Document:

Filed by Bowne Pure Compliance

Exhibit 10.6

KAYDON CORPORATION

1999 LONG TERM STOCK INCENTIVE PLAN

(Amended and Restated Effective October 23, 2008)

Section 1. Purposes. The purposes of the 1999 Long Term Stock Incentive Plan (the “Plan”) are to
encourage selected employees of, and Consultants to, Kaydon Corporation (the “Company”) and its
Subsidiaries to acquire a proprietary interest in the Company in order to create an increased
incentive to contribute to the Company’s future success and prosperity, and enhance the ability of
the Company and its Subsidiaries to attract and retain highly qualified individuals upon whom the
sustained progress, growth and profitability of the Company depend, thus enhancing the value of the
Company for the benefit of its stockholders.

Section 2. Definitions. As used in the Plan, the following terms shall have the meanings set forth
below:

(a) “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit, Performance Award, Dividend Equivalent or Other Stock-Based Award granted under the
Plan.

(b) “Award Agreement” shall mean any written agreement, contract or other instrument or
document evidencing any Award granted under the Plan.

(c) “Board” means the Board of Directors of the Company.

(d) “Change in Control” means the occurrence of any of the following events:

(i) 50% Stock. The acquisition, by a person or Persons Acting as a Group, of
stock of the Company 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 Company;

(ii) 35% Stock. The acquisition, by a person or Persons Acting as a Group, of
ownership of stock of the Company that constitutes 35% or more of the total voting power of
Company’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 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 prior to the date of appointment or election;

(iv) Assets. The acquisition, by a person or Persons Acting as a Group, of the
Company’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 Company’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 the Company, the
substantive effect of which is a Change in Control under any of subsections (i), (ii),
(iii) or (iv) above, unless with or into a Permitted Successor.

(e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(f) “Committee” shall mean the Compensation Committee of the Company, each of the members of
which is a “non-employee director” within the meaning of Rule 16b-3.

(g) “Consultant” shall mean any individual performing bona fide services for the Company
(other than services in connection with the offer or sale of securities in a capital-raising
transaction) including former and prospective employees of the Company and any other individuals
designated as such by the Committee.

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

(i) “Disability” means the Participant: (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than 12 months;
or (ii) is, by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than 3 months under an
accident and health plan covering employees of the Company. To the extent required hereunder, the
determination of Disability shall be made by a medical board certified physician selected by the
Company and acceptable to the Participant (or the Participant’s legal representative, if one has
been appointed), provided such agreement as to acceptability shall not be unreasonably withheld.

(j) “Dividend Equivalent” shall mean any right granted under Section 6(e) of the Plan.

 

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(k) “Employee Benefit Plan” means any plan or program established by the Company or a
Subsidiary for the compensation or benefit of employees of the Company or any of its Subsidiaries.

(l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(m) “Excluded Holder” means any Person who at the time this Amended and Restated Plan was
adopted by the Board was the beneficial owner of 20% or more of the outstanding common stock of the
Company; or the Company, a Subsidiary or any Employee Benefit Plan of the Company or a Subsidiary
or any trust holding such common stock or other securities pursuant to the terms of an Employee
Benefit Plan.

(n) “Fair Market Value” means, as of any date, if there is then a public market for the
Shares, the closing price of the Shares as reported on the New York Stock Exchange (“NYSE”) or such
other national or regional securities exchange or market system constituting the primary market for
the Shares. If the relevant date does not fall on a day on which the Shares are trading on NYSE or
other national or regional securities exchange or market system, the date on which the Fair Market
Value shall be established shall be the last day on which the Shares were so traded prior to the
relevant date. If there is then no public market for the Shares, the Fair Market Value on any
relevant date shall be as determined by the Committee without regard to any restriction other than
a restriction which, by its terms, will never lapse.

(o) “Incentive Stock Option” shall mean an Option granted under Section 6(a) of the Plan that
is intended to meet the requirements of Section 422 of the Code, or any successor provision
thereto.

(p) “Non-Qualified Stock Option” shall mean an Option granted under Section 6(a) of the Plan
that is not intended to be an Incentive Stock Option.

(q) “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.

(r) “Other Stock-Based Award” shall mean any right granted under Section 6(f) of the Plan.

(s) “Participant” shall mean an employee of, or Consultant to, the Company or any Subsidiary
designated to be granted an Award under the Plan.

(t) “Performance Award” shall mean any right granted under Section 6(d) of the Plan.

 

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(u) “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:

(i) 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 Company’s outstanding common stock and outstanding securities entitled
to vote generally in the election of directors (respectively) immediately prior to the
applicable transaction;

(ii) 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

(iii) Board. At least a majority of the board of directors is comprised of
Continuing Directors.

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

(w) “Persons Acting as a Group” means owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock (or assets), or similar business transaction with
the Company. If a person, including an entity, owns stock in both corporations that enter into a
merger, consolidation, purchase or acquisition of stock (or assets), 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 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.

(x) “Restricted Period” shall mean the period of time during which Awards of Restricted Stock
or Restricted Stock Units are subject to restrictions.

(y) “Restricted Stock” shall mean any Share granted under Section 6(c) of the Plan.

(z) “Restricted Stock Unit” shall mean any right granted under Section 6(c) of the Plan that
is denominated in Shares.

(aa) “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Exchange Act, or any successor rule or regulation.

 

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(bb) “Section 16” shall mean Section 16 of the Exchange Act, the rules and regulations
promulgated by the Securities and Exchange Commission thereunder, or any successor provision, rule
or regulation.

(cc) “Shares” shall mean the Company’s common stock, par value $.10 per share, and such other
securities or property as may become the subject of Awards, or become subject to Awards, pursuant
to an adjustment made under Section 4(e) of the Plan.

(dd) “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan.

(ee) “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 the Company or by one or more Subsidiaries of the Company.

Section 3. Administration. The Committee shall administer the Plan, and subject to the terms of the
Plan and applicable law, the Committee’s authority shall include without limitation the power to:

(a) designate Participants;

(b) determine the types of Awards to be granted;

(c) determine the number of Shares to be covered by Awards and any payments, rights or other
matters to be calculated in connection therewith;

(d) determine the terms and conditions of Awards and amend the terms and conditions of
outstanding Awards;

(e) determine how, whether, to what extent, and under what circumstances Awards may be settled
or exercised in cash, Shares, other securities, other Awards or other property, or canceled,
forfeited or suspended; provided, however, that the Committee shall not accept the tender of Shares
that have been held by the Participant for less than six months;

(f) determine subject to compliance with any restrictions under Code Section 409A (and as
specifically provided in any Award Agreement hereunder), how, whether, to what extent, and under
what circumstances cash, Shares, other securities, other Awards, other property and other amounts
payable with respect to an Award shall be deferred either automatically or at the election of the
holder thereof or of the Committee;

(g) determine the methods or procedures for establishing the fair market value of any property
(including, without limitation, any Shares or other securities) transferred, exchanged, given or
received with respect to the Plan or any Award;

(h) prescribe and amend the forms of Award Agreements and other instruments required under or
advisable with respect to the Plan;

 

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(i) designate Options granted to key employees of the Company or its Subsidiaries as Incentive
Stock Options;

(j) interpret and administer the Plan, Award Agreements, Awards and any contract, document,
instrument or agreement relating thereto;

(k) establish, amend, suspend or waive such rules and regulations and appoint such agents as
it shall deem appropriate for the administration of the Plan;

(l) decide all questions and settle all controversies and disputes which may arise in
connection with the Plan, Award Agreements and Awards;

(m) make any other determination and take any other action that the Committee deems necessary
or desirable for the interpretation, application and administration of the Plan, Award Agreements
and Awards.

