Document:

Exhibit

EXHIBIT 10.42

BARNES GROUP INC. 
STOCK AND INCENTIVE AWARD PLAN 
PERFORMANCE SHARE AWARD SUMMARY OF GRANT
For Officers and Other Individuals as Designated by the CMDC 

Barnes Group Inc., a Delaware corporation (the “Company”), under the 2014 Barnes Group Inc. Stock and Incentive Award Plan, as may be amended from time to time (the “Plan”), hereby grants to the individual named below (“You” or “Grantee”) this Performance Share Award (also referred to as Performance Share Unit Award) (the “Grant”), representing the target number of performance shares set forth below (each a “Performance Share”) that may be earned by You based on the level of achievement of the Performance Goals.  Each Performance Share entitles You to one share of Common Stock.  The actual number of Performance Shares earned will be based on the actual performance level achieved with respect to the Performance Goals set forth on Schedule A.  The Performance Shares are subject to this Performance Share Award Summary of Grant (the “Summary of Grant”), and the Performance Share Award Agreement attached as Exhibit A (the “Performance Share Award Agreement”) and the Plan, both of which are incorporated herein by reference and made part hereof.  The Grant also entitles You to be paid Dividend Equivalents as set forth in the Performance Share Award Agreement.  Unless otherwise defined, capitalized terms used in this Summary of Grant and the Performance Share Award Agreement have the meanings set forth in the Plan.  
	
		
	Grantee:
	[__________________________]

	 
	 

	Grant Date:
	February XX, 20XX

	 
	 

	Target Award:
	[______] Performance Shares

	 
	 

	Performance Period:
	The 3 year period beginning on January 1, 20XX and ending on December 31, 20XX

	 
	 

	Performance Goals:

Vesting Schedule
	The Performance Goals are based on the performance measures set forth on Schedule A.
The Performance Shares will be earned based on the performance level achieved with respect to the Performance Goals if, except as provided otherwise in the Performance Share Award Agreement, You continue employment with Company through the third anniversary of the Grant Date.
The number of Performance Shares set forth above is equal to the target number of shares of Common Stock that the Grantee will earn for 100% achievement of the Performance Goals (referred to as the “Target Award”).  The actual number of shares of Common Stock that You will earn with respect to the Performance Shares may be greater or less than the Target Award, or even zero, and will be based on the performance level achieved by the Company with respect to the Performance Goals, as set forth on Schedule A.  
 

	
		
	 
	Performance level is measured based on the threshold, target and maximum performance levels set forth on Schedule A.  Each performance level is calculated as a percentage of target level performance.  Threshold performance level is 33% of target, target performance level is 100% of target, maximum performance level is 150% of target, maximum+ performance level is 200% of target and maximum++ performance level is 250% of target.  If actual performance is between performance levels, the number of Performance Shares earned will be interpolated on a straight line basis for pro-rata achievement of the Performance Goals, rounded down to the nearest whole number.  Failure to achieve the threshold performance level with respect to a Performance Goal will result in no Performance Shares being earned with respect to that Performance Goal.

Grant Acceptance:    
    
You agree to be bound by the Plan, the Performance Share Award Agreement and this Summary of Grant by electronically acknowledging and accepting the Grant following the date of the Company’s electronic or other written notification to You of the Grant.  You accept as binding, conclusive and final all decisions or interpretations of the Committee upon any questions arising under the Plan, this Summary of Grant or the Performance Share Award Agreement.  In no event do You acquire any rights to the Grant unless You electronically accept, no later than 60 days after the Grant Date, this Summary of Grant and the attached Performance Share Award Agreement.   

You acknowledge that the Plan and the Plan prospectus are available as part of the online grant package with E*Trade and Barnes Net at http://barnesnet.barnesgrp.net/Legal/default.aspx, respectively, and that paper copies of the Plan and the Plan prospectus are available upon request by contacting the Manager, Stockholder Relations, Monique B. Marchetti, at mmarchetti@bginc.com or  860-973-2185.   

Schedule A

The number of Performance Shares that may be earned will be determined based on the actual performance level achieved with respect to the following performance measures during the Performance Period: 3-Year Total Stockholder Return (“TSR”) and 3-Year Return on Invested Capital ("ROIC”)(collectively referred to as the “Performance Goals,” and each individual measure, a “Performance Goal”).  The chart below sets forth the applicable weighting of each performance measure and the Performance Goals needed to be achieved at each performance level for such performance measure during the Performance Period: 

January 1, 20XX-December 31, 20XX Performance Period

	
					
	Performance
Measure
	Weight
	Performance
Level
	Performance Goals
	Performance Shares Earned as a Percentage of Target
(% of Target) *

	3-Year TSR** 

	50%
	Threshold
	Achieve 33rd percentile ranking within the Russell 2000
	33% 

	Target
	Achieve 50th percentile ranking within the Russell 2000
	100% 

	Maximum
	Achieve 66th percentile ranking within the Russell 2000
	150% 

	Maximum+
	Achieve 75th percentile ranking within the Russell 2000
	200%

	Maximum++
	Achieve 85th percentile ranking within the Russell 2000
	250%

	3-Year ROIC***
	50%
	Threshold
	Achieve [  ]% 3-Year ROIC
	33%

	Target
	Achieve [  ]% 3-Year ROIC
	100%

	Maximum
	Achieve [  ]% 3-Year ROIC
	150%

	Maximum+
	Achieve [  ]% 3-Year ROIC
	200%

	Maximum++
	Achieve [  ]% 3-Year ROIC
	250%

	 

