Exhibit 10.2
KAYDON CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
As Amended and Restated

 

 

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TABLE OF CONTENTS

              Page  
 
       
ARTICLE I ESTABLISHMENT
    1  
1.1. Effective Date
    1  
1.2. Intent
    1  
1.3. Trust
    1  
ARTICLE II DEFINITIONS
    2  
2.1. Accrued Benefit
    2  
2.2. Active Participant
    2  
2.3. Actuarial Equivalent
    2  
2.4. Average Monthly Compensation
    2  
2.5. Board of Directors
    2  
2.6. Compensation
    3  
2.7. Committee
    3  
2.8. Complying Election
    3  
2.9. Covered Compensation
    3  
2.10. Disability
    3  
2.11. Disability Retirement Eligibility
    3  
2.12. Early Retirement Eligibility
    4  
2.13. Employer
    4  
2.14. Normal Retirement Eligibility
    4  
2.15. Plan Year
    4  
2.16. Separation from Service
    4  
2.17. Specified Employee
    5  
2.18. Vested Retirement Eligibility
    5  
2.19. Year of Credited Service
    6  
2.20. Year of Vesting Service
    7  
ARTICLE III BENEFITS
    7  
3.1. Normal Retirement Benefit
    7  
3.2. Early Retirement Benefit
    7  
3.3. Vested Retirement Benefit
    7  
3.4. Disability Benefit
    7  
3.5. Death Benefit
    8  
3.6. Benefit Limitations
    9  

 

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TABLE OF CONTENTS
(continued)

              Page  
 
       
3.7. Special Transfer Employee Rule
    10  
3.8. Change in Control Override
    10  
ARTICLE IV DISTRIBUTION
    11  
4.1. Time and Method of Payment
    11  
4.2. Method of Payment
    12  
4.3. Designation of Beneficiary
    13  
4.4. Claims Procedure
    13  
4.5. Facility of Payment
    14  
4.6. Offset
    14  
4.7. Distribution in the Event of Taxation
    14  
4.8. Permissible Distributions
    15  
ARTICLE V ADMINISTRATION
    15  
5.1. Committee
    15  
5.2. Limitation of Liability and Indemnification
    16  
ARTICLE VI AMENDMENT AND TERMINATION OF PLAN
    16  
6.1. Amendment or Termination
    16  
6.2. Change in Control Agreement
    17  
ARTICLE VII MISCELLANEOUS
    17  
7.1. Nonassignability
    17  
7.2. Employment Rights Not Enlarged
    17  
7.3. Participants’ Rights Limited
    17  
7.4. Interpretation and Construction
    18  
7.5. Governing Law
    18  
7.6. Arbitration
    18  
Appendix A Other Employers
       
Appendix B Active Participants
       
Appendix C Additional Credit Under Section 2.1 8(a)
       
Appendix D Discretionary Credit Under Section 2.18(b)
       
Appendix E Actuarial Factors
       
Appendix F Special Rules Applicable To Mr. O’Leary
       

 

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KAYDON CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
Kaydon Corporation and certain of its related entities identified in Appendix A
(individually, an Employer, or collectively, the Employers) amend and restate
the Kaydon Corporation Supplemental Executive Retirement Plan (the Plan)
effective October 23, 2008.
ARTICLE I
Establishment
1.1. Effective Date. This Plan was generally effective as of January 1, 1994 as
to Kaydon Corporation and January 1, 1997 as to the other Employer or Employers.
The Plan was amended and restated in 1997 and 1998, in both cases to reflect
amendments adopted by the Board November 7, 1996, was amended and restated
effective January 1, 2005 to reflect Section 409A of the Internal Revenue Code,
and is now further amended and restated, effective October 23, 2008, to reflect
the final regulations under Section 409A of the Internal Revenue Code of 1986,
as amended (the “Code”) and to make certain other clarifying changes.
1.2. Intent. The Plan is intended to be an unfunded deferred compensation
arrangement for purposes of the Internal Revenue Code of 1986, as amended (the
Code) and for purposes of Title I of the Employee Retirement Income Security Act
of 1974, as amended (ERISA).
(a) ERISA Exemption. The Plan is provided for the benefit of a select group of
management employees, is intended to result in taxation to participants only
when amounts are actually received under this Plan and is intended to be exempt
from the participation, funding, vesting and fiduciary requirements of ERISA.
(b) Unfunded. The Plan constitutes only a promise by each Employer to make
benefit payments in the future. Participants have the status of general
unsecured creditors of their Employer.
1.3. Trust. Any trust created by an Employer and any assets held by the trust to
assist the Employer in meeting its obligations under this Plan will conform, in
general form, to the terms of the model trust described in Rev. Proc. 92-64 as
modified from time to time. Notwithstanding that general rule, however,
effective January 1, 2008, no new assets may be set aside in any such trust (or
any other arrangement) to fund benefits under this Plan for any Covered Employee
during any Restricted Period.
(a) Covered Employee. A Covered Employee is the Chief Executive Officer of the
Employer or any member of a controlled group that includes the Employer (or any
individual acting in that capacity) during the taxable year, the four highest
compensated officers of the Employer for the taxable year (in addition to the
Chief Executive Officer), any other individuals subject to Section 16(a) of the
Securities Exchange Act of 1934 for the taxable year, and any former employee of
the Employer or any member of a controlled group that includes the Employer who
was a Covered Employee at the time of termination of employment with the
Employer or that controlled group member.

 

 

