Exhibit 10.9
2003 NON-EMPLOYEE DIRECTORS EQUITY PLAN
NONSTATUTORY STOCK OPTION AGREEMENT
THIS NONSTATUTORY STOCK OPTION AGREEMENT (the “Option Agreement”) is made and
entered into as of  _____  by and between KAYDON CORPORATION , a Delaware
corporation (the “Company”), and (the “Optionee”). The Company has granted to
the Optionee an option to purchase certain shares of Stock, upon the terms and
conditions set forth in this Option Agreement (the “Option”).
1. Definitions and Construction. Capitalized terms not defined herein shall have
the meaning given to them in the Director Plan. Whenever used herein, the
following terms shall have their respective meanings set forth below:
(a) “Annual Grant Date” means  _____, 20_____.
(b) “Director Plan” means the Kaydon Corporation 2003 Non-Employee Directors
Equity Plan, as approved by stockholders of the Company on May 9, 2003.
(c) “Number of Option Shares” means  _____  ( ) shares of Stock, as adjusted
from time to time pursuant to Section 14.
(d) “Exercise Price” means $           per share of Stock, as adjusted from time
to time pursuant to Section 14.
(e) “Option Expiration Date” means the tenth, (10th) anniversary after the
Annual Grant Date.
(f) “Securities Act” means the Securities Act of 1933, as amended.
(g) “Service” means the Optionee’s service as a director.
2. Tax Status of the Option. This Option is intended to be a nonstatutory stock
option and shall not be treated as an incentive stock option within the meaning
of Section 422(b) of the Code.
3. Administration. All questions of interpretation concerning this Option
Agreement shall be determined by the Committee of the Board. All determinations
by the Board shall be final and binding upon all persons having an interest in
the Option.
4. Exercise of the Option.
(a) Except as otherwise provided herein, the Option shall become fully vested
and exercisable on and after the first anniversary of the Annual Grant Date and
prior to the termination of the Option (as provided in Section 11) in an amount
not to exceed the Number of Option Shares less the number of shares previously
acquired upon exercise of the Option. In no event shall the Option be
exercisable for more shares than the Number of Option Shares. Notwithstanding
the foregoing, in the event that the adoption of the Plan or any amendment of
the Plan is subject to the approval of the Company’s stockholders in order for
the Plan or the grant of the Option to comply with the requirements of
Rule 16b-3, the Option shall not be exercisable prior to such stockholder
approval.

 

 

