as of the Appointment Time and to execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Section 7. Except as expressly set forth herein, the Rights Agreement shall remain in full force and effect. - 3 - Section 8. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together shall constitute but one agreement. IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the parties hereto as of the day and year first above written. Attest: BARNES GROUP INC. By:/s/ Mary Louise Beardsley By:/s/ John E. Besser ------------------------- ------------------------ Name: Mary Louise Beardsley Name: John E. Besser Title: Assistant Secretary Title Vice President Attest: THE CONNECTICUT BANK AND TRUST COMPANY, NATIONAL ASSOCIATION By:/s/ Clifford J. Heisler By:/s/ Karl H. Wagner ------------------------ -------------------------- Name: Clifford J. Heisler Name: Karl H. Wagner Title: Assistant Vice President Title: Vice President Attest: MELLON BANK, N.A. By:/s/ Joan B. Hayes By:/s/ Tracie Lvicki ------------------------- -------------------------- Name: Joan B. Hayes Name: Tracie Lvicki Title: Assistant Vice President Title: Assistant Vice President - 4 - EX-4.9 8 EXHIBIT 4.9 BARNES GROUP INC. 123 MAIN STREET BRISTOL, CONNECTICUT 06010 NOTE PURCHASE AGREEMENT $25,OOO,OOO 7.13% SENIOR NOTES DUE DECEMBER 5, 2005 TO EACH OF THE PURCHASERS LISTED IN THE ATTACHED SCHEDULE A: As of December 1, 1995 Dear Sirs: Barnes Group Inc. (the "Company"), a Delaware corporation, hereby agrees with you as follows: SECTION 1. PURCHASE AND SALE OF NOTES. 1.1 Issue of Notes. The Company will issue $25,000,000 in aggregate principal amount of its 7.13% Senior Notes due December 5, 2005 (herein called the "Notes"), Each Note will bear interest on the unpaid principal balance thereof from the date of the Note at the rate of 7.13% per annum, payable semi-annually on the fifth day of June and the fifth day of December in each year, commencing with the payment date next succeeding the date of the Note, until the principal amount shall be due and payable, and will bear interest, payable on demand, on any overdue payment (including any overdue prepayment) of principal or premium and (to the extent permitted by law) on any overdue payment of interest at a fluctuating rate per annum, to be adjusted daily, equal to the greater of (a) the rate announced publicly by Citibank, N.A. in New York, New York from time to time as its prime rate and (b) 9.13% per annum (but in no event higher than the maximum rate permitted by law); and will mature on December 5, 2005. The Notes will be registered notes in the form set out in Exhibit B. 1.2 The Closing. The Company agrees to sell to you and you agree to purchase from the Company, in accordance with the provisions of this Agreement, the principal amount of the Notes set forth opposite PAGE 1 your name on Exhibit A hereto at 100% of the principal amount thereof. The closing of your purchase shall be held at 9:00 a.m. on December 5, 1995 ("Closing Date") at the office of CIGNA Investments, Inc., Bloomfield, Connecticut 06002. At the closing the Company will deliver to you, unless you otherwise request, a single Note in the principal amount of your purchase, dated the Closing Date and payable to you, or your nominee, as set forth in Exhibit A, against payment in immediately available funds. 1.3 Purchase for Investment. You represent to the Company that you are purchasing the Notes for investment for your own account and the account of your affiliated entities and with no present intention of distributing or reselling the Notes or any part thereof to anyone other than an affiliated entity, but without prejudice, however, to your right at all times to sell or otherwise dispose of all or any part of the Notes under a registration under the Securities Act of 1933, as amended, or under a registration exemption available under that Act. It is understood that, in making the representations set out in Sections 2.9 and 2.11, the Company is relying, to the extent applicable, upon your representation as aforesaid. 1.4 Failure to Deliver. If, at the closing, the Company fails to tender to you the Notes to be purchased by you or if the conditions specified in Section 3 have not been fulfilled, you may thereupon elect to be relieved of all further obligations under this Agreement. Nothing in this Section shall operate to relieve the Company from any of its obligations hereunder or to waive any of your rights against the Company. 1.5 Expenses; Issue Taxes. Whether or not the Notes are sold, the Company will pay all expenses relating to this Agreement, including but not limited to: (a) the cost of reproducing this Agreement and the Notes; (b) the reasonable fees and disbursements of your special counsel, if any, and of your in-house counsel; (c) your out-of-pocket expenses; (d) the cost of delivering to or from your home office, insured to your satisfaction, the Notes purchased by you at the closing, any Note surrendered by you to the PAGE 2 Company pursuant to this Agreement and any Note issued to you in substitution or replacement for a surrendered Note; (e) the cost of obtaining the Private Placement Number referred to in Section 3.6; (f) all expenses, including attorneys, fees, relating to any amendments or waivers pursuant to the provisions hereof; and (g) all costs and expenses, including attorneys' fees, incurred by the holder of any Note in enforcing any rights under this Agreement or the Notes or in responding to any subpoena or other legal process issued in connection with this Agreement or the transactions contemplated hereby, including without limitation, costs and expenses incurred in any bankruptcy case. The Company will pay all taxes in connection with the issuance and sale of the Notes and in connection with any modification of the Notes and will save you harmless against any and all liabilities with respect to such taxes. The obligations of the Company under this Section 1.5 shall survive the payment of the Notes and the termination of this Agreement. SECTION 2. WARRANTIES AND REPRESENTATIONS The Company warrants and represents to you as of the date hereof that: 2.1 Subsidiaries. Exhibit C to this Agreement correctly identifies (i) each of the Company's active Subsidiaries (indicating which Subsidiaries are Domestic Subsidiaries), its jurisdiction of incorporation and the percentage of its voting stock owned by the Company and each other Subsidiary and (ii) each of the Company's Affiliates (other than Subsidiaries) which is a corporation or partnership or which is a holder of 5% or more of the voting stock of the Company and the nature of the affiliation. The Company and each Subsidiary is the legal and beneficial owner of all of the shares of voting stock it purports to own of each Subsidiary, free and clear in each case of any Lien. All such shares have been duly issued and are fully paid and non-assessable. 2.2 Corporate Organization and Authority. The Company, and each Subsidiary, PAGE 3 (a) is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, (b) has all requisite power and authority and all necessary licenses, permits, franchises and other governmental authorizations to own and operate its Properties and to carry on its business as now conducted and as presently proposed to be conducted, and (c) has duly qualified and is authorized to do business and in good standing as a foreign corporation in each jurisdiction where the character of its Properties or the nature of its activities makes such qualification necessary and where the failure to be so qualified would have a material adverse effect on the Company's or Subsidiary's business or financial position. 2.3 Business, Property, Indebtedness and Liens. (a) The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 filed by the Company with the Securities and Exchange Commission and previously delivered to you correctly describes the general nature of the business and principal Properties of the Company and its Subsidiaries. (b) Exhibit C correctly lists all outstanding Indebtedness for borrowed money (including all Capitalized Leases) of, and all Liens (other than those (x) permitted by clauses (i) - (v) of Section 7.6(a) and (y) those on Property which individually does not have a Fair Market Value in excess of $500,000 and which, when aggregated with other Property subject to Liens not included pursuant to this clause (y), does not have a Fair Market Value in excess of $2,000,000) on Property of, the Company and its Subsidiaries as of September 30, 1995. Neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its Property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 7.6(a). 2.4 Financial Statements. (a) The consolidated balance sheets of the Company and its Consolidated Subsidiaries as of December 31 in the years 1991, 1992, 1993, and 1994 and the related statements of income, retained earnings and changes in financial position or cash flows for the fiscal years ended on such dates, all accompanied by reports thereon containing opinions without qualification, except as therein noted, by Ernst & Young or by Price, Waterhouse, L.L.P., independent certified public accountants, and the consolidated balance sheets of the Company and its Consolidated PAGE 4 Subsidiaries as of June 30, 1995 and as of September 30, 1995, if the representation is being made as of the Date of Closing, and the related statements of income, retained earnings and cash flows for the 6-month or 9-month period, as appropriate, then ended, certified by the Company's chief financial officer or chief accounting officer, have been prepared in accordance with generally accepted accounting principles consistently applied, and present fairly the financial position of the Company and its Consolidated Subsidiaries as of such dates and the results of their operations for such periods, provided, however, that the 1995 financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements. (b) Since December 31, 1994 there have been no materially adverse changes in the Properties, business, prospects, profits or financial condition of the Company or the Company and its Subsidiaries taken as a whole. 2.5 Full Disclosure. The financial statements referred to in Section 2.4 do not, nor does this Agreement nor the other written materials described in Exhibit F furnished to you by the Company contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading. There is no agreement, restriction or other factual matter which the Company has not disclosed to you in writing which so far as the Company can now reasonably foresee, will have a material adverse impact on the long-term financial condition or prospects of the Company and its Subsidiaries or the ability of the Company to perform this Agreement. 2.6 Pending Litigation; Compliance with Law. There are no proceedings or investigations pending, or to the knowledge of the Company threatened, against or affecting the Company or any Subsidiary in or before any court, governmental authority or agency or arbitration board or tribunal which, so far as the Company can now reasonably foresee, individually or in the aggregate, will have a material adverse impact on the long- term financial condition or prospects of the Company and its Subsidiaries, or would impair the ability of the Company to perform this Agreement. Neither the Company nor any Subsidiary is in default with respect to any order of any court, governmental authority or agency or arbitration board or tribunal or in violation of any laws or governmental rules or regulations where, so far as the Company can now reasonably foresee, such default or violation will have a material adverse impact on the long-term financial condition or prospects of the Company and its Subsidiaries, or the ability of the Company to perform this Agreement. PAGE 5 2.7 Title to Properties. Except where the failure to possess good and marketable title in fee simple or good title, as the case may be, would not have a material adverse impact on the Company or on the Company and its Subsidiaries taken as a whole, the Company, and each Subsidiary, has good and marketable title in fee simple (or its equivalent under applicable law) to all the real Property, and has good title to all the other Property, it purports to own, including that reflected in the most recent balance sheet referred to in Section 2.4 (except as sold or otherwise disposed of in the ordinary course of business), free from Liens not permitted by Section 7.6(a). 2.8 Patents and Trademarks. The Company, and each Subsidiary, owns or possesses all the patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect to the foregoing necessary for the present and planned future conduct of its business, without any conflict with the rights of others known by Senior Management. 2.9 Sale is Legal and Authorized. The sale of the Notes by the Company and compliance by the Company and each Subsidiary with all of the provisions of this Agreement and of the Notes: (a) have been duly authorized and are within the corporate powers of the Company and each Subsidiary; and (b) are legal and will not conflict with, constitute a violation of, or result in the creation of any Lien upon any Property of the Company or any Subsidiary under the provisions of, any agreement, charter instrument, by-law or other instrument to which the Company or any Subsidiary is a party or by which any of them or their respective Properties may be bound. The Company is not a party to any agreement, or subject to any charter or other corporate restriction, which restricts its right or ability to incur Indebtedness, other than this Agreement and the agreements listed on Exhibit C. 2.10 No Defaults. No event has occurred and no condition exists which, upon the issue of the Notes, would constitute a Default or an Event of Default. The Company is not in violation (whether or not temporarily waived) of any term of any certificate of incorporation or by-law and neither the Company nor any PAGE 6 Subsidiary is in default under any agreement or other instrument with respect to borrowed money. Neither the Company nor any Subsidiary is in violation of any term of any other agreement or instrument to which it is a party or by which it or any of its Property may be bound which violation, individually or in the aggregate with other violations, will have a materially adverse impact on the long-term business or prospects of the Company or the Company and its Subsidiaries taken as a whole. 2.11 Governmental Consent. Neither the nature of the Company or of any Subsidiary, or of any of their respective businesses or Properties, nor any relationship between the Company or any Subsidiary and any other Person, nor any circumstance in connection with the offer, issue, sale or delivery of the Notes or the execution, delivery and performance of this Agreement is such as to require a consent, approval or authorization of, or filing, registration or qualification with, any governmental authority on the part of the Company or any Subsidiary in connection with the execution, delivery and performance of this Agreement or the offer, issue, sale or delivery of the Notes. 2.12 Taxes. Consolidated Federal income tax returns for the Company and its Domestic Subsidiaries have been examined by the Internal Revenue Service for all years up to and including the year ended December 31, 1989. The Company and each of its Subsidiaries have filed or caused to be filed all Federal, state and local tax returns which, to the knowledge of Senior Management are required to be filed and have paid or caused to be paid all taxes as shown on such returns or on any assessment received by it or by any of them, to the extent that such taxes have become due, except any such tax or assessment the validity of which is being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as appropriate, has set aside on its books adequate reserves to the extent the Company or any Subsidiary and a nationally recognized independent certified public accountant believes such reserves are necessary. To the extent that the Company in good faith believes is necessary, the Company and its Subsidiaries have set up reserves which are believed by the Company to be adequate for the payment of additional taxes. All assessed deficiencies resulting from examinations by the Internal Revenue Service up to and including the year ended December 31, 1989 have been discharged, reserved against or will not impair the Company's ability to repay the Loans. PAGE 7 2.13 Use of Proceeds. The Company will apply the proceeds from the sale of the Notes to refinance outstanding Indebtedness for borrowed money. None of the transactions contemplated in this Agreement (including, without limitation thereof, the use of the proceeds from the sale of the Notes) will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulations issued pursuant thereto, including, without limitation, Regulations G, T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. 2.14 Private Offering. The Company has not offered any of the Notes or any similar Security of the Company for sale to, or solicited offers to buy any thereof from, or otherwise approached or negotiated with respect thereto with, any prospective purchaser, other than the purchasers of the Notes and not more than five (5) other institutional investors, each of whom was offered all or a portion of the Notes at private sale for investment. The Company agrees that neither the Company nor anyone acting on its behalf will offer the Notes or any part thereof or any similar Securities for issue or sale to, or solicit any offer to acquire any of the same from, anyone so as to bring the issuance and sale of the Notes within the provisions of Section 5 of the Securities Act of 1933, as amended. 2.15 ERISA. (a) Relationship of Vested Benefits to Pension Plan Assets. ------------------------------------------------------ The present aggregate value of all benefits vested under all qualified "defined benefit pension plans", as such term is defined in Section 3 of ERISA, maintained by the Company and its Related Persons, or in which employees of the Company or any Related Person are entitled to participate, as from time to time in effect (herein called the "Pension Plans"), did not, as of January 1, 1994, the last annual valuation date, exceed the actuarial or market value of the assets of the Pension Plans allocable to such vested benefits. (b) Prohibited Transactions. Neither the Company or any ----------------------- Related Person nor any of the Pension Plans nor any trusts created thereunder, nor any trustee or administrator thereof, has engaged in a "prohibited transaction", as such term is defined in Section 4975 of the Internal Revenue Code of 1986, as amended, or described in Section 406 of ERISA, which could subject the Company, any Related Person, any of the Pension Plans, any such trust, or any trustee or administrator thereof, or any party dealing with the Pension Plans or any such trust to the tax or penalty on prohibited transactions imposed by said Section 4975 or by Section 502(i) of ERISA. PAGE 8 (c) Reportable Events. Since December 31, 1986, neither ----------------- any of the Pension Plans nor any such trusts have been terminated, nor have there been any "reportable events", as that term is defined in Section 4043 of ERISA, since the effective date of ERISA. (d) Accumulated Funding Deficiency. Neither any of the ------------------------------ Pension Plans nor any such trusts have incurred any "accumulated funding deficiency", as such term is defined in Section 302 of ERISA (whether or not waived), since the effective date of ERISA. 2.16 Foreign Assets Control Regulations, etc. Neither the sale of the Notes by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto. 2.17 Status under Certain Statutes. Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the Federal Power Act, as amended. 2.18 Environmental Matters. Neither the Company nor any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a material adverse effect on the Company or the Company and its Subsidiaries taken as a whole. Except as otherwise disclosed to you in writing, (a) neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not reasonably be expected to result in a material adverse effect on the Company or the Company and its Subsidiaries taken as a whole; PAGE 9 (b) neither the Company nor any of its Subsidiaries has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them and has not disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a material adverse effect on the Company or the Company and its Subsidiaries taken as a whole; and (c) all buildings on all real properties now owned, leased or operated by the Company or any of its Subsidiaries are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a material adverse effect on the Company or the Company and its Subsidiaries taken as a whole. SECTION 3. CLOSING CONDITIONS Your obligation to purchase and pay for the Notes to be delivered to you at the closing shall be subject to the following conditions precedent: 3.1 Opinions of Counsel. You shall have received from John E. Besser, Esq., Senior Vice President/Finance and Law of the Company, the closing opinion described in Exhibit D and at your option from your counsel stating that the opinion from Company counsel is satisfactory in scope and form and that, in their opinion, you are justified in relying thereon. 3.2 Warranties and Representations True as of Closing Date. (a) The warranties and representations contained in Section 2 shall (except as affected by transactions contemplated by this Agreement) be true in all material respects on the Closing Date with the same effect as though made on and as of that date. (b) Neither the Company nor any Subsidiary shall have taken any action or permitted any condition to exist which would have been prohibited by Section 7 if such Section had been binding and effective at all times during the period from December 31, 1994 to and including the Closing Date. 3.3 Compliance with this Agreement. The Company shall have performed and complied with all agreements and conditions contained herein which are required to be performed or complied with by the Company before or at the closing. PAGE 10 3.4 Officers' Certificate. You shall have received a certificate dated the Closing Date and signed by the President or a Vice President and the Treasurer or an Assistant Treasurer of the Company, certifying that the conditions specified in Sections 3.2 and 3.3 have been fulfilled. 3.5 Proceedings Satisfactory. All proceedings taken in connection with the sale of the Notes and all documents and papers relating thereto shall be satisfactory to you and your counsel. You and your counsel shall have received copies of such documents and papers as you or they may reasonably request in connection therewith or as a basis for your counsel's closing opinion, if any, all in form and substance satisfactory to you and your counsel. 3.6 Private Placement Number. The Company shall have obtained from Standard & Poor's Corporation and provided to you a Private Placement Number for the Notes. 3.7 Legal Investment. Each Note to be purchased by you shall qualify as a legal investment for life insurance companies under the New York Insurance Law and any other law applicable to you (other than under any "basket" or leeway provisions thereof), and the Company shall have delivered to you such officer's certificates or other evidence as you may request to establish compliance with this condition. SECTION 4. DIRECT PAYMENT The Company agrees that, notwithstanding any provision in this Agreement or the Notes to the contrary, it will pay all sums becoming due to any institutional holder of Notes in the manner provided in Exhibit A or in any other reasonable manner as any institutional holder may designate to the Company in writing (without presentment of or notation on the Notes). SECTION 5. PREPAYMENTS 5.1 Required Prepayments. (a) In addition to paying the entire remaining principal amount and interest due on the Notes at maturity, the Company will prepay, and there shall become due and payable, $6,250,000.00 principal amount of the Notes on December 5 in each year beginning on December 5, 2002 and ending December 5, 2004, inclusive. Each such prepayment shall be at 100% of the PAGE 11 principal amount to be prepaid, together with interest accrued thereon to the date of prepayment. (b) The acquisition of any Notes by the Company shall not reduce or otherwise affect its obligation to make any prepayment required by Section 5.l(a). Upon any exercise by the Company of the prepayment option in Section 5.2, each remaining scheduled payment of principal shall be reduced on a pro rata basis to reflect such reduction in outstanding principal amount. 