Exhibit 10.11
KAYDON CORPORATION 1999 LONG TERM STOCK INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
NON-QUALIFIED STOCK OPTION AGREEMENT, dated as of  _____, 200_____; between
KAYDON CORPORATION, a Delaware corporation (the “Corporation”), and  _____ 
(“Optionee”).
The Kaydon Corporation 1999 Long Term Stock Incentive Plan Committee (the
Committee), pursuant to the Corporation’s 1999 Long Term Stock Incentive Plan
(the Plan), has granted to the Optionee, on the date of this Agreement, an
option under the Plan to purchase an aggregate of  _____  shares of Common Stock
of the Corporation par value $0.10 per share (“Common Stock”). To evidence the
option and to set forth its terms and conditions as provided in the Plan, the
Corporation and the Optionee agree as follows.
1. Confirmation of Grant and Price. The Corporation, by this Agreement,
evidences and confirms its grant to the Optionee on the date of this Agreement
of an option (the Option) to purchase  _____  shares of Common Stock, at an
option price of $           per share. The Option is subject to all of the
provisions of the Plan, whether or not explicitly stated in this Agreement,
except that the ability of the Board of Directors or the Committee to amend this
Agreement without the consent of Optionee is limited as provided in this
Agreement.
2. Term for Exercise. The Option becomes available for exercise, subject to the
provisions of this Agreement, as to the percentage of the aggregate number of
shares of Common Stock subject to the Option and on the dates set forth below:
(a) Percentage and Date Schedule

      Percentage of Number   Date First Available of Shares   for Exercise 20%  
One year after the date of grant
20%  
Two years after the date of grant
20%  
Three years after the date of grant
20%  
Four years after the date of grant
20%  
Five years after the date of grant

(b) Later Exercise. The right to purchase is cumulative. If the full number of
shares exercisable in any period is not exercised, the balance may be exercised
at any time or from time to time after that date, as long as the exercise occurs
prior to the expiration or termination of the Option.
(c) Expiration. The Option expires                     ,
200                    .
3. Non-Qualified Stock Option. The Option evidenced by this Agreement is not
intended to be an incentive stock option as that term is defined in Section 422
of the Internal Revenue Code of 1986, as amended (the Code).

 

 

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4. Who May Exercise. During the lifetime of the Optionee, the Option may be
exercised only by the Optionee. If the Optionee dies, the Option may be
exercised, to the extent provided in Section 5 hereof, by the Optionee’s estate
or a person who acquires the right to exercise the Option by bequest or
inheritance or by reason of the death of the Optionee.
5. Exercise After Termination of Employment. Except as explicitly provided
below, no part of an Option may be exercised by an Optionee unless the Optionee
is then in the employ of the Corporation or any parent or subsidiary and was
continuously so employed since the date of the grant. It is not a termination of
employment for purposes of this section if the Optionee transfers employment
from the Corporation to any subsidiary or vice versa, or from one subsidiary to
another, without an intervening period, if the Optionee is absent on sick leave
or is granted a leave of absence (not to exceed one year), or if the Optionee
changes status to become a consultant to the Corporation or a subsidiary.
Termination will include termination by reason of the fact that an entity
employing Optionee is no longer a subsidiary of the Company.
(a) General Rules. Unless governed by a special rule, below, the Option
terminates on the earlier of the expiration date specified in Section 2 and the
date which is 10 days after the date of termination of employment. Unless
acceleration of or continued vesting is specifically provided for in this
Section 5 or in an Employment Agreement between Optionee and the Corporation
which specifically addresses vesting of stock based awards upon termination,
vesting of awards shall cease and no further installments of the Option will
become exercisable following termination of employment by the Corporation or any
parent or subsidiary and the Option shall be exercisable pursuant to the rules
set forth in this Section 5 only with respect to the number of shares of Common
Stock as to which the Optionee could have exercised the Option at the date of
termination. The Board of Directors or the Committee may, in its discretion,
amend this Agreement to accelerate the exercisability of any installments of the
Option which were not exercisable at the time of the Optionee’s death.
(b) Exceptions for Involuntary Termination and Disability. In the case of
involuntary termination of employment or a Disability within the meaning of the
Plan or as defined in any employment agreement between Optionee and the
Corporation, the Option terminates on the earlier of the expiration date
specified in Section 2 and the date which is three months after the date of
termination of employment.
(c) Exception for Death. In the case of death, the Option terminates on the
earlier of the expiration date specified in Section 2 and the date which is one
year from the date of death.
(d) Exception for Retirement. In the case of termination of employment by reason
of retirement at or after age 65, the Option will continue to vest in accordance
with the Option vesting schedule in effect on the date of retirement and will
continue to be exercisable in accordance with its terms as though the Optionee
had continued in employment unless otherwise provided in an Employment Agreement
between Optionee and the Company.

