KAMAN CORPORATION
AMENDED AND RESTATED
CHANGE IN CONTROL AGREEMENT
THIS
AGREEMENT, is made effective as of January 1, 2007
(the
“Effective Date”), by and between Kaman Corporation, a
Connecticut corporation (the “Company”), and Ronald M.
Galla (the “Executive”).
WHEREAS,
the Company and the Executive are parties to the Kaman
Corporation Change in Control Agreement dated as of September
21, 1999, as amended by an Addendum to Change in Control
Agreement dated as of September 11, 2001, and a Second
Addendum to Change in Control Agreement dated as of November
11, 2003 (the "Prior Agreement"); and
WHEREAS,
the Company and the Executive have agreed to replace and
supersede the Prior Agreement as set forth below.
NOW,
THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and the Executive
hereby agree as follows:
1.
Defined Terms .
Definitions of capitalized terms used in this Agreement are
provided in the last Section of this Agreement.
2.
Term .
This Agreement shall terminate on the fifth anniversary of the
Effective Date. The term of this Agreement shall be automatically
extended thereafter for successive one (1) year periods unless, at
least ninety (90) days prior to the end of the fourth anniversary
of the Effective Date or the then current succeeding one-year
extended term of this Agreement, the Company or Executive has
notified the other that the term hereunder shall expire at the end
of the then-current term. Notwithstanding any such notice, the term
of this Agreement shall not expire before the second anniversary of
a Change in Control that occurs within the term of this Agreement.
The initial term of this Agreement, as it may be extended under
this Section 2, is herein referred to as the "Term."
3.
Company’s Covenants Summarized .
In order to induce the Executive to remain in the employ of the
Company and in consideration of the Executive’s continued
employment, the Company agrees, under the conditions described
herein, to pay the Executive the Severance Payments and the other
payments and benefits described in this Agreement. Except as
provided in Sections 5.1 and 8.1 of this Agreement, no Severance
Payments (as defined in Section 5) shall be payable under this
Agreement unless there shall have been a termination of the
Executive’s employment with the Company following a Change in
Control. This Agreement shall not be construed as creating an
express or implied contract of employment and, except as otherwise
agreed in writing between the Executive and the Company, the
Executive shall not have any right to be retained in the employ of
the Company.
4.
Compensation Other Than Severance Payments
.
4.1
If
the Executive’s employment shall be terminated for any
reason following a Change in Control, the Company shall pay
the Executive’s full salary to the Executive through the
Date of Termination at the rate in effect immediately prior to
the Date of Termination or, if Section 18(n)(II) is applicable
as an event or circumstance constituting Good Reason, the rate
in effect immediately prior to such event or circumstance,
together with all compensation and benefits payable to the
Executive through the Date of Termination under the terms of
the Company’s compensation and benefit plans, programs
or arrangements as in effect immediately prior to the Date of
Termination (or, if more favorable to the Executive, as in
effect immediately prior to the first occurrence of an event
or circumstance constituting Good Reason). In addition, if the
Executive’s employment is terminated for any reason
following a Change in Control other than (a) by the Company
for Cause and (b) by the Executive without Good Reason, then
the Company shall pay a pro-rata portion of the
Executive’s annual bonus for the performance year in
which such termination occurs to the Executive at the time
that annual bonuses are paid to other senior executives. This
pro-rata bonus shall be determined by multiplying the amount
the Executive would have received based upon actual financial
performance through such termination, as reasonably determined
by the Company, by a fraction, the numerator of which is the
number of days during such performance year that the Executive
is employed by the Company and the denominator of which is
365.
4.2
If
the Executive’s employment shall be terminated for any
reason following a Change in Control, the Company shall pay to
the Executive the Executive’s normal post-termination
compensation and benefits as such payments become due. Such
post-termination compensation and benefits shall be determined
under, and paid in accordance with, the Company’s
retirement, insurance and other compensation or benefit plans,
programs and arrangements as in effect immediately prior to
the Date of Termination or, if more favorable to the
Executive, as in effect immediately prior to the occurrence of
the first event or circumstance constituting Good
Reason.
5.
Severance Payments.
