Document:

exv10w1

 

EXHIBIT 10.1

KAYDON CORPORATION

EXECUTIVE MANAGEMENT BONUS PROGRAM

(Amended and Restated Effective February 14, 2008)

     1. Definitions. The following terms have the meanings indicated unless a different
meaning is clearly required by the context:

     “Approval Date” means March 2, 2005, which is the date on which this Bonus Plan was approved
by the Board of Directors of the Company.

     “Bonus Plan” means this Kaydon Corporation Executive Bonus Program, as amended from time to
time.

     “Cause” means a determination by the Company that a Participant has committed a fraud or
felony, engaged in deliberate, willful or gross misconduct, or in conduct detrimental to the
Company team effort, or was insubordinate, or performed in an overall unacceptable manner, or
violated the policies of the Company as may be established by the Company from time-to-time, or
committed an act of moral turpitude, or committed any other act that causes or may reasonably be
expected to cause substantial injury to the Company or to its reputation.

     “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.

 

 

     “Committee” means the Compensation Committee of the Company’s Board of Directors, each of the
members of which is a “non-employee director” within the meaning of Rule 16b-3.

     “Company” means Kaydon Corporation and any of its wholly-owned subsidiaries or affiliates.

     “Continuing Directors” means the individuals constituting the Board of Directors of the
Company on the Approval Date, and any subsequent directors whose election or nomination for
election was approved by a vote of 2/3 or more 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 or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors
of the Company.

     “Excluded Holder” means any Person who on the Approval Date was the beneficial owner of 20% or
more of the outstanding Common Stock of the Company, a subsidiary of the Company, any employee
benefit plan of the Company or any subsidiary of the Company or any trust holding such Common Stock
pursuant to the terms of an employee benefit plan of the Company.

     “Executive Officer” means the Chief Executive Officer (“CEO”), the Chief Financial Officer,
the Chief Operating Officer and such other Senior Vice Presidents or other senior executive
officers of the Company as the Committee shall designate from time to time.

     “Good Reason” means (a) the assignment of a Participant to any duties or responsibilities that
are a reduction of, or are materially inconsistent with, the Participant’s position, duties,
responsibilities or status on the Approval Date, (b) a change in a Participant’s reporting
responsibilities or titles in effect on the Approval Date that results in a reduction of the
Participant’s responsibilities or position, (c) the reduction of a Participant’s annual salary,
level of benefits (except for a reduction uniformly applicable to all similarly situated
executives), projected Supplemental Executive Retirement Plan benefits, or (d) transfer of the
Participant to a location more than forty (40) miles from the Participant’s location of employment
on the Approval Date which requires a change in residence or a material increase in the amount of
travel normally required of the Participant in connection with his employment.

     “Permitted Successor” means a corporation that immediately after the consummation of a
transaction described in the definition of “Change in Control” satisfies all of the following
criteria: (a) at least 60% of the voting securities of such corporation is beneficially owned by
Persons who were the beneficial owners of the Company’s Common Stock immediately prior to such
transaction, (b) no Person other than an Excluded Holder beneficially owns, directly or indirectly,
20% or more of the outstanding voting securities of such corporation and (c) at least a majority of
the Board of Directors of such corporation is comprised of Continuing Directors.

     “Person” means a natural person, corporation, partnership, limited liability company,
government or political subdivision, agency or instrumentality of a government.

     2. Purpose. The purpose of this Bonus Plan is to provide annual incentives to certain
senior executive officers in a manner designed to reinforce the Company’s performance

2

 

goals; to link a significant portion of participants’ compensation to the achievement of such
goals; and to continue to attract, motivate and retain key executives on a competitive basis.

     3. Participation. Participants in this Bonus Plan are the Executive Officers of the
Company. The Committee shall determine the effective date of a Participant’s participation in this
Bonus Plan. Each Participant shall execute an Agreement annually, a form of which is attached
hereto as Exhibit A, acknowledging his willingness to participate in this Bonus Plan and agreeing
to preserve corporate opportunity with the Company for a period ending two years following receipt
of the last bonus payment made pursuant to this Bonus Plan. The Company may modify and amend the
Agreement at its discretion prior to each Bonus Plan year.

     4. Performance Metric and Adjustments. The metric, or benchmark, against which
Company performance shall be measured for purposes of determining whether bonuses shall be awarded
to Participants, and the amount of such bonuses, shall be earnings before interest, taxes,
depreciation and amortization (“EBITDA”) from continuing operations.

     5. Performance Objective. The performance objective for each year will be Target
EBITDA, which shall be determined by the Committee each year at a regular Board of Directors
meeting occurring prior to the 90th day of the year for which Target EBITDA is to be
determined. In conjunction with, or promptly after, the presentation of the annual budget for the
following year, management will present to the Committee a recommended Target EBITDA for the
following fiscal year. The Committee shall evaluate the recommended Target EBITDA and Budget and
may determine the final Target EBITDA utilizing this information and any additional information
that it deems relevant.

