exv10w2



 






EXHIBIT 10.2




KAYDON CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

As Amended and Restated




 









 









Table of Contents




	 	 	 	 	 	 	 	 	 
	Article	 	 	 	 	 	Page	 
	I
	 	Establishment	 	 	1	 
	1.1
	 	 	 	Effective Date	 	 	1	 
	1.2
	 	 	 	Intent	 	 	1	 
	1.3
	 	 	 	Trust	 	 	2	 
	II
	 	Definitions	 	 	2	 
	2.1
	 	 	 	Accrued Benefit	 	 	2	 
	2.2
	 	 	 	Active Participant	 	 	3	 
	2.3
	 	 	 	Actuarial Equivalent	 	 	3	 
	2.4
	 	 	 	Average Monthly Compensation	 	 	3	 
	2.5
	 	 	 	Board of Directors	 	 	3	 
	2.6
	 	 	 	Compensation	 	 	4	 
	2.7
	 	 	 	Committee	 	 	4	 
	2.8
	 	 	 	Complying Election	 	 	4	 
	2.9
	 	 	 	Covered Compensation	 	 	4	 
	2.10
	 	 	 	Disability	 	 	4	 
	2.11
	 	 	 	Disability Retirement Eligibility	 	 	5	 
	2.12
	 	 	 	Early Retirement Eligibility	 	 	5	 
	2.13
	 	 	 	Employer	 	 	5	 
	2.14
	 	 	 	Normal Retirement Eligibility	 	 	5	 
	2.15
	 	 	 	Plan Year	 	 	5	 
	2.16
	 	 	 	Specified Employee	 	 	5	 
	2.17
	 	 	 	Vested Retirement Eligibility	 	 	6	 
	2.18
	 	 	 	Year of Credited Service	 	 	6	 
	2.19
	 	 	 	Year of Vesting Service	 	 	8	 
	III
	 	Benefits	 	 	8	 
	3.1
	 	 	 	Normal Retirement Benefit	 	 	8	 
	3.2
	 	 	 	Early Retirement Benefit	 	 	9	 
	3.3
	 	 	 	Vested Retirement Benefit	 	 	9	 
	3.4
	 	 	 	Disability Benefit	 	 	9	 
	3.5
	 	 	 	Death Benefit	 	 	10	 
	3.6
	 	 	 	Benefit Limitations	 	 	11	 
	3.7
	 	 	 	Special Transfer Employee Rule	 	 	13	 
	3.8
	 	 	 	Change in Control Override	 	 	14	 
	IV
	 	Distribution	 	 	14	 
	4.1
	 	 	 	Time and Method of Payment	 	 	14	 
	4.2
	 	 	 	Method of Payment	 	 	15	 
	4.3
	 	 	 	Designation of Beneficiary	 	 	17	 
	4.4
	 	 	 	Claims Procedure	 	 	17	 
	4.5
	 	 	 	Facility of Payment	 	 	18	 
	4.6
	 	 	 	Offset	 	 	19	 
	4.7
	 	 	 	Distribution in the Event of Taxation	 	 	19	 
	4.8
	 	 	 	Permissible Distribution	 	 	20	 
	V
	 	Administration	 	 	20	 
	5.1
	 	 	 	Committee	 	 	20	 













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	Article	 	 	 	 	 	Page	 
	5.2
	 	 	 	Limitation of Liability and Indemnification	 	 	21	 
	VI
	 	Amendment and Termination of Plan	 	 	22	 
	6.1
	 	 	 	Amendment or Termination	 	 	22	 
	6.2
	 	 	 	Change in Control Agreement	 	 	23	 
	VII
	 	Miscellaneous	 	 	23	 
	7.1
	 	 	 	Nonassignability	 	 	23	 
	7.2
	 	 	 	Employment Rights Not Enlarged	 	 	24	 
	7.3
	 	 	 	Participants’ Rights Limited	 	 	24	 
	7.4
	 	 	 	Interpretation and Construction	 	 	24	 
	7.5
	 	 	 	Governing Law	 	 	24	 
	7.6
	 	 	 	Arbitration	 	 	24	 





Appendix A
Other Employers



Appendix B 
 Active Participants



Appendix C
 Additional Credit Under Section 2.18(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 January 1, 2005.



