Document:

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

-15-

 

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.

-17-

 

     (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;

-20-

 

     (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.exv10w3

 

EXHIBIT 10.3

AMENDED

KAYDON CORPORATION

CHANGE IN CONTROL COMPENSATION AGREEMENT

     AMENDED AGREEMENT made and executed May 31, 2007 between KAYDON CORPORATION, a Delaware
corporation, 315 East Eisenhower Parkway, Suite 300, Ann Arbor,
Michigan 48108 (Kaydon), and John F. Brocci, (the
Executive). This Amended Agreement is generally effective January 1, 2005. Any amendments not
necessary to comply with Section 409A of the Internal Revenue Code, however, are effective on June
1, 2007.

     The Board of Directors of Kaydon has recommended and approved that Kaydon enter into
agreements providing for compensation under certain circumstances involving a change in control of
Kaydon. Executive is a key executive of Kaydon or one or more of its Subsidiaries and has been
selected by the Compensation Committee of the Board of Directors to enter into this Agreement.

     The Board of Directors believes it is imperative that Kaydon and the Board be able to rely
upon Executive to continue in his position should Kaydon become subject to a proposed or threatened
Change in Control. The Board also believes it is critical that Kaydon and the Board be able to
receive and rely upon Executive’s advice, if requested, as to the best interests of Kaydon and its
stockholders, without concern that Executive might be distracted by the personal uncertainties and
risks created by such a proposal or threat. The parties anticipate that this may require actions
above and beyond Executive’s regular duties as the Board determines to be appropriate.

     To assure Kaydon that it will have the continued dedication of Executive and the availability
of Executive’s advice and counsel notwithstanding the possibility, threat or occurrence of an
effort to take over control of Kaydon, and to induce Executive to remain in the employ of Kaydon
and its Subsidiaries and for other good and valuable consideration, Kaydon and Executive agree as
follows:

     1. Services During Certain Events. In the event a third person begins a tender or
exchange offer, circulates a proxy to stockholders, or takes other steps to effect a Change in
Control, Executive agrees that he will not voluntarily terminate employment with Kaydon (or the
Subsidiary then employing Executive) on less than three months written notice to the Chief
Executive Officer of Kaydon, will render the services expected of his position, and will act in all
things related to the interests of the stockholders of Kaydon until the third person has abandoned
or terminated the efforts to effect a Change in Control or until a Change in Control has occurred.

     2. Termination In Connection With or Following Change in Control. In the event that
Executive’s employment is terminated under the circumstances stated in Subsection (a) during the
period beginning on the date a third person begins a tender or exchange offer, circulates a proxy
to stockholders, or takes other steps to effect a Change in Control and ending on the earlier of
the complete abandonment of that effort, the date

 

 

which is three years following the date a Change in Control is deemed to have occurred or the
date this Agreement ceases to apply to Executive (the Protected Period), Kaydon will provide to
Executive the rights and benefits described in Subsection (b), except as provided in Subsection
(c).

          a. Circumstances. This Agreement applies if Executive’s employment is terminated:

               i. By Kaydon. By Kaydon (or the Subsidiary employing Executive) for
reasons other
than For Cause and other than as a consequence of Executive’s death, permanent disability or
attainment of the normal retirement date under the Kaydon Corporation Retirement Plan (the
Retirement Plan) or other Kaydon retirement plan applicable to Executive, as in effect immediately
preceding that date; or

               ii. By Executive. By Executive following the occurrence of any of
the following
events:

                    A. Demotion. The assignment of Executive to any duties or
responsibilities that are a
reduction of, or are materially inconsistent with, Executive’s position, duties, responsibilities
or status immediately preceding the beginning of the Protected Period;

                    B. Reporting. A change in Executive’s reporting responsibilities or titles in
effect immediately preceding the beginning of the Protected Period resulting in a reduction of
Executive’s responsibilities or position;

                    C. Reduction. The reduction of Executive’s annual
salary, projected or target annual
bonus (including any deferred portions), level of benefits (except for a reduction uniformly
applicable to all similarly situated executives), target long-term incentives, stock options,
projected Supplemental Executive Retirement Plan benefits, or supplemental compensation in effect
at the beginning of the Protected Period; or