All designations, determinations, interpretations and other decisions under or with respect to the
Plan, Award Agreements or any Award shall be within the sole discretion of the Committee, may be
made at any time and shall be final, conclusive and binding upon all persons, including the
Company, Subsidiaries, Participants, beneficiaries of Awards and stockholders of the Company.

Section 4. Shares Available for Awards

(a) Shares Available. Subject to adjustment as provided in Section 4(c):

(i) Initial Authorization. There shall be 2,000,000 Shares initially available for
issuance under the Plan.

(ii) Acquired Shares. In addition to the amount set forth above, up to 2,000,000
Shares acquired by the Company subsequent to the effectiveness of the Plan as full or
partial payment for the exercise price for an Option or any other stock option granted by
the Company, or acquired by the Company, in open market transactions or otherwise, in
connection with the Plan or any Award hereunder or any other employee stock option or
restricted stock issued by the Company may thereafter be included in the Shares available
for Awards. If any Shares covered by an Award or to which an Award relates are forfeited,
or if an Award expires, terminates or is canceled, then the Shares covered by such Award,
or to which such Award relates, or the number of Shares otherwise counted against the
aggregate number of Shares available under the Plan by reason of such Award, to the extent
of any such forfeiture, expiration, termination or cancellation, may thereafter be
available for further granting of Awards and included as acquired Shares for purposes of
the preceding sentence.

 

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(iii) Accounting for Awards. For purposes of this Section 4,

(A) if an Award (other than a Dividend Equivalent) is denominated in Shares,
the number of Shares covered by such Award, or
to which such Award relates, shall be counted on the date of grant of such
Award against the aggregate number of Shares available for granting Awards under
the Plan to the extent determinable on such date and insofar as the number of
Shares is not then determinable under procedures adopted by the Committee
consistent with the purposes of the Plan; and

(B) Dividend Equivalents and Awards not denominated in Shares shall be counted
against the aggregate number of Shares available for granting Awards under the Plan
in such amount and at such time as the Committee shall determine under procedures
adopted by the Committee consistent with the purposes of the Plan;

provided, however, that Awards that operate in tandem with (whether granted simultaneously with or
at a different time from), or that are substituted for, other Awards or restricted stock awards or
stock options granted under any other plan of the Company may be counted or not counted under
procedures adopted by the Committee in order to avoid double counting. Any Shares that are
delivered by the Company or its Subsidiaries, and any Awards that are granted by, or become
obligations of, the Company, through the assumption by the Company of, or in substitution for,
outstanding restricted stock awards or stock options previously granted by an acquired company
shall not, except in the case of Awards granted to Participants who are directors or officers of
the Company for purposes of Section 16, be counted against the Shares available for granting Awards
under the Plan.

(iv) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an
Award may consist, in whole or in part, of authorized but unissued Shares or of Shares
reacquired by the Company, including but not limited to Shares purchased on the open
market.

(b) Individual Stock-Based Awards. Subject to adjustment as provided in Section 4(c),
no Participant may receive stock-based Awards under the Plan during any three consecutive calendar
years that relate to more than 500,000 Shares. No provision of this Paragraph 4(b) shall be
construed as limiting the amount of any cash-based Award which may be granted to any Participant.

(c) Adjustments. Subject to compliance with any restrictions under Code Section 409A,
upon the occurrence of any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), change in the capital or shares of capital stock,
recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other securities of the Company
or extraordinary transaction or event which affects the Shares, then the Committee shall have the
authority to make such adjustment, if any, in such manner as it deems appropriate, in (i) the
number and type of Shares (or other securities or property) which thereafter may be made the
subject of Awards, (ii) outstanding Awards including without limitation the number and type of
Shares (or other securities or property) subject thereto, and (iii) the grant, purchase or exercise
price with
respect to outstanding Awards and, if deemed appropriate, make provision for cash payments to
the holders of outstanding Awards; provided, however, that the number of Shares subject to any
Award denominated in Shares shall always be a whole number.

 

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Section 5. Eligibility. Any employee of, or Consultant to, the Company or any Subsidiary, including
any officer of the Company (who may also be a director, but excluding a member of the Committee,
any person who serves only as a director of the Company and any Consultant to the Company or a
Subsidiary who is also a director of the Company and who is not rendering services pursuant to a
written agreement with the entity in question), as may be selected from time to time by the
Committee or by the directors to whom authority may be delegated pursuant to Section 3 hereof in
its or their discretion, is eligible to be designated a Participant.

Section 6. Awards

(a) Options. The Committee is authorized to grant Options to Participants to purchase
Shares of the Company. Notwithstanding the foregoing, the Committee may only grant Incentive Stock
Options to Participants who are employees of the Company or an Affiliate that is a “parent
corporation” or “subsidiary corporation” within the meaning of Section 424 of the Code, and a
Participant shall not be eligible to receive Options or SARs if they are classified as an employee
solely by an entity that is a “parent corporation” (within the meaning of Code Section 424) of the
Company.

(i) Committee Determinations. Subject to the terms of the Plan, the Committee shall
determine:

(A) the purchase price per Share under each Option; provided, that no Option
will be granted with an exercise price that is below the Fair Market Value of the
Shares on the date such Option is granted;

(B) the term of each Option; and

(C) the time or times at which an Option may be exercised, in whole or in
part, the method or methods by which and the form or forms (including, without
limitation, cash, Shares or other property, or any combination thereof, having a
fair market value on the exercise date equal to the relevant exercise price) in
which payment of the exercise price with respect thereto may be made or deemed to
have been made. The terms of any Incentive Stock Option granted under the Plan
shall comply in all respects with the provisions of Section 422 of the Code, or any
successor provision thereto, and any regulations promulgated thereunder.

Subject to the terms of the Plan, the Committee may impose such conditions or restrictions on any
Option as it deems appropriate, and as shall be set forth in the Award Agreement therefor.

 

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(ii) Other Terms. Unless otherwise determined by the Committee:

(A) A Participant electing to exercise an Option shall give written notice to
the Company, as may be specified by the Committee, of exercise of the Option and
the number of Shares elected for exercise, such notice to be accompanied by such
instruments or documents as may be required by the Committee, and shall tender the
purchase price of the Shares elected for exercise.

(B) At the time of exercise of an Option payment in full in cash shall be made
for all Shares then being purchased. At the discretion of the Committee, as set
forth in a Participant’s Award Agreement, any Option granted under the Plan may be
deemed exercised by delivery to the Company of a properly executed exercise notice,
acceptable to the Committee, together with irrevocable instructions to the
Participant’s broker to deliver to the Company sufficient cash to pay the exercise
price and any applicable income and employment withholding taxes, in accordance
with a written agreement between the Company and the brokerage firm.

(C) The Company shall not be obligated to issue any Shares unless and until:

(1) if the class of Shares at the time is listed upon any stock
exchange, the Shares to be issued have been listed, or authorized to be
added to the list upon official notice of issuance, upon such exchange,
and

(2) in the opinion of the Company’s counsel there has been compliance
with applicable law in connection with the issuance and delivery of Shares
and such issuance shall have been approved by the Company’s counsel.

Without limiting the generality of the foregoing, the Company may require from the Participant such
investment representation or such agreement, if any, as the Company’s counsel may consider
necessary in order to comply with the Securities Act of 1933 as then in effect, and may require
that the Participant agree that any sale of the Shares will be made only in such manner as shall be
in accordance with law and that the Participant will notify the Company of any intent to make any
disposition of the Shares whether by sale, gift or otherwise. The Participant shall take any action
reasonably requested by the Company in such connection. A Participant shall have the rights of a
stockholder only as and when Shares have been actually issued to the Participant pursuant to the
Plan.