	* The actual number of Performance Shares that will be earned with respect to the 3-Year TSR performance measure is based on the Company’s percentile ranking within the Russell 2000 Index at the end of the Performance Period and the actual number of Performance shares that will be earned with respect to the 3-Year ROIC performance measure is based on the Company’s performance compared to pre-established goals as determined by the Committee and set forth in the chart above.  Each performance measure will be evaluated on a measure by measure basis, and once performance results are determined as to each individual performance measure, those results will be aggregated and the weighting applied.  When assessing each performance measure, actual performance level achievement between each performance level will be interpolated on a straight line basis rounded down to the nearest whole number; provided that if the actual performance level achieved does not meet threshold performance (i.e., less than 33%) for the applicable performance measure, then no Performance Shares will be earned for that performance measure pursuant to this Grant.  Threshold level performance may be achieved for one performance measure and not another based on the Company’s actual performance during the Performance Period.  The actual number of Performance Shares earned will be determined by the Committee based on the actual performance level achieved with respect to each of the applicable Performance Goals, factoring in the 

	
					
	weighting for each performance measure.  The maximum number of Performance Shares that may be earned pursuant to this Grant is capped at 250% of the Target Award.   

** 3-Year TSR represents the comparison between the Opening Average Share Value and the Closing Average Share Value, plus cumulative dividends during the Performance Period.  At the end of the Performance Period, the TSR for the Company and each company in the Russell 2000 Index will be calculated by dividing the Closing Average Share Value by the Opening Share Value.  For purposes of this Grant, the term “Closing Average Share Value” means the average closing value of the common stock,  for the 20 trading days ending on the last day of the Performance Period (i.e., the 20 trading days ending on December 31, 20XX) (the “20-day period”), which will be calculated as follows: (i) determine the closing price of the common stock on each trading date during the 20-day period, (ii) average the amounts so determined for the 20-day period; the term “Opening Average Share Value” means the average of the closing price of a share of common stock for the 20 trading days preceding the start of the Performance Period (i.e., January 1, 20XX). 

 *** 3-Year ROIC represents the ratio of the Company’s Net Income and the Company’s Total Average Invested Capital during the Performance Period. At the end of the Performance Period, the ROIC for the Company will be calculated for the Performance Period by dividing the Net Income during the Performance Period by Total Average Invested Capital during the Performance Period, and then divided by three.  For purposes of this Grant, “Net Income” means the Company’s net income, adjusted for accounting changes and after-tax interest expense, and “Total Average Invested Capital” means the sum of the Company’s average total debt, stockholders equity and any non-controlling interest for the performance period computed on a four point basis.  The 3-Year ROIC calculation is subject to the provisions as set forth below.  

3-Year ROIC shall be determined in accordance with generally accepted accounting principles (GAAP) and may include or exclude (or be adjusted to include or exclude) unusual or infrequently occurring items, the impact of charges for restructurings or productivity initiatives, non-operating items, discontinued operations and other unusual and non-recurring items, the effects of currency fluctuations, the effects of financing activities (by way of example, without limitation, the effect on earnings per share of issuing convertible debt securities), the effects of acquisitions and acquisition expenses, the effects of divesture and divesture expenses, and the effects of tax or accounting changes. However, notwithstanding the preceding sentence, unless the Committee determines otherwise either at the time it establishes the Performance Goals for an award or prior to the payment of an award, if any of the items referenced in the preceding sentence occurs, then such item shall be automatically excluded or included in determining the extent to which the Performance Goal has been achieved, whichever will produce the higher award (subject to any exercise of “negative discretion” by the Committee). 

EXHIBIT A
PERFORMANCE SHARE AWARD AGREEMENT
Under the provisions of the 2014 Barnes Group Inc. Stock and Incentive Award Plan, as may be amended from time to time, (the “Plan”), the Compensation and Management Development Committee of the Company’s Board of Directors (the “Committee”) has authorized the execution of this Agreement.  Capitalized terms used in this Agreement and not otherwise defined herein will have the same meaning as provided for in the Plan or Summary of Grant, as applicable.
NOW, THEREFORE, in consideration of the agreements of each, and for other good and valuable consideration, the parties agree as follows:
1.    Definitions.

(a)“Cause” means (i) Your willful and continued failure to substantially perform Your duties with the Company (other than any such failure resulting from the Your incapacity due to physical or mental illness) or (ii) Your willful engaging in conduct which is demonstrably and materially injurious to the Company or its Subsidiaries, monetarily or otherwise.

(b)“Change in Control” has the meaning assigned to it in the Company’s form of Severance Agreement in effect as of February 4, 2014.

(c)“Disability” means “disability” as defined in the Company’s long-term disability plan as in effect from time to time (or, if that plan is not in effect at the time in question, as it was last in effect).

(d)“Good Reason” means, after any Change in Control, any one of the following acts by the Company, or failures by the Company to act, if You notify the Company that such act or failure to act has occurred within 90 days of the initial occurrence of such act or failure to act, and if such act or failure to act is not corrected within 30 days after You so notify the Company:

(i)the assignment to You of any duties materially inconsistent with Your position as an employee of the Company, or a material adverse alteration in the nature or status of Your responsibilities from those in effect immediately prior to a Change in Control;

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

(iii)the relocation of Your principal place of employment to a location more than 50 miles from Your principal place of employment immediately prior to a Change in Control, provided that such relocation increases Your round trip commuting time by 25% or more, or the Company's requiring You to be based anywhere other than such principal place of 

employment (or permitted relocation thereof) except for required travel on the Company's business to an extent substantially consistent with Your present business travel obligations.

(e)“Retirement” means a Separation of Service initiated by You on or after Retirement Age under circumstances that do not constitute Cause.

(f)“Retirement Age” means age 55 or later with a minimum of 10 full years of service with the Company and/or its Subsidiaries.

