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exv10w18

 

EXHIBIT 10.18

KAYDON CORPORATION

CHANGE IN CONTROL COMPENSATION AGREEMENT

     AGREEMENT made and executed December 3, 2007 between KAYDON CORPORATION, a Delaware
corporation, 315 East Eisenhower Parkway, Suite 300, Ann Arbor, Michigan 48108 (Kaydon), and
Anthony T. Behrman (the Executive). This Agreement is effective on the date provided above.

     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 Board of
Directors or 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. One (1) 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. One (1) times the greater of:

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	 	•	 	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 1/12 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

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	 	• 	 	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. 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 or 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.

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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 Agreement.

                    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:

	 	• 	 	One year 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

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	 	• 	 	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 one year limitation provided above will not apply if 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.

                    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

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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 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.

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                    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 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 Internal Revenue 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.

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               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:

               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

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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 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;

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               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

               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:

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               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 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

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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 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 shall terminate on December 31 of the year in which it is effective.

               i. Extension. This Agreement shall automatically renew for successive one-year terms,
each ending on the anniversary of December 31, 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.

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     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.

          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

-14-

 

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.

          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

-15-

 

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 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 Agreement this 3rd day of December,
2007.

	 	 	 	 	 	 	 	 	 
	KAYDON CORPORATION	 	 	 	EXECUTIVE
	 
	 	 	 	 	 	 	 	 
	By:	 	/s/ James O’Leary	 	 	 	/s/ Anthony T. Behrman
	 	 	 	 	 	 	 
	 

	 	James O’Leary 	 	 	 	 
	 

	 	Its:
	 	President & CEO	 	 	 	 

-16-exv10w5

 

Exhibit 10.5

EMPLOYMENT AGREEMENT

          EMPLOYMENT AGREEMENT (“Agreement”) dated as of September 1, 2007 by and between GMAC LLC (the
“Company”) and Alvaro G. de Molina (the “Executive”) (each a “Party” and together, the “Parties”).

          WHEREAS, the Company desires to employ Executive as Chief Operating Officer (COO) of GMAC LLC
upon the terms set forth herein.

          Accordingly, the Parties agree as follows:

          1. Employment and Acceptance. The Company shall employ the Executive, and the
Executive shall accept employment, subject to the terms of this Agreement, on August 20, 2007 (the
“Effective Date”).

          2. Term. Subject to earlier termination pursuant to Section 5 of this Agreement, this
Agreement and the employment relationship hereunder shall continue from the Effective Date until
December 31, 2011. As used in this Agreement, the “Term” shall refer to the period beginning on the
Effective Date and ending on the earlier of (i) December 31, 2011 or (ii) the date the Executive’s
employment terminates in accordance with Section 5 below. In the event that the Executive’s
employment with the Company terminates, the Company’s obligation to continue to pay, after the date
of termination, Base Salary (as defined below), Bonus (as defined below) and other unaccrued
benefits shall terminate except as may be provided for in Section 5 below.

          3. Duties and Title.

               3.1 Title. The Company shall employ the Executive to render exclusive and full-time
services to the Company and its subsidiaries. The Executive shall serve in the capacity of Chief
Operating Officer, and shall report solely and directly to the Chief Executive Officer the Company
(the “CEO”).

               3.2 Duties. The Executive will have such authority and responsibilities and will
perform such executive duties customarily performed by a Chief Operating Officer, of a company in
similar lines of business as the Company and its subsidiaries or as may be reasonably assigned to
the Executive by the CEO or the Board. The Executive will devote substantially all of his full
working-time and attention (other than due to physical or mental incapacity) to the performance of
such duties and to the promotion of the business and interests of the Company and its subsidiaries.
Provided that the following activities do not materially interfere with the Executive’s duties and
responsibilities as Chief Operating Officer (as determined by the Company), the Executive may (i)
with the prior written consent of the Board (which shall not be unreasonably withheld), serve on
boards, committees and commissions of charitable organizations, (ii) manage his personal
investments, and (iii) with the prior written consent of the Board (which shall not be unreasonably
withheld), serve on the boards of directors of other companies.

          4. Compensation and Benefits by the Company. As compensation for all services
rendered pursuant to this Agreement, the Company shall provide the Executive the following during
the Term:

1

 

               4.1 Base Salary. The Company will pay to the Executive an annualized base salary of
not less than $1,200,000, payable in accordance with the customary payroll practices of the Company
(“Base Salary”). The Base Salary shall be reviewed no less frequently than annually for purposes
of increase, such increase, if any, to be determined in the sole discretion of the Board or the
compensation committee of the Board (the “Compensation Committee”).