 

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(e) Termination following Change in Control. If the Optionee is a party to a
Change in Control Compensation Agreement or an Employment Agreement which
explicitly provides for acceleration of vesting and exercisability of options
upon events of termination following a “Change in Control,” the vesting and
exercisability of the Option for terminations following a Change in Control (as
defined in such other agreement) will be governed by the terms of such Change in
Control Compensation Agreement or Employment Agreement to the extent such
provisions are different than or conflict with the provisions of this Agreement.
Such acceleration is not subject to cancellation under the Plan and is also
irrevocable as long as the Optionee is a party to such a Change in Control
Compensation Agreement or Employment Agreement.
Notwithstanding the foregoing, if at any time upon or following termination of
employment the Committee determines that reason to terminate the Optionee for
cause, as defined in the Plan, exists at the time of termination or existed at
such time, the Committee may terminate the unexercised portion of the Option
concurrently with or at any time following the termination of employment.
Further, nothing in the Plan or in this Agreement confers upon the Optionee any
right to continue in the employ of the Corporation or any of its affiliates, or
interferes in any way with the right of the Corporation or any of its affiliates
to terminate the Optionee’s employment at any time during the Option period or
otherwise.
6. Restrictions on Exercise. The Option may be exercised only with respect to
full shares. No fractional shares of Common Stock will be issued.
(a) General Limitation. The Option may not be exercised in whole or in part, and
no payment by the Corporation shall be made nor shall any certificates
representing shares of Common Stock subject to the Option be delivered, if:
i. Governmental Approval. At any time any requisite approval or consent of any
governmental authority of any kind having jurisdiction over the exercise of
options has not been effectively secured;
ii. Registration. The shares are not effectively registered under the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended; or
iii. Withholding. Applicable federal, state and local tax withholding
requirements are not satisfied (including, any taxes arising under Sections 409A
or 4999 of the Code).
(b) Representation. The Corporation may require as a condition to the exercise
of the Option in whole or in part at any time that the Optionee or any person
exercising the Option after the Optionee’s death in accordance with the
provisions of Section 4 (the Holder) represent to the Corporation in writing
that the shares are being acquired for the Optionee’s or Holder’s own account
for investment only and not with a view to distribution or with any present
intention of reselling any.
(c) Hardship. The Option is not exercisable for the period of at least twelve
(12) months to the extent provided under the hardship distribution provisions of
the Kaydon Corporation Employee Stock Ownership and Thrift Plan or other
Corporation or affiliate plan to the extent the Optionee receives a hardship
distribution from that plan.

 

