Document:

ex10-2.htm

    
      

    

    

       Execution
Copy

    

    
 

    KAMAN AEROSPACE GROUP,
INC.

    CHANGE IN CONTROL
AGREEMENT

     

    

    THIS
AGREEMENT, is made effective as of 7 Jul, 2008 (the “Effective Date”),
by and between Kaman Aerospace Group, Inc. (the “Company”), a subsidiary of
Kaman Corporation, a Connecticut corporation (the “Parent Company”), and Gregory
L. Steiner (the “Executive”).

    

    WHEREAS, the Company considers it
essential to the best interests of its shareholders to foster the continued
employment of key management personnel; and

    

    WHEREAS,
in furtherance of this objective, the Company and Executive have executed an
Employment Agreement dated as of 7 Jul, 2008 with the terms of such agreement
beginning 7 Jul, 2007 (the “Effective Date”; and

    

    NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained the Company and the Executive hereby agree as follows:

    

    1. Defined
Terms.  Definitions of capitalized terms used in this Agreement
are provided in the last Section of this Agreement.

     

    2. Term.  This
Agreement shall terminate on the fifth anniversary of the Effective
Date.  The term of this Agreement shall be automatically extended
thereafter for successive one (1) year periods unless, at least ninety (90) days
prior to the end of the fourth anniversary of the Effective Date or the then
current succeeding one-year extended term of this Agreement, the Company or
Executive has notified the other that the term hereunder shall expire at the end
of the then-current term.  Notwithstanding any such notice, the term
of this Agreement shall not expire before the second anniversary of a Change in
Control that occurs within the term of this Agreement.  The initial
term of this Agreement, as it may be extended under this Section 2, is herein
referred to as the “Term.”

     

    3. Company’s Covenants
Summarized.  In order to induce the Executive to remain in the
employ of the Company and in consideration of the Executive’s continued
employment, the Company agrees, under the conditions described herein, to pay
the Executive the Severance Payments and the other payments and benefits
described in this Agreement.  Except as provided in Sections 5.1 and
8.1 of this Agreement, no Severance Payments (as defined in Section 5) shall be
payable under this Agreement unless there shall have been a termination of the
Executive’s employment with the Company following a Change in
Control.  This Agreement shall not be construed as creating an express
or implied contract of employment and, except as otherwise agreed in writing
between the Executive and the Company, the Executive shall not have any right to
be retained in the employ of the Company.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    4. Compensation Other Than
Severance Payments.

     

    4.1           If
the Executive’s employment shall be terminated for any reason following a Change
in Control, the Company shall pay the Executive’s full salary to the Executive
through the Date of Termination at the rate in effect immediately prior to the
Date of Termination or, if Section 18(n)(II) is applicable as an event or
circumstance constituting Good Reason, the rate in effect immediately prior to
such event or circumstance, together with all compensation and benefits payable
to the Executive through the Date of Termination under the terms of the
Company’s compensation and benefit plans, programs or arrangements as in effect
immediately prior to the Date of Termination (or, if more favorable to the
Executive, as in effect immediately prior to the first occurrence of an event or
circumstance constituting Good Reason). In addition, if the Executive’s
employment is terminated for any reason following a Change in Control other than
(a) by the Company for Cause and (b) by the Executive without Good Reason, then
the Company shall pay a pro-rata portion of the Executive’s annual bonus for the
performance year in which such termination occurs to the Executive at the time
that annual bonuses are paid to other senior executives.  This
pro-rata bonus shall be determined by multiplying the amount the Executive would
have received based upon actual financial performance through such termination,
as reasonably determined by the Company, by a fraction, the numerator of which
is the number of days during such performance year that the Executive is
employed by the Company and the denominator of which is 365.

     

    4.2           If
the Executive’s employment shall be terminated for any reason following a Change
in Control, the Company shall pay to the Executive the Executive’s normal
post-termination compensation and benefits as such payments become
due.  Such post-termination compensation and benefits shall be
determined under, and paid in accordance with, the Company’s retirement,
insurance and other compensation or benefit plans, programs and arrangements as
in effect immediately prior to the Date of Termination or, if more favorable to
the Executive, as in effect immediately prior to the occurrence of the first
event or circumstance constituting Good Reason.

    

    5. Severance
Payments.

     

    5.1           If
the Executive’s employment is terminated during the twenty-four (24) month
period immediately following a Change in Control, other than (A) by the Company
for Cause, (B) by reason of death or Disability, or (C) by the Executive without
Good Reason, then the Company shall pay the Executive the amounts, and provide
the Executive the benefits described in this Section 5 (collectively, the
“Severance Payments”) in addition to any payments and benefits to which the
Executive is entitled under Section 4 of this Agreement.  The
Executive shall also be entitled to Severance Payments under this Agreement if
the Executive’s employment is terminated without Cause by the Company or by the
Executive for Good Reason at any time beginning on the first day of the 90 day
period immediately prior to the execution of a definitive purchase and sale
agreement that results in such Change in Control and the closing of such Change
in Control.

    

    
      	
              (a)  

            	
              In
      lieu of any further salary payments to the Executive for periods
      subsequent to the Date of Termination and in lieu of any severance benefit
      payable to the Executive under the Executive’s Employment Agreement with
      the Company or otherwise, the Company shall pay to the Executive a lump
      sum severance payment, in cash, equal to the sum of (i) two (2) times the
      Executive’s base salary as in effect immediately prior to the Date of
      Termination or, if Section 18(n)(II) is applicable as an event or
      circumstance constituting Good Reason, the rate in effect immediately
      prior to such event or circumstance, and (ii) two (2) times the last
      annual bonus paid or awarded (to the extent not yet paid) to the Executive
      in the previous three years (if any) immediately preceding the Date of
      Termination, pursuant to any annual bonus or incentive plan maintained by
      the Company.

            

    

    

    
      
         

      

      
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              (b)  

            	
              For
      the twenty-four (24) month period immediately following the Date of
      Termination, the Company shall arrange to provide the Executive and his
      dependents medical, dental, and accidental death and disability benefits
      substantially similar to those provided to the Executive and his
      dependents immediately prior to the Date of Termination or, if more
      favorable to the Executive, those provided to the Executive and his
      dependents immediately prior to the first occurrence of an event or
      circumstance constituting Good Reason, at no greater cost to the Executive
      than the cost to the Executive immediately prior to such date or
      occurrence.  Benefits otherwise receivable by the Executive
      pursuant to this Section 5.1(b) shall be reduced to the extent benefits of
      the same type are received by or made available by a subsequent employer
      to the Executive during the twenty-four (24) month period following the
      Date of Termination (and any such benefits received by or made available
      to the Executive shall be reported to the Company by the Executive);
      provided, however, that the Company shall reimburse the Executive for the
      excess, if any, of the cost of such benefits to the Executive over such
      cost immediately prior to the Date of Termination or, if more favorable to
      the Executive, the first occurrence of an event or circumstance
      constituting Good Reason.

            

    

    

    
      	
              (c)  

            	
              Notwithstanding
      any provision to the contrary in any plan or agreement maintained by or
      through the Company pursuant to which the Executive has been granted
      restricted stock, stock options, stock appreciation rights or long-term
      performance awards, effective on the Date of Termination, (i) all service
      and performance based restrictions with respect to any restricted stock
      shall lapse, (ii) all stock appreciation rights and stock options shall be
      deemed fully vested and then canceled in exchange for a cash payment equal
      to the excess of the fair market value of the shares of Parent Company
      stock subject to the stock appreciation right or stock option on the date
      of the Change in Control, over the exercise price(s) of such stock
      appreciation rights or stock options, and (iii) all long-term performance
      awards shall be deemed fully vested and fully earned and then shall be
      canceled in exchange for a cash payment equal to 100% of the target value
      of each such award.