5.1
If
the Executive’s employment is terminated during the
twenty-four (24) month period immediately following a Change
in Control, other than (A) by the Company for Cause, (B) by
reason of death or Disability, or (C) by the Executive without
Good Reason, then the Company shall pay the Executive the
amounts, and provide the Executive the benefits described in
this Section 5 (collectively, the “Severance
Payments”) in addition to any payments and benefits to
which the Executive is entitled under Section 4 of this
Agreement. The Executive shall also be entitled to Severance
Payments under this Agreement if the Executive’s
employment is terminated without Cause by the Company or by
the Executive for Good Reason at any time beginning on the
first day of the 90 day period immediately prior to the
execution of a definitive purchase and sale agreement that
results in such Change in Control and the closing of such
Change in Control.
| (a) |
In
lieu of any further salary payments to the Executive for periods
subsequent to the Date of Termination and in lieu of any severance
benefit payable to the Executive under the Executive’s
Employment Agreement with the Company or otherwise, the Company
shall pay to the Executive a lump sum severance payment, in cash,
equal to the sum of (i) two (2) times the Executive’s base
salary as in effect immediately prior to the Date of Termination
or, if Section 18(n)(II) is applicable as an event or circumstance
constituting Good Reason, the rate in effect immediately prior to
such event or circumstance, and (ii) two (2) times the last annual
bonus paid or awarded (to the extent not yet paid) to the Executive
in the previous three years (if any) immediately preceding the Date
of Termination, pursuant to any annual bonus or incentive plan
maintained by the Company.
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| (b) |
For
the twenty-four (24) month period immediately following the Date of
Termination, the Company shall arrange to provide the Executive and
his dependents medical, dental, and accidental death and disability
benefits substantially similar to those provided to the Executive
and his dependents immediately prior to the Date of Termination or,
if more favorable to the Executive, those provided to the Executive
and his dependents immediately prior to the first occurrence of an
event or circumstance constituting Good Reason, at no greater cost
to the Executive than the cost to the Executive immediately prior
to such date or occurrence. Benefits otherwise receivable by the
Executive pursuant to this Section 5.1(b) shall be reduced to the
extent benefits of the same type are received by or made available
by a subsequent employer to the Executive during the twenty-four
(24) month period following the Date of Termination (and any such
benefits received by or made available to the Executive shall be
reported to the Company by the Executive); provided, however, that
the Company shall reimburse the Executive for the excess, if any,
of the cost of such benefits to the Executive over such cost
immediately prior to the Date of Termination or, if more favorable
to the Executive, the first occurrence of an event or circumstance
constituting Good Reason.
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| (c) |
Notwithstanding
any provision to the contrary in any plan or agreement maintained
by or through the Company pursuant to which the Executive has been
granted restricted stock, stock options, stock appreciation rights
or long-term performance awards, effective on the Date of
Termination, (i) all service and performance based restrictions
with respect to any restricted stock shall lapse, (ii) all stock
appreciation rights and stock options shall be deemed fully vested
and then canceled in exchange for a cash payment equal to the
excess of the fair market value of the shares of Company stock
subject to the stock appreciation right or stock option on the date
of the Change in Control, over the exercise price(s) of such stock
appreciation rights or stock options, and (iii) all long-term
performance awards shall be deemed fully vested and fully earned
and then shall be canceled in exchange for a cash payment equal to
100% of the target value of each such award.
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| (d) |
In
addition to the retirement benefits to which the Executive is
entitled under any tax-qualified, supplemental or excess benefit
pension plan maintained by the Company and any other plan or
agreement entered into between the Executive and the Company which
is designed to provide the Executive supplemental retirement
benefits (the “Pension Plans”) or any successor plan
thereto, effective upon the Date of Termination, the Executive
shall be credited with an additional two years of “Credited
Service” and “Continuous Service” (as defined in
the Kaman Corporation Amended and Restated Employees’ Pension
Plan) when calculating the Executive’s benefit under Kaman
Corporation Supplemental Employees Retirement Plan
(“SERP”). For avoidance of doubt, the Severance
Payments payable under this Agreement shall be disregarded when
determining the Executive's Final Average Salary (as defined under
the Kaman Corporation Amended and Restated Employees' Pension Plan)
for purposes of calculating the benefits payable under the SERP or
this Section 5.1(d).
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| (e) |
If
the Executive would have become entitled to benefits under the
Company’s post-retirement health care plans, as in effect
immediately prior to the Date of Termination or, if more favorable
to the Executive, as in effect immediately prior to the first
occurrence of an event or circumstance constituting Good Reason,
had the Executive’s employment terminated at any time during
the period of twenty-four (24) months after the Date of
Termination, the Company shall provide such post-retirement health
care benefits to the Executive and the Executive’s dependents
commencing on the later of (i) the date on which such coverage
would have first become available and (ii) the date on which
benefits described in Section 5.1 (b) terminate.