 

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(D) If the employment of, or consulting arrangement with, a Participant
terminates for any reason (including termination by reason of the fact that an
entity is no longer a Subsidiary) other than the Participant’s death, the
Participant may thereafter exercise the Option as provided below, except that the
Committee may terminate the unexercised portion of the Option concurrently with or
at any time following
termination of the employment or consulting arrangement (including termination
of employment upon a change of status from employee to Consultant) if it shall
determine that reason to terminate the Participant for cause exists at the time of
termination or existed at such time. For purposes of the foregoing, “cause” shall
be defined as set forth in any employment or other agreement between the
Participant and the Company, or if no such agreement exists, cause shall exist if,
in connection with the Participant’s duties as an employee of the Company, or any
of its subsidiaries or affiliates, Participant 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 the
Company, a subsidiary, or any of its affiliates. If such termination is voluntary
on the part of the Participant, the option may be exercised only within ten days
after the date of termination. If such termination is involuntary on the part of
the Participant, if an employee retires, or if the employment or consulting
relationship is terminated by reason of Disability, the Option may be exercised
within three months after the date of termination or retirement; provided, however,
that at the Committee’s discretion, Options held by a retiree of the Company may
continue to vest in accordance with the Option vesting schedule in effect prior to
such Participant’s retirement (however any Incentive Stock Option would
automatically convert to a Non-Qualified Option after the three-month period after
retirement). For purposes of this Paragraph (D), a Participant’s employment or
consulting arrangement shall not be considered terminated (i) in the case of
approved sick leave or other bona fide leave of absence (not to exceed one year),
(ii) in the case of a transfer of employment or the consulting arrangement among
the Company and Subsidiaries, or (iii) by virtue of a change of status from
employee to Consultant or from Consultant to employee, except as provided above.

(E) If a Participant dies at a time when entitled to exercise an Option, then
at any time or times within one year after death such Option may be exercised, as
to all or any of the Shares which the Participant was entitled to purchase
immediately prior to death. The Company may decline to deliver Shares to a
designated beneficiary until it receives indemnity against claims of third parties
satisfactory to the Company. Except as so exercised such Option shall expire at the
end of such period.

(F) An Option may be exercised only if and to the extent such Option was
exercisable at the date of termination of employment or the consulting arrangement,
and an Option may not be exercised at a time when the Option would not have been
exercisable had the employment or consulting arrangement continued.

 

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(iii) Restoration Options. Subject to compliance with any restrictions under Code
Section 409A, the Committee may grant a Participant the right to receive a restoration
Option with respect to an Option or any other option granted
by the Company. Unless the Committee shall otherwise determine, a restoration Option
shall provide that the underlying option must be exercised while the Participant is an
employee of or Consultant to the Company or a Subsidiary and the number of Shares which are
subject to a restoration Option shall not exceed the number of whole Shares exchanged in
payment of the original option.

(b) Stock Appreciation Rights. The Committee is authorized to grant Stock Appreciation
Rights to Participants. Subject to the terms of the Plan, a Stock Appreciation Right granted under
the Plan shall confer on the holder thereof a right to receive, upon exercise thereof, the excess
of (i) the Fair Market Value of one Share on the date of exercise or, if the Committee shall so
determine in the case of any such right other than one related to any Incentive Stock Option, at
any time during a specified period before or after the date of exercise, over (ii) the grant price
of the right as specified by the Committee; provided, that no such Stock Appreciation Right will be
granted with an exercise price that is below the Fair Market Value of the Shares on the date such
right is granted. Subject to the terms of the Plan, the Committee shall determine the grant price,
term, methods of exercise and settlement and any other terms and conditions of any Stock
Appreciation Right and may impose such conditions or restrictions on the exercise of any Stock
Appreciation Right as it may deem appropriate, and as shall be set forth in the Award Agreement
therefor.

(c) Restricted Stock and Restricted Stock Units.

(i) Issuance. The Committee is authorized to grant to Participants Awards of
Restricted Stock, which shall consist of Shares, and Restricted Stock Units which shall
give the Participant the right to receive cash, other securities or other property, in each
case subject to the termination of the Restricted Period determined by the Committee.

(ii) Restrictions. The Restricted Period may differ among Participants and may have
different expiration dates with respect to portions of Shares covered by the same Award.
Subject to the terms of the Plan, Awards of Restricted Stock and Restricted Stock Units
shall have such restrictions as the Committee may impose (including, without limitation,
limitations on the right to vote Restricted Stock or the right to receive any dividend or
other right or property), which restrictions may lapse separately or in combination at such
time or times, in installments or otherwise. Unless the Committee shall otherwise
determine, any Shares or other securities distributed with respect to Restricted Stock or
which a Participant is otherwise entitled to receive by reason of such Shares shall be
subject to the restrictions contained in the applicable Award Agreement. Subject to the
aforementioned restrictions and the provisions of the Plan, Participants shall have all of
the rights of a stockholder with respect to Shares of Restricted Stock. In addition, any
Award Agreement with respect to an Award of Restricted Stock Units shall set forth the
specific time that payment of such Award will be made upon the lapsing of any restrictions
and the form of payment thereunder, in compliance with any applicable restrictions under
Code Section 409A; including
the requirement that any payment upon a “specified employee’s” termination of
employment be delayed for six months.

 

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(iii) Registration. Restricted Stock granted under the Plan may be evidenced in such
manner as the Committee may deem appropriate, including, without limitation, book-entry
registration or issuance of stock certificates.

(iv) Forfeiture. Except as otherwise determined by the Committee:

(A) If the employment of, or consulting arrangement with, a Participant
terminates for any reason (including termination by reason of the fact that any
entity is no longer a Subsidiary), other than the Participant’s death or Disability
or, in the case of an employee, retirement, all Shares of Restricted Stock
theretofore awarded to the Participant which are still subject to restrictions
shall upon such termination of employment or the consulting relationship be
forfeited and transferred back to the Company. Notwithstanding the foregoing or
Paragraph (C) below, if a Participant continues to hold an Award of Restricted
Stock following termination of the employment or consulting arrangement (including
retirement and termination of employment upon a change of status from employee to
Consultant), the Shares of Restricted Stock which remain subject to restrictions
shall nonetheless be forfeited and transferred back to the Company if the Committee
upon termination or at any time thereafter determines that reason to terminate the
Participant for cause exists or existed at the time of termination of the
employment or the consulting relationship. For purposes of the foregoing, “cause”
shall be defined as set forth in any employment or other agreement between the
Participant and the Company, or if no such agreement exists, cause shall exist if,
in connection with the Participant’s duties as an employee or consultant of the
Company, or any of its subsidiaries or affiliates, Participant 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
the Company, a subsidiary, or any of its affiliates. For purposes of this
Paragraph (A), a Participant’s employment or consulting arrangement shall not be
considered terminated (i) in the case of approved sick leave or other bona fide
leave of absence (not to exceed one year), (ii) in the case of a transfer of
employment or the consulting arrangement among the Company and Subsidiaries, or
(iii) by virtue of a change of status from employee to Consultant or from
Consultant to employee, except as provided above.

(B) If a Participant ceases to be employed or retained by the Company or a
Subsidiary by reason of death or Disability or if following retirement a
Participant continues to have rights under an Award of Restricted Stock and
thereafter dies, the restrictions contained in the Award shall lapse with respect
to such Restricted Stock.

 

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(C) If an employee ceases to be employed by the Company or a Subsidiary by
reason of retirement, the restrictions contained in the Award of Restricted Stock
shall continue to lapse in the same manner as though employment had not terminated.

