Document:

ex10-2.htm

    
      

    

    Exhibit 10.2

     

    KAMAN
      CORPORATION

     

    CHANGE
      IN CONTROL AGREEMENT

     

    

    THIS
      AGREEMENT is made effective as of August 7, 2007 by and
      between KAMAN CORPORATION, a Connecticut corporation (the “Company”), and NEAL
      J. KEATING (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 August 7, 2007 with the term of such agreement
      beginning September 17, 2007 (the "Effective Date"); and

    

    WHEREAS,
      the Board recognizes that the possibility of a Change in Control exists and
      that
      such possibility, which will not be addressed by the Employment Agreement,
      and
      the uncertainty and questions which it may raise among management, may result
      in
      the departure or distraction of management personnel to the detriment of the
      Company and its shareholders; and

    

    WHEREAS,
      the Board has determined that appropriate steps should be taken to reinforce
      and
      encourage the continued attention and dedication of members of the Company's
      management, including the Executive, to their assigned duties without the
      potential distractions arising from the possibility of a Change in
      Control;

    

    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.

     

    
      
        
        

      

      
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    4.  Compensation
      Other Than Severance Payments.

     

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

     

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

    

    5.  Severance
      Payments.

     

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

     

    
      
        
        

      

      
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              (a)  

            	
              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) three (3)
                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) three (3) 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.

            

    

    

    
      	
              (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 Company stock
                subject to the stock appreciation right or stock option on the date
                of the
                Change in Control, over the exercise price(s) of such stock appreciation
                rights or stock options, and (iii) all long-term performance awards
                shall
                be deemed fully vested and fully earned and then shall be canceled
                in
                exchange for a cash payment equal to 100% of the target value of
                each such
                award.

            

    

    

    
      
        
        

      

      
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              (d)  

            	
              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 three 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).

            

    

    

    
      	
              (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.

            

    

    

    
      
        
        

      

      
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    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 Companyand 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.

            

    

     

    
      	
              (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.

    

    
      
        
        

      

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

     

    5.5           Coordination
      with Employment Agreement.

    

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

     

    6.  Termination
      Procedures and Compensation During Dispute.

     

    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).

    

    
      
        
        

      

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

     

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

    

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

     

    8.  Successors;
      Binding Agreement.

     

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

    

    
      
        
        

      

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

    

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

     

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

    

    If
      to the Company:

    

    Kaman
      Corporation

    1332
      Blue Hills Avenue, P.O. Box
      1

    Bloomfield,
      CT 06002

    Attention:
      Chief Financial
      Officer

    

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

            

    

     

    
      
        
        

      

      
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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 Company or any of its subsidiaries
                or
                affiliates to leave such employment in order to accept employment
                with or
                render services to or with any other person, firm, corporation or
                other
                entity unaffiliated with the Company or knowingly take any action
                to
                materially assist or aid any other person, firm, corporation or other
                entity in identifying or hiring any such employee (provided, that
                the
                foregoing shall not be violated by general advertising not targeted
                at
                Company employees nor by serving as a reference for an employee with
                regard to an entity with which the Executive is not
                affiliated).  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 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
                Company
                within the geographical area in which the business of 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, 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).

            

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    
      	
              (e)  

            	
              Return
                of Company Property and Records.  The Executive agrees that
                upon termination of the Executive’s employment, for any cause whatsoever,
                the Executive will surrender to the Company in good condition (reasonable
                wear and tear excepted) all property and equipment belonging to the
                Company and all records kept by the Executive containing the names,
                addresses or any other information with regard to customers or customer
                contacts of the Company, or concerning any proprietary or confidential
                information of the Company or any operational, financial or other
                documents given to the Executive during the Executive’s employment with
                the Company.