               4.2 Bonuses. The Executive shall be eligible to receive an annual bonus (“Bonus”)
under a plan established by the Company based upon achievement of performance targets and key
measures determined by the Board or the Compensation Committee. The Executive’s target bonus shall
be $1,800,000 (the “Target Bonus”), with the actual amount of each Bonus being determined by the
Board or the Compensation Committee in accordance with the applicable plan and formula.

               4.3 Long-Term Incentive Compensation.

                    (a) Subject to the terms of the Company’s Long-Term Phantom Interest Plan (the “Phantom
Interest Plan”) and an award agreement, the Executive shall be granted on, or as soon as
practicable following, the Effective Date an award with an Award Percentage (as defined in the
Phantom Interest Plan) equal to 0.125% payable, subject to the Executive’s continued employment
with the Company (except as set forth in Section 5.2 hereof), as soon as practicable following
December 31, 2009 (the “Payment Date”). In addition, subject to his continued employment with the
Company (except as set forth in Section 5.2 hereof), on December 31, 2009, or as soon as
practicable thereafter, the Executive shall be granted an additional award with an Award Percentage
equal to 0.125% payable, subject to the Executive’s continued employment with the Company, as soon
as practicable following the third anniversary of the date of the grant of such award.

                    (b) Subject to the terms and conditions set forth on Exhibit A attached hereto, the
Amended and Restated Limited Liability Company Operating Agreement of the Company, and the GMAC
Management LLC Class C Membership Interest Plan and award agreement, the Executive shall be granted
on, or as soon as practicable following, the Effective Date, directly or indirectly, 0.50% of the
Class C Membership Interests of the Company.

               4.4 Participation in Employee Benefit Plans. The Executive shall be entitled, if and
to the extent eligible, to participate in all of the applicable benefit plans and perquisite
programs of the Company, which may be available to other senior executives of the Company, on the
same terms as such other executives. The Executive shall be entitled to the same perquisites the
Executive was entitled to receive immediately prior to the Effective Date; provided
that such perquisites may be modified or terminated to the same extent modified or
terminated for other senior executives of the Company. The Company may at any time or from time to
time amend, modify, suspend or terminate any employee benefit plan, program or arrangement for any
reason without the Executive’s consent if such amendment, modification, suspension or termination
is consistent with the amendment, modification, suspension or termination for other executives of
the Company.

               4.5 Vacation/Paid Time Off. The Executive shall be entitled to the equivalent of five
weeks annual vacation pro rated for time worked in 2007. These days will convert to 34 Paid Time
Off (PTO) days beginning in 2008. The Executive shall not be entitled

 

 

to payment for PTO days upon the termination of his employment except as set forth in Section
5 below. The carry-over and accrual of PTO days shall be in accordance with Company policy.

               4.6 Expense Reimbursement. The Executive shall be entitled to receive reimbursement
for all appropriate business expenses incurred by him in connection with his duties under this
Agreement in accordance with the policies of the Company as in effect from time to time.

               4.7 Private Aircraft Usage. The Executive shall be entitled to access to private jet
transportation for business and personal use. Personal use of the aircraft will be reported as W-2
income consistent with Treasury Regulations. Additionally, the Company’s full cost of providing
the aircraft for both business and personal use will be deducted from any Long Term Incentive
Compensation (as described in 4.3 above) that becomes payable to the Executive, pursuant to the
following schedule:

	 	 	 
	GMAC LLC Book Value at Vesting	 	Deduction
	Less than 1 1/2 times Book Value

	 	none
	1 1/2 to 2 times Book Value

	 	50% of cost
	Greater than 2 times Book Value

	 	100% of cost

The provisions of this paragraph 4.7 modify and supersede any inconsistent provisions in the award
agreements associated with the Phantom Interest Plan and the GMAC Management LLC Class C Membership
Interest Plan.

          5. Termination of Employment.

               5.1 By the Company for Cause or by the Executive Without Good Reason or Due to Death or
Disability. If: (i) the Executive’s employment terminates due to his death; (ii) the Company
terminates the Executive’s employment with the Company for Cause (as defined below); (iii) the
Company terminates the Executive’s employment with the Company due to the Executive’s Disability
(as defined below); or (iv) the Executive terminates his employment without Good Reason (as defined
below) the Executive or the Executive’s legal representatives (as appropriate), shall be entitled
to receive the following:

                    (a) the Executive’s accrued but unpaid Base Salary to the date of termination and any employee
benefits that the Executive is entitled to receive pursuant to the employee benefit plans of the
Company and its subsidiaries (other than any severance plans) in accordance with the terms of such
employee benefit plans;

                    (b) the unpaid portion of the Bonus, if any, relating to any calendar year prior to the
calendar year of the Executive’s death, termination due to Disability, termination by the Company
for Cause or by the Executive without Good Reason, payable in accordance with Section 4.3 above;

                    (c) payment for accrued unused PTO days, payable in accordance with Company policy; and

                    (d) expenses reimbursable under Section 4.6 above incurred but not yet reimbursed to the
Executive to the date of termination.