5.2 Option to Prepay. The Company may make optional prepayments to prepay the Notes in whole or in part, in multiples of $1,000,000, at any time at a price equal to the greater of (i) the principal amount to be prepaid together with accrued interest on the principal amount so prepaid to the prepayment date, and (ii) the Makewhole Price applicable at such time with respect to the amount of the Notes being prepaid. 5.3 Notice of Optional Prepayment. The Company will give notice of any optional prepayment of the Notes to each holder of the Notes not less than 10 Business Days nor more than 60 days before the date fixed for prepayment, specifying (a) such date, (b) the section of this Agreement under which the prepayment is to be made, (c) the principal amount of the Notes and of such holder's Notes to be prepaid on such date, and (d) the accrued interest applicable to the prepayment, and setting forth a detailed calculation of what the Makewhole Price would be if the Notes were being prepaid on the date of such notice. Notice of prepayment having been so given, the principal amount of the Notes specified in such notice, together with the premium, if any, and accrued interest thereon, shall become due and payable on the prepayment date. The Company will provide a supplemental notice by courier or facsimile confirmed by telephone to be received by each holder of the Notes by 2:00 p.m., Hartford, Connecticut time, on the Business Day immediately preceding the date fixed for prepayment which will set forth a detailed calculation of the Makewhole Price. 5.4 Partial Payment Pro Rata. If there is more than one Note outstanding at any time, the aggregate principal amount of each required or optional partial payment of the Notes shall be allocated among the outstanding Notes in proportion, as nearly as practicable, to the respective unpaid principal amounts of the Notes. For the purpose of this Section 5.4 only, any Notes reacquired by the Company shall be deemed to be outstanding. PAGE 12 SECTION 6. REGISTRATION; SUBSTITUTION OF NOTES 6.1 Registration of Notes. The Company will cause to be kept at its office maintained pursuant to Section 7.3, a register for the registration and transfer of the Notes. The names and addresses of the holders of the Notes, the transfer thereof and the names and addresses of the transferees of any of the Notes will be registered in the register. The Person in whose name any Note is registered shall be deemed and treated as the owner and holder thereof for all purposes of this Agreement, and the Company shall not be affected by any notice or knowledge to the contrary. 6.2 Exchange of Notes. Upon surrender of any Note to the Company at its office maintained pursuant to Section 7.3, the Company, upon request, will execute and deliver, at its expense (except as provided below), new Notes in exchange therefor, in denominations of at least $100,000 (except as may be necessary to reflect any principal amount not evenly divisible by $100,000), in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note (a) shall be payable to such Person as the surrendering holder may request, and (b) shall be dated and bear interest from the date to which interest has been paid on the surrendered Note or dated the date of the surrendered Note if no interest has been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any transfer. 6.3 Replacement of Notes. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note and, (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it (provided, if the holder of the Note is an institutional investor, its own agreement of indemnity shall be deemed to be satisfactory), or (b) in the case of mutilation, upon surrender and cancellation of the Note, the Company at its expense will execute and deliver a new Note of like tenor, dated and bearing interest from the date to which interest has been paid on the lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest has been paid thereon. PAGE 13 SECTION 7. COMPANY BUSINESS COVENANTS The Company covenants that on and after the date of this Agreement until the Notes are paid in full: 7.1 Payment of Taxes and Claims. Except in situations where the failure to pay would not result in a material adverse impact on the Company or the Company and its Subsidiaries taken as a whole, the Company, and each Subsidiary, will pay, before they become delinquent, (a) all taxes, assessments and governmental charges or levies imposed upon it or its Property, and (b) all claims or demands of any kind (including but not limited to those of materialmen, mechanics, carriers, warehousemen, landlords and other like Persons) which, if unpaid, might result in the creation of a Lien upon its Property, provided that items of the foregoing description need not be paid while being contested in good faith and by appropriate proceedings, if and for so long as book reserves reasonably believed by the Company and independent certified public accountants of recognized national standing to be adequate have been established with respect thereto; provided further that notwithstanding the foregoing provisions of this Section 7.1, the Company and each Subsidiary will pay all taxes known by Senior Management to be due and payable no later than fifteen days after the date such taxes are due. 7.2 Maintenance of Properties and Corporate Existence. (a) Except where the failure to do so would not have a material adverse impact on the Company or the Company and its Subsidiaries taken as a whole, the Company, and each Subsidiary, will: (i) Property -- maintain its Property in good -------- condition and make all necessary renewals, replacements, additions, betterments and improvements thereto; (ii) Insurance -- keep its properties adequately --------- insured at all times, by financially sound and reputable insurers; maintain such other insurance, to such extent and against such risks, including fire and other risks insured against by extended coverage as is customary with companies in the same or similar businesses located or operating in areas with similar PAGE 14 geological conditions; maintain in full force and effect public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any properties owned, occupied or controlled by it, in such amounts as the Company or any Subsidiary, as the case may be, shall reasonably deem necessary; and maintain such other insurance as may be required by law; (iii) Financial Records -- keep true books of records ----------------- and accounts in which full and correct entries will be made of all its business transactions, and will reflect in its financial statements adequate accruals and appropriations to reserves, all in accordance with generally accepted accounting principles, consistently applied; and (iv) Corporate Existence and Rights -- do or cause to ------------------------------ be done all things necessary to preserve and keep in full force and effect its existence, rights and franchises, except as otherwise permitted by Section 7.4, provided, however that -------- the Company may liquidate or sell any Subsidiary if the transaction is permitted by Section 7.4. (b) The Company will and will cause each of its Sub- sidiaries to comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations could not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company or any Subsidiary. 7.3 Maintenance of Office. The Company will maintain an office in the State of Connecticut where notices, presentations and demands in respect of this Agreement or the Notes may be made upon it. Such office shall be maintained at 123 Main Street, Bristol, Connecticut 06010 until such time as the Company shall notify the holders of the Notes of a change of location. PAGE 15 7.4 Sale of Assets or Merger. (a) Sale of Assets -- The Company will not, nor will it -------------- permit any of its Subsidiaries to, directly or indirectly, except in the ordinary course of business, sell, lease, transfer or otherwise dispose of any of its Property or assets, now owned or hereafter acquired, if, as a result of such sale, lease, transfer or disposition, the aggregate net book value or fair market value, whichever shall be higher, of all Property and assets sold, leased, transferred or otherwise disposed of by the Company and its Subsidiaries in the then current fiscal year of the Company would exceed an amount equal to 10% of the book value (computed in accordance with GAAP) of all Property and assets of the Company and its Consolidated Subsidiaries at the end of the preceding fiscal year. (b) Consolidation, Merger -- The Company will not, nor --------------------- will it permit any of its Subsidiaries to, directly or indirectly, consolidate with or merge into any other corporation, or permit another corporation to merge into it, provided, however, -------- ------- that (i) any Subsidiary of the Company may be merged into the Company or another wholly-owned Subsidiary, (ii) the Company or any Subsidiary of the Company may merge or consolidate with another Person or business, if the Company or such Subsidiary, as the case may be, is the surviving corporation, (iii) the Company or any Subsidiary may consolidate with or merge with another Person or business in a transaction where the Company or Subsidiary is not the surviving entity if (1) the continuing or surviving entity shall assume in writing all of the obligations of the Company under this Agreement and the Notes, (2) the continuing or surviving entity shall not, immediately after such merger or consolidation, be in default of any of the Company's obligations under this Agreement or the Notes, (3) the continuing or surviving entity shall be a corporation organized under the laws of the United States or any state thereof, and (4) after giving effect to such consolidation or merger, the continuing or surviving entity could incur $1 of additional Indebtedness under Section 7.7. 7.5 Leases. The Company will not, nor will it permit any of its Subsidiaries, directly or indirectly, to incur, create or assume any commitment to make any direct or indirect payment, whether as rent or otherwise, under any lease, rental or other arrangement for the use of real or personal Property or both of any other Person unless (a) after giving effect to such lease the aggregate rental obligations of the Company and its Subsidiaries (exclusive of obligations to pay taxes and rental increments attributable to escalator clauses) during any fiscal year shall not exceed an amount equal to 15% of the book value (computed in accordance with GAAP) of all Properties and assets of the Company and its PAGE 16 Consolidated Subsidiaries at the end of the preceding fiscal year or (b) such lease was in existence as of the Closing Date and disclosed on Schedule I hereto. 7.6 Liens and Encumbrances. (a) Negative Pledge. The Company will not, nor will it --------------- permit any of its Subsidiaries to, directly or indirectly incur, create, assume or permit to exist any mortgage, pledge, security interest, lien, charge or other encumbrance of any nature whatsoever (including conditional sales or other title retention agreements) on any of its Property or assets, whether owned at the date hereof or hereafter acquired, or assign, or permit any of its Subsidiaries to assign, any right to receive income, except: (i) liens incurred or pledges and deposits made in connection with workers, compensation, unemployment insurance, old-age pensions, social security and public liability and similar legislation; (ii) liens securing the performance of bids, tenders, leases, contracts (other than for the repayment of borrowed money), statutory obligations, surety and appeal bonds and other obligations of like nature, incurred as an incident to and in the ordinary course of business; (iii) statutory liens of landlords and other liens imposed by law, such as carriers', warehousemen's, mechanics', materialmen's and vendors, liens, incurred in good faith in the ordinary course of business; (iv) liens securing the payment of taxes, assessments and governmental charges or levies, either (1) not delinquent, or (2) being contested in good faith by appropriate proceedings; (v) zoning restrictions, easements, licenses, reservations, restrictions on the use of real property or minor irregularities incident thereto which do not in the aggregate materially detract from the value of the Property or assets of the Company or such Subsidiary, as the case may be, or impair the use of such Property in the operation of its business; PAGE 17 (vi) purchase money liens on real Property or equipment (which are filed against the real Property or equipment within 180 days of purchase) that do not exceed 100% of the fair market value of the related Property; and (vii) other liens, that in the aggregate, do not exceed 15% of the book value (computed in accordance with GAAP) of all Properties and assets of the Company and its Consolidated Subsidiaries at the end of the preceding fiscal year. (b) Equal and Ratable Lien: Equitable Lien. In case -------------------------------------- any Property is subjected to a Lien in violation of Section 7.6(a), the Company will make or cause to be made provision whereby the Notes will be secured pursuant to documents reasonably satisfactory to the holders of at least 51% in outstanding principal amount of the Notes (exclusive of Notes owned by the Company, Subsidiaries and Affiliates) equally and ratably with all other obligations secured thereby, and in any case the Notes shall have the benefit, to the full extent that, and with such priority as, the holders may be entitled thereto under applicable law, of an equitable Lien on such Property securing the Notes. Such violation of Section 7.6(a) shall constitute an Event of Default hereunder, whether or not any such provision is made pursuant to this Section 7.6(b). 7.7 Indebtedness. The Company will not, nor will it permit any of its Subsidiaries to, directly or indirectly incur, create, assume or permit to exist any Indebtedness other than: (a) Indebtedness incurred by the Company under the Revolving Credit Agreement; (b) the Notes; (c) Indebtedness outstanding on the date hereof under the Company's $40,000,000, 9.47% Senior Notes due September 16, 2001; (d) Indebtedness of the Company which constitutes extensions, renewals or replacements on substantially the same terms and conditions (and does not increase the amount outstanding) of (a) through (c) above; and (e) additional Indebtedness of the Company and its Subsidiaries; PAGE 18 provided, however, that (i) the total Indebtedness of the Company's Subsidiaries shall not at any time exceed $50 million; (ii) total Indebtedness of the Company's Domestic Subsidiaries shall not at any time exceed $10 million (excluding from the calculation thereof for all purposes except compliance with Section 7,4(b)(4) any pre-existing Indebtedness of a newly acquired Domestic Subsidiary for a period not exceeding 30 days after acquisition of such Domestic Subsidiary); and (iii) the aggregate amount of all Indebtedness of the Company and its Subsidiaries at any time outstanding shall not exceed an amount equal to 155% of Consolidated Net Worth at such time. 7.8 Net Worth. The Company will not permit Consolidated Net Worth of the Company and its Subsidiaries at any time to be less than $135 million plus 50% of Consolidated Net Income for each fiscal year beginning after December 31, 1994 (but without deduction for any fiscal year in which Consolidated Net Income is a negative amount), with the annual adjustments to be applicable as of December 31, 1995 and as of the end of each subsequent fiscal year. 7.9 ERISA Compliance. Neither the Company nor any Related Person will at any time permit any Pension Plan maintained by it to: (i) engage in any "prohibited transaction" as such term is defined in Section 4975 of the Internal Revenue Code of 1986, as amended, or described in Section 406 of ERISA; (ii) incur any accumulated funding deficiency" as such term is defined in Section 302 Of ERISA, whether or not waived; or (iii) terminate under circumstances which could result in the imposition of a Lien on the Property of the Company or any Subsidiary pursuant to Section 4068 of ERISA. 7.1O Transactions with Affiliates. Neither the Company nor any Subsidiary will enter into any transaction (except transactions which do not in any one calendar year involve in the aggregate an amount in excess of $500,000), including without limitations the purchase, sale or exchange of Property or the rendering of any service, with any Affiliate except in the ordinary course of and pursuant to the reasonable requirements of the Company's or such Subsidiary's business and upon fair and reasonable terms no less favorable to the Company PAGE 19 or such Subsidiary than would obtain in a comparable arms-length transaction with a Person not an Affiliate. 7.11 Tax Consolidation. The Company will not file or consent to the filing of any consolidated income tax return with any Person other than a Subsidiary. 7.12 Acquisition of Notes. Neither the Company nor any Subsidiary nor any Affiliate will directly or indirectly acquire or make any offer to acquire any Notes unless the Company or such Subsidiary or Affiliate has offered to acquire Notes, pro rata, from all holders of the Notes and upon the same terms. In case the Company acquires any Notes, such Notes shall thereafter be cancelled and no Notes shall be issued in substitution therefor. 7.13 Lines of Business. Neither the Company nor any Subsidiary will engage in any line of business if as a result thereof the business of the Company and its Subsidiaries taken as a whole would be substantially different from what it was at December 31, 1994 as described in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1994. 7.14 Restricted Loans, Advances and Investments. The Company shall not, and shall not permit any Subsidiary to, at any time make or permit to exist any loans or advances to, or purchase any stock, other securities or evidences of indebtedness of, or make or permit to exist any investment or acquire any interest whatsoever in, any other person, except (a) the purchase of the Company's common or preferred stock, (b) loans or advances of the Company or any Subsidiary of the Company (in addition to loans or advances permitted by clauses (d) and (e) of this Section 7.14) not in excess of $10,000,000 aggregate principal amount for the Company and its Subsidiaries at any time outstanding, (c) investments of its cash by the Company or any Subsidiary of the Company in (i) marketable direct obligations of, or marketable obligations guaranteed by, the United States of America or Canada, or marketable obligations of any instrumentality or agency thereof, the payment of the principal and interest of which is unconditionally guaranteed by the United States of America or Canada, (ii) certificates of deposit or other obligations issued by, or bankers' acceptances of, any bank or trust company organized under the laws of the Federal Republic of Germany, France, the United Kingdom, Japan, Canada or the United States of America or any state thereof (including foreign branches of any such bank or trust company) and having capital, PAGE 20 surplus and undivided profits in excess of $100,000,000, (iii) open market commercial paper with a maturity not in excess of 270 days from the date of acquisition thereof and having the highest credit rating by either Standard & Poor's Corporation or Moody's Investors Service, Inc., or (iv) in the case of any foreign Subsidiary of the Company in a country in which a Subsidiary exists as of the date of this agreement, such investments of a comparable quality and term to the other investments permitted by this clause (c) as are usually made in the jurisdiction or jurisdictions in which the business of such foreign Subsidiary is principally conducted by prudent corporate investors in like circumstances, (d) loans or advances of the Company to any of its Subsidiaries and loans or advances of any Subsidiary of the Company to the Company or another such Subsidiary, (e) purchases of stock or other securities of any corporations, associations or other business entities; provided, however, that the aggregate -------- ------- cost to or fair market value of the consideration paid by the Company and its Subsidiaries for such stock or securities of any such corporation, association or other business entity shall not exceed 40% of the Company's Consolidated Net Worth within any four-year period commencing on the Closing Date, or (f) such other investments in an aggregate amount not to exceed $250,000 as the Company or a Subsidiary may elect. 