Exhibit 10.1

 

RESTRICTED STOCK AGREEMENT

KAYDON CORPORATION

1999 Long Term Stock Incentive Plan

 

Grantee: __________________________

Grant Date: ___________________

 

Address: _________________________

Number of Shares:______________

 

_________________________

 

 

This Restricted Stock Agreement (the “Agreement”) is made as of the Grant Date
between KAYDON CORPORATION, a Delaware corporation (the “Company”), and
_______________________ (“Grantee”).

The Kaydon Corporation 1999 Long Term Stock Incentive Plan (the “Plan”) is
administered by the Compensation Committee of the Company’s Board of Directors
(the “Committee”). The Committee has determined that Grantee is eligible to
participate in the Plan.

The Committee has granted restricted stock to Grantee, subject to the terms and
conditions contained in this Agreement and in the Plan.

Grantee acknowledges receipt of a copy of the Prospectus for the Plan and
accepts these shares of restricted stock subject to all of the terms,
conditions, and provisions of this Agreement and the Plan.

1.             Grant of Restricted Stock. The Company grants to Grantee, and
Grantee accepts, the shares of $0.10 par value Common Stock of the Company set
forth above, subject to the terms and conditions of this Agreement (the
“Restricted Stock”).

2.             Conditions. The Company awards the Restricted Stock to Grantee
subject to the conditions described below and to a vesting schedule. Those
conditions must be met or otherwise lapse, and vesting must occur, before
Grantee will receive any stock under this Agreement. If Grantee breaches the
terms of this Agreement or ceases to be employed by the Company for certain
reasons as described in this Agreement, if the applicable restrictions are not
satisfied or do not lapse, or if Grantee does not vest in some or all of the
Restricted Stock, Grantee will promptly surrender to the Company those shares of
Restricted Stock as to which the restrictions have not lapsed or in which
Grantee’s interest has not vested pursuant to this Agreement as set forth below.

3.             Restrictions On and Vesting of Restricted Stock. If Grantee is
then employed by the Company and has not breached the terms of this Agreement,
the restrictions on twenty percent (20%) of the initial number of shares of
Restricted Stock will lapse and the Grantee will vest in those shares on each
January 5 following the first anniversary of the Grant Date (provided

 

 

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however that _______ will be considered the first anniversary of the Grant
Date). Vesting under this provision will continue until all of the shares are
vested, the Grantee is no longer employed by the Company, or another provision
of this Agreement supersedes this section, whichever occurs first. The Committee
may, in its sole discretion, accelerate the lapsing of restrictions and the
vesting of the Restricted Stock at any time before the restrictions won Id
otherwise lapse or before full vesting. As restrictions lapse and vesting
occurs, a certificate for the number of shares of Restricted Stock as to which
restrictions have lapsed will be forwarded to the Grantee.

4.             Transferability. Unless the Committee otherwise consents or the
Plan otherwise explicitly provides, Grantee will not sell, exchange, transfer,
pledge, or otherwise dispose of the Restricted Stock at any time, whether
voluntarily or involuntarily, by operation of law or otherwise. The provisions
of this paragraph will not apply to Restricted Stock that has vested pursuant to
this Agreement. If Grantee violates the restrictions in this Section, Grantee’s
right to shares of Restricted Stock remaining subject to restrictions or which
have not yet vested will immediately cease and terminate and Grantee will
immediately forfeit and surrender all shares of Restricted Stock that are still
subject to restrictions or which have not yet vested to the Company.

5.             Rights as a Shareholder. Grantee will have certain rights as a
shareholder with respect to the Restricted Stock, including but not limited to
the right to vote the Restricted Stock at shareholders’ meetings, the right to
receive, without restriction, all cash dividends paid with respect to the
Restricted Stock, and the right to participate with respect to the Restricted
Stock in any stock dividend, stock split, recapitalization, or other adjustment
in the capital stock of the Company, or any merger, consolidation, or other
reorganization involving an increase, decrease, or adjustment in the capital
stock of the Company.

(a)               Substitute Shares. Any shares or other security received as a
result of any stock dividend, stock split, or reorganization will be subject to
the same terms, conditions, and restrictions as those relating to the Restricted
Stock granted under this Agreement.

(b)               Registration. Certificates for the shares of stock evidencing
the Restricted Stock will not be issued but the shares will be registered in
Grantee’s name in book entry form as soon as administratively feasible after
Grantee’s acceptance of this Agreement.