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(b) Exercise of the Option shall be by written notice to the Company which must
state the election to exercise the Option, the number of whole shares of Stock
for which the Option is being exercised and such other representations and
agreements as to the Optionee’s investment intent with respect to such shares as
may be required pursuant to the provisions of this Option Agreement. The written
notice must be signed by the Optionee and must be delivered in person, by
certified or registered mail, return receipt requested, by confirmed facsimile
transmission, or by such other means as the Company may permit, to the Vice
President and General Counsel of the Company, or other authorized representative
of the Company, prior to the termination of the Option as set forth in
Section 11, accompanied by full payment of the aggregate Exercise Price for the
number of shares of Stock being purchased. The Option shall be deemed to be
exercised upon receipt by the Company of such written notice and the aggregate
Exercise Price.
5. Payment of Consideration. Except as otherwise provided below, payment of the
aggregate Exercise Price for the number of shares of Stock for which the Option
is being exercised shall be made (i) in cash, by check, or cash equivalent or,
(ii) by tender to the Company of whole shares of Stock owned by the Optionee
having a Fair Market Value not less than the aggregate Exercise Price, or
(iii) by any combination of the foregoing. Notwithstanding the foregoing, the
Option may not be exercised by tender to the Company of shares of Stock to the
extent such tender of Stock would constitute a violation of the provisions of
any law, regulation or agreement restricting the redemption of the Company’s
stock. The Option may not be exercised by tender to the Company of shares of
Stock unless such shares either have been owned by the Optionee for more than
six (6) months or were not acquired, directly or indirectly, from the Company.
6. Tax Withholding and Deferred Compensation. The Company shall have the right,
but not the obligation, to deduct from the shares of Stock issuable upon the
exercise of an Option, or to accept from the Optionee the tender of, a number of
whole shares of Stock having a Fair Market Value equal to all or any part of the
federal, state, local and foreign taxes, if any, required by law (including, any
taxes arising under Sections 409A or 4999 of the Code) to be withheld by the
Company with respect to such Option or the shares acquired upon exercise
thereof. Alternatively or in addition, in its sole discretion, the Company shall
have the right to require the Optionee to make adequate provisions for any such
tax withholding obligations of the Company arising in connection with the Option
or the shares acquired upon exercise thereof. The Company shall have no
obligation to deliver shares of Stock until the Company’s tax withholding
obligations have been satisfied. 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 Optionee from any such tax liabilities. Nevertheless, if the
Company reasonably determines that the Optionee’s receipt of payments or
benefits pursuant to Sections 5 or 6 of the Plan constitutes “nonqualified
deferred compensation” within the meaning of Section 409A, payment of such
amounts shall not commence until the Optionee incurs 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. that period. Thereafter, the Grantee shall receive
any remaining benefits as if there had not been an earlier delay.
7. Certificate Registration. The certificate for the shares as to which the
Option is exercised shall be registered in the name of the Optionee, or, if
applicable, the heirs of the Optionee. The Company may at any time place legends
referencing any applicable federal, state or foreign securities law restrictions
on all certificates representing shares of Stock subject to the provisions of
this Option Agreement. The Optionee shall, at the request of the Company,
promptly present to the Company any and all certificates representing shares
acquired pursuant to the Option in the possession of the Optionee in order to
carry out the provisions of this Section.

 

 

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8. Restrictions on Grant of the Option and Issuance of Shares. The grant of the
Option and the issuance of shares of Stock upon exercise of the Option shall be
subject to compliance with all applicable requirements of federal, state or
foreign law with respect to such securities. The Option may not be exercised if
the issuance of shares of Stock upon exercise would constitute a violation of
any applicable federal, state or foreign securities laws or other law or
regulations or the requirements of any stock exchange or market system upon
which the Stock may then be listed. In addition, the Option may not be exercised
unless (i) a registration statement under the Securities Act shall at the time
of exercise of the Option be in effect with respect to the shares issuable upon
exercise of the Option or (ii) in the opinion of legal counsel to the Company,
the shares issuable upon exercise of the Option may be issued in accordance with
the terms of an applicable exemption from the registration requirements of the
Securities Act. THE OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED
UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT
BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares subject to the Option
shall relieve the Company of any liability in respect of the failure to issue or
sell such shares as to which such requisite authority shall not have been
obtained. As a condition to the exercise of the Option, the Company may require
the Optionee to satisfy any qualifications that may be necessary or appropriate,
to evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the
Company.
9. Fractional Shares. The Company shall not be required to issue fractional
shares upon the exercise of the Option.
10. Nontransferability of the Option. The Option may be exercised during the
lifetime of the Optionee only by the Optionee or the Optionee’s guardian or
legal representative and may not be assigned or transferred in any manner except
by will or by the laws of descent and distribution. Following the death of the
Optionee, the Option, to the extent provided in Section 6 of the Director Plan,
may be exercised by the Optionee’s legal representative or by any person
empowered to do so under the deceased Optionee’s will or under the then
applicable laws of descent and distribution.
11. Expiration of the Option. The Option shall terminate and cease to be
exercisable on the first to occur of the following events:
(a) the date which is the tenth (10th) anniversary of the Annual Grant Date
unless earlier terminated pursuant to clause (iii) below;
(b) the expiration of one (1) month from the date of a person’s Termination of
Service for any reason other than death, Disability or Retirement; or
(c) the expiration of five (5) years from the date of a person’s death, whether
before or after a Termination of Service.
12. Option Exercisability. Notwithstanding the foregoing, if the Optionee incurs
a Termination of Service other than due to death, Disability or Retirement, any
portion of the Option that is not exercisable at the date of such Termination of
Service shall never become exercisable and shall be immediately forfeited. If a
Director incurs a Termination of Service due to Disability or Retirement, the
Option shall continue to become exercisable in accordance with the Vested
Percentage schedule, but the exercise thereof shall be subject to the provisions
of Section 6, and, in addition, the Option shall be cancelled and forfeited if
the Committee at any time thereafter determines that the former Director has
engaged in any activity detrimental to the interests of the Company.
Notwithstanding the foregoing, if the exercise of the Option within the
applicable time periods set forth in Section 6 is prevented by the provisions of
Section 8, the Option shall remain exercisable until three (3) months after the
date the Optionee is notified by the Company that the Option is exercisable, but
in any event no later than the option expiration date set forth in Section 6.
13. Change in Control. In the event of a Change in Control, any unexercisable
portion of the Option shall become immediately exercisable and vested in full as
of the date thirty (30) days prior to the date of the Change in Control. The
exercise or vesting of any Option that results solely by reason of this
Section 13, shall be conditioned upon the consummation of the Change in Control.
In addition, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the “Acquiring Corporation”),
may either assume the Company’s rights and obligations under outstanding Options
or substitute for outstanding Options substantially equivalent options for the
Acquiring Corporation’s stock. Any Options which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Change in
Control nor exercised as of the date of the Change in Control shall terminate
and cease to be outstanding effective as of the date of the Change in Control.

