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Exhibit 10.3
 

AMENDED AND RESTATED
SEVERANCE AGREEMENT
 
THIS AMENDED AND RESTATED SEVERANCE AGREEMENT (the “Agreement”), dated as of
December 22, 2008, is made and entered by and between Harman International
Industries, Incorporated (“Harman” or, including any successor thereto, the
“Company”), a Delaware corporation, and Herbert K. Parker (the “Executive”).
 
WHEREAS, the Executive is a senior executive of Harman and is expected to make
major contributions to the Company’s short and long-term profitability, growth
and financial strength;
 
WHEREAS, Harman recognizes that: (a) top-quality executives may seek more secure
career opportunities if a Change in Control, as defined below, occurs in the
future; and (b) the Company may encounter difficulties in recruiting qualified
senior executives unless it offers an employment security arrangement,
applicable in Change in Control situations;
 
WHEREAS, Harman desires to assure itself of both present and future continuity
of management and desires to establish certain minimum severance benefits for
certain of its senior executives, including the Executive, applicable in the
event of a Change in Control;
 
WHEREAS, Harman wishes to ensure that its senior executives are not practically
disabled from discharging their duties in respect of a proposed or actual
transaction involving a Change in Control; and
 
WHEREAS, Harman desires to provide additional inducement for the Executive to
continue to remain in the Company’s employ.
 
NOW, THEREFORE, Harman and the Executive agree as follows:
 
1.             Certain Defined Terms.  In addition to terms defined elsewhere in
this Agreement, the following terms have the following meanings:
 
(a)           “Base Pay” means the Executive’s annual base salary rate as in
effect from time to time;
 
(b)           “Board” means Harman’s Board of Directors;
 
(c)           “Cause” means that, prior to any termination pursuant to Section
3(b), the Executive shall have:
 
(i)            been convicted of a criminal violation involving fraud,
embezzlement or theft in connection with his duties or in the course of his
employment with the Company or any Subsidiary;
 
(ii)           committed intentional wrongful damage to property of Harman or
any Harman subsidiary;

 
 

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(iii)           committed intentional wrongful disclosure of secret processes or
confidential information of Harman or any Subsidiary; or
 
(iv)          committed intentional wrongful engagement in any Competitive
Activity;
 
and any such act shall have been demonstrably and materially harmful to
Harman.  For purposes of this Agreement, no act or failure to act on the part of
the Executive shall be deemed “intentional” if it was due primarily to an error
in judgment or negligence, but shall be deemed “intentional” only if done or
omitted to be done by the Executive not in good faith and without reasonable
belief that the Executive’s action or omission was in the best interest of
Harman.  Notwithstanding the foregoing, the Executive shall not be deemed to
have been terminated for “Cause” hereunder unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of a majority of the Committee then in office at a meeting of
the Committee called and held for such purpose, after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive’s
counsel (if the Executive chooses to have counsel present at such meeting), to
be heard before the Committee, finding that, in the good faith opinion of the
Committee, the Executive had committed an act constituting “Cause” as defined in
this Agreement and specifying the particulars thereof in detail.  Nothing in
this Agreement will limit the right of the Executive or his beneficiaries to
contest the validity or propriety of any such determination;
 
(d)           “Change in Control” means the occurrence during the Term of any of
the following events:
 
(i)            The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the combined voting power of the then
outstanding Voting Stock of the Company; provided, however, that for purposes of
this Section 1(d)(i), the following acquisitions shall not constitute a Change
in Control:  (A) any issuance of Voting Stock of the Company directly from the
Company that is approved by the Incumbent Board (as defined in Section 1(d)(ii),
below), (B) any acquisition by the Company or a Subsidiary of Voting Stock of
the Company, (C) any acquisition of Voting Stock of the Company by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
Subsidiary, or (D) any acquisition of Voting Stock of the Company by any Person
pursuant to a Business Combination (as defined in Section 1(d)(iii) below) that
complies with clauses (A), (B) and (C) of Section 1(d)(iii), below; or
 
(ii)            individuals who, as of the date hereof, constitute the Board
(the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a Director after
the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least two-thirds of the Directors
then comprising the Incumbent Board (either by a specific vote or by approval of
the proxy statement of the Company in which such person is named as a nominee
for director, without objection to such nomination) shall be deemed to have been
a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest (within the meaning of Rule 14a-11 of the Exchange
Act) with respect to the election or removal of Directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board; or

 
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(iii)           consummation of a reorganization, merger or consolidation, a
sale or other disposition of all or substantially all of the assets of the
Company, or other transaction (each, a “Business Combination”), unless, in each
case, immediately following such Business Combination, (A) all or substantially
all of the individuals and entities who were the beneficial owners of Voting
Stock of the Company immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of the combined voting power of the
then outstanding shares of Voting Stock of the entity resulting from such
Business Combination (including, without limitation, an entity which as a result
of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries), (B) no
Person (other than the Company, such entity resulting from such Business
Combination, or any employee benefit plan (or related trust) sponsored or
maintained by the Company, any Subsidiary or such entity resulting from such
Business Combination) beneficially owns, directly or indirectly, 25% or more of
the combined voting power of the then outstanding shares of Voting Stock of the
entity resulting from such Business Combination, and (C) at least a majority of
the members of the Board of Directors of the entity resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement or of the action of the Board providing for such Business
Combination; or
 
(iv)           approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company, except pursuant to a Business
Combination that complies with clauses (A), (B) and (C) of Section 1(d)(iii).
 