            

    

     

    
      	
              (f)  

            	
              Cooperation.  The
                Executive agrees that, following termination of the Executive’s employment
                for any reason, the Executive shall upon reasonable advance notice,
                and to
                the extent it does not interfere with previously scheduled travel
                plans
                and does not unreasonably interfere with other business activities
                or
                employment obligations, assist and cooperate with the Company with
                regard
                to any matter or project in which the Executive was involved during
                the
                Executive’s employment, including any litigation.  The Company
                shall compensate the Executive for any lost wages (or, 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 the President of the Company 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 any other agreements or
      representations, oral or otherwise, express or implied, with respect to the
      subject matter hereof which may exist between the parties,  except
      that it is specifically acknowledged by the Company that this Agreement does
      not
      supersede the Employment Offer Letter
      dated August 7, 2007 between the parties or the Executive Employment
      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.

            

    

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
      	
              (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,  (ii) the willful engaging by the Executive in conduct
                which is demonstrably and materially injurious to the Company or
                its
                subsidiaries, monetarily or otherwise, or (iii) violation of section
                1(b)
                of the Executive Employment Agreement between Executive and the
                Company.  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.

            

    

    

    
      	
              (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 Company representing thirty-five (35%) or more
                of the
                combined voting power of the Company’s then outstanding voting securities
                generally entitled to vote in the election of directors of the 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 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 Company subsequent to the beginning of
                such
                period whose election, or nomination for election by the 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 Company and whose appointment or
                election
                was not approved by at least a majority of the directors of the Company
                in
                office immediately before any such
                contest;

            

    

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    
      	
              (III)  

            	
              there
                is consummated a Merger of the Company with any other business entity,
                other than (A) a Merger which would result in the securities of the
                Company generally entitled to vote in the election of directors of
                the
                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 Company or any
                Subsidiary, 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, generally entitled to
                vote in
                the election of directors of the 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 Company
                (or
                similar transaction) in which no Person is or becomes the Beneficial
                Owner, directly or indirectly, of securities of the Company representing
                35% or more of the combined voting power of the Company’s then outstanding
                voting securities generally entitled to vote in the election of directors
                of the Company; or

            

    

     

    
      	
              (IV)  

            	
              the
                stockholders of the Company approve a plan of complete liquidation
                or
                dissolution of the Company or there is consummated the sale or disposition
                by the Company of all or substantially all of the Company’s assets, other
                than a sale or disposition by the Company of all or substantially
                all of
                the Company’s assets to an entity where the outstanding securities
                generally entitled to vote in the election of directors of the 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.

            

    

     

    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 Corporation 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.

            

    

    

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    
      	
              (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.

            

    

    

    
      	
              (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 and Chief Operating Officer or President
                and Chief Executive Officer, as the case may be, of the Company 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 Company or any of its subsidiaries,
      including, without limitation, a sale or other transfer of property or other
      assets of the Company or its 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 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 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 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)  

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

            

    

    

    
      
        
        

      

      
        17

        
          

        

      

      
        
        

      

    

    
      	
              (t)  

            	
              “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 Company or any of its 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
                Company in substantially the same proportions and with substantially
                the
                same voting rights as their ownership and voting rights with respect
                to
                the Company.

            

    

    

    
      	
              (u)  

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

            

    

    

    
      	
              (v)  

            	
              “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
                  Corporation

              	 	 
	 	 	 
	
                /s/ Paul
                  R. Kuhn

              	 	 8/7/07
	
                By:  Paul
                  R. Kuhn

              	 	
                Date

              
	
                Its:  Chairman

              	 	 
	 	 	 
	 	 	 
	 	 	 

      

    
      
        	
                 

              	 	 
	 	 	 
	
                /s/ Neal
                  J. Keating

              	 	 08/07/07
	
                Neal J. Keating

              	 	
                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
      Corporation, its affiliates, subsidiaries, divisions, successors and assigns
      in
      such capacity, and the current, future and former employees, officers,
      directors, trustees and agents thereof (collectively referred to throughout
      this
      Agreement as “Employer”), and Neal J. Keating (“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 positions as ________________________of
      Employer 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 _______ __, 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 Financial Officer, or his/her designee, or mailed to Kaman
      Corporation, 1332 Blue Hills Avenue, P.O. Box 1, Bloomfield, CT 06002, Attention
      Chief Financial Officer, 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
                  CORPORATION