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(b) Restricted Period. The Restricted Period is any period that a defined
benefit plan maintained by the Employer or any member of a controlled group that
includes the Employer is “at risk” as defined in Section 430(i) of the Code, any
period the Employer is in bankruptcy, or the 12 month period beginning six
months before the termination of any underfunded defined benefit plan maintained
by the Employer or any member of a controlled group that includes the Employer.
ARTICLE II
Definitions
2.1. Accrued Benefit. A participant’s Accrued Benefit is the Retirement Benefit
earned to date under the Basic form taking into account the offset of the
participant’s accrued benefit under the Kaydon Corporation Retirement Plan from
time to time.
(a) Calculation. The Accrued Benefit is based on the Average Monthly
Compensation, Years of Vesting Service, Years of Credited Service (to a maximum
of 30), the benefit formula and the remaining Plan provisions in effect at the
earlier of termination of employment, cessation of Active Participation, or
other earlier computation date and, for purposes of determining the accrued
benefit under the Kaydon Corporation Retirement Plan, the terms of that Plan in
effect from time to time.
(b) Reduction. The Accrued Benefit of a participant who receives payment of any
benefits under the Plan is reduced by the Actuarial Equivalent of the payments.
2.2. Active Participant. An Active Participant is an employee of the Employer
who has been designated by the Board of Directors or by the Committee of the
Board of Directors as eligible to begin accruing benefits under this Plan and is
identified in Appendix B.
(a) Cessation of Active Participation. An employee who becomes an Active
Participant remains an Active Participant until the earlier of the date on which
the Employee incurs a Separation of Service, and the date the employee is
removed from this Plan by the Board of Directors or the Committee.
(b) Participation. An individual who is or was an Active Participant remains a
participant until no further amounts are payable to the individual under this
Plan.
2.3. Actuarial Equivalent. Actuarial Equivalence is determined under the
assumptions and methods set forth in Appendix E.
2.4. Average Monthly Compensation. Average Monthly Compensation is the
participant’s Average Monthly Compensation determined under the Kaydon
Corporation Retirement Plan, calculated at the earlier of termination of
employment, cessation of Active Participation, or other earlier computation date
using the definition of Compensation contained in this Plan.
2.5. Board of Directors. The Board of Directors is the Board of Directors of
Kaydon Corporation.

 

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2.6. Compensation. Compensation is Compensation as provided in the Kaydon
Corporation Retirement Plan, except that Compensation is determined without
application of the Code Section 401(a)(17) Dollar Limit and the Compensation
Dollar Limit of the Kaydon Corporation Retirement Plan.
2.7. Committee. The Committee is the Compensation Committee of the Board of
Directors. Any members of the Committee who are employees may not receive
compensation for their services to the Committee relating to this Plan.
2.8. Complying Election. A Complying Election is an election that:
(a) 2006. If made prior to January 1, 2007, applies only to amounts that would
not otherwise be payable in 2006 and does not cause an amount to be paid in 2006
that would not otherwise be payable in 2006; and
(b) 2007. If made on or after January 1, 2007 and before January 1, 2008,
applies only to amounts that would not otherwise be payable in 2007 and does not
cause an amount to be paid in 2007 that would not otherwise be payable in 2007.
2.9. Covered Compensation. Covered Compensation is Covered Compensation as
provided in the Kaydon Corporation Retirement Plan.
2.10. Disability. Disability is the occurrence of any medically determinable
physical or mental impairment that:
(a) Condition. Is expected to result in death or to last for a continuous period
of not less than 12 months;
(b) Cessation of Work. Causes the individual to cease active work with the
Employer;
(c) Approval. Is approved by the Board of Directors or the Committee in its
discretion, based on evidence satisfactory to it; and
(d) Effect. Causes the participant to:
(i) Activity. Be unable to engage in any substantial gainful activity; or
(ii) Benefit. Receive income replacement benefits for a period of not less than
three months under an accident and health plan covering employees of the
Employer.
Receipt of permanent and total disability benefits under the Social Security
Act, as amended, or a finding of Disability for purposes of the Kaydon
Corporation Retirement Plan may be considered by the Board or the Committee, but
are not dispositive.
2.11. Disability Retirement Eligibility. Disability Retirement Eligibility is
the Disability of an Active Participant who has attained age 55 (in fact or
based on a deemed age determined at date of hire) and completed at least ten
(10) Years of Vesting Service or ten (10) Years of Credited Service (without
regard to any Additional or Discretionary Credit provided under Section 2.20(a)
or (b) other than credit granted at date of hire).

 

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2.12. Early Retirement Eligibility. Early Retirement Eligibility is the
attainment of age 55 (in fact or based on a deemed age determined at date of
hire) and the completion of at least ten (10) Years of Vesting Service by an
Active Participant.
2.13. Employer.
(a) Except as otherwise provided in part (b) of this Section, the term Employer
means Kaydon Corporation and any successor corporations. Employer shall also
include affiliates and subsidiaries of Kaydon Corporation, and any successor
corporations, if the Committee provides that such corporation shall participate
in the Plan.
(b) For purposes of determining whether an Active Participant has experienced a
Separation from Service, the term Employer shall mean the entity for which the
Active Participant performs services and with respect to which the legally
binding right to compensation deferred or contributed under this Plan arises,
and shall also include all other entities with which such entity would be
aggregated and treated as a single employer under Code Section 414(b)
(controlled group of corporations) and Code Section 414(c) (a group of trades or
businesses, whether or not incorporated, under common control), as applicable,
provided that an ownership threshold of 50% shall be substituted for the 80%
minimum ownership threshold that appears in, and otherwise must be used when
applying, the applicable provisions of (i) Code Section 1563 for determining a
controlled group of corporations under Code Section 414(b), and (ii) Treas. Reg.
§ 1.414(c)-2 for determining the trades or businesses that are under common
control under Code Section 414(c).
2.14. Normal Retirement Eligibility. Normal Retirement Eligibility is:
(a) General Rule. The attainment of age 65 (in fact or based on a deemed age
determined at date of hire) and the completion of at least ten (10) Years of
Vesting Service or ten (10) Years of Credited Service (without regard to any
Additional or Discretionary Credit provided under Section 2.18(a) or (b) other
than credit granted at date of hire) by an Active Participant; or
(b) Special Rule. The attainment of age 65 by an Active Participant who was
first employed by an Employer after age 55.
2.15. Plan Year. The Plan Year is an annual accounting period ending each
December 31.
2.16. Separation from Service. Separation from Service shall mean the Active
Participant’s termination of employment with the Employer, whether voluntarily
or involuntarily, as determined by the Committee in accordance with Treas. Reg.
§ 1.409A-1(h). An Active Participant shall be considered to have experienced a
termination of employment when the facts and circumstances indicate that the
Active Participant and the Employer reasonably anticipate that either (i) no
further services will be performed for the Employer after a certain date, or
(ii) that the level of bona fide services the Active Participant will perform
for the Employer after such date (whether as an employee or as an independent
contractor) will permanently decrease to no more than 20% of the average level
of bona fide services performed by such Active Participant (whether as an
employee or independent contractor) over the immediately preceding 36-month
period (or the full period of services to the Employer if the Active Participant
has been providing services to the Employer for less than 36 months).