6.             Termination of Employee Status. If Grantee ceases to be an
employee of the Company:

(a)               Termination Due to Disability or Death. By reason of Permanent
and Total Disability (as defined in the Plan) (“Disability”) or death, the
shares of Restricted Stock will vest on the date of death or Disability.

(b)               Retirement. By reason of retirement at or after age 65, the
shares of Restricted Stock will continue to vest in the same manner as though
employment had not terminated.

 

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If unforfeited Restricted Stock remains unvested at Grantee’s death following
retirement from employment at or after attainment of age 65, the shares of
Restricted Stock will vest on the date of death.

(c)               Termination for Reason Other Than Retirement, Disability or
Death. For any reason other than death, Disability, or retirement at or after
age 65, with or without cause, no further vesting of Restricted Stock will occur
and any shares of Restricted Stock still subject to restrictions or which have
not yet vested as of the date of termination of employment will automatically be
forfeited and returned to the Company.

Notwithstanding the foregoing, if at any time following termination of
employment Grantee engages in an activity which, in the sole judgment of the
Committee, is detrimental to the interests of the Company, all shares of
Restricted Stock for which restrictions have not lapsed or which have not yet
vested will be forfeited to the Company.

7.             Employment by the Company. Nothing in this Agreement imposes upon
the Company any obligation to retain Grantee in the employ of the Company for
any given period or upon any specific terms of employment. Grantee acknowledges
that, except as otherwise agreed by the Company in a signed written agreement,
Grantee’s employment is at will and terminable by Grantee or the Company at any
time and for any reason.

8.

Tax Withholding. Grantee authorizes the Company to:

(a)               Withhold. Withhold and deduct from future wages of Grantee (or
from other amounts that may be due and owing to Grantee from the Company, or
make other arrangements for the collection of, all amounts deemed necessary to
satisfy any and all federal, state, and local withholding and employment-related
tax requirements attributable to an award of Restricted Stock; or

(b)               Remit. Require Grantee promptly to remit the amount of such
withholding to the Company before taking any action with respect to the
Restricted Stock.

9.             Acknowledgment. By signing this Agreement and accepting the
Restricted Stock, Grantee:

(a)               Representation. Acknowledges acceptance of the Restricted
Stock and receipt of the documents referred to in this Agreement, represents
that Grantee is familiar with the provisions of the Plan and agrees to its
incorporation in the Agreement, agrees to all of the other terms and conditions
of the Agreement and agrees to promptly provide any information with respect to
the Restricted Stock reasonably requested by the Company;

(b)               Taxes. Agrees to comply with the requirements of applicable
federal and other laws with respect to withholding or providing for the payment
of required taxes;

 

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(c)               Limitation of Rights. Acknowledges that all of Grantee’s
rights to the Restricted Stock are embodied in the Agreement and in the Plan;

(d)               Employment. Agrees that while Grantee is employed by the
Company, the Grantee will devote full business time and energies to the business
and affairs of the Company and will not, without the Company’s written consent,
accept other employment or permit any personal business interests to interfere
with the performance of Grantee’s duties; and

(e)               Duties. Agrees to use Grantee’s best efforts, skill and
abilities to promote the interests of the Company, to work with other employees
of the Company in a competent and professional manner and generally to promote
the interests of the Company and to perform such other duties of a management or
professional nature as may be assigned to Grantee.

10.          Commitments of Grantee. Notwithstanding any other provisions of
this Agreement or the Plan, in consideration of the grant of Restricted Stock to
Grantee, in recognition of the highly competitive nature of the industries in
which the Company conducts its business and to further protect the goodwill of
the Company and to promote and preserve its legitimate business interests,
Grantee agrees that during the period commencing on the Grant Date and ending
two years after the date of termination of the Grantee’s employment by the
Company, Grantee will not:

(a)               Compete. Engage in any business activities engaged in by the
Company at any time (“Business Activities”) (other than on behalf of the
Company) whether such engagement is as an officer, director, proprietor,
employee, partner, investor (other than as a holder of less than 1% of the
outstanding capital stock of a publicly traded corporation), consultant,
advisor, agent or otherwise, in any geographic area in which the products or
services of the Company have been distributed or provided during the period
commencing two years prior to the Grant Date.