7.15 Limitation on Restrictions on Dividends by Subsidiaries, etc. The Company shall not permit any Subsidiary or other entity in which the Company or any Subsidiary has an equity investment (a "Subsidiary Investment") to be or become subject to any restriction (except restrictions applicable to corporations generally and those restrictions set forth in the Revolving Credit Agreement), whether arising by agreement, by its articles of incorporation, by-laws or other constituent documents of such Subsidiary or Subsidiary Investment or otherwise, on the right of such Subsidiary or Subsidiary Investment from time to time to (w) declare and pay Stock Payments with respect to capital stock owned by the Company from time to time owed to the Company or any Subsidiary, or (y) make loans or advances to the Company or any Subsidiary, or ((z) transfer any of its properties or assets to the Company or any Subsidiary; provided, however, that such restriction may be permitted with respect to any Subsidiary or Subsidiary Investment in which the Company or a Subsidiary directly or indirectly owns less than 80% of the Voting Stock and in which the Company's or such Subsidiary's cumulative investment since the Closing Date (in terms of cash invested in and/or assets contributed to the entity) (i) individually is less than 10% of the book value of the assets of the Company and its consolidated subsidiaries, and (ii) when taken together with all such Subsidiaries and Subsidiary Investments subject to any such restrictions in which the Company or a Subsidiary directly or indirectly owns less than 80% of the Voting Stock, is less than PAGE 21 15% of the book value of the assets of the Company and its consolidated Subsidiaries. SECTION 8 INFORMATION AS TO COMPANY 8.1 Financial and Business Information. The Company will deliver to you, if at the time you or your nominee holds any Notes (or if you are obligated to Purchase any Notes), and to each other institutional holder of outstanding Notes: (a) Quarterly Statements - within 60 days after the end of -------------------- each of the first three quarterly fiscal periods in each fiscal year of the Company, two copies of: (i) a consolidated balance sheet of the Company and its Consolidated Subsidiaries as at the end of that quarter, and (ii) consolidated statements of income, retained earnings and cash flows of the Company and its Consolidated Subsidiaries for that quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with that quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail and certified by a principal financial officer of the company as presenting fairly the financial condition of the companies being reported upon and as having been prepared in accordance with generally accepted accounting principles for interim statements consistently applied; (b) Annual Statements - within 90 days after the end of ----------------- each fiscal year of the Company, two copies of: (i) a consolidated balance sheet of the Company and its Consolidated Subsidiaries, as at the end of that year, and (ii) consolidated statements of income, retained earnings and cash flows of the Company and its Consolidated Subsidiaries, for that year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by an opinion of independent certified public accountants of recognized national standing stating PAGE 22 that such financial statements fairly present the financial condition of the companies being reported upon and have been prepared in accordance with generally accepted accounting principles consistently applied (except for changes in application in which such accountants concur), and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and which independent auditors, report shall not identify either (A) any departure from the consistent application of generally accepted accounting principles (except for identified changes in application in which such accountants concur), or (B) any tests of the accounting records or other auditing procedures which were considered necessary in the circumstances and which were not performed; (c) Audit Reports - promptly upon receipt thereof, one ------------- copy of each other report submitted to the Company or any Subsidiary by independent accountants in connection with any material interim or special audit made by them of the books of the Company or any material Subsidiary; (d) SEC and Other Reports - promptly upon their becoming --------------------- available one copy of each report, notice or proxy statement sent by the Company to stockholders generally, and of each periodic report and any registration statement, filed by the Company with any securities exchange or the Securities and Exchange Commission or any successor agency; (e) ERISA - as soon as practicable, but in no event later ----- than five days, after a member of Senior Management becoming aware of the occurrence of any (i) "reportable event" as such term is defined in Section 4043 of ERISA, or (ii) "accumulated funding deficiency" as such term is defined in Section 302 of ERISA, or (iii) "prohibited transaction", as such term is defined in Section 4975 of the Internal Revenue Code of 1986, as amended, or described in Section 406 of ERISA, in connection with any Pension Plan or any trust created thereunder, a notice specifying the nature thereof, what action the Company or a Related Person is taking or proposes to take with respect thereto, and, when known, any action taken by the Internal Revenue Service with respect thereto; (f) Notice of Default or Event of Default - immediately ------------------------------------- upon becoming aware of the existence of any Default or PAGE 23 Event of Default a notice describing its nature and the action the Company is taking with respect thereto; (g) Notice of Claimed Default - immediately upon becoming ------------------------- aware that the holder of any Note or of any Indebtedness or Security of the Company or any Subsidiary has given notice or taken any other action with respect to a claimed Default or Event of Default, a notice specifying the notice given or action taken by such holder, the nature of the claimed Default or Event of Default and the action the Company is taking with respect thereto; (h) Report on Proceedings - The Company and each --------------------- Subsidiary will give each holder of the Notes (a) notice, promptly, of any action, suit or proceeding at law or in equity or by or before any court or other governmental instrumentality or agency (i) which is not fully covered by insurance without the applicability of any co-insurance provisions or with respect to which insurance coverage is being contested and which has not been bonded and in which either the aggregate specified dollar amount of all claims (either as set forth in the complaint, demand letters or other written communications by or on behalf of the plaintiff or as otherwise determined in good faith by the Company or its counsel) against the Company and its Subsidiaries taken as a whole, exceeds the amount of any applicable insurance coverage by (x) $1,000,000 for any single proceeding or (y) $5,000,000 in the aggregate during any fiscal year of the Company; provided, however, that after giving notice of such ----------------- claims aggregating at least $5,000,000, notice is only required of subsequent claims made during the same fiscal year which exceed insurance coverage by $500,000 for any single proceeding, or (ii) if the results thereof may have a material adverse effect on the business or condition of the Company or any Subsidiary of the Company, and (b) with respect to any such action, suit or proceeding such documentation as the holder of any Note reasonably requests; (i) Requested Information - with reasonable promptness, --------------------- such data and information as from time to time may be reasonably requested. 8.2 Officers' Certificates. Each set of financial statements delivered pursuant to Section 8.1(a) or 8.1(b) will be accompanied by a certificate of the President or a Vice President and the Treasurer or an Assistant Treasurer of the Company setting forth: PAGE 24 (a) Covenant Compliance - the information required in ------------------- order to establish compliance with the requirements of Section 7 during the period covered by the income statements being furnished; and (b) Event of Default - that the signers have reviewed the ---------------- relevant terms of this Agreement and have made, or caused to be made, under their supervision, a review of the transactions and condition of the Company and its Subsidiaries from the beginning of the period covered by the income statements being furnished and that the review has not disclosed the existence during such period of any Default or Event of Default or, if any such Default or Event of Default existed or exists, describing its nature and the action the Company has taken with respect thereto. 8.3 Accountants' Certificates. Each set of annual financial statements delivered pursuant to Section 8.1(b) will be accompanied by a certificate of the accountants who certify such financial statements, stating that they have reviewed this Agreement and whether, in making the examination necessary for their certification of such statements, they have become aware of any Default or Event of Default, and, if any Default or Event of Default then exists, describing its nature. 8.4 Inspection. The Company will permit your representatives, while you or your nominee holds any Note, or the representatives of any other, institutional holder of the Notes, at your or such holder's expense, to visit and inspect any of the Properties of the Company or any Subsidiary, to examine and make copies and abstracts of all their books of account, records, and other papers, and to discuss their respective affairs, finances and accounts with their respective officers, employees designated by said officers and independent public accountants (and by this provision the Company authorizes said accountants to discuss the finances and affairs of the Company and its Subsidiaries) all at reasonable times, upon notice to a member of Senior Management (unless there shall exist a Default or an Event of Default), and as often as may be reasonably requested. Any visit or inspection made pursuant to this Section 8.4 shall be at the expense of the holder requesting the same unless, at the time of such visit or inspection, there shall exist a Default or Event of Default, in which event the Company shall bear the cost thereof. PAGE 25 SECTION 9. EVENTS OF DEFAULT. 9.1 Nature of Events. An "Event of Default" shall exist if any of the following occurs and is continuing: (a) Principal Payments - failure to pay principal or ------------------ Makewhole Price on any Note on or before the date such payment is due; (b) Interest Payments - failure to pay interest on any ----------------- Note on or before the fifth Business Day following the date such payment is due; (c) Financial Covenant Defaults - the Company defaults in --------------------------- the performance of or compliance with any term contained in Sections 7.7, 7.8 and 8.1(f); (d) Other Defaults - failure to comply with any other -------------- provision of this Agreement, which continues for more than 30 days after it first becomes known to any member of Senior Management of the Company; (e) Warranties or Representations - any warranty or ----------------------------- representation by or on behalf of the Company contained in this Agreement or in any instrument delivered under or in reference to this Agreement is false or misleading in any material respect; (f) Default on Other Indebtedness - a default or defaults ----------------------------- shall have occurred under any other Indebtedness or Securities of the Company having a principal or face amount, individually or in the aggregate, in excess of $5,000,000; or any event shall occur or any condition shall exist, the effect of which is to cause (or permit any holder of such Indebtedness or Securities having a principal or face amount, individually or in the aggregate, in excess of $5,000,000, or a trustee to cause) such Indebtedness or Security, or a portion thereof, to become due prior to its stated maturity or prior to its regularly scheduled dates of payment; (g) Involuntary Bankruptcy Proceedings - a custodian ----------------------------------- receiver, liquidator or trustee of the Company or of any of its Property, is appointed or takes possession and such appointment or possession remains in effect for more than 30 days; or the Company is adjudicated bankrupt or insolvent; or an order for relief is entered under the Federal Bankruptcy Code against the Company; or any of the Property of the Company is sequestered by court order and the order remains in PAGE 26 effect for more than 30 days; or a petition is filed against the Company under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, and is not dismissed within 30 days after filing; (h) Voluntary Petitions - the Company files a petition in ------------------- voluntary bankruptcy or seeking relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or consents to the filing of any petition against it under any such law; (i) Assignments for Benefit of Creditors, etc. - the ----------------------------------------- Company makes an assignment for the benefit of its creditors, or generally fails to pay its debts as they become due, or consents to the appointment of or taking possession by a custodian, receiver, liquidator or trustee of the Company or of all or any part of the Property of the Company; or (j) Undischarged Final Judgments - final judgment or ---------------------------- judgments which are not subject to appeal for the payment of money aggregating in excess of $5,000,000 is or are outstanding against one or more of the Company and its Subsidiaries and any one of such judgments (x) has not been stayed or paid on the date it is finally due and payable or (y) has resulted in the attachment of a Lien on any Property of the Company or any Subsidiary; or (k) Change of Control - the occurrence of a Change of ----------------- Control. 9.2 Default Remedies. (a) If an Event of Default described in Section 9.1(g), 9.1(h) or 9.1(i) occurs, the entire outstanding principal amount of the Notes shall automatically become due and payable, without the taking of any action on the part of any holder of the Notes or any other Person and without the giving of any notice with respect thereto. If an Event of Default described in Section 9.1(a) or 9.1(b) exists, any holder of Notes may, at its option, exercise any right, power or remedy permitted by law, including but not limited to the right by notice to the Company to declare the Notes held by such holder to be immediately due and payable. If any other Event of Default exists, the holder or holders of at least 51% in outstanding principal amount of the Notes (exclusive of Notes owned by the Company, Subsidiaries and Affiliates) may exercise any right, power or remedy permitted by PAGE 27 law, including but not limited to the right by notice to the Company to declare all the outstanding Notes immediately due and payable. Upon any such acceleration the principal of the Notes declared due or automatically becoming due shall be immediately payable together with all interest accrued thereon without any presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, and the Company will immediately pay the greater of (x) the principal of and interest accrued on such Notes and (y) the Makewhole Price applicable at such time to such Notes. (b) No course of dealing or delay or failure on the part of any holder of the Notes to exercise any right shall operate as a waiver of such right or otherwise prejudice such holder's rights, powers and remedies. The Company will pay or reimburse the holders of the Notes, to the extent permitted by law, for all costs and expenses, including but not limited to reasonable attorneys, fees, incurred by them in collecting any sums due on the Notes or in otherwise enforcing any of their rights. 9.3 Annulment of Acceleration of Notes. If a declaration is made pursuant to Section 9.2(a), the holders of at least 51% of the outstanding principal amount of the Notes may annul such declaration and the consequences thereof if no judgment or decree has been entered for the payment of any monies due pursuant to such declaration and if all sums payable under the Notes and this Agreement (except principal, interest or premium which has become due solely by reason of such declaration) have been duly paid. No such annulment shall extend to or waive any subsequent Default or Event of Default. SECTION 10. INTERPRETATION OF THIS AGREEMENT 10.1 Terms Defined. As used in this Agreement (including Exhibits), the following terms have the respective meanings set forth below or in the Section indicated: Affiliate - a Person other than a Subsidiary (1) which --------- directly or indirectly controls, or is controlled by, or is under common control with, the Company, (2) which owns 5% or more of the Voting Stock of the Company or (3) 5% or more of the Voting Stock (or in the case of a Person which is not a corporation, 5% or more of the equity interest) of which is owned by the Company or a Subsidiary. The term "control", means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. PAGE 28 Business Day - any day other than a Saturday, Sunday or a ------------ national, Connecticut or New York holiday. Capitalized Lease - any lease which is shown or is required ----------------- to be shown in accordance with GAAP as a liability on a balance sheet of the lessee thereunder. Change of Control - shall mean any Person or group of ----------------- Persons (as used in Sections 13 and 14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations thereunder) shall have become the beneficial owner (as defined in Rules 13d-3 and 13d-5 promulgated by the Securities and Exchange Commission (the "SEC") under the Exchange Act) of 30% or more of the Company's outstanding voting stock provided, however, that members of the Barnes family, Fleet Norstar financial group and any of its affiliates, successors and assigns (to the extent that it owns stock in which a member of the Barnes family has an interest), the Barnes Group Inc. Guaranteed Stock Plan and State Street Bank & Trust Company, in its capacity as trustee under such plan, or its successor or assigns in its capacity as trustee under such plan, and employees of the Company (except employees of the Company who became beneficial owners of more than 10% of the Company's voting stock prior to becoming employees of the Company) shall not be counted as a person for purposes hereof. Closing Date - Section 1.2. ------------ Consolidated Net Income - the consolidated net income of the ----------------------- Company and its Subsidiaries for any period as determined in accordance with GAAP. Consolidated Net Worth - shall mean the assets of the ---------------------- Company and its Subsidiaries less the liabilities of the Company and its Subsidiaries, each as shown on a consolidated balance sheet of the Company and its Subsidiaries in accordance with GAAP, plus any negative (less any positive) foreign currency translation adjustments shown in the equity section of such a consolidated balance sheet pursuant to FAS 52, plus any amount shown on such a consolidated balance sheet in the equity contra account arising from the Guaranty. Consolidated Subsidiary - shall mean any Subsidiary the ----------------------- accounts of which shall at the time in question be consolidated with the Company. Default - an event or condition which will, with the lapse ------- of time or the giving of notice or both, become an Event of Default. Domestic Subsidiary - shall mean a Subsidiary incorporated ------------------- in the United States. PAGE 29 Environmental Laws - shall mean any and all Federal, state, ------------------ local, and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or governmental restrictions relating to pollution and the protection of the environment or the release of any materials into the en- vironment, including but not limited to those related to hazardous substances or wastes, air emissions and discharges to waste or public systems. ERISA - means the Employee Retirement Income Security Act of ----- 1974, as amended from time to time. Event of Default - Section 9.1. ---------------- Fair Market Value - means, at any time and with respect to ----------------- any property, the sale value of such property that would be realized in an arm's-length sale at such time between an informed and willing buyer and an informed and willing seller (neither being under a compulsion to buy or sell). GAAP - means generally accepted accounting principles which ---- are consistent with the principles promulgated or adopted by the Financial Accounting Standards Board and its predecessors; provided, however, that such principles shall be applied without giving effect to FAS 106. Guaranty - means the Company's obligations as guarantor -------- under a certain Guaranty Agreement, effective as of July 28, 1989, from the Company to Shawmut Bank (formerly known as The Connecticut National Bank) and NBD Bank (formerly known as National Bank of Detroit). Hazardous Material - means any and all pollutants, toxic or ------------------ hazardous wastes or any other substances that might pose a hazard to health or safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage, or filtration of which is or shall be restricted, prohibited or penalized by any applicable law (including, without limitation, asbestos, urea formaldehyde foam insulation and polycholorinated biphenyls). Indebtedness - with respect to any Person, means, without ------------ duplication, (a) all debt arising from borrowed money and similar monetary obligations, whether direct or indirect; (b) all Indebtedness of others secured by any mortgage, pledge, security interest, lien, charge, or other encumbrance existing on Property owned by the Company or any Subsidiary or acquired by the Company or any Subsidiary subject thereto, whether or not the Indebtedness secured thereby shall have been assumed; PAGE 30 (c) all guarantees, endorsements and other contingent obligations, in respect of Indebtedness of others, including (x) any obligation to supply funds to or in any manner to invest in, directly or indirectly, the debtor, to purchase Indebtedness, or to assure the owner of Indebtedness against loss, through an agreement to purchase goods, supplies, or services for the purpose of enabling the debtor to make payment of the Indebtedness held by such owner or otherwise and (y) any obligation of any partnership in which the Company or any Subsidiary is a general partner; and (d) the obligations to reimburse the issuer in respect of any letters of credit. Indebtedness shall not include the indebtedness of (i) a Subsidiary of the Company to the Company or to another Subsidiary of the Company, or (ii) the Company to a Subsidiary of the Company; provided, however, that in the case of debt of a Subsidiary not wholly owned by the Company and/or another Subsidiary, Indebtedness shall include a percentage of such Indebtedness equal to the percentage of the total minority ownership. Investment - means any investment, made in cash or by ---------- delivery of property, by the Company or any of its Subsidiaries (i)in any Person, whether by acquisition of stock, Indebtedness or other obligation or Security, or by loan, guaranty, advance, capital contribution or otherwise, or (ii) in any property. Lien - any mortgage, lien, charge, security interest or ---- other encumbrance of any kind upon any Property or assets of any character, or upon the income or profits therefrom, any conditional sale or other title retention agreement, device or arrangement (including Capitalized Leases), or any sale assignment, pledge or other transfer for security of any accounts, general intangibles or chattel paper, with or without recourse. Makewhole Price - with respect to full or partial optional --------------- prepayments of the Notes pursuant to Section 5.2 or repayment of Notes which have become or been declared immediately due and payable pursuant to Section 9.2, the present value of all scheduled payments of principal and interest in respect of the Notes (or portions thereof being prepaid) which, but for such optional prepayment or required repayment, would be required to be made following the date of the proposed prepayment or the date on which such Notes became or are declared due and payable, determined by discounting (on a semi-annual basis), at a rate which is equal to the Treasury Constant Yield at such time plus .50%, the amount of each such payment (or portion thereof) from the date such payment would be required to be made to the prepayment or repayment date. Notes - Section 1.1. ----- PAGE 31 Pension Plans - Section 2.15(a). ------------- Person - shall mean any individual, corporation partnership, ------ joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. Property - any interest in any kind of property or asset, -------- whether real, personal or mixed, or tangible or intangible. Related Person - any Person (whether or not incorporated) -------------- which is under common control with the Company within the meaning of Section 414(c) of the Internal Revenue Code of 1986, as amended, or of Section 4001(b) of ERISA. Revolving Credit Agreement - means the $100,000,000 -------------------------- Revolving Credit Agreement dated as of December 1, 1991 among the Company, Mellon Bank, N.A., as Agent, and the banks signatory thereto, as amended. Security - shall have the same meaning as in Section 2(l) of -------- the Securities Act of 1933, as amended. Senior Management - shall mean any of the following officers ----------------- of the Company: President, any Group Vice President, Chief Financial Officer, Treasurer or General Counsel. Stock Payment - by any Person shall mean any dividend, ------------- distribution or payment of any nature (whether in cash, securities, or other property) on account of or in respect of any shares of the capital stock (or warrants, options or rights therefor) of such Person, including but not limited to any payment on account of the purchase, redemption, retirement, defeasance or acquisition of any shares of the capital stock (or warrants, options or rights therefor) of such Person, in each case regardless of whether required by the terms of such capital stock (or warrants, options or rights) or any other agreement or instrument. Subsidiary - of a Person shall mean any corporation, ---------- association or other business entity of which more than 50% of the outstanding stock having by its terms ordinary voting power to elect a majority of the board of directors of such corporation, or other business entity (irrespective of whether at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned directly or indirectly by such Person. Treasury Constant Yield - at any time with respect to any ----------------------- optional prepayment of the Notes pursuant to Section 5.2 or repayment of Notes which have been declared or become PAGE 32 immediately due and payable pursuant to Section 9.2, means the yield to maturity at such time of United States Treasury obligations with a remaining life to maturity (as compiled by and published in the most recently published issue of the United States Federal Reserve Bulletin or its successor publication) most nearly equal to the Weighted Average Life to Maturity of the Notes (or portions thereof) to be prepaid or repaid at the time. If there are United States Treasury obligations listed in such publication with a remaining life to maturity equal to the Weighted Average Life to Maturity of the Notes (or portions thereof), then the yield on such Treasury obligations shall be the Treasury Constant Yield. If no such Treasury obligation exists, then the Treasury obligation with the remaining life to maturity closest to and greater than the Weighted Average Life to Maturity of the Notes (or portions thereof) to be prepaid or repaid shall be used, along with the Treasury obligation with a remaining life to maturity closest to and less than the Weighted Average Life to Maturity of such Notes being prepaid or repaid (or portions thereof) in order to calculate the Treasury Constant Yield. In this event these two Treasury obligations will be examined together and the Treasury Constant Yield will be calculated through interpolation of the yields on such Treasury obligations. Voting Stock - shall mean, with respect to any corporation, ------------ the capital stock of such corporation having the power to vote for a majority of the board of directors of such corporation under ordinary circumstances. Weighted Average Life to Maturity - of the Notes or any --------------------------------- portion thereof, at the time of the determination thereof, means the number of years obtained by dividing the then Remaining Dollar-years of such Notes or portion thereof by the then outstanding principal amount of such Notes or portion thereof. The term "Remaining Dollar-years" of any Indebtedness for borrowed money means the amount obtained by (1) multiplying (A) the amount of each then remaining required repayment or redemption (including repayment or redemption at final maturity) by (B) the number of years (calculated at the nearest one-twelfth) which will elapse between the date as of which the calculation is made and the date that such required repayment is due and (2) totaling all the products obtained in (1). 