(D) At the expiration of the Restricted Period as to Shares covered by an
Award of Restricted Stock, the Company shall deliver the Shares as to which the
Restricted Period has expired, as follows:

(1) if an assignment to a trust has been made in accordance with
Section 6(g)(iv)(B)(l ), to such trust; or

(2) if the Restricted Period has expired by reason of death and a
beneficiary has been designated in a form approved by the Company, to the
beneficiary so designated; or

(3) in all other cases, to the Participant or the legal
representative of the Participant’s estate.

(d) Performance Awards. The Committee is authorized to grant Performance Awards to
Participants. Subject to the terms of the Plan, a Performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares (including, without limitation, Restricted Stock), other
securities, or other property, and (ii) shall confer on the holder thereof rights valued as
determined by the Committee and payable to, or exercisable by, the holder of the Performance Award,
in whole or in part, upon the achievement of such performance goals during such performance periods
as the Committee shall establish. Subject to the terms of the Plan, and as shall be set forth in
the Award Agreement therefor, the performance goals to be achieved during any performance period,
the length of any performance period, the amount of any Performance Award granted, the amount of
any payment or transfer to be made pursuant to any Performance Award and other terms and conditions
shall be determined by the Committee. In addition, any Award Agreement with respect to a
Performance Award shall set forth the specific time that payment of such Award will be made upon
the satisfaction of any performance goals and/or period and the form of payment thereunder, in
compliance with any applicable restrictions under Code Section 409A; including the requirement that
any payment upon a “specified employee’s” termination of employment be delayed for six months.

(e) Dividend Equivalents. The Committee is authorized to grant to Participants Awards
under which the holders thereof shall be entitled to receive payments equivalent to dividends or
interest with respect to a number of Shares determined by the Committee, and the Committee may
provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or
otherwise reinvested. Subject to the terms of the Plan, and as shall be set forth in the Award
Agreement therefor, such Awards may have such terms and conditions as the Committee shall
determine. In addition, any Award Agreement with respect to a Dividend Equivalent Award shall set
forth the specific time that payment of such Award will be made and the form of payment thereunder,
in
compliance with any applicable restrictions under Code Section 409A; including the requirement
that any payment upon a “specified employee’s” termination of employment be delayed for six months.

 

13

 

(f) Other Stock-Based Awards. The Committee is authorized to grant to Participants
such other Awards that are denominated or payable in, valued in whole or in part by reference to or
otherwise based on or related to Shares (including, without limitation, securities convertible into
Shares), as are deemed by the Committee to be consistent with the purposes of the Plan, provided,
however, that such grants to persons who are subject to Section 16 must comply with the provisions
of Rule 16b-3. Subject to the terms of the Plan, and as shall be set forth in the Award Agreement
therefor, the Committee shall determine the terms and conditions of such Awards. Shares or other
securities delivered pursuant to a purchase right granted under this Section 6(f) shall be
purchased for such consideration, which may be paid by such method or methods and in such form or
forms, including, without limitation, cash, Shares, other securities or other property or any
combination thereof, as the Committee shall determine. In addition, any Award Agreement with
respect to any other stock-based Award shall set forth the specific time that payment of such Award
will be made and the form of payment thereunder, in compliance with any applicable restrictions
under Code Section 409A; including the requirement that any payment upon a “specified employee’s”
termination of employment be delayed for six months.

(g) General.

(i) No Cash Consideration for Awards. Except for Options and Stock Appreciation Rights
Awards, Awards may be granted hereunder for no cash consideration or for such minimal cash
consideration as may be required by applicable law.

(ii) Awards May Be Granted Separately or Together. Awards may, in the discretion of
the Committee, and as shall be set forth in the Award Agreement therefor, be granted either
alone or in addition to, in tandem with or in substitution (subject to compliance with any
restrictions under Code Section 409A) for any other Award or any award granted under any
other plan of the Company or any Subsidiary. Awards granted in addition to or in tandem
with other Awards or in addition to or in tandem with awards granted under another plan of
the Company or any Subsidiary, may be granted either at the same time as or at a different
time from the grant of such other Awards or awards.

(iii) Forms of Payment Under Awards. Subject to the terms of the Plan and as shall be
set forth in any applicable Award Agreement, payments or transfers to be made by the
Company or a Subsidiary upon the grant, exercise, or payment of an Award may be made in
such form or forms as the Committee shall determine, including, without limitation, cash,
Shares, other securities or other property, or any combination thereof, and may be made in
a single payment or transfer, in installments, or on a deferred basis, in each case in
accordance with rules and procedures established by the Committee. Such rules and
procedures
may include, without limitation, provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of Dividend
Equivalents in respect of installment or deferred payments. In addition, any Award
Agreement hereunder, other than for an Award of Options, Stock Appreciation Rights or
Restricted Stock, shall set forth the specific time that payment of such Award will be made
and the form of payment thereunder, in compliance with any applicable restrictions under
Code Section 409A; including the requirement that any payment upon a “specified employee’s”
termination of employment be delayed for six months.

 

14

 

(iv) Limits on Transfer of Awards.

(A) Except as the Committee may otherwise determine, no Award or right under
any Award may be sold, encumbered, pledged, alienated, attached, assigned or
transferred in any manner and any attempt to do any of the foregoing shall be void
and unenforceable against the Company.

(B) Notwithstanding the provisions of Paragraph (A) above:

(1) Except as set forth in Paragraph (2) below, a Participant may
assign or transfer a Non-Qualified Stock Option or rights under an Award
of Restricted Stock:

	 	•	 	to a beneficiary designated by the Participant in writing
on a form approved by the Committee;

	 	•	 	by will or the applicable laws of descent and distribution
to the personal representative, executor or administrator of
the Participant’s estate; or

	 	•	 	to a revocable grantor trust established by the
Participant for the sole benefit of the Participant during
the Participant’s life, and under the terms of which the
Participant is and remains the sole trustee until death or
Disability. Such assignment shall be effected by a written
instrument in form and content satisfactory to the Committee,
and the Participant shall deliver to the Committee a true
copy of the agreement or other document evidencing such
trust. If in the judgment of the Committee the trust to which
a Participant may attempt to assign rights under such an
Award does not meet the criteria of a trust to which an
assignment is permitted by the terms hereof, or if after
assignment, because of amendment, by force of law or any
other reason such trust no longer meets such criteria, such attempted assignment shall be void and may be disregarded
by the Committee and the Company and all rights to any
such Awards shall revert to and remain solely in the
Participant. Notwithstanding a qualified assignment, the
Participant, and not the trust to which rights under such
an Award may be assigned, for the purpose of determining
compensation arising by reason of the Award, shall
continue to be considered an employee or Consultant, as
the case may be, of the Company or a Subsidiary, but such
trust and the Participant shall be bound by all of the
terms and conditions of the Award Agreement and this Plan.
Shares issued in the name of and delivered to such trust
shall be conclusively considered issuance and delivery to
the Participant.

 

15

 

(2) The Committee shall not permit directors or officers of the
Company for purposes of Section 16 to transfer or assign Awards except as
permitted under Rule 16b-3.