            

    

    

    
      	
              (d)  

            	
              In
      addition to the retirement benefits to which the Executive is entitled
      under any tax-qualified, supplemental or excess benefit pension plan
      maintained by the Company and any other plan or agreement entered into
      between the Executive and the Company which is designed to provide the
      Executive supplemental retirement benefits (the “Pension Plans”) or any
      successor plan thereto, effective upon the Date of Termination, the
      Executive shall be credited with an additional two years of “Credited
      Service” and “Continuous Service” (as defined in the Kaman Corporation
      Amended and Restated Employees’ Pension Plan) when calculating the
      Executive’s benefit under Kaman Corporation Supplemental Employees
      Retirement Plan (“SERP”).  For avoidance of doubt, the Severance
      Payments payable under this Agreement shall be disregarded when
      determining the Executive's Final Average Salary  (as defined
      under the Kaman Corporation Amended and Restated Employees' Pension Plan)
      for purposes of calculating the benefits payable under the SERP or this
      Section 5.1(d).

            

    

    

    
      
         

      

      
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              (e)  

            	
              If
      the Executive would have become entitled to benefits under the Company’s
      post-retirement health care plans, as in effect immediately prior to the
      Date of Termination or, if more favorable to the Executive, as in effect
      immediately prior to the first occurrence of an event or circumstance
      constituting Good Reason, had the Executive’s employment terminated at any
      time during the period of twenty-four (24) months after the Date of
      Termination, the Company shall provide such post-retirement health care
      benefits to the Executive and the Executive’s dependents commencing on the
      later of (i) the date on which such coverage would have first become
      available and (ii) the date on which benefits described in Section 5.1 (b)
      terminate.

            

    

    

    
      	
              (f)  

            	
              The
      Company (i) shall prepay all remaining premiums under any insurance policy
      maintained by the Company insuring the life of the Executive that is in
      effect and (ii) shall transfer to the Executive any and all rights and
      incidents of ownership in such arrangements at no cost to the
      Executive.

            

    

    

    
      	
              (g)  

            	
              The
      Company shall provide the Executive with reimbursement for up to Thirty
      Thousand Dollars ($30,000) in the aggregate for outplacement services,
      relocation costs, or both provided however that reimbursement shall only
      be provided until the earlier of the first anniversary of the Date of
      Termination or the Executive’s first day of employment with a new
      employer.

            

    

    

    
      	
              (h)  

            	
              The
      Company shall provide the Executive with his Company
      automobile.  The book value then attributed to it by the leasing
      company will be considered “fringe benefit” income and that amount will be
      subject to tax during the calendar year in which the Date of Termination
      occurs.

            

    

    

    5.2           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 with any person affiliated with the Company and
      whether or not the Executive’s employment has then terminated (the
      “Payments”)) received or to be received by Executive will be subject to
      the tax (the “Excise Tax”) imposed by Section 4999 of the Code (or any
      similar tax that may hereafter be imposed), then, except as set forth in
      Section 5.2(b) below, the Company shall pay to Executive an amount in
      addition to the Payments (the “Gross-Up Payment”) as calculated
      below.  The Gross-Up Payment shall be in an amount such that,
      after deduction of any Excise Tax on the Payments and any federal, state
      and local income and employment tax and Excise Tax on the Gross-Up
      Payment, but before deduction for any federal, state or local income and
      employment tax on the Payments, the net amount retained by the Executive
      shall be equal to the Payments.

            

    

     

    
      
         

      

      
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              (b)  

            	
              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 5.2 are set
      forth in Appendix A attached hereto.  For purposes of making the
      determinations and calculations required herein, the Consultant may rely
      on reasonable, good faith interpretations concerning the application of
      Section 280G and 4999 of the Code, provided that the Consultant shall make
      such determinations and calculations on the basis of “substantial
      authority” (within the meaning
      of Section 6662
      of the Code) and shall provide opinions to that effect to both the Company
      and Executive.

            

    

     

    5.3           The
Company also shall reimburse the Executive for legal fees and expenses incurred
by the Executive in disputing in good faith any issue hereunder relating to the
termination of the Executive’s employment or in seeking in good faith to obtain
or enforce any benefit or right provided by this Agreement.  Such
payments shall be made within ten (10) business days after delivery of the
Executive’s written request for payment accompanied with such evidence of fees
and expenses incurred as the Company reasonably may require.

    

    5.4           The
payments provided in subsections (a) and (c) of Section 5.1 shall be made on the
last day of the Executive’s employment.  The payments provided in
Section 5.2 of this Agreement, if any, as determined under Appendix A, shall be
paid on the Executive’s behalf to the applicable taxing authorities within five
(5) days of the receipt of the Consultant’s determination of the Gross-Up
Payment.  If payments are not made in the time frame required by this
subsection, interest on the unpaid amounts will accrue at 120% of the rate
provided in Section 1274(b)(2)(B) of the Code until the date such payments are
actually made.  At the time that payments are made under this
Agreement, the Company shall provide the Executive with a written statement
setting forth the manner in which such payments were calculated and the basis
for such calculations including, without limitation, any opinions or other
advice the Company has received from the Consultant or other advisors (and any
such opinions or advice which are in writing shall be attached to the
statement).

     

    
      
         

      

      
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    5.5           Coordination with Employment
Agreement.

    

    Severance
Payments made under this Section 5 shall be in lieu of any severance benefit
payable to the Executive under the Executive’s Employment Agreement with the
Company or otherwise.

     

    6. Termination Procedures and
Compensation During Dispute.

     

    6.1           Notice of
Termination.  After a Change in Control, any purported
termination of the Executive’s employment (other than by reason of death) shall
be communicated by written Notice of Termination from one party hereto to the
other party hereto in accordance with Section 9 of this
Agreement.  For purposes of this Agreement, a “Notice of Termination”
shall mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated.  Further, a Notice of
Termination for Cause is required to include a copy of a resolution duly adopted
by the affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board which was called and held for
the purpose of considering such termination (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive’s
counsel, to be heard before the Board) finding that, in the good faith opinion
of the Board, the Executive was guilty of conduct set forth in clause (i) or
(ii) of the definition of Cause herein, and specifying the particulars thereof
in detail.

    

    6.2           Date of
Termination.  “Date of Termination,” with respect to any
purported termination of the Executive’s employment after a Change in Control,
shall mean (i) if the Executive’s employment is terminated for Disability,
thirty (30) days after Notice of Termination is given (provided that the
Executive shall not have returned to the full-time performance of the
Executive’s duties during such thirty (30) day period), and (ii) if the
Executive’s employment is terminated for any other reason, the date specified in
the Notice of Termination (which, in the case of a termination by the Company,
shall not be less than thirty (30) days (except in the case of a termination for
Cause) and, in the case of a termination by the Executive, shall not be less
than fifteen (15) days nor more than sixty (60) days, respectively, from the
date such Notice of Termination is given).

    

    6.3           Dispute Concerning
Termination.  If within fifteen (15) days after any Notice of
Termination is given, or, if later, prior to the Date of Termination (as
determined without regard to this Section 6.3), the party receiving such Notice
of Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be extended until the date on which
the dispute is finally resolved, either by mutual written agreement of the
parties or by a final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to which the
time for appeal therefrom has expired and no appeal has been perfected);
provided, however, that the Date of Termination shall be extended by a notice of
dispute given by the Executive only if such notice is given in good faith and
the Executive pursues the resolution of such dispute with reasonable
diligence.

     

    
      
         

      

      
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    6.4           Compensation During
Dispute.  If a purported termination occurs following a Change
in Control and the Date of Termination is extended in accordance with Section
6.3 of this Agreement, the Company shall continue to pay the Executive the full
compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, salary) and continue the Executive as a
participant in all compensation, benefit and insurance plans in which the
Executive was participating when the notice giving rise to the dispute was
given, until the Date of Termination, as determined in accordance with Section
6.3 of this Agreement.  Amounts paid under this Section 6.4 are in
addition to all other amounts due under this Agreement (other than those due
under Section 4.1 of this Agreement) and shall not be offset against or reduce
any other amounts due under this Agreement.  Notwithstanding anything
to the contrary in Section 6.3 and 6.4, if the Company, after delivery of a
Notice of Termination, promptly (and in any event within 30 days) determines
that grounds existed prior to the delivery of the Notice of Termination to
terminate the Executive’s employment for Cause after complying with the
procedural requirements of this Agreement, the Company shall have the right to
recover any payments that have been made to the Executive or on the Executive’s
behalf under this Agreement including but not limited to offset against or
reduction of any amounts due under this Agreement or otherwise.