                 

                 

              
	 	
                By:  

              	
                 

              
	 	 	 
	 	
                 Name:

              	 [NAME]
	 	
                 Title:

              	 
	 	
                 Date:

              	 
	 	 	 

      

    

     

    
 

    
      
        	
                 

              	
                 

                 

              	
                 

                 

                 

              
	 	
                 

              
	 	 Neal
                J. Keating
	
                 

              	 
	
                Date:
                  

              	
                 

              

      

    

     

     

    
      
        
        

      

      
        25Unassociated Document

    

      Exhibit
        10.3

      

      THE
        TERMS AND CONDITIONS OF THIS AGREEMENT ARE PURSUANT TO THE PG&E CORPORATION
        OFFICER SEVERANCE PLAN, ADOPTED BY THE NOMINATING, COMPENSATION, AND GOVERNANCE
        COMMITTEE OF PG&E CORPORATION, AND ARE NOT SUBJECT TO
        NEGOTIATION

      

      SEPARATION
        AGREEMENT

      

       

      This
        Separation Agreement (this “Agreement”) is made and entered into by and between
        Bruce R. Worthington and PG&E Corporation (the “Company”) (collectively the
“Parties”) and sets forth the terms and conditions of Mr. Worthington’s
        separation from employment with the Company.  The “Effective Date” of
        this Agreement is defined in paragraph 17(a).

       

      1.  Resignation.  Effective
        the close of business on November 10, 2006, Mr. Worthington will resign from
        his
        position as Senior Vice President and General Counsel of the
        Company.  Effective the close of business on April 6, 2007 (for
        purposes of this Agreement, the “Date of Resignation”), Mr. Worthington will
        resign from employment with the Company.  Regardless of whether Mr.
        Worthington accepts this Agreement, on his Date of Resignation, he will be
        paid
        all salary or wages and vacation accrued, unpaid and owed to him as of that
        date, he will remain entitled to any other benefits to which he is otherwise
        entitled under the provisions of the Company’s plans and programs, and he will
        receive notice of the right to continue his existing health-insurance coverage
        pursuant to COBRA.

       

      Upon
        the
        Date of Resignation, all unvested stock option grants, restricted stock grants,
        and performance share grants provided to Mr. Worthington under PG&E
        Corporation’s Long-Term Incentive Program and 2006 Long-Term Incentive Plan
        shall vest under the provisions governing termination by reason of retirement
        contained in each respective plan or program in effect at the time this
        agreement is signed by Mr. Worthington.  The payment, exercise, and
        withdrawal of Mr. Worthington’s vested stock option grants, restricted stock
        grants and performance share grants shall be as provided under the terms
        of
        their respective plans or program in effect at the time this agreement is
        signed
        by Mr. Worthington.

       

      In
        the
        event that officers in Mr. Worthington’s officer band are eligible for a payment
        under the Company’s Short-Term Incentive Plan (“STIP”) for the year in which the
        Date of Resignation occurs, the Company will make the STIP payment that he
        would
        have received assuming he would have been rated “proficient” in all competencies
        and that he had “met” the 2007 goals, pro-rated to reflect the number of months
        from the beginning of the year to the Date of Resignation under the provisions
        governing termination by reason of retirement.  The STIP payment, if
        any, will be made at such time as STIP payments are made to officers in his
        band.  Subject to the foregoing, the STIP Plan Administrator will have
        the sole discretion to determine the amount of STIP payment, consistent with
        the
        program guidelines for the year in which the Date of Resignation
        occurs.

       

      The
        benefits set forth in paragraph 2 below are conditioned upon Mr. Worthington’s
        acceptance of this Agreement.