     6. Bonus Calculations. Participant bonuses shall be based on the level of EBITDA
achieved for the fiscal year, compared to Target EBITDA for that year, in accordance with the
following:

     (a) No Bonus payout shall be made if EBITDA achieved is equal to or less than 90% of
Target EBITDA;

     (b) Bonus payments will equal 6% of base salary for each Participant other than the CEO
(“Non-CEO Participants”), and 10% of base salary for the CEO, for each 1% that EBITDA
achieved for the year exceeds 90% of Target EBITDA, up to 100% of Target EBITDA, and 4% of
base salary for Non-CEO Participants, and 10% of base salary for the CEO, for each 1% that
EBITDA achieved exceeds 100% of Target EBITDA. An example would be:

     (i) if EBITDA is 93% of Target EBITDA, the bonus will be 18% of a Non-CEO
Participant’s base salary and 30% of the CEO’s base salary;

     (ii) if EBITDA is 100% of Target EBITDA, the bonus will be 60% of a Non-CEO
Participant’s base salary; and 100% of the CEO’s base salary and

     (iii) if EBITDA is 110% of Target EBITDA, the bonus will be 100% of a Non-CEO
Participant’s base salary and 200% of the CEO’s base salary.

3

 

     (c) A Non-CEO Participant’s bonus may not exceed 100% of the Participant’s base salary
and the CEO’s bonus may not exceed 200% of base salary.

     7. Discretionary Bonus Payments. In addition, at the discretion of the Committee, a
discretionary cash bonus may be paid to any Participant in an amount up to 25% of base salary that
shall be in addition to, or in lieu of, the bonus payment, if any, determined pursuant to Section
6.

     8. Payment of Bonus Awards.

     (a) Conditions for Payment After Termination of Employment. If a Participant’s
employment with the Company terminates, the following provisions shall apply:

     (i) Termination for Cause. If a Participant’s employment is terminated
by the Company for Cause, no bonus shall be paid to the former Participant for any
period prior to the date of termination.

     (ii) Termination by Participant. If a Participant terminates his or
her employment without Good Reason, no bonus shall be paid to the former Participant
for any period prior to the date of termination.

     (iii) Termination Following Death, Disability or Retirement. If a
Participant’s employment is terminated due to a Participant’s death, disability or
retirement at the normal retirement age prior to payment of a bonus award, such
bonus shall be paid (A) in the event of death, to the designated beneficiary of the
Participant or, if no beneficiary shall have been designated, the representative of
the Participant’s estate and (B) in the event of disability or retirement, to the
former Participant, and if termination occurs during a fiscal year, the amount of
bonus award shall be pro rated for that year based on the number of days worked
prior to termination of employment.

     (iv) Termination without Cause or for Good Reason, etc. If a
Participant’s employment is terminated without Cause, or the Participant terminates
his or her employment for Good Reason following a Change in Control and prior to the
payment of a bonus award, the Company shall nevertheless pay such bonus to the
terminated Participant. If termination occurs during a fiscal year, the amount of
bonus award shall be pro rated for that year based on the number of days worked
prior to termination of employment.

     (b) Change in Control Payment. In the event of a Change in Control of the
Company, a bonus for the year in which the Change in Control occurs, together with any
unpaid bonus from the preceding year, shall be immediately payable on the date of the Change
in Control. Such bonus shall be equal to 100% of a Participant’s base salary for the year
in which a Change in Control occurs.

4

 

     9. Administrative Provisions. This Bonus Plan shall be administered by the Committee.
The Committee shall have full, exclusive and final authority in all determinations and decisions
affecting this Bonus Plan and Participants, including sole authority to interpret and construe any
provision of this Bonus Plan, to adopt such rules and regulations for administering this Bonus Plan
as it may deem necessary or appropriate under the circumstances, and to make any other
determination it deems necessary or appropriate for the administration of this Bonus Plan.
Decisions of the Committee shall be final and conclusive, and binding on all parties. All expenses
of administering this Bonus Plan shall be borne by the Company. No member of the Committee shall
be liable for any action, omission, or determination relating to this Bonus Plan, and the Company
shall indemnify and hold harmless each member of the Committee and each other director or employee
of the Company or its affiliates to whom any duty or power relating to the administration or
interpretation of this Bonus Plan has been delegated against any cost or expense (including counsel
fees, which fees shall be paid as incurred) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of or in connection with any action, omission
or determination relating to this Bonus Plan, unless, in each case, such action, omission or
determination was taken or made by such member, director or employee in bad faith and without
reasonable belief that it was in the best interests of the Company.

     10. Miscellaneous.

     (a) This Bonus Plan was adopted by the Board of Directors on the Approval Date and will
be effective commencing with bonuses payable in respect of the Company’s fiscal year ending
December 31, 2005. This Bonus Plan was amended and restated effective February 14, 2008, by
action of the Board of Directors, in compliance with the provisions of Section 10(b).

     (b) The Board of Directors may at any time amend this Bonus Plan in any fashion or
terminate or suspend this Bonus Plan, provided that no such action shall adversely affect a
Participant’s rights under this Bonus Plan with respect to bonus arrangements agreed to by
the Company and the Participant, pursuant to a written agreement or otherwise, before the
date of such action, without the consent of the Participant.

     (c) This Bonus Plan shall be governed by and construed in accordance with the internal
laws of the State of Michigan applicable to contracts made, and to be wholly performed,
within such State, without regard to principles of choice of laws.

     (d) All amounts required to be paid under this Bonus Plan shall be subject to any
required Federal, state, local and other applicable withholdings or deductions.

     (e) Nothing contained in this Bonus Plan shall confer upon any Participant or any other
person any right with respect to the continuation of employment by the Company or interfere
in any way with the right of the Company at any time to terminate such employment or to
increase or decrease the compensation payable to the Participant from the rate in effect at
the commencement of a fiscal year or to otherwise modify the terms of such Participant’s
employment. No person shall have any claim or right to

5

 

participate in or receive any award under this Bonus Plan for any particular fiscal
year or any part thereof.

     (f) The Company’s obligation to pay a Participant any amounts under this Bonus Plan
shall be subject to setoff, counterclaim or recoupment of amounts owed by a Participant to
the Company.

     (g) The right of a Participant or of any other person to any payment under this Bonus
Plan shall not be assigned, transferred, pledged or encumbered in any manner, and any
attempted assignment, transfer, pledge or encumbrance shall be null and void and of no force
or effect.

6

 

EXHIBIT A

AGREEMENT

     This Agreement (the “Agreement”) is made as of                     , 20                    , by and between KAYDON
CORPORATION, a Delaware corporation (the “Company”), and                      (the “Executive”). The
Executive is a Participant in the Company’s Cash Bonus Plan (the “Bonus Plan”) and is eligible to
receive a cash bonus award(s) under the Bonus Plan provided that the performance targets
established under the Bonus Plan are achieved. It is a condition of the Executive’s eligibility to
participate in the Bonus Plan that this Agreement be entered into annually and to protect and
preserve the Company’s existing and future business relationships and corporate opportunities.

     *Capitalized terms not expressly defined in this Agreement shall have the meanings ascribed to
them in the Bonus Plan. The parties, intending to be legally bound, agree as follows:

     1. Non-Disclosure of Confidential Information. The Executive agrees not to disclose
to any unauthorized Persons or use for his own account or for the benefit of any third party any
Confidential Information, whether or not such information is embodied in writing or other physical
form or is retained in the memory of the Executive, without the Company’s written consent, unless
and only to the extent that the Confidential Information is or becomes generally known to and
available for use by the public other than as a result of the Executive’s fault or the fault of any
other Person bound by a duty of confidentiality to the Company.

     As used herein, “Confidential Information” includes: (a) any and all trade secrets concerning
the business and affairs of the Company, its subsidiaries and affiliates, product specifications,
data, know-how, formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas, past, current and planned research and development,
current and planned manufacturing and distribution methods and processes, customer lists, current
and anticipated customer requirements, price lists, market studies, business plans, computer
software and programs (including object code and source code), database technologies, and similar
systems of the Company, its subsidiaries and affiliates; (b) any and all information concerning the
business and affairs of the Company, its subsidiaries and affiliates (which includes historical
financial statements, financial projections and budgets, historical and projected sales, capital
spending budgets and plans, the names and backgrounds of key personnel, contractors, agents,
suppliers and potential suppliers, personnel training and techniques and materials, and purchasing
methods and techniques, however documented; and (c) any and all notes, analysis, compilations,
studies, summaries and other material prepared by or for the Company, its subsidiaries and
affiliates containing or based, in whole or in part, upon any information included in the
foregoing.

     2. Non-Competition and Non-Solicitation. As an inducement for the Company to permit
the Executive to participate in the Bonus Plan, the Executive agrees that for a period of two years
after the receipt of the last payment of a bonus award under the Bonus Plan:

     (a) The Executive will not, directly or indirectly, engage or invest in, own, manage,
operate, finance, control or participate in the ownership, management, operation, financing
or control of, be employed by, associated with or in any manner connected with, or render
services or advice or other aid to, or guarantee any obligation of, any

 

 

Person engaged in or planning to become engaged in the a business whose products or
activities compete in whole or in part with the business conducted by the Company, its
subsidiaries or its affiliates at the time of receipt by the Executive of such last bonus
payment; provided, however, that the Executive may purchase or otherwise acquire up to (but
not more than) two percent (2%) of any class of securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if such securities are listed
on any national or regional securities exchange or have been registered under Section 12(g)
of the Securities Exchange Act of 1934. Seller and each Shareholder agree that this covenant
is reasonable with respect to its duration, geographical area and scope.

     (b) The Executive will not, directly or indirectly, (A) induce or attempt to induce any
employee of the Company, its subsidiaries or its affiliates to leave his or her employment;
(B) in any way interfere with the relationship between the Company, its subsidiaries or its
affiliates and any such employee; (C) employ or otherwise engage as an employee, independent
contractor or otherwise any employee of the Company, its subsidiaries or its affiliates; or
(D) induce or attempt to induce any customer, supplier, licensee or other Person to cease
doing business with the Company, its subsidiaries or its affiliates or in any way interfere
with the relationship between any such customer, supplier, licensee or other business
entity.

     (c) The Executive will not, directly or indirectly, solicit the business of any Person
known to be a customer of the Company, its subsidiaries or its affiliates, whether or not
the Executive had personal contact with such Person, with respect to products or activities
which compete in whole or in part with the business operated by the Company, its
subsidiaries or its affiliates.

     (d) The Executive will not disparage the Company, its subsidiaries or its affiliates or
the business conducted by any of them or any shareholder, director, officer, employee or
agent of the Company, its subsidiaries or its affiliates.

     3. Arbitration. The Executive and the Company agree that any disagreement dispute,
controversy, or claim arising out of or relating to this Agreement, its interpretation, or
validity, or the terms and conditions of the Executive’s employment (including but not limited to
the termination of that employment), will be settled exclusively and finally by arbitration
irrespective of its magnitude, the amount in controversy, or the nature of the relief sought. The
arbitration shall be conducted in accordance with the Employment Arbitration Rules (the
“Arbitration Rules”) of the American Arbitration Association (the “AAA”) (the terms of which then
in effect are incorporated here). The arbitral tribunal shall consist of one arbitrator skilled in
arbitration of executive employment matters. The parties to the arbitration shall jointly directly
appoint the arbitrator within thirty (30) days of initiation of the arbitration. If the parties
fail to appoint the arbitrator as provided above, the arbitrator shall be appointed by the AAA as
provided in the Arbitration Rules and shall be a person who has had substantial experience in
executive employment matters. The Company shall pay all of the fees, if any, and expenses of the
arbitrator and the arbitration. The arbitration shall be conducted in the Southeastern Michigan
area or in such other city in the United States of America as the parties to the dispute may
designate by mutual written consent. At any oral hearing of evidence in connection with the
arbitration, each party or its legal counsel shall have the right to examine its witnesses and to

A-2

 

cross-examine the witnesses of any opposing party. No evidence of any witness may be
presented in any form unless the opposing party or parties has the opportunity to cross-examine the
witness, except under extraordinary circumstances where the arbitrator determines that the
interests of justice require a different procedure. Any decision or award of the arbitrator shall
be final and binding upon the parties to the arbitration proceeding. The parties agree that the
arbitral award may be enforced against the parties to the arbitration proceeding or their assets
wherever they may be found and that a judgment upon the arbitral award may be entered in any court
having jurisdiction. Nothing contained here shall be deemed to give the arbitral tribunal any
authority, power, or right to alter, change, amend, modify, add to, or subtract from any of the
provisions of this Agreement. The provisions of this Section shall survive the termination or
expiration of this Agreement, shall be binding upon the Company’s and the Executive’s respective
successors, heirs, personal representatives, designated beneficiaries and any other person
asserting a claim described above, and may not be modified without the consent of the Company. To
the extent arbitration is required, no person asserting a claim has the right to resort to any
federal, state or local court or administrative agency concerning the claim unless expressly
provided by federal statute, and the decision of the arbitrator shall be a complete defense to any
action or proceeding instituted in any tribunal or agency with respect to any dispute, unless
precluded by federal statute.

     4. Miscellaneous.

     (a) This Agreement will be governed by Michigan law and will be binding upon and will
inure to the benefit of the respective successors and assigns of the parties.

     (b) The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any right, power
or privilege under this Agreement will operate as a waiver of such right, power or
privilege, and no single or partial exercise of any such right, power or privilege will
preclude any other or further exercise of such right, power or privilege or the exercise of
any other right, power or privilege. To the maximum extent permitted by applicable law, (a)
no claim or right arising out of this Agreement can be discharged, in whole or in part, by a
waiver or renunciation of the claim or right except in writing; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it is given;
and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation
of such party, or of the right of the party giving such notice or demand to require the
other party, to take further action without notice or demand as provided in this Agreement.

     (c) Any action or proceeding seeking to enforce any provision of, or based upon any
right arising out of, this Agreement may be brought against any of the parties in the courts
of the State of Michigan, County of Washtenaw or, if it has or can acquire jurisdiction, in
the United States District Court for the Eastern District of Michigan, and the parties
consent to the jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.

     (d) Whenever possible, each provision and term of this Agreement will be interpreted in
a manner to be effective and valid, but if any provision or term of this

A-3

 

Agreement is held to be prohibited or invalid, then such provision or term will be
ineffective only to the extent of such prohibition or invalidity, without invalidating or
affecting in any manner whatsoever the remainder of such provision or term or the remaining
provisions or terms of this Agreement. If any of the covenants set forth in this Agreement
are held to be unreasonable, arbitrary or against public policy, such covenants will be
considered divisible with respect to scope, time and geographic area, and in such lesser
scope, time and geographic area, will be effective, binding and enforceable against Seller
and Shareholders to the greatest extent permissible.

     (e) This Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original copy of this Agreement and all of which, when taken together, will
be deemed to constitute one and the same agreement.

     (f) The headings of sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to “Section” or
“Sections” refer to the corresponding Section or Sections of this Agreement unless otherwise
specified. All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the word
“Including” does not limit the preceding words or terms.

     (g) All notices, consents, waivers and other communications under this Agreement must
be in writing and will be deemed to have been duly given when (a) delivered by hand (with
written confirmation of receipt); (b) sent by facsimile (with written confirmation of
receipt), provided that a copy is also promptly mailed by registered mail, return receipt
requested; or (c) when received by the addressee, if sent by a nationally recognized
overnight delivery service (receipt requested), in each case to the appropriate addresses
and facsimile numbers set forth below (or to such other addresses and facsimile numbers as a
party may designate by notice to the other parties):

	 	 	 
	     Executive:
	 	                                        
	 	 	                                        
	 	 	 
	     Company:
	 	315 East Eisenhower Parkway, Suite 300

Ann Arbor, Michigan 48108

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date
first above written.

	 	 	 	 	 	 	 
	EXECUTIVE:	 	KAYDON CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 

A-4exv10w2

 

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) was originally entered into on March 23, 2007, is
effective on March 26, 2007 (the “Effective Date”), by and between KAYDON CORPORATION, a Delaware
corporation (the “Company”), and JAMES O’LEARY, an individual (“Executive”) and has been amended
effective on February 14, 2008.

WITNESSETH:

     WHEREAS, the Company has employed the Executive as its President and Chief Executive Officer,
and the Executive desires to continue his employment on the terms and conditions contained in this
Agreement.

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements
herein contained, the Company and Executive hereby agree as follows:

1. Employment and Duties.

     (a) The Company hereby agrees to employ Executive for the Term (as hereinafter defined) as its
President and Chief Executive Officer. The Executive shall have such management and oversight
responsibilities and authority as are necessary to efficiently administer the affairs of the
Company and as are customary of a President and Chief Executive Officer. All powers herein granted
to the Executive are subject to supervisory approval of the Board, and the Executive may be given
such further reasonably related supervisory duties, powers and prerogatives as may be delegated to
him from time to time by said Board. The Executive shall report exclusively to the Board and
further shall render such advice to the Board as said Board may from time to time request. In
addition, during the Term the Company will cause the Executive to be nominated for re-election as a
Director of the Company.

     (b) During the Term, and excluding any periods of vacation and sick leave to which the
Executive is entitled, Executive shall devote substantially all of his business time and efforts to
the business and affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, use the Executive’s reasonable best efforts
to perform faithfully such responsibilities. Executive is required to work those business hours
customarily necessary to perform properly such duties and responsibilities normally associated with
the position of President and Chief Executive Officer. In performing such duties hereunder,
Executive shall comply with the policies and procedures as adopted from time to time by the Board,
shall give the Company the benefit of his special knowledge, skills, contacts and business
experience, shall perform his duties and carry out his responsibilities hereunder in a diligent
manner. For a transition period to extend no later than May 1, 2007, the Executive may provide
advisory services to Beazer Homes USA, Inc. so as to expedite and facilitate his full time
transition into the Company with the prior approval of the Board. Such advisory services shall not
unreasonably interfere with the services to be rendered by the Executive hereunder.

     (c) During the Term, it shall not be a violation of this Agreement for the Executive to (i)
with the prior approval of the Board in each case (which approval shall not be unreasonably
withheld or delayed), serve on corporate, civic or charitable boards or committees, (ii) with the
prior approval of the Board in each case, deliver lectures, fulfill speaking engagements or teach

 

 

at educational institutions, and (iii) manage personal investments, so long as such activities
do not significantly interfere or constitute a conflict of interest with the performance of the
Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

     (d) The principal location for performance of Executive’s services hereunder shall be at the
offices of the Company in Ann Arbor, Michigan, subject to reasonable travel requirements during the
course of such performance. Executive shall not be required, without his consent, to regularly
report to any office of the Company which is located more than fifty (50) miles from the Company’s
current office location, provided Executive shall be expected to travel to the extent reasonably
necessary to fulfill his responsibilities.

2. Employment Term. The term of Executive’s employment hereunder (the “Term”) shall
commence effective as of the date hereof and shall continue thereafter until terminated in
accordance with Section 4 below.

3. Compensation and Benefits.

     (a) Base Salary. During the Term, the Executive shall receive an annual base salary
(“Annual Base Salary”) in the amount of at least Seven Hundred Thousand ($700,000.00) Dollars,
payable in accordance with the Company’s normal payroll practices (but not less frequently than
monthly). During the Term, the Annual Base Salary shall be reviewed by the Compensation Committee
(for purposes of increase only) at least annually. Any increase in Annual Base Salary shall not
serve to limit or reduce any other obligation to the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase and the term Annual Base Salary as utilized in
this Agreement shall refer to Annual Base Salary as so increased.

     (b) Bonuses; Stock Incentive Plans. Executive shall be eligible to and shall
participate in the Company’s bonus, stock option, restricted stock and other stock incentive plans
at the discretion of the Compensation Committee of the Board. The amount and terms of, and the
targets, conditions and restrictions applicable to each bonus or other incentive award shall be
subject to the provisions of any such plan and of the applicable award by the Company.
Notwithstanding the foregoing:

     (i) under the Company’s Executive Management Bonus Program (the “EMBP”), Executive
shall be entitled to a performance bonus equal to 100% of annual base salary in any year of
the Term during which the Company’s EBITDA performance achieves 100% of the Target EBITDA
goal established by the Compensation Committee pursuant to the EMBP (the “Target Bonus”),
and a supplemental bonus equal to 100% of annual base salary, pro-rated for each percentage
that the Company’s EBITDA performance exceeds the Target EBITDA goal established by the
Compensation Committee pursuant to the EMBP but is less than the maximum limit set by the
Compensation Committee, until the total of the Target Bonus and the supplemental bonus
equals 200% of the Executive’s annual base salary. Anything contained herein to the
contrary notwithstanding, in the event that the EMBP is no longer in effect (or is reduced
or modified downward in any material respect), the Company will establish a comparable
performance incentive plan that will provide for annual cash bonuses to Executive

2

 

resulting in total payments to Executive not less than those which Executive is
currently entitled to receive under this provision.

     (ii) within ten (10) business days from the Effective Date, upon action by the
Compensation Committee, the Company shall grant Executive non-qualified stock options to
acquire 250,000 shares of common stock of the Company in accordance with the terms and
conditions of the Kaydon Corporation 1999 Long-Term Stock Incentive Plan (the “1999 Plan”).
The option agreement relating to such options shall provide that (A) such options shall vest
and become exercisable with respect to 50,000 shares on each anniversary of the date of
grant, subject to acceleration as provided in Sections 4(f)(v) and 5(e) below, (B) the
strike price for all such options shall be the closing price of the Company’s common stock
on the New York Stock Exchange on the date of grant and (C) such options shall expire on the
day prior to the tenth anniversary of the date of grant. In the event of any conflict
between the terms of the 1999 Plan and this Agreement, this Agreement shall govern and
control and shall be deemed to be an amendment to the 1999 Plan.

     (iii) within ten (10) business days from the Effective Date, upon action by the
Compensation Committee, the Company shall grant Executive a restricted stock award for
100,000 shares of common stock of the Company in accordance with all of the terms and
conditions of the 1999 Plan. The agreement relating to such shares of restricted stock
shall provide that (A) the restrictions pertaining to such shares shall terminate with
respect to 20,000 shares on each anniversary of the date of grant, subject to acceleration
as provided in Sections 4(f)(v) and 5(e) below, and (B) so long as the Executive is employed
by the Company, the Executive shall be entitled to receive any dividends declared and
payable by the Company with respect to such restricted stock held by the Executive,
regardless of whether said stock has vested or become unrestricted at such time. In the
event of any conflict between the terms of the 1999 Plan and this Agreement, this Agreement
shall govern and control and shall be deemed to be an amendment to the 1999 Plan.

     (iv) within ten (10) business days from the Effective Date, upon action by the
Compensation Committee, the Company shall grant Executive a restricted stock award for
10,000 shares of common stock of the Company in accordance with all of the terms and
conditions of the 1999 Plan. The agreement relating to such shares of restricted stock
shall provide that (A) the restrictions pertaining to such shares shall terminate on the
first anniversary of the date of grant, subject to acceleration as provided in Sections
4(f)(v) and 5(e) below and (B) so long as the Executive is employed by the Company, the
Executive shall be entitled to receive any dividends declared and payable by the Company
with respect to such restricted stock held by the Executive, regardless of whether said
stock has vested or become unrestricted at such time. In the event of any conflict between
the terms of the 1999 Plan and this Agreement, this Agreement shall govern and control and
shall be deemed to be an amendment to the 1999 Plan The Executive shall purchase an equal
number of shares of the Company’s common stock within thirty (30) days of the Effective Date
and shall retain ownership of at least 10,000 shares of Company common stock during the
Term.

3

 

     (c) Incentive, Savings and Retirement Plans. During the Term, the Executive shall be
entitled to participate in all incentive, savings and retirement plans, practices, policies and
programs (the “Programs”) applicable generally to other most senior executives of the Company and
its affiliated companies. The Programs currently include, without limitation, the Kaydon
Corporation Retirement Plan (the “Retirement Plan”), the Kaydon Corporation Supplemental Executive
Retirement Plan (the “SERP”) and the Kaydon Corporation Executive Management Bonus Plan (the “Bonus
Plan”). Notwithstanding the foregoing or anything contained in the applicable Programs to the
contrary, the Company agrees that, with respect to the Executive’s participation in the SERP, the
Executive shall be entitled to the following (and the SERP shall be amended, as of the Effective
Date, to provide for the following):

     (i) the Executive shall be eligible for benefits under the SERP on the Effective Date
(i.e., for all purposes of the SERP, the Executive shall be deemed to be sixty-five (65)
years of age on the Effective Date) and the Executive shall remain a participant in the SERP
during the Term;

     (ii) the Executive shall be 100% vested under the SERP on the Effective Date,
regardless of whether the Executive is vested under the Retirement Plan;

     (iii) the Executive shall be entitled to a lump sum payment from the SERP upon the
termination of his employment with the Company following a Change in Control, said payment
to be made in cash and, subject to Section 11 below, within thirty (30) days following the
Date of Termination;

     (iv) the Executive shall be entitled to ten (10) years of additional credited service
on the Effective Date and, thereafter, each day of the Executive’s actual credited service
shall entitle the Executive to one (1) day of additional credited service, subject to a
maximum of thirty (30) years of credited service. By way of example, after two years of
actual credited service with the Company, the Executive shall have fourteen (14) years of
credited service under the SERP (i.e., 10 + 2 + 2);

     (v) the Executive shall be deemed to be a person identified in Appendix C to the SERP
as eligible for additional credited service; and

     (vi) the definition of a “Change in Control” shall be as set forth in Section 5(i)(ii)
below .

     (d) Welfare Benefit Plans. During the Term, the Executive and/or the Executive’s
family, as the case may be, shall be eligible for participation in and shall receive all benefits
under welfare benefit plans, practices, policies and programs provided by the Company and its
affiliated companies (including, without limitation, medical, prescription, dental, disability,
employee life, group life, accidental death and travel accident insurance plans and programs) to
the extent applicable generally to other most senior executives of the Company and its affiliated
companies.

     (e) Expenses. The Company shall pay or reimburse Executive for all reasonable and
necessary out-of-pocket expenses incurred in the performance of his duties under this Agreement,
subject to approval in accordance with the Company’s standard reimbursement

4

 

policies. Executive shall keep detailed and accurate records of expenses incurred in
connection with the performance of his duties hereunder and reimbursement therefore shall be in
accordance with policies and procedures to be established from time to time by the Board.

     (f) Office and Support Staff. During the Term, the Executive shall be entitled to an
office or offices of a size and with furnishings and other appointments, and to secretarial and
other assistance, consistent with the Executive’s position and title.

     (g) Vacation. During the Term, Executive shall be entitled to twenty (20) working
days of compensated vacation in each fiscal year, to be taken at times which do not unreasonably
interfere with the performance of Executive’s duties hereunder. Any unused vacation time from any
fiscal year shall be subject to accumulation or forfeiture in accordance with Company policy as in
effect from time to time. Executive also shall be entitled to such periods of sick leave as is
customarily provided by the Company to its senior executive employees.

     (h) Relocation. The Company shall reimburse Executive for reasonable and actual
relocation expenses incurred in moving from his present primary residence in the Atlanta, Georgia
area to the Ann Arbor, Michigan area. The following reasonable expenses shall be reimbursed,
provided Executive submits adequate documentation (for example, receipts, closing documents, etc.)
substantiating the expenses: costs for packing, moving and insuring household goods and
automobiles; costs for storage of household goods prior to moving into a new residence; costs
associated with house hunting trips to Ann Arbor; costs associated with temporary housing (a small,
furnished apartment in the Ann Arbor area) for Executive; costs associated with the purchase of a
new home in the Ann Arbor area (including, without limitation, closing costs, legal fees, home
inspections, title insurance, mortgage broker fees and transfer taxes, “points” or “origination
fees” not to exceed 1%); costs associated with the sale of Executive’s current residence
(including, without limitation, closing costs, legal fees, transfer taxes, any real estate broker
commissions and mortgage prepayment penalties). All of the foregoing (Subsections (i) through
(viii) above) and Section 3(i) below shall be “grossed-up”, so-called, to the extent not otherwise
tax deductible to the Executive, to take into account income tax consequences to Executive.

     (i) Attorneys’ Fees. The Company shall reimburse Executive for the actual and
reasonable expenses incurred by Executive for having this Agreement prepared and/or reviewed by an
attorney.

     (j) Life insurance. During the Term, the Company shall maintain a term life insurance
policy covering the life of Executive in the face amount of not less than $2,000,000.00 with
respect to which the Executive shall have the right to designate the beneficiary. Upon the
termination of Executive’s employment for any reason, the Company shall, within thirty (30) days
after such termination, transfer (without cost to the Executive), free and clear of liens and
security interests, the ownership of said life insurance to Executive or his designee.

     The Company warrants and represents to the Executive that this Agreement, including, without
limitation, the grants and amendments to the 1999 Plan and the SERP contemplated hereby, have been
duly authorized and approved by the Compensation Committee of the Board and the Board.

5

 

4. Termination of Employment for Death or Disability; Other Termination Absent any Change in
Control.

     (a) Death or Disability. The Executive’s employment shall terminate automatically
upon the Executive’s death during the Term. If the Disability of the Executive occurs during the
Term (pursuant to the definition of Disability set forth below), the Company may give to the
Executive written notice in accordance with Section 10(c) of this Agreement of its intention to
terminate the Executive’s employment. In such event, the Executive’s employment with the Company
shall terminate effective on the 30th day after receipt of such notice by the Executive
(the “Disability Effective Date”), provided that, within the thirty (30) days after such receipt,
the Executive shall not have returned to full-time performance of the Executive’s duties. For
purposes of this Agreement, “Disability” shall mean the absence of the Executive from the
Executive’s duties with the Company on a full-time basis for one hundred and twenty (120)
consecutive business days as a result of incapacity due to mental or physical illness which is
determined to be total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive’s legal representative.

     (b) Cause. The Company may terminate the Executive’s employment for Cause. For
purposes of this Agreement, “Cause” shall mean:

     (i) any act or failure to act by Executive done with the intent to harm in any material
respect the financial interests or reputation of the Company or any affiliated companies;

     (ii) Executive being convicted of (or entering a plea of guilty or nolo contendere to)
a felony (other than a felony involving a motor vehicle not involving alcohol or drugs);

     (iii) Executive’s dishonesty, misappropriation or fraud with regard to the Company or
any affiliated companies, including (but not limited to) any falsification of company
records or reports (other than good faith expense account disputes);

     (iv) a grossly negligent act or failure to act by Executive which has a material
adverse affect on the Company or any affiliated companies;

     (v) the material breach by Executive of his agreements or obligations under this
Agreement which has a material adverse effect on the Company, which breach, if curable, is
not cured by Executive within fifteen (15) days (i.e., calendar days) after written notice
from the Company which specifically identifies the material breach which the Company
believes that Executive has committed; or

     (vi) the continued refusal to follow the directives of the Board or its designees which
are consistent with Executive’s duties and responsibilities identified in Section 1 hereof;
provided that the foregoing refusal shall not be “cause” if Executive in good faith believes
that such direction is illegal, unethical or immoral and promptly so notifies the Board in
writing.

     (c) Good Reason. The Executive’s employment may be terminated by the Executive

6

 

for Good Reason. For purposes of this Agreement, “Good Reason” shall mean:

     (i) the assignment to the Executive of any duties inconsistent in any material respect
with the Executive’s position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities as contemplated by Section 1 of this
Agreement, or any other action by the Company which results in a diminution in such
position, authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is remedied by the
Company within fifteen (15) days after receipt of notice thereof given by the Executive;

     (ii) any failure by the Company to comply with any of the provisions of Section 3 of
this Agreement, other than an isolated, insubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company within fifteen (15) days after receipt of
notice thereof given by the Executive;

     (iii) the Company’s requiring the Executive to be based at any office or location other
than as provided in Section 1(e) hereof, which is not remedied by the Company within fifteen
(15) days after receipt of notice thereof given by the Executive; or

     (iv) the material breach by the Company of any of its other material obligations under
this Agreement, which breach, if curable, is not cured by the Company within fifteen (15)
days after written notice from the Executive which specifically identifies the material
breach which the Executive believes that the Company has committed permitted by this
Agreement.

     Anything in this Agreement to the contrary notwithstanding, a termination by the Executive for
any reason during the 30 day period immediately preceding the twelve (12) month anniversary of a
Change in Control shall be deemed to be a termination for Good Reason for all purposes of this
Agreement.