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

2.    Contingent Dividend Equivalents.  You may be entitled to receive from the Company the cash payments described below, if (and only if) the Performance Shares are earned during the Performance Period pursuant to the Performance Share Award Summary of Grant.  You understand and agree that, if the Company cancels the Performance Shares, the Dividend Equivalents that would have been payable if those Performance Shares had not been cancelled will automatically be cancelled, without action by the Company (other than its action cancelling those Performance Shares) and without the payment of any consideration to You, unless the Committee provides otherwise when those Performance Shares are cancelled or at a prior time.

3.    Calculation of Dividend Equivalents.  At the end of the Performance Period, or a prior date on which a portion of the Performance Shares have been earned pursuant to this Agreement, (the “End Date”) after the determination of the number of Performance Shares that have been earned, there will be calculated the dividends that were paid (other than a dividend paid in Common Stock, which is subject to the adjustment provided in Section 10 of the Plan) to the holders of Common Stock, the record date of which fell during the period commencing on the Grant Date and ending on the End Date (each a “Dividend Payment Date”).  The Company will credit and pay to you, at the time specified in 5(a) below, an amount of money (“Dividend Equivalents”) determined by multiplying (a) the number of Performance Share Shares earned on the End Date (if any), times (b) the dividend per share paid on each Dividend Payment Date.  However, if the dividend is paid in property other than cash, the amount of money to be paid to You in respect of such dividend will be determined by multiplying (i) the number of the Performance Shares (if any), times (ii) the fair market value on each Dividend Payment Date of the property that was paid per share of Common Stock as a dividend on such Dividend Payment Date.  The fair market value of the property that was paid will be determined by the Committee in its sole and absolute discretion.

Any provision of this Agreement to the contrary notwithstanding, in no event (except on Death, Disability or a Change in Control as a result of which Performance Shares are deemed earned pursuant to this Agreement) will any payment be made pursuant to this Section unless the Committee certifies in writing that the performance goals applicable to the related Performance 

Shares and any other material terms (within the meaning of Treasury Regulation section 1.162-27(e)(5)) applicable to such payment were in fact satisfied.
4.    Vesting of Grant.  The Performance Shares will be earned based on the actual performance level achieved with respect to the Performance Goals set forth on Schedule A of the Performance Share Award Summary of Grant and You remaining continuously employed by the Company through the third anniversary of the Grant Date.
5.    Forfeiture or Earning of Performance Share Awards Prior to the End of the Performance Period.

(a)Notwithstanding the vesting schedule contained in the Performance Share  Award Summary of Grant, the vesting schedule may change under one of the following conditions:

(i)Voluntary Termination or Termination for Cause.  If You initiate a Separation from Service other than as a result of (A) death, (B) Disability, or (C) Retirement or if you have a Separation from Service initiated by the Company and/or its Subsidiaries for Cause, in each case, before the third anniversary of the Grant Date, then the Grant will terminate with respect to all Performance Shares, whether or not earned as of the date of the Separation from Service, and You will not be entitled to any distribution of shares for any Performance Shares.

(ii)    All Other Separations of Service.  If You have a Separation from Service (A) due to (x) death, (y) Disability, or (z) Retirement or (B) that is initiated by the Company and/or its Subsidiaries without Cause after the 1 year anniversary of the Grant Date but before the last day of the Performance Period, then on the last day of the Performance Period, the number of Performance Shares that will be deemed earned will equal the number of Performance Shares actually earned pursuant to the Grant, as determined at the end of the Performance Period, multiplied by a fraction equal to the total days worked from the beginning of the Performance Period to the date of the Separation from Service, divided by the total number of days in the Performance Period.

(iii)    Change in Control.  If You remain employed with the Company from the Grant Date to the date, if any, on which a Change in Control occurs before the last day of the Performance Period, except as otherwise provided in Your employment agreement, if applicable, the number of Performance Shares that will be deemed earned will equal the sum of (A) the number of Performance Shares subject to the award earned for each completed year (1/3 of the total number that would be earned for the full Performance Period based upon actual performance in the completed year(s)) of the Performance Period, if any, based on the achievement of the Performance Goals, plus (B) the target number of Performance Shares for each incomplete year of the Performance Period, if you are terminated (1) by the Company without Cause or (2) You terminate employment for Good Reason, in either case, if such termination occurs on or within 2 years following a Change in Control.

(b)Acceptance.  All Performance Shares that are not earned in accordance with the terms of this Agreement and the Performance Share Award Summary of Grant will be 

forfeited.  By electronically accepting this Grant, You irrevocably consent to any forfeiture of Performance Shares required or authorized by this Agreement.

6.    Issuance of Shares.

(a)    Except as otherwise provided below, a share of Common Stock will be issued to You in payment of each Performance Share that is deemed earned pursuant to the terms of this Agreement as soon as practicable in the year (but no later than August 1) following the year in which such Grant is deemed earned (which date during that period will be determined by the Company).  In the event a distribution is due under Section 4(a)(ii) prior to the end of the Performance Period, the shares will be issued as soon as practicable following the date of the event giving rise to the payment, but no later than 60 days following the date of the event.  In the event a distribution is due under Section 4(a)(v) prior to the end of the Performance Period, the shares will be issued on the first day of the seventh month following the date of termination. 