    

    7. No
Mitigation.  The Company agrees that under this Agreement, if
the Executive’s employment with the Company terminates, the Executive is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 5 of this Agreement
or Section 6.4 of this Agreement.  Further, the amount of any payment
or benefit provided for in this Agreement (other than as specifically provided
in Section 5.1(b) of this Agreement) shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by the
Executive to the Company, or otherwise.

     

    8. Successors; Binding
Agreement.

     

    8.1           In
addition to any obligations imposed by law upon any successor to the Company,
the Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform this
Agreement in accordance with its terms.  Failure of the Company to
obtain such agreement prior to the effectiveness of any such succession shall be
a breach of this Agreement and shall entitle the Executive to compensation from
the Company in the same amount and on the same terms as the Executive would be
entitled to hereunder if the Executive were to terminate the Executive’s
employment for Good Reason after a Change in Control, except that, for purposes
of implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination.

    

    8.2           This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.  If the Executive shall die while
any amount would still be payable to the Executive hereunder (other than amounts
which, by their terms, terminate upon the death of the Executive) if the
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
executors, personal representatives or administrators of the Executive’s
estate.

     

    
      
         

      

      
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    9. Notice.  For
the purpose of this Agreement, notices and all other communications provided for
in this Agreement shall be in writing and shall be deemed to have been duly
given (a) on the date of delivery if delivered by hand, (b) on the date of
transmission, if delivered by confirmed facsimile, (c) on the first business day
following the date of deposit if delivered by guaranteed overnight delivery
service, or (d) on the fourth business day following the date delivered or
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

     

    If to the Executive: at the address (or
to the facsimile number) shown on the records of the Company

    

    If to the Company:

    

    c/o Kaman Corporation

    1332 Blue Hills Avenue, P.O. Box
1

    Bloomfield,
CT   06002

    Attention:    Candace A.
Clark, Esq.

    

    Facsimile No.:  860
243-7397

    

    or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be effective
only upon receipt.

    

    10. Obligations after the Date
of Termination.

     

    
      	
              (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 Parent Company and the Company, at any time following the
      Date of Termination, any nonpublic, proprietary or confidential
      information, knowledge or data relating to the Parent Company or the
      Company, any of their subsidiaries, affiliated companies or businesses,
      which shall have been obtained by the Executive during the Executive’s
      employment by the Company.  The foregoing shall not apply to
      information that (i) was known to the public prior to its disclosure to
      the Executive; (ii) becomes known to the public subsequent to disclosure
      to the Executive through no wrongful act of the Executive or any
      representative of the Executive; or (iii) the Executive is required to
      disclose by applicable law, regulation or legal process (provided that the
      Executive provides the Parent Company and the Company with prior notice of
      the contemplated disclosure and reasonably cooperates with the Parent
      Company and the Company at their expense in seeking a protective order or
      other appropriate protection of such
      information).  Notwithstanding clauses (i) and (ii) of the
      preceding sentence, the Executive’s obligation to maintain such disclosed
      information in confidence shall not terminate where only portions of the
      information are in the public
domain.

            

    

     

    
      
         

      

      
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              (b)  

            	
              Non-Solicitation.  In
      the event that the Executive receives Severance Payments under Section 5
      of this Agreement, the Executive agrees that for the two (2) year period
      following the Date of Termination, the Executive will not, directly or
      indirectly, individually or on behalf of any other person, firm,
      corporation or other entity, knowingly solicit, aid or induce any
      managerial level employee of the Parent Company or the Company or any of
      their subsidiaries or affiliates to leave such employment in order to
      accept employment with or render services to or with any other person,
      firm, corporation or other entity unaffiliated with the Parent Company or
      the Company or knowingly take any action to materially assist or aid any
      other person, firm, corporation or other entity in identifying or hiring
      any such employee (provided, that the foregoing shall not be violated by
      general advertising not targeted at Parent Company or Company employees
      nor by serving as a reference for an employee with regard to an entity
      with which the Executive is not affiliated).  For the avoidance
      of doubt, if a managerial level employee on his or her own initiative
      contacts the Executive for the primary purpose of securing alternative
      employment, any action taken by the Executive thereafter shall not be
      deemed a breach of this Section
10(b).

            

    

     

    
      	
              (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 will result in
      irreparable harm to the Parent Company and the
      Company.  Accordingly, in the event that the Executive receives
      Severance Payments described in Section 5 of this Agreement, the Executive
      agrees that for a period of two (2) years following the Date of
      Termination, the Executive will not, directly or indirectly, become
      connected with, promote the interest of, or engage in any other business
      or activity competing with the business of the Parent Company or the
      Company within the geographical area in which the business of the Parent
      Company or the Company is
conducted.

            

    

     

    
      	
              (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 otherwise and (ii) the
      executive officers and directors thereof and not any other employees)
      agrees not to make any public statements that disparage the other party,
      or in the case of the Company, its respective affiliates (including
      parents and subsidiaries), officers, directors, products or
      services.  Notwithstanding the foregoing, statements made in the
      course of sworn testimony in administrative, judicial or arbitral
      proceedings (including, without limitation, depositions in connection with
      such proceedings) or otherwise as required by law shall not be subject to
      this Section 10(d).

            

    

     

    
      
         

      

      
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              (e)  

            	
              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 Parent Company and
      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, if the Executive is not then employed, provide reasonable
      compensation as determined by the Compensation Committee) and 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 which arise out of the Executive’s employment with
      the Company, or relate to any matters directly pertaining to the business
      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.  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.

            

    

     

    
      	
              (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.

            

    

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    
      	
              (i)  

            	
              Reformation.  If
      it is determined by a court of competent jurisdiction in any state that
      any restriction in this Section 10 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 10
      shall survive the termination or expiration of the Executive’s employment
      with the Company and shall be fully enforceable
  thereafter.

            

    

     

    11. Conditions.  Any
payments or benefits made or provided pursuant to this Agreement are subject to
the Executive’s:

     

    
      	
              (a)  

            	
              compliance
      with the provisions of Section 10
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 B (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.

            

    

     

    12. 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 a member of the Board or his designee.  No waiver by
either party hereto at any time of any breach by the other party hereto of, or
of any lack of 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.  The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of Connecticut without regard to
its conflicts of law principles.  Any payments provided for hereunder
shall be paid net of any applicable withholding required under federal, state or
local law and any additional withholding to which the Executive has
agreed.  The obligations of the Company and the Executive under this
Agreement which by their nature may require either partial or total performance
after its expiration shall survive any such expiration.

     

    13. Validity;
Counterparts.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.  This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    14. Prior
Agreements.  This Agreement supersedes and replaces the Prior
Agreement.  This Agreement supersedes any other agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof which have been made by either party.  By
signing this Agreement, the Executive releases and discharges the Company from
any and all obligations and liabilities heretofore or now existing under or by
virtue of the Prior Agreement.

     

    15. Coordination with Employment
Agreement.  In the event that the Executive receives
compensation or benefits under the Executive’s Employment Agreement and
thereafter becomes entitled to similar compensation or benefits under this
Agreement, the compensation and benefits paid or provided under the Employment
Agreement shall be an offset against the similar compensation and benefits
payable or to be provided under this Agreement.

     

    16. Settlement of
Disputes.  All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be in
writing.  Any denial by the Board of a claim for benefits under this
Agreement shall be delivered to the Executive in writing and shall set forth the
specific reasons for the denial and the specific provisions of this Agreement
relied upon.  The Board shall afford a reasonable opportunity to the
Executive for a review of the decision denying a claim and shall further allow
the Executive to appeal to the Board a decision of the Board within sixty (60)
days after notification by the Board that the Executive’s claim has been
denied.