                    D. Location. The transfer of Executive to a location at
least fifty miles from
Executive’s location at the beginning of the Protected Period requiring a change in residence or a
material increase in the amount of travel normally required of Executive in connection with
employment.

          b. Rights and Benefits. The rights and benefits under this Agreement are all of the
following:

               i. Additional Compensation. Payment of an amount equal to:

                    A. Salary. Three (3) times the greater of the
Executive’s base salary for the
calendar year in which the termination of employment occurs or for the preceding calendar year;
plus

                    B. Bonus. Three (3) times the greater of:

-2-

 

	 	•	 	The average bonus payable to Executive over the most recent three-year fiscal period
(or the period during which the Executive has been employed by Kaydon (or any of its Subsidiaries) if less than three years); or
	 
	 	•	 	Executive’s target bonus for the calendar year in which the termination of
employment occurs.

               ii. Incentive Compensation. Payment of all amounts to which
Executive is entitled
under all incentive compensation plans maintained by Kaydon or any Subsidiary or to which Executive
would be entitled to by virtue of Executive’s employment with the corporation or entity which
succeeds Kaydon after a Change in Control.

                    A. Incentive Compensation Plans. This amount
includes, but is not limited to, any
award under any Kaydon incentive compensation plan for a prior year that has not been paid to
Executive at the time of termination of employment.

                    B. Increase. In addition, Executive shall
receive an amount equal to
1/12th of the greater of:

	 	•	 	 The projected incentive compensation plan awards for the year in which termination
of employment occurs; or
	 
	 	•	 	 The incentive compensation plan awards to the Executive for the most recently ended
plan year,

for each full or partial month in the current plan year prior to the month of Executive’s
termination of employment.

                    C. Acceleration. This Subsection (ii) may not
accelerate the time, or modify the
form, of any payment to Executive unless Executive’s employment is terminated within two years
after a Change in Control as defined in Section 5.b. occurs.

               iii. Supplemental Executive Retirement Plan Benefits. In the event
a Change in
Control occurs, payment of the Actuarial Equivalent (except as limited below) of the Executive’s
vested Accrued Benefit under the Kaydon Corporation Supplemental Executive Retirement Plan (the
SERP), if any, adjusted as provided in this subsection iii to the extent applicable to the
Executive.

                    A. Vesting. If the Executive is not otherwise vested in
the SERP Accrued Benefit,
Executive will fully vest in the Executive’s Accrued Benefit under the SERP if the Executive:

	 	•	 	 Is age 55 or older at the time of the Change in Control; and
	 
	 	•	 	 Is fully vested in the Retirement Plan (or would be fully vested if Executive was a
participant in that Plan) at the time of the Change in Control.

-3-

 

                    B. Additional Credit. Executive’s benefit and Accrued Benefit under the SERP
will be computed by crediting the Executive with the Additional
Credit provided in Section 2.18(a) and the Discretionary Credit provided in Section 2.18(b)
of the SERP if the Executive qualifies for that credit at that time or, if the Executive does not
otherwise qualify for that credit at the time of the Change in Control under the terms of that
Section 2.18(a) or (b), the Executive:

	 	•	 	 Has been (and remains) identified in the SERP as an individual eligible for that
Additional Discretionary Credit or was removed as an individual eligible for that
Credit in anticipation of the Change in Control; and
	 
	 	•	 	 Is vested in the Executive’s Accrued Benefit under the SERP under the terms of the
SERP or subsection A, above.

                    C. Actuarial Equivalent. The Actuarial Equivalent of the
payments from the SERP
determined under that Plan and this subsection shall be determined by taking into account the
reduction for early commencement of benefits imposed by that Plan and by using reasonable actuarial
assumptions. For purposes of determining the lump sum actuarial equivalent, the corresponding
actuarial assumptions provided in the Retirement Plan (or, to the extent not provided in that Plan,
as provided under GATT) shall be used.

                    D. Effect. If Executive is a Participant in the SERP, the
execution of this Agreement
constitutes:

	 	•	 	 An amendment of the SERP with respect to Executive to effect these provisions;
	 
	 	•	 	Agreement by Executive to the terms of, and consent in accordance with Section
6.1(a) of the SERP to, the amended and restated SERP adopted by the Board of Directors
on May 17, 2007 and to the amendments to the SERP provided in this Agreement;
	 
	 	•	 	Agreement by Kaydon and Executive that Executive may not be removed from the
Additional Credit provisions of the SERP once steps to effect a Change in Control have
commenced; and
	 
	 	•	 	Agreement by Kaydon and Executive that Executive’s employment with any successor to
Kaydon shall not cause forfeiture of Executive’s benefits under the SERP under Section
3.6(a) of the SERP.