 

 

          For the purposes of this Agreement, “Disability” means a determination by a licensed physician
in accordance with applicable law that as a result of a physical or mental injury or illness, the
Executive is unable to perform the essential functions of his job with or without reasonable
accommodation for a period of (i) one hundred twenty (120) consecutive days or (ii) one hundred
eighty (180) days in any one (1) year period (the “Disability Date”). Either the Executive or the
Company may request that a licensed physician be selected. The licensed physician shall be
mutually and reasonably selected by the Company and the Executive (or his legal representative);
provided, that if a licensed physician is not mutually selected within ten (10) business days
following a request for a licensed physician, the Company shall select a licensed physician in good
faith.

          For the purposes of this Agreement, “Cause” means, as determined by the Board, (i) indictment
of the Executive for a felony; (ii) conduct by the Executive in connection with his employment
duties or responsibilities that is fraudulent or grossly negligent, (iii) willful misconduct on an
ongoing basis after written notice from the Company or any of its subsidiaries to the Executive,
(iv) the Executive’s contravention of specific written lawful directions related to a material duty
or responsibility which is directed to be undertaken from the Board or the person to whom the
Executive reports which is not cured within 20 days of the Executive’s receipt of written notice of
such contravention; (v) breach of the Executive’s covenants set forth in Section 6 below; (vi) any
acts of dishonesty by the Executive resulting or intending to result in personal gain or enrichment
at the expense of the Company, its subsidiaries or affiliates; or (vii) the Executive’s continued
failure to comply with a material policy of the Company, its subsidiaries or affiliates after
receiving notice from the Board of such failure to comply. An act or failure to act shall not be
“willful” if the Executive reasonably believed that such action or inaction was in the best
interests of the Company. A termination for “Cause” shall be effective immediately (or on such
other date set forth by the Board).

          For the purposes of this Agreement, “Good Reason” means, without the Executive’s consent, (i)
a reduction in Base Salary or bonus; provided that, the Company may at any time or
from time to time amend, modify, suspend or terminate any bonus, incentive compensation or other
benefit plan or program provided to the Executive for any reason and without the Executive’s
consent if such modification, suspension or termination (x) is a result of the underperformance of
the Company under its business plan, (y) is consistent with an “across the board” reduction for all
senior executives of the Company, and (z) is undertaken in the Board’s reasonable business judgment
acting in good faith and engaging in fair dealing with the Executive, or (ii) a material diminution
in the Executive’s title, duties or responsibilities below a level consistent with Executive’s
performance and skill level, as determined in good faith by the Board; provided
that, a suspension of the Executive and the requirement that the Executive not report to
work shall not constitute Good Reason if the Executive continues to receive his compensation and
benefits. The Company shall have thirty (30) days after receipt of notice from the Executive in
writing specifying the deficiency to cure the deficiency that would result in Good Reason.

          5.2 By the Company Without Cause or by the Executive for Good Reason. If during the
Term, the Executive terminates his employment for Good Reason, upon at least thirty (30) days prior
written notice to the Company, or the Company terminates the Executive’s employment without Cause,
and upon execution without revocation of a valid release agreement substantially in the form
attached hereto as Exhibit B (except that the Company shall, in its sole discretion, have
the right to amend the release agreement to take into account changes

 

 

in law effective subsequent to the Effective Date), the Executive shall receive the following
incremental severance payments set forth in this Section 5.2 (in addition to the payments upon
termination specified in Section 5.1):

                    (a) continued payment of any unpaid installments of the Retention Bonus, if any (the sum of
the unpaid installments, the “Unpaid Retention Bonus”);

                    (b) an amount equal to the excess of (x) the product of (1) the Severance Multiplier (as
defined below) multiplied by (2) the Executive’s Base Salary over (y) the Unpaid Retention Bonus,
such amount payable in equal monthly installments on the last business day of each month over a
number of months following such termination of employment equal to the Severance Multiplier;

