EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT (the
“Agreement”) is effective
as
of January
1, 2007 (the
“Effective Date”) between Kaman Corporation, a
Connecticut corporation (the “Company”), and
Ronald M. Galla (the “Executive”).
W
I T N E S S E T H:
WHEREAS,
the Executive is currently employed as the Senior Vice
President and Chief Information Officer of the
Company;
WHEREAS,
the Company has offered to continue employing the Executive on
the terms set forth below; and
WHEREAS,
the Executive has agreed to continued employment with the
Company on the terms as set forth below;
NOW
THEREFORE, in consideration of the foregoing, of the mutual
promises contained herein and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as
follows:
1.
EMPLOYMENT
TERM.
The
Executive’s term of employment under this Agreement
shall be for an initial term commencing on the Effective Date
and shall end on the third 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 initial term of
this Agreement 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 terminate
upon its expiration date. The initial term of this Agreement,
as it may be extended from year to year thereafter, is herein
referred to as the “Employment Term.” In all
events hereunder, Executive’s employment is subject to
earlier termination pursuant to Section 7 hereof, and upon
such earlier termination the Employment Term shall be deemed
to have ended.
2.
POSITION
& DUTIES.
(a)
The
Executive shall serve as the Company’s Senior Vice
President and Chief Information Officer under this Agreement
during the Employment Term. As Senior Vice President and Chief
Information Officer, the Executive shall have such duties,
authorities and responsibilities commensurate with the duties,
authorities and responsibilities of persons in similar
capacities in similarly sized companies and such other duties
and responsibilities as the Company’s Board of Directors
(the “Board”) shall designate that are consistent
with the Executive’s positions as Senior Vice President
and Chief Information Officer.
(b)
During
the Employment Term, the Executive shall use the
Executive’s best reasonable efforts to perform
faithfully and efficiently the duties and responsibilities
assigned to the Executive hereunder (including applicable
obligations under state law )
and
devote substantially all of the Executive’s business
time (excluding periods of vacation and other approved leaves
of absence) to the performance of the Executive’s duties
with the Company, provided the foregoing shall not prevent the
Executive from (i) participating in charitable, civic,
educational, professional, community or industry affairs or,
with prior written approval of the Board, serving on the board
of directors or advisory boards of other companies; and (ii)
managing the Executive’s and the Executive’s
family’s personal investments so long as such activities
do not materially interfere with the performance of the
Executive’s duties hereunder or create a potential
business conflict or the appearance thereof. If at any time
service on any board of directors or advisory board would, in
the good faith judgment of the Board, conflict with the
Executive’s fiduciary duty to the Company or create any
appearance thereof, the Executive shall promptly resign from
such other board of directors or advisory board after written
notice of the conflict is received from the
Board.
(c)
The
Executive further agrees to serve without additional
compensation as an officer and director of any of the
Company’s subsidiaries and agrees that any amounts
received from any such corporation may be offset against the
amounts due hereunder.
3.
BASE
SALARY. The Company agrees to pay the Executive a base salary
(the “Base Salary”) during the Employment Period
at an annual rate of $282,000 (subject to possible increase if
the Board, in its sole discretion, so determines), payable in
accordance with the regular payroll practices of the Company,
but not less frequently than monthly
.
4.
BONUSES.
The Executive shall be eligible to participate in the
Company’s bonus and other short-
and long-term incentive
compensation plans and programs for the Company’s
senior executives at a level commensurate with the
Executive’s position during the Employment Term. The
Executive shall have the opportunity to earn an annual target
bonus measured against performance criteria to be determined
by the Board (or a committee thereof) of at least 45% of Base
Salary as an initial target bonus opportunity as described in
the terms of the Company’s annual bonus plan as then in
effect. Except as provided under Section 8 of the Agreement,
the Executive shall receive payments with respect to the
plans and programs described in this Section 4 in accordance
with the terms of such plans and programs.
5.
EQUITY
AWARDS. T he
Executive shall be eligible to receive additional grants of
stock options, stock appreciation rights, restricted stock and
other equity awards at the sole discretion of the Board or the
Personnel and Compensation Committee (the
“Committee”). The
Executive shall be subject to, and shall comply with, the
Company’s stock ownership guidelines (unless waived by
the Compensation Committee) and the Company’s reasonable
policies regarding forfeitures of cash and equity incentive
awards due to material financial restatements due to executive
misconduct, as may be in effect from time to time
,
it being agreed that any such policies shall only be effective
with respect to awards made on or after the Effective
Date .