(C) The Committee, the Company and its officers, agents and employees may rely
upon any beneficiary designation, assignment or other instrument of transfer,
copies of trust agreements and any other documents delivered to them by or on
behalf of the Participant which they believe genuine and any action taken by them
in reliance thereon shall be conclusive and binding upon the Participant, the
personal representatives of the Participant’s estate and all persons asserting a
claim based on an Award. The delivery by a Participant of a beneficiary
designation, or an assignment of rights under an Award as permitted hereunder,
shall constitute the Participant’s irrevocable undertaking to hold the Committee,
the Company and its officers, agents and employees harmless against claims,
including any cost or expense incurred in defending against claims, of any person
(including the Participant) which may be asserted or alleged to be based on an
Award, subject to a beneficiary designation or an assignment. In addition, the
Company may decline to deliver Shares to a beneficiary until it receives indemnity
against claims of third parties satisfactory to the Company.

(v) Share Certificates. All certificates for Shares or other securities delivered
under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable under the Plan
or the rules, regulations and other requirements of the Securities and Exchange Commission,
any stock exchange upon which such Shares or other securities are then listed and any
applicable Federal or state securities laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.

(vi) Change in Control. Notwithstanding any of the provisions of this Plan or
instruments evidencing Awards granted hereunder, upon a Change in Control (as defined
above) the vesting of all rights of Participants under outstanding Awards shall be
accelerated and all restrictions thereon shall terminate in order that Participants may
fully realize the benefits thereunder, in the manner otherwise provided for as to the time
and form of payment in the Participant’s Award Agreement. Such acceleration shall include,
without limitation, the immediate exercisability in full of all Options and Stock
Appreciation Rights and the termination of restrictions on Restricted Stock and Restricted
Stock Units. Further, in addition to the Committee’s authority set forth in Section 4(c)
and subject to compliance with any restrictions under Code Section 409A, the Committee (as
constituted before such Change in Control) is authorized and has sole discretion, as to any
Award of Options, Stock Appreciation Rights or Restricted Stock, to take any one or more of
the following actions: (i) provide for the purchase of any such Award for an amount of cash
equal to the net value of such Award to the holder thereof (taking into account any
exercise price with respect to such Award and the Fair Market Value of the Shares as of
that time) that could have been attained upon the exercise of such Award or realization of
the Participant’s rights had such Award been currently exercisable or payable; (ii) make
such adjustment to any such Award then outstanding as the Committee deems appropriate to
reflect such Change in Control; and (iii) cause any such Award then outstanding to be
assumed, or new rights substituted therefor, by the acquiring or surviving corporation
after such Change in Control.

 

16

 

(vii) Cash Settlement. Notwithstanding any provision of this Plan or of any Award
Agreement to the contrary, any Award of Options, Stock Appreciation Rights or Restricted
Stock outstanding hereunder may at any time be canceled in the Committee’s sole discretion
upon payment of the net value of such Award to the holder thereof in cash (taking into
account any exercise price with respect to such Award and the Fair Market Value of the
Shares as of that time).

Section 7. Amendment and Termination. Except to the extent prohibited by applicable law and unless
otherwise expressly provided in an Award Agreement or in the Plan:

(a) Amendments to the Plan. The Board may amend the Plan and the Board or the
Committee may amend any outstanding Award; provided, however, that without the consent of affected
Participants, no amendment of the Plan or of any Award may impair the rights of Participants under
outstanding Awards.

(b) Waivers. The Committee may waive any conditions or rights under any Award
theretofore granted, prospectively or retroactively, without the consent of any Participant.

(c) Adjustments of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. Subject to compliance with any restrictions under Code Section 409A, the Committee
shall be authorized to make adjustments in the terms and conditions
of, and the criteria included in, Awards in recognition of unusual or nonrecurring events
(including, without limitation, the events described in Section 4(c) hereof) affecting the Company,
any Subsidiary, or the financial statements of the Company or any Subsidiary, or of changes in
applicable laws, regulations, or accounting principles, whenever the Committee determines that such
adjustments are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits to be made available under the Plan.

(d) Correction of Defects, Omissions, and Inconsistencies. Subject to compliance with
any restrictions under Code Section 409A, the Committee may correct any defect, supply any omission
or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall
deem desirable to effectuate the Plan.

 

17

 

Section 8. General Provisions

(a) No Rights to Awards. No Participant or other person shall have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of treatment of
Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards of the same type and the determination of the Committee to grant a waiver or modification of
any Award and the terms and conditions thereof need not be the same with respect to each
Participant.

(b) Withholding. The Company or any Subsidiary shall be authorized to withhold from
any Award granted or any payment due or transfer made under any Award or under the Plan the amount
(in cash, Shares, other securities, other Awards or other property) of withholding taxes due in
respect of an Award, its exercise or any payment or transfer under such Award or under the Plan and
to take such other action as may be necessary in the opinion of the Company or Subsidiary to
satisfy all obligations for the payment of such taxes. In no event shall the Company or any
Subsidiary withhold from an Award under the Plan more Shares than are required to meet the
established minimum tax withholding requirements of federal, state and local obligations.

(c) Income Taxes and Deferred Compensation. Participants are solely responsible and
liable for the satisfaction of any federal, state, province, or local taxes that may arise in
connection with the grant of Awards (including, for Participants subject to taxation in the United
States, any taxes arising under Section 409A of the Code, except to the extent otherwise
specifically provided in a written agreement with the Company). Neither the Company nor any of its
employees, officers, directors, or service providers shall have any obligation whatsoever to pay
such taxes, to prevent any Participant from incurring such taxes, or to mitigate or protect any
Participant from any such tax liabilities. Notwithstanding anything in this Plan to the contrary,
if any amounts that become due under this Plan as a result of a Participant’s cessation of
employment with the Company constitute “nonqualified deferred compensation” within the meaning of
Section 409A, payment of such amounts shall not commence until the Participant incurs a “separation
from service” within the meaning of Treasury Regulation § 1.409A-1(h) (“Separation from Service”).
If, at the time of a Participant’s Separation from Service, the Participant is a “specified
employee” (under Internal Revenue Code Section 409A), any amount that constitutes “nonqualified
deferred compensation” within the meaning of Code Section
409A that becomes payable to a Participant on account of the Participant’s Separation from
Service (including any amounts payable pursuant to the preceding sentence) will not be paid until
after the end of the sixth calendar month beginning after the Participant’s Separation from Service
(the “409A Suspension Period”). Within 14 calendar days after the end of the 409A Suspension
Period, the Participant shall be paid a lump sum payment in cash equal to any payments delayed
because of the preceding sentence, without interest. Thereafter, the Participant shall receive any
remaining benefits as if there had not been an earlier delay.

(d) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall
prevent the Company or any Subsidiary from adopting or continuing in effect other or additional
compensation arrangements, including the grant of options and other stock-based awards, and such
arrangements may be either generally applicable or applicable only in specific cases.

 

18

 

(e) No Right to Employment. The grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Company or any Subsidiary. Further, the
Company or a Subsidiary may at any time dismiss a Participant from employment, free from any
liability, or any claim under the Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement or other written agreement with the Participant.

(f) Governing Law. The validity, construction and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws of the State of
Delaware and applicable Federal law.

(g) Severability. If any provision of the Plan or any Award is or becomes or is deemed
to be invalid, illegal or unenforceable in any jurisdiction or as to any person or Award, or would
disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed
or deemed amended without, in the determination of the Committee, materially altering the intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award,
and the remainder of the Plan and any such Award shall remain in full force and effect.

(h) No Trust or Fund Created. Neither the Plan nor any Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary relationship between the
Company or any Subsidiary and a Participant or any other person. To the extent that any person
acquires a right to receive payments from the Company or any Subsidiary pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor of the Company or any
Subsidiary.

(i) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant
to the Plan or any Award, and subject to compliance with any restrictions under Code Section 409A,
the Committee shall determine whether cash, other securities, or other property shall be paid or
transferred in lieu of any fractional Shares, or whether
such fractional Shares or any rights thereto shall be canceled, terminated or otherwise
eliminated.