(e)           “Committee” means the Compensation and Option Committee of the
Board or such similar committee of the Board comprised of non-officer directors
and responsible for executive compensation matters of the Company generally;
 
(f)           “Competitive Activity” means the Executive’s participation,
without the Company’s written consent, in the management of any business
enterprise if such enterprise engages in substantial and direct competition with
the Company or a Subsidiary and the enterprise’s sales of any product or service
under the Executive’s supervision competitive with any product or service of the
Company or a Subsidiary amounted to 10% of the enterprise’s net sales for its
most recently completed fiscal year and if the Company’s and its Subsidiary’s
net sales of said product or service amounted to 10% of the Company’s net sales
for its most recently completed fiscal year.  “Competitive Activity” will not
include (i) the mere ownership of securities in any such enterprise and the
exercise of rights appurtenant thereto or (ii) participation in the management
of any such enterprise other than in connection with the competitive operations
of such enterprise;

 
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(g)           “Employee Benefits” means the perquisites, benefits and service
credit for benefits as provided under any and all employee retirement income and
welfare benefit policies, plans, programs or arrangements in which Executive is
entitled to participate, including without limitation any stock option,
performance share, performance unit, stock purchase, stock appreciation,
savings, pension, supplemental executive retirement, or other retirement income
or welfare benefit, deferred compensation, incentive compensation, group or
other life, health, medical/hospital or other insurance (whether funded by
actual insurance or self-insured by the Company or a Subsidiary), disability,
salary continuation, expense reimbursement and other employee benefit policies,
plans, programs or arrangements that may now exist or any equivalent successor
policies, plans, programs or arrangements that may be adopted by the Company or
a Subsidiary, providing perquisites, benefits and service credit for benefits at
least as great in the aggregate as are payable thereunder prior to a Change in
Control;
 
(h)           “Exchange Act” means the Securities Exchange Act of 1934, as
amended from time to time;
 
(i)            “Incentive Pay” means an annual bonus, incentive or other payment
of compensation, in addition to Base Pay, made or to be made in regard to
services rendered in any year or other period pursuant to any bonus, incentive,
profit-sharing, performance, discretionary pay or similar agreement, policy,
plan, program or arrangement (whether or not funded) of the Company or a
Subsidiary, or any successor thereto;
 
(j)            “Retirement Plans” means the retirement income, supplemental
executive retirement, excess benefits and retiree medical, life and similar
benefit plans providing retirement perquisites, benefits and service credit for
benefits at least as great in the aggregate as are payable thereunder prior to a
Change in Control;
 
(k)           “Severance Period” means the period of time commencing six months
prior to the date of the first occurrence of a Change in Control and continuing
until the earlier of (i) the second anniversary of the occurrence of the Change
in Control, or (ii) the Executive’s death; provided, however, that commencing on
each anniversary of the Change in Control, the Severance Period will
automatically be extended for an additional year unless, not later than 90
calendar days before the anniversary date, either the Company or the Executive
shall have given written notice to the other that the Severance Period is not to
be so extended;
 
(l)            “Subsidiary” means an entity in which the Company, directly or
indirectly, beneficially owns 50% or more of the outstanding Voting Stock;
 
(m)           “Term” means the period commencing as of the date hereof and
expiring as of the later of (i) the close of business on December 31, 2012, or
(ii) the expiration of the Severance Period.  However, commencing on January 1,
2012 and each January 1 thereafter, the term of this Agreement will
automatically be extended for an additional year unless, not later than
September 30 of the immediately preceding year, the Company or the Executive
shall have given notice that it or the Executive, as the case may be, does not
wish to have the Term extended.  Furthermore, if prior to the date which is six
months prior to a Change in Control, the Executive ceases for any reason to be
an officer of the Company or any Subsidiary, thereupon without further action
the Term shall be deemed to have expired and this Agreement will immediately
terminate and be of no further effect.  For purposes of this Section, the
Executive shall not be deemed to have ceased to be an officer of the Company and
any Subsidiary by reason of the transfer of Executive’s employment between the
Company and any Subsidiary, or among any Subsidiaries;

 
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(n)           “Termination Date” means the date on which the Executive’s
employment is terminated (the effective date of which shall be the date of
termination, or such other date that may be specified by the Executive if the
termination is pursuant to Section 3(b)); provided, however, that if the
Termination Date precedes the Change in Control, then any additional payments
and benefits that are due upon a Change in Control and that are deferred
compensation within the meaning of Section 409A shall be subject to the Section
409A Delay, as defined below, and payable upon the Change in Control; and
 
(o)           “Voting Stock” means securities entitled to vote generally in the
election of directors.
 