     

    17. Arbitration.  Any
further dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Hartford, Connecticut,
in accordance with the rules of the American Arbitration Association then in
effect; provided, however, that the evidentiary standards set forth in this
Agreement shall apply.  Judgment may be entered on the arbitrator’s
award in any court having jurisdiction.  Notwithstanding any provision
of this Agreement to the contrary, the Executive shall be entitled to seek
specific performance of the Executive’s right to be paid until the Date of
Termination during the pendency of any dispute or controversy arising under or
in connection with this Agreement.

     

    18. Definitions.  For
purposes of this Agreement, the following terms shall have the meanings
indicated below:

     

    
      	
              (a)  

            	
              “Affiliate”
      shall have the meaning set forth in Rule 12b-2 promulgated under Section
      12 of the Exchange Act.

            

    

    

    
      	
              (b)  

            	
              “Beneficial
      Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange
      Act.

            

    

    

    
      	
              (c)  

            	
              “Board”
      shall mean the Board of Directors of the
  Company.

            

    

    

    
      	
              (d)  

            	
              “Cause”
      for termination by the Company of the Executive’s employment shall mean
      (i) the willful and continued failure by the Executive to substantially
      perform the Executive’s duties with the Company (other than any such
      failure resulting from the Executive’s incapacity due to physical or
      mental illness or any such actual or anticipated failure after the
      issuance of a Notice of Termination for Good Reason by the Executive
      pursuant to Section 6.1 of this Agreement) after a written demand for
      substantial performance is delivered to the Executive by the Board, which
      demand specifically identifies the manner in which the Board believes that
      the Executive has not substantially performed the Executive’s duties, or
      (ii) the willful engaging by the Executive in conduct which is
      demonstrably and materially injurious to the Parent Company, the Company,
      or their subsidiaries, monetarily or otherwise.  For purposes of
      clauses (i) and (ii) of this definition, (x) no act, or failure to act, on
      the Executive’s part shall be deemed “willful” unless done, or omitted to
      be done, by the Executive not in good faith and without reasonable belief
      that the Executive’s act, or failure to act, was in the best interest of
      the Company and (y) in the event of a dispute concerning the application
      of this provision, no claim by the Company that Cause exists shall be
      given effect unless the Company establishes to the Board by clear and
      convincing evidence that Cause exists.  Notwithstanding the
      foregoing, Cause shall not include any act or omission of which the Audit
      Committee of the Board (or the full Board) has had actual knowledge of all
      material facts related thereto for at least 90 days without asserting that
      the act or omission constitutes
Cause.

            

    

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    
      	
              (e)  

            	
              “Change
      in Control” for purposes of this Agreement shall mean any of the following
      events, provided that such an event is not also a Management
      Buyout:

            

    

    

    
      	
              (I)  

            	
              any
      Person is or becomes the Beneficial Owner directly or indirectly, of
      securities of the Parent Company representing thirty-five (35%) or more of
      the combined voting power of the Parent Company’s then outstanding voting
      securities generally entitled to vote in the election of directors of the
      Parent Company; provided, however, that no Change in Control will be
      deemed to have occurred as a result of a change in ownership percentage
      resulting solely from an acquisition of securities by the Parent Company
      or a transaction described in clause (A) of paragraph (III)
      below;

            

    

     

    
      	
              (II)  

            	
              during
      any period of two consecutive years, individuals who, as of the beginning
      of such period, constitute the Board (the “Incumbent Board”) cease to
      constitute at least a majority of the Board; provided, that any person
      becoming a director of the Parent Company subsequent to the beginning of
      such period whose election, or nomination for election by the Parent
      Company’s shareholders, was approved by a vote of at least a majority of
      the directors then comprising the Incumbent Board shall be considered as
      though such individual were a member of the Incumbent Board, but
      excluding, for this purpose, any such individual whose initial assumption
      of office occurs as a result of either an actual or threatened election
      contest, including but not limited to a consent solicitation, relating to
      the election of directors of the Parent Company and whose appointment or
      election was not approved by at least a majority of the directors of the
      Parent Company in office immediately before any such
    contest;

            

    

     

    
      	
              (III)  

            	
              there
      is consummated a Merger of the Parent Company with any other business
      entity, other than (A) a Merger which would result in the securities of
      the Parent Company generally entitled to vote in the election of directors
      of the Parent Company outstanding immediately prior to such Merger
      continuing to represent (either by remaining outstanding or by being
      converted into such securities of the surviving entity or any parent
      thereof), in combination with the ownership of any trustee or other
      fiduciary holding such securities under an employee benefit plan of the
      Parent Company or any Subsidiary, at least 50% of the combined voting
      power of the voting securities of the Parent Company or such surviving
      entity or any parent thereof outstanding immediately after such Merger,
      generally entitled to vote in the election of directors of the Parent
      Company or such surviving entity or any parent thereof and, in the case of
      such surviving entity or any parent thereof, of a class registered under
      Section 12 of the Exchange Act, or (B) a Merger effected to implement a
      recapitalization of the Parent Company (or similar transaction) in which
      no Person is or becomes the Beneficial Owner, directly or indirectly, of
      securities of the Parent Company representing 35% or more of the combined
      voting power of the Parent Company’s then outstanding voting securities
      generally entitled to vote in the election of directors of the Parent
      Company;

            

    

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    
      	
              (IV)  

            	
              the
      stockholders of the Parent Company approve a plan of complete liquidation
      or dissolution of the Parent Company or there is consummated the sale or
      disposition by the Parent Company of all or substantially all of the
      Parent Company’s assets, other than a sale or disposition by the Parent
      Company of all or substantially all of the Parent Company’s assets to an
      entity where the outstanding securities generally entitled to vote in the
      election of directors of the Parent Company immediately prior to the
      transaction continue to represent (either by remaining outstanding or by
      being converted into such securities of the surviving entity or any parent
      thereof) 50% or more of the combined voting power of the outstanding
      voting securities of such entity generally entitled to vote in such
      entity’s election of directors immediately after such sale and of a class
      registered under Section 12 of the Exchange Act;
  or

            

    

     

    
      	
              (V)  

            	
              A
      Sale of the Company.

            

    

     

    Within
five (5) days after a Change in Control has occurred, the Company shall deliver
to the Executive a written statement memorializing the date that the Change in
Control occurred.

    

    
      	
              (f)  

            	
              “Code”
      shall mean the Internal Revenue Code of 1986, as amended from time to
      time, and any successor Code, and related rules, regulations and
      interpretations.

            

    

    

    
      	
              (g)  

            	
              “Company”
      shall mean Kaman Aerospace Group, Inc. and, except in determining under
      Section 18(e) hereof whether or not any Change in Control of the Company
      has occurred, shall include any successor to its business and/or
      assets.

            

    

     

    
      	
              (h)  

            	
              “Consultant”
      shall have the meaning set forth in Appendix A of this
      Agreement.

            

    

    

    
      	
              (i)  

            	
              “Date
      of Termination” shall have the meaning set forth in Section 6.2 of this
      Agreement.

            

    

    

    
      	
              (j)  

            	
              “Disability”
      shall be deemed the reason for the termination by the Company of the
      Executive’s employment, if, as a result of the Executive’s incapacity due
      to physical or mental illness, the Executive shall have been absent from
      the full-time performance of the Executive’s duties with the Company for a
      period of six (6) consecutive months, the Company shall have given the
      Executive a Notice of Termination for Disability, and, within thirty (30)
      days after such Notice of Termination is given, the Executive shall not
      have returned to the full-time performance of the Executive’s
      duties.

            

    

    

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    
      	
              (k)  

            	
              “Exchange Act” shall mean the Securities Exchange Act of
      1934, as amended from time to
time.

            

    

    

    
      	
              (l)  

            	
              “Excise
      Tax” shall mean any excise tax imposed under Section 4999 of the
      Code.