(b)               Customers. Other than on behalf of the Company supply products
or provide services (but only to the extent such restricted activities
constitute Business Activities) to any customer with whom the Company has done
any business during the period commencing two years prior to the Grant Date,
whether as an officer, director, proprietor, employee, partner, investor (other
than as a holder of less than 1% of the outstanding capital stock of a publicly
traded corporation), consultant, advisor, agent or otherwise.

(c)               Assist. Assist others in engaging in any of the Business
Activities in the manner prohibited to the Grantee.

(d)               Employee Solicitation. Induce or attempt to induce employees
of the Company to engage in any activities prohibited to the Grantee or to
terminate their employment.

(e)               Confidentiality. Disclose the contents of any Proprietary
Information of the Company. Proprietary Information means information or
material of the Company

 

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which is not generally available to or used by others or the utility or value of
which is not generally known or recognized as standard practice, whether or not
the underlying details are in the public domain. Proprietary Information
includes, without limitation:

(i)                Information or materials which relate to the Company’s trade
secrets, manufacturing, methods, machines, articles of manufacture,
compositions, inventions, engineering services, technological developments,
know-how, purchasing, accounting, merchandising or licensing;

(ii)               Software in various stages of development (source code,
object code, documentation, diagrams, flow charts), designs, drawings,
specifications, models, data and customer information; and

(iii)              Any information of the type described above which the Company
obtained from another party and which the Company treats as proprietary or
designates as confidential, whether or not owned or developed by the Company.

(f)                Cooperation. Fail to furnish such information and render such
assistance and cooperation as may reasonably be requested in connection with any
litigation or legal proceedings concerning the Company (other than any legal
proceedings concerning Grantee’s employment) provided the Company agrees to pay
or reimburse Grantee for all reasonable expenses incurred in cooperating with
such requests.

(g)               Non-Disparagement. Disparage the Company or their respective
officers, directors or employees.

The Grantee and the Company consider the commitments contained above to be
reasonable for the purpose of preserving the Company’s goodwill, proprietary
rights, trade secrets, valuable confidential business interests, relationships
with specific prospective and existing customers and going concern value, and to
protect the Company’s business opportunities, markets and trade areas. If a
final judicial determination is made by a court having jurisdiction that the
time or territory or scope of restricted activities or any other commitment
contained in this Section 10 is an unenforceable restriction on the activities
of Grantee, the provisions of this Agreement will not be rendered void but will
be deemed amended to apply as to such maximum time, restricted activities and
territory and to such other extent as the court may determine or indicate to be
reasonable.

Alternatively, if the court finds that any commitment contained in this Section
10 is unenforceable, and the commitment cannot be amended so as to make it
enforceable, that finding shall not affect the enforceability of any of the
other commitments contained here.

In addition, without limiting the generality of the preceding or the Company’s
remedies for Grantee’s breach of any of these commitments, upon Grantee’s
material breach of any of these commitments, all shares of Restricted Stock
which have not at the time of breach been freed from restrictions and vested
will automatically be forfeited and returned to the Company.

11.          Change in Control. Notwithstanding the restrictions and vesting
rules of this Agreement, in the event of a Change in Control as defined in the
Plan, the Restricted Stock will

 

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no longer be subject to any restrictions and will vest. In addition, in that
circumstance, the Committee as constituted before the Change in Control may, in
its sole discretion:

(a)               Purchase. Provide for the purchase of the shares of Restricted
Stock by the Company, at the Grantee’s request, for an amount of cash equal to
the value of the shares immediately prior to the Change in Control; and

(b)               Adjust. Adjust the shares, at the Grantee’s request, as the
Committee deems appropriate to reflect the Change in Control.

12.          Change in Control Compensation Agreement. Notwithstanding the
restrictions and vesting rules of this Agreement, if the Condition below is met,
in the event of a Change in Control as defined in this Section 12, the
Restricted Stock will no longer be subject to any restrictions and will vest.

(a)               Condition. The lapse of restrictions and acceleration of
vesting provided in this Section will occur only if Grantee is a party at the
time of a Change in Control, as defined in this Section 12, to an effective
Change in Control Compensation Agreement which explicitly provides for immediate
acceleration of vesting of the Restricted Stock held by the Grantee upon a
Change in Control.

(b)               Change in Control. Notwithstanding the definition of Change in
Control provided in Section 11 of this Agreement, for purposes of this Section
12 a Change in Control has the meaning provided in the Change in Control
Compensation Agreement applicable to Grantee.