2.             Operation of Agreement.  This Agreement will be effective and
binding immediately upon its execution, but anything in this Agreement to the
contrary notwithstanding, this Agreement will not be operative unless and until
the date which is six months prior to a Change in Control occurs.  If a Change
in Control occurs at any time during the Term, this Agreement shall become
operative immediately and retroactively, including without limitation,
notwithstanding that the Term may have since expired.
 
3.             Termination Following a Change in Control.  (a) In the event of
the occurrence of a Change in Control, the Executive’s employment may be
terminated by the Company or a Subsidiary during the Severance Period and the
Executive shall be entitled to the benefits provided by Section 4 as a result
thereof or of any termination within six months prior to a Change in Control
unless such termination is the result of the occurrence of one or more of the
following events:
 
(i)            The Executive’s death;
 
(ii)           The Executive becoming permanently disabled within the meaning
of, and begins actually receiving disability benefits pursuant to, the long-term
disability plan in effect for, or applicable to, Executive immediately prior to
the Change in Control; or
 
(iii)           Cause.
 
If, during the Severance Period, the Executive’s employment is terminated by the
Company or any Subsidiary other than pursuant to Section 3(a)(i), 3(a)(ii) or
3(a)(iii), the Executive will be entitled to the benefits provided by Section 4
hereof.
 
(b)           In the event of the occurrence of a Change in Control, the
Executive may terminate employment with the Company and any Subsidiary during
the Severance Period with the right to severance compensation as provided in
Section 4 upon the occurrence of one or more of the following events (regardless
of whether any other reason, other than Cause, for such termination exists or
has occurred, including without limitation other employment) and shall also have
such severance compensation in the event he had terminated employment upon the
occurrence of one or more of the following events within six months prior to the
Change in Control:

 
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(i)            Failure to elect or reelect or otherwise to maintain the
Executive in the office or the position, or a substantially equivalent office or
position, of or with the Company and/or a Subsidiary (or any successor thereto
by operation of law or otherwise), as the case may be, which the Executive held
immediately prior to a Change in Control, or the removal of the Executive as a
Director of the Company and/or a Subsidiary (or any successor thereto) if the
Executive shall have been a Director of the Company and/or a Subsidiary
immediately prior to the Change in Control;
 
(ii)           (A) A significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties attached to the
position with the Company and any Subsidiary which the Executive held
immediately prior to the Change in Control, (B) a reduction in the aggregate of
the Executive’s Base Pay and Incentive Pay received from the Company and any
Subsidiary, or (C) the termination or denial of the Executive’s rights to
Employee Benefits or a reduction in the scope or value thereof, any of which is
not remedied by the Company within 10 calendar days after receipt by the Company
of written notice from the Executive of such change, reduction or termination,
as the case may be;
 
(iii)           A determination by the Executive (which determination will be
conclusive and binding upon the parties to this Agreement, provided that the
determination has been made in good faith and in all events will be presumed to
have been made in good faith unless otherwise shown by the Company by clear and
convincing evidence) that a change in circumstances has occurred following a
Change in Control, including, without limitation, a change in the scope of the
business or other activities for which the Executive was responsible immediately
prior to the Change in Control, which has rendered the Executive substantially
unable to carry out, has substantially hindered Executive’s performance of, or
has caused Executive to suffer a substantial reduction in, any of the
authorities, powers, functions, responsibilities or duties attached to the
position held by the Executive immediately prior to the Change in Control, which
situation is not remedied within 10 calendar days after the Company receives
written notice from the Executive of such determination;
 
(iv)          The liquidation, dissolution, merger, consolidation or
reorganization of the Company or transfer of all or substantially all of its
business and/or assets, unless the successor or successors (by liquidation,
merger, consolidation, reorganization, transfer or otherwise) to which all or
substantially all of its business and/or assets have been transferred (by
operation of law or otherwise) assumed all duties and obligations of the Company
under this Agreement pursuant to Section 11(a);
 
(v)           The Company relocates its principal executive offices (if such
offices are the principal location of Executive’s work), or requires the
Executive to have his principal location of work changed, to any location that,
in either case, is in excess of 50 miles from the principal executive office’s
location immediately prior to the Change in Control, or requires the Executive
to travel away from his office in the course of discharging his responsibilities
or duties at least 20% more (in terms of aggregate days in any calendar year or
in any calendar quarter when annualized for purposes of comparison to any prior
year) than was required of Executive in any of the three full years immediately
prior to the Change in Control without, in either case, his prior written
consent; or

 
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(vi)           Without limiting the generality or effect of the foregoing, any
material breach of this Agreement by the Company or any successor thereto which
is not remedied by the Company within 10 calendar days after receipt by the
Company of written notice from the Executive of such breach.
 