 

 

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14. Adjustments for Changes in Capital Structure. In the event of any stock
dividend, stock split, reverse stock split, recapitalization, combination,
reclassification, or similar change in the capital structure of the Company,
appropriate adjustments shall be made in the number, Exercise Price and class of
shares of stock subject to the Option. If a majority of the shares which are of
the same class as the shares that are subject to the Option are exchanged for,
converted into, or otherwise become (whether or not pursuant to a Change in
Control) shares of another corporation (the “New Shares”), the Board may
unilaterally amend the Option to provide that the Option is exercisable for New
Shares. In the event of any such amendment, the Number of Option Shares and the
Exercise Price shall be adjusted in a fair and equitable manner, as determined
by the Board, in its sole discretion. Notwithstanding the foregoing, any
fractional share resulting from an adjustment pursuant to this Section 14 shall
be rounded down to the nearest whole number, and in no event may the Exercise
Price be decreased to an amount less than the par value, if any, of the stock
subject to the Option.
15. Rights as a Stockholder. The Optionee shall have no rights as a stockholder
with respect to any shares covered by the Option until the date of the issuance
of a certificate for the shares for which the Option has been exercised (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). No adjustment shall be made for
dividends, distributions or other rights for which the record date is prior to
the date such certificate is issued, except as provided in Section 14.
16. Construction. Captions and titles contained herein are for convenience only
and shall not affect the meaning or interpretation of any provision of this
Option Agreement. Except when otherwise indicated by the context, the singular
shall include the plural, the plural shall include the singular, and use of the
term “or” shall not be exclusive.
17. Binding Effect. Subject to the restrictions on transfer set forth herein,
this Option Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
18. Termination or Amendment. The Board may terminate or amend the Plan or the
Option at any time; provided, however, that no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee unless such termination or amendment is necessary to
comply with any applicable law or government regulation. No amendment or
addition to this Option Agreement shall be effective unless in writing.
19. Integrated Agreement. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Company with respect to the
subject matter contained herein, and there are no agreements, understandings,
restrictions, representations, or warranties among the Optionee and the Company
with respect to such subject matter other than those as set forth or provided
for herein. To the extent contemplated herein, the provisions of this Option
Agreement shall survive any exercise of the Option and shall remain in full
force and effect.

 

 

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20. Applicable Law. This Option Agreement shall be governed by the laws of the
State of Delaware as such laws are applied to agreements between Delaware
residents entered into and to be performed entirely within the State of
Delaware.

            KAYDON CORPORATION
      By:           Its:   

The Optionee represents that the Optionee is familiar with the terms and
provisions of this Option Agreement and hereby accepts the Option subject to all
of the terms and provisions thereof. The Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement.

            OPTIONEE     Dated:                          

            Print Name: