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KAMAN
AEROSPACE GROUP, INC.
CHANGE IN
CONTROL AGREEMENT
THIS
AGREEMENT, is made effective as of 7 Jul, 2008 (the
“Effective Date”), by and between Kaman Aerospace
Group, Inc. (the “Company”), a subsidiary of Kaman
Corporation, a Connecticut corporation (the “Parent
Company”), and Gregory L. Steiner (the
“Executive”).
WHEREAS, the Company
considers it essential to the best interests of its
shareholders to foster the continued employment of key
management personnel; and
WHEREAS,
in furtherance of this objective, the Company and Executive
have executed an Employment Agreement dated as of 7 Jul, 2008
with the terms of such agreement beginning 7 Jul, 2007 (the
“Effective Date”; and
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.
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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 Parent 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).
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
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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:
c/o 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 Parent Company and the Company, at any time
following the Date of Termination, any nonpublic, proprietary or
confidential information, knowledge or data relating to the Parent
Company or the Company, any of their 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 Parent
Company and the Company with prior notice of the contemplated
disclosure and reasonably cooperates with the Parent Company and
the Company at their 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 Parent Company or the Company or
any of their 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 Parent Company or 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 Parent Company or 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 Parent Company and 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 Parent Company or the
Company within the geographical area in which the business of the
Parent Company or 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 (including parents and subsidiaries), 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
excepted) all property and equipment belonging to the Company and
all records kept by the Executive containing the names, addresses
or any other information with regard to customers or
custom
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