<PAGE>
To the Holders of Class B common stock and Class A common stock of
Kaman Corporation:
The Annual Meeting of Shareholders of Kaman Corporation will be
held on April 14, 1998 to consider, in addition to the election of
directors, certain other matters. These matters include proposals
to amend each of the Corporation's Employees Stock Purchase Plan
and 1993 Stock Incentive Plan in order to increase the number of
shares of the Corporation's Class A common stock reserved for
issuance pursuant to each such plan. These two proposals are to be
voted on by both the Class B and Class A shareholders and are
described in detail in the Proxy Statement which follows this
letter and the Notice of Annual Meeting. The Class A shareholders
are being invited to vote on these proposals at the request of the
Board of Directors. The other proposals set forth in the Notice of
Annual Meeting, including the election of directors, are to be
voted on only by the Class B shareholders and are not discussed in
the Proxy Statement.
The Board of Directors recommends a vote by the Class A
shareholders in favor of the proposals to increase the shares of
Class A common stock reserved for issuance under the Employees
Stock Purchase Plan and the 1993 Stock Incentive Plan. The Board
recommends a vote by the Class B shareholders in favor of all of
the proposals set forth in the Notice of Annual Meeting.
Subject to the discussion contained in the Voting Rights and
Effect of Vote section of the Proxy Statement, the adoption of the
amendments to the Employees Stock Purchase Plan and the 1993 Stock
Incentive Plan will require approval by the holders of a majority
of the outstanding shares of each class present in person or by
proxy and voting on the particular proposal. The adoption of all
other proposals will require approval by the holders of a majority
of the Class B common stock represented in person or by proxy at
the Annual Meeting and voting thereon.
Your prompt return of the enclosed proxy, signed and completed,
in the envelope which has been enclosed for your convenience, will
be greatly appreciated.
Sincerely,
Charles H. Kaman
Chairman
Dated March 16, 1998
<PAGE>
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
APRIL 14, 1998
To the Holders of Class B common stock and Class A common stock of
Kaman Corporation:
Notice is hereby given that the Annual Meeting of Shareholders
of Kaman Corporation will be held at the offices of the
Corporation, Blue Hills Avenue, Bloomfield, Connecticut on the 14th
day of April, 1998, at 11:00 a.m., local time, for the following
purposes:
1. To elect fifteen (15) Directors to serve for the
ensuing year and until their successors are duly elected and
qualify.
2. To approve an amendment to the Kaman Corporation
Employees Stock Purchase Plan.
3. To approve an amendment to the Kaman Corporation 1993
Stock Incentive Plan.
4. To consider and act upon a proposal to appoint KPMG
Peat Marwick LLP as auditors for the Corporation for the ensuing
year.
5. To transact such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on
March 2, 1998, as the record date for determining the holders of
Class B common stock and Class A common stock entitled to notice of
and to vote at the Annual Meeting.
Proposals 2 and 3, which are to be considered and acted upon at
the Annual Meeting by the Holders of Class B common stock as well
as the Holders of Class A common stock, are discussed in the
accompanying Proxy Statement. The Board of Directors has requested
a vote of the Class A shareholders on these plans because of the
interest in the plans which they may have even though no such
vote is otherwise required. Proposals 1 and 4 will be acted upon
only by the Class B shareholders and are not discussed in the Proxy
Statement.
In the absence of unforeseen developments, it is intended that
the Proxy with respect to the Class B common stock it represents
will be voted for the election of the following individuals as
Directors (all of whom are currently directors): Brian E. Barents,
Fred A. Breidenbach, E. Reeves Callaway III, Frank C. Carlucci,
Laney J. Chouest, John A. DiBiaggio, Edythe J. Gaines, Huntington
Hardisty, Charles H. Kaman, C. William Kaman II, Eileen S. Kraus,
Hartzel Z. Lebed, Walter H. Monteith, Jr., John S. Murtha, Wanda
Lee Rogers, and in favor of proposals Nos. 2, 3, and 4.
Page 1
<PAGE>
<PAGE>
The election of the proposed slate of Directors will require a
plurality of the votes cast by Class B shares entitled to vote.
Approval of proposals Nos. 2, 3, and 4 will require the affirmative
vote of a majority of the Class B common stock present in person or
by proxy and voting at the meeting. Subject to the discussion
contained in the Voting Rights and Effect of Vote section of the
Proxy Statement, the adoption of each of proposals 2 and 3 will
require the affirmative vote of a majority of the Class B and Class
A common stock, present in person or by proxy and voting on each
proposal at the meeting, voting as separate classes.
All shareholders are cordially invited to attend the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
CANDACE A. CLARK, Secretary
Dated March 16, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON,
THE DIRECTORS URGE YOU TO COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY IN THE ACCOMPANYING ENVELOPE WHICH REQUIRES NO POSTAGE.
Page 2
<PAGE>
<PAGE>
KAMAN CORPORATION
BLUE HILLS AVENUE
BLOOMFIELD, CONNECTICUT 06002
TELEPHONE: (860) 243-7100
PROXY STATEMENT
This Proxy Statement is being furnished to the holders of
Class A common stock of Kaman Corporation (the "Corporation") in
connection with the solicitation by the management of the
Corporation of proxies for use at the Annual Meeting of
Shareholders of the Corporation to be held on Tuesday, April
14, 1998, at the time, place and for the purposes set forth in the
accompanying Notice of Annual Meeting dated March 16, 1998. Copies
are also being provided to the holders of Class B common stock for
their information.
The Board of Directors has fixed the close of business on
March 2, 1998 as the record date for determining shareholders
entitled to notice of and to vote at the Annual Meeting. A majority
of the issued and outstanding shares of Class A common stock
entitled to vote, represented in person or by proxy, shall
constitute a quorum for the transaction of business by the holders
of such class. Any stockholder giving a proxy has the power to
revoke it at any time before it is voted by executing and
delivering to the Corporation (i) written notice of its revocation
or (ii) a later dated proxy.
The Corporation intends to mail this Proxy Statement and the
accompanying form of proxy to stockholders on or about March 16,
1998.
VOTING RIGHTS AND EFFECT OF VOTE
Upon Class B common shareholder approval of the proposals to
amend the Corporation's Employees Stock Purchase Plan and 1993
Stock Incentive Plan, all statutorily required shareholder
approvals will have been obtained. Class A common stock is
nonvoting in nature except under certain circumstances required
by Connecticut law. While these proposals do not require approval
by Class A common shareholders under Connecticut law, the Board of
Directors recognizes that these shareholders have an interest in
the proposals and therefore, has also requested approval by the
Class A common shareholders. Proxies are being solicited from the
Class A common shareholders with respect to these proposals
Page 3
<PAGE>
<PAGE>
only. In the event that either of the proposals is adopted by the
Class B common shareholders, but rejected by the Class A common
shareholders, the Board of Directors would reconsider the proposal
and determine to implement or reject the proposal in accordance
with its judgment of what would be in the best interests of the
Corporation under the circumstances.
Subject to the foregoing discussion, approval of the amendment
to the Corporation's Employees Stock Purchase Plan and approval of
the amendment to the Corporation's 1993 Stock Incentive Plan will
require the affirmative vote of the holders of the majority of
Class B common stock and Class A common stock represented in person
or by proxy and voted on the proposal, voting as separate classes
on each such proposal.
VOTING PROCEDURE
Under the applicable provisions of the Connecticut Business
Corporation Act (the "CBCA"), shares entitled to vote as a separate
voting group may take action on a particular matter at the Annual
Meeting only if a quorum of those shares exists with respect to
that matter. A majority of the votes entitled to be cast
on the matter by the voting group constitutes a quorum of that
voting group for action on that matter. For this purpose, only
shares of Class B and Class A common stock held by those present at
the Annual Meeting or for which signed proxies are returned will be
considered to be represented at the Annual Meeting. All shares of
Class B and Class A common stock represented at the Annual Meeting
will be counted without regard to abstentions as to any particular
item.
All duly executed proxies received prior to the Annual Meeting
will be voted in accordance with the terms of such proxies. Shares
of Class B and Class A common stock represented by proxies that are
returned signed but without instructions for voting will be voted
as recommended by management. Shares of Class B and Class A common
stock represented by proxies that are returned unsigned or
improperly marked will be treated as abstentions for voting
purposes and, in the case of unsigned proxies only, not counted for
purposes of determining a quorum. Abstentions and broker nonvotes
are not counted in the tally of shares cast for or against a
particular matter.
Any shares represented by broker proxies which are not voted
with respect to any matter will not be counted in determining
whether a quorum is present for consideration of such matter and
will not be considered for purposes of determining the tally of
shares cast for or against such matter. Proxies marked to abstain
from voting with respect to any matter to be voted upon at the
Annual Meeting will not be considered for purposes of determining
the tally of shares cast for or against such matter.
Page 4
<PAGE>
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
CERTAIN BENEFICIAL OWNERS. On February 1, 1998, there were
issued and outstanding 22,686,588 shares of the Corporation's Class
A common stock and 667,814 shares of Class B common stock. The only
persons who on February 1, 1998 owned beneficially more than 5% of
the Corporation's voting securities, the Class B common stock, are
identified in the following table:
<TABLE>
- -----------------------------------------------------------------
Class of Number of Shares
Common Name and Address Owned as of Percentage
Stock Beneficial Owner February 1, 1998 of Class
- -----------------------------------------------------------------
<S> <C> <C> <C>
Class B Charles H. Kaman 258,375(1) 38.69%
Kaman Corporation
Blue Hills Avenue
Bloomfield, CT 06002
Class B Newgate Associates 199,802 29.91%
Limited Partnership
c/o Murtha, Cullina,
Richter & Pinney
CityPlace I
185 Asylum Street
Hartford, CT 06103
Class B C. William Kaman, II 64,206(2) 9.61%
Kaman Corporation
Blue Hills Avenue
Bloomfield, CT 06002
Class B Robert D. Moses 48,729(3) 7.30%
Farmington Woods
Avon, CT 06001
<FN>
(1) Excludes 1,471 shares held by Mrs. Kaman. Excludes
199,802 shares reported separately above and held by
Newgate Associates Limited Partnership, a limited
partnership in which Mr. Kaman serves as general
partner.
(2) Excludes 4,800 shares held as trustee for the benefit of
certain family members.
(3) Includes 37,248 shares held by a partnership controlled by
Mr. Moses.
</FN>
</TABLE>
Page 5
<PAGE>
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT. The following is information
concerning beneficial ownership of the Corporation's stock by each Director
of the Corporation, each Executive Officer of the Corporation named in the
Summary Compensation Table, and all Directors and Executive Officers of the
Corporation as a group. Ownership is direct unless otherwise indicated.