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7. Manner of Exercise. To the extent the Option has become and remains
exercisable as provided in this Agreement, and subject to any additional
administrative regulations the Committee may from time to time adopt, the Option
may be exercised from time to time, in whole or in part, by a signed written
notice to the Secretary of the Corporation on a form supplied by the
Corporation. The notice must specify the number of shares of Common Stock with
respect to which the Option is being exercised and be accompanied by full
payment of the option price for the shares.
(a) Payment. Payment must be made in:
i. Cash or Shares. Cash; provided, however, that with the consent of the
Committee, payment may be made in whole or in part with (A) shares of Common
Stock, represented by certificates duly endorsed to the Corporation or its
nominees, valued at fair market value, (B) shares of Common Stock otherwise
issuable upon exercise of such Option, valued at fair market value, or other
awards or property having a fair market value on the exercise date equal to the
exercise price;
ii. Instructions. With the consent of the Committee, by delivering with a
properly executed exercise notice irrevocable instructions to a third party to
promptly deliver to the Corporation the amount of sale or loan proceeds to pay
the exercise price;
iii. Combination. With the consent of the Committee, a combination of the above;
or
iv. Other. With the consent of the Committee, other consideration.
(b) Prior Holdings Limitation. The option price may not be paid in shares of
Common Stock that have been held by the Optionee for less than six months.
(c) Tax Withholding. Prior to the issuance of shares upon exercise of the
Option, Optionee must pay or provide for any applicable federal or state
withholding obligations of the Corporation (including any taxes arising under
Sections 409A or 4999 of the Code). If the Committee allows, Optionee may
provide for payment of withholding taxes upon exercise of the Option by
(i) requesting that the Corporation retain shares with a fair market value equal
to the minimum amount of taxes required to be withheld or (ii) delivering to the
Corporation other shares of Common Stock owned by Optionee for a period of at
least six months having a fair market value equal to the minimum amount of taxes
required to be withheld. In the case of clause (i) above, the Corporation shall
issue the net number of shares to the Optionee by deducting the shares retained
from the shares issuable upon exercise. Unless otherwise expressly set forth in
a written agreement between the Company and the Optionee, neither the Company
nor any of its employees, officers, directors, or service providers shall have
any obligation whatsoever to pay such taxes, to prevent the Optionee from
incurring them, or to mitigate or protect the

 

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Optionee from any such tax liabilities. Nevertheless, if the Company reasonably
determines that the Optionee’s receipt of payments or benefits pursuant to
Section 6 of the Plan as a result of the Optionee’s cessation of employment with
the Company constitutes “nonqualified deferred compensation” within the meaning
of Section 409A, payment of such amounts shall not commence until the Optionee
incur a “separation from service” within the meaning of Treasury Regulation §
1.409A-1(h) (“Separation from Service”). If, at the time of the Optionee’s
Separation from Service, the Optionee is a “specified employee” (under Internal
Revenue Code Section 409A), any amount that constitutes “nonqualified deferred
compensation” within the meaning of Code Section 409A that becomes payable to
the Optionee on account of the Optionee’s Separation from Service (including any
amounts payable pursuant to the preceding sentence) will not be paid until after
the end of the sixth calendar month beginning after the Optionee’s Separation
from Service (the “409A Suspension Period”). Within 14 calendar days after the
end of the 409A Suspension Period, the Optionee shall be paid a lump sum payment
in cash equal to any payments delayed because of the preceding sentence, without
interest. Thereafter, the Optionee shall receive any remaining benefits as if
there had not been an earlier delay.
(d) Right to Exercise. In the event that the Option is exercised by a person
other than the Optionee in accordance with Section 4, the person must furnish to
the Corporation evidence satisfactory to it of the person’s right to exercise
the Option.
(e) Other Documents. The Corporation may require the Optionee or any other
person exercising the Option to furnish or execute any documents the Corporation
deems necessary to evidence the exercise or to comply with any requirements of
this Agreement, the Plan, or any law.
8. Non-Assignability. The Option may not be assigned, transferred or
hypothecated by the Optionee or other Holder except as provided below:
(a) Acceptable Assignments. Subject to subsection b., the Option may be assigned
by the Optionee:
i. Death. By will or by the laws of descent and distribution to the extent
provided in Section 4;
ii. Grantor Trust. To a revocable grantor trust established by the Optionee for
the Optionee’s sole benefit during the Optionee’s life, subject to the terms of
the Plan; or
iii. Other. To a beneficiary designated by the Optionee in writing on a form
approved by the Committee.
(b) Limitation. Notwithstanding those general rules, the Option may not be
assigned by Optionee if Optionee is a director or officer of the Corporation or
an affiliate for purposes of the securities laws, except as permitted under
Rule 16b-3 of those laws.