(j) Headings. Headings are given to the Sections and subsections of the Plan solely as
a convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof

Section 9. Effective Date of the Plan. The Plan was originally effective as of April 30, 1999, the
date of its approval by the Company’s stockholders. The Plan is hereby amended and restated
effective October 23, 2008, by Board action, in compliance with the provisions of Section 7(a)
hereof.

 

19Filed by Bowne Pure Compliance

Exhibit 10.7

KAYDON CORPORATION

2003 NON-EMPLOYEE DIRECTORS EQUITY PLAN

(Amended and Restated Effective October 23, 2008)

1. Establishment, Purpose and Term of Plan. This Kaydon Corporation 2003 Non-Employee
Directors Equity Plan (the “Plan”) shall be effective as of the date of its approval by the
stockholders of the Company (the “Effective Date”). The purpose of this Plan is to advance the
interests of the Company and its stockholders by providing an incentive to attract and retain
highly qualified persons to serve as Non-Employee Directors of the Company and by creating
additional incentives for Non-Employee Directors to promote the growth and profitability of the
Company. This Plan shall continue in effect until the earlier of its termination by the Board or
the date on which all of the shares of Stock available for issuance under the Plan have been issued
and all restrictions on such shares under the terms of the Plan and the agreements evidencing
Options granted under the Plan have lapsed.

2. Definitions and Construction. Whenever used herein, the following terms shall have their
respective meanings set forth below:

“Board” means the Board of Directors of the Company.

“Change in Control” means the occurrence of any of the following events:

(a) 50% Stock. The acquisition, by a person or Persons Acting as a Group, of stock of
the Company 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 Company;

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

(c) Directors. The majority of members of the Board 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 prior to the date of appointment or election;

(d) Assets. The acquisition, by a person or Persons Acting as a Group, of the
Company’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 Company’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

(e) Merger. A reorganization, merger or consolidation of the Company, the substantive
effect of which is a Change in Control under any of subsections (a), (b), (c) or (d) above,
unless with or into a Permitted Successor.

“Code” means the Internal Revenue Code of 1986, as amended, and any applicable regulations
promulgated thereunder.

“Committee” means the Compensation Committee of the Board, or any other committee of the Board
duly appointed to administer the Plan and having such powers as shall be specified by the Board.
Unless the powers of the Committee have been specifically limited, the Committee shall have all of
the powers of the Board granted herein, including, without limitation, the power to amend or
terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations
imposed by law.

 

 

 

“Company” means Kaydon Corporation, a Delaware corporation, or any successor corporation
thereto.

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

“Disability” means the Non-Employee Director: (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months; or (ii) is, by reason of any medically determinable physical or mental impairment which can
be expected to result in death or can be expected to last for a continuous period of not less than
12 months, receiving income replacement benefits for a period of not less than 3 months under an
accident and health plan covering employees of the Company. To the extent required hereunder, the
determination of Disability shall be made by a medical board certified physician selected by the
Company and acceptable to the Non-Employee Director (or the Non-Employee Director’s legal
representative, if one has been appointed), provided such agreement as to acceptability shall not
be unreasonably withheld.

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

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Holder” means any Person who at the time this Amended and Restated Plan was adopted
by the Board was the beneficial owner of 20% or more of the outstanding common stock of the
Company; or the Company, a Subsidiary or any Employee Benefit Plan of the Company or a Subsidiary
or any trust holding such common stock or other securities pursuant to the terms of an Employee
Benefit Plan.

“Fair Market Value” means, as of any date, if there is then a public market for the Stock, the
closing price of the Stock as reported on the New York Stock Exchange (“NYSE”) or such other
national or regional securities exchange or market system constituting the primary market for the
Stock. If the relevant date does not fall on a day on which the Stock is trading on NYSE or other
national or regional securities exchange or market system, the date on which the Fair Market Value
shall be established shall be the last day on which the Stock was so traded prior to the relevant
date. If there is then no public market for the Stock, the Fair Market Value on any relevant date
shall be as determined by the Committee without regard to any restriction other than a restriction
which, by its terms, will never lapse.

“Option” means a right to purchase Stock, subject to adjustment as provided in Section 4(b),
pursuant to the terms and conditions of this Plan.

“Optionee” means a person who has been granted one or more Options.

“Option Agreement” means a written agreement between the Company and an Optionee setting forth
the terms, conditions and restrictions of an Option granted to an Optionee.

“Non-Employee Director” means a Director of the Company who meets the qualifications set forth
in Rule 16b-3(b)(3)(i).

 

2

 

“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 Company’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.

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

“Persons Acting as a Group” means owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock (or assets), or similar business transaction with
the Company. If a person, including an entity, owns stock in both corporations that enter into a
merger, consolidation, purchase or acquisition of stock (or assets), 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 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.

“Restricted Stock” means any shares of Stock granted under Section 5(c) of this Plan.

“Restricted Stock Agreement” means a written agreement between the Company and a Non-Employee
Director setting forth the terms, conditions and restrictions relating to Shares of Restricted
Stock granted to such director.

“Retirement” means a voluntary Termination of Service by a Non-Employee Director that occurs
on or after the director’s sixty-fifth (65 th ) birthday.

“Rule 16b-3” means Rule 16b-3 as promulgated under the Exchange Act, as amended from time to
time, or any successor rule or regulation.

“Stock” means the common stock, par value $0.10 per share, of the Company, as adjusted from
time to time in accordance with Section 4(b).

“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 the
Company or by one or more Subsidiaries of the Company.

“Termination of Service” means a cessation of the director’s service on the Board for any
reason, including, but not limited to, a cessation of service due to resignation, death,
Disability, Retirement or non-reelection to the Board.

3. Administration. This Plan shall be administered by the Committee. All questions of
interpretation of the Plan or of any Option or Restricted Stock shall be determined by the
Committee, and such determinations shall be final and binding upon all persons having an interest
in the Plan or such Option or Restricted Stock. Except as otherwise provided herein, the Committee
shall have no authority, discretion, or power to (a) select the Non-Employee Directors who will
receive Options, (b) set the exercise price of the Options, (c) determine the number of shares of
Stock to be subject to an Option, (d) determine the number of shares of Restricted Stock to be
granted, (e) determine the time at which an Option or shares of Restricted Stock shall be granted,
(f) establish the
duration of an Option, or (g) alter any other terms or conditions specified in the Plan,
except in the sense of administering the Plan subject to the provisions of the Plan.

 

3

 

4. Shares Subject to Plan.

(a) Maximum Number of Shares Issuable. Subject to adjustment as provided in Section
4(b), the maximum aggregate number of shares of Stock that may be issued under the Plan,
pursuant to Options or in the form of Shares of Restricted Stock awarded hereunder, shall be
three hundred thousand (300,000) and shall consist of authorized but unissued shares or
reacquired shares of Stock or any combination thereof. If an outstanding Option for any
reason expires or is terminated or canceled or if shares of Restricted Stock are forfeited
for any reason, the shares of Stock allocable to the unexercised portion of such Option, or
such forfeited shares of Restricted Stock shall again be available for issuance under this
Plan.