       

      2.  Separation
        benefits.  In consideration of his acceptance of this
        Agreement, the Company will provide to Mr. Worthington the following separation
        benefits:

       

      a.  Severance
        payment.  Under the terms of the PG&E Corporation
        Officer

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      Severance
        Policy, Mr. Worthington’s severance payment amount is One Million Five Hundred
        Sixteen Thousand Six Hundred Seventy-Five Dollars
        ($1,516,675).  Within five business days after the Date of
        Resignation, but conditioned on the occurrence of the Effective Date of this
        Agreement as set forth in paragraph 17(a) below, the Company will make a
        lump-sum payment to Mr. Worthington in the gross amount of One Million
        Fifty-Three Thousand Dollars ($1,516,675), less applicable withholdings and
        deductions.

       

      b.  Career
        transition services.  For a maximum period of one year
        following the Date of Resignation, the Company will provide Mr. Worthington
        with
        executive career transition services from the firm of Torchiana, Mastrov
&
Sapiro, Inc., in accordance with the contract between the Company and Torchiana,
        Mastrov & Sapiro, Inc.  Mr. Worthington’s entitlement to services
        under this Agreement will terminate when he becomes employed on a full-time
        basis, either by another employer or through self-employment.  If Mr.
        Worthington becomes employed, as defined, he will promptly notify PG&E
        Corporation’s Human Resources Officer to enable the Company to end the provision
        of services to him by Torchiana, Mastrov & Sapiro, Inc.

       

      c.  Payment
        of COBRA premiums.  If Mr. Worthington elects and is
        otherwise eligible to continue his existing health-insurance coverage pursuant
        to COBRA, the Company will pay his monthly COBRA premiums for the eighteen-month
        period commencing the first full month after the Date of Resignation and
        until
        and unless Mr. Worthington becomes covered under the health-insurance plan
        of
        another employer or through self-employment.  Mr. Worthington will
        promptly notify the PG&E Corporation’s Human Resources Officer if he becomes
        employed within that period.

       

      3.  Defense
        and indemnification in third-party claims.  The Company
        and/or its parent, affiliate, or subsidiary will provide Mr. Worthington
        with
        legal representation and indemnification protection in any legal proceeding
        in
        which he is a party or is threatened to be made a party by reason of the
        fact
        that he is or was an employee or officer of the Company and/or its parent,
        affiliate or subsidiary, in accordance with the terms of the resolution of
        the
        Board of Directors of PG&E Corporation dated December 18, 1996.

       

      4.  Cooperation
        with legal proceedings.  Mr. Worthington will, upon
        reasonable notice, furnish information and proper assistance to the Company
        and/or its parent, affiliate or subsidiary (including truthful testimony
        and
        document production) as may reasonably be required by them or any of them
        in
        connection with any legal, administrative or regulatory proceeding in which
        they
        or any of them is, or may become, a party, or in connection with any filing
        or
        similar obligation imposed by any taxing, administrative or regulatory authority
        having jurisdiction, provided, however, that the Company and/or its parent,
        affiliate or subsidiary will pay all reasonable expenses incurred and income
        foregone by Mr. Worthington in complying with this paragraph.

       

      5.  Release
        of claims and covenant not to sue.

       

      a.  In
        consideration of the separation benefits and other benefits the Company is
        providing under this Agreement, Mr. Worthington, on behalf of himself and
        his
        representatives, agents, heirs and assigns, waives, releases, discharges
        and
        promises never to

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      assert
        any and all claims, liabilities or obligations of every kind and nature,
        whether
        known or unknown, suspected or unsuspected that he ever had, now has or might
        have as of the Effective Date against the Company or its predecessors, parent,
        affiliates, subsidiaries, shareholders, owners, directors, officers, employees,
        agents, attorneys, successors, or assigns.  These released claims
        include, without limitation, any claims arising from or related to Mr.
        Worthington’s employment with the Company, its parent or any of its affiliates
        and subsidiaries, and the termination of that employment.  These
        released claims also specifically include, but are not limited, any claims
        arising under any federal, state and local statutory or common law, such
        as (as
        amended and as applicable) Title VII of the Civil Rights Act, the Age
        Discrimination in Employment Act, the Americans With Disabilities Act, the
        Employee Retirement Income Security Act, the California Fair Employment and
        Housing Act, the California Labor Code, any other federal, state or local
        law
        governing the terms and conditions of employment or the termination of
        employment, and the law of contract and tort; and any claim for attorneys’
fees.