If
there is a Change in Control (as defined in the Kaman
Corporation 2003 Stock Incentive Plan in effect on the date
hereof), all then outstanding unvested equity awards granted
to the Executive (for example, stock options, stock
appreciation rights and restricted stock), whether under this
Agreement or otherwise, will fully vest and become
non-forfeitable
and remain exercisable in accordance with the terms of the
applicable Company plans.
6.
EMPLOYEE
BENEFITS.
(a)
BENEFIT
PLANS. The Executive shall be entitled to participate in all
employee benefit plans of the Company including, but not
limited to, pension, thrift, profit sharing, medical coverage,
education, other retirement or welfare benefits and
perquisites (as approved by the Committee) that the Company
has adopted or may adopt, maintain or contribute to for the
benefit of its senior executives at a level commensurate with
the Executive’s positions subject to satisfying the
applicable eligibility requirements.
(b)
VACATION.
The Executive shall be entitled to at least 4 weeks paid
vacation per year. Vacation may be taken at such times as the
Executive elects with due regard to the needs of the Company.
Unused vacation at the end of a calendar year shall be
forfeited according to the Company's vacation
policy.
(c)
AUTOMOBILE.
The Company shall provide the Executive with a leased
automobile as approved by the Committee as per the
Company’s perquisites policy from time to
time.
(d)
BUSINESS
AND ENTERTAINMENT EXPENSES. Upon presentation of appropriate
documentation, the Executive shall be reimbursed in accordance
with the Company’s expense reimbursement policy for all
reasonable and necessary business and entertainment expenses
incurred in connection with the performance of the
Executive’s duties hereunder.
(e)
CERTAIN
AMENDMENTS. Nothing herein shall be construed to prevent the
Company from amending, altering, eliminating or reducing any
plans, benefits or programs so long as the Executive continues
to receive compensation and benefits consistent with Sections
3 through 6.
7.
TERMINATION.
The Executive’s employment and the Employment Term shall
terminate on the first of the following to occur:
(a)
DISABILITY.
Upon written notice by the Company to the Executive of
termination due to Disability, while the Executive remains
Disabled. For purposes of this Agreement,
“Disability” shall be deemed the reason for the
termination by the Company of the Executive’s
employment, if, as a result of the Executive incapacity due to
physical or mental illness, the Executive shall have been
absent from fully performing the Executive’s duties with
the Company for a period of 6 consecutive months, the Company
shall have provided a notice of termination under this Section
7(a), and, within thirty days after such notice being given,
the Executive shall not have returned to the fully performing
the Executive’s duties hereunder.
(b)
DEATH.
Automatically on the date of death of the
Executive.
(c)
CAUSE.
Immediately upon written notice by the Company to the
Executive of a termination for Cause. “Cause”
shall mean (i) Executive’s conviction of (or a plea of
guilty or nolo contendere to) a felony or any crime involving
moral turpitude, dishonesty, fraud, theft or financial
impropriety; or (ii) a determination by a majority of the
Board in good faith that Executive has (A) willfully and
continuously failed to perform substantially the
Executive’s duties (other than any such failure
resulting from the Executive’s Disability or incapacity
due to bodily injury or physical or mental illness), after a
written demand for substantial performance is delivered to the
Executive by the Board that specifically identifies the manner
in which the Board believes that the Executive has not
substantially performed the Executive’s duties, (B)
engaged in illegal conduct, an act of dishonesty or gross
misconduct, in each case which is in the course of the
Executive’s employment and materially injurious to the
Company, or (C) willfully violated a material requirement of
the Company’s code of conduct or the Executive’s
fiduciary duty to the Company. No act or failure to act on the
part of the Executive shall be considered
“willful” unless it is done, or omitted to be
done, by the Executive in bad faith and without reasonable
belief that the Executive’s action or omission was in,
or not opposed to, the best interests of the Company.
Notwithstanding
the foregoing, Cause shall not include any act or omission of
which the Audit Committee of the Board (or the full Board) has
had actual knowledge of all material facts related thereto for
at least 90 days without asserting that the act or omission
constitutes Cause.
(d)
WITHOUT
CAUSE. Upon written notice by the Company to the Executive of
an involuntary termination without Cause and other than due to
death or Disability.