SECURITY OWNERSHIP OF MANAGEMENT
<TABLE>
Class of Number of Shares Owned Percentage
Name Common Stock as of February 1, 1998 of Class
- --------------------------------------------------------------------
<S> <C> <C> <C>
Brian E. Barents Class A 500 -----
Fred A. Breidenbach ------- ------- -----
T. Jack Cahill Class A 44,698(1) *
E. Reeves Callaway Class A 500 -----
Frank C. Carlucci Class A 3,500(2) *
Laney J. Chouest Class A 5,831 *
John A. DiBiaggio Class A 500 -----
Edythe J. Gaines Class A 2,697 *
Robert M. Garneau Class A 42,863(3) *
Class B 19,578 2.93%
Huntington Hardisty Class A 13,800(4) *
Charles H. Kaman Class A 222,920(5) *
Class B 258,375(6) 38.69%
C. William Kaman, II Class A 58,359(7) *
Class B 64,206(8) 9.61%
Walter R. Kozlow Class A 64,967(9) *
Class B 296 *
Eileen S. Kraus Class A 1,029 *
Hartzel Z. Lebed Class A 14,486(10) *
Walter H. Monteith, Jr. Class A 700 *
John S. Murtha Class A 53,548(11) *
Class B 432 *
Wanda L. Rogers Class A 500 *
All Directors and
Executive Officers Class A 690,672(12) 3.04%
as a group ** Class B 344,625 51.60%
- --------------------------
* Less than one percent.
** Excludes 23,612 Class A shares and 1,471 Class B shares held
by spouses of certain Directors and Executive Officers.
Page 6
<PAGE>
<PAGE>
<FN>
(1) Includes 13,800 shares subject to the exercisable portion of
stock options.
(2) Held jointly with Mrs. Carlucci.
(3) Includes 20,200 shares subject to the exercisable portion
of stock options.
(4) Includes 1,800 shares subject to the exercisable portion of
stock options.
(5) Excludes the following: 23,132 shares held by Mrs. Kaman;
7,911 shares held by Fidelco Guide Dog Foundation, Inc., a
charitable foundation of which Mr. Kaman is President and
Director, in which shares Mr. Kaman disclaims beneficial
ownership; 184,434 shares held by Newgate Associates
Limited Partnership, a limited partnership of which Mr.
Kaman is the general partner; 21,816 shares held by Oldgate
Limited Partnership ("Oldgate") a limited partnership of which
Mr. Kaman is the general partner; 125,034 shares held by
Oldgate and as to which shares Mr. Kaman disclaims beneficial
interest, such portion of Oldgate having been placed in an
irrevocable trust; and 72,500 shares held by the Charles H.
Kaman Charitable Foundation, a private charitable foundation.
Included are 20,000 shares subject to exercisable portion of
stock options.
(6) Excludes the following: 1,471 shares held by Mrs. Kaman and
199,802 shares held by Newgate Associates Limited Partnership,
a limited partnership of which Mr. Kaman is the general
partner.
(7) Includes 14,200 shares subject to exercisable portion of
stock options; and excludes 81,998 shares held by Mr. Kaman
as Trustee, in which shares Mr. Kaman disclaims any
beneficial ownership.
(8) Excludes 4,800 shares held by Mr. Kaman as Trustee in which
shares Mr. Kaman disclaims any beneficial ownership.
(9) Includes 21,000 shares subject to exercisable portion of
stock options.
(10)Includes 6,000 shares held in an Individual Retirement
Account, and shares held jointly with Mrs. Lebed; excludes 480
shares held by Mrs. Lebed.
(11)Held by Fleet National Bank pursuant to a revocable trust.
Excludes 7,980 shares held by Fleet National Bank pursuant
to a revocable trust for the benefit of Mrs. Murtha.
(12)Includes 115,700 shares subject to exercisable portion of
stock options.
</FN>
</TABLE>
Page 7
<PAGE>
<PAGE>
EXECUTIVE COMPENSATION
GENERAL
The following tables provide certain information relating to
the compensation of the Corporation's Chief Executive Officer and
its four most highly compensated Executive Officers.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation Long Term Compensation
------------------- ----------------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
All
Name and Other AWARDS Other
Principal Salary Bonus Annual RSA Options*/SARs** LTIP Comp.
Position Year ($) ($) Comp. ($)(1) (#Shares) Payments ($)(2)
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
C. H. Kaman 1997 750,000 400,000 ------- ------ ------ --- 56,793
Chairman and 1996 725,000 340,000 56,252(3) ------ ------ --- 58,412
Chief 1995 660,000 275,000 ------ ------ ------ --- 56,145
Executive
Officer
R.M.Garneau 1997 340,000 185,000 ------ 99,375 10,000*/ --- 10,896
Executive 100,000**
Vice Pres- 1996 240,000 82,000 ------ 77,812 10,000*/ --- 7,935
ident and 0**
Chief 1995 216,000 80,000 ------ 56,875 7,500*/ --- 6,485
Financial 0**
Officer
W.R.Kozlow 1997 240,000 100,000 ------ 79,500 9,000*/ --- 13,588
President 50,000**
Kaman 1996 233,000 65,000 ------ 62,250 9,000*/ --- 10,881
Aerospace 0**
Corporation 1995 226,000 60,000 ------ 56,875 7,500*/ --- 9,515
0**
T.J. Cahill 1997 230,000 90,000 ------ 79,500 9,000*/ --- 7,754
President, 50,000**
Kaman 1996 210,000 70,000 ------ 62,250 9,000*/ --- 7,952
Industrial 0**
Technologies 1995 190,000 55,000 ------ 56,875 7,500*/ --- 6,530
Corporation 0**
H. Hardisty 1997 215,000 90,000 ------ 79,500 9,000*/ --- 13,012
President 50,000**
Kaman 1996 200,000 55,000 ------ 62,250 9,000*/ --- 9,198
Aerospace 0**
Inter- 1995 61,282 40,000 ------ ------ ----- --- -----
national
Corporation
- -------------------------
*Stock Options ("Options")
**Stock Appreciation Rights ("SARs") payable in cash only
Page 8
<PAGE>
<PAGE>
<FN>
1. As of December 31, 1997, aggregate restricted stock holdings
and their year end value were: C.H. Kaman, none; R.M. Garneau,
17,100 shares valued at $280,013; W.R. Kozlow, 14,400 shares
valued at $235,800; T.J. Cahill, 14,300 shares valued at $234,163;
and H. Hardisty, 10,800 shares valued at $176,850. Restrictions
lapse at the rate of 20% per year for all awards, beginning one
year after the grant date. Awards reported in this column are
as follows: R.M. Garneau, 7,500 shares in 1997, 7,500 shares in
1996, and 5,000 shares in 1995; W.R. Kozlow, 6,000 shares in 1997,
6,000 shares in 1996, and 5,000 shares in 1995; T.J. Cahill, 6,000
shares in 1997, 6,000 shares in 1996, and 5,000 shares in 1995; H.
Hardisty, 6,000 shares in 1997 and 6,000 shares in 1996. Dividends
are paid on the restricted stock.
2. Amounts reported in this column consist of: C.H. Kaman, $53,000
- - Officer 162 Insurance Program, $3,793 - medical expense
reimbursement program ("MERP"); R.M. Garneau, $3,049 - Senior
executive life insurance program ("Executive Life"), $851 - Officer
162 Insurance Program, $2,000 - employer matching contributions to
the Kaman Corporation Thrift and Retirement Plan (the "Thrift Plan
employer match"), $434 - MERP, $4,562 - all supplemental employer
contributions under the Kaman Corporation Deferred Compensation
Plan ("supplemental employer contributions"); W.R. Kozlow, $5,763
- - Executive Life, $2,000 - Thrift Plan employer match, $3,575 -
MERP, $2,250 - supplemental employer contributions; T.J. Cahill,
$1,527 - Executive Life, $2,000 - Thrift Plan employer match,
$2,227 - MERP, $2,000 - supplemental employer contributions; H.
Hardisty, $13,012 - supplemental employer contributions.
3. The Corporation maintains a program pursuant to which it pays
for tax and estate planning services provided to executive officers
by third parties, up to certain limits. $45,314 of the figure
reported in this column relates to payments for such services on
behalf of Mr. Kaman.
</FN>
</TABLE>
Page 9
<PAGE>
<PAGE>
OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
<TABLE>
- ---------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term*
- ---------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g)
% of Total
Options/
SARs**
Options/ Granted to
SARs** Employees Exercise or
Granted in Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5%($) 10%($)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
C. H. Kaman none ---- --- --- ----- -----
R. M. Garneau 10,000/ 5.16/ 13.25 2/11/07 916,614 2,322,880
100,000** 28.57
W. R. Kozlow 9,000/ 4.65/ 13.25 2/11/07 491,638 1,245,908
50,000** 14.29
T. J. Cahill 9,000/ 4.65/ 13.25 2/11/07 491,638 1,245,908
50,000** 14.29
H. Hardisty 9,000/ 4.65/ 13.25 2/11/07 491,638 1,245,908
50,000** 14.29
- ----------------
*The information provided herein is required by Securities and Exchange
Commission rules and is not intended to be a projection of future common
stock prices.
**Stock Appreciation Rights (SARs) payable in cash only, not in shares of
common stock.
</TABLE>
Page 10
<PAGE>
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN THE LAST FISCAL YEAR, AND
FISCAL YEAR-END OPTION/SAR VALUES.
<TABLE>
Value of
Number of Unexercised
Unexercised in-the-money
options options*
Shares at FY-end (#) at FY-end ($)
acquired on Value exercisable/ exercisable/
Name Exercise(#) realized unexercisable unexercisable
(a) (b) (c) (d-1) (e-1)
- -------------------------------------------------------------------
<S> <C> <C> <C> <C>
C. H. Kaman 25,000 200,625 20,000/-0- 172,500/-0-
R. M. Garneau None ------ 20,200/24,300 145,250/114,125
W. R. Kozlow 3,000 33,375 21,000/22,500 152,550/106,200
T. J. Cahill 1,000 10,250 13,800/22,200 92,800/104,138
H. Hardisty None ------ 1,800/16,200 10,800/71,325
<CAPTION>
Value of
Number of Unexercised
Unexercised in-the-money
SARs SARs*
at FY-end (#) at FY-end ($)
exercisable/ exercisable/
Name unexercisable unexercisable
(a) (d-2) (e-2)
- -------------------------------------------------------------------
<S> <C> <C>
C. H. Kaman -0-/-0- -0-/-0-
R. M. Garneau -0-/100,000 -0-/312,500
W. R. Kozlow -0-/50,000 -0-/156,250
T. J. Cahill -0-/50,000 -0-/156,250
H. Hardisty -0-/50,000 -0-/156,250
- ------------------
*Difference between the 12/31/97 FMV and the exercise price(s).
</TABLE>
Page 11
<PAGE>
<PAGE>
LONG TERM INCENTIVE PLAN AWARDS. No long term incentive plan
awards were made to any named Executive Officer in the last
completed fiscal year.