(b)    Notwithstanding any provision of this Agreement to the contrary, (i) no “distributions” (within the meaning of Treasury Regulation Section 1.409A-1(c)(3)(v)) of deferred compensation that is subject to Section 409A of the Code may be made pursuant to this Agreement to a “specified employee” (within the meaning of Treasury Regulation Section 1.409A-1(i)) (“Specified Employee”) due to a Separation from Service before the date that is 6 months after the date of such Specified Employee’s Separation from Service (or, if earlier than the end of the 6 month period, the date of his death); and (ii) any distribution that, but for the preceding clause (i), would be made before the date that is 6 months after the date of the Specified Employee’s Separation from Service will be paid on the first day of the seventh month following the date of his Separation from Service (or, if earlier, within 14 days after the date of his death). For the avoidance of doubt, the preceding sentence will apply to any payment (and only to any payment) pursuant to this Agreement to which Code Section 409A(a)(2)(B)(i) (relating to Specified Employees) applies, and will not apply to any payment that is not subject to Code Section 409A as a result of Treasury Regulation Section 1.409A-1(b)(4) (relating to short-term deferrals) or otherwise.  Your right to any series of payments pursuant to this Agreement will be treated as a right to a series of separate payments within the meaning of Treasury Regulation Section 1.409A-2(b)(2)(iii), including without limitation for purposes of the short-term deferral rule set forth in Treasury Regulation Section 1.409A-1(b)(4).

(c)In no event, except a Change in Control or a Grantee’s Separation from Service as a result of death or Disability, as a result of which Performance Shares are deemed earned pursuant to this Agreement, will any shares be issued in payment of Performance Shares unless the Committee certifies in writing that the performance goals and any other material terms (within the meaning of Treasury Regulation Section 1.162-27(e)(5)) were in fact satisfied with respect to such Performance Shares.  Such certification will be final, conclusive and binding on You, and on all other persons, to the maximum extent permitted by law.

(d)The shares to be issued will be credited to a brokerage account established by the Company in Your name (or, in the event of Your death, in the name of Your Beneficiary) in payment of such Performance Shares. All shares of Common Stock issued under this Agreement will be duly authorized, validly issued, fully paid and non-assessable.

7.    Your Commitments; Recoupment.

(a)    If You, at any time before the Grant terminates: (i) directly or indirectly, whether as an owner, partner, shareholder, consultant, agent, employee, investor or in any other capacity, accept employment by, render services for or otherwise assist any other business which competes with the business conducted by the Company or any of its Subsidiaries in which You worked during Your last 2 years with the Company or any of its Subsidiaries; (ii) directly or indirectly, hire or solicit or arrange for the hiring or solicitation of any employee of the Company or any of its Subsidiaries, or encourage any such employee to leave such employment; (iii) use, disclose, misappropriate or transfer confidential or proprietary information concerning the Company or any of its Subsidiaries (except as required by Your work responsibilities with the Company or any of its Subsidiaries); or (iv) are convicted of a crime against the Company or any of its Subsidiaries; or (v) engage in any activity in violation of the policies of the Company or any of its Subsidiaries, including without limitation the Company’s Code of Business Ethics and Conduct, or, at any time, engage in conduct adverse to the best interests of the Company or any of its Subsidiaries; then should any of the foregoing events occur, the Grant will be canceled, unless the Committee, in its sole discretion, elects not to cancel such Grant.  The obligations in this Section are in addition to any other agreements related to non-competition, non-solicitation and preservation of Company confidential and proprietary information entered into between You and the Company, and nothing herein is intended to waive, modify, alter or amend the terms of any such other agreement.

(b)    You agree that You will be subject to any compensation, clawback and recoupment policies that may be applicable to You, as in effect from time to time and as approved by the Board or the Committee, whether or not approved before or after the Grant Date.

8.    Restrictions on Grant.  In no event may (a) You sell, exchange, transfer, assign, pledge, hypothecate, mortgage or dispose of the Grant or any interest therein, nor (b) the Grant or any interest therein be subject to anticipation, attachment, garnishment, levy, encumbrance or charge of any nature, voluntary or involuntary, by operation of law or otherwise and any attempt to do so, whether voluntary or involuntary, will be null and void and no other party will obtain any rights to or interest in the Grant.  You may designate a Beneficiary to receive the Grant in the event of Your death in accordance with Section 2(c) of the Plan.  Any Beneficiary will receive the Grant subject to all of the terms, conditions and restrictions set forth in this Agreement, including but not limited to the forfeiture provisions set forth in this Agreement.

9.    Taxes and Withholding.  The Committee may cause to be made, as a condition precedent to any payment or transfer of stock hereunder, appropriate arrangements for the withholding of any Federal, state or local taxes.  If applicable, the Company will have the right, in its discretion, to deduct from any Dividend Equivalents payable pursuant to this Agreement, and from any shares to be issued pursuant to this Agreement, cash and/or shares, valued at Fair Market Value on the date of payment, in an amount necessary to satisfy all Federal, state and local taxes required by law to be withheld with respect to such Dividend Equivalents, cash and/or shares.  You may be required to pay to the Company, prior to delivery of certificates representing such shares and prior to such shares being credited to a book entry account in Your name, the amount of any such taxes.  The Company will accept whole shares of Common Stock of 

equivalent Fair Market Value in payment of the Company’s minimum statutory withholding tax obligations if You elect to make payment in shares.

10.    Compliance with Law.  The Company will make reasonable efforts to comply with all applicable federal and state securities laws.  However, no shares or other securities will be issued pursuant to this Agreement if their issuance would result in a violation of any such law.  If at any time the Committee determines, in its discretion, that the listing, registration or qualification of any shares subject to this Grant upon any securities exchange or under any state or Federal law, or the consent or approval of any government regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of this Grant or the issue of shares hereunder, no rights under the Grant may be exercised and shares of Common Stock may not be issued pursuant to the Grant, in whole or in part, unless such listing, registration, qualification, consent or approval will have been effected or obtained free of any conditions not acceptable to the Committee and any delay will in no way affect the dates of vesting or forfeiture of the Grant.

11.    Amendments; Integrated Agreement.  This Agreement may only be amended in a writing signed by You and an officer of the Company duly authorized to do so.  This Agreement contains the entire agreement of the parties relating to the subject matter of this Agreement and supersedes and replaces all prior agreements and understandings with respect to such subject matter, and the parties have made no agreements, representations or warranties relating to the subject matter of this Agreement which are not set forth herein.