(e)
GOOD
REASON. Upon written notice by the Executive to the Company of
a termination for Good Reason, unless such events are
corrected in all material respects by the Company within 30
days following written notification by the Executive to the
Company, that the Executive intends to terminate the
Executive’s employment hereunder for one of the reasons
set forth below. “Good Reason” shall mean, without
the Executive’s express written consent, the occurrence
of any of the following events:
(1)
the
Company removing the Executive from the positions of Senior
Vice President and Chief Information Officer (
other
than for Cause);
(2)
a
reduction of the Executive’s Base Salary, annual initial
target bonus opportunity or modified bonus opportunity to the
extent the modification to the initial target bonus
opportunity is adverse to the Executive relative to the
modification made to the initial target bonus opportunity of
other senior officers of the Executive’s business
unit;
(3)
a
failure to pay the Executive’s compensation or benefits
provided or referred to under this Agreement;
(4)
the
Executive being required to relocate to a principal place of
employment more than 50 miles from the Executive’s
principal place of employment with the Company as of the
Effective Date; or
(5)
the
assignment of duties to the Executive that are materially
inconsistent with the Executive’s positions as
Senior
Vice President and Chief Information Officer
.
Notwithstanding
the foregoing, (i) a suspension of the Executive’s title
and authority while on administrative leave due to a
reasonable belief that the Executive has engaged in
misconduct, whether or not the suspected misconduct
constitutes Cause for employment termination, shall not be
considered “Good Reason”; provided that if such
leave is unpaid and either the Executive returns to full-time
employment under this Agreement or it is subsequently
determined the Executive’s employment is to be
terminated without Cause, then the compensation and benefits
that would have been payable during such leave will be paid as
soon as reasonably practicable with interest at the prime rate
beginning as of the date such leave commenced plus 100 basis
points; (ii) an event shall not be considered Good Reason if
the Executive fails to deliver notice of termination for Good
Reason within 90 days of the Executive’s actual
knowledge of the event, and (iii) prospective changes to
employee benefits (as defined in Section 6) for future
employment made on an across-the-board basis to all similarly
situated executives of the Company and its subsidiaries shall
not be considered Good Reason.
(f)
WITHOUT
GOOD REASON. Upon 60 days’ prior written notice by the
Executive to the Company of the Executive’s termination
of employment without Good Reason (which the Company may, in
its sole discretion, make effective earlier than any notice
date).
(g)
RETIREMENT.
Upon remaining employed with the Company until at least the
attainment of age 65 (the “Retirement Eligibility
Date”). Nothing herein shall be construed as limiting
the Executive’s right, if any, to terminate employment
prior to the Retirement Eligibility Date and receive
compensation and benefits, as applicable, provided under the
respective terms of the Company’s benefit plans
.
8.
CONSEQUENCES
OF TERMINATION. Any termination payments made and benefits
provided under this Agreement to the Executive shall be in
lieu of any termination or severance payments or benefits for
which the Executive may be eligible under any of the plans,
policies or programs of the Company or its affiliates as may
be in effect from time to time including but not limited to
the Change in Control Agreement. Except to the extent
otherwise provided in this Agreement, all benefits, including,
without limitation, stock options, stock appreciation rights,
restricted stock units and other awards under the
Company’s long-term incentive programs, shall be subject
to the terms and conditions of the plan or arrangement under
which such benefits accrue, are granted or are awarded.
Subject to Section 9, the following amounts and benefits shall
be due to the Executive.
(a)
DISABILITY.
Upon employment termination due to Disability, the Company
shall pay or provide the Executive (i) any unpaid Base Salary
through the date of termination and any accrued vacation in
accordance with Company policy; (ii) any unpaid bonus or other
short-term and long-term incentive compensation as described
in Section 4 above earned with respect to any completed fiscal
year; (iii) reimbursement for any unreimbursed expenses
incurred through the date of termination; (iv) all other
payments and benefits to which the Executive may be entitled
under the terms of any applicable compensation arrangement or
benefit, equity or perquisite plan or program or grant or this
Agreement, including but not limited to any applicable
pension, retirement and insurance benefits (collectively,
“Accrued Amounts”). Executive will also be paid a
pro-rata portion of the Executive’s annual bonus for the
performance year in which the Executive’s termination
occurs, payable at the time that annual bonuses are paid to
other senior executives (determined by multiplying the amount
the Executive would have received had employment continued
through the end of the performance year by a fraction, the
numerator of which is the number of days during the
performance year of termination that the Executive is employed
by the Company and the denominator of which is
365).