PENSION AND OTHER DEFINED BENEFIT DISCLOSURE. The following
table shows estimated annual benefits payable at normal retirement
age to participants in the Corporation's Pension Plan at various
compensation and years of service classifications using the benefit
formula applicable to Kaman Corporation. Pension benefits are based
on 60 percent of the average of the highest five consecutive years
of "Covered Compensation" out of the final ten years of employment
less 50 percent of the primary social security benefit, reduced
proportionately for years of service less than 30 years:
<TABLE>
PENSION PLAN TABLE
Years of Service
Remuneration* 15 20 25 30 35
- -----------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
125,000 33,519 44,915 55,642 67,038 67,038
150,000 41,019 54,965 68,092 82,038 82,038
175,000 48,519 65,015 80,542 97,038 97,038
200,000 56,019 75,065 92,992 112,038 112,038
225,000 63,519 85,115 105,442 127,038 127,038
250,000 71,019 95,165 117,892 142,038 142,038
300,000 86,019 115,265 142,792 172,038 172,038
350,000 101,019 135,365 167,692 202,038 202,038
400,000 116,019 155,465 192,592 232,038 232,038
450,000 131,019 175,565 217,492 262,038 262,038
500,000 146,019 195,665 242,392 292,038 292,038
- ------------------
*Remuneration: Average of the highest five consecutive years of
"Covered Compensation" out of the final ten years of service.
</TABLE>
"Covered Compensation" means "W-2 earnings" or "base earnings,"
if greater, as defined in the Pension Plan. W-2 earnings for
pension purposes consist of salary (including 401(k) and Section
125 Plan contributions but not deferrals under a non-qualified
deferred compensation plan), bonus and taxable income attributable
to restricted stock awards. Salary and bonus amounts for the named
Executive Officers for 1997 are shown on the Summary Compensation
Table. Compensation deferred under the Corporation's non-qualified
deferred compensation plan is included in Covered Compensation here
because it is covered by the Corporation's unfunded supplemental
employees' retirement plan for the participants in that plan.
Current Compensation covered by the Pension Plan for any named
executive whose Covered Compensation differs by more than 10% from
the compensation disclosed for that executive in the Summary
Compensation Table: Mr. Garneau, $510,077; Mr. Kozlow, $363,046;
Mr. Hardisty, $290,124.
Page 12
<PAGE>
<PAGE>
Federal law imposes certain limitations on annual pension
benefits under the Pension Plan. For the named executives who are
participants, the excess will be paid under the Corporation's
unfunded supplemental employees' retirement plan.
The Executive Officers named in the Summary Compensation Table
are participants in the Pension Plan and as of January 1, 1998, had
the number of years of credited service indicated: Mr. C.H. Kaman--
51.1 years; Mr. Garneau--16.48 years; Mr. Kozlow 37.7 years; Mr.
Cahill--22.7 years; and Mr. Hardisty 2.45 years.
Benefits are computed generally in accordance with the benefit
formula described above.
COMPENSATION OF DIRECTORS. Non-officer members of the Board of
Directors of the Corporation receive an annual retainer of $20,000
and a fee of $1,000 for attending each meeting of the Board and
each meeting of a Committee of the Board, except that the Chairman
of the Audit Committee receives $1,250 for attending each such
meeting of that Committee. These fees may be received on a
deferred basis. In addition, each such person will receive a
Restricted Stock Award (RSA) for 500 Class A common shares that
will vest immediately upon election as a director at the
Corporation's 1998 Annual Meeting of Shareholders.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE-IN-CONTROL ARRANGEMENTS. The Corporation has no employment
contract, plan or arrangement with respect to any named Executive
Officer which relates to employment termination for any reason,
including resignation, retirement or otherwise (except as described
in connection with the Corporation's Pension Plan) or a change in
control of the Corporation or a change in any such Executive
Officer's responsibilities following a change of control (except as
described in the Corporation's Deferred Compensation Plan), which
exceeds or could exceed $100,000.
APPROVAL OF AMENDMENT TO KAMAN CORPORATION
EMPLOYEES STOCK PURCHASE PLAN
The Corporation's Employees Stock Purchase Plan (the "Stock
Purchase Plan"), in the opinion of the Board of Directors, has been
successful in giving employees an expanded opportunity to acquire
shares of the Corporation's Class A common stock. On November 18,
1997, the Board of Directors approved a replenishment of the number
of shares available under the Plan to the Plan's original allotment
of 1,500,000 shares, effective November 18, 1997 (an increase
of 904,110 shares). This replenishment is reflected in a copy of
the Stock Purchase Plan as set forth on Exhibit A attached. The
Board of Directors recommends that shareholders approve the Plan as
so replenished.
Page 13
<PAGE>
<PAGE>
The Stock Purchase Plan grants to employees the right to
purchase Class A common stock of the Corporation through payroll
deductions at prices which are eighty five percent (85%) of the
market value of the Class A common stock at the time each purchase
is made. The Stock Purchase Plan provides for the granting of
rights to purchase up to a maximum of 1,500,000 shares of Class A
common stock in the aggregate, from and after November 18, 1997.
The closing price per share of the Corporation's Class A common
stock on The Nasdaq Stock Market on March 3, 1998 was $17.375 (such
shares being listed under the symbol KAMNA).
The Stock Purchase Plan provides for offering periods of
between one and five years beginning on any given January 1. The
current offering period is for 24 months beginning January 1, 1997
and ending December 31, 1998. All full-time regular employees of
the Corporation and its subsidiaries with at least three months or
more service as of the first day of any calendar quarter, will be
eligible to participate in the Stock Purchase Plan subject to such
rules as may be prescribed from time to time by the Personnel and
Compensation Committee (the "Committee") of the Board of Directors
of the Corporation, which administers the plan. As of March 2,
1998, the Corporation had approximately 4,300 full-time regular
employees. Each employee participant in an offering under the Stock
Purchase Plan will be granted a right to purchase shares of the
Corporation's Class A common stock with an aggregate purchase price
under the Stock Purchase Plan of up to ten percent (10%) of his or
her compensation during each pay period of each offering period in
which he or she participates. However, in no event may an employee
be granted a right to purchase Class A common stock at a rate which
exceeds $25,000 of fair market value of such stock for any calendar
year in which such rights are outstanding. The Stock Purchase Plan
shall continue until terminated by the Board of Directors or until
the aggregate number of shares authorized to be issued under such
plan have been issued.
FEDERAL TAX CONSEQUENCES. The following discussion of the
federal tax consequences associated with the Stock Purchase Plan is
necessarily general and does not include all aspects of federal
income tax laws which may be relevant to any participant in such
plan. Accordingly, each plan participant should consult a tax
advisor to determine all tax effects.
The Stock Purchase Plan is intended to qualify as an "Employee
Stock Purchase Plan" as defined in Section 423 of the Internal
Revenue Code of 1986, as amended. Rights issued to an employee
under such plans do not result in taxable income to the employee
either upon the grant of rights or upon their exercise even if the
exercise price is less than the fair market value of the stock at
the time of exercise. If the employee disposes of such shares of
stock prior to two years after the grant of the right or if he or
she disposes of the shares within one year of the acquisition of
the stock, the employee will realize ordinary income (compensation)
to the extent of the difference between the exercise price and the
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fair market value of the stock at the date the right was exercised.
If the stock is disposed of after the required holding period,
the lesser of (a) the difference between the fair market value on
the date of disposition and the price paid for the shares, or (b)
the difference between the fair market value on the date of grant
and the exercise price on that date, will be treated as
compensation income in the year in which the employee disposes of
such shares of stock or in the year of the employee's death
(whenever occurring) if the employee's death occurs while owning
such shares.
When an individual is required to include compensation in his
or her gross income because of his disposition of stock acquired
under an employee stock purchase plan, the amount of compensation
is added to the basis of his or her stock. If an employee dies
while owning stock under such plan, the basis of the stock in the
hands of the employee's estate or heir is the fair market value of
the stock on the date of the employee's death.
Neither the issuance nor exercise of the rights under the Plan
nor the subsequent qualifying disposition of shares of stock
acquired under the Plan will create an item of income or deduction
to the Corporation. However, a deduction is allowed to the
Corporation if the employee incurs ordinary income tax on the
difference between the exercise price and the value at the time of
exercise by reason of disqualifying disposition.
If upon the sale of shares by the employee, gain is realized
over the amount paid for the shares plus any amount treated as
ordinary income (compensation) to the employee, such gain, under
current tax laws, would be capital gain. Under federal tax laws,
long-term capital gain and mid-term capital gain are taxed at a
rate lower than ordinary income.
APPROVAL OF AMENDMENT TO KAMAN CORPORATION
1993 STOCK INCENTIVE PLAN
The Corporation depends in large part upon the judgment and
loyalty of key employees of the Corporation and its subsidiaries,
as well as certain other persons (principally, directors) for the
successful conduct of its businesses. The purpose of the 1993 Stock
Incentive Plan (the "1993 Plan") is to motivate these individuals
by encouraging and enabling them to acquire equity interests in the
Corporation. In the opinion of the Corporation's Board of
Directors, the plan has served this purpose while also enhancing
the Corporation's ability to attract and retain key personnel of
outstanding abilities by affording the Corporation flexibility in
awarding equity based incentive compensation.
On November 18, 1997, the Board of Directors approved an
amendment to the 1993 Plan increasing by 1,250,000 shares the
number of shares issuable under the 1993 Plan in addition to those
shares previously authorized for issuance under the 1993 Plan (a
total of 2,210,000 shares which may be issued under the 1993 Plan).
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This increase is reflected in a copy of the 1993 Plan as set forth
on Exhibit B attached. The Board of Directors recommends that
shareholders approve the amendment to the 1993 Plan as so
increased.
The 1993 Plan will expire on October 31, 2003. The 1993 Plan
permits the Corporation to grant incentive stock options,
nonstatutory stock options, stock appreciation rights and
restricted stock awards to key employees of the Corporation and its
subsidiaries (and except for Incentive Stock Options, to other
persons) upon whose judgment and loyalty the Corporation is largely
dependent for the successful conduct of its operations. As of
March 2, 1998, there were approximately 125 such employees. As of
March 2, 1998, a total of 252 employees held stock options covering
an aggregate of 895,210 shares of the Corporation's Class A common
stock. As of March 2, 1998, restricted stock awards covering an
aggregate of 484,900 shares of the Corporation's Class A common
stock have been granted to 17 employees of which 139,600 shares
remain subject to restrictions. Directors of the Corporation also
are eligible to receive awards under the 1993 Plan. As of March 2,
1998, restricted stock awards covering an aggregate of 5,500 shares
of the Corporation's Class A common stock had been made to 11
nonemployee directors of the Corporation. In addition, the
1993 Plan provides for awards of stock appreciation rights. As of
March 2, 1998, seven employees held stock appreciation rights
respecting 515,000 shares, all of which may be settled only for
cash and therefore do not affect the number of shares reserved or
available for other awards under the Plan in accordance with its
terms. The closing price per share of the Corporation's Class A
common stock on The Nasdaq Stock Market on March 3, 1998 was
$17.375 (such shares being listed under the symbol KAMNA).