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| (f) |
The
Company (i) shall establish an irrevocable grantor trust holding an
amount of assets sufficient to pay all remaining premiums (which
trust shall be required to pay such premiums), under any insurance
policy maintained by the Company insuring the life of the
Executive, that is in effect and (ii) shall transfer to the
Executive any and all rights and incidents of ownership in such
arrangements at no cost to the Executive.
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| (g) |
The
Company shall provide the Executive with reimbursement for up to
Thirty Thousand Dollars ($30,000) in the aggregate for outplacement
services, relocation costs, or both provided however that
reimbursement shall only be provided until the earlier of the first
anniversary of the Date of Termination or the Executive’s
first day of employment with a new employer.
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| (h) |
The
Company shall provide the Executive with his Company automobile.
The book value then attributed to it by the leasing company will be
considered “fringe benefit” income and that amount will
be subject to tax during the calendar year in which the Date of
Termination occurs.
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5.2
Section 4999 Excise Tax .
| (a) |
If
any payments
,
rights or
benefits
(whether
pursuant to the terms of this Agreement or any
other plan, arrangement or agreement of
Executive with
the Company or
with any person affiliated
with the Company
and
whether or not the Executive’s employment has then terminated
(the “Payments”)) received or to be received by
Executive will be subject to the tax (the “Excise Tax”)
imposed by Section 4999 of the Code (or any similar tax that may
hereafter be imposed), then, except as set forth in Section 5.2(b)
below ,
the Company shall pay to Executive
an amount in addition to the Payments (the “Gross-Up
Payment”) as calculated below. The Gross-Up Payment shall be
in an amount such that ,
after deduction of any Excise Tax on the Payments
and any federal, state and local income and employment tax and
Excise Tax on the Gross-Up Payment, but before deduction for any
federal, state or local income and employment tax on the
Payments, the
net amount retained by the Executive shall
be equal to the Payments.
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| (b) |
Notwithstanding
anything in this Agreement to the contrary, if the amount of
Payments that will be subject to
the Excise Tax does not exceed the amount of Payments that
Executive could receive without having any Payments become subject
to the Excise Tax by at least $100,000,
then
Executive’s taxable cash-based benefits under this Agreement
will first be reduced in the order selected by Executive, and then,
if necessary, Executive’s equity-based compensation (based on
the value of such equity-based compensation as a “parachute
payment” as defined in Treasury Regulations promulgated under
Section 280G of the Code and IRS revenue rulings, revenue
procedures and other official guidance) shall be reduced in the
order selected by Executive, and then any other Payments shall be
reduced as reasonably determined by the Company, to the extent
necessary to avoid imposition of the Excise Tax. If Executive does
not select the amount to be reduced within the time prescribed by
the Company, the reductions specified herein shall be made by the
Company in its sole discretion from such compensation as it shall
determine. Any amount so reduced shall be irrevocably forfeited and
Executive shall have no further rights to receive it.
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| (c) |
The
process for calculating the Excise Tax, determining the amount of
any Gross-Up Payment and other procedures relating to this Section
5.2 are set forth in Appendix A attached hereto. For purposes of
making the determinations and calculations required herein, the
Consultant may rely on reasonable, good faith interpretations
concerning the application of Section 280G and 4999 of the Code,
provided that the Consultant shall make such determinations and
calculations on the basis of “substantial
authority”
(within
the meaning of Section
6662
of the Code) and shall provide opinions to that effect to both the
Company and Executive.
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5.3
The
Company also shall reimburse the Executive for legal fees and
expenses incurred by the Executive in disputing in good faith
any issue hereunder relating to the termination of the
Executive’s employment or in seeking in good faith to
obtain or enforce any benefit or right provided by this
Agreement. Such payments shall be made within ten (10)
business days after delivery of the Executive’s written
request for payment accompanied with such evidence of fees and
expenses incurred as the Company reasonably may
require.
5.4
The
payments provided in subsections (a) and (c) of Section 5.1
shall be made on the last day of the Executive’s
employment. The payments provided in Section 5.2 of this
Agreement, if any, as determined under Appendix A, shall be
paid on the Executive’s behalf to the applicable taxing
authorities within five (5) days of the receipt of the
Consultant’s determination of the Gross-Up Payment. If
payments are not made in the time frame required by this
subsection, interest on the unpaid amounts will accrue at 120%
of the rate provided in Section 1274(b)(2)(B) of the Code
until the date such payments are actually made. At the time
that payments are made under this Agreement, the Company shall
provide the Executive with a written statement setting forth
the manner in which such payments were calculated and the
basis for such calculations including, without limitation, any
opinions or other advice the Company has received from the
Consultant or other advisors (and any such opinions or advice
which are in writing shall be attached to the
statement).