(c)           A termination by the Company pursuant to Section 3(a) or by the
Executive pursuant to Section 3(b) will not affect any rights that the Executive
may have pursuant to any agreement, policy, plan, program or arrangement of the
Company or any Subsidiary providing Employee Benefits, which rights shall be
governed by the terms thereof; provided that the Executive shall not be entitled
to a severance payment or benefit under any other agreement with the Company,
including, without limitation, any employment agreement, if the Executive is
entitled to a comparable payment or benefit hereunder.
 
4.             Severance Compensation.  a) If the Company or Subsidiary
terminates the Executive’s employment during the Severance Period other than
pursuant to Section 3(a)(i), 3(a)(ii) or 3(a)(iii), or if the Executive
terminates his employment pursuant to Section 3(b), the Company will pay to the
Executive, subject to Section 18 hereof as to the Section 409A Delay, the amount
described in Paragraph (a) of Annex A within five business days after the
Termination Date and will continue to provide to the Executive the benefits
described in Paragraphs (b) and (c) of Annex A for the periods described
therein; provided, however, that no payment that would otherwise be made and no
benefit that would otherwise be provided upon a termination of employment that
is deferred compensation for purposes of Section 409A shall be made or provided,
as the case may be, unless and until such termination of employment also
constitutes a separation from service (within the meaning of Section 409A).
 
(b)           Without limiting the rights of the Executive at law or in equity,
if the Company fails to make any payment or provide any benefit required to be
made or provided under this Agreement on a timely basis, the Company will pay
interest on the amount or value thereof at an annualized rate of interest equal
to the so-called composite “prime rate” as quoted from time to time during the
relevant period in The Wall Street Journal , plus 2%.  Such interest will be
payable as it accrues on demand.  Any change in such prime rate will be
effective on and as of the date of such change.
 
(c)           Notwithstanding any provision of this Agreement to the contrary,
the parties’ respective rights and obligations under this Section 4 and under
Sections 5, 7 and 8 will survive any termination or expiration of this Agreement
or the termination of the Executive’s employment following a Change in Control
for any reason whatsoever.
 
5.             Certain Additional Payments by the Company.  b) Anything in this
Agreement to the contrary notwithstanding, in the event that this Agreement
shall become operative and it shall be determined (as hereafter provided) that
any payment (other than the Gross-Up Payments provided for in this Section 5) or
distribution by the Company or any of its affiliates to or for the benefit of
the Executive, whether paid or payable or distributed or distributable under the
terms of this Agreement or otherwise pursuant to or by reason of any other
agreement, policy, plan, program or arrangement, including without limitation
any stock option, performance share, performance unit, stock appreciation right
or similar right, or the lapse or termination of any restriction on or the
vesting or exercisability of any of the foregoing (a “Payment”), would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”) (or any successor provision thereto) by reason
of being considered “contingent on a change in ownership or control” of the
Company, within the meaning of Section 280G of the Code (or any successor
provision thereto) or to any similar tax imposed by state or local law, or any
interest or penalties with respect to such tax (such tax or  taxes, together
with any such interest and penalties, being hereafter collectively referred to
as the “Excise Tax”), then the Executive shall be entitled to receive, and the
Company shall be required to pay, an additional payment or payments
(collectively, a “Gross-Up Payment”); provided, however, that no Gross-Up
Payment shall be made with respect to the Excise Tax, if any, attributable to
(i) any incentive stock option, as defined by Section 422 of the Code (“ISO”)
granted prior to the execution of this Agreement, or (ii) any stock appreciation
or similar right, whether or not limited, granted in tandem with any ISO
described in clause (i).  The Gross-Up Payment shall be in an amount such that,
after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes), including any Excise Tax imposed upon the
Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal
to the Excise Tax imposed upon the Payment.

 
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(b)           Subject to the provisions of Section 5(f), all determinations
required to be made under this Section 5, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required to be paid by the Company to the Executive and the
amount of such Gross-Up Payment, if any, shall be made by a nationally
recognized accounting firm (the “Accounting Firm”) selected by the Executive in
his sole discretion.  The Executive shall direct the Accounting Firm to submit
its determination and detailed supporting calculations to both the Company and
the Executive within 30 calendar days after the Termination Date, if applicable,
and any such other time or times as may be requested by the Company or the
Executive.  If the Accounting Firm determines that any Excise Tax is payable by
the Executive, the Company shall pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive.  If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it shall, at the
same time as it makes such determination, furnish the Company and the Executive
an opinion that the Executive has substantial authority not to report any Excise
Tax on his federal, state or local income or other tax return.  As a result of
the uncertainty in the application of Section 4999 of the Code (or any successor
provision thereto) and the possibility of similar uncertainty regarding
applicable state or local tax law at the time of any determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments which will not
have been made by the Company should have been made (an “Underpayment”),
consistent with the calculations required to be made hereunder.  In the event
that the Company exhausts or fails to pursue its remedies pursuant to Section
5(f) and the Executive thereafter is required to make a payment of any Excise
Tax, the Executive shall direct the Accounting Firm to determine the amount of
the Underpayment that has occurred and to submit its determination and detailed
supporting calculations to both the Company and the Executive as promptly as
possible.  Any such Underpayment shall be promptly paid by the Company to, or
for the benefit of, the Executive within five business days after receipt of
such determination and calculations.