 

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If an Active Participant is on military leave, sick leave, or other bona fide
leave of absence, the employment relationship between the Active Participant and
the Employer shall be treated as continuing intact, provided that the period of
such leave does not exceed six months, or if longer, so long as the Active
Participant retains a right to reemployment with the Employer under an
applicable statute or by contract. If the period of a military leave, sick
leave, or other bona fide leave of absence exceeds six months and the Active
Participant does not retain a right to reemployment under an applicable statute
or by contract, the employment relationship shall be considered to be terminated
for purposes of this Plan as of the first day immediately following the end of
such six-month period. In applying the provisions of this paragraph, a leave of
absence shall be considered a bona fide leave of absence only if there is a
reasonable expectation that the Active Participant will return to perform
services for the Employer.
2.17. Specified Employee. Specified Employee means a service provider who, at
any time during the 12-month period ending on December 31 of each year (the
“Identification Date”), is:
(a) Officer. An officer of the employer with annual compensation greater than
$150,000 in 2008 (as adjusted for future years as provided in Section 416 of the
Code);
(b) Five Percent Owner. A 5-percent owner of the Employer; or
(c) One Percent Owner. A 1-percent owner of the Employer with annual
compensation greater than $150,000,
in each case, to the extent that the Employer is a publicly traded company on
the date of such service provider’s Separation from Service. Such a service
provider is a Specified Employee for the 12-month period beginning on the first
April 1 following the Identification Date and ending on March 31 of the
following year.
2.18. Vested Retirement Eligibility. Vested Retirement Eligibility is the
attainment of a vested interest in an Accrued Benefit. The Accrued Benefit is
vested upon the earlier of:
(a) Age and Service. The attainment of age 55 while (or prior to becoming) an
Active Participant and the completion of either ten (10) Years of Vesting
Service or ten (10) Years of Credited Service (without regard to any Additional
or Discretionary Credit provided under Section 2.19(a) or (b)); or
(b) Age. The attainment of age 65 while (or prior to becoming) an Active
Participant.

 

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2.19. Year of Credited Service. A Year of Credited Service is a Year of Credited
Service determined under the Kaydon Corporation Retirement Plan, including
service credited prior to participation in this Plan, except that:
(a) Additional Credit. For purposes of the Accrued Benefit once the individual
attains the Eligibility requirement below and for purposes of the computation of
the Normal Retirement, Early Retirement, Death, or Disability Benefit under
Sections 3.1, 3.2, 3.4 and 3.5(b) only (and not for purposes of calculating the
Accrued Benefit prior to the time the individual attains the Eligibility
requirement below, calculating the Vested Retirement Benefit, or determining
eligibility for a benefit, vesting, or any other purpose), Active Participants
identified in Appendix C as potentially eligible for Additional Credit who are
described in this subsection will be credited with Years of Credited Service as
provided in this subsection in addition to the Years of Credited Service already
credited to the participant.
(i) Eligibility. An individual is eligible for the additional credit provided in
subsection (ii) if the individual attains while an Active Participant in this
Plan Normal Retirement Eligibility, Disability Retirement Eligibility, or Early
Retirement Eligibility and age 62, or dies while an Active Participant in this
Plan with a Qualifying Spouse who is eligible for a benefit under
Section 3.5(b).
(ii) Amount of Credit. The number of additional Years of Credited Service
credited is equal to the Active Participant’s Years of Credited Service actually
earned under the Kaydon Corporation Retirement Plan or credited under
Section 3.7 of this Plan (excluding, for example, Years of Credited Service
imputed under the terms of that Plan or this Plan, other than in accordance with
Section 3.7 of this Plan).
(iii) Removal. An individual may be removed from the list of Active Participants
identified in Appendix C as potentially eligible for Additional Credit at any
time prior to the earlier of attainment of the Eligibility requirement, above,
and the date which is six months prior to the time the provisions of Section 3.8
of this Plan have operated with respect to the individual. Subject to that
limitation, that removal may occur in the discretion of the Board of Directors
or the Committee.
(b) Discretionary Credit. The Committee also has the authority, in its complete
and absolute discretion, to grant on a case by case basis additional Years of
Credited Service in addition to the Years of Credited Service already credited
to the participant. Any Years of Credited Service granted under this subsection
(b) after October 1, 2004 other than at date of hire may be granted for purposes
of the computation of the Normal Retirement, Early Retirement, Vested
Retirement, Death, or Disability Benefit under Sections 3.1, 3.2, 3.3, 3.4 and
3.5(b) only (and not for purposes of determining eligibility for a benefit,
vesting, or any other purpose that could have the effect of accelerating the
time of payment of benefits under the Plan).

 

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(c) Maximum. In every case, total Years of Credited Service (including any
Additional Credit under subsection (a) and any Discretionary Credit under
subsection (b)) are limited to 30.
(d) Limitation. Years of Credited Service are not credited under this Plan after
an individual ceases to be an Active Participant in this Plan.
2.20. Year of Vesting Service. A Year of Vesting Service is a Year of Vesting
Service determined under the Kaydon Corporation Retirement Plan, except that
Years of Vesting Service are not credited under this Plan after an individual
ceases to be an Active Participant in this Plan.
ARTICLE III
Benefits
3.1. Normal Retirement Benefit. An Active Participant who attains Normal
Retirement Eligibility is entitled to the following benefit, calculated in the
Basic form, payable beginning on the first day of the month following Separation
from Service at or after attainment of Normal Retirement Eligibility (or later,
as required by Section 4.1(d)). The benefit is one percent (1%) of Average
Monthly Compensation plus fifty-eight hundredths percent (.58%) of Average
Monthly Compensation in excess of Covered Compensation, multiplied by Years of
Credited Service (to a maximum of 30 years), less the participant’s accrued
benefit under the Kaydon Corporation Retirement Plan, calculated in the Basic
Form, as if payable beginning at the same date.
3.2. Early Retirement Benefit. A participant who retires and separates from
service after attaining Early Retirement Eligibility is entitled to a benefit
computed in the same manner as the Normal Retirement Benefit, payable beginning
on the first day of the month following the later of Separation from Service and
attainment of Early Retirement Eligibility (or later, as required by
Section 4.l(d)). The benefit is calculated by subtracting from the Actuarial
Equivalent (determined under Appendix E) of the participant’s Accrued Benefit
(calculated without the offset of the benefit under the Kaydon Corporation
Retirement Plan) the participant’s actuarially adjusted benefit under the Kaydon
Corporation Retirement Plan from time to time.
3.3. Vested Retirement Benefit. A participant who retires and separates from
service after attaining Vested Retirement Eligibility is entitled to a benefit
calculated under the formula provided in Section 3.1, calculated in the Basic
form, payable beginning on the first day of the month following the later of
Separation from Service and attainment of age 65 (or later, as required by
Section 4.1(d)).
3.4. Disability Benefit. A participant who attains Disability Retirement
Eligibility and retires due to Disability is entitled to the individual’s
Accrued Benefit, payable beginning on the first day of the month following the
later of Separation from Service and attainment of age 65 (or later, as required
by Section 4.1(d)), calculated based on the Years of Credited Service the
participant would have completed had employment continued to Normal Retirement
Eligibility (with additional Years of Credited Service credited under
Section 2.20(a), if applicable, based only on the individual’s actual Years of
Credited Service and under Section 2.20(b), if applicable) and Average Monthly
Compensation determined on the first day of the month coincident with or next
following the occurrence of the Disability, reduced dollar for dollar by any
benefits being received by the participant under the Employer’s long term
disability insurance program (provided that program constitutes bona fide
disability pay within the meaning of IRC Reg. 1.409A-1(a)(5)).

