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Exhibit 10.1
 

EXECUTIVE EMPLOYMENT AGREEMENT
 
 
This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is dated as of February
24, 2006, between Kaman Corporation, a Connecticut corporation (the “Company”),
and Paul R. Kuhn (the “Executive”).
 
W I T N E S S E T H:
 
WHEREAS, the Executive is currently employed as the President and Chief
Executive Officer of the Company and serves as Chairman of the Board of
Directors 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 a term commencing on February 21, 2006 (the “Effective Date”) and,
unless terminated earlier as provided in Section 7 hereof, ending on the second
anniversary of the Effective Date (such term of employment is herein referred to
as the “Employment Term”).
 
2. POSITION & DUTIES.
 
(a) Except as provided in Section 2(b) below, the Executive shall serve as the
Company’s President and Chief Executive Officer during the Employment Term. As
President and Chief Executive 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 position
as President and Chief Executive Officer.
 
(b) The Executive shall relinquish his respective titles as President, Chief
Executive Officer or both effective as of a date or dates (if applicable)
designated by the Board in connection with the appointment of a successor (or
successors, if applicable) (the date on which a new President or Chief Executive
Officer is appointed being the “Succession Date”). During the period commencing
on the Succession Date and ending on the last day of the Employment Term (the
“Transition Period”), the Executive shall serve the Company as an executive
employee with the title of Chairman, and shall have the title of President or
Chief Executive Officer, as applicable, to the extent that such other title is
not then given to the individual appointed by the Board as of the Succession
Date to succeed the Executive in either of such positions and the Executive
shall retain such title until the Board takes action to give such title to the
individual appointed on the Succession Date or to any other individual the Board
shall determine (it being understood that the subsequent appointment of an
individual to serve as President or Chief Executive Officer following the
Succession Date shall not constitute "Good Reason" hereunder). The Executive’s
duties and responsibilities during the Transition Period shall consist of
reasonably assisting the Company and its new President and Chief Executive
Officer (the “New CEO”) as directed by the Board and the New CEO in the senior
management transition. The Executive’s compensation and benefits during the
Transition Period shall be the same as in effect during the Employment Term
immediately prior to the Succession Date.
 
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(c) During the Employment Term, the Executive shall use his best reasonable
efforts to perform faithfully and efficiently the duties and responsibilities
assigned to the Executive hereunder 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.
 
(d) 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. In addition, it is agreed that the Company may assign the Executive
to one of its subsidiaries for payroll purposes, but such assignment shall not
relieve the Company of its obligations 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 $900,000 (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 incentive compensation plans and programs for the Company’s
senior executives at a level commensurate with his position for the 2006 and
2007 calendar year. 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 80% of Base Salary in accordance with the
terms of the Company’s bonus plan as then in effect.
 
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5. EQUITY AWARDS. The 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 stock ownership guidelines of the Company as may be in effect from
time to time. If there is a Change in Control (as defined in the Kaman
Corporation 2003 Stock Incentive Plan in effect on the date hereof) or the
Executive’s employment by the Company is terminated by the Company for
Disability (as defined in Section 7(a)) or without Cause (as defined in Section
7(c), or by the Executive for Good Reason (as defined in Section 7(e)),
Retirement (as defined in Section 7(g) or due to death, all then outstanding
unvested equity awards granted to the Executive, whether under this Agreement or
otherwise, shall be fully vested.
 
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. The Executive agrees and
acknowledges that he shall only be entitled to defined pension benefits under
the Kaman Corporation Supplemental Employees’ Retirement Plan, as amended by the
Sixth Amendment (as so amended, the “SERP”), and the Kaman Corporation
Employees’ Pension Plan. No amendment or termination of the SERP subsequent to
the date of this Agreement shall adversely affect the Executive’s rights
thereunder without his prior written consent.
 
(b) VACATION. The Executive shall be entitled to up to 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.
 
(c) AUTOMOBILE. The Company shall continue to provide the Executive with a
leased automobile as approved by the Committee.
 
(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 his 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 his duties
hereunder.
 
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(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 the course of his
employment materially injurious to the Company, or (C) willfully violated a
material requirement of the Company’s code of conduct or his 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 forgoing, 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.
In addition, the termination of the Executive’s employment after the Succession
Date with the Board’s consent shall be treated as employment termination without
Cause. Notwithstanding anything to the contrary contained in this Agreement, or
any other plan of the Company or its affiliates in which the Executive
participates or agreement between the Executive and the Company or any of its
affiliates, the Executive’s cessation of service as the President and Chief
Executive Officer and the appointment the New CEO shall not (i) serve as the
basis for a claim of breach or constructive termination without Cause under this
Agreement or otherwise, or (ii) be grounds for the Executive to terminate
employment for “Good Reason” (as defined under Section 7(e) below).
 
(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 position of Chairman without his
prior written consent (other than for Cause) prior to February 21, 2008;
 
(2) except as contemplated under Section 2(b) (regarding appointment of a
successor), the Company removing the Executive from the position of President,
Chief Executive Officer or both without his prior written consent (other than
for Cause);
 
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(3) a reduction of Base Salary or other compensation to which the Executive is
entitled to under any Company plan , policy, program or arrangement (subject to
Section 6(e) hereof) or failure to pay compensation or benefits provided or
referred to under this Agreement after a reasonable opportunity to cure;
 
(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;
 
(5) the assignment of duties to the Executive that are materially inconsistent
with the Executive’s position as Chairman, President and Chief Executive Officer
prior to the Transition Period;
 
(6) the assignment of duties to the Executive during the Transition Period that
are materially inconsistent with the Executive’s duties as set forth in Section
2(b) above; or
 
(7) the failure of the Company to obtain an agreement from any successor to all
or substantially all of the assets or business of the Company to assume and
agree to perform this Agreement within fifteen (15) days after a merger,
consolidation, sale or similar transaction.
 
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”, (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 his
actual knowledge of the event, and (iii) changes to compensation and benefit
plans not specifically targeted to the Executive 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 February 21, 2008
(the “Retirement Date”).
 
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. 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.
 
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(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 earned with respect to any fiscal year ending on or preceding the
date of termination; (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 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 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). Upon such
termination, all stock options, stock appreciation rights and restricted stock
awards will fully vest and become non-forfeitable and, to the extent applicable,
remain exercisable in accordance with the terms of the applicable Company plans.
 
(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). Upon the Executive’s death, all stock options,
stock appreciation rights and restricted stock awards will fully vest and become
non-forfeitable and, to the extent applicable, remain exercisable in accordance
with the terms of the applicable Company plans.
 
(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;
 
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(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 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 (A) the sum of (i) the 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)
multiplied by (B) a fraction, the numerator of which is the number of days from
Mr. Kuhn’s employment termination date until February 21, 2008, and the
denominator of which is 730, 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;
 
(4) each long-term performance award 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) the Company shall continue to pay all premiums on the $1.2 million life
insurance policy issued by Mass Mutual to the Executive for the remainder of his
life; and
 
(7) subject to the Executive’s continued co-payment of premiums, continued
participation for 18 months 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”).
Upon such termination, all stock options, stock appreciation rights and
restricted stock awards will fully vest and become non-forfeitable.
 
(e) RETIREMENT. If the Executive terminates employment on his Retirement Date,
the Company shall pay to the Executive:
 
(1) any Accrued Amounts;
 
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(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 performance had
employment continued through the end of the performance year (but in no event
higher than the target award) 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) each long-term performance award 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;
 
(4) the Company shall continue to pay all premiums on the $1.2 million life
insurance policy issued by Mass Mutual to the Executive for the remainder of his
life;
 
(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; and
 
(6) the Executive shall be considered to have “retired” on his Retirement Date
for purposes of any plans, programs, agreements or arrangements with the Company
or its affiliates.
 
9. CONDITIONS. Any payments or benefits made or provided pursuant to Section 8
(other than Accrued Amounts) are subject to the Executive’s (or, in the event of
the Executive’s death, the beneficiary’s or estate’s):
 
(a) compliance with the provisions of Section 11 hereof;
 
(b) delivery to the Company of an executed Agreement and General Release (the
“General Release”), which shall be substantially in the form attached hereto as
Appendix A (with such changes therein or additions thereto as needed under then
applicable law to give effect to its intent and purpose) within 21 days of
presentation thereof by the Company to the Executive; and
 
(c) delivery to the Company of a resignation from all offices, directorships and
fiduciary positions with the Company, its affiliates and employee benefit plans.
 