 
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(c)           The Company and the Executive shall each provide the Accounting
Firm access to and copies of any books, records and documents in the possession
of the Company or the Executive, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by Section 5(b).  Any determination by the Accounting Firm as to
the amount of the Gross-Up Payment shall be binding upon the Company and the
Executive.
 
(d)           The federal, state and local income or other tax returns filed by
the Executive shall be prepared and filed on a consistent basis with the
determination of the Accounting Firm with respect to the Excise Tax payable by
the Executive.  The Executive shall make proper payment of the amount of any
Excise Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of the applicable portions of his federal
income tax return as filed with the Internal Revenue Service and corresponding
state and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the Company,
evidencing such payment.  If prior to the filing of the Executive’s federal
income tax return, or corresponding state or local tax return, if relevant, the
Accounting Firm determines that the amount of the Gross-Up Payment should be
reduced, the Executive shall within five business days pay to the Company the
amount of such reduction.
 
(e)           The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Section 5(b)
shall be borne by the Company.  If such fees and expenses are initially paid by
the Executive, the Company shall reimburse the Executive the full amount of such
fees and expenses within five business days after receipt from the Executive of
a statement therefor and reasonable evidence of Executive’s payment thereof.
 
(f)           The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by the Company of a Gross-Up Payment.  Such
notification shall be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim and the
Executive shall further apprise the Company of the nature of such claim and the
date on which such claim is requested to be paid (in each case, to the extent
known by the Executive).  The Executive shall not pay such claim prior to the
earlier of (i) the expiration of the 30 calendar day period following the date
on which he gives such notice to the Company and (ii) the date that any payment
of amount with respect to such claim is due.  If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to
contest such claim, the Executive shall:
 
(i)             provide the Company with any written records or documents in his
possession relating to such claim reasonably requested by the Company;

 
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(ii)            take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including without
limitation accepting legal representation with respect to such claim by an
attorney competent in respect of the subject matter and reasonably selected by
the Company;
 
(iii)           cooperate with the Company in good faith in order effectively to
contest such claim; and
 
(iv)           permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including interest and penalties) incurred in connection
with such contest and shall indemnify and hold harmless the Executive, on an
after-tax basis, for and against any Excise Tax or income tax, including
interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses.  Without limiting the
foregoing provisions of this Section 5(f), the Company shall control all
proceedings taken in connection with the contest of any claim contemplated by
this Section 5(f) and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim (provided, however, that the Executive may
participate therein at his own cost and expense) and may, at its option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
the tax claimed and sue for a refund, the Company shall advance the amount of
such payment to the Executive on an interest-free basis and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income or other tax, including interest or penalties with respect thereto,
imposed with respect to such advance; and provided further, however, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount.  Furthermore, the
Company’s control of any such contested claim shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and the Executive
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
 
(g)           If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 5(f), the Executive receives any refund with
respect to such claim, the Executive shall (subject to the Company’s complying
with the requirements of Section 5(f)) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after any taxes
applicable thereto).  If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5(f), a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial or refund prior to the expiration of 30 calendar days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of any such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid by the Company to
the Executive pursuant to this Section 5.

 
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(h)           In the event any obligation of the Executive to repay any amounts
due hereunder would be a violation of the “loan” provisions of the
Sarbanes-Oxley Act, such obligation shall be treated as null and void ab initio.
 
(i)            Notwithstanding the foregoing provisions of Section 5, (i) a
Gross-Up Payment, or portion thereof, attributable to Paragraph (1) of Annex A
will be subject to the Section 409A Delay; (ii) Gross-Up Payments will be paid
no later than the time prescribed therefor by Section 1.409A-3(i)(1)(v) of the
Treasury Regulations; and (iii) reimbursements under Sections 5(e) and 5(f)
shall be paid no later than December 31 of the calendar year following the
calendar year in which the related expense is incurred; provided that in no
event shall the reimbursement provided by the Company in one taxable year affect
the amount of reimbursement provided in any other taxable year nor shall
Executive’s right to reimbursement be subject to liquidation or exchange for
another benefit.
 