                    (c) (x) if such termination occurs on or prior to June 30th, an amount equal to the product of
(1) the Severance Multiplier multiplied by (2) the Severance Bonus Amount (as defined below),
payable in equal monthly installments on the last business day of each month over a number of
months following such termination of employment equal to the Severance Multiplier or (y) if such
termination occurs following June 30th, an amount equal to (1) the Severance Multiplier multiplied
by (2) the Severance Bonus Amount, payable as follows, (A) a lump sum equal to such amount
multiplied by a fraction, the numerator of which is the number of full months following such
termination through the date such amounts are paid to similarly situated employees (the “Lapsed
Months”) and the denominator of which is equal to the Severance Multiplier (such fraction not to
exceed one (1)) and (B) the remaining amount, if any, payable in equal monthly installments for a
number of months equal to the Severance Multiplier minus the number of Lapsed Months;

                    (d) a pro rata bonus for the year of termination, calculated as the product of (x) “Severance
Bonus Amount” and (y) a fraction, the numerator of which is the number of days in the current
calendar year through the date of termination and the denominator of which is 365, payable in the
calendar year following the date of termination when bonuses are paid to similarly situated
employees;

                    (e) a pro rata payment with respect to any award outstanding under the Phantom Interest Plan
equal to the amount that would have been payable to the Executive for the performance period
applicable to such award (determined as of the end of such performance period) multiplied by a
fraction, the numerator of which is the number of full months in the performance period that have
lapsed prior to such termination and the denominator of which is the number of months in the
performance period, payable at the end of such performance period; and

                    (f) reimbursement of the employer portion of the cost (consistent with the Company’s policy
for active employees) of continuation coverage of group health coverage pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) for a
number of months equal to the lesser of (x) the Severance Multiple and (y) eighteen (18), to the
extent the Executive elects such continuation coverage and is eligible for such coverage and
subject to the terms of the plan and the law. Notwithstanding the foregoing, the benefits provided
under this Section 5.2(f) shall cease when the Executive is covered under another group health
plan.

 

 

          For purposes of this Agreement, (x) the “Severance Multiplier” shall equal the lesser of (A)
two (2) and (B) the quotient of (1) the number of full months remaining in the Term divided by (2)
twelve (12); provided that in no event shall the
Severance Multiplier be less than .5 and (y) the “Severance Bonus Amount” shall mean, in the event of a termination (i) on or prior
to June 30th of any calendar year, the Bonus paid to the Executive for the calendar year prior to
the termination or (ii) after June 30th of any calendar year, the Bonus that would have been
payable to the Executive for the calendar year of the termination (determined as of the end of such
calendar year). Notwithstanding the foregoing, the amount payable pursuant to the sum of (b) and
(c) above shall not be less than the excess of (x) the product of the Severance Multiplier
multiplied by $1.5 million over (y) the Unpaid Retention Bonus.

          The Company shall have no obligation to provide the benefits set forth above in the event that
the Executive materially breaches the provisions of Section 6.

               5.3 Continued Employment Beyond the Expiration of the Term. Unless the Parties
otherwise agree in writing, continuation of the Executive’s employment with the Company beyond the
expiration of the Term shall be deemed an employment at-will and shall not be deemed to extend any
of the provisions of this Agreement and the Executive’s employment may thereafter be terminated at
will by either the Executive or the Company; provided that the provisions of
Sections 5.6, 6, 7, 8, 9.6, 9.11 and 9.12 of this Agreement shall survive any termination of this
Agreement or the termination of the Executive’s employment hereunder.

               5.4 No Mitigation; No Offset. The Executive shall be under no obligation to seek
other employment after his termination of employment with the Company and the obligations of the
Company to the Executive which arise upon the termination of his employment pursuant to this
Section 5 shall not be subject to mitigation or offset.

               5.5 Removal from any Boards and Position. If the Executive’s employment is terminated
for any reason under this Agreement, he shall be deemed to resign (i) if a member, from the Board
or board of managers of any subsidiary of the Company or any other board to which he has been
appointed or nominated by or on behalf of the Company and (ii) from any position with the Company
or any subsidiary of the Company, including, but not limited to, as an officer of the Company and
any of its subsidiaries.

               5.6 Nondisparagement. The Executive agrees that he will not at any time (whether
during or after the Term) publish or communicate to any person or entity any Disparaging (as
defined below) remarks, comments or statements concerning the Company, its parent, subsidiaries and
affiliates, and their respective present and former members, partners, directors, officers,
shareholders, employees, agents, attorneys, successors and assigns. The Company agrees to instruct
its executive officers and directors to refrain from publishing or communicating to any person or
entity any Disparaging remarks, comments or statements concerning the Executive at any time
(whether during or after the Term), provided that, nothing in this Section 5.6
shall prevent the Company from (a) responding in a truthful manner to inquiries regarding
Executive’s employment or the termination thereof, from investors, regulators, the Company’s
auditors or insurers, or as otherwise may be required by applicable law, rules or regulations, or
(b) disclosing information concerning the Executive or the termination of Executive’s employment to
officers of the Company or its affiliates who, at the discretion of the Company, should know such
information. “Disparaging” remarks, comments or

 

 

statements are those that impugn the character, honesty, integrity or morality or business
acumen or abilities in connection with any aspect of the operation of business of the individual or
entity being disparaged.