       

      b.  Mr.
        Worthington acknowledges that there may exist facts or claims in addition
        to or
        different from those which are now known or believed by him to
        exist.  Nonetheless, this Agreement extends to all claims of every
        nature and kind whatsoever, whether known or unknown, suspected or unsuspected,
        past or present, and Mr. Worthington specifically waives all rights under
        Section 1542 of the California Civil Code which provides that:

       

      
        	
                 

              	
                A
                  GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
                  NOT KNOW
                  OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING
                  THE
                  RELEASE, WHICH IF KNOWN TO HIM OR HER MUST HAVE MATERIALLY AFFECTED
                  HIS OR
                  HER SETTLEMENT WITH THE DEBTOR.

              

      

       

      c.  With
        respect to the claims released in the preceding paragraphs, Mr. Worthington
        will
        not initiate or maintain any legal or administrative action or proceeding
        of any
        kind against the Company or its predecessors, parent, affiliates, subsidiaries,
        shareholders, owners, directors, officers, employees, agents, attorneys,
        successors, or assigns, for the purpose of obtaining any personal relief,
        nor
        (except as otherwise required or permitted by law) assist or participate
        in any
        such proceedings, including any proceedings brought by any third
        parties.

       

      6.  Re-employment.  Mr.
        Worthington will not seek any future re-employment with the Company, its
        parent
        or any of its subsidiaries or affiliates.  This paragraph will not,
        however, preclude Mr. Worthington from accepting an offer of future employment
        from the Company, its parent or any of its subsidiaries or
        affiliates.

       

      7.  Non-disclosure.

       

      a.  Mr.
        Worthington will not disclose, publicize, or circulate to anyone in whole
        or in
        part, any information concerning the existence, terms, and/or conditions
        of this
        Agreement without the express written consent of the PG&E Corporation’s
        Chief Legal Officer unless otherwise required or permitted by
        law.  Notwithstanding the preceding sentence, Mr. Worthington may
        disclose the terms and conditions of this Agreement to his family members,
        and
        any attorneys or tax advisors, if any, to whom there is a bona fide
        need for disclosure in order for them to render professional services to
        him,
        provided that the person first agrees to keep theinformation confidential
        and
        not to make any disclosure of the terms and conditions of this Agreement
        unless
        otherwise required or permitted by law.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      b.  Mr.
        Worthington will not use, disclose, publicize, or circulate any confidential
        or
        proprietary information concerning the Company or its subsidiaries or
        affiliates, which has come to his attention during his employment with the
        Company, unless doing so is expressly authorized in writing by the PG&E
        Corporation’s Chief Legal Officer, or is otherwise required or permitted by
        law.  Before making any legally-required or permitted disclosure, Mr.
        Worthington will use his best efforts to give the Company notice at least
        ten
        (10) business days in advance.

       

      8.  No
        unfair competition.

       

      a.  Mr.
        Worthington will not engage in any unfair competition against the Company,
        its
        parent or any of its subsidiaries or affiliates.

       

      b.  For
        a
        period of one year after the Effective Date, Mr. Worthington will not, directly
        or indirectly, solicit or contact for the purpose of diverting or taking
        away or
        attempt to solicit or contact for the purpose of diverting or taking
        away:

       

      
        	
                (1)  

              	
                any
                  existing customer of the Company or its parent, affiliates or
                  subsidiaries;

              

      

       

      
        	
                (2)  

              	
                any
                  prospective customer of the Company or its parent, affiliates or
                  subsidiaries about whom Mr. Worthington acquired information as
                  a result
                  of any solicitation efforts by the Company or its parent, affiliates
                  or
                  subsidiaries, or by the prospective customer, during Mr. Worthington’s
                  employment with the Company;

              