6.             No Mitigation Obligation.  The Company hereby acknowledges that
it will be difficult and may be impossible for the Executive to find reasonably
comparable employment following the Termination Date and that the
non-competition covenant contained in Section 8 will further limit the
employment opportunities for the Executive.  In addition, the Company
acknowledges that its severance pay plans applicable in general to its salaried
employees do not provide for mitigation, offset or reduction of any severance
payment received thereunder.  Accordingly, the payment of the severance
compensation by the Company to the Executive in accordance with the terms of
this Agreement is hereby acknowledged by the Company to be reasonable, and the
Executive will not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever create
any mitigation, offset, reduction or any other obligation on the part of the
Executive under this Agreement or otherwise.
 
7.             Legal Fees and Expenses.  c) The Executive shall not be required
to incur legal fees and the related expenses associated with the interpretation,
enforcement or defense of Executive’s rights under this Agreement by litigation
or otherwise because such costs substantially would detract from the Executive’s
benefits under this Agreement.  Accordingly, if it should appear to the
Executive that the Company has failed to comply with any of its obligations
under this Agreement or in the event that the Company or any other person takes
or threatens to take any action to declare this Agreement void or unenforceable,
or institutes any litigation or other action or proceeding designed to deny, or
to recover from, the Executive the benefits provided or intended to be provided
to the Executive hereunder, the Company irrevocably authorizes the Executive
from time to time to retain counsel of Executive’s choice, at the expense of the
Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer, stockholder
or other person affiliated with the Company, in any
jurisdiction.  Notwithstanding any existing or prior attorney-client
relationship between the Company and such counsel, the Company irrevocably
consents to the Executive’s entering into an attorney-client relationship with
such counsel, and in that connection the Company and the Executive agree that a
confidential relationship shall exist between the Executive and such
counsel.  Without respect to whether the Executive prevails, in whole or in
part, in connection with any of the foregoing, the Company will pay and be
solely financially responsible for any and all attorneys’ and related fees and
expenses incurred by the Executive in connection with any of the
foregoing.  However, if the Executive brings an action in bad faith, or with no
colorable claim of success, the Company shall not pay for any of Executive’s
attorneys’ fees or related expenses.

 
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(b)           Without limiting the obligations of the Company under Section 7(a)
of this Agreement, in the event a Change in Control occurs, the performance of
the Company’s obligations under this Section 7 shall be secured by amounts
deposited or to be deposited in trust pursuant to certain trust agreements to
which the Company shall be a party, which amounts deposited shall in the
aggregate be not less than $1,000,000, providing that the fees and expenses of
counsel selected from time to time by the Executive pursuant to Section 7(a)
shall be paid, or reimbursed to the Executive if paid by the Executive, either
in accordance with the terms of such trust agreements, or, if not so provided,
on a regular, periodic basis upon presentation by the Executive to the trustee
of a statement or statements prepared by such counsel in accordance with its
customary practices.  Any failure by the Company to satisfy any of its
obligations under this Section 7(b) shall not limit the rights of the Executive
hereunder.  Subject to the foregoing, the Executive shall have the status of a
general unsecured creditor of the Company and shall have no right to, or
security interest in, any assets of the Company or any Subsidiary.
 
(c)           The reimbursement obligations of the Company under Section 7(a)
and Section 7(b) will be subject to the requirements of Section 5(i)(iii).
 
8.             Competitive Activity; Confidentiality; Nonsolicitation.  d) For a
period ending one year following the Termination Date, if the Executive shall
have received or shall be receiving benefits under Section 4, the Executive
shall not, without the prior written consent of the Company, which consent shall
not be unreasonably withheld, engage in any Competitive Activity; provided that
the foregoing shall not apply if the Termination Date was prior to the Change in
Control and Executive had already commenced such activity.
 
(b)           During the Term, the Company agrees that it will disclose to
Executive its confidential or proprietary information (as defined in this
Section 8(b)) to the extent necessary for Executive to carry out his obligations
to the Company.  The Executive hereby covenants and agrees that he will not,
without the prior written consent of the Company, during the Term or thereafter
disclose to any person not employed by the Company, or use in connection with
engaging in competition with the Company, any confidential or proprietary
information of the Company.  For purposes of this Agreement, the term
“confidential or proprietary information” will include all information of any
nature and in any form that is owned by the Company and that is not publicly
available (other than by Executive’s breach of this Section 8(b)) or generally
known to persons engaged in businesses similar or related to those of the
Company.  Confidential or proprietary information will include, without
limitation, the Company’s financial matters, customers, employees, industry
contracts, strategic business plans, product development (or other proprietary
product data), marketing plans, and all other secrets and all other information
of a confidential or proprietary nature.  For purposes of the preceding two
sentences, the term “Company” will also include any Subsidiary (collectively,
the “Restricted Group”).  The foregoing obligations imposed by this Section 8(b)
will not apply (i) during the Term, in the course of the business of and for the
benefit of the Company, (ii) if such confidential or proprietary information
will have become, through no fault of the Executive, generally known to the
public or (iii) if the Executive is required by law to make disclosure (after
giving the Company notice and, to the extent feasible, an opportunity to contest
such requirement).