Notwithstanding the due date of any post-employment payments, any amounts due
following a termination under this Agreement (other than Accrued Amounts) shall
not be due until after the expiration of any revocation period applicable to the
General Release without the Executive having revoked such General Release, and
any such amounts shall be paid to the Executive within thirty (30) days of the
expiration of such revocation period without the occurrence of a revocation by
the Executive (or such later date as may be required under Section 409A of the
Code). Nevertheless (and regardless of whether the General Release has been
executed by the Executive), upon any termination of Executive’s employment,
Executive shall be entitled to receive any Accrued Amounts, payable within
thirty (30) days after the date of termination or in accordance with the
applicable plan, program or policy. In the event that the Executive dies before
all payments pursuant to this Section 9 have been paid, all remaining payments
shall be made to the beneficiary specifically designated by the Executive in
writing prior to his death, or, if no such beneficiary was designated (or the
Company is unable in good faith to determine the beneficiary designated), to his
personal representative or estate.
 
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10. SECTION 4999 EXCISE TAX.
 
(a) If any payments, rights or benefits (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement of Executive with the
Company or any person affiliated with the Company) (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 10(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.
 
(b) Notwithstanding anything in this Agreement to the contrary, if the amount of
Payments that will be subject to the Excise Tax does not exceed the amount of
Payments that Executive could receive without having any Payments become subject
to the Excise Tax by at least $100,000, then Executive’s taxable cash-based
benefits under this Agreement will first be reduced in the order selected by
Executive, and then, if necessary, Executive’s equity-based compensation (based
on the value of such equity-based compensation as a “parachute payment” as
defined in Treasury Regulations promulgated under Section 280G of the Code and
IRS revenue rulings, revenue procedures and other official guidance) shall be
reduced in the order selected by Executive, and then any other Payments shall be
reduced as reasonably determined by the Company, to the extent necessary to
avoid imposition of the Excise Tax. If Executive does not select the amount to
be reduced within the time prescribed by the Company, the reductions specified
herein shall be made by the Company in its sole discretion from such
compensation as it shall determine. Any amount so reduced shall be irrevocably
forfeited and Executive shall have no further rights to receive it.
 
(c) The process for calculating the Excise Tax, determining the amount of any
Gross-Up Payment and other procedures relating to this Section 10 are set forth
in Appendix B attached hereto. For purposes of making the determinations and
calculations required herein, the Accounting Firm (as defined in Appendix B) may
rely on reasonable, good faith interpretations concerning the application of
Section 280G and 4999 of the Code, provided that the Accounting Firm 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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11. POST-EMPLOYMENT OBLIGATIONS
 
(a) CONFIDENTIALITY. The Executive agrees that the Executive shall not, directly
or indirectly, use, make available, sell, disclose or otherwise communicate to
any person, other than in the course of the Executive’s employment and for the
benefit of the Company, either during the period of the Executive’s employment
or at any time thereafter, any nonpublic, proprietary or confidential
information, knowledge or data relating to the Company, any of its subsidiaries,
affiliated companies or businesses, which shall have been obtained by the
Executive during the Executive’s employment by the Company. The foregoing shall
not apply to information that (i) was known to the public prior to its
disclosure to the Executive; (ii) becomes known to the public subsequent to
disclosure to the Executive through no wrongful act of the Executive or any
representative of the Executive; or (iii) the Executive is required to disclose
by applicable law, regulation or legal process (provided that the Executive
provides the Company with prior notice of the contemplated disclosure and
reasonably cooperates with the Company at its expense in seeking a protective
order or other appropriate protection of such information). Notwithstanding
clauses (i) and (ii) of the preceding sentence, the Executive’s obligation to
maintain such disclosed information in confidence shall not terminate where only
portions of the information are in the public domain.
 
(b) NON-SOLICITATION. During the Executive’s employment with the Company and for
the 2 year period thereafter, whether at the end of the Employment Term or
thereafter, the Executive agrees that 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 (i) any managerial level employee
of the Company or any of its subsidiaries or affiliates to leave such employment
in order to accept employment with or render services to or with any other
person, firm, corporation or other entity unaffiliated with the Company or
knowingly take any action to materially assist or aid any other person, firm,
corporation or other entity in identifying or hiring any such employee
(provided, that the foregoing shall not be violated by general advertising not
targeted at Company employees nor by serving as a reference for an employee with
regard to an entity with which the Executive is not affiliated) or (ii) any
customer of the Company or any of its subsidiaries or affiliates to purchase
goods or services then sold by the Company or any of its subsidiaries or
affiliates from another person, firm, corporation or other entity or assist or
aid any other persons or entity in identifying or soliciting any such customer
(provided, that the foregoing shall not apply to any product or service which is
not covered by the non-competition provision set forth in Section 11(c), below).
 