      

       

      
        	
                (3)  

              	
                any
                  existing vendor of the Company or its parent, affiliates or
                  subsidiaries;

              

      

       

      
        	
                (4)  

              	
                any
                  prospective vendor of the Company or its parent, affiliates or
                  subsidiaries, about whom Mr. Worthington acquired information as
                  a result
                  of any solicitation efforts by the Company or its parent, affiliates
                  or
                  subsidiaries, or by the prospective vendor, during Mr. Worthington’s
                  employment with the Company;

              

      

       

      
        	
                (5)  

              	
                any
                  existing employee, agent or consultant of the Company or its parent,
                  affiliates or subsidiaries, to terminate or otherwise alter the
                  person’s
                  or entity’s employment, agency or consultant relationship with the Company
                  or its parent, affiliates or subsidiaries;
                  or

              

      

       

      
        	
                (6)  

              	
                any
                  existing employee, agent or consultant of the Company or its parent,
                  affiliates or subsidiaries, to work in any capacity for or on behalf
                  of
                  any person, company or other business enterprise that is in competition
                  with the Company or its parent, affiliates
                  orsubsidiaries.

              

      

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

       

      9.  Material
        breach by Employee.  In the event that Mr. Worthington
        breaches any material provision of this Agreement, including but not necessarily
        limited to paragraphs 4, 5, 6, 7, and/or 8, the Company will have no further
        obligation to pay or provide to him any unpaid amounts or benefits specified
        in
        this Agreement and will be entitled to immediate return of any and all amounts
        or benefits previously paid or provided to him under this Agreement and to
        recalculate any future pension benefit entitlement without the additional
        credited age he received or would have received under this
        Agreement.  Despite any breach by Mr. Worthington, his other duties
        and obligations under this Agreement, including his waivers and releases,
        will
        remain in full force and effect.  In the event of a breach or
        threatened breach by Mr. Worthington of any of the provisions in paragraphs
        4,
        5, 6, 7, and/or 8, the Company will, in addition to any other remedies provided
        in this Agreement, be entitled to equitable and/or injunctive relief and,
        because the damages for such a breach or threatened breach will be difficult
        to
        determine and will not provide a full and adequate remedy, the Company will
        also
        be entitled to specific performance by Mr. Worthington of his obligations
        under
        paragraphs 4, 5, 6, 7, and/or 8.

       

      10.  Material
        breach by the Company.  Mr. Worthington will be entitled to
        recover any loss, injury, or actual damages in the event of any material
        breach
        of this Agreement by the Company, including any unexcused late or non-payment
        of
        any amounts owed under this Agreement, or any unexcused failure to provide
        any
        other benefits specified in this Agreement.  In the event of a breach
        or threatened breach by the Company of any of its material obligations to
        him
        under this Agreement, Mr. Worthington will be entitled, in addition to any
        other
        remedies provided in this Agreement, to specific performance of the Company’s
        obligations and any other applicable equitable or injunctive
        relief.  Despite any breach by the Company, its other duties and
        obligations under this Agreement will remain in full force and
        effect.

       

      11.   No
        admission of liability.  This Agreement is not, and will not
        be considered, an admission of liability or of a violation of any applicable
        contract, law, rule, regulation, or order of any kind.

       

      12.  Complete
        agreement.  This Agreement sets forth the entire agreement
        between the Parties pertaining to the subject matter of this Agreement and
        fully
        supersedes any prior or contemporaneous negotiations, representations,
        agreements, or understandings between the Parties with respect to any such
        matters, whether written or oral (including any that would have provided
        Mr.
        Worthington with any different severance arrangements).  The Parties
        acknowledge that they have not relied on any promise, representation or
        warranty, express or implied, not contained in this Agreement.  Parol
        evidence will be inadmissible to show agreement by and among the Parties
        to any
        term or condition contrary to or in addition to the terms and conditions
        contained in this Agreement.

       

      13.  Severability.  If
        any provision of this Agreement is determined to be invalid, void, or
        unenforceable, the remaining provisions will remain in full force and
        effect.