 

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(a) Notice. A participant whose employment terminated as the result of a
permanent disability must advise the Committee within sixty (60) days should
payment of Social Security disability insurance benefits be discontinued.
(b) Examination. The Committee may require any participant whose employment
terminated as the result of a permanent disability to provide evidence the
Committee considers appropriate verifying the participant’s continued
eligibility for disability benefits under this Plan.
(c) Effect of Discontinuance. If the permanent disability of a participant
ceases, the Disability Benefit shall also cease and the participant shall
receive no further Years of Credited Service unless, in the case of a
participant receiving an unreduced Disability Benefit, the participant returns
to the employ of an Employer within thirty (30) days after the cessation of
disability.
(i) Special Credit. In that event, the participant shall receive Years of
Credited Service for the entire period of permanent disability.
(ii) Other. If the participant does not return to the employ of an Employer
within thirty (30) days after the cessation of disability, or in the case of a
participant receiving a reduced Disability Benefit, the participant shall not
receive any Years of Credited Service for the period of permanent disability and
shall be entitled only to the benefit, if any, applicable on the date of
commencement of the permanent disability, determined as if employment with the
Employers had terminated as of that date.
3.5. Death Benefit. Death Benefits are payable only under this Section.
(a) Non-Eligible. If an individual dies before vesting, no benefit is payable
under this Plan.
(b) Eligible Death. The Qualifying Spouse (as defined in the Kaydon Corporation
Retirement Plan) of a participant who dies after vesting but before benefits are
payable is entitled to the Spousal Survivor Annuity. If the Spousal Survivor
Annuity is not payable, no benefit is payable under this Plan.
(i) Spousal Survivor Annuity. The Spousal Survivor Annuity is an equal monthly
benefit for the Qualifying Spouse’s life equal to the Qualifying Spouse’s
benefit under the Joint and Spousal Survivor form of benefits (as defined in the
Kaydon Corporation Retirement Plan) (with additional Years of Credited Service
under Sections 2.19(a) and 2.19(b), if applicable) less the Spousal Survivor
Annuity benefit payable under the Kaydon Corporation Retirement Plan from time
to time.

 

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(ii) Payment. The Spousal Survivor Benefit is payable at the earliest time
payment of the Spousal Survivor Annuity benefit under the Kaydon Corporation
Retirement Plan (as it existed on December 31, 2004) could commence (based on
the participant’s age in fact or a deemed age determined at date of hire) and is
not payable if the spouse does not survive until the actual commencement date.
The benefit is actuarially reduced as provided in Appendix E.
(c) Post-Benefit Death. The designated beneficiary of a participant who dies
after benefits are payable is entitled to a continuation of payment under the
elected payment form if the participant was properly receiving payments in the
Joint and Spousal Survivor form, the Joint and Survivor form, or the Period
Certain form.
3.6. Benefit Limitations. Notwithstanding any other provision of the Plan
(except as provided in subsection (a)):
(a) Forfeiture of Vested Benefits. An individual forfeits all amounts payable
under the Plan, whether or not vested and whether or not benefits have yet
commenced, if the individual:
(i) For Cause. Is discharged For Cause;
(ii) Employment. Is employed other than by Kaydon Corporation, one of its
wholly-owned subsidiaries or a successor, or is self-employed, in any capacity
to any extent, prior to attainment of age 65, without prior written approval of
the Committee or the Board of Directors; or
(iii) Compete. Is employed other than by Kaydon Corporation, one of its
wholly-owned subsidiaries or a successor, or is self-employed, in any capacity
to any extent, at any age, in any industry determined by the Committee or the
Board of Directors in its discretion to be an industry in which Kaydon
Corporation or any of its subsidiaries competes.
Subsection (ii) shall not apply if Section 3.8 operates with respect to the
individual. For purposes of this Plan, discharge is For Cause if the
participant, in connection with the participant’s duties as an employee of the
Employer or any of its affiliates, committed a fraud or any felony, engaged in
deliberate, willful or gross misconduct, or committed any other act which causes
or may reasonably be expected to cause substantial injury to Kaydon or any of
its affiliates. For purposes of clarification, this use of this For Cause
standard for discharge affects the participant’s entitlement to benefits under
this Plan only and does not generally limit the ability of Kaydon or other
employer to terminate participant’s employment for any reason or for no reason
at all.
(b) Receipt of Benefit. Receipt of any benefit under the Plan fully terminates
the employment relationship with the Employers.
(c) Kaydon Corporation Retirement Plan Benefit. Except where Section 3.8
operates, an individual is entitled to a benefit under this Plan only if the
individual has accrued a benefit under the Kaydon Corporation Retirement Plan or
would have accrued a benefit under that Plan except that the individual’s
Employer did not maintain that Plan.