          6. Restrictions and Obligations of the Executive.

                    6.1 Confidentiality. (a) During the course of the Executive’s employment by the
Company, the Executive has had and will have access to certain trade secrets and confidential
information relating to the Company and its subsidiaries (the “Protected Parties”) which is not
readily available from sources outside the Company. The confidential and proprietary information
and, in any material respect, trade secrets of the Protected Parties are among their most valuable
assets, including but not limited to, their customer, supplier and vendor lists, databases,
competitive strategies, computer programs, frameworks, or models, their marketing programs, their
sales, financial, marketing, training and technical information, their product development (and
proprietary product data) and any other information, whether communicated orally, electronically,
in writing or in other tangible forms concerning how the Protected Parties create, develop, acquire
or maintain their products and marketing plans, target their potential customers and operate their
retail and other businesses. The Protected Parties invested, and continue to invest, considerable
amounts of time and money in their process, technology, know-how, obtaining and developing the
goodwill of their customers, their other external relationships, their data systems and data bases,
and all the information described above (hereinafter collectively referred to as “Confidential
Information”), and any misappropriation or unauthorized disclosure of Confidential Information in
any form would irreparably harm the Protected Parties. The Executive acknowledges that such
Confidential Information constitutes valuable, highly confidential, special and unique property of
the Protected Parties. The Executive shall hold in a fiduciary capacity for the benefit of the
Protected Parties all Confidential Information relating to the Protected Parties and their
businesses, which shall have been obtained by the Executive during the Executive’s employment by
the Company or its subsidiaries and which shall not be or become public knowledge (other than by
acts by the Executive or representatives of the Executive in violation of this Agreement). The
Executive shall not, during the period the Executive is employed by the Company or its subsidiaries
or at any time thereafter, disclose any Confidential Information, directly or indirectly, to any
person or entity for any reason or purpose whatsoever, nor shall the Executive use it in any way,
except (i) in the course of the Executive’s employment with, and for the benefit of, the Protected
Parties, (ii) to enforce any rights or defend any claims hereunder or under any other agreement to
which the Executive is a party, provided that such disclosure is relevant to the
enforcement of such rights or defense of such claims and is only disclosed in the formal
proceedings related thereto, (iii) when required to do so by a court of law, by any governmental
agency having supervisory authority over the business of the Company or by any administrative or
legislative body (including a committee thereof) with jurisdiction to order him to divulge,
disclose or make accessible such information; provided that the Executive shall
give prompt written notice to the Company of such requirement, disclose no more information than is
so required, and cooperate with any attempts by the Company to obtain a protective order or similar
treatment, (iv) as to such Confidential Information that becomes generally known to the public or
trade without his violation of this Section 6.1(a) or (iv) to the Executive’s spouse, attorney
and/or his personal tax and financial advisors as reasonably necessary or appropriate to advance
the Executive’s tax, financial and other personal planning (each an “Exempt Person”),
provided, however, that any disclosure or use of Confidential Information by an
Exempt Person shall be deemed to be a

 

 

breach of this Section 6.1(a) by the Executive. The Executive shall take all reasonable steps
to safeguard the Confidential Information and to protect it against disclosure, misuse, espionage,
loss and theft. The Executive understands and agrees that the Executive shall acquire no rights to
any such Confidential Information.

          (b) All files, records, documents, drawings, specifications, data, computer programs,
evaluation mechanisms and analytics and similar items relating thereto or to the Business (for the
purposes of this Agreement, “Business” shall be as defined in Section 6.3 hereof), as well as all
customer lists, specific customer information, compilations of product research and marketing
techniques of the Company and its subsidiaries, whether prepared by the Executive or otherwise
coming into the Executive’s possession, shall remain the exclusive property of the Company and its
subsidiaries.

          (c) It is understood that while employed by the Company or its subsidiaries, the Executive
will promptly disclose to it, and assign to it the Executive’s interest in any invention,
improvement or discovery made or conceived by the Executive, either alone or jointly with others,
which arises out of the Executive’s employment. At the Company’s request and expense, the
Executive will assist the Company and its subsidiaries during the period of the Executive’s
employment by the Company or its subsidiaries and thereafter (but subject to reasonable notice and
taking into account the Executive’s schedule) in connection with any controversy or legal
proceeding relating to such invention, improvement or discovery and in obtaining domestic and
foreign patent or other protection covering the same.