(b) Adjustments for Changes in Capital Structure. In the event of any stock dividend,
stock split, reverse stock split, recapitalization, combination, reclassification or similar
change in the capital structure of the Company, appropriate adjustments shall be made in the
number and class of shares subject to this Plan, to any outstanding Options (including their
exercise price), to any previously issued shares of Restricted Stock and to the number of
Options or Shares of Restricted Stock that may be granted pursuant to Section 5. If a
majority of the shares which are of the same class as the shares that are subject to
outstanding Options are exchanged for, converted into, or otherwise become (whether or not
pursuant to a Change in Control) shares of another corporation (the “New Shares”), the
Committee may unilaterally amend the outstanding Options to provide that such Options are
exercisable for New Shares. In the event of any such amendment, the number of shares
subject to, and the exercise price of, the outstanding Options shall be adjusted in a fair
and equitable manner as determined by the Committee, in its sole discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to
this Section 4(b) shall be rounded down to the nearest whole number, and in no event may the
exercise price of any Option be decreased to an amount less than the par value, if any, of
the stock subject to the Option.

5. Automatic Grant of Options and/or Restricted Stock.

(a) Options. Options shall be granted only to a person who, at the time of grant, is a
Non-Employee Director. Options shall be nonstatutory stock options, which means that they
will not be treated as “incentive stock options” within the meaning of Section 422(b) of the
Code.

(b) Initial Option Grant. A person who first becomes a Non-Employee Director within
the six month period immediately following an annual meeting of the Company’s stockholders
shall be granted an initial Option to purchase five thousand (5,000) shares of Stock as of
the date such person is initially elected or appointed (the “Initial Grant Date”);
provided, however, that a person serving as a director of the Company who does not qualify
as an Non-Employee Director shall not receive an initial Option in the event that such
person subsequently becomes a Non-Employee Director. In addition, a person who becomes a
Non-Employee Director after the six-month period following an annual meeting of the
Company’s stockholders shall not receive an initial Option.

(c) Annual Option and Restricted Stock Grant. Each Non-Employee Director (including
any director of the Company who previously did not qualify as a Non-Employee Director but
who subsequently becomes an Non-Employee Director) who is a Non-Employee Director on the day
following the annual meeting of stockholders of the Company shall be granted on the day
immediately following such annual meeting of stockholders (the “Annual Grant Date”),
commencing with the Annual Grant Date in 2003, an Option to purchase three thousand five
hundred (3,500) shares of Stock and one thousand (1,000) shares of Restricted Stock.

 

4

 

6. Terms and Conditions of Options. Options shall be evidenced by an Option Agreement
specifying the number of shares of Stock covered, in such form as the Committee shall from time to
time approve. Option Agreements may incorporate all or any of the terms of this Plan by reference
and shall comply with and be consistent with the following terms and conditions:

(a) Exercise Price. The exercise price per share of Stock subject to an Option shall
be the Fair Market Value of a share of Stock on the Initial Grant Date or the Annual Grant
Date, as applicable.

(b) Exercisability. Each Initial Option shall become fully vested and exercisable on
the first anniversary of the Initial Grant Date. Each Annual Option shall become fully
vested and exercisable on the first anniversary of the Annual Grant Date.

Notwithstanding the foregoing, if a Non-Employee Director incurs a Termination of Service
other than due to death, Disability or Retirement, any Options that are not exercisable at
the date of such Termination of Service shall never become exercisable and shall be
immediately forfeited. If a Non-Employee Director incurs a Termination of Service due to
Disability or Retirement, any Options held by such person shall continue to become
exercisable in accordance with the foregoing schedule, but the exercise thereof shall be
subject to the provisions of Section 6(c) below, and, in addition, any Options shall be
cancelled and forfeited if the Committee at any time thereafter determines that the former
Non-Employee Director has engaged in any activity detrimental to the interests of the
Company.

(c) Expiration of Options. Each Option shall terminate and cease to be exercisable on
the first to occur of the following events:

(i) the date which is the tenth (10th) anniversary of the applicable Grant Date
unless earlier terminated pursuant to clause (iii) below or pursuant to the terms of
the applicable Option Agreement;

(ii) the expiration of one (1) month from the date of a person’s Termination of
Service for any reason other than death, Disability or Retirement; or

(iii) the expiration of five (5) years from the date of a person’s death,
whether before or after a Termination of Service.

(d) Acceleration of Exercisability. If an Optionee incurs a Termination of Service due
to death or dies following a Termination of Service while holding Options that are
unexercisable, then 100% of his or her Options shall immediately become exercisable. The
exercisability of Options shall also be accelerated as provided in Section 8.

(e) Payment of Exercise Price. Except as otherwise provided below, payment of the
exercise price for the number of shares of Stock being purchased pursuant to any Option
shall be made (i) in cash, by check, or cash equivalent, (ii) by tender to the Company of
 shares of Stock owned by the Optionee having a Fair Market Value not less than the exercise
price or (iii) by any combination thereof. Notwithstanding the foregoing, an Option may not
be exercised by tender to the Company of shares of Stock to the extent such tender of Stock
would constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company’s stock. Unless otherwise provided by the Board,
an Option may not be exercised by tender to the Company of shares of Stock unless such
 shares either have been owned by the Optionee for more than six (6) months or were not
acquired, directly or indirectly, from the Company.

(f) Tax Withholding. The Company shall have the right, but not the obligation, to
deduct from the shares of Stock issuable upon the exercise of an Option, or to accept from
the Optionee the tender of, a number of whole shares of Stock having a Fair Market Value
equal to all or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Company with respect to such Option or the shares acquired upon
exercise thereof. Alternatively or in addition, in its sole discretion, the Company shall
have the right to require the Optionee to make adequate provision for any such tax
withholding obligations of the Company arising in connection with the Option or the shares
acquired upon exercise thereof. The Company shall have no obligation to deliver shares of
Stock until the Company’s tax withholding obligations have been satisfied.

 

5

 

(g) Nontransferability of Options; Exercise Following Death. No Option shall be
assignable or transferable by the Optionee, except by will or by the laws of descent and
distribution or pursuant to a “qualified domestic relations order” (as defined in the Code).
During the lifetime of the Optionee, an Option shall be exercisable only by the Optionee,
the Optionee’s guardian or legal representative or an alternate payee pursuant to a
qualified domestic relations order.

7. Terms and Conditions of Restricted Stock. Shares of Restricted Stock shall be subject to
restrictions on transferability and on the right of a Non-Employee Director to receive certificates
evidencing Shares of Restricted Stock, as set forth in a Restricted Stock Agreement in such form as
the Committee shall from time to time approve. Subject to such restrictions and the provisions of
such Restricted Stock Agreement and this Plan, Non-Employee Directors who receive awards of
Restricted Stock shall have all of the rights of a stockholder with respect to such Shares of
Restricted Stock. Restricted Stock granted under this Plan may be evidenced in such manner as the
Committee may deem appropriate, including, without limitation, book-entry registration or issuance
of stock certificates.

(a) Forfeiture. Except as otherwise determined by the Committee, if a Non-Employee
Director incurs a Termination of Service other than by reason of death, Disability or
Retirement, all Shares of Restricted Stock theretofore awarded which are still subject to
restrictions shall upon such Termination of Service be forfeited and transferred back to the
Company. In addition, if a former Non-Employee Director continues to hold Restricted Stock
following his or her Termination of Service due to his or her Retirement, the Shares of
Restricted Stock which remain subject to restrictions shall nonetheless be forfeited and
transferred back to the Company if the Committee at any time thereafter determines that the
former Non-Employee Director has engaged in any activity detrimental to the interests of the
Company.

(b) Lapse of Restrictions. The restrictions on transferability and any other
restrictions contained in a Restricted Stock Agreement shall lapse with respect to all
Shares of Restricted Stock awarded to a Non-Employee Director on an Annual Grant Date on the
January 5th following the Annual Grant Date for such award. The lapse of restrictions on
transferability and any other restrictions contained in a Restricted Stock Agreement shall
also be accelerated as provided in Sections 7(d) and 8.