12.    Relation to Plan; Interpretation.  The Grant is granted under the Plan, and the Grant and this Agreement are each subject to the terms and conditions of the Plan, which is incorporated in this Agreement by reference.  In the event of any inconsistent provisions between this Agreement and the Plan, the provisions of the Plan control.  References to Sections are to Sections of this Agreement unless otherwise noted.  The titles to Sections of this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the title of any Section.

13.    Notices. Any notice hereunder by You will be given to the Senior Vice President Human Resources and the Corporate Secretary in writing and such notice and any payment by You will be deemed duly given or made only upon receipt by the Corporate Secretary at Barnes Group Inc., 123 Main Street, Bristol, Connecticut 06010, U.S.A., or at such other address as the Company may designate by notice to You.  Any notice to You will be in writing and will be deemed duly given if delivered to You in person or mailed or otherwise delivered to You at such address as You may have on file with the Company from time to time.

14.    Interpretation and Disputes.  This Agreement will be interpreted and construed, and all determinations will be made, by the Committee, and any such interpretation, construction or determination will be final, binding and conclusive on the Company and You.  In the event there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan will govern.

Any claim, demand or controversy arising from such interpretation, construction or determination by the Committee shall be submitted first to a mediator in accordance with the rules of the American Arbitration Association (“AAA”) by submitting a mediation request to the 

Administrator within 30 days of the date of the Committee’s interpretation or construction.  The mediation process shall conclude upon the earlier of: (a) the resolution of the dispute; (b) a determination by either the mediator or one or more of the parties that all settlement possibilities have been exhausted and there is no possibility of resolution; or (c) 30 days have passed since the filing of a request to mediate with the AAA.  A party who has previously submitted a dispute to mediation, and which dispute has not been resolved, may submit such dispute to binding arbitration pursuant to the rules of the AAA.  Any arbitration proceeding for such dispute must be initiated within 14 days from the date that the mediation process has concluded.  The prevailing party shall recover its costs and reasonable attorney’s fees incurred in such arbitration proceeding.  You and the Company specifically understand and agree that the failure of a party to timely initiate a proceeding hereunder shall bar the party from any relief or other proceeding and any such dispute shall be deemed to have been finally and completely resolved.  All mediation and arbitration proceedings shall be conducted in Bristol, Connecticut or such other location as the Company may determine and You agree that no objection shall be made to such jurisdiction or venue, as a forum non conveniens or otherwise.  The arbitrator’s authority shall be limited to resolution of the legal disputes between the parties and the arbitrator shall not have authority to modify or amend this Agreement or the Committee’s interpretation or construction thereof, or abridge or enlarge rights available under applicable law.  Any court with jurisdiction over the parties may enforce any award made hereunder.  

15.    General.

(a)    Nothing in this Agreement confers upon You any right to continue in the employ or other service of the Company or any Subsidiary, or limit in any manner the right of the Company, its stockholders or any Subsidiary to terminate Your employment or adjust Your compensation.

(b)    You have no rights as a stockholder with respect to any shares that may be issued pursuant to this Agreement until the date of issuance to You of a stock certificate for such shares or the date of a credit for such shares in a brokerage account in Your name.

(c)    This Agreement is binding upon the successors and assigns of the Company and upon Your Beneficiary, estate, legal representatives, legatees and heirs.

(d)    This Agreement is governed by and construed in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of laws thereof.

(e)If applicable, any shares that may be earned pursuant to this Agreement are intended to qualify as “performance-based compensation” within the meaning of Section 162(m)(4)(C) of the Code.  Any provision of this Agreement that would prevent any such shares from so qualifying will be administered, interpreted and construed to carry out such intention, and any provision that cannot be so administered, interpreted and construed will to that extent be disregarded.Exhibit

Exhibit 10.46

CASH UNIT AWARD AGREEMENT
THIS CASH UNIT AWARD AGREEMENT (the “Agreement”) is made between EVERCORE PARTNERS INC. (the “Company”) and [________] (the “Participant”).
WHEREAS, the Company has determined that the Participant will receive an annual bonus (the “Bonus”); and
WHEREAS, the payment of a portion of the Bonus is subject to the Participant’s continued service with the Company; and
WHEREAS, the Participant has elected to have this portion of the bonus notionally invested in one or more investment alternatives designated by the Participant; and
WHEREAS, this portion of the Bonus will be credited to a bookkeeping account in the Participant’s name, notionally invested and, as adjusted to reflect the results of such investment, distributed to the Participant upon the completion of the requisite service period.
NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:
1.Creation of Bookkeeping Account.  On [__________], 2016 (the “Effective Date”), the Company will establish a bookkeeping account in the Participant’s name (the “Account”).  The Company will credit to the Account an amount equal to $[_______], which amount will thereafter be subject to adjustment in accordance with Section 2, below. 
2.    Investment of Account Balance. 
(a)    The balance of the Account, as adjusted in accordance with the remainder of this Section 2 (the “Account Balance”), will be adjusted to track a hypothetical investment of equal amount, invested as of the Effective Date, in the investment funds the Participant specified on the Investment Selection Form attached hereto as Exhibit A.  Therefore, following the Effective Date and until the date on which all amounts in the Account have been paid to the Participant or forfeited, the Account Balance will be adjusted to reflect income, gains, losses and dividends and distributions (which will be deemed reinvested in the distributing fund) attributable to the deemed investments and to reflect payments in respect of portions of the Account Balance that have become vested in accordance with Section 3, below. 
(b)    The Investment Selection Form attached hereto as Exhibit A sets forth the Participant’s initial allocation of his or her Account Balance among the investment funds made available for this purpose.  The Participant acknowledges that, prior to the Effective Date, the Participant has received and reviewed current prospectuses for those funds. 
(c)    Prior to complete vesting or forfeiture of the Account Balance, the Participant will have two opportunities each year, in such manner and at such intervals as the Company will establish, to re-designate the investment fund(s) in which the Account Balance is 