(c) NON-COMPETITION. The Executive acknowledges that the Executive performs
services of a unique nature for the Company that are irreplaceable, and that the
Executive’s performance of such services to a competing business (other than
respecting a product or service of the Company involving less than one percent
(1%) of the Company’s revenues in the prior fiscal year (“De Minimis”)) will
result in irreparable harm to the Company. Accordingly, during the Executive’s
employment hereunder and for the 2 year period thereafter, (whether at the end
of the Employment Term or thereafter), the Executive shall not, without the
Board’s prior written consent, directly or indirectly engage in the development,
production, marketing, or sale of products that compete (or, upon
commercialization, could compete) with products of the Company or its affiliates
being developed, marketed or sold as of the date of such termination (such
business or activity, a “Competing Business”) whether such engagement shall be
as an officer, director, owner, employee, partner, consultant, advisor or any
other capacity. This Section 11(c) shall not prevent the Executive from owning
not more than one percent (1%) of the total shares of all classes of stock
outstanding of any publicly held entity engaged in such business, nor will it
restrict the Executive from rendering services to charitable organizations, as
such term is defined in Section 501(c) of the Code.
 
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(d) NON-DISPARAGEMENT. Each of the Executive and the Company (for purposes
hereof, “the Company” shall mean only (i) the Company by press release or other
formally released announcement 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, employees, 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) shall not be
subject to this Section 11(d).
 
(e) 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 customer contacts of the Company, or
concerning any proprietary or confidential information of the Company or any
operational, financial or other documents given to the Executive during the
Executive’s employment with the Company.
 
(f) COOPERATION. The Executive agrees that, following termination of the
Executive’s employment for any reason, the Executive shall upon reasonable
advance notice, and to the extent it does not interfere with previously
scheduled travel plans and does not unreasonably interfere with other business
activities or employment obligations, assist and cooperate with the Company with
regard to any matter or project in which the Executive was involved during the
Executive’s employment, including any litigation. The Company shall compensate
the Executive for any lost wages or expenses associated with such cooperation
and assistance.
 
(g) ASSIGNMENT OF INVENTIONS. The Executive will promptly communicate and
disclose in writing to the Company all inventions and developments including
software, whether patentable or not, as well as patents and patent applications
(hereinafter collectively called “Inventions”), made, conceived, developed, or
purchased by the Executive, or under which the Executive acquires the right to
grant licenses or to become licensed, alone or jointly with others, which have
arisen or jointly with others, which have arisen or may arise out of the
Executive’s employment, or relate to any matters pertaining to, or useful in
connection therewith, the business or affairs of the Company or any of its
subsidiaries. Included herein as if developed during the employment period is
any specialized equipment and software developed for use in the business of the
Company. All of the Executive’s right, title and interest in, to, and under all
such Inventions, licenses, and right to grant licenses shall be the sole
property of the Company. Any such Inventions disclosed to anyone by the
Executive within one (1) year after the termination of employment for any cause
whatsoever shall be deemed to have been made or conceived by the Executive
during the Term. As to all such Inventions, the Executive will, upon request of
the Company execute all documents which the Company deems necessary or proper to
enable it to establish title to such Inventions or other rights, and to enable
it to file and prosecute applications for letters patent of the United States
and any foreign country; and do all things (including the giving of evidence in
suits and other proceedings) which the Company deems necessary or proper to
obtain, maintain, or assert patents for any and all such Inventions or to assert
its rights in any Inventions not patented.
 
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(h) EQUITABLE RELIEF AND OTHER REMEDIES. The parties acknowledge and agree that
the other party’s remedies at law for a breach or threatened breach of any of
the provisions of this Section would be inadequate and, in recognition of this
fact, the parties agree that, in the event of such a breach or threatened
breach, in addition to any remedies at law, the other party, without posting any
bond, shall be entitled to obtain equitable relief in the form of specific
performance, temporary restraining order, a temporary or permanent injunction or
any other equitable remedy which may then be available.
 
(i) REFORMATION. If it is determined by a court of competent jurisdiction in any
state that any restriction in this Section 11 is excessive in duration or scope
or is unreasonable or unenforceable under the laws of that state, it is the
intention of the parties that such restriction may be modified or amended by the
court to render it enforceable to the maximum extent permitted by the law of
that state.
 
(j) SURVIVAL OF PROVISIONS. The obligations contained in this Section 11 shall
survive the termination or expiration of the Executive’s employment with the
Company and shall be fully enforceable thereafter.
 