Payment of the SERP benefit as provided by this Agreement satisfies Kaydon’s obligations to
Executive, if any, under the SERP. If Executive’s employment is terminated in anticipation of a
Change in Control but a Change in Control does not occur, subsections A., B. and D. shall operate
but payment of the SERP benefit will occur under the terms of the SERP without acceleration under
this Amended Agreement.

-4-

 

                    E. Limitation. Notwithstanding any other provision of this
Agreement, this subsection
(iii) does not provide any SERP benefit to Executive if Executive is not an Active Participant in
the SERP immediately prior to the Change in Control, unless Executive was removed as an Active
Participant in the SERP or the SERP was amended or terminated in anticipation of the Change in
Control.

                    F. Acceleration. This Subsection (ii) may not
accelerate the time, or modify the
form, of any payment to Executive unless Executive’s employment is terminated within two years
after a Change in Control as defined in Section 5.b. occurs. If the Executive’s employment is
terminated other than as provided above, the Executive’s SERP benefit will be paid at the time and
in the form provided in the SERP without regard to the acceleration of payment and change to the
lump sum form provided by this Agreement, but within the other modifications provided here.

               iv. Other Compensation. Immediate acceleration of vesting and
exercisability of any
outstanding stock option, stock appreciation right, restricted stock, or other similar incentive
compensation rights. This provision may not accelerate the time, or modify the form, of any
payment to Executive unless Executive’s employment is terminated within two years after a Change in
Control as defined in Section 5.b. occurs.

               v. Insurance and Other Special Benefits. Continued coverage under
the life insurance
and medical, dental and prescription drug insurance or other coverage (ie, provision of in kind
benefits or reimbursement of expenses incurred by Executive covered by the medical, dental and
prescription drug plans, to the extent the expenses are referred to in Section 105(b) of the
Internal Revenue Code) of Kaydon and its Subsidiaries (or any successor plan or program in effect
at or after termination of Executive’s employment for employees in the same class or category as
was Executive prior to termination) for the period provided in (A), below, subject to the
conditions provided in (B), below.

                    A. Period. These benefits will be provided until the
earlier of:

	 	•	 	 Three years from the date of termination of Executive’s employment;
	 
	 	•	 	 The Executive’s Normal Retirement Date (as defined in the Retirement Plan) (and, in
the case of medical insurance, until Executive is eligible for Parts A and B of
Medicare or their equivalent, if later); or
	 
	 	•	 	 The date Executive obtains reasonably comparable life insurance, medical insurance,
dental insurance, accident insurance, or disability insurance, as the case may be, at
no greater cost to Executive than was the case at Kaydon.

     The three year limitation provided above will not apply if Executive:

-5-

 

	 	•	 	 Is age 55 or older at the time of the Change in Control; and
	 
	 	•	 	 Is fully vested in the Retirement Plan (or would be fully vested if Executive was a
participant in that Plan) at the time of the Change in Control.

                    B. Conditions. Continued coverage is subject to the terms
of the governing plans
(other than any exclusion preventing Executive’s participation because Executive is no longer
an employee), to Executive’s making any payments for coverage required of employees in the
same class or category as was Executive prior to termination, and to any limitations necessary to
comply with Section 409A and avoid penalties on the Executive under Section 409A. Executive agrees
to waive any continued coverage that exceeds the limits imposed by Section 409A. In addition:

	 	•	 	The in kind benefits and the amount eligible for reimbursement during a taxable year
of Executive may not affect the in kind benefits to be provided or reimbursement in any
other taxable year, except that the lifetime and other benefit limits of the medical,
dental and prescription drug plans continue to apply.
	 
	 	•	 	The reimbursement of an eligible amount must be made on or before the last day of
Executive’s taxable year next following the taxable year in which the expense being
reimbursed was incurred.
	 
	 	•	 	The right to this in kind benefit or reimbursement is not subject to liquidation or
exchange for any other benefit.