-1-

deemed invested.  For this purpose, the Participant may choose from any of the investment alternatives that the Company makes available as of the date of redesignation.
3.    Vesting and Distribution of Account Balance.
(a)Subject to the Participant remaining in continuous service with the Company through the relevant Vesting Event (as hereinafter defined), the Participant shall become vested in the Account Balance as follows (the occurrence of each such event described herein, a “Vesting Event”):

(i)25% of the then-current Account Balance will become vested on February 4, 2017; and

(ii)33% of the then-current Account Balance will become vested on February 4, 2018; and

(iii)50% of the then-current Account Balance will become vested on February 4, 2019; and

(iv)100% of the then-current Account Balance will become vested on February 4, 2020; and

(v)any otherwise unvested portion of the then-current Account Balance will become one hundred percent (100%) vested upon (A) the occurrence of a Change in Control, (B) the Participant’s death, (C) the Participant’s Disability, (D) the termination of the Participant’s service by the Company without Cause (as defined below), or (E) the Participant becoming eligible for a Qualifying Retirement (as defined below).

(b)Upon cessation of the Participant’s service with the Company for any reason other than death, Disability, Qualifying Retirement or termination by the Company without Cause, all then unvested any unvested portion of the then-current Account Balance will immediately and automatically be forfeited, and the Participant will have no further rights in respect thereof.  

(c)Upon the occurrence of a Vesting Event, such vested portion of the Account Balance will be payable to the Participant in cash, subject to the terms and provisions of this Agreement (including, without limitation, Section 3(e) below).  To the extent and in the manner permitted by the Company, the Participant may elect the investment funds from which the vested portion of the Account Balance is deemed distributed.  After such Vesting Event, upon satisfaction of any required tax withholding obligations, except as otherwise provided in Section 3(d) and subject to Section 3(e) below, the Company shall pay to the Participant the value of such vested portion of the Account Balance as soon as practicable (but in no event later than 30 calendar days after the Vesting Event).

(d)In the event of a Vesting Event described in Section 3(a)(v)(D)(termination without Cause), the Account Balance then vested will be paid by the Company, following satisfaction of applicable tax withholding requirements, on the earlier of (i) the date such portion of the Account Balance would otherwise have vested (but for a cessation of the Participant’s service) under Sections 3(a)(i)-(iv)(scheduled vesting dates), 3(a)(v)(A)(Change in Control), 3(a)(v)(B)(death) 

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or 3(a)(v)(C)(Disability) as applicable, or (ii) March 15th of the year following the year of such termination; provided in each case that, within 45 days following such termination, the Participant has executed a general release of claims against the Company and its Affiliates in a form reasonably prescribed by the Company and such release has become irrevocable.  If the Participant has failed to timely satisfy the release requirements described in the preceding sentence, any portion of the Account Balance vesting under Section 3(a)(v)(D) and any cash otherwise payable under this paragraph will be forfeited and the Participant will have no further rights hereunder.

(e)In the event of a Vesting Event described in Section 3(a)(v)(E)(eligibility for Qualifying Retirement), following satisfaction of applicable tax withholding requirements, the Account Balance then vesting will be held in escrow by the Company.  While any amounts are held in escrow, the Company will hold those amounts separate from its own assets and will invest those amounts in a manner consistent with the directions provided under Section 2, above.  While such escrow is in effect, the amount held in escrow may not be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered other than by will or the laws of descent or distribution (in which case, the heir or intestate successor will receive a distribution of the escrow subject to the terms of this paragraph).  The Company will direct the escrow agent to distribute such portion of the Account Balance promptly following the earliest of: (i) the Participant’s death, (ii) the Participant’s Disability, and (iii) (A) the first anniversary of the date of the Participant’s cessation of service, if such portion of the Account Balance would otherwise have vested prior to such anniversary pursuant to Sections 3(a)(i)-(iv)(scheduled vesting dates) or 3(a)(v)(A)(Change in Control), or (B) the date such portion of the Account Balance would otherwise have vested pursuant to Sections 3(a)(i)-(iv) or 3(a)(v)(A), if such date is after the first anniversary of the Participant’s cessation of service; provided that, in any case, no forfeiture of such amounts is required pursuant to Section 10, below.  If the Company determines that a forfeiture is required pursuant to Section 10, below, it will notify the Participant within 10 days.  If the forfeiture of any portion of the Account Balance is required pursuant to Section 10, such portion of the escrow will be cancelled and the Participant (and his or her heirs or intestate successors) will have no further rights in respect thereof.

(f)In the event of the death of the Participant, the distribution of the Account Balance under this Section 3 will be made in accordance with the written beneficiary designation form on file with the Company; provided, however, that, in the absence of any such written beneficiary designation form, the distribution of the Account Balance will be made to the person or persons to whom the Participant’s rights with respect to the Account Balance shall pass by will or by the applicable laws of descent and distribution.  A form of beneficiary designation is attached hereto as Exhibit B.

(g)For purposes of this Agreement, service with the Company will be deemed to include service with the Company’s Affiliates, but only during the period of such affiliation.