            

    

    

    
      	
              (m)  

            	
              “Executive”
      shall mean the individual named in the preamble to this
      Agreement

            

    

    

    
      	
              (n)  

            	
              “Good
      Reason” for termination by the Executive of the Executive’s employment
      shall mean the occurrence (without the Executive’s express written
      consent) after any Change in Control (if more than one Change in Control
      has occurred, any reference to a Change in Control in this subsection (n)
      shall refer to the most recent Change in Control), of any one of the
      following acts by the Company, or failures by the Company to act, unless,
      in the case of any act or failure to act described in paragraph (I), (V),
      (VI), or (VII) below, such act or failure to act is corrected prior to the
      Date of Termination specified in the Notice of Termination given in
      respect thereof:

            

    

    

    
      	
              (I)  

            	
              the
      assignment to the Executive of any duties inconsistent with the
      Executive’s status as President of Kaman Aerospace Group, Inc. or a
      substantial diminution in the nature or status of the Executive’s
      responsibilities from those in effect immediately prior to the Change in
      Control;

            

    

     

    
      	
              (II)  

            	
              a
      reduction by the Company in the Executive’s annual Base Salary as in
      effect on the date of this Agreement or as the same may be increased from
      time to time;

            

    

     

    
      	
              (III)  

            	
              the
      relocation of the Executive’s principal place of employment to a location
      more than 50 miles from the Executive’s principal place of employment
      immediately prior to the Change in Control or the Company’s requiring the
      Executive to be based anywhere other than such principal place of
      employment (or permitted relocation thereof) except for required travel on
      the Company’s business to an extent substantially consistent with the
      Executive’s business travel obligations immediately prior to the Change in
      Control;

            

    

     

    
      	
              (IV)  

            	
              the
      failure by the Company to pay to the Executive any portion of the
      Executive’s current compensation, or to pay to the Executive any portion
      of an installment of deferred compensation under any deferred compensation
      program of the Company, within thirty (30) days of the date such
      compensation is due;

            

    

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    
      	
              (V)  

            	
              the
      failure by the Company to continue in effect any compensation plan in
      which the Executive participates immediately prior to the Change in
      Control which is material to the Executive’s total compensation
      (including, but not limited to, the Kaman Corporation Compensation
      Administration Plan, Kaman Corporation Cash Bonus Plan, and Kaman
      Corporation 2003 Stock Incentive Plan), unless an equitable arrangement
      (embodied in an ongoing substitute or alternative plan) has been made with
      respect to such plan, or the failure by the Company to continue the
      Executive’s participation  therein (or in such substitute or
      alternative plan) on a basis not materially less favorable, both in terms
      of the amount or timing of payment of benefits provided and the level of
      the Executive’s participation relative to other participants, as existed
      immediately prior to the Change in
Control;

            

    

     

    
      	
              (VI)  

            	
              the
      failure by the Company to continue to provide the Executive with benefits
      substantially similar to those enjoyed by the Executive under any of the
      Company’s life insurance, health and accident, or disability plans in
      which the Executive was participating immediately prior to the Change in
      Control, the taking of any other action by the Company which would
      directly or indirectly materially reduce any of such benefits or deprive
      the Executive of any material fringe benefit enjoyed by the Executive at
      the time of the Change in Control, or the failure by the Company to
      provide  the Executive with the number of paid vacation days to
      which the Executive is entitled on the basis of years of service with the
      Company in accordance with the Company’s normal vacation policy in effect
      at the time of the Change in Control, provided, however, that this
      paragraph shall not be construed to require the Company to provide the
      Executive with a defined benefit pension plan if no such plan is provided
      to similarly situated executive officers of the Company or its Affiliates;
      or

            

    

     

    
      	
              (VII)  

            	
              any
      purported termination of the Executive’s employment which is not effected
      pursuant to a Notice of Termination satisfying the requirements of Section
      6.1 of  this Agreement; for purposes of this Agreement, no such
      purported termination shall be
effective.

            

    

     

    The
Executive’s right to terminate the Executive’s employment for Good Reason shall
not be affected by the Executive’s incapacity due to physical or mental
illness.  The Executive’s continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.

     

    Notwithstanding
anything to the contrary above, the Executive shall not have “Good Reason” to
terminate employment due solely to one or more of the following events: (1)
there is a diminution of the business of the Parent Company, the Company, or any
of their subsidiaries, including, without limitation, a sale or other transfer
of property or other assets of the Parent Company, the Company, or their
subsidiaries, or a reduction in the Executive’s business unit’s head count or
budget, or (2) a suspension of the Executive’s position, job functions,
authorities, duties and responsibilities while on paid administrative leave due
to a reasonable belief by the Board that the Executive has engaged in conduct
that would give adequate grounds to terminate the Executive’s employment for
Cause.

     

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    
      	
              (o)  

            	
              “Gross-Up
      Payment” shall have the meaning set forth in Section 5.2 of this
      Agreement.

            

    

     

    
      	
              (p)  

            	
              “Management
      Buyout” means any event or transaction which would otherwise constitute a
      Change in Control (a “Transaction”) if, in connection with the
      Transaction, the Executive, members of the Executive's immediate family,
      and/or the “Executive's Affiliates” (as defined below) participate,
      directly or beneficially, as an equity investor in, or have the option or
      right to acquire, whether or not vested, equity interests of, the
      acquiring entity or any of its Affiliates (the “Acquiror”) having a
      percentage interest therein greater than 1%.   For purposes
      of the preceding sentence, a party shall not be deemed to have
      participated as an equity investor in the Acquiror by virtue of (i)
      obtaining beneficial ownership of any equity interest in the Acquiror as a
      result of the grant to the party of an incentive compensation award under
      one or more incentive plans of the Acquiror (including, but not limited
      to, the conversion in connection with the Transaction of incentive
      compensation awards of the Parent Company into incentive compensation
      awards of the Acquiror), on terms and conditions substantially equivalent
      to those applicable to other employees of the Company at a comparable
      level as such party immediately prior to the Transaction, after taking
      into account normal differences attributable to job responsibilities,
      title and the like, or (ii) obtaining beneficial ownership of any equity
      interest in the Acquiror on terms and conditions substantially equivalent
      to those obtained in the Transaction by all other shareholders of the
      Parent Company or (iii) the party’s interests in any tax-qualified defined
      benefit or defined contribution pension or retirement plan in which such
      party or any family member is a participant or beneficiary.  The
      “Executive’s Affiliates” at any time consist of any entity in which the
      Executive and/or members of the Executive’s immediate family then own,
      directly or beneficially, or have the option or right to acquire, whether
      or not vested, greater than 10% of such entity’s equity interests, and all
      then current directors and executive officers of the Parent Company and
      the Company who are members of any group, that also includes the
      Executive, a member of the Executive’s immediate family and/or any such
      entity, in which the members have agreed to act together for the purpose
      of participating in the Transaction.  The Executive’s immediate
      family consists of the Executive’s spouse, parents, children and
      grandchildren.

            

    

     

    
      	
              (q)  

            	
              “Merger”
      means a merger, share exchange, consolidation or similar business
      combination under applicable law.

            

    

    

    
      	
              (r)  

            	
              “Notice
      of Termination” shall have the meaning set forth in Section 6.1 of this
      Agreement.

            

    

    

    
      	
              (s)  

            	
              “Parent
      Company” shall mean Kaman Corporation and, except in determining under
      Section 18(e) hereof whether or not any Change in Control of the Parent
      Company has occurred, shall include any successor to its business and/or
      assets.

            

    

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    
      	
              (t)  

            	
              “Payments”
      shall have the meaning set forth in Section 5.1 of this
      Agreement.

            

    

    

    
      	
              (u)  

            	
              “Person”
      shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
      modified and used in Sections 13(d) and 14(d) thereof, except that such
      term shall not include (i) the Parent Company or the Company or any of
      their direct or indirect Subsidiaries, (ii) a trustee or other fiduciary
      holding securities under an employee benefit plan of the Company, (iii) an
      underwriter temporarily holding securities pursuant to an offering of such
      securities, or (iv) a corporation owned, directly or indirectly, by the
      stockholders of the Parent Company in substantially the same proportions
      and with substantially the same voting rights as their ownership and
      voting rights with respect to the
Company.