 

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(d) Single Benefit. A participant is eligible for only one (1) type of benefit
under the Plan. The receipt of a Plan benefit during any month precludes payment
of another type of benefit for the same month. Under no circumstances will the
Plan pay duplicate benefits with respect to the same participant or surviving
spouse benefits in excess of the actuarial present value of the benefits
described in this Article III determined as of the earlier of the commencement
of benefits or the date of the participant’s death.
(e) Employment After Benefit Commencement. To the extent permitted under Section
409A of the Code, benefit payments under the Plan cease and are forfeited during
any period of reemployment with an Employer or a prior Employer and during any
other period during which benefits under the Kaydon Corporation Retirement Plan
are suspended, but only if the termination of employment immediately preceding
the period of reemployment did not constitute a Separation from Service.
(f) Withholding and Payroll Taxes. Benefit payments shall be reduced as
determined in the sole discretion of the Employer for any withholding for
federal, state and local income, employment and other taxes required to be
withheld by the Employer in connection with the benefits paid under this Plan.
3.7. Special Transfer Employee Rule. An Active Participant who is employed while
an Active Participant by a subsidiary of Kaydon Corporation which does not
maintain the Kaydon Corporation Retirement Plan:
(a) Service. Is credited with Years of Vesting Service and Years of Credited
Service under this Plan as though the subsidiary had maintained the Kaydon
Corporation Retirement Plan during the Active Participant’s employment by the
subsidiary as an Active Participant; and
(b) Benefit. Receives a benefit under this Plan calculated taking that imputed
service into account for purposes of this Plan. The benefit offset under this
Plan is then calculated based on the greater of:
(i) Pension Benefit. The participant’s benefit under the Kaydon Corporation
Retirement Plan based on the aggregate of the participant’s actual service under
that Plan and imputed service under Section 3.7(a) of this Plan; or
(ii) Other Benefit. The sum of the participant’s actual benefit under the Kaydon
Corporation Retirement Plan, the participant’s actual benefit under any other
Kaydon Corporation or other subsidiary defined benefit plan, and the Actuarial
Equivalent of the participant’s actual benefit under any other Kaydon
Corporation or other subsidiary defined contribution plan.
3.8. Change in Control Override. To the extent a participant is a party to an
effective Change in Control Agreement with an Employer which explicitly provides
for amendment of this Plan as to the participant, upon a Separation from Service
triggering the operation of that Change in Control Agreement as to the
participant, except as provided in this Section 3.8, this Plan shall be deemed
amended as to that participant to the extent provided in the Change in Control
Agreement. Notwithstanding that general rule, the Change in Control Agreement
may not amend this Plan in a manner that causes this Plan to violate
Section 409A of the Code in form or operation.

 

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ARTICLE IV
Distribution
4.1. Time and Method of Payment. Except as otherwise explicitly provided in this
Plan, benefits under this Plan will be paid (other than in the case of death of
the participant) in the form of payment elected by the participant in a written
Complying Election made on or before December 31, 2007, or, in the case of an
individual who first becomes a participant after December 31, 2007, prior to the
beginning of the year in which the participant first renders service that is
taken into account under this Plan, commencing on the first day of the month
following eligibility for payment as provided and limited by this Plan.
(a) Automatic Change of Form. Notwithstanding the participant’s written election
as provided above, to the extent permitted by regulations under Section 409A of
the Code, at any time prior to the date an annuity payment has been made to the
participant this Plan, the participant may elect to change an annuity form of
payment previously elected by the participant to another form of annuity
payment, provided that:
(i) Actuarial Equivalent. The annuities are actuarially equivalent applying
reasonable actuarial assumptions;
(ii) Date of Payment. The scheduled date for the first annuity payment is not
changed; and
(iii) Change of Beneficiary. The change does not affect the identity of a
beneficiary in a manner that accelerates the time of payment of any benefit.
(b) Other Change of Circumstances. Once payments have begun, no method of
payment may be revoked or modified, nor may the benefit be increased, by reason
of a subsequent divorce or death of the spouse of a participant before that of
the participant or by reason of the participant’s actual retirement after
benefits have begun because of the participant’s attainment of age 70.
(c) No Acceleration. Once elected, the time and manner of payment under this
Plan may not be accelerated except as permitted under Sections 4.7 and 4.8.
(d) Delay in Payment to Specified Employees. Notwithstanding any other
provisions of this Plan, no payment may be made to a Specified Employee (as
defined in Section 2.18) during the first six months following the Specified
Employee’s Separation from Service with the Employer if the payment is due to
the Specified Employee as a result of a Separation from Service with the
Employer. Any such payments shall be accumulated and paid to the Specified
Employee, without interest, within the fourteen calendar days following the
first day of the seventh month following the date of the Separation from
Service. Thereafter, the Specified Employee shall receive any remaining payments
and benefits due under the Plan in accordance with the terms of this Plan (as if
there had not been prior delay in payments beforehand).

 

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(e) Subsequent Deferrals of Payment Dates. A participant may elect to defer
payment of an annuity under this Plan for at least five years from the
originally scheduled commencement of the annuity, so long as the election is
made in writing and at least twelve months prior to the scheduled commencement
of the annuity.
4.2. Method of Payment. Subject to Section 4.1, the participant may elect that
benefits be paid in one (1) of the following forms:
(a) Basic. An immediate, equal monthly benefit for the participant’s life. The
Basic form automatically applies if the participant does not have a Qualifying
Spouse (defined as provided in the Kaydon Corporation Retirement Plan, but
without the one-year of marriage requirement) and fails to adequately elect
another form of payment.
(b) Joint and Spousal Survivor. An immediate, reduced equal monthly benefit for
the participant’s life and, if the participant is survived by a Qualifying
Spouse (defined as provided in the Kaydon Corporation Retirement Plan, but
without the one-year of marriage requirement) to whom the participant is married
at the date of death or who is treated as a Qualifying Spouse under a Qualified
Order (also as defined in the Kaydon Corporation Retirement Plan), fifty percent
(50%) of the amount continued for that spouse’s life. The Joint and Spousal
Survivor form automatically applies if the participant has a Qualifying Spouse
(as defined for purposes of this Plan) and fails to effectively elect another
form of payment.
(c) Joint and Survivor. An immediate, reduced equal monthly benefit for the
participant’s life and, if the participant is survived by an individual
Designated Beneficiary (defined as provided in the Kaydon Corporation Retirement
Plan), an equal (100%) or lesser (50% or 66-2/3%) amount continued for that
beneficiary’s life.
(d) Period Certain. An immediate, reduced equal monthly benefit for the
participant’s life, and if the participant dies before the end of a period
certain of ten years, an equal amount continued to the Designated Beneficiary
(or successor) for the remainder of that period certain. The ten year period
certain may not be longer than the applicable life expectancy, determined
without recalculation.
(e) Lump Sum. To the extent provided in a governing Change in Control Agreement
or as provided here, payment of the Actuarial Equivalent of the participant’s
vested Accrued Benefit within one (1) taxable year of the recipient. The
participant’s entire vested Accrued Benefit will be paid to the participant in a
lump sum upon the participant’s Separation from Service if the Actuarially
Equivalent lump sum is less than $10,000.
Each optional form and time of payment of benefits must be the Actuarial
Equivalent of the benefit payable under the Basic form. A married participant
may elect a form of payment other than the Joint and Spousal Survivor form only
with the written consent of the participant’s spouse.