       

      14.  Arbitration.  With
        the exception of any request for specific performance, injunctive or other
        equitable relief, any dispute or controversy of any kind arising out of or
        related to this Agreement, Mr. Worthington’s employment with the Company (or
        with theemploying subsidiary), the separation of Mr. Worthington from that
        employment and from his positions as an officer and/or director of the Company
        or any subsidiary or affiliate, or any claims for benefits, will be resolved
        exclusively by final and binding arbitration using a three-member arbitration
        panel in accordance with the Commercial Arbitration Rules of the American
        Arbitration Association currently in effect, provided, however, that in
        rendering their award, the arbitrators will be limited to accepting the position
        of Mr. Worthington or the Company.  The only claims not covered by
        this paragraph are any non-waivable claims for benefits under workers’
compensation or unemployment insurance laws, which will be resolved under
        those
        laws.  Any arbitration pursuant to this paragraph will take place in
        San Francisco, California.  The Parties may be represented by legal
        counsel at the arbitration but must bear their own fees for such representation
        in the first instance.  The prevailing party in any dispute or
        controversy covered by this paragraph, or with respect to any request for
        specific performance, injunctive or other equitable relief, will be entitled
        to
        recover, in addition to any other available remedies specified in this
        Agreement, all litigation expenses and costs, including any arbitrator,
        administrative or filing fees and reasonable attorneys’ fees, except as
        prohibited or limited by law.  The Parties specifically waive any
        right to a jury trial on any dispute or controversy covered by this
        paragraph.  Judgment may be entered on the arbitrators’ award in any
        court of competent jurisdiction.  Subject to the arbitration
        provisions of this paragraph, the sole jurisdiction and venue for any action
        related to the subject matter of this Agreement will be the California state
        and
        federal courts having within their jurisdiction the location of the Company’s
        principal place of business in California at the time of such action, and
        both
        Parties hereby consent to the jurisdiction of such courts for any such
        action.

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      15.  Governing
        law.  This Agreement will be governed by and construed under
        the laws of the United States and, to the extent not preempted by such laws,
        by
        the laws of the State of California, without regard to their conflicts of
        laws
        provisions.

       

      16.  No
        waiver.  The failure of either Party to exercise or enforce,
        at any time, or for any period of time, any of the provisions of this Agreement
        will not be construed as a waiver of that provision, or any portion of that
        provision, and will in no way affect that party’s right to exercise or enforce
        such provisions.  No waiver or default of any provision of this
        Agreement will be deemed to be a waiver of any succeeding breach of the same
        or
        any other provisions of this Agreement.

       

      17.  Acceptance
        of Agreement.

       

      a.  Mr.
        Worthington was provided up to 21 days to consider and accept the terms of
        this
        Agreement and was advised to consult with an attorney about the Agreement
        before
        signing it.  After signing the Agreement, Mr. Worthington will have an
        additional seven (7) days in which to revoke in writing acceptance of this
        Agreement.  To revoke, Mr. Worthington will submit a signed statement
        to that effect to PG&E Corporation’s Human Resources Officer before the
        close of business on the seventh day.  If Mr. Worthington does not
        submit a timely revocation, the Effective Date of this Agreement will be
        the
        eighth day after he has signed it.

       

      b.  Mr.
        Worthington acknowledges reading and understanding the contents of this
        Agreement, being afforded the opportunity to review carefully this Agreement
        with an attorney of his choice, not relying on any oral or written
        representation not contained in this

       

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

       

       Agreement,
        signing this Agreement knowingly and voluntarily, and, after the Effective
        Date
        of this Agreement, being bound by all of its provisions.

       

      Dated:                                                          
                PG&E
        CORPORATION

       

       

                                      HYUN
        PARK                                     

      By:  Hyun
        Park

       

      Dated:  
        April 10,
        2007                                         BRUCE
        R.
        WORTHINGTON               

                      Bruce
        R. Worthington

      
        
           

        

        
          7

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