          (d) As requested by the Company and at the Company’s expense, from time to time and upon the
termination of the Executive’s employment with the Company for any reason, the Executive will
promptly deliver to the Company and its subsidiaries all copies and embodiments, in whatever form,
of all Confidential Information in the Executive’s possession or within his control (including, but
not limited to, memoranda, records, notes, plans, photographs, manuals, notebooks, documentation,
program listings, flow charts, magnetic media, disks, diskettes, tapes and all other materials
containing any Confidential Information) irrespective of the location or form of such material. If
requested by the Company, the Executive will provide the Company with written confirmation that all
such materials have been delivered to the Company as provided herein.

                    6.2 Non-Solicitation or Hire. During the Term and for a period of twelve (12) months
following the termination of the Executive’s employment for any reason, the Executive shall not (a)
directly or indirectly solicit or attempt to solicit or induce, directly or indirectly, (x) any
party who is a customer of the Company or its subsidiaries, who was a customer of the Company or
its subsidiaries at any time during the twelve (12) month period immediately prior to the date the
Executive’s employment terminates or who is a prospective customer that has been identified and
targeted by the Company or its subsidiaries, for the purpose of marketing, selling or providing to
any such party any services or products offered by or available from the Company or its
subsidiaries (provided that if the Executive intends to solicit any such party for
any other purpose, he shall notify the Company of such intention), or (y) any supplier to the
Company or any subsidiary to terminate, reduce or alter negatively its relationship with the
Company or any subsidiary or in any manner interfere with any agreement or contract between the
Company or any subsidiary and such supplier or (b) directly or indirectly solicit or attempt to
solicit any employee of the Company or any of its subsidiaries (a “Current Employee”) or any person
who was an employee of the Company or any of its subsidiaries

 

 

during the twelve (12) month period immediately prior to the date the Executive’s employment
terminates (a “Former Employee”) to terminate such employee’s employment relationship with the
Protected Parties in order, in either case, to enter into a similar relationship with the
Executive, or any other person or any entity or hire any employee or Former Employee,
provided, however, that Current Employees and Former Employees do not include the
Executive’s personal assistant(s) or his administrative support personnel.

          6.3 Non-Competition. During the Term and for a period of six (6) months following the
termination of the Executive’s employment for any reason, the Executive shall not, whether
individually, as a director, manager, member, stockholder, partner, owner, employee, consultant or
agent of any business, or in any other capacity, other than on behalf of the Company or a
subsidiary, organize, establish, own, operate, manage, control, engage in, participate in, invest
in, permit his name to be used by, act as a consultant or advisor to, render services for (alone or
in association with any person, firm, corporation or business organization), or otherwise assist
any person or entity that engages in or owns, invests in, operates, manages or controls any venture
or enterprise which engages or proposes to engage in any business conducted by the Company or any
of its subsidiaries on the date of the Executive’s termination of employment or within twelve (12)
months of the Executive’s termination of employment in the geographic locations where the Company
and its subsidiaries engage or propose to engage in such business (the “Business”).
Notwithstanding the foregoing, nothing in this Agreement shall prevent the Executive from (i)
owning for passive investment purposes not intended to circumvent this Agreement, less than five
percent (5%) of the publicly traded common equity securities of any company engaged in the Business
(so long as the Executive has no power to manage, operate, advise, consult with or control the
competing enterprise and no power, alone or in conjunction with other affiliated parties, to select
a director, manager, general partner, or similar governing official of the competing enterprise
other than in connection with the normal and customary voting powers afforded the Executive in
connection with any permissible equity ownership), (ii) being employed by or otherwise associated
with an organization or entity of which a subsidiary, division, segment, unit, etc. is engaged in
the Business (a “Competing Division”), provided that (x) the Executive has no
direct or indirect responsibilities or involvement with such Competing Division and (y) the
Competing Division does not account for more that five percent (5%) of the gross revenues of such
organization or entity for its prior fiscal year or (iii) being employed by or otherwise associated
with an organization or entity engaged in the Business; provided that the Business
that is competitive with the Company or any of its Subsidiaries does not account for more than five
percent (5%) of the gross revenues of the Company and its Subsidiaries.

          6.4 Property. The Executive acknowledges that all originals and copies of materials,
records and documents generated by him or coming into his possession during his employment by the
Company or its subsidiaries are the sole property of the Company and its subsidiaries (“Company
Property”). During the Term, and at all times thereafter, the Executive shall not remove, or cause
to be removed, from the premises of the Company or its subsidiaries, copies of any record, file,
memorandum, document, computer related information or equipment, or any other item relating to the
business of the Company or its subsidiaries, except in furtherance of his duties under the
Agreement. When the Executive’s employment with the Company terminates, or upon request of the
Company at any time, the Executive shall promptly deliver to the Company all copies of Company
Property in his possession or control.

 

 

          7. Remedies; Specific Performance. The Parties acknowledge and agree that the
Executive’s breach or threatened breach of any of the restrictions set forth in Section 6 will
result in irreparable and continuing damage to the Protected Parties for which there may be no
adequate remedy at law and that the Protected Parties shall be entitled to seek equitable relief,
including specific performance and injunctive relief as remedies for any such breach or threatened
or attempted breach, without requiring the posting of a bond. The Executive hereby consents to the
grant of an injunction (temporary or otherwise) against the Executive or the entry of any other
court order against the Executive prohibiting and enjoining him from violating, or directing him to
comply with any provision of Section 6, if such is determined by a court of competent jurisdiction.
The Executive also agrees that such remedies shall be in addition to any and all remedies,
including damages, available to the Protected Parties against him for such breaches or threatened
or attempted breaches. In addition, without limiting the Protected Parties’ remedies for any
breach of any restriction on the Executive set forth in Section 6, except as required by law, the
Executive shall not be entitled to any payments set forth in Section 5.2 hereof if the Executive
has breached the covenants applicable to the Executive contained in Section 6, the Executive will
immediately return to the Protected Parties any such payments previously received under Section 5.2
upon such a breach, and, in the event of such breach, the Protected Parties will have no obligation
to pay any of the amounts that remain payable by the Company under Section 5.2.

          8. Indemnification. The Company agrees, to the extent permitted by applicable law and
its organizational documents, to indemnify, defend and hold harmless the Executive from and against
any and all losses, suits, actions, causes of action, judgments, damages, liabilities, penalties,
fines, costs or claims of any kind or nature (“Indemnified Claim”), including reasonable legal fees
and related costs incurred by Executive in connection with the preparation for or defense of any
Indemnified Claim, whether or not resulting in any liability, to which the Executive may become
subject or liable or which may be incurred by or assessed against the Executive, relating to or
arising out of his employment by the Company or the services to be performed pursuant to this
Agreement, provided that the Company shall only defend, but not indemnify or hold
the Executive harmless, from and against an Indemnified Claim in the event there is a final,
non-appealable, determination that the Executive’s liability with respect to such Indemnified Claim
resulted from the Executive’s willful misconduct or gross negligence. The Company’s obligations
under this section shall be in addition to any other right, remedy or indemnification that the
Executive may have or be entitled to at common law or otherwise. During the Term and for a period
of six (6) years after the termination of the Executive’s employment, the Company agrees to
continue and maintain a directors and officers’ liability insurance policy covering the Executive
to the extent the Company provides such coverage for its managers, directors and/or other executive
officers.

          9. Other Provisions.

                    9.1 Notices. Any notice or other communication required or which may be given
hereunder shall be in writing and shall be delivered personally, telegraphed, telexed, sent by
facsimile transmission or sent by certified, registered or express mail, postage prepaid or
overnight mail and shall be deemed given when so delivered personally, telegraphed, telexed, or
sent by facsimile transmission or, if mailed, four (4) days after the date of mailing or one (1)
day after overnight mail, as follows:

                         (a) If the Company, to:

 

 

	 	 	 	 	 
	 	 	GMAC LLC
	 	 	200 Renaissance Center
	 	 	Tower 200, 9th Floor
	 	 	Mail Code 482-B09-B11
	 	 	Detroit, MI 48265
	 	 	Attention: General Counsel
	 	 	Telephone: (313) 656-6128
	 	 	Fax: (313) 656-6189
	 
	 	 	 	 
	 	 	Cerberus Capital Management, L.P.
	 	 	299 Park Avenue
	 	 	New York, NY 10171
	 

	 	Attention:
	 	Lenard Tessler
	 

	 	Telephone:
	 	(212) 891-2100
	 

	 	Fax:
	 	(212) 755-3009

               (b) If the Executive, to the Executive’s home address reflected in the Company’s records.

          9.2 Entire Agreement. This Agreement contains the entire agreement between the
Parties with respect to the subject matter hereof and supersedes all prior agreements, written or
oral, with respect thereto.