DURATION AND EXERCISE OF OPTIONS. Each incentive stock option
("incentive option") granted under the 1993 Plan shall have a term
not in excess of ten (10) years from the date on which it is
granted, except in the case of any incentive option granted to an
individual owning stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the
Corporation (a "Principal Shareholder"). Any incentive option
granted to a Principal Shareholder shall have a term not in excess
of five (5) years from the date on which it was granted. Each
nonstatutory option granted under the 1993 Plan shall have a term
not in excess of ten (10) years and one (1) day from the date on
which it is granted.
Each option granted under the 1993 Plan shall be exercisable on
such date or dates and in such amounts as the Committee shall
determine. In the absence of any other provisions by the Committee,
each option shall become exercisable with respect to not more than
twenty percent (20%) of the shares subject thereto after the
expiration of one (1) year following the date of its grant, and
shall be exercisable as to an additional twenty percent (20%) of
such shares after the expiration of each of the succeeding four (4)
years, on a cumulative basis, so that such option, or any
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unexercised portion thereof, shall be fully exercisable after a
period of five (5) years from the date of its grant. In the case of
an incentive option granted to a Principal Shareholder, each such
incentive option shall become exercisable to the extent of
twenty-five percent (25%) after one (1) year and an additional
twenty-five percent (25%) after each of the succeeding three (3)
years unless otherwise provided by the Committee. No optionee other
than nonemployees granted nonstatutory options may exercise his
or her option or any part thereof unless at the time of such
exercise he or she shall be employed by the Corporation or a
subsidiary and shall have been so employed continuously since the
date of grant of his or her option, excepting leaves of absence
approved by the Committee and except that unexercised options,
to the extent exercisable on the date of termination of employment,
shall terminate on the date three (3) months following the date on
which such optionee ceases to be employed by the Corporation or a
subsidiary.
The purchase price under each incentive option shall be as
determined by the Committee, but not less than 100 percent of the
fair market value of the shares subject to such option on the date
of grant, except that such option price shall not be less than 110
percent of such fair market value in the case of any incentive
option granted to a Principal Shareholder. The purchase price under
each nonstatutory option shall be as determined by the Committee,
but shall not be less than 85 percent of the fair market value of
the shares subject to such option on the date of grant. "Fair
market value" shall be the closing price of the stock on the NASDAQ
National Market System on the day of the grant or, if no sales of
stock occurred on that day, the most recent prior day on which
sales were reported.
In the event of the death or disability of an optionee while in
the employ of the Corporation or a subsidiary, the option shall
expire one (1) year after the date of the death or disability,
except that in no event shall an incentive option be exercisable
later than ten (10) years from the date on which it was granted
(five (5) years in the case of an incentive option granted to a
Principal Shareholder) or later than ten (10) years and one (1) day
in the case of a nonstatutory option.
DURATION AND EXERCISE OF STOCK APPRECIATION RIGHTS. Each stock
appreciation right granted under the 1993 Plan shall become
exercisable on such date or dates and in such amount or amounts as
the Committee shall determine; provided, however, that any stock
appreciation right granted in tandem with a stock option shall be
exercisable in relative proportion to and to the extent that such
related stock option is exercisable. Each stock appreciation right
shall have a term not in excess of ten (10) years from the date on
which it is granted (ten (10) years and one (1) day if granted in
tandem with a nonstatutory option). Generally, in the absence of
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any other provision by the Committee, each stock appreciation right
granted under the 1993 Plan shall be exercisable with respect to
not more than twenty percent (20%) of the shares subject thereto
after the expiration of one (1) year following the date of its
grant, and shall be exercisable as to an additional twenty percent
(20%) of such shares after the expiration of each of the succeeding
four (4) years.
A stock appreciation right granted in tandem with a
nonstatutory option may be granted either at or after the time of
grant of such option. A stock appreciation right granted in tandem
with an incentive option may be granted only at the time of the
grant of such option. A stock appreciation right or applicable
portion thereof granted in tandem with a given stock option shall
terminate and no longer be exercisable upon the termination or
exercise of the related stock option.
LAPSE OF RESTRICTIONS ON RESTRICTED STOCK AWARDS. The
Committee may from time to time grant to participants shares of the
Corporation's Class A common stock subject to such restrictions, if
any, that the Committee, in its sole discretion, may from time to
time determine. Shares of restricted stock granted to employees of
the Corporation or a subsidiary shall be subject to forfeiture
to the Corporation upon termination of employment with the
Corporation or a subsidiary, and those granted to nonemployee
directors of the Corporation shall be subject to forfeiture upon
cessation of service as a director. In the absence of any other
provision by the Committee, such restrictions shall lapse with
respect to not more than twenty percent (20%) of the shares subject
to the restricted stock award on the date one (1) year following
the date of grant and with respect to an additional twenty percent
(20%) of such shares after the expiration of each of the succeeding
four (4) years thereafter, such that such restricted stock shall be
free of all such restrictions on the date five (5) years following
the date of grant.
FEDERAL TAX CONSEQUENCES. The following discussion of the
federal tax consequences associated with the 1993 Plan is
necessarily general and does not include all aspects of federal
income tax laws which may be relevant to any participant in such
plan. Accordingly, each plan participant should consult a tax
advisor to determine all tax effects.
INCENTIVE OPTIONS. Incentive options granted under the 1993
Plan are intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended. Under
current federal tax laws, an optionee who is granted an incentive
option does not realize income either upon receiving the option or
exercising the option. However, the excess of the fair market value
of the stock over the option price at the time of exercise is
generally treated as a tax preference item for purposes of the
alternative minimum tax. When the shares acquired by exercise of
the option are sold, any gain is taxed as long-term capital gain or
mid-term capital gain, provided that the optionee has not sold the
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shares within two years from the date the option was granted or
within one year after the shares acquired pursuant to the option
were transferred to him or her, whichever is later. The gain is
taxed as long-term capital gain if the shares acquired pursuant to
the option are held for more than eighteen (18) months. The gain is
taxed as mid-term capital gain if the shares acquired pursuant to
the option are held for more than twelve (12) months, but not more
than eighteen (18) months. Under federal tax laws, long-term
capital gain and mid-term capital gain are taxed at a rate lower
than ordinary income.
If an optionee disposes of stock acquired pursuant to the
exercise of an incentive option before the expiration of the
requisite holding period, the optionee will realize income in the
year of the disqualifying disposition in an amount equal to the
difference between the option price and the fair market value of
the stock on the date the option was exercised (or fair market
value on the date of disposition, if lower), and the Corporation
will be entitled to a tax deduction in an equivalent amount.
Where an option is exercised more than three (3) months after
termination of employment (except following termination by death or
death within three months of termination or in certain cases of
disability), the tax consequences of exercise will, in general, be
the same as described below for Nonstatutory Options, rather than
as described above.
NONSTATUTORY OPTIONS. An optionee will not realize any
taxable income upon the grant of a nonstatutory option, nor will
the Corporation be entitled to a deduction. However, an optionee
will realize ordinary taxable income at the time of exercise in an
amount equal to the excess of the fair market value of the stock
acquired over the option price, and the Corporation will be
entitled to a corresponding deduction. Such income realized by the
optionee will constitute "wages" subject to income tax withholding
requirements. The optionee's tax basis for the stock will be
increased by the amount of taxable income attributable to the
exercise of the option acquired pursuant to the exercise of
the option. Any gain or loss realized on the subsequent disposition
of the stock will be taxed as capital gain or loss. When the shares
acquired by exercise of a nonstatutory option are sold, any gain
will be taxed as capital gain. Under federal tax laws, long-term
capital gain and mid-term capital gain are taxed at a rate lower
than ordinary income.
STOCK APPRECIATION RIGHTS. The grant of stock appreciation
rights will not produce taxable income to the employee or a
deduction for the Corporation. Upon exercise of the stock
appreciation rights the amount of any cash received and the fair
market value of any shares of Class A common stock received will be
taxable to the employee as ordinary income, and the Corporation
ordinarily will be entitled to a corresponding deduction.
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RESTRICTED STOCK AWARDS. Participants in the 1993 Plan are
not allowed to make an election under Section 83(b) of the Internal
Revenue Code to be taxed currently upon the receipt of a restricted
stock award. Consequently, the recipient of a restricted stock
award will not recognize income upon the receipt of a restricted
stock award. Recipients of restricted stock awards will recognize
compensation income equal to the fair market value of the stock
upon the lapse of the restrictions. Generally, the Corporation is
entitled to a corresponding deduction. If dividends are paid on
restricted stock during the restriction period, such dividends are
treated as compensation to the employee rather than as dividends
for federal tax purposes.
SHAREHOLDER PROPOSALS
Shareholder proposals relating to the Corporation's 1999 Annual
Meeting of Shareholders must be received by the Corporation at its
offices, Blue Hills Avenue, Bloomfield, Connecticut no later than
November 15, 1998. However, no assurance can be given that there
will be any matters upon which the holders of Class A common stock
will be entitled to vote at the 1999 Annual Meeting. In addition,
the fact that a shareholder proposal is received in a timely manner
does not ensure its inclusion in the proxy material, since there
are other requirements in the proxy rules relating to such
inclusion.
OTHER MATTERS
The entire cost of soliciting proxies will be borne by the
Corporation, and, in following up the original solicitation of
proxies by mail, the Corporation may make arrangements with
brokerage houses and other custodians, nominees and fiduciaries to
send proxies and proxy material to beneficial owners and may
reimburse them for their expenses in so doing. In addition to
solicitation by mail, proxies may be solicited by certain directors
and officers of the Corporation. The Corporation has engaged
ChaseMellon Shareholder Services, L.L.C. to aid in the solicitation
of proxies, for which the Corporation will pay a fee of
approximately $7,500, plus certain out-of-pocket disbursements.
It is not expected that any matters upon which the holders of
Class A common stock would be entitled to vote will be brought
before the meeting other than the proposals described herein. The
persons named in the form of proxy solicited by management intend
to vote in favor of these proposals, and, if any other matters are
properly brought before the meeting upon which any shareholders may
vote, then to vote thereon in accordance with their best judgment.