12. NO ASSIGNMENT.
 
(a) This Agreement is personal to each of the parties hereto. Except as provided
in Section 12(b) below, no party may assign or delegate any rights or
obligations hereunder without first obtaining the written consent of the other
party hereto.
 
(b) The Company may assign this Agreement to any successor to all or
substantially all of the business and/or assets of the Company provided the
Company shall require such successor to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place and shall
deliver a copy of such assignment to the Executive.
 
13. 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
 
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If to the Company:
 
Kaman Corporation
1332 Blue Hills Avenue, P.O. Box 1
Bloomfield, CT 06002
Attention: Candace A. Clark, Esq.
 
Facsimile No.: 860 243-7397
 
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
 
14. SECTION HEADINGS; INCONSISTENCY. The section headings used in this Agreement
are included solely for convenience and shall not affect, or be used in
connection with, the interpretation of this Agreement. If there is any
inconsistency between this Agreement and any other agreement (including but not
limited to any option, stock, long-term incentive or other equity award
agreement), plan, program, policy or practice (collectively, “Other Provision”)
of the Company the terms of this Agreement shall control over such Other
Provision.
 
15. PRIOR AGREEMENTS. This Agreement supersedes and replaces any and all prior
employment agreements and change in control agreements (collectively, the “Prior
Agreements”) between the Company and the Executive. By signing this Agreement,
the Executive acknowledges that the Prior Agreements are terminated and
cancelled, and releases and discharges the Company from any and all obligations
and liabilities heretofore or now existing under or by virtue of such Prior
Agreements, it being the intention of the parties hereto that this Agreement
effective immediately shall supersede and be in lieu of the Prior Agreements.
 
16. SEVERABILITY. The provisions of this Agreement shall be deemed severable and
the invalidity of unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
 
17. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instruments. One or more counterparts of this Agreement may be
delivered by facsimile, with the intention that delivery by such means shall
have the same effect as delivery of an original counterpart thereof.
 
18. ARBITRATION. Any dispute or controversy arising under or in connection with
this Agreement, other than injunctive relief under Section 11(h) hereof or
damages for breach of Section 11, shall be settled exclusively by arbitration,
conducted before a single arbitrator in Hartford, Connecticut administered by
the American Arbitration Association (“AAA”) in accordance with its Commercial
Arbitration Rules then in effect. The single arbitrator shall be selected by the
mutual agreement of the Company and the Executive, unless the parties are unable
to agree to an arbitrator, in which case, the arbitrator will be selected under
the procedures of the AAA. The arbitrator will have the authority to permit
discovery and to follow the procedures that he/she determines to be appropriate.
The arbitrator will have no power to award consequential (including lost
profits), punitive or exemplary damages. The decision of the arbitrator will be
final and binding upon the parties hereto. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction.
 
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19. MISCELLANEOUS. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by the Executive and such officer or director as may be designated by
the Board. No waiver by either party hereto at any time of any breach by the
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. This Agreement together with all exhibits hereto sets forth the
entire agreement of the parties hereto in respect of the subject matter
contained herein. No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Connecticut without regard to its conflicts of law
principles.
 
20. PAYMENT OF COMPENSATION. The parties shall revisit this Agreement when the
IRS issues final regulations under Section 409A of the Code for the sole purpose
of determining whether any amendments are required in order to comply with such
regulations. The parties shall promptly agree in good faith on appropriate
provisions to avoid any material risk of noncompliance without materially
changing the economic value (to the Executive) or the cost (to the Company) of
this Agreement. Notwithstanding the foregoing, the Company shall in no event be
obligated to indemnify the Executive for any taxes or interest that may be
assessed by the IRS pursuant to Section 409A of the Code.
 
21. MITIGATION OF DAMAGES In no event shall the Executive be obliged to seek
other employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, nor
shall the amount of any payment hereunder be reduced by any compensation earned
by the Executive as a result of employment by another employer, except as set
forth in this Agreement.
 
22. REPRESENTATIONS. The Executive represents and warrants to the Company that
the Executive has the legal right to enter into this Agreement and to perform
all of the obligations on the Executive’s part to be performed hereunder in
accordance with its terms and that the Executive is not a party to any agreement
or understanding, written or oral, which could prevent the Executive from
entering into this Agreement or performing all of the Executive’s obligations
hereunder.
 
23. WITHHOLDING. The Company may withhold from any and all amounts payable under
this Agreement such federal, state and local taxes as may be required to be
withheld pursuant to any applicable law or regulation.
 