(c) Delivery of Shares. At the time all restrictions have lapsed with respect to
Shares covered by an award of Restricted Stock, the Company shall deliver the Shares as to
which such restrictions have lapsed as follows:

(i) if an assignment to a trust has been made, to such trust; or

(ii) if the Restricted Period has expired by reason of death and a beneficiary
has been designated in a form approved by the Company, to the beneficiary so
designated; or

(iii) in all other cases, to the Participant or the legal representative of the
Participant’s estate.

(d) Acceleration of Lapsing Only Upon Death or Disability. Notwithstanding the
provisions of Section 7(b), if an Non-Employee Director incurs a Termination of Service due
to death or Disability, or if a former Non-Employee Director dies following a Termination of
Service, then all restrictions in effect at the date of such Termination of Service or at
such date of death shall immediately lapse and all Shares shall be free of, and no longer
subject to, any restrictions. If a Non-Employee Director incurs a Termination of Service
due to Retirement, any restrictions on Shares of Restricted Stock remaining at the time of
Retirement shall continue in effect and shall lapse as provided in Section 7(b).

(e) Tax Withholding. The Company shall have the right to require a Non-Employee
Director to make adequate provision for any federal, state, local or foreign taxes, if any,
required by law to be withheld by the Company with respect to the income realized by such
director as a result of the lapsing of restrictions with respect to Shares of Restricted
Stock. The Company shall have no obligation to deliver
Shares of Stock that were previously Restricted Stock until the Company’s tax
withholding obligations have been satisfied.

 

6

 

8. Change in Control. In the event of a Change in Control, (i) any unexercisable Options
shall be immediately exercisable and vested in full and (ii) all restrictions relating to any
Shares of Restricted Stock shall lapsed and be of no further effect, as of the date thirty (30)
days prior to the date of the Change in Control. The exercise or vesting of any Option and the
lapsing of restrictions with respect to Shares of Restricted Stock that results solely by reason of
this Section 8, shall be conditioned upon the consummation of the Change in Control. In addition,
the surviving, continuing, successor, or purchasing corporation or parent corporation thereof, as
the case may be (the “Acquiring Corporation”), may either assume the Company’s rights and
obligations under outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiring Corporation’s stock. Any Options which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Change in Control nor exercised
as of the date of the Change in Control shall terminate and cease to be outstanding effective as of
the date of the Change in Control.

9. Income Taxes and Deferred Compensation. Non-Employee Directors are solely responsible and
liable for the satisfaction of any federal, state, province, or local taxes that may arise in
connection with the grant of Options or Restricted Stock pursuant to this Plan (including, for
Non-Employee Directors subject to taxation in the United States, any taxes arising under Section
409A of the Code, except to the extent otherwise specifically provided in a written agreement with
the Company). Neither the Company nor any of its employees, officers, directors, or service
providers shall have any obligation whatsoever to pay such taxes, to prevent any Non-Employee
Director from incurring such taxes, or to mitigate or protect such Director from any such tax
liabilities. Notwithstanding anything in this Plan to the contrary, if any amounts that become
due under this Plan as a result of a Non-Employee Director’s termination of membership on the Board
constitute “nonqualified deferred compensation” within the meaning of Section 409A, payment of such
amounts shall not commence until the Non-Employee Director incurs a “separation from service”
within the meaning of Treasury Regulation § 1.409A-1(h) (“Separation from Service”). If, at the
time of a Non-Employee Director’s Separation from Service, the Non-Employee Director is a
“specified employee” (under Internal Revenue Code Section 409A), any amount that constitutes
“nonqualified deferred compensation” within the meaning of Code Section 409A that becomes payable
to a Non-Employee Director on account of the Non-Employee Director’s Separation from Service
(including any amounts payable pursuant to the preceding sentence) will not be paid until after the
end of the sixth calendar month beginning after the Non-Employee Director’s Separation from Service
(the “409A Suspension Period”). Within 14 calendar days after the end of the 409A Suspension
Period, the Non-Employee Director shall be paid a lump sum payment in cash equal to any payments
delayed because of the preceding sentence, without interest. Thereafter, the Non-Employee Director
shall receive any remaining benefits as if there had not been an earlier delay.

10. Issuance of Stock. The issuance or delivery of any Option or any shares of Stock upon the
exercise of an Option or the lapsing of restrictions on Restricted Stock may be postponed by the
Company for any period required to comply with any applicable requirements under the federal
securities laws, any applicable listing requirement of the NYSE or any other requirements of
applicable laws or regulations. The Company is not obligated to deliver or issue any shares of
Stock if such delivery or issuance would constitute a violation of any provision of any law or
regulation or any rule of the NYSE. So long as the Company’s Stock is listed on the NYSE, issuance
of any Shares of Stock pursuant to an Option, or of any Shares of Restricted Stock, is conditioned
on such Shares to be issued also being listed on the NYSE. In addition, if at any time counsel to
the Company is of the opinion that the sale or issuance of Shares of Restricted Stock or Shares of
Stock pursuant to exercise of an Option is or may be unlawful under the circumstances, the Company
shall have no obligation to make such sale or issuance, and the right of an Optionee to exercise an
Option, shall be suspended until, in the opinion of the Company’s counsel, such sale or issuance is
lawful. No such suspension shall extend the period of time during which an Option must be
exercised under Section 6(c).

 

7

 

11. Termination or Amendment of Plan. The Board may terminate or amend the Plan at any time.
However, subject to changes in the law or other legal requirements that would permit otherwise,
without the approval of the Company’s stockholders, there shall be (i) no increase in the total
number of shares of Stock that may be issued under the Plan, except by operation of the provisions
of Section 4(b), (ii) no change in the number of Options and Shares of Restricted Stock that will
be granted pursuant to Section 5(b) and (c), and (iii) no expansion in the class of persons
eligible to receive Options or Shares of Restricted Stock. Furthermore, to the extent required
by Rule 16b-3, provisions of the Plan addressing eligibility to participate in the Plan and
the amount, price and timing of Options shall not be amended more than once every six (6) months,
other than to comport with changes in the Code, the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder. In any event, no termination or amendment of this Plan
may adversely affect any outstanding Option or Shares of Restricted Stock without the consent of
the Non-Employee Director, unless such amendment is necessary to comply with applicable laws or
regulations. This Plan shall terminate on April 30, 2013, and no further Options or shares of
Restricted Stock shall be granted pursuant to this Plan after such date.

12. Construction. Captions and titles contained herein are for convenience only and shall not
affect the meaning or interpretation of any provision of this Plan. Except when otherwise
indicated by the context, the singular shall include the plural, the plural shall include the
singular, and use of the term “or” shall not be exclusive. This Plan shall be governed by the law
of the State of Delaware, regardless of the law that might otherwise govern under applicable
Delaware principles of conflict of laws.

 

8

 

CERTIFICATION

The undersigned Secretary of the Company certifies that the foregoing Kaydon Corporation 2003
Non-Employee Directors Equity Plan was duly adopted by the Board on March 19, 2003, and approved by
the stockholders of Kaydon Corporation on May 9, 2003 and amended and restated effective May 6,
2008 in compliance with the provision of Section 10 hereof in a manner not requiring approval of
the stockholders of Kaydon Corporation. The undersigned Secretary of the Company further certifies
that this Amended and Restated version of the Plan was adopted and made effective by the Board on
October 23, 2008, in compliance with the provision of Section 10 hereof in a manner not requiring
approval of the stockholders of Kaydon Corporation.

	 	 	 
	/s/ Debra K. Crane
	 	 
	 

Debra K Crane, Secretary

	 	 

 

9

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