By Order of the Board of Directors
Candace A. Clark
SECRETARY
Date: March 16, 1998
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EXHIBIT A
KAMAN CORPORATION
EMPLOYEES STOCK PURCHASE PLAN
As Amended effective November 18, 1997
1. Purpose; Authorized Shares. The Kaman Corporation Employees
Stock Purchase Plan (the "Plan") was adopted by the Board of
Directors (the "Board") of Kaman Corporation (the "Corporation") on
February 28, 1989 for the purpose of providing employees of the
Corporation and its subsidiaries an opportunity to purchase Kaman
Corporation Class A common stock through payroll deductions during
consecutive offerings commencing July 1, 1989. As of November 18,
1997, One Million Five Hundred Thousand (1,500,000) shares of the
Corporation's Class A common stock in the aggregate including
shares previously authorized for issuance pursuant to the Plan but
unissued as of such date have been approved for purposes of the
Plan by the Board.
2. Offering Periods. Each offering shall be made over a period
of one or more whole or partial Plan Years as determined by the
Committee (as defined in paragraph 3), provided that in no event
shall an offering period be greater than five (5) Plan Years.
3. Administration. The Plan will be administered by a committee
(the "Committee") appointed by the Board, consisting of at least
three of its members. Members of the Committee shall not be
eligible to participate in the Plan. The Committee will have
authority to make rules and regulations for the administration of
the Plan, and its interpretations and decisions with respect to the
Plan shall be final and conclusive. Absent some other provision by
the Board, the power and responsibilities of the Committee shall be
vested in and assumed by the Personnel and Compensation Committee
of the Board.
4. Eligibility. All full-time regular employees of the
Corporation and its subsidiaries, with at least three (3) months of
service as of the effective date of each offering hereunder, will
be eligible to participate in the Plan, subject to such rules as
may be prescribed from time to time by the Committee. Such rules,
however, shall neither permit nor deny participation in the Plan
contrary to the requirements of the Internal Revenue Code of 1986,
as amended (the "Code"), including, but not limited to, Section 423
thereof, and regulations promulgated thereunder. To the extent
consistent with Code Section 423, and regulations promulgated
thereunder, the Committee may permit persons who are not full-time
regular employees of the Corporation or one of its subsidiaries at
the commencement of an offering period, or who have not satisfied
the aforementioned three (3) month service requirement at the
commencement of an offering period, to participate in such offering
beginning on the date or at a specified date after such person has
been a full-time, regular employee of the Corporation or one of its
subsidiaries for at least three (3) months. No employee may be
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granted a right under the Plan if such employee, immediately after
the right is granted, would own five percent (5%) or more of the
total combined voting power or value of the stock of the
Corporation or any subsidiary. For purposes of the preceding
sentence, the rules of Section 424(d) of the Code shall apply in
determining stock ownership of an employee, and stock which the
employee may purchase under outstanding rights shall be treated as
stock owned by the employee.
5. Participation. An eligible employee may begin participation
in an offering at any time by completing and forwarding a payroll
deduction authorization form to the employee's appropriate payroll
location. The form will authorize a regular payroll deduction from
the employee's compensation, and must specify the date on which
such deduction is to commence. The authorization may not be
retroactive.
6. Deductions. Payroll deduction accounts will be maintained for
all participating employees. An employee may authorize a payroll
deduction in terms of dollars and cents per payroll period of not
less than $1.00 or more than ten (10%) percent of the compensation
of the employee during any such payroll period.
7. Deduction Changes. An employee may at any time increase or
decrease the employee's payroll deduction by filing a new payroll
deduction authorization form. The change may not become effective
sooner than the next pay period after receipt of the form. A
payroll deduction may be increased only twice and may be reduced
only twice during any Plan Year of an offering period, unless any
such additional change is required to permit the purchase of the
whole number of shares for which rights have been granted to the
employee under the provisions of paragraph 10.
8. Interest. Since the amount of time that the Corporation will
be holding funds withheld from employees' compensation is minimal,
no interest will be credited to employees' accounts.
9. Withdrawal of Funds. An employee may at any time and for any
reason permanently withdraw the balance of funds accumulated in the
employee's payroll deduction account, and thereby withdraw from
participation in an offering. Upon any such withdrawal, the
employee shall be entitled to receive in cash the value of any
fractional share (rounded to four decimal places) allocated to such
employee's account determined on the basis of the market value
thereof as of the date of withdrawal. The employee may thereafter
begin participation again only once during each Plan Year of an
offering period. Partial withdrawals will not be permitted.
10. Purchase of Shares. Subject to the payroll deduction
limitation set forth in paragraph 6 and the limitation below, each
employee participating in an offering under this Plan will be
granted a right to purchase shares of the Corporation's Class A
common stock which have an aggregate purchase price (determined
under paragraph 11) equal to the sum of (a) up to ten percent (10%)
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of his or her compensation during each pay period of each offering
period in which he or she participates and (b) any cash dividends
reinvested in accordance with paragraph 12. In no event may an
employee be granted a right which permits such employee's rights to
purchase stock under this Plan, and any other stock purchase plan
of the Corporation and its subsidiaries, to accrue at a rate which
exceeds $25,000 of fair market value of stock (determined at the
date of grant of the right) for each calendar year in which the
right is outstanding at any time. No right may be exercised in any
manner other than by payroll deduction as specified in paragraph 6
or dividend reinvestment as specified in paragraph 12.
11. Purchase Price and Payment. The purchase price to
participating employees for each share of Class A common stock
purchased under the Plan will be 85% of its market value at the
time of purchase. Purchases of shares pursuant to the Plan shall
be made on the fifteenth (15th) day of each month. The number of
whole and fractional shares allocated to each employee's account as
of each date of purchase shall be based upon the balance of funds
in an employee's account available for the purchase of shares as of
the close of the immediately preceding month. A participating
employee's payroll deduction account shall be charged with the
purchase price of each whole and fractional share allocated to the
employee as of the date of purchase and the employee shall be
deemed to have exercised a right to acquire such whole and
fractional share as of such date. Additional shares covered by the
participating employee's rights under the Plan will be purchased in
the same manner, provided funds have again accrued in his account.
12. Dividends. Any cash dividends paid with respect to the shares
held under the Plan shall be paid in cash to the participating
employees for whom shares are so held on the basis of the number of
whole and fractional shares so held or, if a participating employee
so elects, such dividends shall be combined with payroll
deductions, added to the funds held under the Plan, and applied to
the purchase of additional shares of stock purchased pursuant to
the Plan. A participating employee choosing to have dividends
reinvested under this paragraph may terminate such election during
an offering period by filing a written form at the appropriate
payroll location, but may thereafter resume his election to
reinvest such cash dividends only once during each Plan Year of an
offering period. An election to either stop or resume dividend
reinvestment will be effective with respect to the dividend payment
next following receipt of the form; provided that if the form is
filed within thirty (30) days before a dividend record date
declared by the Board, then such election will not be effective
with respect to that particular dividend declaration.
13. Stock Certificates. Stock certificates will only be issued to
participating employees promptly after their request or promptly
after the participating employee's withdrawal from the Plan for any
reason.
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14. Registration of Certificates. Certificates may be registered
only in the name of the employee, or if the employee so indicates
on the employee's payroll deduction authorization form, in the
employee's name jointly with a member of the employee's family,
with right of survivorship. An employee who is a resident of a
jurisdiction which does not recognize such a joint tenancy may have
certificates registered in the employee's name as tenant in common
with a member of the employee's family, without right of
survivorship.
15. Definitions. The following terms when used herein shall have
the meanings set forth below:
(a) The phrase "market value" or "fair market value"
means the closing price of the Corporation's Class A common stock
in the Over-the-Counter NASDAQ National Market System, as reported
in the Hartford, Connecticut local issue of The Wall Street
Journal, on the business day immediately preceding the day of
purchase or the effective date of the offering as the context
requires.
(b) The term "subsidiary" means a subsidiary of the
Corporation within the meaning of Section 424(f) of the Internal
Revenue Code and the regulations thereunder, provided, however,
that each consecutive offering under this Plan shall not be deemed
to cover the employees of any subsidiary acquired or established
after the effective date of such offering, unless so authorized by
the Committee.
(c) a "Plan Year" means the calendar year.
16. Rights as a Shareholder. None of the rights or privileges of
a shareholder of the Corporation shall exist with respect to (a)
rights granted to a participating employee under the Plan or, (b)
except as provided in paragraph 12, any fractional shares credited
to the participating employee's account.
17. Rights on Retirement, Death or Termination of Employment. In
the event of a participating employee's retirement, death or
termination of employment, no payroll deduction shall be taken from
any pay due and owing to an employee at such time, and the balance
in the employee's account (including the value of any fractional
shares calculated in the manner described in paragraph 9) shall be
paid to the employee or, in the event of the employee's death, to
the employee's estate; provided, however, that in the event shares
credited to the account of a deceased employee would have been
issued to the employee and a joint tenant with right of
survivorship as permitted in paragraph 14 if issued immediately
prior to such employee's death, then such shares shall be issued to
such joint tenant, if living at the time such shares are issued.
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18. Obligation of Corporation to Purchase. In the event of
personal or family circumstances of an emergency nature, for a
period of one year after the exercise of a right to purchase a
share or shares as described in paragraphs 10 and 11, a
participating employee shall have the right to offer such shares
back to the Corporation at the price at which such shares were pur-
chased, and the Corporation shall have the obligation to make such
repurchase.
19. Rights Not Transferable. Rights under this Plan are not
transferable by a participating employee and are exercisable during
an employee's lifetime only by the employee.
20. Application of Funds. All funds received or held by the
Corporation under this Plan may be used for any corporate purpose.
21. Adjustment in Cases of Changes Affecting Class A Stock. In
the event of any merger, consolidation, reorganization,
recapitalization, stock dividend, combination, issuance of rights,
split-up or spin-off of the Corporation, or the like, the number of
shares approved for this Plan shall be increased appropriately and
such other adjustments to the terms of this Plan shall be made as
may be deemed equitable by the Board. In the event of any other
change affecting such stock, such adjustments shall be made as may
be deemed equitable by the Board to give proper effect to such
event.
22. Amendment of the Plan. The Board may at any time, or from
time to time, amend this Plan in any respect, except that, without
the approval of each class of stock of the Corporation then issued
and outstanding and entitled to vote on the matter by applicable
law, no amendment shall be made (i) increasing the number of shares
approved for this Plan (other than as provided in paragraph 21);
(ii) decreasing the purchase price per share; (iii) withdrawing the
administration of this Plan from the Committee; or (iv) changing
the designation of subsidiaries eligible to participate in the
Plan, except adding a subsidiary as provided in paragraph 15(b).
23. Termination of Plan. This Plan and all rights of employees
under an offering hereunder shall terminate:
(a) on the date that participating employees'
accumulated payroll deductions pursuant to paragraph 6 and amounts
reinvested pursuant to paragraph 12 are sufficient to purchase a
number of shares equal to or greater than the number of shares
remaining available for purchase. If the number of shares so
purchasable is greater than the shares remaining available, the
available shares shall be allocated by the Committee among such
participating employees in such manner as it deems equitable, or
(b) at any time at the discretion of the Board.