          9.3 Representations and Warranties. The Executive represents and warrants that he is
not a party to or subject to any restrictive covenants, legal restrictions or other agreements in
favor of any entity or person which would in any way preclude, inhibit, impair or limit the
Executive’s ability to perform his obligations under this Agreement, including, but not limited to,
non-competition agreements, non-solicitation agreements or confidentiality agreements. The Company
represents and warrants that it is fully authorized and empowered to enter into this Agreement and
that the performance of its obligations under this Agreement will not violate any agreement between
it and any other person, firm or organization.

          9.4 Waiver and Amendments. This Agreement may be amended, modified, superseded,
canceled, renewed or extended, and the terms and conditions hereof may be waived, only by a written
instrument signed by the Parties or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof, nor shall any waiver on the part of any right, power or privilege hereunder,
nor any single or partial exercise of any right, power or privilege hereunder, preclude any other
or further exercise thereof or the exercise of any other right, power or privilege hereunder.

          9.5 Governing Law, Dispute Resolution and Venue.

               (a) This Agreement shall be governed and construed in accordance with the laws of the State of
Michigan applicable to agreements made and not to be performed entirely within such state, without
regard to conflicts of laws principles, unless superseded by federal law.

 

 

               (b) The parties agree irrevocably to submit to the exclusive jurisdiction of the federal
courts or, if no federal jurisdiction exists, the state courts, located in Detroit, Michigan, for
the purposes of any suit, action or other proceeding brought by any party arising out of any breach
of any of the provisions of this Agreement and hereby waive, and agree not to assert by way of
motion, as a defense or otherwise, in any such suit, action, or proceeding, any claim that it is
not personally subject to the jurisdiction of the above-named courts, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that the provisions of this Agreement may not be enforced in or by such courts. In
addition, the parties agree to waive trial by jury.

          9.6 Assignability by Holdings and the Executive. This Agreement, and the rights and
obligations hereunder, may not be assigned by Holdings or the Executive without written consent
signed by the other party; provided that the Company may assign the Agreement to
any successor that continues the business of the Company.

          9.7 Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original but all of which shall constitute one and the same instrument.

          9.8 Headings. The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning of terms contained herein.

          9.9 Severability. If any term, provision, covenant or restriction of this Agreement,
or any part thereof, is held by a court of competent jurisdiction of any foreign, federal, state,
county or local government or any other governmental, regulatory or administrative agency or
authority to be invalid, void, unenforceable or against public policy for any reason, the remainder
of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force
and effect and shall in no way be affected or impaired or invalidated. The Executive acknowledges
that the restrictive covenants contained in Section 6 are a condition of this Agreement and are
reasonable and valid in temporal scope and in all other respects.

          9.10 Judicial Modification. If any court determines that any of the covenants in
Section 6, or any part of any of them, is invalid or unenforceable, the remainder of such covenants
and parts thereof shall not thereby be affected and shall be given full effect, without regard to
the invalid portion. If any court determines that any of such covenants, or any part thereof, is
invalid or unenforceable because of the geographic or temporal scope of such provision, such court
shall reduce such scope to the minimum extent necessary to make such covenants valid and
enforceable.

          9.11 Tax Withholding. The Company or other payor is authorized to withhold from any
benefit provided or payment due hereunder, the amount of withholding taxes due any federal, state
or local authority in respect of such benefit or payment and to take such other action as may be
necessary in the opinion of the Board to satisfy all obligations for the payment of such
withholding taxes.

          9.12 Section 409A. Notwithstanding any other provision of this Agreement, if at the
time of the termination of the Executive’s employment the Executive is a “specified employee” (as
defined in Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”)) and any
payments upon such termination under Section 5 hereof will

 

 

result in additional tax or interest to the Executive under Section 409A, he will not be
entitled to receive such payments until the date which is six (6) months after the termination of
the Executive’s employment for any reason, other than as a result of the Executive’s death or
disability (as such term is defined in Section 409A). In addition, if any provision of this
Agreement would subject the Executive to any additional tax or interest under Section 409A, then
the Company shall reform such provision; provided that the Company shall (x)
maintain, to the maximum extent practicable, the original intent of the applicable provision
without subjecting the Executive to such additional tax or interest and (y) not incur any
additional compensation expense as a result of such reformation.

     IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have executed
this Agreement as of the day and year first above mentioned.

	 	 	 	 	 	 	 
	 	 	EXECUTIVE	 	 
	 
	 
	 	 	 	 	 	 
	 

	 	Name:
	 	 

Alvaro G. de Molino
	 	 
	 
	 	 	 	 	 	 
	 	 	GMAC LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

Eric A. Feldstein
	 	 
	 

	 	Title:
	 	Chief Executive Officer

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