10.2 Accounting Principles. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made under this Agreement, this shall be done in accordance with GAAP. PAGE 33 10.3 Directly or Indirectly. Where any provision in this Agreement refers to any action which a Person is prohibited from taking, the provision shall be applicable whether such action is taken directly or indirectly by such Person, including actions taken by or on behalf of any partnership in which such Person is a general partner and all liabilities of such partnerships shall be considered liabilities of such Person for purposes of this Agreement. 10.4 Governing Law. This Agreement and the Notes shall be governed by and construed in accordance with Connecticut law. SECTION 11. MISCELLANEOUS 11.1 Notices. All notices provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a - confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail - with return receipt requested (postage prepaid), or (c) by a - recognized overnight delivery service (with charges prepaid). Any such notice must be sent: a. if to you or your nominee, to you or it at the address specified for such communications in Schedule A, or at such other address as you or it shall have specified to the Company in writing, b. if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or c. if to the Company, to the Company at its address set forth at the beginning hereof to the attention of "Treasurer", or at such other address as the Company shall have specified to the holder of each Note in writing. Notices under this Section 11 will be deemed given only when actually received. 11.2 Reproduction of Documents. This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by you at the closing of your purchase of the Notes (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter PAGE 34 furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process and you may destroy any original document so reproduced. The Company agrees and stipulates that any such reproduction shall, to the extent permitted by applicable law, be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by you in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. 11.3 Survival. All warranties, representations, and covenants made by the Company herein or on any certificate or other instrument delivered by it or on its behalf pursuant to the terms of this Agreement shall be considered to have been relied upon by you and shall survive the delivery to you of the Notes regardless of any investigation made by you or on your behalf. All statements in any such certificate or other instrument shall constitute warranties and representations by the Company hereunder. 11.4 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, except that the Company's right to require you to purchase the Notes in accordance with Section 1.2 shall be personal to the Company and shall not be assignable or transferable to any other Person (including successors at law) whether voluntarily or involuntarily. The provisions of this Agreement are intended to be for the benefit of all holders, from time to time, of the Notes, and shall be enforceable by any holder, whether or not an express assignment to such holder of rights under this Agreement has been made by you or your successor or assign. 11.5 Amendment and Waiver. This Agreement may be amended, and the observance of any term of this Agreement may be waived, with (and only with) the written consent of the Company and the holders of at least 66-2/3% of the outstanding principal amount of the Notes (exclusive of Notes owned by the Company, Subsidiaries and Affiliates); provided that no such amendment or waiver of any of -------- the provisions of Sections 1 through 4 shall be effective as to you unless consented to by you in writing; and provided further, -------- that no such amendment or waiver shall, without the written consent of the holders of all the outstanding Notes, (i) subject to Section 9.3, change the amount or time of any prepayment or payment of principal or premium or the rate or time of payment of interest, (ii) amend Section 9, or (iii) amend this Section 11.5. PAGE 35 Executed or true and correct copies of any amendment or waiver effected pursuant to the provisions of this Section 11.5 shall be delivered by the Company to each holder of outstanding Notes promptly following the date on which the same shall become effective. No such amendment or waiver shall extend to or affect any provision or obligation not expressly amended or waived. 11.6 Duplicate Originals. Two or more duplicate originals of this Agreement may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. If this Agreement is satisfactory to you, please so indicate by signing the acceptance at the foot of a counterpart of this Agreement and return such counterpart to the Company, whereupon this Agreement will become binding between us in accordance with its terms. Very truly yours, BARNES GROUP INC. By: /s/ John E. Besser ------------------ Title: Senior Vice President-Finance and Law Accepted: CONNECTICUT GENERAL LIFE INSURANCE COMPANY By: CIGNA Investments, Inc. By: /s/ Edward Lewis ---------------- Title: Managing Director CONNECTICUT GENERAL LIFE INSURANCE COMPANY ON BEHALF OF ONE OR MORE OF ITS SEPARATE ACCOUNTS By: CIGNA Investments, Inc. By: /s/ Edward Lewis ---------------- Title: Managing Director [Signatures Continued On Next Page] PAGE 36 CIGNA PROPERTY AND CASUALTY INSURANCE COMPANY By: CIGNA Investments, Inc. By: /s/ Edward Lewis ---------------- Title: Managing Director LIFE INSURANCE COMPANY OF NORTH AMERICA By: CIGNA Investments, Inc. By: /s/ Edward Lewis ---------------- Title: Managing Director PAGE 37
EXHIBIT A PAGE 1 of 4 BARNES GROUP, INC. ---------------------------------------------------------------- Purchaser Name | CONNECTICUT GENERAL LIFE INSURANCE COMPANY ----------------------------------------------------------------- Name in Which Note | CIG & Co. is to be Registered | ----------------------------------------------------------------- Principal Amount | $10,000,000 ----------------------------------------------------------------- Payment on Account | of Note | Federal Funds Wire Transfer | Method | | Chase NYC/CTR/ Account | BNF=CIGNA Private Information | Placements/AC=9009001802 | ABA# 021000021 ----------------------------------------------------------------- Accompanying | OBI=BARNES GROUP, INC.; 7.13% Senior Information | Secured Notes due December, ___ 2005; | PPN: ________; due date and application | (as among principal, premium and interest | of the payment being made; contact name ----------------------------------------------------------------- Address for Notices | CIG & Co. Related to Payments | c/o CIGNA Investments, Inc. | Attention: Securities Processing S-206 | 900 Cottage Grove Road | Hartford CT 06152-2206 | | with a copy to: | | Chase Manhattan Bank, N.A. | Private Placement Servicing | P.O. Box 1508 | Bowling Green Station | New York, New York 10081 | Attention: CIGNA Private Placements | FAX: 212-552-3107/1005 ----------------------------------------------------------------- Address for All | CIG & Co. Other Notices | c/o CIGNA Investments, Inc. | Attention: Private Securities Division - | S-307 | 900 Cottage Grove Road | Hartford, Connecticut 06152-2307 | FAX: 203-726-7203 ----------------------------------------------------------------- Tax Identification | 13-3574027 Number | -----------------------------------------------------------------
EXHIBIT A PAGE 2 of 4 BARNES GROUP ---------------------------------------------------------------- Purchaser Name | CONNECTICUT GENERAL LIFE INSURANCE COMPANY | on behalf of one or more separate accounts ----------------------------------------------------------------- Name in Which Note | CIG & Co. is to be Registered | ----------------------------------------------------------------- Principal Amount | $5,000,000 ----------------------------------------------------------------- Payment on Account | of Note | | Federal Funds Wire Transfer Method | | Chase NYC/CTR/ Account | BNF=CIGNA Private Information | Placements/AC=9009001802 | ABA# 021000021 ----------------------------------------------------------------- Accompanying | OBI=BARNES GROUP, INC.; 7.13% Senior Information | Secured Notes due December, ___ 2005; | PPN: ________; due date and application | (as among principal, premium and interest | of the payment being made; contact name ----------------------------------------------------------------- Address for Notices | CIG & Co. Related to Payments | c/o CIGNA Investments, Inc. | Attention: Securities Processing S-206 | 900 Cottage Grove Road | Hartford CT 06152-2206 | | with a copy to: | | Chase Manhattan Bank, N.A. | Private Placement Servicing | P.O. Box 1508 | Bowling Green Station | New York, New York 10081 | Attention: CIGNA Private Placements | FAX: 212-552-3107/1005 ----------------------------------------------------------------- Address for All | CIG & Co. Other Notices | c/o CIGNA Investments, Inc. | Attention: Private Securities Division - | S-307 | 900 Cottage Grove Road | Hartford, Connecticut 06152-2307 | FAX: 203-726-7203 ----------------------------------------------------------------- Tax Identification | 13-3574027 Number | -----------------------------------------------------------------
EXHIBIT A PAGE 3 of 4 MATTER NAME: BARNES GROUP, INC. ---------------------------------------------------------------- Purchaser Name | CIGN PROPERTY AND CASUALTY INSURANCE ----------------------------------------------------------------- Name in Which Note | CIG & Co. is to be Registered | ----------------------------------------------------------------- Principal Amount | $5,000,000 ----------------------------------------------------------------- Payment on Account | of Note | | Federal Funds Wire Transfer Method | | Chase NYC/CTR/ Account | BNF=CIGNA Private Information | Placements/AC=9009001802 | ABA# 021000021 ----------------------------------------------------------------- Accompanying | OBI=BARNES GROUP, INC.; 7.13% Senior Information | Secured Notes due December, ___ 2005; | PPN: ________; due date and application | (as among principal, premium and interest | of the payment being made; contact name ----------------------------------------------------------------- Address for Notices | CIG & Co. Related to Payments | c/o CIGNA Investments, Inc. | Attention: Securities Processing S-206 | 900 Cottage Grove Road | Hartford CT 06152-2206 | | with a copy to: | | Chase Manhattan Bank, N.A. | Private Placement Servicing | P.O. Box 1508 | Bowling Green Station | New York, New York 10081 | Attention: CIGNA Private Placements | FAX: 212-552-3107/1005 ----------------------------------------------------------------- Address for All | CIG & Co. Other Notices | c/o CIGNA Investments, Inc. | Attention: Private Securities Division - | S-307 | 900 Cottage Grove Road | Hartford, Connecticut 06152-2307 | FAX: 203-726-7203 ----------------------------------------------------------------- Tax Identification | 13-3574027 Number | -----------------------------------------------------------------
EXHIBIT A PAGE 4 of 4 MATTER NAME: BARNES GROUP, INC. ---------------------------------------------------------------- Purchaser Name | LIFE INSURANCE COMPANY OF NORTH AMERICA ----------------------------------------------------------------- Name in Which Note | CIG & Co. is to be Registered | ----------------------------------------------------------------- Principal Amount | $5,000,000 ----------------------------------------------------------------- Payment on Account | of Note | | Federal Funds Wire Transfer Method | | Chase NYC/CTR/ Account | BNF=CIGNA Private Information | Placements/AC=9009001802 | ABA# 021000021 ----------------------------------------------------------------- Accompanying | OBI=BARNES GROUP, INC.; 7.13% Senior Information | Secured Notes due December, ___ 2005; | PPN: ________; due date and application | (as among principal, premium and interest | of the payment being made; contact name ----------------------------------------------------------------- Address for Notices | CIG & Co. Related to Payments | c/o CIGNA Investments, Inc. | Attention: Securities Processing S-206 | 900 Cottage Grove Road | Hartford CT 06152-2206 | | with a copy to: | | Chase Manhattan Bank, N.A. | Private Placement Servicing | P.O. Box 1508 | Bowling Green Station | New York, New York 10081 | Attention: CIGNA Private Placements | FAX: 212-552-3107/1005 ----------------------------------------------------------------- Address for All | CIG & Co. Other Notices | c/o CIGNA Investments, Inc. | Attention: Private Securities Division - | S-307 | 900 Cottage Grove Road | Hartford, Connecticut 06152-2307 | FAX: 203-726-7203 ----------------------------------------------------------------- Tax Identification | 13-3574027 Number | -----------------------------------------------------------------
EXHIBIT B FORM OF NOTE BARNES GROUP INC. 7.13% Senior Unsecured Note, due December 5, 2005 Private Placement No.: No. R-B______________ Bloomfield, CT U.S. $______________ December 5, 1995 Barnes Group Inc., (the "Company"), a Delaware corporation, for value received, hereby promises to pay to ______________, or registered assigns, the principal amount of U.S. $____________ on December 5, 2005, with interest (computed on the basis of a 360- day year of twelve 30-day months) on the unpaid balance of such principal amount at the rate of 7.13% per annum from the date hereof, payable semiannually on each June 5 and December 5 after the date hereof, until such unpaid balance shall become due and payable (whether at maturity or at a date fixed for prepayment or by declaration or otherwise), and with interest on any overdue principal (including any overdue prepayment of principal) and the Makewhole Price, as defined in the Note Purchase Agreement (as hereinafter defined), if any, and (to the extent permitted by applicable law) on any overdue interest, at the rate of 1% per annum above the applicable interest rate until paid, payable semiannually as aforesaid or, at the option of the holder hereof, on demand. Payments of principal, premium, if any, and interest on this Note shall be made without tender of the Note in immediately available funds by federal wire transfer in lawful money of the United States of America on the due date therefor to the account of the respective holder hereof at the address shown in the register maintained by the Company for such purpose, in the manner provided in the Note Purchase Agreement. This Note is one of the Company's 7.13% Unsecured Notes, due December 5, 2005 (the "Notes"), originally issued in the aggregate principal amount of U.S. $25,000,000 pursuant to the Note Purchase Agreement (the "Note Purchase Agreement"), dated as of October ____, 1995, as from time to time amended, between the Company and each of the Purchasers listed therein. The registered holder of this Note is entitled to the benefits of such Note Purchase Agreement and may enforce the agreements of the Company contained therein and exercise the remedies provided for thereby or otherwise available in respect thereof. This Note has not been registered under the Securities Act of 1933, as amended, or the laws of any state and may be transferred in whole or in part only pursuant to an effective registration statement under such Act and applicable state laws or under an exemption from such registration available under such Act and applicable state law. Subject to the foregoing, transfers of this Note shall be registered upon registration books maintained for such purpose by or on behalf of the Company as provided in the Note Purchase Agreement. Prior to presentation of this Note for registration of transfer, the Company shall treat the registered holder hereof as the owner and holder of this Note for the purpose of receiving all payments of principal and interest hereon and for all other purposes whatsoever, whether or not this Note shall be overdue, and the Company shall not be affected by notice to the contrary. This Note is transferable only in accordance with the provisions of the Note Purchase Agreement and the holder hereof is subject to and bound by the provisions of the Note Purchase Agreement as if it were an original signatory thereto. This Note is subject to prepayment, in whole or in part, in certain cases with the Makewhole Price, all as specified in such Note Purchase Agreement. In case an Event of Default, as defined in such Note Purchase Agreement, shall occur and be continuing, the unpaid balance of the principal of this Note, together with the Makewhole Price applicable thereto, may become due and payable in the manner and with the effect provided in such Note Purchase Agreement. This Note is made and delivered in Bloomfield, Connecticut, and shall be governed by the laws of the State of Connecticut. BARNES GROUP INC. By: ______________________________ Name: Title: EXHIBIT C I. THE COMPANY'S ACTIVE SUBSIDIARIES, EACH OF WHICH HAS ONLY A SINGLE CLASS OF STOCK OUTSTANDING, ARE AS FOLLOWS:
Jurisdiction of Name Incorporation ---- --------------- Associated Spring-Asia PTE. LTD. Singapore Associated Spring SPEC Limited United Kingdom Barnes Group (Bermuda) Limited Bermuda Barnes Group Canada Inc. Canada Barnes Group Holding B.V. Netherlands Bowman Distribution Europe Limited United Kingdom Bowman Distribution France S.A. France Resortes Mecanicos, S.A. Mexico Ressorts SPEC, EURL France Stumpp & Schuele do Brasil Industria e Comercio Limitada Brazil Windsor Airmotive Asia PTE, LTD. Singapore
Associated Spring SPEC Limited is wholly-owned by Bowman Distribution Europe Limited. Ressorts SPEC, EURL is wholly-owned by Bowman Distribution France S.A. Windsor Airmotive Asia PTE. LTD. is wholly-owned by Barnes Group Canada Inc. Associated Spring-Asia PTE. Ltd., Resortes Mechanicos, S.A., and Stumpp & Schuele do Brasil Industria e Comercio Limitada are wholly-owned by Barnes Group (Bermuda) Limited. Barnes Group Canada Inc., Bowman Distribution Europe Limited, and Bowman Distribution France S.A. are wholly-owned by Barnes Group Holding B.V. Barnes Group (Bermuda) Limited and Barnes Group Holding B.V. are wholly-owned by Barnes Group Inc. The Company's consolidated financial statements include all of the above-named subsidiaries. For a statement of the principles of consolidation applicable to these subsidiaries, see note 1 of the Notes to Consolidated Financial Statements on page 18 of the 1994 Annual Report to Stockholders. EXHIBIT C (CONTINUED) II. AFFILIATES The Company's Affiliates, other than Subsidiaries, are as follows:
Jurisdiction of Nature and Extent Name of Affiliate Incorporation of Affiliation ----------------- --------------- ----------------- a) NHK-Associated Spring Delaware 45% of Voting Stock Owned by Company b) Carlyle F. Barnes Have beneficial Thomas O. Barnes ownership of more Wallace Barnes than 5% of the Fleet Bank of Connecticut Company's stock as Mitchell Hutchins Institutional determined under Investors, Inc. Rule 13d-3 of the State Street Bank & Trust Company Securities Exchange (in its capacity as Trustee for Act of 1934 the Company's Guaranteed Stock Plan)
EXHIBIT C (CONTINUED) III. DESCRIPTION OF INDEBTEDNESS [UPDATED DESCRIPTION OF INDEBTEDNESS TO BE PROVIDED BY THE COMPANY] (A) The Indebtedness for borrowed money (including Financing Leases) of the Company and its Subsidiaries as of September 30, 1995 is as follows:
Description Amount ----------- ------ 1. Senior Notes Travelers Insurance Company $23,077,000.00 Allstate Life Insurance $ 9,231,000.00 Company Aid Association for Lutherans $ 4,615,000.00 2. Revolving Mellon Bank, N.A. Trustee $ -0- Credit Agreement 3. Industrial Commercia Bank, N.A. Trustee $ 7,000,000.00 Revenue Bond Saline, MI 4. Short Term Various $26,500,000.00 Credit Line 5. Bank Overdraft Society National Bank $ 557,000.00 6. Letter of Fuji Bank, Ltd. $ 7,394,000.00 Credit 7. NASCO Guaranty LTCB Trust Co. $ 3,780,000.00 8. NASCO Guaranty Tohlease Corp. $ 1,282,000.00 9. NASCO Guaranty Yokohama Bank $ 450,000.00 10. NASCO Guaranty LTCB Trust Co. $ 1,350,000.00 11. NASCO Guaranty LTCB Trust Co. $ 3,150,000.00 12. ESOP Guaranty Shawmut Bank, N.A. $10,398,000.00 NBD Bank N.A. 13. Standby L/C Shawmut Bank, N.A. $ 6,448,000.00 14. Commercial L/C Shawmut Bank, N.A. $ 2,680,000.00 15. Company Various $ 100,000.00 Guaranty