24. SURVIVAL. The respective obligations of, and benefits afforded to, the
Company and Executive which by their express terms or clear intent survive
termination of Executive’s employment with the Company, including, without
limitation, the provisions of Sections 4(a), 5(a), and 8 through 25, inclusive
of this Agreement, will survive termination of Executive’s employment with the
Company, and will remain in full force and effect according to their terms.
 
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26. AGREEMENT OF THE PARTIES. The language used in this Agreement will be deemed
to be the language chosen by the parties hereto to express their mutual intent,
and no rule of strict construction will be applied against any party hereto.
Neither Executive nor the Company shall be entitled to any presumption in
connection with any determination made hereunder in connection with any
arbitration, judicial or administrative proceeding relating to or arising under
this Agreement.
 
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
 
 

 
 
 
 
 KAMAN CORPORATION
 
/s/ Brian E. Barents
     By:   Brian E. Barents      
Its: Chairman, Personnel and Compensation Committee
 

 

 
 
 
PAUL R. KUHN
 
     
/s/ Paul R. Kuhn
 

 

 

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APPENDIX A
 
FORM OF RELEASE
 
AGREEMENT AND GENERAL RELEASE
 
Kaman Corporation, its affiliates, subsidiaries, divisions, successors and
assigns in such capacity, and the current, future and former employees,
officers, directors, trustees and agents thereof (collectively referred to
throughout this Agreement as “Employer”), and Paul R. Kuhn (“Executive”), the
Executive’s heirs, executors, administrators, successors and assigns
(collectively referred to throughout this Agreement as “Employee”) agree:
 
1. Last Day of Employment. Executive’s last day of employment with Employer is
______________. In addition, effective as of DATE, Executive resigns from the
Executive’s position as President and Chief Executive Officer of Employer and
will not be eligible for any benefits or compensation after ________, other than
as specifically provided in Sections 6 and 8 of the Executive Employment
Agreement between Employer and Executive dated as of February __, 2006 (the
“Employment Agreement”). Executive further acknowledges and agrees that, after
DATE, the Executive will not represent the Executive as being a director,
employee, officer, trustee, agent or representative of Employer for any purpose.
In addition, effective as of DATE, Executive resigns from all offices,
directorships, trusteeships, committee memberships and fiduciary capacities held
with, or on behalf of, Employer or any benefit plans of Employer. These
resignations will become irrevocable as set forth in Section 3 below.
 
2. Consideration. The parties acknowledge that this Agreement and General
Release is being executed in accordance with Section 9 of the Employment
Agreement.
 
3. Revocation. Executive may revoke this Agreement and General Release for a
period of fifteen (15) calendar days following the day Executive executes this
Agreement and General Release. Any revocation within this period must be
submitted, in writing, to Employer and state, “I hereby revoke my acceptance of
our Agreement and General Release.” The revocation must be personally delivered
to Employer’s _______________, or his/her designee, or mailed to Kaman
Corporation, 1332 Blue Hills Avenue, P.O. Box 1, Bloomfield, CT 06002, Attention
Candace Clark, and postmarked within fifteen (15) calendar days of execution of
this Agreement and General Release. This Agreement and General Release shall not
become effective or enforceable until the revocation period has expired. If the
last day of the revocation period is a Saturday, Sunday, or legal holiday in
Hartford, Connecticut, then the revocation period shall not expire until the
next following day which is not a Saturday, Sunday, or legal holiday.
 
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4. General Release of Claim. Employee knowingly and voluntarily releases and
forever discharges Employer from any and all claims, causes of action, demands,
fees and liabilities of any kind whatsoever, whether known and unknown, against
Employer, Employee has, has ever had or may have as of the date of execution of
this Agreement and General Release, including, but not limited to, any alleged
violation of:
 
 
- Title VII of the Civil Rights Act of 1964, as amended;
 
- The Civil Rights Act of 1991;
 
- Sections 1981 through 1988 of Title 42 of the United States Code, as amended;
 
- The Employee Retirement Income Security Act of 1974, as amended;
 
- The Immigration Reform and Control Act, as amended;
 
- The Americans with Disabilities Act of 1990, as amended;
 
- The Age Discrimination in Employment Act of 1967, as amended;
 
- The Older Workers Benefit Protection Act of 1990;
 
- The Worker Adjustment and Retraining Notification Act, as amended;
 
- The Occupational Safety and Health Act, as amended;
 
- The Family and Medical Leave Act of 1993;
 

 
-
Any wage payment and collection, equal pay and other similar laws, acts and
statutes of the State of Connecticut;

 

 
-
Any other federal, state or local civil or human rights law or any other local,
state or federal law, regulation or ordinance;

 

 
-
Any public policy, contract, tort, or common law; or

 

 
-
Any allegation for costs, fees, or other expenses including attorneys fees
incurred in these matters.