5.5
Coordination with Employment Agreement .
Severance
Payments made under this Section 5 shall be in lieu of any
severance benefit payable to the Executive under the
Executive’s Employment Agreement with the Company or
otherwise.
6.
Termination Procedures and Compensation During
Dispute .
6.1
Notice of Termination .
After a Change in Control, any purported termination of the
Executive’s employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party
hereto to the other party hereto in accordance with Section 9 of
this Agreement. For purposes of this Agreement, a “Notice of
Termination” shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated. Further, a Notice of
Termination for Cause is required to include a copy of a resolution
duly adopted by the affirmative vote of not less than
three-quarters (3/4) of the entire membership of the Board at a
meeting of the Board which was called and held for the purpose of
considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the
Executive’s counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was
guilty of conduct set forth in clause (i) or (ii) of the definition
of Cause herein, and specifying the particulars thereof in
detail.
6.2
Date of Termination .
“Date of Termination,” with respect to any purported
termination of the Executive’s employment after a Change in
Control, shall mean (i) if the Executive’s employment is
terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have
returned to the full-time performance of the Executive’s
duties during such thirty (30) day period), and (ii) if the
Executive’s employment is terminated for any other reason,
the date specified in the Notice of Termination (which, in the case
of a termination by the Company, shall not be less than thirty (30)
days (except in the case of a termination for Cause) and, in the
case of a termination by the Executive, shall not be less than
fifteen (15) days nor more than sixty (60) days, respectively, from
the date such Notice of Termination is given).
6.3
Dispute Concerning Termination .
If within fifteen (15) days after any Notice of Termination is
given, or, if later, prior to the Date of Termination (as
determined without regard to this Section 6.3), the party receiving
such Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall be
extended until the date on which the dispute is finally resolved,
either by mutual written agreement of the parties or by a final
judgment, order or decree of an arbitrator or a court of competent
jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been
perfected); provided, however, that the Date of Termination shall
be extended by a notice of dispute given by the Executive only if
such notice is given in good faith and the Executive pursues the
resolution of such dispute with reasonable diligence.
6.4
Compensation During Dispute .
If a purported termination occurs following a Change in Control and
the Date of Termination is extended in accordance with Section 6.3
of this Agreement, the Company shall continue to pay the Executive
the full compensation in effect when the notice giving rise to the
dispute was given (including, but not limited to, salary) and
continue the Executive as a participant in all compensation,
benefit and insurance plans in which the Executive was
participating when the notice giving rise to the dispute was given,
until the Date of Termination, as determined in accordance with
Section 6.3 of this Agreement. Amounts paid under this Section 6.4
are in addition to all other amounts due under this Agreement
(other than those due under Section 4.1 of this Agreement) and
shall not be offset against or reduce any other amounts due under
this Agreement. Notwithstanding anything to the contrary in Section
6.3 and 6.4, if the Company, after delivery of a Notice of
Termination, promptly (and in any event within 30 days) determines
that grounds existed prior to the delivery of the Notice of
Termination to terminate the Executive’s employment for Cause
after complying with the procedural requirements of this Agreement,
the Company shall have the right to recover any payments that have
been made to the Executive or on the Executive’s behalf under
this Agreement including but not limited to offset against or
reduction of any amounts due under this Agreement or
otherwise.
7.
No Mitigation .
The Company agrees that under this Agreement, if the
Executive’s employment with the Company terminates, the
Executive is not required to seek other employment or to attempt in
any way to reduce any amounts payable to the Executive by the
Company pursuant to Section 5 of this Agreement or Section 6.4 of
this Agreement. Further, the amount of any payment or benefit
provided for in this Agreement (other than as specifically provided
in Section 5.1(b) of this Agreement) shall not be reduced by any
compensation earned by the Executive as the result of employment by
another employer, by retirement benefits, by offset against any
amount claimed to be owed by the Executive to the Company, or
otherwise.
8.
Successors; Binding Agreement .
8.1
In
addition to any obligations imposed by law upon any successor
to the Company, the Company will require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to expressly assume and
agree to perform this Agreement in accordance with its terms.