(c)               Effect. The provisions of this Section 12 are not subject to
cancellation under the 1999 Long Term Stock Incentive Plan. The provisions of
this Section 12 are also irrevocable as long as Grantee is a party to an
effective Change in Control Compensation Agreement.

13.          Arbitration. Grantee and the Company agree that, except with
respect to the enforcement of the Company’s rights under Section 10 of this
Agreement, any disagreement dispute, controversy, or claim arising out of or
relating to this Agreement, its interpretation, or validity, or the terms and
conditions of Grantee’s employment (including but not limited to the termination
of that employment), will be settled exclusively and finally by arbitration
irrespective of its magnitude, the amount in controversy, or the nature of the
relief sought.

(a)               Rules. The arbitration shall be conducted in accordance with
the Employment Arbitration Rules (the “Arbitration Rules”) of the American
Arbitration Association (the “AAA”) (the terms of which then in effect are
incorporated here).

(b)               Arbitrator. The arbitral tribunal shall consist of one
arbitrator skilled in arbitration of executive employment matters. The parties
to the arbitration shall jointly directly appoint the arbitrator within thirty
(30) days of initiation of the arbitration. If the parties fail to appoint the
arbitrator as provided above, the arbitrator shall be appointed by the AAA as
provided in the Arbitration Rules and shall be a person who has had

 

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substantial experience in executive employment matters. The Company shall pay
all of the fees, if any, and expenses of the arbitrator and the arbitration.

(c)               Location. The arbitration shall be conducted in the
Southeastern Michigan area or in such other city in the United States of America
as the parties to the dispute may designate by mutual written consent.

(d)               Procedure. At any oral hearing of evidence in connection with
the arbitration, each party or its legal counsel shall have the right to examine
its witnesses and to cross-examine the witnesses of any opposing party. No
evidence of any witness may be presented in any form unless the opposing party
or parties has the opportunity to cross-examine the witness, except under
extraordinary circumstances where the arbitrator determines that the interests
of justice require a different procedure.

(e)               Decision. Any decision or award of the arbitrator shall be
final and binding upon the parties to the arbitration proceeding. The parties
agree that the arbitral award may be enforced against the parties to the
arbitration proceeding or their assets wherever they may be found and that a
judgment upon the arbitral award may be entered in any court having
jurisdiction.

(f)                Power. Nothing contained here shall be deemed to give the
arbitral tribunal any authority, power, or right to alter, change, amend,
modify, add to, or subtract from any of the provisions of this Agreement.

The provisions of this Section shall survive the termination or expiration of
this Agreement, shall be binding upon the Company’s and Grantee’s respective
successors, heirs, personal representatives, designated beneficiaries and any
other person asserting a claim described above, and may not be modified without
the consent of the Company. To the extent arbitration is required, no person
asserting a claim has the right to resort to any federal, state or local court
or administrative agency concerning the claim unless expressly provided by
federal statute, and the decision of the arbitrator shall be a complete defense
to any action or proceeding instituted in any tribunal or agency with respect to
any dispute, unless precluded by federal statute.

14.          Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan.

15.          Binding Effect and Amendment. This Agreement is the entire
agreement between the parties and will be binding upon, and will inure to the
benefit of, the parties to this Agreement and their respective heirs,
successors, and assigns, and may be modified only by a writing signed by the
parties.

16.          Remedies. Grantee acknowledges that any breach of the promises in
Section 10 of this Agreement would cause the Company irreparable damage and
therefore agrees that, in the event of a breach of one or more of those
commitments, the Company shall be entitled to preliminary and permanent
injunctive relief in addition to any direct, incidental, and consequential
damages, including lost profits, arising from that breach.

 

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17.          Effective Date. The grant of the Restricted Stock under this
Agreement will be effective as of the Grant Date set forth above.

18.          Agreement Controls. The Plan is incorporated by reference into this
Agreement. Capitalized terms not defined in this Agreement have those meanings
provided in the Plan. In the event of any conflict between the terms of this
Agreement and the terms of the Plan, the provisions of the Agreement control as
long as the applicable provision does not violate any law, change the character
or effect of the Plan or the Restricted Stock under federal or state, tax or
securities law, or exceed the Committee’s authority under the Plan. In that
case, the terms of the Plan shall control.

Executed this ___day of _________________.

KAYDON CORPORATION

GRANTEE

 

 

By: __________________________

____________________________

Its: __________________________

DATE: ______________________

 

 

 

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