 
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(c)           The Executive hereby covenants and agrees that during the Term and
for one year thereafter Executive will not, without the prior written consent of
the Company, which consent shall not unreasonably be withheld, on behalf of
Executive or on behalf of any person, firm or company, directly or indirectly,
attempt to influence, persuade or induce, or assist any other person in so
persuading or inducing, any management employee of the Restricted Group to give
up employment with the Restricted Group, provided the foregoing shall not be
violated by advertising or searches not specifically targeted at the management
employees of the Restricted Group, or serving as a reference.
 
(d)           Executive and the Company agree that the covenants contained in
this Section 8 are reasonable under the circumstances, and further agree that if
in the opinion of any court of competent jurisdiction any such covenant is not
reasonable in any respect, such court will have the right, power and authority
to excise or modify any provision or provisions of such covenants as to the
court will appear not reasonable and to enforce the remainder of the covenants
as so amended.  Executive acknowledges and agrees that the remedy at law
available to the Company for breach of any of his obligations under this Section
8 would be inadequate and that damages flowing from such a breach may not
readily be susceptible to being measured in monetary terms.  Accordingly,
Executive acknowledges, consents and agrees that, in addition to any other
rights or remedies that the Company may have at law, in equity or under this
Agreement, upon adequate proof of his violation of any such provision of this
Agreement, the Company will be entitled to immediate injunctive relief and may
obtain a temporary order restraining any threatened or further breach, without
the necessity of proof of actual damage.
 
9.             Employment Rights.  Nothing expressed or implied in this
Agreement will create any right or duty on the part of the Company or the
Executive to have the Executive remain in the employment of the Company or any
Subsidiary prior to or following any Change in Control.
 
10.           Withholding of Taxes.  The Company may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as the
Company is required to withhold pursuant to any applicable law, regulation or
ruling.
 
11.           Successors and Binding Agreement.
 
(a)           The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation, reorganization or otherwise) to
all or substantially all of the business or assets of the Company, by agreement
in form and substance reasonably satisfactory to the Executive, expressly to
assume and agree to perform this Agreement in the same manner and to the same
extent the Company would be required to perform if no such succession had taken
place.  This Agreement will be binding upon and inure to the benefit of the
Company and any successor to the Company, including without limitation any
persons acquiring directly or indirectly all or substantially all of the
business or assets of the Company whether by purchase, merger, consolidation,
reorganization or otherwise (and such successor shall thereafter be deemed the
“Company” for the purposes of this Agreement), but will not otherwise be
assignable, transferable or delegable by the Company.

 
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(b)           This Agreement will inure to the benefit of and be enforceable by
the Executive’s personal or legal representatives, executors, administrators,
successors, heirs, distributees and legatees.
 
(c)           This Agreement is personal in nature and neither of the parties
hereto shall, without the consent of the other, assign, transfer or delegate
this Agreement or any rights or obligations hereunder except as expressly
provided in Sections 11(a) and 11(b).  Without limiting the generality or effect
of the foregoing, the Executive’s right to receive payments hereunder will not
be assignable, transferable or delegable, whether by pledge, creation of a
security interest, or otherwise, other than by a transfer by Executive’s will or
by the laws of descent and distribution and, in the event of any attempted
assignment or transfer contrary to this Section 11(c), the Company shall have no
liability to pay any amount so attempted to be assigned, transferred or
delegated.
 
12.           Notices.  For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been
sent by a nationally recognized overnight courier service such as FedEx, UPS, or
Purolator, addressed to the Company (to the attention of the Secretary of the
Company) at its principal executive office and to the Executive at his address
on the books of the Company, or to such other address as any party may have
furnished to the other in writing and in accordance herewith, except that
notices of changes of address shall be effective only upon receipt.
 
13.           Governing Law.  The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the State of Delaware, excluding any conflicts or
choice of law rule or principle that might otherwise refer construction or
interpretation of this Agreement to the substantive law of another jurisdiction.
 
14.           Consent to Jurisdiction.  Any disputes, litigation, proceedings or
other legal actions by any party to this Agreement in connection with or
relating to this Agreement or any matters described or contemplated in this
Agreement may be instituted in the courts of the State of Delaware or of the
United States sitting in the State of Delaware.  Each party to this Agreement
irrevocably submits to the jurisdiction of the courts of the State of Delaware
and of the United States sitting in the State of Delaware in connection with any
such dispute, litigation, proceeding or other legal action arising out of or
relating to this Agreement.
 