Total Debt: $101,012,000.00 Total excludes duplication items listed: #3 Industrial Revenue Bond, Saline, $7,000,000.00 EXHIBIT C (CONTINUED) (B) Agreement Restricting the Company's Ability to Incur Indebtedness: 1. Senior Notes, Travelers Insurance Company, Allstate Life ------------ Insurance Co., Aid Association for Lutherans, dated September 16, 1991; 2. Revolving Credit Agreement, Mellon Bank, N.A., agent, dated -------------------------- December 1, 1991; 3. Reimbursement Agreement, Fuji Bank Limited, New York Branch, ----------------------- dated February 1, 1986; 4. Guarantee Agreement, Connecticut National Bank and National ------------------- Bank of Detroit, dated July 28, 1989; 5. Interest Rate Swap Agreement, Chemical Bank, N.A., dated ---------------------------- September 16, 1991; 6. Barnes Group Inc. Company Resolution, Barnes Group Inc., ------------------------------------ dated April 14, 1990. IV. LIENS ON PROPERTY Liens existing as of June 30, 1995 (other than Liens of the types permitted by clauses (i) through (v) of Section 7.6(a)) on any Property of the Company and its Subsidiaries which has a cost or market value greater than $500,000 are as follows: a. NONE EXHIBIT D DESCRIPTION OF COMPANY COUNSEL'S CLOSING OPINION The closing opinion of John E. Besser, Esq., Counsel of the Company, which is called for by Section 3.1, shall be dated the Closing Date and addressed to you, shall be satisfactory in form and substance to you, and shall be to the effect that: (1) Organization, Standing, etc. of the Company--the Company is a duly incorporated and validly existing corporation in good standing under the laws of the State of Delaware and has all requisite power and authority to issue, sell and deliver the Notes and to carry on its business and own its Property; (2) Organization, Standing, etc, of Subsidiaries--each Subsidiary is a duly incorporated and validly existing corporation in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to carry on its business and own its Property; (3) Authority to Conduct Business--the Company, and each Subsidiary, is duly authorized to conduct its business in each jurisdiction in which it operates and has duly qualified and is in good standing as a foreign corporation in each jurisdiction where the character of its Properties or the nature of its activities makes such qualification necessary or desirable; (4) Agreement, Notes--the Agreement and the Notes being delivered to you at the closing have been duly authorized by all necessary corporate action on the part of the Company (no action by the stockholders of the Company being required by law, by the Certificate of Incorporation or By-Laws of the Company or otherwise), have been duly executed and delivered by the Company, and are legal, valid and binding obligations of the Company enforceable in accordance with their terms except as enforcement of such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors, rights generally or by general equitable principles; (5) No Conflict with Charter, By-Laws or Other Agreements--the issue and sale of the Notes and compliance by the Company with the terms of the Notes and the Agreement will not conflict with, or result in any breach of any of the provisions of, or constitute a default under, or result in the creation or imposition of any Lien upon any of the Property of the Company EXHIBIT D (CONTINUED) pursuant to the provisions of, the Certificate of Incorporation or By-Laws of the Company, or any agreement or other instrument to which the Company is a party or by which it is bound; (6) Title to Stock of Subsidiaries--the Company is the legal and beneficial owner of all of the shares it purports to own of the capital stock of each Subsidiary, free and clear in each case of any Lien and all such shares have been duly issued and are fully paid and non-assessable; (7) Governmental Consent, etc,--all consents, approvals or authorizations, if any, of any governmental authority required on the part of the Company in connection with the execution and delivery of the Agreement or the offer, issue, sale or delivery of the Notes to you have been duly obtained, and the Company has complied with any applicable provisions of law requiring any designation, declaration, filing, registration or qualification with any governmental authority in connection with such offer, issue, sale or delivery; (8) Margin Requirements--none of the transactions contemplated in the Agreement (including, without limitation thereof, the use of the proceeds from the sale of the Notes) will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulations issued pursuant thereto, including, without limitation, Regulations G, T and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II; and (9) Exempted Offering--the issuance, sale and delivery of the Notes under the circumstances contemplated by the Agreement are exempted transactions under the registration provisions of the Securities Act of 1933, as amended, and do not, under existing law, require the registration of the Notes under the Securities Act of 1933, as amended, or qualification of an indenture under the Trust Indenture Act of 1939. (10) Litigation--there is no action, suit, or proceeding at law or in equity or any investigation pending, or to the best knowledge of such counsel threatened, against or affecting the Company or any Subsidiary in or before any court, governmental authority or agency or arbitration board or tribunal which, individually or in the aggregate will have a material adverse impact on the long-term financial condition or prospects of the Company and its Subsidiaries, or the ability of the Company to perform the Agreement. EXHIBIT D (CONTINUED) (11) The Company is not an "investment company," or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended. (12) The Company is not a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," as such terms are defined in the Public Utility Holding Company Act of 1935, as amended. Such opinion shall also cover such other matters incident to the transactions contemplated hereby as you or your counsel may reasonably request. EXHIBIT E DESCRIPTION OF SPECIAL COUNSEL'S CLOSING OPINION The closing opinion of special counsel for you, which is called for by Section 3.1 of the Agreement, shall be dated the Closing Date and addressed to you, shall be satisfactory in form and substance to you, and shall cover the matters referred to in paragraphs 1 (as to incorporation and good standing only), and 4, 5 (as to Certificate of Incorporation and ByLaws only), 7, 8 and 9 of Exhibit D. Such opinion shall also state that based on such due investigation and inquiry as deemed relevant and appropriate, the closing opinion of Company counsel delivered pursuant to Section 3.1 is satisfactory in scope and form to special counsel and that in their opinion you are justified in relying thereon, and shall cover such other matters relating to the sale of the Notes as you may reasonably request. EXHIBIT F CERTAIN DOCUMENTS FURNISHED TO PURCHASERS 1. Financial Statements for 1991, 1992, 1993 and 1994. 2. The Company's 1994 Proxy Statement and 10k filing. 3. Offering Memorandum with respect to the Company's $40,000,000 9.47% Senior Notes due September 16, 2001. CONFORMED COPY BARNES GROUP INC. NOTE PURCHASE AGREEMENT TABLE OF CONTENTS
PAGE ---- SECTION 1. PURCHASE AND SALE OF NOTES 1 1.1 Issue of Notes 1 1.2 The Closing 1 1.3 Purchase for Investment 2 1.4 Failure to Deliver 2 1.5 Expenses; Issue Taxes 2 SECTION 2. WARRANTIES AND REPRESENTATIONS 3 2.1 Subsidiaries 3 2.2 Corporate Organization and Authority 3 2.3 Business, Property, Indebtedness and Liens 4 2.4 Financial Statements 4 2.5 Full Disclosure 5 2.6 Pending Litigation; Compliance with Law 5 2.7 Title to Properties 6 2.8 Patents and Trademarks 6 2.9 Sale is Legal and Authorized 6 2.10 No Defaults 6 2.11 Governmental Consent 7 2.12 Taxes 7 2.13 Use of Proceeds 8 2.14 Private Offering 8 2.15 ERISA 8 2.16 Foreign Assets Control Regulations, etc 9 2.17 Status under Certain Statutes 9 2.18 Environmental Matters 9 SECTION 3. CLOSING CONDITIONS 10 3.1 Opinions of Counsel 10 3.2 Warranties and Representations True as of Closing Date 10 3.3 Compliance with this Agreement 10 3.4 Officers' Certificate 11 3.5 Proceedings Satisfactory 11 3.6 Private Placement Number 11 3.7 Legal Investment 11 SECTION 4. DIRECT PAYMENT 11 SECTION 5. PREPAYMENTS 11 5.1 Required Prepayments 11 5.2 Option to Prepay 12 5.3 Notice of Optional Prepayment 12 5.4 Partial Payment Pro Rata 12
TABLE OF CONTENTS (CONTINUED)
PAGE ---- SECTION 6. REGISTRATION; SUBSTITUTION OF NOTES 13 6.1 Registration of Notes 13 6.2 Exchange of Notes 13 6.3 Replacement of Notes 13 SECTION 7. COMPANY BUSINESS COVENANTS 14 7.1 Payment of Taxes and Claims 14 7.2 Maintenance of Properties and Corporate Existence 14 7.3 Maintenance of Office 15 7.4 Sale of Assets or Merger 16 7.5 Leases 16 7.6 Liens and Encumbrances 17 7.7 Indebtedness 18 7.8 Net Worth 19 7.9 ERISA Compliance 19 7.10 Transactions with Affiliates 19 7.11 Tax Consolidation 20 7.12 Acquisition of Notes 20 7.13 Lines of Business 20 7.14 Restricted Loans, Advances and Investments 20 7.15 Limitation on Restrictions on Dividends by Subsidiaries, etc. 21 SECTION 8. INFORMATION AS TO COMPANY 22 8.1 Financial and Business Information 22 8.2 Officers' Certificates 24 8.3 Accountants' Certificates 25 8.4 Inspection 25 SECTION 9. EVENTS OF DEFAULT 26 9.1 Nature of Events 26 9.2 Default Remedies 27 9.3 Annulment of Acceleration of Notes 28 SECTION 10. INTERPRETATION OF THIS AGREEMENT 28 10.1 Terms Defined 28 10.2 Accounting Principles 33 10.3 Directly or Indirectly 34 10.4 Governing Law 34
TABLE OF CONTENTS (CONTINUED)
PAGE ---- SECTION 11. MISCELLANEOUS 34 11.1 Notices 34 11.2 Reproduction of Documents 34 11.3 Survival 35 11.4 Successors and Assigns 35 11.5 Amendment and Waiver 35 11.6 Duplicate Originals 36 Exhibit A - Schedule of Purchasers Exhibit B - Form of Note Exhibit C - Subsidiaries and Affiliates of Company, Description of Indebtedness Exhibit D - Form of Opinion of General Counsel of Company Exhibit E - Form of Opinion of Special Counsel of Company Exhibit F - List of Disclosure Documents Schedule I - List of Leases
EX-10.1 9 EXHIBIT 10.1 BARNES GROUP INC. MANAGEMENT INCENTIVE COMPENSATION PLAN --------------------------------------- SECTION 1. PURPOSE --------------------- The Management Incentive Compensation Plan is designed to provide incentive compensation opportunities to persons in key positions who contribute importantly to the success of Barnes Group Inc. (the "Company"). SECTION 2. ADMINISTRATION ---------------------------- The MICP shall be administered in part by the Compensation Committee of the Board of Directors or its successor (the "Committee"). Amounts paid or projected to be paid under the MICP are referred to herein as "Awards". SECTION 3. DEFINITIONS ------------------------- 3.1 "Plan Net Headquarters Expense" shall mean headquarters expense, less headquarters expense allocated to divisions plus any operating plan contingency. 3.2 "Threshold" shall mean a Performance Profit level above which an Award will be earned. 3.3 "Target" shall mean a Performance Profit level at which 25% of the total base salaries in the fund for persons other than the President and Chief Executive Officer ("CEO"), Group Presidents and Senior Vice Presidents (hereafter collectively referred to as "Senior Officers") shall be paid as an award if Performance Profit equals the Target. For the CEO, Group Presidents and Senior Vice Presidents, 50% of salary, 45% of 1 salary and 40% of salary, respectively shall be paid as an award if performance profit equals the Target. 3.4 "Maximum" shall mean a Performance Profit level at which 50% of the total base salaries in the fund for persons other than the Senior Officers, 100% of the salary of the CEO, 90% of the salaries of the Group Presidents and 80% of the salaries of the Senior Vice Presidents, shall be paid as an award if performance profit equals the Maximum. 3.5 "Plan Group Threshold" shall mean the sum of the Thresholds for all divisions in the group less Plan Net Headquarters Expense. 3.6 "Plan Group Target" shall mean the sum of the Targets for all divisions in the group less Plan Net Headquarters Expense. 3.7 "Plan Group Maximum" shall mean the sum of the Maximums for all divisions in the group less Plan Net Headquarters Expense. 3.8 "Net Income" shall mean consolidated net income for the company plus (a) and (b) where (a) equals the after-tax amount of any payments made to any participant in the MICP for achievement over the Maximum and (b) equals the after- tax amount of any expense attributable to Incentive Stock Unit Awards under the Barnes Group Stock Incentive Plan. Net Income may be adjusted to exclude amounts for extraordinary and non-recurring items designated for exclusion by the Committee or other factors deemed appropriate by the Committee. 3.9 "Performance Profit" shall mean performance profit as calculated under the company's normal procedures; provided, however that net income rather than performance profit may be used in the calculation hereunder for units based outside the United States. Performance Profit may be adjusted to exclude amounts for extraordinary and non- 2 recurring items or other factors deemed appropriate by the President and Chief Executive Officer. SECTION 4. CORPORATE INCENTIVE FUND -------------------------------------- Prior to March 1st of each year the Committee shall establish for the Corporate Incentive Fund a Threshold, a Target and a Maximum; provided, however that Net Income shall be used rather than Performance Profit. The Committee may also designate intermediate levels of Net Income between a Threshold and the Maximum and the percent of salary which will be paid as an Award if Net Income equals any such intermediate point. Based on the above determinations by the Committee and the total actual base salaries of the participants in each incentive fund, the Controller shall calculate the applicable participation rates. Unless otherwise determined by the Committee, a participation rate for performance above the Maximum shall be set equal to the participation rate for performance between the Target and the Maximum. The Incentive Fund available at the end of the year for payment of Awards shall be equal to the participation rate(s) times the applicable amount by which Performance Profit exceeds the profit objective(s). SECTION 5. GROUP GOALS ------------------------- Prior to March 1st of each year the Committee shall establish for Associated Spring, Bowman Distribution and Barnes Aerospace the Plan Group Threshold, the Plan Group Target and the Plan Group Maximum. 3 SECTION 6. GROUP FUNDS ----------------------- Prior to March 1st of each year, the President and Chief Executive Officer (the "CEO") will determine which units, other than the Corporate Headquarters, should have separate incentive funds. For each fund he will then set a Threshold, a Target and a Maximum. The CEO may also designate intermediate levels of Performance Profit between the Threshold and the Maximum and the percent of salary which will be paid as an Award if Performance Profit equals any such intermediate point. Based on the above determinations, which shall be submitted in writing to the Controller, and the total actual base salaries of the participants in each incentive fund, the Controller shall calculate the applicable participation rates. Unless otherwise determined by the CEO, participation rates for performance above Maximum shall be equal to the applicable fund's participation rate for performance between the Target and the Maximum. The Incentive Fund available at the end of the year for payment of Awards shall be equal to the participation rate(s) times the applicable amount by which Performance Profit exceeds the profit objective(s). SECTION 7 PARTICIPANTS ------------------------- Prior to March 1st of each year, the CEO, upon the recommendations of the group presidents and the senior staff officers, shall designate participants in the MICP for the current year and the funds in which they shall participate. The CEO shall participate in the Corporate fund. The designations will be incorporated in a memorandum from the CEO to the Controller. 4 SECTION 8 GRANT OF AWARDS - GROUP FUNDS ------------------------------------------ 8.1 Each December the CEO shall make determinations relating to Awards to be made under the MICP. 8.2 The Controller shall provide to the CEO an estimate of each Incentive Fund for the year and the estimated percent of salaries earned as Awards by participants based on the objectives set by the CEO pursuant to Section 6 hereof. 8.3 The CEO will then decide the portion of each Incentive Fund which will be collectively awarded to the participants in the fund. The CEO will provide a report to the Committee summarizing his determinations made pursuant to this paragraph. 8.4 After the end of the year and based on the final amount of each Incentive Fund, the CEO, upon recommendation from the group presidents, shall determine each participant's share of the Incentive Funds (except for any Company officer who participates in the fund). 8.5 The CEO shall have full authority to make adjustments to Incentive Funds. He shall also have the authority to refrain from making an Award to any participant. Except for persons who retire, die or become permanently disabled during the year, a person must be employed by the Company or one of its subsidiaries on December 1st in order to receive an Award, unless the CEO decides otherwise in individual cases. SECTION 9 GRANT OF AWARDS - CORPORATE FUND --------------------------------------------- 9.1 The Committee shall meet each December to make determinations relating to Awards to be made under the MICP for the Corporate Fund and for all Company officers. 5 9.2 The Controller shall provide to the Committee an estimate of the Corporate Incentive Fund for the year and the estimated percent of salaries earned as Awards by participants based on the objectives set by the Committee pursuant to Section 4 hereof. 9.3 The Committee will then decide the portion of the Corporate Incentive Fund which will be collectively awarded to the participants in the fund. 9.4 In December the Committee shall decide each officer's percentage share of his/her applicable fund. 9.5 After the end of the year and based on the final amount of the Corporate Incentive Fund, the CEO, upon recommendation from the senior staff officers, shall determine each participant's share of the Incentive Funds (except for officers of the Company). 9.6 The Committee shall have full authority to make adjustments to the Corporate Incentive Fund. It shall also have the authority to refrain from making an Award to any officer. It may also award a bonus in excess of a participant's MICP award to any officer and may recommend to the CEO that a bonus in excess of a participant's MICP award be paid to a specified individual(s). Except for persons who retire, die, or becomes permanently disabled during the year, a person must be employed by the Company or one of its subsidiaries on December 1st in order to receive an Award, unless the Committee decides otherwise in individual cases. SECTION 10. AWARDS ABOVE MAXIMUM ----------------------------------- 10.1 Notwithstanding anything in this Plan to the contrary, no awards above the Maximum shall be made to any person without the approval of the Committee. 6 SECTION 11. PAYMENT ---------------------- 11.1 Prior to March 1st, a report signed by the Controller and Chief Financial Officer specifying the final Incentive Funds and the percent of salaries to be awarded to Participants will be given to the Committee. 11.2 Awards shall be paid prior to March 1st, unless otherwise decided by the Committee. SECTION 12. GENERAL ---------------------- 12.1 The interpretation of this plan by the Committee and its decisions on all questions arising under this plan shall be conclusive and binding on all concerned parties. 12.2 This plan may be amended at any time, including retroactively, by the Committee. Amended: 2/20/96 ---------------- EX-10.2 10 EXHIBIT 10.2 BARNES GROUP INC. 1996 LONG TERM INCENTIVE PLAN ----------------------------- SECTION 1. PURPOSE --------------------- The 1996 Long Term Incentive Plan ("LTIP") is designed to provide incentive compensation to key executives of Barnes Group Inc. (the "Company") and its subsidiaries in a form which relates the financial reward to an increase in the value of the Company to its shareholders. The plan shall be administered by the Compensation Committee of the Board of Directors (the "Committee"). This plan shall be effective for awards granted with the 1996-1998 Incentive Award Period. SECTION 2. DEFINITIONS ------------------------- 2.1 Total Cost of Equity. Total Cost of Equity equals Average -------------------- Stockholders' Equity, multiplied by a percentage cost of equity selected by the Committee which shall be held constant throughout the Incentive Award Period. Average Stockholders' Equity shall be computed by adding stockholders' equity on December 31st of the prior year to stockholders' equity at the end of each month of the applicable year and dividing the result by 13. 2.2 Economic Return. Economic Return for any year equals Cash --------------- Flow From Operations less the Cost of Equity divided by the average number of common shares outstanding for the year. In computing Economic Return, the Committee may make adjustments for any extraordinary changes which occur during an Incentive Award Period. 1 2.3 Cash Flow from Operations. Cash Flow From Operations equals ------------------------- net income, less any dividends on preferred stock, plus depreciation and amortization, plus any losses, less any gains, on the sale of plant, property and equipment or other assets where the gain or loss exceeds $500,000 for each individual transaction. 2.4 Performance Unit. A Performance Unit is the form of award ---------------- under the LTIP. Its value in any year is equal to the sum of the Economic Returns per share for the current year and preceding four years. SECTION 3. ADMINISTRATION ---------------------------- The Committee shall designate participants, award a number of Performance Units to each participant, and perform all other actions necessary to the proper administration of the LTIP. The interpretation by the Committee of the LTIP and any awards made hereunder shall be binding upon the participants and the Company. SECTION 4. PARTICIPANTS -------------------------- Key senior executives of the Company and its subsidiaries whose activities can contribute significantly to the performance of the Company are eligible to participate in the LTIP. SECTION 5. GRANT OF INCENTIVE AWARDS ------------------------------------- 5.1 Prior to March 1 of each year, the Committee shall determine whether or not Performance Units will be granted in the current year. If they are to be granted, the Committee shall: 2 (a) establish an Incentive Award Period which will commence on January 1 of the current year and terminate on January 1 of the year selected by the Committee; provided, however, that in no event shall it be less than 24 months; and (b) designate recipients of Performance Units and the number of Performance Units to be awarded to each participant. 5.2 During an Incentive Award Period, new employees and employees who are promoted or transferred may be granted new or additional Performance Units. SECTION 6. PAYMENT --------------------- 6.1 Incentive award payments shall be calculated by multiplying the number of Performance Units held by a participant times the increase, if any, in the value of the Performance Unit between the beginning and end of the Incentive Award Period. 6.2 If a participant becomes employed by the Company after the beginning of an Incentive Award Period, payment under any such Performance Unit will be reduced by multiplying its value by a fraction, the numerator of which shall be the number of full calendar months of the Incentive Award Period during which the Participant was employed by the Company, and the denominator of which shall be the number of calendar months in the Incentive Award Period. 6.3 Notwithstanding anything in the LTIP to the contrary, the amount of payment made to each participant shall be in the sole discretion of the Committee. The amount of all such payments shall be determined by the Committee within 90 days after the end of the Incentive Award Period. 3 6.4 The Committee, in its sole discretion, shall determine whether all or any portion of any payment made with respect to the Performance Units held by each participant shall be deferred and credited to a participant's Incentive Deferred Compensation Account. 