 

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4.3. Designation of Beneficiary. The participant must designate a beneficiary
and contingent beneficiary to receive amounts payable under the Plan (other than
the Spousal Survivor Annuity or the Spousal Survivor portion of the Joint and
Spousal Survivor Annuity) in the event of the participant’s death. The
participant must designate the same beneficiary and contingent beneficiary,
respectively, applicable to the participant from time to time under the Kaydon
Corporation Retirement Plan. Any non-complying designation by the participant
shall be disregarded.
4.4. Claims Procedure. A participant or beneficiary, the Committee and the Board
of Directors must observe the following procedures for claims to benefits.
(a) Claim. If a participant, beneficiary or legal representative asserts that a
benefit which is payable has not been paid in a timely manner, the individual
must file an Application for Distribution with the Committee. The Committee must
grant or deny the request within ninety (90) days after receipt unless special
circumstances require an extension of time. The extension must not exceed an
additional ninety (90) days. The Committee must notify the applicant in writing
of the extension and the reasons for the extension.
(b) Denial of Claim. If a claim is denied, the Committee must provide to the
applicant a written notice containing the reason for the denial. If notice of a
denial of claim or an extension of time is not received by the applicant within
ninety (90) days, the claim is deemed denied.
(c) Employer Review. Within sixty (60) days after a denial is received, the
applicant may request a review upon written application to the Board of
Directors. The applicant may submit issues and comments in writing to the Board.
The Board must make a decision on review and notify the applicant of the
decision within ninety (90) days of receipt of the request for review unless
circumstances require an extension of time. The extension may not exceed an
additional ninety (90) days.
(i) Pre-Change in Control. Prior to a Change in Control (as defined in a Change
in Control Agreement affecting a participant), except during any period of time
in anticipation of a Change in Control, the Board has the duty and power in this
regard to exercise discretionary authority to construe and interpret the Plan
and decide all questions of eligibility for benefits. The decision of the Board
upon review is final and binding on the applicant unless the applicant
establishes that the decision of the Board is arbitrary and capricious.
(ii) Post-Change in Control. After such a Change in Control and during any
period of time in anticipation of a Change in Control:
(A) Interpretation. The Board’s construction and interpretation of the Plan and
its decisions regarding eligibility for benefits with respect to the affected
participant must be reasonable and consistent with the spirit and intent of the
Plan; and
(B) Standard. The decision of the Board upon review with respect to the affected
participant is subject to de novo review.

 

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4.5. Facility of Payment. A payment made under this section fully discharges the
Employer and the Committee from all future liability with respect to the
payment.
(a) Incapacity. If a person entitled to payment is legally, physically or
mentally incapable of receiving or acknowledging payment, the Committee may
direct payment: directly to the person; to the person’s legal representative; to
the spouse, child or relative by blood or marriage of the person; to the person
with whom the person resides; or by expending the payment directly for the
benefit of the person. A payment made other than to the person is intended to be
used for the person’s exclusive benefit.
(b) Legal Representative. The Committee is not required to commence probate
proceedings or to secure the appointment of a legal representative.
(c) Determinations. The Committee may act upon affidavits in making any
determination. The Committee, in relying upon affidavits or having made a
reasonable effort to locate any person entitled to payment, is authorized to
direct payment to a successor beneficiary or another person. A person omitted
from payment has no rights on account of payments so made.
(d) Anti-Escheat. If the Committee cannot locate a person entitled to payment,
the amount is a forfeiture which is reinstated if a claim is made within the
applicable limitations period by a person entitled to payment.
4.6. Offset. The Committee shall be entitled to offset any participant’s benefit
to satisfy a debt owed by the participant to an Employer, where such debt was
incurred in the ordinary course of the employment relationship between the
participant and the Employer, the entire amount of the offset does not exceed
$5,000 in any taxable year of the Employer, and the reduction is made at the
same time and in the same amount as the debt otherwise would have been due and
collected from the participant. In addition, in all cases the benefit payable
under this Plan is reduced by the benefit payable under the Kaydon Corporation
Retirement Plan.
4.7. Distribution in the Event of Taxation. If, as a result of a failure of this
Plan to meet the requirements of Section 409A of the Code, all or any portion of
the participant’s benefit under this Plan becomes taxable to the participant
prior to receipt of such benefit, the participant may request a distribution of
assets sufficient to meet the participant’s tax liability (including additions
to tax, penalties and interest), but not in excess of the amount required to be
included in income as a result of the failure to comply with Code Section 409A.
(a) Calculation. Upon receipt of the request, the Employer shall distribute to
the participant immediately available funds in an amount equal to the
participant’s federal, state and local tax liability associated with such
taxation (not to exceed the lesser of the participant’s Vested Accrued Benefit
under the Plan and the amount required to be included in income as a result of
the failure to comply with Section 409A).

 

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(b) Timing. Subject to Section 4.1(d) above, the tax liability distribution
shall be made within two and one-half months after the request unless the rules
of Section 4.4 require a longer time for processing.
(c) Effect. The distribution shall affect and reduce the participant’s Accrued
Benefit and the benefits to be paid under this Plan.
4.8. Permissible Distributions. In addition, all or any portion of a
participant’s benefit under this Plan may be distributed in an amount sufficient
to meet the participant’s needs as follows:
(a) Conflicts of Interest. To comply with a certificate of divestiture as
defined in Code Section 1043(b)(2).
(b) Payment of Taxes. To pay Federal Insurance Contributions Act tax under Code
Sections 3101, 3121(a) and 3121(v)(2) on amounts payable under this Plan and
income tax at source on wages under Code Section 3401 or applicable state, local
or foreign tax laws based on the FICA amount.
(c) Plan Termination. To provide an accelerated payment of the participant’s
benefit under this Plan upon the termination of this Plan in accordance with
Code Section 409A.
ARTICLE V
Administration
5.1. Committee. The Committee has responsibility for general administration of
the Plan.
(a) Authority. The Committee has the duty and power to:
(i) Construction. Exercise discretionary authority to construe and interpret the
Plan and decide all questions of eligibility for participation and benefits;
(ii) Procedures. Prescribe procedures and forms for the payment of benefits; and
(iii) Benefit Authorization. Determine entitlement to and the amount of benefits
and authorize benefit payments.
(b) Procedure and Action. The Committee may elect one of its members as
chairperson and may designate a secretary. The Committee must keep a brief
record of all meetings. Any delegation of duties by the Committee must state the
scope of the delegation with reasonable specificity. The Committee acts by a
majority of its members, either by vote at a meeting or by signature to a
writing. Action by the Committee must be evidenced by written and duly executed
instrument.