            

    

    

    
      	
              (v)  

            	
              “Sale
      of the Company” shall mean a sale of all or substantially all of the
      securities or all or substantially all of the assets of the Company or the
      Merger of the Company with or into any Person, other than a Merger which
      would result in the voting securities of the Company outstanding
      immediately prior to such Merger continuing to represent (either by
      remaining outstanding or by being converted into voting securities of the
      surviving entity or any parent thereof) at least 50% of the combined
      voting power of the voting securities of the Company or such surviving
      entity or any parent thereof outstanding immediately after such Merger and
      generally entitled to vote in the election of directors of the Company or
      such surviving entity or parent
thereof.

            

    

    

    
      	
              (w)  

            	
              “Subsidiary”
      shall mean any corporation within the meaning of Section 424(f) of the
      Code.

            

    

    

    
      	
              (x)  

            	
              “Term”
      shall mean the period of time described in Section 2 of this
      Agreement.

            

    

    

    19.           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 including, if necessary, the deferral of any amount
payable hereunder upon separation from service to the first date such amount may
be paid without incurring tax under Section 409A of the Code, in which case such
payment shall bear interest at the applicable federal rate under Section 1274 of
the Code.  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.

     

    

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the parties have executed this agreement.

    
 

    
      	 
      	
                

              Kaman
      Aerospace Group, Inc.

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              /s/ Robert
      M. Garneau

            	 
      	
              6/11/08

            
	 
      	
              By:  

            	
              Robert
      M. Garneau

            	 
      	
              Date

            
	 
      	
              Its:

            	
              Vice
      President

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
              Executive

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	
              By:

            	
              /s/
      Gregory L. Steiner

            	 
      	
              6/4/08

            
	 
      	 
      	
              Gregory
      L. Steiner

            	 
      	
              Date

            
	 
      	 
      	 
      	 
      	 
      

    

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

     

    APPENDIX A

    

    TAX
GROSS-UP PAYMENT RULES AND PROCEDURES

     

    1.           Subject
to Paragraph 3 below, all determinations required to be made under Section 5.2
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
“Consultant”) selected in accordance with Paragraph 2 below.  The
Consultant 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
Consultant’s determination.  If the Consultant determines that the
Executive is not subject to Excise Tax, 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
Consultant 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 Consultant 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 Consultant 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 Date of Termination, (or the date of the Change in
Control if the Executive is subject to Excise Tax prior to the issuance of a
Notice 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
Consultant shall be a nationally recognized public accounting firm, benefits
consultant or law 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 Consultant within ten (10) days after the date on which the Company
proposed to Executive an entity to serve as the Consultant, then Executive and
the Company shall each select one and those two firms shall jointly select the
entity to serve as the Consultant within ten (10) days after being requested by
the Company and Executive to make such selection.  The Company shall
pay the Consultant’s fee.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    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
Executive 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).

     

    

     

    
      
        
          

        

         

      

      
        21

        
          

        

      

      
         

      

    

    APPENDIX
B

     

    FORM
OF RELEASE

     

    AGREEMENT
AND GENERAL RELEASE

     

    Kaman
Aerospace Group, Inc., its affiliates, parents, 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 Gregory L. Steiner
(“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 of Kaman Aerospace Group,
Inc. and will not be eligible for any benefits or compensation after ________,
including payments under the Executive’s Employment Agreement, other than as
specifically provided under the Change in Control Agreement between Employer and
Executive effective as of January 1, 2007 (the “Change in Control
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 11 of the Change in Control Agreement.

     

    3.           Revocation.  Executive
may revoke this Agreement and General Release for a period of seven (7) 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 Chief Legal Officer, or his/her designee, or mailed to Kaman
Aerospace Group, Inc., c/o Kaman Corporation, 1332 Blue Hills Avenue, P.O. Box
1, Bloomfield, CT 06002, Attention Candace Clark, and postmarked within seven
(7) 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.

     

    4.           General
Release of Claim.  Subject to the full satisfaction by the Employer of
its obligations under the Change in Control Agreement, 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:

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    -           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; (ii) Employee’s rights under the provisions of the Change in
Control 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.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    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
under the Change in Control Agreement.  Employee also affirms
Executive has no known workplace injuries.

     

    7.           Cooperation;
Return of Property.  In accordance with Section 10(f) of the Change in
Control Agreement 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 and Employer
will reimburse the Employee for any reasonable out-of-pocket travel, delivery or
similar expenses incurred and lost wages (or will provide reasonable
compensation if Executive is not then employed) in providing such service to
Employer.  The Employee represents the Executive has complied with
Section 10(e) of the Change in Control Agreement regarding the return of
Employer property and records.

     

    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 Change in
Control Agreement which are intended to survive termination of the Change in
Control Agreement, including but not limited to those contained in Section 10
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.

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    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 CHANGE
IN CONTROL 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:

     

    
      
        	 
      	 
      	
                 

                KAMAN
      AEROSPACE GROUP, INC.

                 

              
	 
      	 
      	 
      
	 
      	
                By:  

              	
                 

              
	 
      	
                 

                Name:

              	
              
	 
      	
                Title:

              	
                 

              
	 
      	
                Date:

              	
                 

              
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	
                 

              
	 
      	
                 

              	
                Gregory
      L. Steiner

              
	 
      	
                Date:

              	
                 

              
	 
      	 
      	 
      

      

      
        
           

        

        
          25Proxy Statement

EXHIBIT 10.1

PHILLIPS-VAN HEUSEN CORPORATION

PERFORMANCE INCENTIVE BONUS PLAN 

(As Amended Through May 1, 2008)

1.

Purpose.  The purposes of the Plan are to induce certain senior executive employees of the Company and its Subsidiaries to remain in the employ of the Company and its Subsidiaries, to attract new individuals to enter into such employ and to provide such persons with additional incentive to promote the success of the business of the Company and its Subsidiaries.

2.

Definitions.

(a)

Defined Terms.  The following words as used in the Plan shall have the meanings ascribed to each below.

“Board” means the Board of Directors of the Company.

“Cause” means, with respect to any Participant (i) gross negligence or willful misconduct, as the case may be, in the performance of the material responsibilities of the Participant’s office or position; (ii) the willful and continued failure of the Participant to perform substantially the Participant’s duties with the Company or any Subsidiary (other than any such failure resulting from incapacity due to physical or mental illness); (iii) the Participant is convicted of, or pleads guilty or nolo contendere to, a felony within the meaning of U.S. Federal, state or local law (other than a traffic violation); (iv) the Participant having willfully divulged, furnished or made accessible to anyone other than the Company or any Subsidiary, or any of their respective directors, officers, employees, auditors and legal advisors, otherwise than in the ordinary course of business, any confidential or proprietary information of the Company or such Subsidiary; or (v) any act or failure to act by the Participant, which, under the provisions of applicable law, disqualifies the Participant from performing his or her duties or serving in his or her then current capacity with the Company or a Subsidiary; provided, however, that with respect to a Participant who has an employment agreement with the Company or any of its Subsidiaries which has a definition of “cause”, the definition contained therein shall govern.

“Change in Control” means the first to occur of the following events:

(1)

Any Person, other than a Person who as of the date the Plan is first approved by the Board is the owner of at least 8% of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”), becomes (A) a “beneficial owner,” as such term is used in Rule 13d-3 of the Exchange Act, of at least one-quarter but less than one-half of the Outstanding Company Voting Securities, unless such acquisition has been approved within 30 days thereafter by at least a majority of the Incumbent Board (as defined in clause (2) below taking into account the provisos), or (B) a “beneficial owner,” as such term is used in Rule 13d-3 of the Exchange Act, of at least one-half of the Outstanding Company Voting Securities; provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change in Control:  (I) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (II) any acquisition by the Company, 

(III) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its affiliates, or (IV) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of paragraph 3 of this definition; or

(2)

Individuals who, as of the date hereof, constitute the Board (such Board, and any Board consisting of individuals who hereafter replace such individuals or otherwise join the Board in accordance with the terms of the proviso to this sentence, the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to when the Plan is first approved by the Board whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were 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 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;

(3)

Consummation of a reorganization, merger, consolidation or a sale or other disposition of all or substantially all of the assets of the Company (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) and the Outstanding Company Voting Securities, immediately prior to such  Business Combination, beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and more than 50% of the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, 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) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns directly or indirectly, 20% or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Business Combination or the outstanding voting securities of such corporation entitled to vote generally in the election of directors, except to the extent that such ownership existed prior to the Business Combination or to the extent that such Business Combination has been approved within 30 days thereafter by at least a majority of the Incumbent Board, and (C) at least a majority of the members of the board of directors of the corporation 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, whichever occurs first; or

(4)

The approval by the stockholders of the Company of a complete liquidation or a dissolution of the Company.