 
Notwithstanding anything herein to the contrary, the sole matters to which the
Agreement and General Release do not apply are: (i) Employee’s express rights
under any pension (including but not limited to any rights under the Kaman
Corporation Supplemental Retirement Plan) or claims for accrued vested benefits
under any other employee benefit plan, policy or arrangement maintained by
Employer or under COBRA and other Accrued Benefits (as such term is defined in
the Employment Agreement); (ii) Employee’s rights under the provisions of the
Employment Agreement which are intended to survive termination of employment; or
(iii) Employee’s rights as a stockholder.
 
5. No Claims Permitted. Employee waives Executive’s right to file any charge or
complaint against Employer arising out of Executive’s employment with or
separation from Employer before any federal, state or local court or any state
or local administrative agency, except where such waivers are prohibited by law.
 
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6. Affirmations. Employee affirms Executive has not filed, has not caused to be
filed, and is not presently a party to, any claim, complaint, or action against
Employer in any forum. Employee further affirms that the Executive has been paid
and/or has received all compensation, wages, bonuses, commissions, and/or
benefits to which Executive may be entitled and no other compensation, wages,
bonuses, commissions and/or benefits are due to Executive, except as provided in
Sections 6 and 8 of the Employment Agreement. Employee also affirms Executive
has no known workplace injuries.
 
7. Cooperation; Return of Property. Employee agrees to reasonably cooperate with
Employer and its counsel in connection with any investigation, administrative
proceeding or litigation relating to any matter that occurred during Executive’s
employment in which Executive was involved or of which Executive has knowledge.
Employer will reimburse the Employee for any reasonable out-of-pocket travel,
delivery or similar expenses incurred in providing such service to Employer.
Employee represents that Executive has returned to Employer all property
belonging to Employer, including but not limited to any leased vehicle, laptop,
cell phone, keys, access cards, phone cards and credit cards, provided that
Executive may retain, and Employer shall cooperate in transferring, Executive’s
cell phone number and any home communication and security equipment as well as
Executive’s rolodex and other address books.
 
8. Governing Law and Interpretation. This Agreement and General Release shall be
governed and conformed in accordance with the laws of the State of Connecticut
without regard to its conflict of laws provisions. In the event Employee or
Employer breaches any provision of this Agreement and General Release, Employee
and Employer affirm either may institute an action to specifically enforce any
term or terms of this Agreement and General Release. Should any provision of
this Agreement and General Release be declared illegal or unenforceable by any
court of competent jurisdiction and should the provision be incapable of being
modified to be enforceable, such provision shall immediately become null and
void, leaving the remainder of this Agreement and General Release in full force
and effect. Nothing herein, however, shall operate to void or nullify any
general release language contained in the Agreement and General Release.
 
9. No Admission of Wrongdoing. Employee agrees neither this Agreement and
General Release nor the furnishing of the consideration for this Release shall
be deemed or construed at any time for any purpose as an admission by Employer
of any liability or unlawful conduct of any kind.
 
10. Amendment. This Agreement and General Release may not be modified, altered
or changed except upon express written consent of both parties wherein specific
reference is made to this Agreement and General Release.
 
11. Entire Agreement. This Agreement and General Release sets forth the entire
agreement between the parties hereto and fully supersedes any prior agreements
or understandings between the parties; provided, however, that notwithstanding
anything in this Agreement and General Release, the provisions in the Employment
Agreement which are intended to survive termination of the Employment Agreement,
including but not limited to those contained in Section 11 thereof, shall
survive and continue in full force and effect. Employee acknowledges Executive
has not relied on any representations, promises, or agreements of any kind made
to Executive in connection with Executive’s decision to accept this Agreement
and General Release.
 
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EMPLOYEE HAS BEEN ADVISED THAT EXECUTIVE HAS UP TO TWENTY-ONE (21) CALENDAR DAYS
TO REVIEW THIS AGREEMENT AND GENERAL RELEASE AND HAS BEEN ADVISED IN WRITING TO
CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT AND GENERAL
RELEASE.
 