                    C. Alternative. If Executive is ineligible to continue to
be covered under the terms
of any such benefit plan or program, or in the event Executive is eligible but the benefits
applicable to Executive under any such plan or program after termination of employment are not
substantially equivalent to the benefits applicable to Executive immediately prior to termination,
Kaydon shall provide such substantially equivalent benefits, or such additional benefits as may be
necessary to make the benefits applicable to Executive substantially equivalent to those in effect
before termination of Executive’s employment, through other sources, subject to all of the
limitations and conditions provided above.

                    D. Other. Nothing contained in this subsection
(v) shall be deemed to require or
permit termination or restriction of Executive’s coverage under any other plan or program of
Kaydon or any of its subsidiaries or any successor plan or program to which Executive is entitled
under the terms of such plan or program.

               vi. Outplacement Services. Reimbursement of the cost of full
outplacement services
provided by the professional outplacement consulting firm of Executive’s choosing, to a maximum
cost of 15% of the Executive’s base salary for the calendar year preceding the calendar year in
which termination of Executive’s employment occurs, provided that all expenses reimbursable under
this Subsection 2(b)(vi) must be
incurred no later than December 31 of the second calendar year following the calendar year

-6-

 

in which Executive separates from service and must be reimbursed no later than December 31 of
the third calendar year following the calendar year in which Executive separates from service.

                    A. Effect. The amount eligible for reimbursement during a
taxable year of Executive
may not affect the amount eligible for reimbursement in any other taxable year.

                    B. Timing. The reimbursement of an eligible amount must be
made on or before the last
day of Executive’s taxable year next following the taxable year in which the expense being
reimbursed was incurred.

                    C. Limitation. The right to this reimbursement is not
subject to liquidation or
exchange for any other benefit.

               vii. Excise Tax Payment. An additional payment in an amount to
cover the full cost of
the golden parachute excise tax, and the Executive’s state and Federal income and employment taxes
on this excise tax payment, incurred by Executive at any time during Executive’s life or within ten
years after Executive’s death as a result of the rights and benefits or any other payment under
this Agreement, or under any other agreement with, or plan of, Kaydon or its Subsidiaries.

                    A. Adjustment. In the event the Internal Revenue Service
subsequently adjusts the
excise tax computation described here, Kaydon shall reimburse the Executive for the full amount
necessary to make the Executive whole (less any amounts received by the Executive that the
Executive would not have received had the computations initially been computed as subsequently
adjusted), including the value of any underpaid excise tax, and any related interest and/or
penalties due to the Internal Revenue Service.

                    B. Definitions. For purposes of this Agreement, the term
“golden parachute
excise tax” has the meaning assigned to the term in Sections 280G and 4999 of the Internal
Revenue Code.

                    C. Effect. The amount eligible for reimbursement during a
taxable year of Executive
may not affect the amount eligible for reimbursement in any other taxable year.

                    D. Timing. The reimbursement of an eligible amount must be
made on or before the last
day of Executive’s taxable year next following the taxable year in which the Executive remits the
related taxes.

                    E. Limitation. The right to this reimbursement is not
subject to liquidation or
exchange for any other benefit.

               viii. Attorney’s Fees. Reimbursement in full for
Executive’s attorney’s fees and
costs reasonably incurred at any time during Executive’s life or within

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ten years after Executive’s death in enforcing this Agreement against Kaydon or a successor or
in seeking damages for Kaydon’s (or a successor’s) failure to fully perform its obligations under
this Agreement.

                    A. Effect. The amount eligible for reimbursement during a
taxable year of Executive
may not affect the amount eligible for reimbursement in any other taxable year.

                    B. Timing. The reimbursement of an eligible amount must be
made on or before the last
day of Executive’s taxable year next following the taxable year in which the expense being
reimbursed was incurred.

                    C. Limitation. The right to this reimbursement is not
subject to liquidation or
exchange for any other benefit.

               ix. Penalty Tax Payment. An additional payment in the amount
necessary to cover the
full cost of any tax imposed on the Executive at any time during Executive’s life or within ten
years after Executive’s death under Section 409A(a)(1)(A) of the Internal Revenue Code less the tax
to which the Executive would have been subject to in any event on the income, plus the additional
tax and interest imposed on the Executive under Section 409A(B) of the Code, plus the Executive’s
state and Federal income and employment taxes on this payment, as a result of the rights and
benefits or any other payment under this Agreement, or under any other agreement with, or plan of,
Kaydon or its Subsidiaries.