“Code” means the Internal Revenue Code of 1986, as amended.

2

“Committee” means the Compensation Committee of the Board or such other committee of the Board that the Board shall designate from time to time to administer the Plan or any subcommittee thereof.

“Company” means Phillips-Van Heusen Corporation, a Delaware corporation.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fiscal Year” means each fiscal year of the Company, as set forth in the Company’s books and records.

“Participant” means each senior executive officer of the Company or a Subsidiary designated by the Committee to participate in the Plan from time to time, as provided herein.

“Performance Cycle” means each Fiscal Year or such shorter period as may be designated by the Company from time to time.

“Performance Objective” means any one or more of the following: earnings, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization, earnings per share, economic value created, market share, net income (before or after taxes), operating income, adjusted net income after capital charge, return on assets, return on capital (based on earnings or cash flow), return on equity, return on investment, revenue, cash flow, operating margin, share price, total stockholder return, total market value, and strategic business criteria, consisting of one or more objectives based on meeting specified market penetration goals, productivity measures, geographic business expansion goals, cost targets, customer satisfaction or employee satisfaction goals, goals relating to merger synergies, management of employment practices and employee benefits, or supervision of litigation or information technology, and goals relating to acquisitions or divestitures of subsidiaries, affiliates or joint ventures.  Performance Objectives may be established at Company, subsidiary or business unit levels.  The targeted level or levels of performance with respect to such Performance Objectives may be established at such levels and on such terms as the Committee may determine, in its discretion, including in absolute terms, as a goal relative to performance in prior periods, or as a goal compared to the performance of one or more comparable companies or an index covering multiple companies.  

“Person” means person such as term is used in Sections 3(a)(9) and 13(d) of the Exchange Act. 

“Plan” means the Phillips-Van Heusen Corporation Performance Incentive Bonus Plan, as set forth herein and as may be amended from time to time.

“Retirement” means the termination of a Participant’s employment with the Company and all of its Subsidiaries (A) other than for Cause or by reason of his or her death and (B) on or after the earlier to occur of (x) the first day of the calendar month in which his or her 65th birthday shall occur and (y) the date on which he shall have attained his or her 55th birthday and completed 10 years of employment with the Company and/or any of its Subsidiaries.

“Subsidiary” has the meaning ascribed to such term in Section 424(f) of the Code.

3

(b)

Interpretation.

(i)

The definitions of terms defined herein shall apply equally to both the singular and plural forms of the defined terms.

(ii)

Any pronoun shall include the corresponding masculine, feminine and neuter forms, as the context may require.

(iii)

All references herein to Sections shall be deemed to be references to Sections of the Plan unless the context shall otherwise require.

(iv)

The headings of the Sections are included for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of the Plan.

3.

Effective Date.  The Plan became effective on April 21, 2005, subject to the ratification of the Plan by the Company’s stockholders.

4.

Eligibility.  Participation in the Plan with respect to any Performance Cycle shall be available only to such senior executive employees of the Company and/or one or more of its Subsidiaries as may be designated by the Committee.

5.

Committee.  The Plan shall be administered by the Committee.  The Committee shall consist of two or more members of the Board.  To the extent the Committee is taking action with respect to an award intended to qualify as performance-based compensation for purposes of Section 162(m) of the Code, it is intended that the Committee would be comprised solely of two or more “outside directors” within the meaning of Section 162(m)(4)(C) of the Code.  The Committee shall be appointed annually by the Board.  The Board may, at any time, from time to time, remove any members of the Committee, with or without cause, appoint additional directors as members of the Committee and fill vacancies on the Committees, however created.  A majority of the members of the Committee shall constitute a quorum.  All determinations of the Committee shall be made by a majority vote of its members at a meeting duly called and held.

6.

Administration.

(a)

Subject to the express provisions of the Plan, the Committee shall have complete authority to administer and interpret the Plan.  The Committee shall establish the Performance Objectives for any Performance Cycle in accordance with Section 7 hereof and determine whether such Performance Objectives have been attained prior to the payment of any bonus.  Any determination made by the Committee under the Plan shall be final and conclusive.  The Committee in its sole discretion shall resolve any dispute or disagreement that may arise hereunder or as a result of or in connection with any action taken hereunder.  The Committee may employ such legal counsel, consultants and agents (including counsel or agents who are employees of the Company or a Subsidiary) as it may deem desirable for the administration of the Plan and may rely upon any opinion received from any such counsel or consultant or agent and any computation received from such consultant or agent.  The Company shall pay all expenses incurred in the administration of the Plan, including, without limitation, for the engagement of any counsel, consultant or agent.  No member or former member of the Board or 

4

the Committee shall be liable for any act, omission, interpretation, construction or determination made in connection with the Plan, other than as a result of such individual’s willful misconduct.

(b)

The Chief Executive Officer of the Company, subject to such conditions, restrictions and limitations as may be imposed by the Committee, may administer the Plan with respect to employees of the Company or a Subsidiary whose compensation is not, and is reasonably not expected to become, subject to the provisions of Section 162(m) of the Code, and who are not “executive officers” for purposes of Section 303A of the New York Stock Exchange Listed Company Manual.  Any actions duly taken by the Chief Executive Officer with respect to the administration of the Plan and the qualification for and payment of bonuses to employees shall be deemed to have been taken by the Committee for purposes of the Plan.

7.

Determination of Participation, Performance Criteria and Bonuses.

(a)

Participation and Performance Criteria.  The Committee shall determine who the Participants for each Performance Cycle will be and establish the Performance Objective or Performance Objectives that must be satisfied in order for a Participant to be eligible to receive a bonus for such Performance Cycle, within 90 days of the commencement of such Performance Cycle, or if less, prior to the expiration of 25% of the length of such Performance Cycle.  

(b)

Performance Objectives.  The Committee shall establish three targets for each Performance Cycle for the Performance Objectives established by the Committee.  The three targets shall consist of a threshold (below which no bonus shall be payable), a plan level and a maximum level (above which no additional bonus shall be payable).

(c)

Bonus Percentages.  At the time that the Committee determines the Participants and establishes the Performance Objectives with respect to a Performance Cycle, it shall determine the bonus percentage payable to each Participant with respect to such Performance Cycle if the applicable threshold, plan or maximum level of the applicable Performance Objective is attained.  If a level achieved falls between two of the target levels, a Participant shall receive a bonus based on a straight line interpolation between the bonuses for the two target levels, or such other basis as the Committee shall determine at the time the Performance Objective for the Participant is established.  The bonus percentages represent the percentage of a Participant’s base salary as in effect on the October 31 that coincides with or immediately precedes the last day of the Performance Cycle that he or she shall be entitled to receive as a bonus if specified Performance Objective targets are attained.  Subject to the provisions of Section 7(g), there shall be no limit to the minimum or maximum bonus percentages that may be established for any Performance Cycle.  Bonus percentages may differ from Participant to Participant in any Performance Cycle and a Participant’s bonus percentages may change from year to year, but with respect to each Participant for each Performance Cycle, the bonus percentage for attaining the maximum level of the applicable Performance Objective shall exceed the bonus percentage for attaining the plan level of the applicable Performance Objective, which, in turn, shall exceed the bonus percentage for attaining the threshold level of the applicable Performance Objective.  In determining the bonus percentage for each Participant, the Committee may take into account the nature of the services rendered by such Participant, his past, present and potential contribution to the Company and its Subsidiaries, his seniority with the Company or any of its Subsidiaries and such other factors as the Committee, in its discretion, shall deem relevant.