 

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(c) Finality. Except as provided in subsection (d), the decision or action of
the Committee with respect to any question arising out of or in connection with
the administration, interpretation and application of the Plan is final and
conclusive and binding on all persons having any interest in the Plan.
(d) Post-Change in Control. After a Change in Control (as defined in a Change in
Control Agreement affecting a participant) or during any period of time in
anticipation of a Change in Control:
(i) Interpretation. The Committee’s construction and interpretation of the Plan
and its decisions regarding eligibility for benefits with respect to the
affected participant must be reasonable and consistent with the spirit and
intent of the Plan; and
(ii) Standard. The decisions of the Committee with respect to the affected
participant are subject to de novo review.
5.2. Limitation of Liability and Indemnification. As a condition of
participation in the Plan, each participant agrees that neither the Employers’
officers and agents, the Committee, the Board of Directors, nor their individual
members shall in any way be subject to any suit, litigation, or legal liability
for any cause or reason in connection with the Plan or its operation, and each
participant releases the Employers’ officers and agents, the Committee, the
Board of Directors and their individual members from any and all such liability
or obligation. The Board of Directors, the Committee and their respective
individual members shall not be liable for any act, omission, determination,
construction, or communication made by that individual or any other party. Each
shall be indemnified by Kaydon Corporation against any and all liabilities
arising by reason of any act or failure to act made in good faith pursuant to
the provisions of the Plan, including expenses reasonably incurred in the
defense of any claim of liability.
ARTICLE VI
Amendment and Termination of Plan
6.1. Amendment or Termination. The Board of Directors of Kaydon Corporation may
amend or terminate the Plan at any time and the Board of Directors of each
Employer may amend or terminate the Plan as to that Employer at any time. Except
as explicitly limited, no individual has any right to continuation of the Plan,
to continued participation in the Plan, or to continued accrual under the Plan.
(a) Limitation. No amendment or termination may, without the consent of the
participant, modify Section 4.4(c)(ii) or 5.1(d) of this Plan or retroactively
decrease the vested Accrued Benefit of a participant:
(i) Regular Vesting. Who completed ten (10) Years of Credited Service (without
regard to any Additional Credit provided under Section 2.18(a) or any
Discretionary Credit provided under Section 2.18(b)) or ten (10) Years of
Vesting Service and attained age 55 while (or prior to becoming) an Active
Participant and prior to the amendment or termination;

 

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(ii) Age Vesting. Who attained age 65 while (or prior to becoming) an Active
Participant and prior to the amendment or termination; or
(iii) Change in Control. Upon or after the occurrence of a Change in Control or
in anticipation of a Change in Control, if the participant is at that time a
party to an effective Change in Control Agreement.
(b) Benefits, Rights and Features. No amendment or termination upon or after the
occurrence of a Change in Control or in anticipation of a Change in Control may,
without the consent of the participant, adversely affect the benefits, rights or
features of this Plan (determined in accordance with Section 411(d) of the Code
and applicable regulations) at the time of the Change in Control (or the action
in anticipation of a Change in Control) with respect to a participant who is at
that time:
(i) Change in Control. A party to an effective Change in Control Agreement; and
(ii) This Plan. An Active Participant in this Plan.
(c) Automatic. Subject to subsections (a) and (b), above, any freeze of benefit
accrual or termination of the Kaydon Corporation Retirement Plan shall
automatically effect a freeze or termination of this Plan, as the case may be.
Distribution at termination may not occur, however, except to the extent
permitted by Section 409A.
6.2. Change in Control Agreement. Subject to the limitations of Section 3.8,
this Plan may also be amended as to a participant by an effective Change in
Control Agreement or other written document which explicitly amends this Plan
and which is signed by the participant and authorized representatives of Kaydon
Corporation or the participant’s Employer. Notwithstanding that general rule,
the Change in Control Agreement may not amend this Plan in a manner that causes
this Plan to violate Section 409A of the Code in form or operation.
ARTICLE VII
Miscellaneous
7.1. Nonassignability. Benefits are not subject to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance, charge, attachment,
garnishment, execution, or levy (Assignment), before actual receipt, by
creditors of the participant or the participant’s beneficiary. Any assignment
which violates this section is void. The right to receive a benefit is not an
asset for insolvency or bankruptcy.
7.2. Employment Rights Not Enlarged. The Plan does not create any employment
rights or restrict an Employer’s right to discharge an employee.
7.3. Participants’ Rights Limited. The Plan does not give any participant or
beneficiary: any interest in any Employer’s assets, business or affairs; the
right to question any Employer action or policy; or the right to examine
Employer books and records. The rights of all participants are limited to the
right to receive payment of benefits when due. The Employer’s obligation under
the Plan is simply an unfunded and unsecured promise to pay money in the future
and its assets remain the general, unpledged and unrestricted assets of the
Employer. Notwithstanding these limits and any other provision of this Plan, the
Employer shall not be a party to any merger, consolidation, or reorganization
unless its obligations under this Plan are expressly assumed by its successor.
This Plan shall inure to the benefit of and shall be binding upon the successors
and assigns of the Employer and each participant.

 

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7.4. Interpretation and Construction. The use of the singular includes the
plural where applicable, and vice versa. The headings in the Plan do not limit
or extend the provisions of the Plan. Capitalized terms, except where
capitalized solely for grammar, have the meanings as provided in the Plan. If a
provision is unenforceable in a legal proceeding, the provision is severed only
for that proceeding.
7.5. Governing Law. The Plan is governed by the applicable laws of the United
States of America (including the Code, ERISA, securities law, labor law, age
discrimination law, and civil rights law) and, to the extent not preempted, by
the laws of Michigan.
7.6. Arbitration. Any claim which cannot be resolved under this Plan shall be
submitted to arbitration.
(a) Rules. The arbitration shall be conducted by the American Arbitration
Association under its commercial arbitration rules within the county where the
Employer maintains its registered office.
(b) Award. The Arbitrator’s decision shall be embodied in an award which shall
be final and binding on the parties. In making an award, the arbitrator may
include any remedy contemplated by this Agreement and shall allocate the fees
and expenses of the arbitration.