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Upon termination of the Plan all amounts in the accounts of
participating employees not applied to the purchase of shares
hereunder, together with the value of any fractional shares
calculated in the manner described in paragraph 9, shall be
promptly refunded.
24. Government Regulations. The Corporation's obligation to sell
and deliver shares of its Class A common stock under this Plan is
subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such stock.
25. Shares Used to Fund Plan. The Corporation may utilize
unissued or treasury shares to fund the Plan. Purchases of
outstanding shares may also be made pursuant to and on behalf of
the Plan, upon such terms as the Corporation may approve, for
delivery under the Plan.
26. Qualified Plan. This Plan is intended to qualify as an
Employee Stock Purchase Plan as defined in Section 423 of the Code.
The term "right" as used herein shall mean "option" as used in
Section 423, and is used herein only to avoid confusion with
"options" granted under the Kaman Corporation 1993 Stock Incentive
Plan.
27. Successor Corporation. The rights and obligations of the
Corporation under this Plan shall inure to and be binding upon any
successor to all or substantially all of the Corporation's assets
and business.
28. Business Days. If any event provided for in this Plan is
scheduled to take place on a day which is not a business day then
such event shall take place on the immediately preceding business
day.
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EXHIBIT B
KAMAN CORPORATION
1993 STOCK INCENTIVE PLAN
As Amended effective November 18, 1997
1. Purpose. This Plan includes a continuation and extension
of the incentive stock program of the Corporation set forth in the
First Predecessor Plan and the Second Predecessor Plan and is
designed to give directors, officers and key employees of the
Corporation and other persons an expanded opportunity to acquire
stock in the Corporation or receive other long-term incentive
remuneration in order that they may better participate in the
Corporation's growth and be motivated to remain with the
Corporation and promote its further development and success.
2. Definitions. The following terms shall have the meanings
given below unless the context otherwise requires:
(a) "Act" means the Securities Exchange Act of 1934, as
amended.
(b) "Award" or "Awards" except where referring to a
particular category of grant under the Plan shall include Incentive
Stock Options, Non-Statutory Stock Options, Stock Appreciation
Rights and Restricted Stock Awards.
(c) "Board" means the Board of Directors of the
Corporation.
(d) "Code" means the Internal Revenue Code of 1986, as
amended, and any successor Code, and related rules, regulations and
interpretations.
(e) "Committee" means the committee of the Board
established under Section 9 hereof.
(f) "Corporation" means the committee of the Board
established as defined by the Code.
(g) "Disability" or "disabled" means disability or
disabled as defined by the Code.
(h) "Eligible Person" means any person, including a
person who is not an employee of the Corporation or a Subsidiary,
or entity who satisfies all the eligibility requirements set forth
in either Section 3(a) or 3(b) hereof, excluding, however, any
member of the Committee and any alternate member of the Committee.
(i) "Fair Market Value" of the Stock on any given date
shall be the closing price of the Stock in the NASDAQ National
Market System on such date, or, if no sales of the Stock occurred
on that day, the then most recent prior day on which sales were
reported.
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(j) "First Predecessor Plan" means the Kaman Corporation
1973 Stock Option Plan.
(k) "Incentive Stock Option" means a stock option
qualifying under the provisions of Section 422 of the Code.
(l) "Non-Employee Director" shall have the meaning set
forth in Rule 16b-3(b)(3)(i) promulgated under the Act, and any
successor to such rule.
(m) "Non-Employee Director Participant" means an
Eligible Person, who at the time of grant of an Award is a director
of the Corporation but not an employee of the Corporation or a
Subsidiary.
(n) "Non-Statutory Option" means a stock option not
qualifying for incentive stock option treatment under the
provisions of Section 422 of the Code.
(o) "Optionee" means the holder of any option granted
under the Plan.
(p) "Participant" means the holder of any Award granted
under the Plan.
(q) "Plan" means the Kaman Corporation 1993 Stock
Incentive Plan.
(r) "Principal Shareholder" means any individual owning
stock possessing more than ten percent (10%) of the total combined
voting power of all classes of capital stock of the Corporation.
(s) "Restricted Stock" means Stock received pursuant to
a Restricted Stock Award.
(t) "Restricted Stock Award" is defined in Section 8(a).
(u) "Second Predecessor Plan" means the Kaman
Corporation 1983 Stock Incentive Plan.
(v) "Stock" or "shares" means shares of Class A Common
Stock of the Corporation.
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(w) "Stock Appreciation Right" or "Right" means a right
described in Section 7.
(x) "Subsidiary" means any corporation in which the
Corporation owns, directly or indirectly, a majority of the
outstanding voting stock.
3. Eligibility.
(a) Incentive Stock Options. Incentive Stock Options
may be granted to any Eligible Persons who are full-time, salaried
employees of the Corporation or a Subsidiary and who in the sole
opinion of the Committee are, from time to time, responsible for
the management and/or growth of all or part of the business of the
Corporation.
(b) Awards Other than Incentive Stock Options. Awards,
other than Incentive Stock Options, may be granted to any Eligible
Persons who in the sole opinion of the Committee are, from time to
time, responsible for the growth and/or the management of all or a
part of the business of the Corporation.
(c) Substitute Awards. The Committee, in its
discretion, may also grant Awards in substitution for any stock
incentive awards previously granted by companies acquired by the
Corporation or one of its Subsidiaries. Such substitute awards may
be granted on such terms and conditions as the Committee deems
appropriate in the circumstances, provided, however, that
substitute Incentive Stock Options shall be granted only in
accordance with the Code.
4. Term of Plan. The Plan shall take effect on November 1,
1993 and shall remain effective for ten (10) years thereafter,
expiring on October 31, 2003.
5. Stock Subject to the Plan. The aggregate number of
shares of Stock which may be issued pursuant to all Awards granted
under the Plan shall not exceed 2,210,000 shares of Stock, subject
to adjustment as hereinafter provided in Section 10, which shall be
in addition to all shares of Stock issued or reserved for issuance
pursuant to options granted under the First Predecessor Plan and
the Second Predecessor Plan, and which may be treasury shares or
authorized but unissued shares. In the event that any Award under
the Plan for any reason expires, is terminated, forfeited,
reacquired by the Corporation, or satisfied without the issuance of
Stock (except in the cases of (i) the Stock otherwise issuable
under an Award but retained by the Corporation for payment of
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withholding taxes under Section 14(b) hereof; and (ii) stock
otherwise issuable under a stock option but for which the
Corporation has made a discretionary payment under Section 7(d)
hereof) the shares allocable to the unexercised portion of such
Award may again be made subject to an Award under the Plan. Any
award of a Stock Appreciation Right, to the extent that such Stock
Appreciation Right may be settled only for cash, shall not be
deemed to reduce the aggregate number of shares of Stock authorized
to be issued pursuant to Awards granted under the Plan.
6. Stock Options. The following terms and conditions shall
apply to each option granted under the Plan and shall be set forth
in a stock option agreement between the Corporation and the
Optionee together with such other term and conditions not
inconsistent herewith as the Committee may deem appropriate in the
case of each Optionee:
(a) Option Price. The purchase price under each
Incentive Stock Option shall be as determined by the Committee but
not less than 100% of the Fair Market Value of the shares subject
to such option on the date of grant, provided that such option
price shall not be less than 110% of such Fair Market Value in the
case of any Incentive Stock Option granted to a Principal
Shareholder. The purchase price per share of Stock deliverable
upon the exercise of a Non-Statutory Option shall be determined by
the Committee, but shall not be less than 85% of the Fair Market
Value of such Stock on the date of grant and in no event less than
the par value per share of such Stock.
(b) Type of Option. All options granted under the Plan
shall be either Incentive Stock Options or Non-Statutory Options.
All provisions of the Plan applicable to Incentive Stock Options
shall be interpreted in a manner consistent with the provisions of,
and regulations under, Section 422 of the Internal Revenue Code.
(c) Period of Incentive Stock Option. Each Incentive
Stock Option shall have a term not in excess of ten (10) years from
the date on which it is granted, except in the case of any
Incentive Stock Option granted to a Principal Shareholder which
shall have a term not in excess of five (5) years from the date on
which it is granted; provided that any Incentive Stock Option
granted or the unexercised portion thereof, to the extent
exercisable at the time of termination of employment, shall
terminate at the close of business on the day three (3) months
following the date on which the Optionee ceases to be employed by
the Corporation or a Subsidiary unless sooner expired or unless a
longer period is provided under Subsection (g) of this Section in
the event of the death or disability of such an Optionee.
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(d) Period of Non-Statutory Option. Each Non-Statutory
Option granted under the Plan shall have a term not in excess of
ten (10) years and one (1) day from the date on which it is
granted; provided that any Non-Statutory Option granted to an
employee of the Corporation or a Subsidiary or to a Non-Employee
Director Participant, or the unexercised portion thereof shall
terminate not later than the close of business on the day three (3)
months following the date on which such employee ceases to be
employed by the Corporation or a Subsidiary or the date on which
such Non-Employee Director ceases to be a director of the
Corporation, as the case may be, unless a longer period is provided
under Subsection (g) of this Section in the event of the death or
disability of such an Optionee. Such an Optionee's Non-Statutory
Option shall be exercisable, if at all, during such three (3) month
period only to the extent exercisable on the date such Optionee's
employment terminates or the date on which such Optionee ceases to
be a director, as the case may be.
(e) Exercise of Option.
(i) Each option granted under the Plan shall become
exercisable on such date or dates and in such amount or
amounts as the Committee shall determine. In the absence of
any other provision by the Committee, each option granted
under the Plan shall be exercisable with respect to not more
than twenty percent (20%) of such shares subject thereto after
the expiration of one (1) year following the date of its
grant, and shall be exercisable as to an additional twenty
percent (20%) of such shares after the expiration of each of
the succeeding four (4) years, on a cumulative basis, so that
such option, or any unexercised portion thereof, shall be
fully exercisable after a period of five (5) years following
the date of its grant; provided, however, that in the absence
of any other provision by the Committee, each Incentive Stock
Option granted to a Principal Shareholder shall be exercisable
with respect to not more than twenty-five percent (25%) of the
shares subject thereto after the expiration of one (1) year
following the date of its grant, and shall be exercisable as
to an additional twenty-five percent (25%) after the
expiration of each of the succeeding three (3) years, on a
cumulative basis, so that such option, or any unexercised
portion thereof, shall be fully exercisable after a period of
four (4) years following the date of its grant.
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(ii) The Committee, in its sole discretion, may,
from time to time and at any time, accelerate the vesting
provisions of any outstanding option, subject, in the case of
Incentive Stock Options, to the provisions of Subsection
(6)(i) relating to "Limit on Incentive Options".