15.           Validity.  If any provision of this Agreement or the application
of any provision hereof to any person or circumstances is held invalid,
unenforceable or otherwise illegal, the remainder of this Agreement and the
application of  such provision to any other person or circumstances will not be
affected, and the provision so held to be invalid, unenforceable or otherwise
illegal will be reformed to the extent (and only to the extent) necessary to
make it enforceable, valid or legal.

 
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16.           Miscellaneous.  No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by the Executive and the Company.  No waiver by either party
to this Agreement at any time of any breach by the other contracting party or
compliance with any condition or provision of this Agreement to be performed by
such other party will be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.  No agreements or
representations, oral or otherwise, expressed or implied with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.  References to Sections are to references to
Sections of this Agreement.
 
17.           Code Section 409A.  The intent of the parties hereto is that
payments and benefits under this Agreement comply with or be exempt from Code
Section 409A and the regulations and guidance promulgated thereunder
(collectively “Section 409A”) and, accordingly, to the maximum extent permitted,
this Agreement shall be interpreted and administered to be in compliance
therewith.  To the extent that there is a material risk that any payments under
this Agreement may result in the imposition of an additional tax to the
Executive under Section 409A, the Company will reasonably cooperate with the
Executive to amend this Agreement such that payments hereunder comply with
Section 409A without materially changing the economic value of this Agreement to
either party.  The Company shall use its best efforts to ensure ongoing
compliance with Section 409A.  Notwithstanding any provision in this Agreement
to the contrary, no payment or benefit that is deferred compensation for
purposes of Section 409A and that is due upon the Executive’s termination of
employment will be paid or provided unless such termination is also a separation
from service (within the meaning of Section 409A).  For purposes of Section
409A, the Executive’s right to receive any installment payments pursuant to this
Agreement shall be treated as a right to receive a series of separate and
distinct payments.  Whenever a payment under this Agreement specifies a payment
period with reference to a number of days (e.g., “payment shall be made within
30 days following the date of termination”), the actual date of payment within
the specified period shall be within the sole discretion of the Company.
 
18.           Section 409A Delay.  If the Executive is at the time of his
separation from service (as defined in Section 409A) with the Company (other
than as a result of his death) a “Specified Employee,” as such term is defined
under Section 409A and using the identification methodology selected by the
Company from time to time, then with regard to any payment or the provision of
any benefit that is considered deferred compensation under Section 409A and that
is payable on account of a separation from service shall be delayed until the
earlier of his death or six months after his separation from service (the
“Section 409A Delay”) and shall then be promptly paid to the Executive in a lump
sum, together with interest for the period of delay, compounded annually, equal
to the prime rate (as published in The Wall Street Journal) and in effect as of
the date the payment should otherwise have been provided, and any remaining
payments and benefits due under this Agreement shall be paid or provided in
accordance with the normal payment dates specified for them herein.

 
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19.           Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same agreement.
 
20.           Prior Agreement.  This Agreement amends and restates the
Agreement, dated as of July 28, 2008 (the “Prior Agreement”), between the
Company and the Executive, which Prior Agreement will, without further action,
be superseded as of the date first above written.

 
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
and delivered as of the date first above written.
 

 
HARMAN INTERNATIONAL
 
INDUSTRIES, INCORPORATED
              By:
/s/ John Stacey
 
Name:
John Stacey
 
Title:
Vice President and Chief Human Resources Officer
             
/s/ Herbert K. Parker
 
Herbert K. Parker

 
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Annex A
 
Severance Compensation
 
(1)           (i) A lump sum payment in an amount equal to two times the sum of
(A) Base Pay (at the highest rate in effect for any period prior to the
Termination Date), plus (B) Incentive Pay (in an amount equal to not less than
the highest aggregate Incentive Pay earned in any of the three fiscal years
immediately preceding the year in which the Change in Control occurred).
 
(2)           For a period of 18 months following the Termination Date (the
“Continuation Period”), the Company will arrange to provide the Executive (and
his dependents) with coverage under the Company’s medical, dental or other
health plan, but only to the extent that the Executive makes a payment to the
Company in an amount equal to the monthly COBRA premium payments on a timely
basis required to maintain such coverage commencing with the first calendar
month following the Termination Date and the Company shall reimburse the
Executive on an after-tax basis for the amount of such premiums, if any, in
excess of any employee contributions necessary to maintain such coverage for the
Continuation Period (the “COBRA Reimbursement”).  The COBRA Reimbursement shall
be subject to Section 18 and shall be made within 30 days following the date on
which Executive incurs the expense but no later than December 31 of the year
following the year in which Executive incurs the related expense; provided, that
in no event shall the reimbursements or in-kind benefits to be provided by the
Company in one taxable year affect the amount of reimbursements or in-kind
benefits to be provided in any other taxable year, nor shall Executive’s right
to reimbursement or in-kind benefits be subject to liquidation or exchange for
another benefit.
 
(3)           Outplacement services for one year after the Termination Date by a
firm selected by the Executive, at the expense of the Company in an amount up to
$50,000.
 
 
A-1

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