 

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KAYDON CORPORATION and
KAYDON RING & SEAL, INC.

         
By
  /s/ James O’Leary
 
James O’Leary, President and
Chief Executive Officer, Kaydon Corporation
Vice-President, Kaydon Ring & Seal, Inc.    
 
       
And
  /s/ Debra Crane
 
Debra Crane, Secretary of Kaydon Ring & Seal, Inc.
Secretary, Kaydon Corporation    

 

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APPENDIX A
OTHER EMPLOYERS
Kaydon Ring & Seal, Inc.

 

 

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APPENDIX B
ACTIVE PARTICIPANTS

                          Effective Date of         Effective Date of  
Cessation of Name   Employer   Active Participation   Active Participation
 
           
Arthur Ridler
  Kaydon Ring & Seal, Inc.   January 1, 1994    
James O’Leary
  Kaydon Corporation   March 26, 2007    

 

 

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APPENDIX C
ADDITIONAL CREDIT UNDER SECTION 2.18(A)

                  Effective Date of         Eligibility for         Additional
Credit Name   Employer   Under Section 2.19(a)
 
       
James O’Leary
  Kaydon Corporation   March 26, 2007 (1)

      (1)   For each day of actual Credited Service on and after March 26, 2007,
one additional day of Credited Service (subject to the Plan’s maximum of 30
Years of Credited Service), per the terms of Appendix F and Mr. O’Leary’s
Employment Agreement effective March 26, 2007.

 

 

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APPENDIX D
DISCRETIONARY CREDIT UNDER SECTION 2.18(B)

                      Effective Date of             Eligibility for Additional
Credit     Name   Employer   Under Section 2.19(b) Amount of Credit   Amount of
Credit
 
           
James O’Leary
  Kaydon Corporation   March 26, 2007   10 Years (1)

      (1)   Subject to the Plan’s maximum of 30 Years of Credited Service, per
the terms of Appendix F and Mr. O’Leary’s Employment Agreement effective
March 26, 2007.

 

 

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APPENDIX E
ACTUARIAL FACTORS
1. Time of Payment Actuarial Equivalence. Actuarially reduced from age 62 based
on:
(a) Interest Rate. 7.5%
(b) Mortality. 1983 Group Annuity Mortality (GAM) with annuity values based on
75% male and 25% female mortality.
2. Form of Payment Actuarial Equivalence.
(a) Interest Rate. 7.5%
(b) Mortality. 1983 Group Annuity Mortality (GAM) with annuity values based on
75% male and 25% female mortality.
(c) Lump Sum Override. For purposes of determining lump sum actuarial
equivalence under this Plan, the interest rate, mortality and other factors
applicable for purposes of determining lump sum actuarial equivalence under the
Kaydon Corporation Retirement Plan from time to time and, to the extent not
addressed by that Plan, the applicable mortality table and applicable interest
rate as described in Code Section 417(e)(3) shall be used instead of the
interest rate and mortality factors provided in this Appendix E.
3. Other. For any other purpose for which Actuarial Equivalence is specified:
(a) Interest Rate. 7.5%
(b) Mortality. 1983 Group Annuity Mortality (GAM) with annuity values based on
75% male and 25% female mortality.

 

 

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APPENDIX F
SPECIAL RULES APPLICABLE TO MR. O’LEARY
Notwithstanding the corresponding limiting provisions of this Plan:
1 Eligibility. Mr. O’Leary is eligible for benefits under the Plan on March 26,
2007 and, for all purposes of the Plan, is deemed to be sixty-five (65) years of
age on that date and each succeeding date until he is actually sixty-five
(65) years of age. He shall remain a participant in the Plan during the Term of
his employment.
2 Vesting. Mr. O’Leary is 100% vested under the Plan on March 26, 2007,
regardless of whether he is vested under the Retirement Plan.
3 Lump Sum. Mr. O’Leary is entitled to a lump sum payment from the Plan upon his
Separation from Service within two years following a Change in Control (as
defined in Section 6 of this Appendix F), in cash, payable thirty (30) days
following his Separation from Service (or later, if required by Section 4.1(d)
of the Plan).
4 Additional Credit. Mr. O’Leary is credited with ten (10) years of additional
Credited Service on March 26, 2007 and, thereafter, each day of his actual
Credited Service shall entitle him to one (1) day of additional Credited
Service, subject to a maximum of thirty (30) years of Credited Service.
5 Appendix C. Mr. O’Leary is deemed to be a person identified in Appendix C as
eligible for additional Credited Service.
6 Definition of Change in Control. For the purposes of this Appendix F, “Change
in Control” means any one of the following (capitalized terms set forth in this
definition shall have the meanings assigned to them in Mr. O’Leary’s Employment
Agreement effective March 26, 2007):
A. The failure of the Continuing Directors within any 12-month period to
constitute at least a majority of the members of the Board of Directors;
B. The acquisition by any Person or Persons Acting as a Group of beneficial
ownership (within the meaning of Rule 13d-3 issued under the Act) of the
Company’s stock representing more than 50% of the total fair market value or
total voting power of the Company’s outstanding stock;
C. The date any Person or Persons Acting as a Group, acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such Person or Persons) stock of the Company possessing 30% or more of the total
voting power of the Company’s outstanding stock; or
D. The date any Person or Persons Acting as Group (other than a Permitted
Successor) acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such Person or Persons) substantially all
of the assets of the Company.

 

 

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For purposes of this definition, “Permitted Successor” means any one of the
following:

  i.   A shareholder of the Company (immediately before the asset transfer) in
exchange for or with respect to its stock in the Company;     ii.   A
Subsidiary;     iii.   A Person or Persons Acting as a Group that owns,
directly, or indirectly 50% or more of the total value or voting power of all of
the Company’s outstanding stock; or     iv.   Any entity, at least 50% of the
total value or voting power of which is owned, directly or indirectly by a
Person or Persons Acting as a Group described in paragraph C above.

For purposes of this definition, “Continuing Directors” means those individuals
constituting the Board as of the effective date of this Plan and any subsequent
directors whose election or nomination for election by the Company’s
stockholders was approved by a vote of two thirds of the individuals who are
then Continuing Directors, but specifically excluding any individual whose
initial assumption of office occurs as a result of either an actual or
threatened election contest (as the term is used in Rule 14a-11 of
Regulation 14A issued under the Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board.