                    A. Effect. The amount eligible for reimbursement during a
taxable year of Executive
may not affect the amount eligible for reimbursement in any other taxable year.

                    B. Timing. The reimbursement of an eligible amount must be
made on or before the last
day of Executive’s taxable year next following the taxable year in which the Executive remits the
related taxes.

                    C. Limitation. The right to this reimbursement is not
subject to liquidation or
exchange for any other benefit.

               The specific arrangements referred to in this Subsection (b) are not intended to exclude
Executive’s participation in other benefit plans in which Executive currently participates or which
are or may become available to executive personnel generally in the class or category of Executive
or to preclude other compensation or benefits as may be authorized by the Board of Directors from
time to time.

          c. Conditions to the Obligations of Kaydon. Notwithstanding the general rules, above,
Kaydon shall have no obligation to provide or cause to be provided to Executive the rights and
benefits described above if any of the following events occurs:

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               i. Prior Termination. Executive terminates employment or Kaydon (or
the appropriate
Subsidiary) terminates Executive’s employment for any reason or for no reason at all prior to the
time a third person begins a tender or exchange offer, circulates a proxy to stockholders, or takes
other steps to effect a Change in Control of Kaydon (unless Kaydon (or the appropriate Subsidiary)
terminates Executive’s employment in anticipation of the Change in Control).

               ii. Termination
for Cause. Kaydon terminates Executive’s employment For Cause.

                    A. For Cause. For purposes of this Agreement, termination
of employment is For Cause
if Executive, in connection with the Executive’s duties as an employee of Kaydon, its Subsidiaries,
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, a Subsidiary, or any of its affiliates.

                    B. Limitation. For purposes of clarification, this use of
this For Cause standard for
employment termination affects Executive’s entitlement to benefits under this Agreement only and
does not generally limit the ability of Kaydon or other employer to terminate Executive’s
employment for any reason or for no reason at all.

               iii. Resignation as Director or Officer. Executive fails, within a
reasonable time
after a termination of employment which is not wrongful on the part of Kaydon (or the Subsidiary
employing Executive) and upon receiving a written request to do so, to resign as a director and/or
officer of Kaydon and each Subsidiary and affiliate of Kaydon of which Executive is then serving as
a director and/or officer.

               iv. Termination of Agreement. This Agreement ceases to be effective
as to Executive
in accordance with Section 6.

               In all other events, Kaydon’s obligation to pay or cause to be paid to Executive the benefits
and to make the arrangements provided below is absolute and unconditional and shall not be affected
by any circumstances, including, without limitation, any set off, counterclaim, recoupment, defense
or other right which Kaydon may have against Executive or anyone else. Except as provided in
Section 2(b)(v), Executive’s entitlement to benefits under this Agreement is not subject to any
duty to mitigate damages by seeking further employment nor offset by any compensation which
Executive may receive from future employment.

     3. Confidentiality and Cooperation. Executive agrees that at all times:

          a. Confidentiality. Executive will not, without the prior written consent of Kaydon,
disclose to any person, firm or corporation any confidential information of or about Kaydon or its
Subsidiaries which is now known to Executive or which (whether before or after termination) may
become known to Executive as a result of Executive’s employment

-9-

 

or association with Kaydon and which could be helpful to a competitor. This limitation does
not apply, however, to confidential information that becomes publicly disseminated by means other
than a breach of this Agreement.

          b. Cooperation. Executive will furnish such information and render such assistance
and cooperation as may reasonably be requested in connection with any litigation or legal
proceedings concerning Kaydon or any of its Subsidiaries (other than any legal proceedings
concerning Executive’s employment). In connection with that cooperation, Kaydon will pay or
reimburse Executive for all reasonable expenses incurred in cooperating with such requests,
provided that all expenses reimbursable under this Subsection 3(b) must be incurred and reimbursed
no later than December 31 of the second calendar year following the calendar year in which
Executive’s employment is terminated.

