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Exhibit 10.6
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 Robert M. Garneau (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.
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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.
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(a)
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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)
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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)
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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)
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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)
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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)
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The Company (i) shall prepay all remaining
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)
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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)
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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
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(a)
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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)
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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)
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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).
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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.
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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.
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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.
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(a)
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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)
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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)
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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)
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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)
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Return of Company Property and Records
. The Executive agrees that upon termination of the
Executive’s employment, for any cause whatsoever, the
Executive will surrender to the Company in good condition
(reasonable wear and tear except
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