Failure of the Company to obtain such agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from
the Company in the same amount and on the same terms as the
Executive would be entitled to hereunder if the Executive were
to terminate the Executive’s employment for Good Reason
after a Change in Control, except that, for purposes of
implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of
Termination.
8.2
This
Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If the Executive shall die while any amount would still
be payable to the Executive hereunder (other than amounts which, by
their terms, terminate upon the death of the Executive) if the
Executive had continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this
Agreement to the executors, personal representatives or
administrators of the Executive’s estate.
9.
Notice .
For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given (a) on the date of
delivery if delivered by hand, (b) on the date of transmission, if
delivered by confirmed facsimile, (c) on the first business day
following the date of deposit if delivered by guaranteed overnight
delivery service, or (d) on the fourth business day following the
date delivered or mailed by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as
follows:
If
to the Executive: at the address (or to the facsimile number)
shown on the records of the Company
If
to the Company:
Kaman
Corporation
1332
Blue Hills Avenue, P.O. Box 1
Bloomfield,
CT 06002
Attention:
Candace A. Clark, Esq.
Facsimile
No.: 860 243-7397
or
to such other address as either party may have furnished to
the other in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
10.
Obligations after the Date of Termination.
| (a) |
Confidentiality .
The Executive agrees that the Executive shall not, directly or
indirectly, use, make available, sell, disclose or otherwise
communicate to any person, other than in the course of the
Executive’s employment and for the benefit of the Company, at
any time following the Date of Termination, any nonpublic,
proprietary or confidential information, knowledge or data relating
to the Company, any of its subsidiaries, affiliated companies or
businesses, which shall have been obtained by the Executive during
the Executive’s employment by the Company. The foregoing
shall not apply to information that (i) was known to the public
prior to its disclosure to the Executive; (ii) becomes known to the
public subsequent to disclosure to the Executive through no
wrongful act of the Executive or any representative of the
Executive; or (iii) the Executive is required to disclose by
applicable law, regulation or legal process (provided that the
Executive provides the Company with prior notice of the
contemplated disclosure and reasonably cooperates with the Company
at its expense in seeking a protective order or other appropriate
protection of such information). Notwithstanding clauses (i) and
(ii) of the preceding sentence, the Executive’s obligation to
maintain such disclosed information in confidence shall not
terminate where only portions of the information are in the public
domain.
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| (b) |
Non-Solicitation .
In the event that the Executive receives Severance Payments under
Section 5 of this Agreement, the Executive agrees that for the two
(2) year period following the Date of Termination, the Executive
will not, directly or indirectly, individually or on behalf of any
other person, firm, corporation or other entity, knowingly solicit,
aid or induce any managerial level employee of the Company or any
of its subsidiaries or affiliates to leave such employment in order
to accept employment with or render services to or with any other
person, firm, corporation or other entity unaffiliated with the
Company or knowingly take any action to materially assist or aid
any other person, firm, corporation or other entity in identifying
or hiring any such employee (provided, that the foregoing shall not
be violated by general advertising not targeted at Company
employees nor by serving as a reference for an employee with regard
to an entity with which the Executive is not affiliated). For the
avoidance of doubt, if a managerial level employee on his or her
own initiative contacts the Executive for the primary purpose of
securing alternative employment, any action taken by the Executive
thereafter shall not be deemed a breach of this Section
10(b).
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| (c) |
Non-Competition .
The
Executive acknowledges that the Executive performs services of a
unique nature for the Company that are irreplaceable, and that the
Executive’s performance of such services to a competing
business will result in irreparable harm to the Company.
Accordingly, in the event that the Executive receives Severance
Payments described in Section 5 of this Agreement, the Executive
agrees that for a period of two (2) years following the Date of
Termination, the Executive will not, directly or indirectly, become
connected with, promote the interest of, or engage in any other
business or activity competing with the business of the Company
within the geographical area in which the business of the Company
is conducted.
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| (d) |
Non-Disparagement .
Each
of the Executive and the Company (for purposes hereof, “the
Company” shall mean only (i) the Company by press release or
otherwise and (ii) the executive officers and directors thereof and
not any other employees) agrees not to make any public statements
that disparage the other party, or in the case of the Company, its
respective affiliates, officers, directors, products or services.
Notwithstanding the foregoing, statements made in the course of
sworn testimony in administrative, judicial or arbitral proceedings
(including, without limitation, depositions in connection with such
proceedings) or otherwise as required by law shall not be subject
to this Section 10(d).
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| (e) |
Return of Company Property and Records .
The Executive agrees that upon termination of
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