          The parties agree that damages in the event of breach of this Section 3 by Executive would be
difficult, if not impossible, to ascertain. The parties therefore agree that Kaydon, in addition
to and without limitation of any other remedy or right it may have, shall have the right to an
injunction or other equitable relief in any court of competent jurisdiction enjoining any such
breach. Executive waives any and all defenses Executive may have to such an action on the ground
of lack of jurisdiction or other equitable relief. The existence of this right shall not preclude
Kaydon from pursuing any other rights and remedies at law or in equity which Kaydon may have.

     4. Release. In exchange for benefits under this Agreement, Executive agrees that,
upon acceptance of those benefits, Executive will release all claims against Kaydon and its
Subsidiaries which might then exist and will execute a reasonable and customary release of any such
claims.

     5. Change in Control. For purposes of this Agreement:

          a. General Definition of Change in Control. Except as otherwise provided in this
Agreement, a Change in Control means:

               i. Directors. The failure of the Continuing Directors at any time
to constitute at
least a majority of the members of the Board;

               ii. Ownership. The acquisition by any Person other than an Excluded
Holder of
beneficial ownership (within the meaning of Rule 13d-3 issued under the Act) of 20% or more of the
outstanding common stock of Kaydon or the combined voting power of Kaydon’s outstanding securities
entitled to vote generally in the election of directors;

               iii. Transaction. The approval by the stockholders of Kaydon of a
reorganization,
merger or consolidation, unless with or into a Permitted Successor; or

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               iv. Termination. The approval by the stockholders of Kaydon of a
complete liquidation
or dissolution of Kaydon or the sale or disposition of all or substantially all of the assets of
Kaydon other than to a Permitted Successor.

          b. Change in Control For SERP Benefits and Certain Purposes. For purposes of the SERP
benefits under Section 2.b.iii., and for purposes of any acceleration or modification of the terms
of payment of any benefit under Section 2.b.ii., Section 2.b.iii., Section 2.b.iv. or any other
Section of this Agreement, a Change in Control means a Change in Control under Section 5.a., above,
that is:

               (i) 50% Stock. The acquisition, by a person or Persons Acting as a
Group, of stock of
Kaydon that together with stock held by such person or group constitutes more than 50% of the total
fair market value or total voting power of the stock of Kaydon;

               (ii) 35% Stock. The acquisition, by a person or Persons Acting as a
Group, of
ownership of stock of Kaydon that constitutes 35% or more of the total voting power of Kaydon’s
stock in a single transaction or within a twelve month period ending with the most recent
acquisition;

               (iii) Directors. The majority of members of the Board of Directors
of Kaydon being
replaced during any twelve month period by directors whose appointment or election is not endorsed
by a majority of the members of the Board of Directors of Kaydon prior to the date of appointment
or election;

               (iv) Assets. The acquisition, by a person or Persons Acting as a
Group, of Kaydon’s
assets that have a total gross fair market value equal to or exceeding forty percent (40%) of the
total gross fair market value of Kaydon’s assets in a single transaction or within a twelve month
period ending with the most recent acquisition. For the purpose of this section, gross fair market
value means the value of the assets of the corporation, or the value of the assets being disposed
of, determined without regard to any liabilities associated with such assets; or

               (v) Merger. A reorganization, merger or consolidation of Kaydon,
the substantive
effect of which is a Change in Control under Section 5.b.(i), (ii), (iii), or (iv), unless with or
into a Permitted Successor

          c. Other Definitions. The following terms are defined as follows:

               i. Continuing Directors. The Continuing Directors are the
individuals constituting
the Board as of the date this Agreement was executed by Kaydon and any subsequent directors whose
election or nomination for election by Kaydon’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

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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.

               ii. Excluded Holder. Excluded Holder means any Person who at the
time this Agreement
was executed by Kaydon was the beneficial owner of 20% or more of the outstanding common stock of
Kaydon; or Kaydon, a Subsidiary or any Employee Benefit Plan of Kaydon or a Subsidiary or any trust
holding such common stock or other securities pursuant to the terms of an Employee Benefit Plan.

               iii. Permitted Successor. Permitted Successor means a corporation
which, immediately
following the consummation of a transaction specified in the definition of “Change in Control”
above, satisfies each of the following criteria:

                    A. Stock. Sixty percent or more of the outstanding common
stock of the corporation
and the combined voting power of the outstanding securities of the corporation entitled to vote
generally in the election of directors (in each case determined immediately following the
consummation of the applicable transaction) is beneficially owned, directly or indirectly, by all
or substantially all of the Persons who were the beneficial owners of Kaydon’s outstanding common
stock and outstanding securities entitled to vote generally in the election of directors
(respectively) immediately prior to the applicable transaction;