(iii) Notwithstanding anything herein to the
contrary, except as provided in subsection (g) of this
Section, no Optionee who was, at the time of the grant of an
option, an employee of the Corporation or a Subsidiary, may
exercise such option or any part thereof unless at the time of
such exercise he shall be employed by the Corporation or a
Subsidiary and shall have been so employed continuously since
the date of grant of such option, excepting leaves of absence
approved by the Committee; provided that the option agreement
may provide that such an Optionee may exercise his option, to
the extent exercisable on the date of termination of such
continuous employment, during the three (3) month period,
ending at the close of business on the day three (3) months
following the termination of such continuous employment unless
such option shall have already expired by its term.
(iv) An option shall be exercised in accordance
with the related stock option agreement by serving written
notice of exercise on the Corporation accompanied by full
payment of the purchase price in cash. As determined by the
Committee, in its discretion, at (or, in the case of Non-
Statutory Options, at or after) the time of grant, payment in
full or in part may also be made by delivery of (i)
irrevocable instructions to a broker to deliver promptly to
the Corporation the amount of sale or loan proceeds to pay the
exercise price, or (ii) previously owned shares of Stock not
then subject to restrictions under any Corporation plan (but
which may include shares the disposition of which constitutes
a disqualifying disposition for purposes of obtaining
incentive stock option treatment for federal tax purposes), or
(iii) shares of Stock otherwise receivable upon the exercise
of such option; provided, however, that in the event the
Committee shall determine in any given instance that the
exercise of such option by withholding shares otherwise
receivable would be unlawful, unduly burdensome or otherwise
inappropriate, the Committee may require that such exercise be
accomplished in another acceptable manner. For purposes of
subsections (ii) and (iii) above, such surrendered shares
shall be valued at Fair Market Value on the date of exercise.
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(f) Nontransferability. No option granted under the
Plan shall be transferable by the Optionee otherwise than by
will or by the laws of descent and distribution, and such
option shall be exercisable, during his lifetime, only by him.
(g) Death or Disability of Optionee. In the event of
the death or disability of an Optionee while in the employ of
the Corporation or a Subsidiary or while serving as a director
of the Corporation, his stock option or the unexercised
portion thereof may be exercised within the period of one (1)
year succeeding his death or disability, but in no event later
than (i) ten (10) years (five (5) years in the case of a
Principal Shareholder) from the date the option was granted in
the case of an Incentive Stock Option, and (ii) ten (10) years
and one (1) day in the case of a Non-Statutory Option, by the
person or persons designated in the Optionee's will for that
purpose or in the absence of any such designation, by the
legal representative of his estate, or by the legal
representative of the Optionee, as the case may be.
Notwithstanding anything herein to the contrary and in the
absence of any contrary provision by the Committee, during the
one-year period following termination of employment or
cessation as a director by reason of death or disability, an
Optionee's stock option shall continue to vest in accordance
with its terms and be and become exercisable as if employment
or service as a director had not ceased.
(h) Shareholder Rights. No Optionee shall be entitled
to any rights as a shareholder with respect to any shares subject
to his option prior to the date of issuance to him of a stock
certificate representing such shares.
(i) Limit on Incentive Stock Options. The aggregate
Fair Market Value (determined at the time an option is granted) of
shares with respect to which Incentive Stock Options granted to an
employee are exercisable for the first time by such employee during
any calendar year (under all incentive stock option plans of the
Corporation and its Subsidiaries to the extent required under the
Code) shall not exceed $100,000.
(j) Notification of Disqualifying Disposition.
Participants granted Incentive Stock Options shall undertake, in
the Incentive Stock Option agreements, as a precondition to the
granting of such option by the Corporation, to promptly notify the
Corporation in the event of a disqualifying disposition (within the
meaning of the Code) of any shares acquired pursuant to such
Incentive Stock Option agreement and provide the Corporation with
all relevant information related thereto.
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7. Stock Appreciation Rights; Discretionary Payments.
(a) Nature of Stock Appreciation Right. A Stock
Appreciation Right is an Award entitling the Participant to receive
an amount in cash or shares of Stock (or forms of payment permitted
under Section 7(d) hereof) or a combination thereof, as determined
by the Committee at the time of grant, having a value equal to (or
if the Committee shall so determine at time of grant, less than)
the excess of the Fair Market Value of a share of Stock on the date
of exercise over the Fair Market Value of a share of Stock on the
date of grant (or over the option exercise price, if the Stock
Appreciation Right was granted in tandem with a stock option)
multiplied by the number of shares with respect to which the Stock
Appreciation Right shall have been exercised.
(b) Grant and Exercise of Stock Appreciation Rights.
(i) Stock Appreciation Rights may be granted in
tandem with, or independently of, any stock option granted
under the Plan. In the case of a Stock Appreciation Right
granted in tandem with a Non-Statutory Option, such Right may
be granted either at or after the time of grant of such
option. In the case of a Stock Appreciation Right granted in
tandem with an Incentive Stock Option such Right may be
granted only at the time of the grant of such option. A Stock
Appreciation Right or applicable portion thereof granted in
tandem with a given stock option shall terminate and no longer
be exercisable upon the termination or exercise of the related
stock option, except that a Stock Appreciation Right granted
with respect to less than the full number of shares covered by
a related stock option shall not be reduced until the exercise
or termination of the related stock option exceeds the number
of shares not covered by the Stock Appreciation Right.
(ii) Each Stock Appreciation Right granted under
the Plan shall become exercisable on such date or dates and in
such amount or amounts as the Committee shall determine;
provided, however, that any Stock Appreciation Right granted
in tandem with a stock option shall be exercisable in relative
proportion to and to the extent that such related stock option
is exercisable; provided further, however, that,
notwithstanding anything herein to the contrary, any Stock
Appreciation Right granted in tandem with a Non-Statutory
Option which has a purchase price at the date of grant of less
than Fair Market Value shall not be exercisable at all until
at least one (1) year after the date of grant of such option.
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Except as provided in the immediately preceding sentence, in
the absence of any other provision by the Committee, each
Stock Appreciation Right granted under the Plan shall be
exercisable with respect to not more than twenty percent (20%)
of such shares subject thereto after the expiration of one (1)
year following the date of its grant, and shall be exercisable
as to an additional twenty percent (20%) of such shares after
the expiration of each of the succeeding four (4) years, on a
cumulative basis, so that such Right, or any unexercised
portion thereof, shall be fully exercisable after a period of
five (5) years following the date of its grant. The
Committee, in its sole discretion, may, from time to time and
at any time, accelerate the vesting provisions of any
outstanding Stock Appreciation Right.
(iii) Notwithstanding anything herein to the
contrary, except as provided in subsections (c)(v) and (c)(vi)
of this Section, no Participant who was, at the time of the
grant of a Stock Appreciation Right, an employee of the
Corporation or a Subsidiary, may exercise such Right or any
part thereof unless at the time of such exercise, he shall be
employed by the Corporation or a Subsidiary and shall have
been so employed continuously since the date of grant of such
Right, excepting leaves of absence approved by the Committee;
provided that the Stock Appreciation Right agreement may
provide that such a Participant may exercise his Stock
Appreciation Right, to the extent exercisable on the date of
termination of such continuous employment unless such Right
shall have already expired by its terms.
(iv) Notwithstanding anything herein to the
contrary, except as provided in subsections (c)(v) and (c)(vi)
of this Section, no Non-Employee Director Participant may
exercise a Stock Appreciation Right or part thereof unless at
the time of such exercise he shall be a director of the
Corporation and shall have been a director of the Corporation
continuously since the date of grant of such Right excepting
leaves of absence approved by the Committee; provided that the
Stock Appreciation Right agreement may provide that such
Participant may exercise his Stock Appreciation Right, to the
extent exercisable on the date he ceased to be a director of
the Corporation, during the three (3) month period ending at
the close of business on the day three (3) months following
the cessation of such continuous service as a director unless
such Right shall already have expired by its terms.
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(v) A Stock Appreciation Right shall be exercised
in accordance with the related Stock Appreciation Right
Agreement by serving written notice of exercise on the
Corporation.
(c) Terms and Conditions of Stock Appreciation Rights.
Stock Appreciation Rights shall be subject to such terms and
conditions as shall be determined from time to time by the
Committee, subject to the following:
(i) Stock Appreciation Rights granted in tandem
with stock options shall be exercisable only at such time or
times and to the extent that the related stock options shall
be exercisable;
(ii) Upon the exercise of a Stock Appreciation
Right, the applicable portion of any related stock option
shall be surrendered.
(iii) Stock Appreciation Rights granted in tandem
with a stock option shall be transferable only with such
option. Stock Appreciation Rights shall not be transferable
otherwise than by will or the laws of descent and
distribution. All Stock Appreciation Rights shall be
exercisable during the Participant's lifetime only by the
Participant or the Participant's legal representative.
(iv) A Stock Appreciation Right granted in tandem
with a stock option may be exercised only when the then Fair
Market Value of the Stock subject to the stock option exceeds
the exercise price of such option. A Stock Appreciation Right
not granted in tandem with a stock option may be exercised
only when the then Fair Market Value of the Stock exceeds the
Fair Market Value of the Stock on the date of grant of such
Right.
(v) Each Stock Appreciation Right shall have a term
not in excess of ten (10) years from the date on which it is
granted (ten (10) years and one (1) day in the case of a Stock
Appreciation Right granted in tandem with a Non-Statutory
Option); provided that any Stock Appreciation Right granted to
(aa) an employee of the Corporation or a Subsidiary shall
terminate not later than the close of business on the day
three (3) months following the date such Participant ceases to
be employed by the Corporation or a Subsidiary, excepting
leaves of absences approved by the Committee, and (bb) a
Non-Employee Director Participant shall terminate not later
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than the close of business on the day three (3) months
following the date such Participant ceases to be a director of
the Corporation, unless a longer period is provided under
subsection (c)(vi) below in the event of death or disability
of a Participant. Such a Participant's Stock Appreciation
Right shall be exercisable, if at all, during such three (3)
month period only to the extent exercisable on the date his
employment terminates or the date he ceases to be a director,
as the case may be.
(vi) In the event of the death or disability of a
Participant while in the employ of the Corporation or a
Subsidiary or while serving as a director of the Corporation,
his Stock Appreciation Right or the unexercised portion
thereof may be exercised within the period of one (1) year
succeeding his death or disability, but in no event later than
(i) ten (10) years from the date on which it was granted (ten
(10)years and one (1) day in the case of a Non-Statutory
Option), by the person or persons designated in the
Participant's will for that purpose or in the absence of any
such designation, by the legal representative of his estate,
or by the legal representative of the Participant, as the case
may be. Notwithstanding anything herein to the contrary and
in the absence of any contrary provision by the Committee,
during the one-year period following termination of employment
or cessation as a director by reason of death or disability, a
Participant's Stock Appreciation Right shall continue to vest
in accordance with its terms and be and become exercisable as
if employment or service as a director had not ceased.