4.    Definitions.  For purposes of this Agreement, the following definitions will apply:
(a)    “Cause” means (i) the Participant’s material breach of any of the Restrictive Covenants (as defined below), any published policy of the Company or its Affiliates applicable to the Participant, including the Company’s or any of its Affiliates’ Code of Ethics; (ii) any act or omission by the Participant that causes the Participant, the Company or any of the Company’s 

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Affiliates to be in violation of any law, rule or regulation related to the business of the Company or its Affiliates, or any rule of any exchange or association of which the Company or its Affiliates is a member, which, in any such case, would make the Participant, the Company or any of the Company’s Affiliates subject to being enjoined, suspended, barred or otherwise disciplined; (iii) the Participant’s conviction of, or plea of guilty or no contest to, any felony; (iv) the Participant’s participation in any fraud or embezzlement; (v) gross negligence, willful misconduct by the Participant in the course of employment or the Participant’s deliberate and unreasonably continuous disregard of his or her material duties; or (vi) the Participant’s committing to, or engaging in any act or making any statement which impairs, impugns, denigrates, disparages or negatively reflects upon the name, reputation or business interests of the Company or any of its Affiliates which, in any such case, has a material adverse effect on the Company; provided, however, that in the case of clauses (i), (ii), (v) and (vi), “Cause” shall not exist if such breach, act or omission, if capable of being cured (in the good faith determination of the Board or any committee of the Board that does not include any employee directors), shall have been cured within ten business days after the Company provides the Participant with written notice thereof.
(b)    “Change in Control” will have the meaning ascribed to it in the Company’s 2006 Stock Incentive Plan, except that no event or transaction will be considered a Change in Control under this Agreement unless it also constitutes a change in control event within the meaning of Treas. Reg. § 1.409A-3(i)(5).
(c)     “Qualifying Retirement” will mean the Participant’s voluntary resignation from service with the Company if, as of the effective date of such resignation: (A) the sum of the Participant’s age plus completed years of service with the Company is greater than 65; (B) the Participant is at least age 55 and has completed at least 5 years of service with the Company; and (C) the Participant has provided the Company with notice of intent to retire at least 12 months prior to the effective date of such resignation.
5.    Tax Consequences.  The Participant acknowledges that the Company has not advised the Participant regarding the Participant’s tax liability in connection with the creation of the Account or the deemed investment or distribution of the Account Balance.  The Participant has reviewed with the Participant’s own tax advisors the federal, state, local and non-U.S. tax consequences of the transactions contemplated by this Agreement.  The Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.
6.    Nature of Company’s Obligation.
(a)    The Company’s sole obligation hereunder is to pay to the Participant an amount in cash equal to the vested portion of the Account Balance in accordance with Section 3.  This obligation is purely contractual and should not be construed as creating a trust or any fiduciary relationship.
(b)    Except as may be required under Section 3(e) following a Qualifying Retirement, it is the Company’s intention that this arrangement be unfunded for U.S. federal income tax purposes.  Accordingly, except as may be required under Section 3(e) following a Qualifying Retirement, the rights of the Participant under this Agreement will be no greater than those of an unsecured general creditor of the Company.

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(c)    This Agreement does not require the Company to segregate or maintain any asset or otherwise fund the obligation created hereunder, nor will anything herein be construed to give the Participant a right to any specific asset of the Company, except as may be required under Section 3(e) following a Qualifying Retirement,. 
(d)    No right to receive payment under this Agreement will be transferable or assignable by the Participant, or subject to anticipation, alienation, sale, pledge, encumbrance, attachment or garnishment by creditors of the Participant.
7.    Representations and Warranties.  By executing this Agreement, the Participant hereby represents, warrants, covenants, acknowledges and/or agrees that:
(a)    The investment funds are not sponsored, promoted, endorsed, sold or issued by the Company, and the financial performance of the investment funds should not be expected to track the performance of the Company’s common stock;
(b)    The Company makes no representation or warranty, express or implied, with respect to the performance of the investment funds at any time, and the Participant should review the prospectuses and other offering memoranda provided by the relevant fund managers before deciding how to direct the deemed investment of his or her Account Balance; and
(c)    The Company has no obligation or liability in connection with the administration, marketing or trading of the investment funds.
8.    Electronic Delivery of Documents.  The Participant hereby authorizes the Company to deliver electronically any prospectuses or other documentation related to this Agreement.  For this purpose, electronic delivery will include, without limitation, delivery by means of e-mail or e-mail notification that such documentation is available on the Company’s Intranet site.  Upon written request, the Company will provide to the Participant a paper copy of any document also delivered to the Participant electronically.  The authorization described in this paragraph may be revoked by the Participant at any time by written notice to the Company.
9.    No Right to Continued Service.  This Agreement will not be construed as giving the Participant the right to be retained in the employ of, or in any consulting relationship with, the Company or any of its Affiliates.  Further, the Company (or, as applicable, its Affiliates) may at any time dismiss the Participant, free from any liability or any claim under this Agreement, except as otherwise expressly provided herein.
10.    Restrictive Covenants.
(a)    The Participant acknowledges that he or she has agreed to be bound by certain restrictive covenants which apply during the Participant’s service to the Company and following the cessation of that service for any reason(such covenants, together with any restrictive covenants made by the Participant after the date hereof, the “Restrictive Covenants”).   Upon or in anticipation of payment of any portion of the Account Balance hereunder, the Participant may be required to certify, in a manner acceptable to the Company, that he or she continues to be in compliance with the Restrictive Covenants. 