                    B. Limitation. No Person other than an Excluded Holder
beneficially owns, directly or
indirectly, 20% or more of the outstanding common stock of the corporation or the combined voting
power of the outstanding securities of the corporation entitled to vote generally in the election
of directors (for these purposes the term Excluded Holder shall include the corporation, any
subsidiary of the corporation and any Employee Benefit Plan of the corporation or any such
subsidiary or any trust holding common stock or other securities of the corporation pursuant to the
terms of any such Employee Benefit Plan); and

                    C. Board. At least a majority of the board of directors is
comprised of Continuing
Directors.

               iv. Person. Person has the same meaning as set forth in Sections
13(d) and 14(d)(2)
of the Act.

               v. Persons Acting as a Group. Persons Acting as a Group means
owners of a corporation
that enters into a merger, consolidation, purchase or acquisition of stock, or similar business
transaction with the corporation. If a person, including an entity, owns stock in both corporations
that enter into a merger, consolidation, purchase or acquisition of stock, or similar transaction,
such shareholder is considered to be acting as a group with other shareholders in a corporation
prior to the transaction giving rise to the change and not with respect to the ownership interest
in the other corporation. Persons will not be considered to be acting as a group solely because
they purchase or

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own stock of the same corporation at the same time or as a result of the same public offering,
or purchase assets of the same corporation at the same time.

               vi. Act. Act means the Securities Exchange Act of 1934, as amended.

               vii. Employee Benefit Plan. Employee Benefit Plan means any plan or
program
established by Kaydon or a Subsidiary for the compensation or benefit of employees of Kaydon or any
of its Subsidiaries.

               viii. Subsidiary. Subsidiary means any corporation or other entity
of which 50% or
more of the outstanding voting stock or voting ownership interest is directly or indirectly owned
or controlled by Kaydon or by one or more Subsidiaries of Kaydon.

     6. Term of Agreement. Subject to Section 2 and the remainder of this Section 6, this
Agreement was initially effective on October 24, 1998 and was automatically renewed for successive
one-year terms, each ending on the anniversary of December 31, 1999.

               i. Extension. This Amended Agreement shall continue to
automatically renew for
successive one-year terms, each ending on the anniversary of December 31, 1999, unless Kaydon
notifies Executive in writing at least 30 days prior to the expiration date of the original or a
successive term that it does not wish to renew the Agreement for an additional term.

               ii. Limitation. Notwithstanding those general rules, the Board of
Directors may
terminate this Agreement as to Executive for good cause (including but not limited to a diminution
in Executive’s duties and responsibilities with Kaydon) during the original or a successive
term, on 30 days advance written notice to Executive.

          Notice of non-renewal or termination shall not be given, and if given shall have no effect,
and Board action to terminate the Agreement will not be effective, however, within three years
after a Change in Control or during any period of time when Kaydon has reason to believe that any
third person has begun a tender or exchange offer, circulated a proxy to stockholders, or taken
other steps or formulated plans to effect a Change in Control. That period of time ends when, in
the opinion of the Board of Directors, the third person has abandoned or terminated the efforts or
plans to effect a Change in Control.

     7. Miscellaneous. In addition, the following terms govern.

          a. Assignment. No right, benefit or interest under this Agreement is subject to
assignment, anticipation, alienation, sale, encumbrance, charge, pledge, hypothecation or set-off
in respect of any claim, debt or obligation, or to execution, attachment, levy or similar process.
Executive may, however, assign any right, benefit or interest under this Agreement if the
assignment is permitted under the terms of any plan or policy of insurance or annuity contract
governing such right, benefit or interest.