6.5 As soon as practical after the amount of any award is determined, it shall be paid in cash to the participant or all or part of it shall be credited to the participant's Incentive Deferred Compensation Account, all in accord with the procedures specified in paragraph 9. SECTION 7. EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH --------------------------------------------------------- If a participant ceases to be an employee prior to the end of an Incentive Award Period other than by reason of death, disability, or retirement after attaining age 55, then the Performance Units granted to the participant shall terminate. If a participant ceases to be an employee because of death, disability, or retirement after attaining age 55, then payment under his Performance Units may be adjusted as set forth in paragraph 6.2. SECTION 8. TRANSFERABILITY ----------------------------- Performance Units and any amount standing to a person's credit in the Incentive Deferred Compensation Account may not be transferred or assigned by a participant except by will or by the laws of descent and distribution. SECTION 9. INCENTIVE DEFERRED COMPENSATION ACCOUNT ----------------------------------------------------- 9.1 To the extent that the Committee decided to defer payment of any award made under the LTIP, the amount of such deferred award shall be credited to the 4 Company's Incentive Deferred Compensation Account. The Company shall not be required to segregate or earmark assets with respect to such account and participants shall have no interest in any specific asset as a result of the creation of such account or of any award under the LTIP. All funds in such accounts shall be available for general corporate purposes. 9.2 Interest will be credited quarterly on the unpaid amount standing to any participant's credit in the Incentive Deferred Compensation Account at the end of each quarter. On or as soon as practical after the first business day of January, the Company will pay to each participant who is less than 60 years old the interest credited to his account with respect to the prior year. No cash payment will be made to participants who are employed by the Company and who have attained age 60. 9.3 The interest rate for purposes of computing interest under paragraph 9.2 shall be the rate of interest for prime commercial loans of 90-day maturities charged by Chemical Bank (or such other New York City bank as the Committee may select) on the first business day of each quarter. 9.4 Payments from the amount standing to a participant's credit in the Incentive Deferred Compensation Account shall begin on the first day of the month following the month in which the participant ceases to be an employee of the Company. Payments shall be made in 120 monthly installments (as equal as possible); provided, however, that, except if otherwise decided by the Committee, the entire amount then standing to the participant's credit in the Incentive Deferred Compensation Account shall be paid in one lump sum to any person whose employment is terminated other than by death or by early or normal retirement 5 under the applicable retirement plan. Notwithstanding anything in this section to the contrary, the Committee may in its discretion either: (i) without the consent of the participant, advance the time of payment of any unpaid portion of the award; or (ii) if the consent of the participant is obtained, further defer the time of payment of any unpaid portion of the award to a time not later than 15 years after the termination of the participant's employment. 9.5 No amendment or termination of the LTIP shall reduce or cancel any amount standing to a participant's credit in the Incentive Deferred Compensation Account, prior to the effective date of such amendment or termination. 9.6 In the event of the death of a participant while there is still an amount standing to the participant's credit in the Incentive Deferred Compensation Account, the amount shall be paid to the beneficiary designated by the participant in installments; provided, however, that (a) if the beneficiary is the participant's estate, the funds shall be paid in a lump sum, and (b) notwithstanding anything in this section to the contrary, the Committee may advance the time of payment to a beneficiary of any unpaid funds credited to the Incentive Deferred Compensation Account. In the absence of a designated beneficiary, any amount standing to the participant's credit in the Incentive Deferred Compensation Account shall be paid in a lump sum to the participant's estate. SECTION 10. AMENDMENT ------------------------ The LTIP may be amended at any time by the Committee. Amended: 2/16/96 ----------------- 6 EX-10.3 11 EXHIBIT 10.3 BARNES GROUP INC. RETIREMENT BENEFIT EQUALIZATION PLAN 1. Purpose ------- The purpose of the Retirement Benefit Equalization Plan (the "Equalization Plan") is to equalize the benefits for those participants in the Barnes Group Inc. Salaried Retirement Income Plan (the "Pension Plan") whose benefits are limited by statute including Section 415 of the Internal Revenue Code of 1954 as amended from time to time (the "Code"). 2. Benefits -------- 2.1 Barnes Group Inc. (the "Company") will pay to any recipient of benefits pursuant to the Pension Plan the difference between benefits paid under the Plan and what the recipient would have received but for the limitations set forth in section 6.8 (or any successor thereto) of the Pension Plan. 2.2 Benefits payable hereunder will be paid at the same time and in the same manner as benefits paid pursuant to the Pension Plan. 3. Administration -------------- The Retirement Committee which administers the Pension Plan shall administer the Equalization Plan, and it shall have the same powers relating to the Equalization Plan as it does with respect to the Pension Plan. 1 4. General ------- 4.1 The Equalization Plan may be amended or terminated at any time by the Board of Directors of the Company, except that no such amendment or termination shall adversely affect the benefits payable to any person who has begun to receive benefits hereunder. 4.2 Benefits payable hereunder shall not be funded and shall be paid out of the general assets of the Company. 4.3 The Equalization Plan shall be construed, administered and enforced according to the laws of the State of Connecticut. As amended January 16, 1986 2 EX-10.4 12 EXHIBIT 10.4 BARNES GROUP INC. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN --------------------------------------- 1. Purpose ------- The purpose of the Supplemental Executive Retirement Plan (the"Supplemental Plan") is to provide supplemental pension benefits to certain Officers of Barnes Group Inc. ("Officers") who elect any form of contingent annuity under the Barnes Group Inc. Salaried Retirement Income Plan (the "Pension Plan") under which a spouse or former spouse is the contingent annuitant. 2. Benefits -------- 2.1 The Company will pay to each person who (i) is an Officer on or after November 16, 1979, and either retires as an Officer under the Pension Plan with ten years of service with Barnes Group or a direct or indirect subsidiary of Barnes Group, or ceases to be an Officer due to disability, and (ii) who is receiving retirement benefits under the Pension Plan pursuant to a contingent pensioner form of benefit under which the contingent pensioner is the Officer's spouse or former spouse, a monthly supplemental annuity equal to (a) minus (b) where: (a) equals the monthly retirement income payable to the Officer if he/she elected a straight life annuity under the Plan, including any amount payable pursuant to the Retirement Benefit Equalization Plan; and (b) equals the monthly pension benefits to which the Officer is entitled pursuant to the Pension Plan were he/she to elect the 50% contingent pensioner form of annuity, naming such spouse or former spouse as contingent pensioner. 1 2.2 Benefits payable hereunder will be paid at the same time and in the same manner as benefits paid pursuant to the Pension Plan. 3. Administration -------------- The Benefits Committee shall administer the Supplemental Plan, and shall have the same administrative powers relating to the Supplemental Plan as it does with respect to the Pension Plan. 4. General ------- 4.1 The Supplemental Plan may be amended in whole or in part or terminated at any time by the Board of Directors of the Company, except that no such amendment or termination shall adversely affect the benefits payable to any person who has begun to receive benefits hereunder. 4.2 Benefits payable under the Supplemental Plan shall not be funded and shall be paid out of the general assets of the Company. 4.3 The Supplemental Plan shall be construed, administered, and enforced according to the laws of the State of Connecticut. As amended by the Board of Directors on May 19, 1995 2 EX-10.10 13 EXHIBIT 10.10 ADDENDUM TO CONSULTING AGREEMENT -------------------------------- WHEREAS, Wallace Barnes ("Barnes") and Barnes Group Inc. ("BGI") entered into a Consulting Agreement dated April 1, 1994 for a two year period commencing April 1, 1994 and ending March 31, 1996; and WHEREAS, the parties desire to amend said Consulting Agreement; NOW THEREFORE, the parties agree as follows: 1. Commencing July 1, 1995 and continuing for the remainder of the term of the Consulting Agreement, Barnes shall be paid a supplemental monthly fee of $944.44 in addition to his annual fee of $60,000 (payable in monthly installments of $5,000). Payments shall be made on or about the first day of the month. 2. All other terms and conditions of the Consulting Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties have signed this addendum agreement as of May 22, 1995. BARNES GROUP INC. By: /s/ A. Stanton Wells /s/ Wallace Barnes --------------------- ---------------------- A. Stanton Wells Wallace Barnes 1 EX-13 14 1995 ANNUAL REPORT TO STOCKHOLDERS PGS 11- BACK COVER 1 Barnes Group Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS SALES In 1995, sales were $593 million, up 4% from 1994. Sales in 1994 were $569 million, a 13% increase over 1993's level of $502 million. Associated Spring's 1995 sales increased 2% to $279 million, following an increase of 17% in 1994. In North America, sales were down slightly, reflecting in part, a softening of the U.S. durable goods market and labor issues at its Bristol, Connecticut plant. Internationally, the group reported very strong sales growth, led by its Singapore operation which continued its penetration of the electronics industry. The group's distribution business, which markets die springs and precision stock springs, also reported good sales growth. Bowman Distribution's 1995 sales were $217 million, up slightly from 1994. Sales in 1994 were $215 million, 11% higher than 1993's level of $193 million. Sales from Bowman U.S., the group's largest business unit, kept pace with the prior year. Bowman's sales in Europe increased nearly 15% reflecting progress in the development of new systems business in the U.K. Bowman's Canadian business showed slight year-over-year gains in sales. Barnes Aerospace's sales were $97 million in 1995, up 18% from 1994, following an increase of 7% in 1994. Sharply higher sales were reported by both the group's Advanced Fabrications and Precision Machining businesses. The sales of the group's Repair and Overhaul business were marginally higher than 1994. OPERATING INCOME Consolidated operating income in 1995 was $48.8 million, compared to $36.6 million in 1994 and $12.5 million in 1993. As a result, operating income margin has risen significantly to 8.2%, an improvement of nearly six percentage points in the past two years. The gain in operating income in 1995 resulted primarily from cost reductions and productivity improvements at Barnes Aerospace and Bowman Distribution, and sharply higher sales volume in Barnes Aerospace. Increased volume, manufacturing efficiencies and overall containment of costs in all three operating groups contributed to the 1994 gain. The continued focus on cost control led to lower selling and administrative expenses, as a percent of sales, in both 1995 and 1994 compared to previous years. Operating income in 1993 included provisions of $4.9 million for plant consolidations and work force reductions. Associated Spring's increase in operating income, to a record $42.6 million, kept pace with its sales growth. Strong profit gains overseas, driven by higher sales volume and manufacturing efficiencies, offset lower year-over-year results in its North American manufacturing operations. Bowman's operating income in 1995 of $17.4 million was $4.8 million above the 1994 level. This gain reflects sharply lower selling and administrative expenses, primarily at Bowman U.S. Barnes Aerospace's operating income was $5.0 million in 1995 compared to an operating loss of $1.8 million in 1994. The 1994 operating loss included $1.1 million of severance costs recognized in the fourth quarter. The sharply higher profits in 1995 reflect higher sales volume coupled with ongoing productivity improvements and cost containment. The improvements in sales volume, gross margins and operating costs, resulted in the group reporting operating income for four consecutive quarters. Please refer to Note 13 of the Notes to Consolidated Financial Statements on pages 26-27 for further information about the company's operations by business segment. 11 2 Barnes Group Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS NON-OPERATING INCOME/EXPENSE Other income was $4.4 million in 1995, $4.6 million in 1994 and $4.1 million in 1993 and includes $1.9 million, $2.3 million and $1.7 million, respectively, from the company's investment in NASCO, a company jointly owned with NHK Spring Co., Ltd. of Japan. Interest income, another major component of other income, increased 10% in 1995 to $1.4 million, primarily due to higher levels of short-term investments in Brazil. Interest expense increased slightly in 1995, following a decrease in 1994. The impact of lower debt in 1995 was largely offset by higher interest rates. Other expenses increased in 1995, following a decrease in 1994, primarily due to higher foreign exchange and translation losses. These losses were $1.1 million, $0.5 million and $1.7 million in 1995, 1994 and 1993, respectively. INCOME TAXES The company's effective tax rate was 39.5% in 1995 compared with 40.1% in 1994 and 47.8% in 1993. Note 6 of the Notes to Consolidated Financial Statements on page 22 contains an explanatory table showing the factors affecting the company's effective tax rate in each of these years. NET INCOME AND NET INCOME PER SHARE Consolidated net income was $27.5 million in 1995, $20.3 million in 1994 and $4.4 million in 1993. On a per share basis, income for 1995 was $4.20 compared to $3.20 in 1994 and $.70 in 1993. INFLATION Management believes that inflation during the 1993-1995 period did not have a material impact on the company's historical financial statements. FINANCIAL CONDITION The company's financial condition, as presented in its statement of cash flows and balance sheet, is strong. The following is a discussion of the significant elements of these financial statements. CASH FLOWS Operating activities are the principal source of cash flow for the company. In 1995, operating activities generated a record $47 million in cash flow, $10 million more than 1994 and $28 million more than 1993. During the past three years, operating activities provided over $104 million in cash which the company used to pay dividends to stockholders and fund significant investments in new plant and equipment. Investing activities utilized cash of $37 million in 1995 compared with $31 million in 1994. Capital expenditures increased to $36 million in 1995, 12% over 1994 and 61% over 1993. Management continued to invest heavily to improve quality and productivity while adding capacity. During the past three years the company has invested nearly $90 million in new plant and equipment with over 65% of that at Associated Spring. In 1996, capital expenditures are expected to exceed 1995, with the level of investments in all three businesses expected to increase. 12 3 Barnes Group Inc. MANAGEMENT'S DISCUSSION AND ANALYSIS The company's financing activities used cash of $14 million in 1995 compared to $8 million in 1994. The company continued to use surplus cash generated by its U.S. operations to reduce borrowings under short-term credit lines. Surplus cash from foreign operations was used, in part, to fund strategic investments in Mexico and Europe. In 1995, the annual dividend per share increased from $1.45 to $1.60. As a result, total cash dividends paid to the owners of the company increased by 14% to $10 million. Cash generated from the exercise of employee stock options partially offset these uses. LIQUIDITY AND CAPITAL RESOURCES The company's liquidity, measured in terms of the level of working capital, increased $7 million in 1995 to $95 million at December 31, 1995. The current ratio, a key measure of liquidity, improved to 2.2 at December 31, 1995 compared to 2.0 at December 31, 1994. In evaluating the company's working capital position, consideration should be given to the fact that the majority of its inventories are accounted for on a LIFO basis. If these inventories were stated on a current cost basis, their value would have been higher by $13 million in both 1995 and 1994. The company's ratio of interest-bearing debt to total capitalization improved for the sixth consecutive year to 25% at December 31, 1995 from 28% at December 31, 1994. For this purpose, total capitalization includes interest-bearing debt, plus other long-term liabilities, accrued long-term retirement benefits and stockholders' equity, excluding the guaranteed ESOP obligation. To supplement internal cash generation in the U.S., the company maintains substantial bank borrowing facilities. At December 31, 1995, the company had $100 million of borrowing capacity available under a revolving credit agreement which expires in 2000. In addition, the company has available $135 million in uncommitted, short-term bank credit lines, of which $1.5 million was in use at December 31, 1995. During 1995 and 1994, the company maintained long-term debt of $70 million comprised, in part, of borrowings under its short-term bank credit lines backed by its long-term revolving credit agreement. In December 1995, substantially all of the credit line borrowings were replaced with the proceeds of a $25 million private placement with a final maturity in 2005. This was done to extend the maturity of the company's long-term financing and to secure an additional block of committed funding. The company believes its bank credit facilities coupled with cash generated from operations are adequate for its anticipated future requirements. CHANGES IN ACCOUNTING PRINCIPLES In 1995, the FASB issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," effective for years beginning after December 15, 1995. Under the provisions of this accounting standard, the company is not required to change its method of accounting for stock-based compensation. Management expects to retain its current method of accounting. 13 4 Barnes Group Inc. CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data) Years Ended December 31, 1995 1994 1993 ---------------------------------------------------------------------------- Net sales $592,509 $569,197 $502,292 Cost of sales 382,150 366,455 323,950 Selling and administrative expenses 161,555 166,093 160,904 Plant closings and restructurings - - 4,900 ---------------------------------------------------------------------------- 543,705 532,548 489,754 ---------------------------------------------------------------------------- Operating income 48,804 36,649 12,538 Other income 4,373 4,611 4,117 Interest expense 5,274 5,133 5,187 Other expenses 2,453 2,205 3,077 ---------------------------------------------------------------------------- Income before income taxes 45,450 33,922 8,391 Income taxes 17,966 13,606 4,008 ---------------------------------------------------------------------------- Net income $ 27,484 $ 20,316 $ 4,383 ============================================================================ Per common share: Net income $ 4.20 $ 3.20 $ .70 ============================================================================ Dividends $ 1.60 $ 1.45 $ 1.40 ============================================================================ Average common shares outstanding 6,546,671 6,353,777 6,249,966
See accompanying notes. 14 5 Barnes Group Inc. CONSOLIDATED BALANCE SHEETS
(Dollars in thousands) December 31, 1995 1994 ---------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 17,868 $ 22,023 Accounts receivable, less allowances (1995 - $3,635; 1994 - $3,222) 86,086 86,877 Inventories 56,749 50,845 Deferred income taxes 8,344 12,147 Prepaid expenses 3,769 3,645 ---------------------------------------------------------------------- Total current assets 172,816 175,537 Deferred income taxes 24,308 23,854 Property, plant and equipment 122,870 112,569 Goodwill 20,028 20,614 Other assets 21,527 19,382 ---------------------------------------------------------------------- Total assets $361,549 $351,956 ====================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Notes payable $ 509 $ 7,903 Accounts payable 31,839 31,424 Accrued liabilities 42,840 45,713 Guaranteed ESOP obligation-current 2,348 2,172 ---------------------------------------------------------------------- Total current liabilities 77,536 87,212 Long-term debt 70,000 70,000 Guaranteed ESOP obligation 7,491 9,839 Accrued retirement benefits 68,824 66,817 Other liabilities 8,857 10,949 Stockholders' equity Common stock - par value $1.00 per share Authorized: 20,000,000 shares Issued: 7,345,923 shares stated at 15,737 15,737 Additional paid-in capital 27,360 27,772 Retained earnings 136,092 118,938 Foreign currency translation adjustments (10,656) (8,715) Treasury stock at cost (1995 - 791,205 shares; 1994 - 916,748 shares) (29,853) (34,582) ---------------------------------------------------------------------- 138,680 119,150 Guaranteed ESOP obligation (9,839) (12,011) ---------------------------------------------------------------------- Total stockholders' equity 128,841 107,139 ---------------------------------------------------------------------- Total liabilities and stockholders' equity $361,549 $351,956 ======================================================================
See accompanying notes. 15 6 Barnes Group Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands) Years Ended December 31, 1995 1994 1993 ------------------------------------------------------------------------------------ OPERATING ACTIVITIES: Net income $27,484 $20,316 $ 4,383 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 26,750 23,733 23,094 Gain on sale of property, plant and equipment (268) (151) (442) Translation losses 290 356 1,459 Changes in assets and liabilities: Accounts receivable 365 (9,411) (4,504) Inventories (6,073) (1,037) 1,599 Accounts payable 794 4,298 3,113 Accrued liabilities (2,664) 2,630 (6,369) Deferred income taxes 3,479 (485) 1,992 Other liabilities and assets (2,862) (2,549) (4,683) ------------------------------------------------------------------------------------ Net cash provided by operating activities 47,295 37,700 19,642 INVESTING ACTIVITIES: Proceeds from sale of property, plant and equipment 1,301 2,835 4,506 Capital expenditures (35,820) (31,848) (22,216) Other (2,057) (2,252) (3,014) ------------------------------------------------------------------------------------ Net cash used by investing activities (36,576) (31,265) (20,724) FINANCING ACTIVITIES: Net decrease in notes payable (7,389) (2,653) (4,377) Proceeds from the issuance of common stock 5,849 3,956 1,706 Payments to acquire treasury stock (1,746) - - Dividends paid (10,491) (9,223) (8,756) ------------------------------------------------------------------------------------ Net cash used by financing activities (13,777) (7,920) (11,427) Effect of exchange rate changes on cash flows (1,097) (621) (2,430) ------------------------------------------------------------------------------------ Decrease in cash and cash equivalents (4,155) (2,106) (14,939) Cash and cash equivalents at beginning of year 22,023 24,129 39,068 ------------------------------------------------------------------------------------ Cash and cash equivalents at end of year $17,868 $22,023 $24,129 ====================================================================================