EMPLOYEE AGREES ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT
AND GENERAL RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL
TWENTY-ONE (21) CALENDAR DAY CONSIDERATION PERIOD.
 
HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL THE
PROMISES SET FORTH HEREIN, AND TO RECEIVE THE SUMS AND BENEFITS SET FORTH IN THE
EMPLOYMENT AGREEMENT, EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE
CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO
WAIVE, SETTLE AND RELEASE ALL CLAIMS EXECUTIVE HAS OR MIGHT HAVE AGAINST
EMPLOYER.
 
IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this
Agreement and General Release as of the date set forth below:
 
 
 
 
 
 
 
 
By:  
 
 
 
Name:  Paul R. Kuhn
 
Title:  __________________________________
 
Date: __________________________________

 

 
 

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APPENDIX B

TAX GROSS-UP PAYMENT RULES AND PROCEDURES

1. Subject to Paragraph 3 below, all determinations required to be made under
Section 10 of this Agreement, including whether a Gross-Up Payment is required
and the amount of such Gross-Up Payment, shall be made by an accounting firm
(the “Accounting Firm”) selected in accordance with Paragraph 2 below. The
Accounting Firm shall provide detailed supporting calculations both to the
Company and Executive within 15 business days of the event that results in the
potential for an excise tax liability for the Executive, which could include but
is not limited to a Change in Control and the subsequent vesting of any cash
payments or awards, or the Executive’s termination of employment, or such
earlier time as is required by the Company. The initial Gross-Up Payment, if
any, as determined pursuant to this Paragraph 1, shall be paid on the
Executive’s behalf to the applicable taxing authorities within five (5) days of
the receipt of the Auditor’s determination. If the Accounting Firm determines
that no Excise Tax is payable to the Executive, it shall furnish the Executive
with a written report indicating that he has substantial authority not to report
any Excise Tax on his federal income tax return. Any determination by the
Accounting Firm shall be binding upon the Company and Executive. As a result of
the uncertainty in the application of Section 4999 of the Code at the time of
the initial 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 (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Paragraph 3 below and Executive thereafter is required to make a payment or
additional payment of any Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment,
increased by all applicable interest and penalties associated with the
Underpayment, shall be promptly paid by the Company to or for the benefit of
Executive. For purposes of determining the amount of the Gross-Up Payment,
Executive shall be deemed to pay federal income tax at the highest marginal rate
of federal income taxation in the calendar year in which the Gross-Up Payment is
to be made and state and local income taxes on earned income at the highest
marginal rate of taxation in the state and locality of Executive’s residence on
the Effective Date of Termination, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state and local
taxes.

2. The Accounting Firm shall be a public accounting firm proposed by the Company
and agreed upon by the Executive. If Executive and the Company cannot agree on
the firm to serve as the Accounting Firm within ten (10) days after the date on
which the Company proposed to Executive a public accounting firm to serve as
Auditor, then Executive and the Company shall each select one accounting firm
and those two firms shall jointly select the accounting firm to serve as the
Accounting Firm within ten (10) days after being requested by the Company and
Executive to make such selection. The Company shall pay the Auditor’s fee.

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3. Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the Company of
the Gross-Up Payment. Such notification shall be given as soon as practicable
but no later than fifteen (15) business days after Executive knows of such claim
and shall apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid. Executive shall not pay such claim prior to
the expiration of the period ending on the date that any payment of taxes with
respect to such claim is due or the thirty day period following the date on
which Executive gives such notice to the Company, whichever period is shorter.
If the Company notifies Executive in writing prior to the expiration of such
period that it desires to contest such claim, Executive shall (i) give the
Company any information reasonably requested by the Company relating to such
claim, (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 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 attorneys fees and any additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold Executive harmless, on
an after-tax basis, for 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 limitation of the foregoing provisions of
this Paragraph 3, the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect to such claim and may, at its sole option, either direct
Executive to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and 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 Executive to pay such
claim and sue for a refund, the Company shall advance the amount of such payment
to Executive, on an interest-free basis and shall indemnify and hold Executive
harmless, on an after-tax basis, from any Excise Tax and income tax, including
interest or penalties with respect thereto, imposed with respect to such advance
or with respect to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to payment of
taxes for the taxable year of Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
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 authority.

4. If, after the receipt by Executive of an amount advanced by the Company
pursuant to Paragraph 3 above, Executive becomes entitled to receive any refund
with respect to such claim, Executive shall (subject to the Company’s complying
with the requirements of Paragraph 3), promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto).
 
 
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