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          b. Construction of Agreement. Nothing in this Agreement shall be construed to amend
any provision of any plan or policy of Kaydon other than as specifically stated here.

               i. Employment. This Agreement is not, and nothing here shall be
deemed to create, an
employment contract between Executive and Kaydon or any of its Subsidiaries. Executive
acknowledges that the rights of Kaydon and the Subsidiary employing Executive to change or reduce
at any time and from time to time Executive’s compensation, title, responsibilities, location and
other aspects of the employment relationship or to discharge Executive prior to a Change in Control
shall remain wholly unaffected by the provisions of this Agreement, except as explicitly limited in
this Agreement.

               ii. No Waiver. No waiver by either party to this Agreement at any
time of any breach
by the other party to this Agreement, or noncompliance with any condition or provision of this
Agreement to be performed by such other party, shall be deemed a waiver of that or of any other
provision or condition.

               iii. Integration. This Agreement sets forth the entire agreement of
the parties on
the subjects addressed here and no agreements or representations express or implied on such
subjects have been made by either party which are not set forth expressly in this Agreement.

          c. Amendment. Except as otherwise provided in this Agreement, this Agreement may not
be amended, modified or canceled except by written agreement of the parties.

          d. Waiver. No provision of this Agreement may be waived except by a writing signed by
the party to be bound.

          e. Severability. In the event that any provision or portion of this Agreement is
determined to be invalid or unenforceable for any reason, the remaining provisions of this
Agreement shall remain in full force and effect to the fullest extent permitted by law.

          f. Successors. This Agreement shall be binding upon and inure to the benefit of
Executive and Executive’s personal representative and heirs, and upon Kaydon and any successor
organization or organizations which shall succeed to substantially all of the business and property
of Kaydon whether by means of merger, consolidation, acquisition of substantially all of the assets
of Kaydon or otherwise, including by operation of law. References here to duties and obligations
of Kaydon following a Change in Control are binding upon and shall be the joint and several
liability of Kaydon and any successor of it and all Subsidiaries of Kaydon and any successors of
any of them.

-14-

 

          g. Taxes. Any payment or delivery required under this Agreement shall be subject to
all requirements of the law with regard to withholding of taxes, filing, making of reports and the
like. Kaydon shall use its best efforts to satisfy promptly all such requirements.

          h. Payment. All amounts payable by or on behalf of Kaydon under this Agreement shall,
unless specifically stated to the contrary in this Agreement, be paid in a lump sum in U.S.
Dollars, without notice or demand, on the first day of the second month following termination of
Executive’s employment (or for payment of the SERP benefits to an Executive whose employment
terminated prior to a Change in Control, on the first day of the second month following the Change
in Control). Each and every payment made by or on behalf of Kaydon shall be final and Kaydon and
its subsidiaries shall not, for any reason whatsoever, seek to recover all or any part of any
payment from Executive or from whomever is entitled to it.

               i. Delay in Payment to Specified Employees. Notwithstanding that
general rule
regarding payment and the remaining provisions of this Plan, no payment may be made under any
provision of this Agreement to a Specified Employee during the first six months following the
Specified Employee’s separation from service with Kaydon (or any related entity) if the payment is
due to the Specified Employee as a result of that separation from service. 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.

               ii. 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 Date”), is:

                    (A) Officer. An officer of Kaydon (or any related entity)
with annual compensation
greater than $140,000 in 2006 (as adjusted for future years as provided in Section 416 of the
Internal Revenue Code);

                    (B) Five Percent Owner. A 5-percent owner of Kaydon (or
any related entity) ; or

                    (C) One Percent Owner. A 1-percent owner of Kaydon (or any
related entity) 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.

          i. Death. If Executive dies prior to the time all payments due to Executive under
this Agreement have been made, then as soon as practicable after Executive’s death (but in no
event later than 90 days after), Kaydon shall pay in a lump sum in U.S. Dollars all sums not paid
to Executive prior to his death. Payment shall be

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made to the beneficiary or beneficiaries (in addition to the amount of life insurance proceeds
payable to each beneficiary) named under the life insurance plan or plans maintained by Kaydon on
the date of Executive’s death. If no such beneficiary is named, such sums shall be paid to
Executive’s estate. Except as provided in Subsection 2(b)(iii), no reduction to present value of
any such sums shall be made.

          IN WITNESS, the parties have executed this Amended Agreement this 31st day of May, 2007.

	 	 	 	 	 
	KAYDON CORPORATION	 	EXECUTIVE
	 
	 	 	 	 
	By

	 	/s/James O’Leary	 	/s/John F. Brocci
	 

	 	 
	 	 

	 	 	 	 	 	 
	 	Its

	 	President and Chief Executive Officer	 	 
	 

	 	 	 	 	 

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