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(d)

Termination of Employment During or After Performance Cycle. 

i)

If a Participant’s employment terminates during a Performance Cycle for which he or she was determined to be a Participant by reason of his or her death, his or her estate shall receive the bonus that would otherwise have been payable to such Participant for such Performance Cycle if the plan level were achieved, prorated to the portion of such Performance Cycle actually worked by such Participant.

ii)

If a Participant’s employment terminates during a Performance Cycle for which he was determined to be Participant by reason of his or her disability, such Participant shall receive the bonus, if any, which would otherwise been payable to such Participant for such Performance Cycle prorated to the portion of such Performance Cycle actually worked by such Participant.  

iii)

If a Participant’s employment terminates during a Performance Cycle by reason of his or her Retirement, such Participant shall receive the bonus, if any, which would otherwise have been payable to such Participant for such Performance Cycle prorated to the portion of such Performance Cycle actually worked by such Participant.

iv)

If a Participant’s employment terminates during a Performance Cycle for any reason other than death, disability or Retirement, such Participant shall receive no bonus for such Performance Cycle. 

v)

If a Participant’s employment terminates after the end of a Performance Cycle but prior to the date of payment of a bonus for any reason, such Participant shall receive the bonus, if any, which would otherwise have been payable to such Participant for such Performance Cycle.

(e)

Determination of Bonuses.  The Committee shall determine whether any Performance Objective targets were achieved for a Performance Cycle, which Participants shall have earned bonuses as the result thereof, and the bonus percentage such Participants are entitled to no later than the end of the first quarter of the Performance Cycle immediately subsequent to the Performance Cycle with respect to which the bonuses were earned.  With respect to bonuses intended to qualify as performance-based compensation for purposes of Section 162(m) of the Code, the Committee must certify in writing prior to the payment of the bonus that the applicable Performance Objective targets and any other material terms were in fact satisfied.  Written certification for this purpose shall include, without limitation, approved minutes of the Committee meeting in which the certification is made.

(f)

Change In Control.  Notwithstanding the foregoing, in the event that there shall be a Change in Control during a Performance Cycle, each Participant for such Performance Cycle shall be entitled to receive a bonus equal to the bonus payable to such Participant if the plan level for such Performance Cycle had been achieved prorated to the portion of such Performance Cycle actually worked by such Participant through the date of the Change in Control.  

(g)

Absolute Maximum Bonus.  Notwithstanding any other provision in the Plan to the contrary, the maximum bonus that may be paid to any Participant under the Plan with respect to any fiscal  year may not exceed $4,000,000.

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(h)

Unusual or Nonrecurring Events.  Unless otherwise determined by the Committee, Performance Objective targets may be adjusted to take into account unusual or nonrecurring events affecting the Company, a Subsidiary or a division or business unit, or the financial statements thereof, or changes in applicable laws, regulations or accounting principles to the extent such unusual or nonrecurring events or changes in applicable laws, regulations or accounting principles otherwise would result in dilution or enlargement of the bonus intended to be paid.  With respect to any bonus intended to qualify as performance-based compensation for purposes of Section 162(m) of the Code, it is intended that such adjustment be made in such manner as will not cause the bonus to fail to qualify as performance-based compensation.  

8.

Payment.

(a)

Timing.  Payment of any bonus to a Participant shall be made (i) in the case of a bonus payable in accordance with Section 7(d)(i), within 30 days of the Participant’s death, (ii) in the case of a bonus payable in accordance with the provisions of Section 7(d)(ii), (iii), (v) or (vi) within 30 days following the Committee’s determination and certification pursuant to Section 7(e) that the applicable targets for the preceding Performance Cycle were achieved, that the bonus was earned and what bonus percentage the Participant is entitled to or (iii) in the case of a bonus payable in accordance with the provisions of Section 7(f), within 30 days of the Change in Control.

(b)

Forfeiture.  Except as otherwise set forth in Section 7(d) or in the case of a Change of Control, in order to remain eligible to receive a bonus, a Participant must be employed by the Company at the end of a Performance Cycle.

(c)

Form of Payment.  All bonuses payable under the Plan, if any, shall be payable in cash.  All amounts hereunder shall be paid solely from the general assets of the Company.  The Company shall not maintain any separate fund to provide any benefits hereunder, and each Participant shall be solely an unsecured creditor of the Company with respect thereto.

9.

General Provisions of the Plan.

(a)

Term of the Plan.  The Plan shall be effective with respect to Fiscal Years 2005 through 2009 and shall terminate upon the payment of all bonuses, if any, earned with respect to Fiscal Year 2009, unless the holders of a majority of the shares of the Company’s Outstanding Voting Securities present in person or by proxy at any special or annual meeting of the stockholders of the Company occurring on or prior to the date of the 2009 Annual Meeting of Stockholders shall approve the continuation of the Plan.

(b)

Amendment and Termination.  Notwithstanding Section 9(a), the Board or the Committee may at any time amend, suspend, discontinue or terminate the Plan as it deems advisable; provided, however, that no such amendment shall be effective without approval by the holders of a majority of the shares of the Company’s Outstanding Voting Securities present in person or by proxy at any special or annual meeting of the Company’s stockholders, to the extent such approval is necessary to continue to qualify the amounts payable hereunder to “covered employees” (within the meaning of Section 162(m) of the Code) as deductible under Section 162(m) of the Code.

7

(c)

Designation of Beneficiary.  Each Participant may designate a beneficiary or beneficiaries (which beneficiary may be an entity other than a natural person) to receive any payments which may be made following the Participant’s death.  Such designation may be changed or canceled at any time without the consent of any such beneficiary.  Any such designation, change or cancellation must be made in a form approved by the Committee and shall not be effective until received by the Committee.  If no beneficiary has been named, or the designated beneficiary or beneficiaries shall have predeceased the Participant, the beneficiary shall be the Participant’s spouse or, if no spouse survives the Participant, the Participant’s estate.  If a Participant designates more than one beneficiary, the rights of such beneficiaries shall be payable in equal shares, unless the Participant has designated otherwise.

(d)

Withholding.  Any amount payable to a Participant or a beneficiary under the Plan shall be subject to any applicable Federal, state and local income and employment taxes and any other amounts that the Company or a Subsidiary is required at law to deduct and withhold from such payment.

10.

No Right of Continued Employment.  Neither the existence nor any term of the Plan shall be construed as conferring upon any Participant any right to continue in the employment of the Company or any of its Subsidiaries, nor shall participation herein for any Performance Cycle confer upon any Participant any right to participate in the Plan with respect to any subsequent Performance Cycle.

11.

No Limitation on Corporate Actions.  Nothing contained in the Plan shall be construed to prevent the Company or any Subsidiary from taking any corporate action, which is deemed by it to be appropriate or in its best interest, whether or not such action would have an adverse effect on any bonuses paid under the Plan.  No employee, beneficiary or other person shall have any claim against the Company or any Subsidiary as a result of any such action.

12.

Miscellaneous.

(a)

Nonalienation of Benefits.  Except as expressly provided herein, no Participant or beneficiary shall have the power or right to transfer, anticipate, or otherwise encumber the Participant’s interest under the Plan.  The Company’s obligations under the Plan are not assignable or transferable except to (i) a corporation or other entity which acquires all or substantially all of the Company’s assets or (ii) any corporation or other entity into which the Company may be merged or consolidated.  The provisions of the Plan shall inure to the benefit of each Participant and the Participant’s beneficiaries, heirs, executors, administrators or successors in interest.

(b)

Severability.  If any provision of the Plan is held unenforceable, the remainder of the Plan shall continue in full force and effect without regard to such unenforceable provision and shall be applied as though the unenforceable provision were not contained in the Plan.

(c)

Governing Law.  The Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to the conflict of law principles thereof.

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