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(b)    If the Participant violates any of the terms of the Restrictive Covenants, then the Participant will immediately forfeit any undistributed Account Balance (even if otherwise vested).
(c)    Similarly, if the Participant’s service with the Company terminates upon or after becoming eligible for a Qualifying Retirement and if, at any time prior to the full distribution of all amounts held in escrow, the Participant, engages in conduct that violates the Restrictive Covenants (regardless of the fact that such Participant is at the time of such violation no longer an employee or whether the time limits in the relevant Restrictive Covenant have otherwise expired), in addition to any other remedies that are available pursuant to the Restrictive Covenants: the Participant will immediately and automatically forfeit (i) any undistributed Account Balance (even if otherwise vested), and (ii) any amounts held in the escrow described above in Section 3(c).  The Participant agrees that the remedies contained in this paragraph are reasonable and further agrees not to challenge the enforceability of this section.
(d)    The remedies contained in this section will be in addition to, not in lieu of, any other available remedies.
11.    General. 
(a)    Capitalized terms used but not defined herein will have the meanings defined in the Company’s 2006 Stock Incentive Plan.
(b)    This Agreement represents the entire agreement between the parties regarding the matters herein discussed and merges and supersedes all prior and contemporaneous discussions, agreements and understandings of every nature relating to those matters.  This Agreement may only be modified or amended in a writing signed by both parties.
(c)    Neither this Agreement nor any rights or interest hereunder will be assignable by the Participant, his or her beneficiaries or legal representatives, and any purported assignment will be null and void.
(d)    Either party’s failure to enforce any provision or provisions of this Agreement will not in any way be construed as a waiver of any such provision or provisions, nor prevent that party thereafter from enforcing each and every other provision of this Agreement.
(e)    This Agreement will be governed by, and enforced in accordance with, the laws of the State of New York, without regard to the application of the principles of conflicts or choice of laws.
(f)    This Agreement may be executed, including execution by facsimile signature, in one or more counterparts, each of which will be deemed an original, and all of which together will be deemed to be one and the same instrument.
[Signatures on next page.]

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized representative on the date below indicated.
	
	
	EVERCORE PARTNERS INC.

	
		
	By:
	 

	 
	Justin Kulo

	 
	Managing Director-Human Resources

	 
	 

	Date:
	 

	 
	 

[EVERCORE PARTNERS INC. SIGNATURE PAGE TO 
CASH UNIT AWARD AGREEMENT]

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IN WITNESS WHEREOF, the Participant has executed this Agreement on the date below indicated.
	
	
	PARTICIPANT

	
		
	By:
	 

	 
	 

	 
	 

	 
	 

	Date:
	 

	 
	 

[PARTICIPANT SIGNATURE PAGE TO 
CASH UNIT AWARD AGREEMENT]

-8-

    

Exhibit A

Investment Selection Form

Human Resources

I hereby agree to allocate the investment of my Account Balance as follows:

	
		
	Investment Name
	% Allocation of my Account Balance

	Vanguard Intermediate-Term Investment Grade Fund - VFIDX
	 

	Vanguard S&P 500 ETF - VOO
	 

	Vanguard Total World Stock ETF - VT
	 

	iShares S&P GSCI Commodity Indexed Trust - GSG
	 

	Vanguard Prime Money Market Fund - VMMXX
	 

	Vanguard FTSE 100 UCITS ETF - VUKE
	 

	Vanguard U.K. Short-Term Investment Grade Bond Index Fund - VGUKSTA
	 

	FTSE Developed Europe ex-U.K. Equity Index Fund - VDEXEIA
	 

	The total percentage allocated must equal:
	100%

This allocation will remain in effect until changed by me in accordance with my Cash Unit Award Agreement.  In addition, I am aware that, in accordance with my Cash Unit Award Agreement, the investment of my Account Balance will be a notional investment only.  I understand that the amount deemed invested in each fund may be rounded to initially allocate amounts in whole dollars.

Signature:    _____________________________________
Printed Name:    _____________________________________
Date:    ___________________________________________

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Exhibit B

CASH UNIT AWARD AGREEMENT
 
Designation or Change of Beneficiary
		
	TO:
	Evercore Partners Inc.:

I, ________________________________, hereby designate the following
(Please Print)
person(s) or entity(ies) as beneficiary(ies) of any and all payments which may be made with respect to any amount due to me under the Cash Unit Award Agreement between Evercore Partners Inc. and me, by reason of my death:
	
		
	Primary Beneficiary Designation
Primary Beneficiary No. 1:
Name:____________________________   Percentage Interest ________%
Address:________________________________________________________
Relationship:________________   Social Security No:_______________

Primary Beneficiary No. 2:
Name:____________________________   Percentage Interest _________%
Address:_________________________________________________________
Relationship:________________   Social Security No:________________

	If more than one primary beneficiary has been named, specify whether the surviving beneficiary’s percentage of your payment is to be increased if the other beneficiary dies or ceases to exist (check one):

	Primary Beneficiary No. 1:
______ Yes, it is to be increased to _____%
______ No, it is not to be increased.
	Primary Beneficiary No. 2:
______ Yes, it is to be increased to _____%
______ No, it is not to be increased.

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If you checked “Yes” in either of the boxes above but entered less than 100%, or if you checked “No”, or if you checked only one primary beneficiary, specify who is to receive the balance of the deceased primary beneficiary’s share below:
	
	
	Secondary Beneficiary Designation
Secondary Beneficiary No. 1:
Name:___________________________   Percentage Interest_______%
Address:______________________________________________________
Relationship:________________   Social Security No._____________

Secondary Beneficiary No.2:
Name:___________________________   Percentage Interest_______%
Address:______________________________________________________
Relationship:________________   Social Security No._________

If any of the named beneficiaries is a trust, is the trust under your will? Yes______    No______
If the trust(s) is not under your will, but under an agreement or deed of trust, list the date on which such deed or agreement was executed and the name and address of the trustee(s):
_________________________________________________________________
_________________________________________________________________
I understand that if I fail to designate a beneficiary, or if no designated beneficiary survives me, any and all payments which may be made with respect to my interest under the Cash Unit Award Agreement by reason of my death shall be paid to my estate.

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This designation supersedes any and all prior designations and shall be effective until such time as it is superseded by a subsequent designation or revoked.  This designation shall be effective only after receipt by Evercore Partners Inc.
	
	
	 

	Participant

	 

	 

	 

	Social Security No.

Dated:_________________, 20__
Received by:__________________________________________

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