(b)
DEATH.
In the event the Employment Term ends on account of the
Executive’s death, the Executive’s estate (or to
the extent a beneficiary has been designated in accordance
with a program, the beneficiary under such program) shall be
entitled to any Accrued Amounts, including but not limited to
proceeds from any Company sponsored life insurance programs.
Executive’s estate (or beneficiary) will also be paid a
pro-rata portion of the Executive’s annual bonus for the
performance year in which the Executive’s death occurs,
payable at the time that annual bonuses are paid to other
senior executives (determined by multiplying the amount the
Executive would have received based upon target performance
had employment continued through the end of the performance
year by a fraction, the numerator of which is the number of
days during the performance year of termination that the
Executive is employed by the Company and the denominator of
which is 365).
(c)
TERMINATION
FOR CAUSE OR WITHOUT GOOD REASON. If the Executive’s
employment should be terminated (i) by the Company for Cause,
or (ii) by the Executive without Good Reason, the Company
shall pay to the Executive any Accrued Amounts.
(d)
TERMINATION
WITHOUT CAUSE OR FOR GOOD REASON .
If the Executive’s employment by the Company is
terminated by the Company other than for Cause (other than a
termination due to Disability or death) or by the Executive
for Good Reason, then the Company shall pay or provide the
Executive with:
(1)
Accrued
Amounts;
(2)
a
pro-rata portion of the Executive’s annual bonus for the
performance year in which the Executive’s termination
occurs, payable at the time that annual bonuses are paid to
other senior executives (determined by multiplying the amount
the Executive would have received based upon actual financial
performance had employment continued through the end of the
performance year by a fraction, the numerator of which is the
number of days during the performance year of termination that
the Executive is employed by the Company and the denominator
of which is 365);
(3)
an
amount equal to the product of two times the sum of (i) the
Executive’s then Base Salary and (ii) the most recent
annual bonus paid to the Executive (or awarded by the Board or
the Committee for the preceding calendar year if not then
paid), payable in a single lump sum commencing on the earliest
payroll date that does not result in adverse tax consequences
to Executive under Section 409A of the Code. Notwithstanding
the foregoing, if the Executive terminates employment within
two years of his Retirement Eligibility Date, the lump sum
amount described in the immediately preceding sentence shall
be reduced by multiplying it by a fraction, the numerator of
which is the number of days from the Executive’s
employment termination date until the Retirement Eligibility
Date, and the denominator of which is 730;
(4)
each
cash-based long-term performance award for which the
performance period has not yet been completed as of the date
of such termination
shall
be deemed fully vested and fully earned and then shall be
cancelled in exchange for a cash payment equal to 100% of the
target value of such award multiplied by a fraction, the
numerator which is the number of days the Executive remained
employed with the Company during the award’s performance
period and the denominator of which is the total number of
days during the award’s performance period;
(5)
title
to the Company automobile to the Executive on an “as
is” basis, with the automobile’s fair market value
being taxable to the Executive;
(6)
subject
to the Executive’s continued co-payment of premiums, if
required under Company policy, continued participation for 24
months but in no event later than the Retirement Eligibility
Date in all medical, dental and vision plans which cover the
Executive (and eligible dependents) upon the same terms and
conditions (except for the requirements of the
Executive’s continued employment) in effect for active
employees of the Company. In the event the Executive obtains
other employment that offers substantially similar or improved
benefits, as to any particular medical, dental or vision plan,
such continuation of coverage by the Company for such similar
or improved benefit under such plan under this subsection
shall immediately cease. The continuation of health benefits
under this subsection shall reduce and count against the
Executive’s rights under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (“COBRA”);
and
(7)
the
Company shall continue to pay all premiums on the life
insurance coverage issued to the Executive for 24 months but
in no event later than the Retirement Eligibility
Date.
(e)
RETIREMENT.
If the Executive terminates employment on or following the
Executive’s Retirement Eligibility Date, the Company
shall pay to the Executive:
(1)
any
Accrued Amounts;
(2)
a
pro-rata portion of the Executive’s annual bonus for the
performance year in which the Executive’s retirement
occurs, payable at the time that annual bonuses are paid to
other senior executives (determined by multiplying the amount
the Executive would have received based upon actual financial
performance had employment continued through the end of the
performance year by a fraction, the numerator of which is the
number of day