See accompanying notes. 16 7 Barnes Group Inc. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Foreign Additional Currency Guaranteed Common Paid-In Retained Translation Treasury ESOP Stockholders' (Dollars in thousands) Stock Capital Earnings Adjustments Stock Obligation Equity - ----------------------------------------------------------------------------------------------------------------------------------- January 1, 1993 $15,737 $29,502 $111,838 $ (5,138) $(42,488) $(15,876) $ 93,575 Net income 4,383 4,383 Cash dividends (8,756) (8,756) Employee stock plans (757) 2,670 1,913 Guaranteed ESOP obligation 1,857 1,857 Income tax benefits on unallocated ESOP dividends 203 203 Translation adjustments (1,326) (1,326) - ----------------------------------------------------------------------------------------------------------------------------------- December 31, 1993 15,737 28,745 107,668 (6,464) (39,818) (14,019) 91,849 Net income 20,316 20,316 Cash dividends (9,223) (9,223) Employee stock plans (973) 5,236 4,263 Guaranteed ESOP obligation 2,008 2,008 Income tax benefits on unallocated ESOP dividends 177 177 Translation adjustments (2,251) (2,251) - ----------------------------------------------------------------------------------------------------------------------------------- December 31, 1994 15,737 27,772 118,938 (8,715) (34,582) (12,011) 107,139 Net income 27,484 27,484 Cash dividends (10,491) (10,491) Employee stock plans (412) 4,729 4,317 Guaranteed ESOP obligation 2,172 2,172 Income tax benefits on unallocated ESOP dividends 161 161 Translation adjustments (1,941) (1,941) - ----------------------------------------------------------------------------------------------------------------------------------- DECEMBER 31, 1995 $15,737 $27,360 $136,092 $(10,656) $(29,853) $ (9,839) $128,841 ===================================================================================================================================
See accompanying notes. 17 8 Barnes Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (All dollar amounts included in the notes are stated in thousands except per share data and the tables in Note 13.) - ------------------------------------------------------------------------------- 1. SUMMARY OF GENERAL: The preparation of financial statements requires SIGNIFICANT management to make estimates and assumptions that affect the ACCOUNTING reported amounts of assets and liabilities at the date of the POLICIES financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. CONSOLIDATION: The accompanying consolidated financial statements include the accounts of the company and all of its subsidiaries. Intercompany transactions and account balances have been eliminated. The company accounts for its 45% investment in the common stock of NASCO, an automotive suspension spring company jointly owned with NHK Spring Co., Ltd. of Japan, under the equity method. Other income in the accompanying income statements includes $1,897, $2,314 and $1,734 for the years 1995, 1994 and 1993, respectively, of income from the company's investment in NASCO. REVENUE RECOGNITION: Sales and related cost of sales are recognized when products are shipped to customers. CASH AND CASH EQUIVALENTS: All highly liquid investments purchased with a maturity of three months or less are cash equivalents and are carried at fair market value. INVENTORIES: Inventories are valued at the lower of cost or market. The last-in, first-out (LIFO) method was used to accumulate the cost of all U.S. inventories which represent 69% of total inventories. The cost of foreign subsidiary inventories was determined using the first-in, first-out (FIFO) method. PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is stated at cost. Depreciation is provided using accelerated methods over estimated useful lives ranging generally from 20 to 50 years for buildings and 3 to 17 years for machinery and equipment. Maintenance and repairs charged to expense were $15,396, $16,341 and $12,966 in 1995, 1994 and 1993, respectively. GOODWILL: Goodwill represents the excess purchase price over the net assets of companies acquired in business combinations. Goodwill acquired since 1970 is being amortized on a straight-line basis over 40 years; similar investments for businesses acquired prior to 1970 (approximately $5,200) are not being amortized. The company has determined that there is no indication of any impairment in the value of goodwill. Accumulated amortization was $7,588 and $7,002 at December 31, 1995 and 1994, respectively. FOREIGN CURRENCY TRANSLATION: Assets and liabilities of foreign operations, except those in countries with high rates of inflation, are translated at year-end rates of exchange; revenue and expenses are translated at average annual rates of exchange. The resulting translation gains and losses are reflected in foreign currency translation adjustments within stockholders' equity. For operations in countries that have high rates of inflation, translation gains and losses are included in net income. These losses, along with those generated from foreign currency transactions, were $1,078, $550 and $1,661 in 1995, 1994 and 1993, respectively. INCOME PER COMMON SHARE: Income per common share is based on the weighted average number of common shares outstanding during the year. The effect of common stock equivalents (stock options) is not material. For purposes of calculating income per share, Employee Stock Ownership Plan (ESOP) shares are considered outstanding. 18 9 Barnes Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 2. INVENTORIES Inventories at December 31, consisted of:
1995 1994 --------------------------------------------------------------- Finished goods $28,541 $28,769 Work-in-process 16,222 13,697 Raw materials and supplies 11,986 8,379 --------------------------------------------------------------- $56,749 $50,845 ===============================================================
Inventories valued by the LIFO method aggregated $39,219 and $37,781 at December 31, 1995 and 1994, respectively. If LIFO inventories had been valued using the FIFO method, they would have been $12,632 and $12,639 higher at those dates. - -------------------------------------------------------------------------------- 3. PROPERTY, Property, plant and equipment at December 31, consisted of: PLANT AND EQUIPMENT
1995 1994 --------------------------------------------------------------- Land $ 5,412 $ 5,651 Buildings 60,064 59,727 Machinery and equipment 232,356 210,807 --------------------------------------------------------------- 297,832 276,185 Less accumulated depreciation 174,962 163,616 --------------------------------------------------------------- $122,870 $112,569 ===============================================================
- -------------------------------------------------------------------------------- 4. ACCRUED Accrued liabilities at December 31, consisted of: LIABILITIES
1995 1994 --------------------------------------------------------------- Payroll and other compensation $ 12,699 $ 15,033 Postretirement/postemployment benefits 6,541 7,631 Vacation pay 4,460 4,500 Accrued income taxes 5,006 3,927 Pension and profit sharing 2,017 1,707 Other 12,117 12,915 --------------------------------------------------------------- $ 42,840 $ 45,713 ===============================================================
- -------------------------------------------------------------------------------- 5. DEBT AND Long-term debt at December 31, consisted of: COMMITMENTS
1995 1994 --------------------------------------------------------------- Carrying Fair Carrying Amount Value Amount --------------------------------------------------------------- 9.47% Notes $36,923 $40,228 $40,000 7.13% Notes 25,000 25,302 - Borrowings under lines of credit 1,077 1,077 23,000 Other 7,000 7,000 7,000 --------------------------------------------------------------- $70,000 $73,607 $70,000 ===============================================================
The 9.47% Notes are payable in thirteen semi-annual payments of $3,077 beginning on September 16, 1995, while the 7.13% Notes are payable in four equal installments of $6,250 beginning on December 5, 2002. The fair values of these notes are determined using discounted cash flows based upon the company's estimated current interest rate for similar types of borrowings. The carrying values of other long-term debt, notes payable and guaranteed ESOP obligation approximate their fair value. 19 10 Barnes Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The company has a revolving credit agreement with five banks that allows borrowings up to $100,000 under notes due December 6, 2000. A commitment fee of .17% per annum is paid on the unused portion of the commitments. The company had no borrowings under this agreement at December 31, 1995 and 1994. The company has available $135,000 in uncommitted, short-term bank credit lines, of which $1,500 and $30,000 were in use at December 31, 1995 and 1994, respectively. The interest rate on these borrowings was 6.1% and 6.2% at December 31, 1995 and 1994, respectively. At December 31, 1995, the company classified $1,077 of borrowings under its lines of credit and $6,154 of its 9.47% Notes due within one year as long-term debt. The company has both the intent and the ability, through its revolving credit agreement, to refinance these amounts on a long-term basis. During 1995, the company had outstanding an interest rate swap, a form of derivative, which effectively converted $18,462 of its fixed rate 9.47% Notes to floating rate debt with interest equal to LIBOR plus 83 basis points. The effective interest rate on this floating rate portion was 6.7% and 7.3% at December 31, 1995 and 1994, respectively. This swap decreases as the Notes are repaid. The fair value of the swap is determined based upon current market prices and was $1,914 at December 31, 1995. The company does not use derivatives for trading purposes. The company guaranteed $9,953 of letters of credit, bank borrowings and capital lease obligations related to its 45% investment in NASCO. In addition, the company has other outstanding letters of credit totaling $7,004 at December 31, 1995. The required principal payments on the Notes are $6,154 in each of the next five years. As noted above, the 1996 maturity has been classified as long-term. Certain of the company's debt arrangements contain requirements to maintain minimum levels of working capital and net worth, which as a result, place limitations on dividend payments and acquisitions of the company's common stock. Under the most restrictive covenant in any agreement, $43,118 was available for dividends or acquisitions of common stock at December 31, 1995. Interest paid was $5,661, $5,626 and $5,496 in 1995, 1994 and 1993, respectively. - -------------------------------------------------------------------------------- 6. INCOME The components of income before income taxes and the provision TAXES for income taxes follow:
1995 1994 1993 --------------------------------------------------------------- Income before income taxes: U.S. $31,722 $23,639 $6,212 International 13,728 10,283 2,179 --------------------------------------------------------------- $45,450 $33,922 $8,391 =============================================================== Income tax provision: Current: U.S. - federal $ 7,668 $ 7,975 $ (743) U.S. - state 1,363 1,639 (172) International 5,456 4,477 2,931 --------------------------------------------------------------- 14,487 14,091 2,016 --------------------------------------------------------------- Deferred: U.S. - federal 2,479 (403) 1,383 U.S. - state 1,056 355 626 International (56) (437) (17) --------------------------------------------------------------- 3,479 (485) 1,992 --------------------------------------------------------------- $17,966 $13,606 $4,008 ===============================================================
20 11 Barnes Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Deferred income tax assets and liabilities at December 31, consist of the tax effects of temporary differences related to the following:
Assets Liabilities ---------------------------------------------------------------------------- 1995 1994 1995 1994 ---------------------------------------------------------------------------- Allowance for doubtful accounts $ 1,296 $ 1,197 $ (10) $ (7) Depreciation and amortization (6,460) (7,155) 1,980 1,826 Inventory valuation 3,127 6,295 775 594 Postretirement/ postemployment costs 28,921 29,234 (435) - Tax loss carryforwards 7,665 6,672 - - Other 4,742 5,744 1,163 1,050 ---------------------------------------------------------------------------- 39,291 41,987 3,473 3,463 Valuation allowance (6,639) (5,986) - - ---------------------------------------------------------------------------- $32,652 $36,001 $ 3,473 $ 3,463 ============================================================================ Current deferred income taxes $ 8,344 $12,147 $ 765 $ 587 Noncurrent deferred income taxes 24,308 23,854 2,708 2,876 ---------------------------------------------------------------------------- $32,652 $36,001 $ 3,473 $ 3,463 ============================================================================
The components of the net deferred income tax balances recognized in the accompanying balance sheets at December 31, follow:
1995 1994 ---------------------------------------------------------------------------- Total deferred income tax assets $53,307 $56,892 Total deferred income tax asset valuation allowance (6,639) (5,986) Total deferred income tax liabilities (17,489) (18,368) ---------------------------------------------------------------------------- $29,179 $32,538 ============================================================================
A portion of the deferred income tax assets can be realized through carrybacks and reversals of existing taxable temporary differences with the remainder, net of the valuation allowance, dependent on future income. Management believes that sufficient income will be earned in the future to realize the remaining net deferred income tax assets. The company has not recognized deferred income taxes on $69,092 of undistributed earnings of its international subsidiaries since such earnings are considered to be reinvested indefinitely. If the earnings were distributed in the form of dividends, the company would be subject to both U.S. income taxes and foreign withholding taxes. Determination of the amount of this unrecognized deferred income tax liability is not practicable. 21 12 Barnes Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A reconciliation of the U.S. federal statutory income tax rate to the consolidated effective income tax rate follows:
1995 1994 1993 ------------------------------------------------------------------------ U.S. federal statutory income tax rate 35.0% 35.0% 35.0% Effect of graduated rates - - (1.0) State taxes (net of federal benefit) 3.5 3.8 3.6 Foreign losses without tax benefit 2.7 4.0 25.2 Translation losses 0.2 0.4 5.9 Research and development tax credits - (0.3) (1.8) Foreign tax rates (1.6) (3.1) (5.2) NASCO income (1.0) (2.0) (5.9) Goodwill amortization 0.5 0.7 2.7 Income tax benefit of allocated ESOP dividends (0.8) (0.9) (3.2) Enacted rate change - - (9.5) Other 1.0 2.5 2.0 ------------------------------------------------------------------------ Consolidated effective income tax rate 39.5% 40.1% 47.8% ========================================================================
Income taxes paid, net of refunds, were $13,269, $8,848 and $4,255 in 1995, 1994 and 1993, respectively. - ------------------------------------------------------------------------------- 7. COMMON STOCK In 1995, 1994 and 1993, 167,779, 135,692 and 70,504 shares of common stock were issued from treasury for the exercise of stock options, purchases by the Employee Stock Purchase Plan and various other incentive awards. Also in 1995, the company acquired 42,236 shares of the company's common stock from its Guaranteed Stock Plan at a cost of $1,746. These acquired shares were placed in treasury. Each share of outstanding common stock contains a dividend distribution right (Right) which entitles the holder to purchase 1/100 of a share of Series A Junior Participating Preferred Stock for one hundred dollars. Separate rights certificates will be mailed to stockholders if a person or group acquires or commences a tender or exchange offer for 50% or more of the outstanding shares of the company's common stock. The Rights, which have no voting or dividend rights, expire July 29, 1996 and may be redeemed by the company at a price of five cents per Right at any time until the tenth day following public announcement that a person or group has acquired or intends to acquire 50% or more of the outstanding common stock. If, following the acquisition by a person or group of 50% or more of the outstanding shares of the company's common stock, the company is acquired in a merger or other business combination or 50% or more of the company's assets or earning power is sold or transferred, each outstanding Right becomes exercisable for common stock or other securities of the acquiring entity having a value of twice the exercise price of the Right. - ------------------------------------------------------------------------------- 8. PREFERRED At December 31, 1995 and 1994, the company had 3,000,000 STOCK shares of $1 par value preferred stock authorized, none of which were outstanding. - ------------------------------------------------------------------------------- 9. STOCK PLANS All U.S. salaried and non-union hourly employees are eligible to participate in the company's Guaranteed Stock Plan (GSP). The GSP provides for the investment of employer and employee contributions in the company's common stock. The company guarantees a minimum rate of return on certain GSP assets. 22 13 Barnes Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The GSP is a leveraged Employee Stock Ownership Plan (ESOP). In 1989, the GSP purchased 579,310 shares of the company's common stock at a cost of $21,000 using the proceeds of a loan guaranteed by the company. These shares are held in trust and are issued to employees' accounts in the GSP as the loan is repaid. Principal and interest on the GSP loan are being paid in quarterly installments through 1999. The loan bears interest based on LIBOR. At December 31, 1995 the interest rate was 6.7%. Interest of $747, $653 and $592 was incurred in 1995, 1994 and 1993, respectively. Contributions and certain dividends received are used in part by the GSP to service its debt. Contributions include both employee contributions up to a maximum of 10% of eligible pay and company contributions. The company contributions are equal to the amount required by the Plan to pay the principal and interest due under the Plan loan plus that required to purchase any additional shares required to be allocated to participant accounts, less the sum of participant contributions and dividends received by the GSP. The GSP used $1,459, $1,323 and $1,277 of company dividends for debt service in 1995, 1994 and 1993, respectively. The company expenses all cash contributions made to the GSP. Compensation expense was $2,245, $2,268 and $2,452 in 1995, 1994 and 1993, respectively. In addition to the company shares held in trust, the GSP also purchases the company's common stock on the open market to meet its requirements. As of December 31, 1995, the GSP held 1,158,819 shares of the company's common stock, of which 224,968 shares were unallocated. For financial statement purposes, the company reflects its guarantee of the GSP's debt as a liability with a like amount reflected as a reduction of stockholders' equity. The company also has an Employee Stock Purchase Plan under which eligible employees may elect to have up to 10% of base compensation deducted from payroll for the purchase of the company's common stock at 85% of market value on the date of purchase. The maximum number of shares which may be purchased under the Plan is 675,000. During 1995, 21,012 shares (22,367 and 23,737 shares in 1994 and 1993, respectively) were purchased. As of December 31, 1995, 221,871 shares may be issued in the future. The 1991 Barnes Group Stock Incentive Plan authorizes the granting of incentives to officers and other executives in the form of stock options, stock appreciation rights, incentive stock rights and performance unit awards. A predecessor plan which provided for similar incentives expired in 1991. Options granted under that plan continue to be exercisable and any options which terminate without being exercised become available for grant under the 1991 Plan. A maximum of 660,926 common shares are subject to issuance under this plan after December 31, 1995. Data relating to grants under these plans follow:
Options 1995 1994 -------------------------------------------------------------- Outstanding, January 1 644,554 713,696 Granted 79,100 117,300 Exercised (at $17.96 to $38.38) 146,046 108,464 Cancelled 77,252 77,978 -------------------------------------------------------------- Outstanding, December 31 (at $20.83 to $42.13) 500,356 644,554 ============================================================== Exercisable, December 31 (at $20.83 to $38.38) 142,400 237,120 ============================================================== Available for future grants, December 31 160,570 162,418 ==============================================================
23 14 Barnes Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Under the Non-employee Director Deferred Stock Plan each non-employee director is awarded 2,000 shares of the company's common stock upon retirement. In 1994, 4,000 shares were issued under this plan. No shares were issued in 1995 or 1993. As of December 31, 1995, 20,000 shares were reserved for issuance under this plan. Total shares reserved for issuance under all stock plans aggregated 902,797 at December 31, 1995. - ------------------------------------------------------------------------------- 10. PENSION The company has noncontributory defined benefit pension plans PLANS covering a majority of its worldwide employees at Associated Spring, Bowman Distribution and its Executive Office. Plan benefits for salaried and non-union hourly employees are based on years of service and average salary. Plans covering union hourly employees provide benefits based on years of service. The company funds U.S. pension costs in accordance with the Employee Retirement Income Security Act of 1974 (ERISA). Plan assets consist primarily of common stocks and fixed income investments. Pension expense consisted of the following:
1995 1994 1993 -------------------------------------------------------------- Service cost $ 4,836 $ 5,282 $ 4,467 Interest cost 15,907 15,290 14,946 Actual (return) loss on plan assets (43,256) 941 (25,875) Net amortization and deferral 22,960 (20,295) 7,308 -------------------------------------------------------------- $ 447 $ 1,218 $ 846 ==============================================================
The funded status of the plans at December 31, is set forth below:
1995 1994 -------------------------------------------------------------- Plan assets at fair value $247,915 $216,767 Actuarial present value of benefit obligations: Vested benefits 201,231 176,219 Nonvested benefits 4,124 3,856 -------------------------------------------------------------- Accumulated benefit obligations 205,355 180,075 Additional benefits based on projected future salary increases 23,026 20,324 -------------------------------------------------------------- Projected benefit obligations 228,381 200,399 -------------------------------------------------------------- Plan assets greater than projected benefit obligations $ 19,534 $ 16,368 ==============================================================
Reconciliation to net pension asset recognized in the accompanying balance sheets:
1995 1994 -------------------------------------------------------------- Plan assets greater than projected benefit obligations $ 19,534 $ 16,368 Adjustments for unrecognized: Net gains (6,512) (2,901) Prior service costs 4,591 4,859 Net asset at transition (9,043) (10,639) -------------------------------------------------------------- (10,964) (8,681) -------------------------------------------------------------- Net pension asset $ 8,570 $ 7,687 ==============================================================
24 15 Barnes Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Significant assumptions used in determining pension expense and the funded status of the plans were:
1995 1994 1993 --------------------------------------------------------------- Weighted average discount rate 7.25% 8.25% 7.50% Increase in compensation 5.25% 5.25% 5.25% Long-term rate of return on plan assets 9.00% 9.00% 9.00%
The reduction in the weighted average discount rate, from 8.25% to 7.25%, increased the projected benefit obligations by approximately $23,016 at December 31, 1995 and will increase annual pension expense by $712. The company has defined contribution plans covering employees of Barnes Aerospace and field sales employees of Bowman Distribution's U.S. operation. Company contributions under these plans are based primarily on the performance of the business unit and employee compensation. Total expense amounted to $1,748, $1,431 and $1,566 in 1995, 1994 and 1993, respectively. The pension agreement between the company and the union representing the three largest Associated Spring plants became subject to renegotiation during the first quarter of 1995. Pension negotiations have been delayed, in part, due to negotiations for a new collective bargaining agreement covering workers at Associated Spring's largest plant. The pension negotiation could be further delayed by the fact that the labor agreement covering workers at another large Associated Spring plant is scheduled for renegotiation in 1996. - -------------------------------------------------------------------------------- 11. POSTRE- The company provides certain medical, dental and life TIREMENT insurance benefits for a majority of its retired employees in HEALTHCARE the U.S. and Canada. It is the company's practice to fund AND LIFE these benefits as incurred. INSURANCE BENEFITS Postretirement benefit expense consisted of the following:
1995 1994 1993 --------------------------------------------------------------- Service cost $ 679 $ 874 $ 792 Interest cost 5,594 5,199 5,840 Net amortization (158) (158) - --------------------------------------------------------------- $ 6,115 $ 5,915 $ 6,632 ===============================================================
The amounts included in the accompanying balance sheets at December 31, were as follows:
1995 1994 1993 --------------------------------------------------------------- Accumulated benefit obligations: Retirees $57,160 $50,917 $48,199 Employees eligible to retire 6,904 6,209 8,334 Employees not eligible to retire 13,654 12,020 15,204 Unrecognized prior service cost 1,021 1,245 1,403 Unrecognized net loss (7,339) (986) (4,823) --------------------------------------------------------------- $71,400 $69,405 $68,317 =============================================================== Postretirement benefit obligations included in: Accrued liabilities $ 5,673 $ 5,300 $ 5,200 Accrued retirement benefits 65,727 64,105 63,117 --------------------------------------------------------------- $71,400 $69,405 $68,317 ===============================================================
A deferred tax asset is included in the accompanying balance sheets recognizing the future tax benefit of the postretirement benefit obligations (See Note 6). 25 16 Barnes Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cash payments made in 1995, 1994 and 1993 for postretirement benefits were $5,210, $4,828 and $4,597, respectively. The company's accumulated benefit obligations take into account certain cost-sharing provisions. The annual assumed rate of increase in the cost of covered benefits (i.e., healthcare cost trend rate) is assumed to be 10.0% for 1995, gradually reducing to 5.0% by the year 2001. A one percentage point increase in the assumed healthcare cost trend rate would increase the accumulated benefit obligations by approximately $6,664 at December 31, 1995, and would have increased 1995 expense by approximately $815. Discount rates of 7.25%, 8.25% and 7.5% were used in determining the accumulated benefit obligations at December 31, 1995, 1994 and 1993, respectively. While the reduction in the weighted average discount rate from 8.25% to 7.25% increased the accumulated benefit obligations by $7,213 at December 31, 1995, it will have only a minor impact on the 1996 expense. - ------------------------------------------------------------------------------- 12. LEASES Rent expense was $5,866, $6,072 and $5,256 for 1995, 1994 and 1993, respectively. Minimum rental commitments under noncancellable leases (principally for buildings and equipment) in years 1996 through 2000 are $3,089, $2,198, $1,601, $1,023, $837 and $4,895 thereafter. - ------------------------------------------------------------------------------- 13. INFORMATION The company operates three businesses: ON BUSINESS SEGMENTS Associated Spring: manufactures and distributes custom-made springs and other close-tolerance engineered metal components principally to the transportation, electronics and industrial markets. Associated Spring's custom metal parts are sold in the United States and through its foreign subsidiaries. Foreign manufacturing operations are located in Brazil, Canada, Mexico and Singapore. The automotive and automotive parts industries constitute Associated Spring's largest market. Bowman Distribution: distributes fast-moving, consumable repair and replacement products for industrial, heavy equipment and transportation maintenance markets. Bowman Distribution's operations and markets are located primarily in the United States. Other important locations include Canada and Europe. Barnes Aerospace: manufactures precision machined parts and fabricated assemblies, and refurbishes jet engine components for the aircraft and aerospace industries. Barnes Aerospace's operations and markets are located primarily in the United States. Sales between the business segments and between the geographic areas are accounted for on the same basis as sales to unaffiliated customers. Operating income includes net sales less cost of sales, selling and administrative expenses and the cost of plant closings and restructurings. In 1993, plant closings and restructurings included $3,400 for combining operations of the Aerospace machining units and $1,500 for the consolidation of Associated Spring's operations in Mexico. Other income and expenses are not included in operating income. Corporate assets consist of cash and cash equivalents, deferred income taxes, other assets, transportation equipment and the Executive Office building. Included in the 1995 identifiable international assets are the assets of manufacturing facilities in Singapore ($19,200), Brazil ($14,100), Canada ($18,000) and Mexico ($10,300) and distribution facilities in Canada ($13,100), United Kingdom ($16,300) and France ($8,000). Associated Spring's operation in Singapore was an important contributor to the company's international operating income during each of the three years presented. 26 17 Barnes Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following tables set forth information about the company's operations by its three business segments and by geographic area: OPERATIONS BY BUSINESS SEGMENT
Net Sales Operating Income ----------------------------------------------------- (Dollars in millions) 1995 1994 1993 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------- Associated Spring $279.0 $272.4 $233.0 $ 42.6 $ 41.7 $ 28.6 Bowman Distribution 217.0 215.1 193.2 17.4 12.6 6.7 Barnes Aerospace 97.3 82.3 77.0 5.0 (1.8) (4.5) Intersegment sales (0.8) (0.6) (0.9) - - - ----------------------------------------------------- $592.5 $569.2 $502.3 65.0 52.5 30.8 ======================== Plant closings and restructurings - - (4.9) Corporate expenses (16.2) (15.9) (13.4) - ---------------------------------------------------------------------------------------------------------- Operating Income $ 48.8 $ 36.6 $ 12.5 ==========================================================================================================
Identifiable Assets Capital Expenditures Depreciation Expense ---------------------------------------------------------------------------------- (Dollars in millions) 1995 1994 1993 1995 1994 1993 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------- Associated Spring $160.3 $144.7 $124.3 $ 24.2 $ 23.7 $ 11.1 $ 11.6 $ 9.0 $ 7.7 Bowman Distribution 79.2 86.0 80.7 3.6 4.3 5.6 4.1 3.1 2.9 Barnes Aerospace 87.0 85.6 90.0 7.8 3.7 5.4 7.2 7.5 8.0 Corporate 35.0 35.7 38.3 0.2 0.1 0.1 0.3 0.2 0.3 - ---------------------------------------------------------------------------------------------------------- $361.5 $352.0 $333.3 $ 35.8 $ 31.8 $ 22.2 $ 23.2 $ 19.8 $ 18.9 ==========================================================================================================
OPERATIONS BY GEOGRAPHIC AREA
Net Sales Operating Income ----------------------------------------------------- (Dollars in millions) 1995 1994 1993 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------- Domestic $463.4 $454.8 $404.8 $ 51.3 $ 45.0 $ 28.4 International 137.9 121.9 103.1 13.7 7.5 2.4 Sales between geographic areas (8.8) (7.5) (5.6) - - - - ---------------------------------------------------------------------------------------------------------- $592.5 $569.2 $502.3 $ 65.0 $ 52.5 $ 30.8 ==========================================================================================================
Identifiable Assets ------------------------ (Dollars in millions) 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------- Domestic $227.5 $226.6 $210.3 International 99.0 89.7 84.7 Corporate 35.0 35.7 38.3 - ---------------------------------------------------------------------------------------------------------- $361.5 $352.0 $333.3 ==========================================================================================================
27 18 Barnes Group Inc. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- 14. CONTINGENCY In December, 1991, the company was notified by the McDonnell Douglas Corporation that McDonnell Douglas was terminating for default an $8,200 contract with the company's Advanced Fabrication division. In 1992, the company wrote off $4,000 of net assets related to this contract previously included in its financial statements. The company believed from the onset that it had legitimate defenses to the default claim. In June, 1995, this dispute was settled to the satisfaction of both parties with no further financial impact on the results of operations or on the financial position of the company. - ------------------------------------------------------------------------------- REPORT OF INDEPENDENT ACCOUNTANTS TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF BARNES GROUP INC. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, changes in stockholders' equity and of cash flows present fairly, in all material respects, the financial position of Barnes Group Inc. and its subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. The financial statements of Barnes Group Inc. for the year ended December 31, 1993 were audited by other independent accountants whose report dated January 28, 1994 expressed an unqualified opinion on those statements. /s/ PRICE WATERHOUSE LLP Hartford, Connecticut January 23, 1996 28 19 Barnes Group Inc. QUARTERLY DATA (UNAUDITED)
First Second Third Fourth Full (Dollars in millions except per share data) Quarter Quarter Quarter Quarter Year - ----------------------------------------------------------------------------------------------------------------------------------- 1995 Net sales $158.6 $151.0 $141.7 $141.2 $592.5 Gross profit* 57.7 54.8 49.8 48.1 210.4 Operating income 14.5 13.4 11.1 9.8 48.8 Net income 8.3 7.3 6.3 5.6 27.5 Per Common Share: Net income 1.29 1.12 .95 .84 4.20 Dividends .40 .40 .40 .40 1.60 Market prices (high-low) $44 3/8-36 1/4 $45 3/4-40 1/4 $43-40 $40 7/8-35 7/8 $45 3/4-35 7/8 1994 Net sales $142.1 $143.2 $140.3 $143.6 $569.2 Gross profit* 51.4 51.4 50.6 49.3 202.7 Operating income 8.8 9.6 10.2 8.0 36.6 Net income 4.9 5.5 5.4 4.5 20.3 Per Common Share: Net income .78 .87 .84 .71 3.20 Dividends .35 .35 .35 .40 1.45 Market prices (high-low) $31 1/2-29 1/2 $37 3/4-29 3/4 $38-33 5/8 $39 7/8-35 1/2 $39 7/8-29 1/2
Note: The fourth quarter of 1994 includes a pretax charge of $1.1 or $.10 per common share for severance costs at Barnes Aerospace. *Sales minus cost of sales. 29 20 Barnes Group Inc. SELECTED FINANCIAL DATA
1995 1994 1993(2) - --------------------------------------------------------------------------------------------------------------------------------- PER COMMON SHARE (1) Income (loss) Continuing operations $ 4.20 $ 3.20 $ .70 Effect of accounting changes - - - Discontinued operations - - - Net income (loss) 4.20 3.20 .70 Dividends paid 1.60 1.45 1.40 Stockholders' equity before deduction of guaranteed ESOP obligation (at year-end) 21.16 18.53 16.82 Stock price (at year-end) 36 38 31 1/4 - --------------------------------------------------------------------------------------------------------------------------------- FOR THE YEAR (in thousands) Net sales $592,509 $569,197 $502,292 Operating income 48,804 36,649 12,538 As a percent of sales 8.2% 6.4% 2.5% Income from continuing operations before income taxes and effect of accounting changes $ 45,450 $ 33,922 $ 8,391 Income taxes 17,966 13,606 4,008 Income from continuing operations before effect of accounting changes (8) 27,484 20,316 4,383 As a percent of average stockholders' equity before deduction of guaranteed ESOP obligation 20.8% 18.0% 4.1% Effect of accounting changes $ - $ - $ - Net income (loss) 27,484 20,316 4,383 Net income (loss) applicable to common stock 27,484 20,316 4,383 Depreciation and amortization 26,750 23,733 23,094 Capital expenditures 35,820 31,848 22,216 Average common shares outstanding 6,547 6,354 6,250 - --------------------------------------------------------------------------------------------------------------------------------- YEAR-END FINANCIAL POSITION (in thousands) Working capital $ 95,280 $ 88,325 $ 87,011 Current ratio 2.2 to 1 2.0 to 1 2.1 to 1 Property, plant and equipment $122,870 $112,569 $103,043 Total assets 361,549 351,956 333,296 Long-term debt 70,000 70,000 70,000 Stockholders' equity before deduction of guaranteed ESOP obligation 138,680 119,150 105,868 Guaranteed ESOP obligation 9,839 12,011 14,019 Stockholders' equity 128,841 107,139 91,849 Debt as a percent of total capitalization (9) 24.6% 28.3% 30.5% - --------------------------------------------------------------------------------------------------------------------------------- YEAR-END STATISTICS Employees 3,880 4,181 4,357 (1) All per-share data, other than earnings per common share, are based on common shares outstanding at the end of each year. Earnings per common share are based on weighted average common shares outstanding during each year. (2) Includes a $3.4 million pretax, $2.0 million after-tax charge ($.33 per share) against income related to the plant consolidation and work force reduction at Barnes Aerospace and a $1.5 million charge without tax benefit ($.24 per share) for a plant consolidation at Associated Spring's Mexican operations. (3) Includes a $17.8 million pretax, $10.7 million after-tax charge ($1.73 per share) against income related to the costs of plant closings at Associated Spring, Barnes Aerospace charges on a terminated contract and restructuring of Bowman U.S. sales organization. These charges were partially offset by a $5.0 million pretax gain, $3.7 million after-tax ($.60 per share) from the sale of Bowman's Pioneer division. (4) Barnes Group adopted three new accounting standards in 1992 retroactive to the beginning of the year. Included is a one-time $39.7 million after-tax charge ($6.41 per share) to comply with FAS 106 and 112 which changes the accounting for certain postretirement and postemployment benefits to the accrual method and an additional $1.0 million income tax charge ($.15 per share) for FAS 109, which changed income tax accounting.
30 21
1992(3)(4) 1991 1990 1989(5) 1988 1987(6) 1986(7) 1985 - ----------------------------------------------------------------------------------------------------------- $ .94 $ 2.60 $ 2.76 $ 1.94 $ 3.06 $ 2.80 $ 2.57 $ 2.27 (6.56) - - - - - - - - - - - - - - (.60) (5.62) 2.60 2.76 1.94 3.06 2.80 2.57 1.67 1.40 1.40 1.40 1.40 1.20 1.15 1.00 .85 17.59 25.31 23.88 21.96 20.35 17.91 19.27 17.68 30 1/2 35 3/8 25 7/8 29 35 5/8 32 30 1/2 27 1/2 - ----------------------------------------------------------------------------------------------------------- $529,073 $535,660 $545,857 $511,221 $496,060 $458,016 $439,727 $431,762 7,259 37,982 41,198 33,990 43,702 42,265 43,056 40,767 1.4% 7.1% 7.5% 6.6% 8.8% 9.2% 9.8% 9.4% $ 7,671 $ 28,849 $ 29,952 $ 23,118 $ 33,175 $ 34,576 $ 35,336 $ 33,574 1,838 12,926 13,163 10,745 14,327 16,736 18,733 17,157 5,833 15,923 16,789 11,114 16,711 17,700 16,603 16,417 5.1% 10.5% 12.0% 9.0% 15.9% 14.0% 14.0% 13.4% $(40,695) $ - $ - $ - $ - $ - $ - $ (4,324) (34,862) 15,923 16,789 12,373 18,848 17,840 16,603 12,093 (34,862) 15,923 16,789 11,114 16,711 17,700 16,603 12,093 23,741 23,159 22,044 18,167 16,626 15,470 14,511 13,486 16,238 19,099 21,615 18,218 21,821 22,457 18,803 16,232 6,202 6,127 6,078 5,733 5,465 6,321 6,461 7,223 - ----------------------------------------------------------------------------------------------------------- $ 93,500 $102,995 $ 94,087 $ 89,194 $102,126 $ 85,991 $ 54,659 $ 54,077 2.0 to 1 2.2 to 1 1.9 to 1 1.9 to 1 2.3 to 1 2.0 to 1 1.5 to 1 1.6 to 1 $104,437 $114,299 $114,717 $107,491 $100,403 $ 96,066 $ 87,613 $ 87,662 348,346 341,857 342,383 328,116 311,876 297,946 277,828 253,586 70,000 78,428 78,714 79,088 79,287 73,853 32,285 29,837 109,451 156,407 145,614 133,218 112,810 97,103 123,025 113,978 15,876 17,594 19,182 20,650 - - - - 93,575 138,813 126,432 112,568 112,810 97,103 123,025 113,978 31.2% 36.5% 39.8% 41.1% 37.7% 39.7% 28.5% 22.9% - ----------------------------------------------------------------------------------------------------------- 4,051 4,478 4,744 4,799 4,770 4,712 4,697 4,845 (5) Includes a $6.5 million pretax, $3.9 million after-tax charge ($.68 per share) against income related to restructuring costs at Associated Spring. (6) Includes a $2.9 million pretax, $1.6 million after-tax charge ($.26 per share) against income related to the transition costs involved in modernizing Associated Spring's valve spring production facilities in North America. (7) Barnes Group changed its U.S. pension cost accounting to comply with FAS 87. The effect was to increase net income by $2.2 million ($.33 per share). (8) Adjusted for preferred dividends in 1989, 1988 and 1987. (9) Debt includes all interest-bearing debt and total capitalization includes interest-bearing debt, accrued long-term retirement benefits, other long-term liabilities, preferred stock and stockholders' equity, excluding the guaranteed ESOP obligation.
31 22 Barnes Group Inc. DIRECTORS AND OFFICERS DIRECTORS THOMAS O. BARNES Chairman of the Board * WALLACE BARNES Retired Chairman of the Board + ++ GARY G. BENANAV Executive Vice President Aetna Life and Casualty Company Hartford, Connecticut * WILLIAM S. BRISTOW, JR. President W. S. Bristow & Associates, Inc. Rollinsford, New Hampshire * ++ ROBERT J. CALLANDER Executive in Residence Columbia University School of Business Retired Vice Chairman Chemical Banking Corporation New York, New York * GEORGE T. CARPENTER President The S. Carpenter Construction Company Bristol, Connecticut + ++ DONNA R. ECTON Chairman, President and Chief Executive Officer Business Mail Express, Inc. Reston, Virginia + ++ MARCEL P. JOSEPH Chairman of the Board Augat Inc. Mansfield, Massachusetts * THEODORE E. MARTIN President and Chief Executive Officer + ++ JUAN M. STETA Counsel to the law firm of Santamarina y Steta Mexico, D.F., Mexico + K. GRAHAME WALKER Chairman and Chief Executive Officer The Dexter Corporation Windsor Locks, Connecticut * A. STANTON WELLS Retired President and Chief Executive Officer OFFICERS EXECUTIVE OFFICE THEODORE E. MARTIN President and Chief Executive Officer THOMAS O. BARNES Senior Vice President - Administration JOHN E. BESSER Senior Vice President - Finance and Law JOSEPH R. KOWALCHIK Senior Vice President - Human Resources + JOHN J. LOCHER Vice President, Treasurer MARY LOUISE BEARDSLEY Associate General Counsel and Secretary FRANCIS C. BOYLE, JR. Assistant Controller OPERATIONS ALI A. FADEL Vice President, Barnes Group Inc., and President, Associated Spring LEONARD M. CARLUCCI Vice President, Barnes Group Inc., and President, Bowman Distribution THEODORE E. MARTIN (Acting) President, Barnes Aerospace * MEMBER OF EXECUTIVE COMMITTEE + MEMBER OF AUDIT COMMITTEE ++ MEMBER OF COMPENSATION COMMITTEE 32 23 Barnes Group Inc. CORPORATE INFORMATION DIRECTORY OF BARNES GROUP INC. OPERATIONS Executive Office Bristol, Connecticut ASSOCIATED SPRING Headquarters Bristol, Connecticut Manufacturing Plants North America: Bristol, Connecticut Saline, Michigan Syracuse, New York Arden, North Carolina Corry, Pennsylvania Dallas, Texas Milwaukee, Wisconsin Burlington, Ontario, Canada Mexico City, Mexico South America: Campinas, Brazil Asia: Republic of Singapore Distribution Operations United States: Maumee, Ohio Cerritos, California Ypsilanti, Michigan Arlington, Texas New Berlin, Wisconsin United Kingdom: Evesham France: Montigny BOWMAN DISTRIBUTION Headquarters Cleveland, Ohio Distribution Centers United States: Bakersfield, California Norcross, Georgia Rockford, Illinois Elizabethtown, Kentucky Edison, New Jersey Arlington, Texas Auburn, Washington Canada: Concord, Ontario Edmonton, Alberta Moncton, New Brunswick St. Laurent, Quebec Distribution Operations United Kingdom: Corsham France: Voisins Le Bretonneux BARNES AEROSPACE Headquarters Windsor, Connecticut Manufacturing Plants United States: East Granby, Connecticut Windsor, Connecticut Lansing, Michigan Ogden, Utah Asia: Republic of Singapore STOCKHOLDERS' TRANSFER AGENT AND REGISTRAR INFORMATION Shareholder Inquiries/ Address Changes/Consolidations Chemical Mellon Shareholder Services, L.L.C. P.O. Box 590 Ridgefield Park, NJ 07660 1-800-288-9541 (Continental U.S. only) or 1-412-236-8000 For Hearing Impaired 1-800-231-5469 Lost Certificates/Replacements Chemical Mellon Shareholder Services, L.L.C. Estoppel Department P.O. Box 467 Washington Bridge Station New York, NY 10033 Certificate Transfers Chemical Mellon Shareholder Services, L.L.C. P.O. Box 469 Washington Bridge Station New York, NY 10033 All certificates should be sent registered mail. Dividend Investment/ Shareholder Investment Plans Dividends on Barnes Group common stock may be automatically invested in additional shares. Further information can be obtained from: Mellon Securities Trust Company c/o Chemical Mellon Shareholder Services, L.L.C. P. O. Box 750 Pittsburgh, PA 15230 1-800-288-9541 (Continental U.S. only) or 1-412-236-8000 For Hearing Impaired 1-800-231-5469 Hand Deliveries Chemical Mellon Shareholder Services, L.L.C. 120 Broadway, 13th Floor New York, NY 10271 STOCK EXCHANGE New York Stock Exchange Stock Trading Symbol: B INDEPENDENT ACCOUNTANTS Price Waterhouse LLP One Financial Plaza Hartford, CT 06103 ANNUAL MEETING Barnes Group Inc. annual meeting of stockholders will be held at 10:30 a.m., Wednesday, April 3, 1996, at The Travelers Education Center, Hartford, CT. INVESTOR INFORMATION Barnes Group welcomes inquiries from stockholders, analysts and prospective investors. 10-K Reports are available on request. Contact: John F. Sand Barnes Group Inc. 123 Main St., P.O. Box 489 Bristol, CT 06011-0489 1-860-583-7070 EX-27 15
5 This schedule contains summary financial information extracted from the consolidated balance sheet of Barnes Group Inc. as of December 31, 1995, the related consolidated statement of income, Note 3 to the consolidated financial statements and Schedule VIII of Form 10-K and is qualified in its entirety by reference to such financial statements, note and schedule. 1,000 YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 17,868 0 89,721 3,635 56,749 172,816 297,832 174,962 361,549 77,536 77,491 15,737 0 0 113,104 361,549 592,509 592,509 382,150 382,150 0 1,577 5,274 45,450 17,966 27,484 0 0 0 27,484 4.20 4.20
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