 

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9. Rights as Shareholders. The Optionee and any other Holder have no rights as a
shareholder with respect to any shares covered by the Option until the issuance
of a certificate or certificates to the Optionee or other Holder for the shares
upon due exercise of the Option. No adjustment will be made for dividends or
other rights for which the record date is prior to the issuance of the
certificate or certificates.
10. Capital and Other Adjustments. In the event of any change in the number of
outstanding shares of Common Stock by reason of any stock dividend, stock split,
combination or exchange of shares, recapitalization, reclassification, merger,
consolidation, reorganization, or other similar transaction, the Committee may
adjust the number, type and option price of shares of Common Stock covered by
the Option, by means of a grant of a substitute option or an additional option
or otherwise, as it in its discretion deems appropriate. In addition, in the
event of any unusual or nonrecurring event (including, but not limited to, the
events described in the preceding sentence) affecting the Corporation, any
subsidiary, or the financial statements of the Corporation or any subsidiary, or
of changes in applicable laws, regulations, or accounting principles, the
Committee may adjust the terms and conditions of, and the criteria included in
this Agreement if the Committee determines that such adjustments are appropriate
to prevent dilution or enlargement of the benefits or potential benefits of the
Option.
11. Change in Control. In the event of a Change in Control (as defined in the
Plan), the Option shall vest, shall become exercisable in full and shall no
longer be subject to any restrictions which would prevent immediate exercise. 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 Option for an amount of cash equal
to the amount that could have been attained upon exercise had the Option been
exercisable at that time;
(b) Adjust. Adjust the Option as the Committee deems appropriate to reflect the
Change in Control; and
(c) Cause Assumption. Cause the Option to be assumed, or replaced with a new
option, by the acquiring or surviving corporation after the Change in Control.
12. Legality. The issuance or delivery of any shares of Common Stock pursuant to
an Option may be postponed by the Corporation for any period required to comply
with any applicable requirements under the Federal securities laws, any
applicable listing requirements of any national securities exchange or any
requirements under any other applicable law or regulation. The Corporation is
not obligated to issue or deliver any shares if the issuance or delivery
constitutes, or in the opinion of counsel to the Corporation may constitute, a
violation of any provision of any law or of any regulation of any governmental
authority or any national securities exchange.
13. Notice. Notice to the Secretary of the Corporation shall be deemed given if
in writing and delivered to the Secretary of the Corporation at the then
principal office of the Corporation in accordance with the Sarbanes-Oxley
Accounting/Corporate Responsibility Act of 2002 (such Notice must be delivered
in a timely manner in order for the Corporation to meet its reporting
requirements).

 

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14. Amendment. The Board of Directors or the Committee may amend the terms and
conditions of this Agreement as provided in the Plan, except that, without the
consent of the Optionee, no amendment may impair the rights of the Optionee or
Holder relating to the Option or amend Sections 5(e), or 11, or this Section 14
of this Agreement. Notwithstanding that, the Option provided in this Agreement
may be canceled in the Committee’s sole discretion, as long as the Optionee is
not a party to an effective Change in Control Compensation Agreement or
Employment Agreement, as described in Section 5 above, upon payment of the value
of the Option to the Optionee or Holder in cash or in another Option, and such
value may be determined by the Committee in its sole discretion.
15. Governing Law. The words “exercise”, “subsidiary”, “outstanding” and any
other words or terms used in this Agreement which are defined or used in
Section 421, 422 or 425 of the Code have the meanings assigned to them in those
Sections, unless the context clearly requires otherwise. In all other respects
this Agreement shall be construed and enforced in accordance with, and governed
by, the laws of the State of Delaware.
Executed  _____  day of                     , effective as of the date first set
forth above.

                      KAYDON CORPORATION       OPTIONEE    
 
                   
By 
                                   

Name:                   
 
 
 
               

Its:                   
 
 
 
               

 

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