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, and is now further amended and restated to reflect new Section 409A of the Internal Revenue
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.



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     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.



     (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 regulations under Section 409A 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),



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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 Kaydon Corporation or
a wholly owned subsidiary of Kaydon Corporation which has adopted this Plan who has been designated
by the Board of Directors or by the Compensation 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 the employee is no longer actively
employed in that manner and the date the employee is removed from this Plan by the Board of
Directors or the Compensation 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



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          (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 2.18(a) or (b) other than credit granted at date of hire).



     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. Employer means Kaydon Corporation and any wholly owned subsidiary of
Kaydon Corporation which has adopted this Plan.



     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 Specified Employee. Specified Employee means an employee who, at any
time during the 12-month period ending on December 31 of each year (the “Identification



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Date”), is:




     (a) Officer. An officer of the employer with annual compensation greater than
$140,000 in 2006 (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.



     Such an employee is a Specified Employee for the 12-month period beginning the first April 1
following the Identification Date and ending on March 31 of the following year.



     2.17 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 2.18(a) or (b)); or



     (b) Age. The attainment of age 65 while (or prior to becoming) an Active Participant.



     2.18 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:



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     (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.



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     (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).



     (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.



     2.19 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,



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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 4.1(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 2.18(a), if applicable, based only on
the individual’s actual Years of Credited Service and under Section 2.18(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



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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)).




     (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.



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     (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 2.18(a) and 2.18(b), if
applicable) less the Spousal Survivor Annuity benefit payable under the Kaydon Corporation
Retirement Plan from time to time.




     (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;



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     (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.



     (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



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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.



     (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



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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 termination of employment triggering the operation of that
Agreement as to 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.



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



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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 the benefit 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 702.



     (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 2.16) 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, on the first day of the seventh month following the date of the separation from service.



     (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



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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



-16-









 




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.



     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.



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     (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.



     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



-18-









 




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 offset any benefit by the value of benefits received
before reemployment or when or to the extent benefits should not have been paid. 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, 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 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).



-19-









 





     (b) Timing. 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;



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     (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.



     (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



-21-









 




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;




     (ii) Age Vesting. Who attained age 65 while (or prior to becoming) an
Active Participant and prior to the amendment or termination; or



-22-









 






     (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,



-23-









 




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.



     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.



-24-









 





     (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.



	 	 	 	 	 
	KAYDON CORPORATION and

KAYDON RING & SEAL, INC.

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



-25-









 






	 	 	 	 	 



APPENDIX A




OTHER EMPLOYERS




Kaydon Ring & Seal, Inc.




 









 








APPENDIX B




ACTIVE PARTICIPANTS




	 	 	 	 	 	 	 
	 	 	 	 	 	 	Effective Date of
	 	 	 	 	Effective Date of	 	Cessation of
	Name	 	Employer	 	Active Participation	 	Active Participation
	 
	 	 	 	 	 	 
	John F. Brocci

	 	Kaydon Corporation
	 	January 1, 1994	 	 
	Arthur Ridler

	 	Kaydon Ring & Seal, Inc.
	 	January 1, 1994	 	 
	James O’Leary

	 	Kaydon Corporation
	 	March 26, 2007	 	 






 









 






APPENDIX C




ADDITIONAL CREDIT UNDER SECTION 2.18(a)




	 	 	 	 	 
	 	 	 	 	Effective Date of
	 	 	 	 	Eligibility for Additional Credit
	Name	 	Employer	 	Under Section 2.18(a)
	 
	 	 	 	 
	John F. Brocci

	 	Kaydon Corporation
	 	August 1, 1998
	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.




 









 










APPENDIX D




DISCRETIONARY CREDIT UNDER SECTION 2.18(b)






	 	 	 	 	 	 	 
	 	 	 	 	Effective Date of	 	 
	 	 	 	 	Eligibility for Discretionary Credit	 	 
	Name	 	Employer	 	Under Section 2.18(b)	 	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.




 









 










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.



 









 





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 SERP on March 26, 2007
and, for all purposes of the SERP, 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 SERP during the Term of his employment.



     2. Vesting. Mr. O’Leary is 100% vested under the SERP 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 SERP upon the
termination of his employment with the Company following a Change in Control, in cash, payable
thirty (30) days following the Date of Termination (or later, as required by Section 4.1(d) of the
SERP).



     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.