(d) Discretionary Payments. Upon the written request of
an Optionee whose stock option is not accompanied by a Stock
Appreciation Right, the Committee may, in its discretion, cancel
such option if the Fair Market Value of the shares subject to the
option at the exercise date exceeds the exercise price thereof; in
that event, the Corporation shall pay to the Optionee an amount
equal to the difference between the Fair Market Value of the shares
subject to the cancelled option (determined as of the date the
option is cancelled) and the exercise price. Such payment shall be
by check or in Stock having a Fair Market Value (determined on the
date the payment is to be made) equal to the amount of such
payments or any combination thereof, as determined by the
Committee.
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8. Restricted Stock.
(a) Nature of Restricted Stock Award. A Restricted
Stock Award is an Award entitling the Participant to receive shares
of Stock, subject to such conditions, including a Corporation right
during a specified period or periods to require forfeiture of such
shares upon the Participant's termination of employment with the
Corporation or a Subsidiary or cessation as a director of the
Corporation, as the case may be, as the Committee may determine at
the time of grant. The Committee, in its sole discretion, may,
from time to time and at any time, waive any or all restrictions
and/or conditions contained in the Restricted Stock Award
agreement. Notwithstanding anything herein to the contrary, the
Committee, in its discretion, may grant Restricted Stock without
any restrictions or conditions whatsoever. Restricted Stock shall
be granted in respect of past services or other valid
consideration.
(b) Award Agreement. A Participant who is granted a
Restricted Stock Award shall have no rights with respect to such
Award unless the Participant shall have accepted the Award within
60 days (or such shorter date as the Committee may specify)
following the Award date by executing and delivering to the
Corporation a Restricted Stock Award Agreement in such form as the
Committee shall determine.
(c) Rights as a Shareholder. Upon complying with
paragraph (b) above, a Participant shall have all the rights of a
shareholder with respect to the Restricted Stock including voting
and dividend rights, subject to nontransferability and Corporation
forfeiture rights described in this Section 8 and subject to any
other conditions contained in the Award agreement. Unless the
Committee shall otherwise determine, certificates evidencing shares
of Restricted Stock shall remain in the possession of the
Corporation until such shares are free of any restrictions under
the Plan. The Committee in its discretion may, as a precondition
of the Corporation's obligation to issue a Restricted Stock Award,
require the Participant to execute a stock power or powers or other
agreement or instruments necessary or advisable in connection with
the Corporation's forfeiture rights with respect to such shares.
(d) Restrictions. Shares of Restricted Stock may not be
sold, assigned, transferred or otherwise disposed of or pledged or
otherwise encumbered. In the event of termination of employment of
the Participant with the Corporation or a Subsidiary for any
reason, or cessation as a director of the Corporation in the case
of a Non-Employee Director Participant, such shares shall be
forfeited to the Corporation, except as set forth below:
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(i) The Committee at the time of grant shall
specify the date or dates (which may depend upon or be related
to the attainment of performance goals and other conditions)
on which the nontransferability of the Restricted Stock and
the Corporation's forfeiture rights with respect thereto shall
lapse. The Committee at any time may accelerate such date or
dates and otherwise waive or, subject to Section 13, amend any
conditions of the Award.
(ii) Except as may otherwise be provided in the
Award agreement, in the event of termination of a Participant
with the Corporation or a Subsidiary for any reason or
cessation as a director of the Corporation for any reason, all
of the Participant's Restricted Stock shall be forfeited to
the Corporation without the necessity of any further act by
the Corporation, the Participant or the Participant's legal
representative; provided, however, that in the event of
termination of employment or cessation of service as a
director of the Corporation by reason of death or disability,
all conditions and restrictions relating to a Restricted Stock
Award held by such a Participant shall thereupon be waived and
shall lapse.
(iii) In the absence of any other provision by the
Committee, each Restricted Stock Award granted to (A) an
employee of the Corporation or a Subsidiary shall be subject
to forfeiture to the Corporation conditioned on the
Participant's continued employment and (B) Non-Employee
Director Participants shall be subject to forfeiture to the
Corporation conditioned on the Participant's continued service
as a director of the Corporation, and in the case of clause
(A) or (B), such forfeiture rights shall lapse as follows:
with respect to twenty percent (20%) of the shares subject to
the Restricted Stock Award on the date one year following the
date of grant, and with respect to an additional twenty
percent (20%) of such shares after the expiration of each of
the succeeding four (4) years thereafter, on a cumulative
basis, so that such Restricted Stock shall be free of such
risk of forfeiture on the date five (5) years following the
date of its grant.
(e) Waiver, Deferral, and Investment of Dividends. The
Restricted Stock Award agreement may require or permit the
immediate payment, waiver, deferral or investment of dividends paid
with respect to the Restricted Stock.
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9. The Committee.
(a) Administration. The Committee shall be a committee
of not less than three (3) members of the Board who are
Non-Employee Directors, appointed by the Board. Vacancies
occurring in membership of the Committee shall be filled by the
Board. The Committee shall keep minutes of its meetings. One or
more members of the Committee may participate in a meeting of the
Committee by means of conference telephone or similar
communications equipment provided all persons participating in the
meeting can hear one another. A majority of the entire Committee
shall constitute a quorum, and the acts of a majority of the
members present at or so participating in any meeting at which a
quorum is constituted shall be the acts of the Committee. The
Committee may act without meeting by unanimous written consent.
Absent some other provision by the Board, the power and
responsibilities of the Committee shall be vested in and assumed by
the Personnel and Compensation Committee of the Board.
(b) Authority of Committee. Subject to the provisions
of the Plan, the Committee shall have full and final authority to
determine the persons to whom Awards shall be granted, the number
of shares to be subject to each Award, the term of the Award, the
vesting provisions of the Award, if any, restrictions on the Award,
if any, and the price at which the shares subject thereto may be
purchased. The Committee is empowered, in its discretion, to
modify, extend or renew any Award theretofore granted and adopt
such rules and regulations and take such other action as it shall
deem necessary or proper for the administration of the Plan. The
Committee shall have full power and authority to construe, inter-
pret and administer the Plan, and the decisions of the Committee
shall be final and binding upon all interested parties.
10. Adjustments. Any limitations, restrictions or other
provisions of this Plan to the contrary notwithstanding, each Award
agreement shall make such provision, if any, as the Committee may
deem appropriate for the adjustment of the terms and provisions
thereof (including, without limitation, terms and provisions
relating to the exercise price and the number and class of shares
subject to the Award) in the event of any merger, consolidation,
reorganization, recapitalization, stock dividend, divisive
reorganization, issuance of rights, combination or split-up or
exchange of shares, or the like. In the event of any merger,
consolidation, reorganization, recapitalization, stock dividend,
divisive reorganization, issuance of rights, combination or
split-up or exchange of shares, or the like, the Committee shall
make an appropriate adjustment in the number of shares authorized
to be issued pursuant to the Plan.
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11. Options Under First Predecessor Plan and Second
Predecessor Plan. Options presently outstanding which have been
granted under either the First Predecessor Plan or the Second
Predecessor Plan shall continue to be governed and interpreted
under the terms of such plans, respectively, and not by the terms
hereof.
12. Amendment to and Termination of the Plan. The Board may
from time to time amend the Plan in such way as it shall deem
advisable provided the Board may not extend the expiration date of
the Plan, change the class of Eligible Persons, increase the
maximum Award term, decrease the minimum exercise price or increase
the total number of authorized shares (except in accordance with
Section 10 hereof) for which Awards may be granted. The Board, in
its discretion, may at any time terminate the Plan prior to its
expiration in accordance with Section 4 hereof. No amendment to or
termination of the Plan shall in any way adversely affect Awards
then outstanding hereunder.
13. Status of Plan. Until shares pursuant to an Award or
exercise thereof are actually delivered to a Participant, a
Participant shall have no rights to or with respect to such shares
greater than those of a general creditor of the Corporation unless
the Committee shall otherwise expressly determine in connection
with any Award or Awards.
14. General Provisions.
(a) Other Compensation Arrangements; No Right to Receive
Awards; No Employment or Other Rights. Nothing contained in this
Plan shall prevent the Board from adopting other or additional
capital stock based compensation arrangements, subject to
stockholder approval if such approval is required, and such
arrangements may be either generally applicable or applicable only
in specific cases. No Eligible Person shall have any right to
receive Awards except as the Committee may determine. The Plan
does not confer upon any employee any right to continued employment
with the Corporation or a Subsidiary or upon any director or
officer of the Corporation any right to continued service as a
director or officer of the Corporation, nor does it interfere in
any way with the right of the Corporation or a Subsidiary to
terminate the employment of any of its employees or for the
Corporation to remove a director or officer with or without cause
at any time.
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(b) Tax Withholding, Etc. Any obligation of the
Corporation to issue shares pursuant to the grant or exercise of
any Award shall be conditioned on the Participant having paid or
made provision for payment of all applicable tax withholding
obligations, if any, satisfactory to the Committee. The
Corporation and its Subsidiaries shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the Participant. In the case of
Non-Statutory Options, and Stock Appreciation Rights exercisable
only for Stock, the Committee in its discretion, but only upon the
written request of a Participant exercising such an Award, may
permit such Participant to satisfy federal income tax withholding
requirements occasioned by the exercise thereof by the surrender of
shares otherwise to be received on the exercise of such Award.
Such shares shall be valued at the Fair Market Value thereof on the
date of exercise.
(c) Section 83(b) of the Code. Participants may not
make, and each Award agreement shall prohibit, an election under
Section 83(b) of the Code, with respect to any Award.
(d) Restrictions on Transfers of Shares. Although the
Corporation presently intends to register under applicable
securities laws all shares acquired or received by Participants
under the Plan, the Corporation is not required to cause such
shares to be registered under the Securities Act of 1933 or the
securities laws of any State. Accordingly, the shares acquired or
received may be "restricted securities" as defined in Rule 144
under said Securities Act of 1933 or other rule or regulation of
the Securities and Exchange Commission. Any certificate evidencing
any such shares may bear a legend restricting the transfer of such
shares, and the recipient may be required to assert that the shares
are being acquired for his own account and not with a view to the
distribution thereof as a condition to the granting or exercise of
an Award.
(e) Issuance of Shares. Any obligation of the
Corporation to issue shares pursuant to the grant or exercise of
any Award shall be conditioned on the Corporation's ability at
nominal expense to issue such shares in compliance with all
applicable statutes, rules or regulations of any governmental
authority. The Participant shall provide the Corporation with any
assurances or agreements which the Committee, in its sole
discretion, shall deem necessary or advisable in order that the
issuance of such shares shall comply with any such statutes, rules
or regulations.
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(f) Date of Grant. The date on which each Award under
the Plan shall be considered as having been granted shall be the
date on which the award is authorized by the Committee, unless a
later date is specified by the Committee; provided, however, in the
case of options intended to qualify as Incentive Stock Options, the
date of grant shall be determined in accordance with the Code.
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