     (d) Notice of Termination. Any termination by the Company for Cause, or by the
Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto
given in accordance with Section 10(c) of this Agreement. For purposes of this Agreement, a
“Notice of Termination” means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) if the Date of Termination (as defined below)
is other than the date of receipt of such notice, specifies the termination date (which date shall
be not more than thirty (30) days after the giving of such notice). The failure by the Executive
or the Company to set forth in the Notice of Termination any fact or circumstance which contributes
to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

     (e) Date of Termination. “Date of Termination” means (i) if the Executive’s

7

 

employment is terminated by the Company for Cause, or by the Executive for Good Reason, the
date of receipt of the Notice of Termination or, subject to applicable cure periods, any later date
specified therein, as the case may be, (ii) if the Executive’s employment is terminated by the
Company other than for Cause or Disability, the Date of Termination shall be the date on which the
Company notifies the Executive of such termination and (iii) if the Executive’s employment is
terminated by reason of death or Disability, the Date of Termination shall be the date of death of
the Executive or the Disability Effective Date, as the case may be.

     (f) Obligations of the Company. If, during the Term, the Company shall terminate the
Executive’s employment other than for Cause or the Executive shall terminate his employment for
Good Reason, then:

     (i) the Company shall pay to the Executive in a lump sum in cash, subject to Section 11
below, within thirty (30) days following the Date of Termination, or as soon thereafter as
is reasonably practicable, the aggregate of the following amounts: (1) the Executive’s
Annual Base Salary through the Date of Termination to the extent not theretofore paid, (2)
any accrued but unpaid annual bonus (“Annual Bonus”) respecting any completed fiscal year
ending prior to the Date of Termination, (3) the product of (x) the Highest Annual Bonus
(hereinafter defined) and (y) a fraction, the numerator of which is the number of days in
the current fiscal year through the Date of Termination, and the denominator of which is 365
and (4) any compensation previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1), (2), (3) and (4) shall be
hereinafter referred to as the “Accrued Obligations”). The timing of payment by the Company
of any deferred compensation shall remain subject to any payment election previously made by
the Executive. The term “Highest Annual Bonus” shall mean the highest of the Executive’s
aggregate bonuses (whether paid or deferred) under all of the Company’s annual incentive
and/or bonus plans (including, without limitation, the Bonus Plan) during the last three
full fiscal years prior to the Date of Termination or for such lesser period as the
Executive has been employed by the Company (annualized in the event that the Executive was
not employed by the Company for the whole of any such fiscal year).

     (ii) the Company shall pay to the Executive in a lump sum in cash, subject to Section
11 below, within thirty (30) days following the Date of Termination, or as soon thereafter
as is reasonably practicable, an amount equal to two (2) times the sum of (1) Executive’s
Annual Base Salary (at the rate in effect on the Date of Termination), and (2) the Highest
Annual Bonus;

     (iii) for a period two (2) years after the Date of Termination, or such longer period
as may be provided by the terms of the appropriate plan, program, practice or policy, but
subject to applicable insurance company and other legal requirements, the Company shall
continue benefits to the Executive and/or the Executive’s family at least equal to those
which would have been provided to them in accordance with the plans, programs, practices and
policies described in Section 3(d) of this Agreement if the Executive’s employment had not
been terminated or, if more favorable to the Executive, as in effect generally at any time
within two (2) years thereafter with respect to other peer

8

 

executives and their families; provided, however, that if the Executive becomes
reemployed with another employer and receives medical or other welfare benefits under
another employer provided plan, the medical and other welfare benefits described herein
shall be secondary to those provided under the other employer-provided plan during the two
(2) year period referenced herein. Notwithstanding the foregoing, if the Executive’s
benefits referenced herein or the level of coverage cannot be continued due to Internal
Revenue Service or insurance company restrictions, the Company shall provide the Executive
with such substantially equivalent benefits or such additional benefits as shall be
necessary to make the benefits to the Executive and/or the Executive’s family substantially
equivalent, even if the payment or coverage of such benefits shall be provided through other
sources; and

     (iv) to the extent not theretofore paid or provided, the Company shall timely pay or
provide to the Executive any other amounts or benefits required to be paid or provided or
which the Executive is eligible to receive under any plan, program, policy or practice or
contract or agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the “Other Benefits”).

     (v) all stock options, restricted stock awards, long term incentive plan benefits and
any other benefits that are subject to vesting based upon the continued employment of the
Executive which would become vested, unrestricted or exercisable within the two (2) year
period immediately following the Date of Termination shall automatically become vested,
unrestricted and/or exercisable, as the case may be.

     (g) Death. If the Executive’s employment is terminated by reason of the Executive’s
death, this Agreement shall terminate without further obligations to the Executive’s legal
representatives under this Agreement, other than for payment of Accrued Obligations and the timely
payment or provision of Other Benefits. Accrued Obligations shall be paid to the Executive’s
estate or beneficiary, as applicable, in a lump sum in cash within thirty (30) days of the Date of
Termination, or as soon thereafter as is reasonably practicable.

     (h) Disability. If the Executive’s employment is terminated by reason of the
Executive’s Disability, this Agreement shall terminate without further obligations to the
Executive, other than for payment of Accrued Obligations and the timely payment or provision of
Other Benefits. Accrued Obligations shall be paid to the Executive or the Executive’s legal
representative in a lump sum in cash, subject to Section 11 below, within thirty (30) days
following the Date of Termination, or as soon thereafter as is reasonably practicable.

     (i) Cause. If the Executive’s employment shall be terminated by the Company for
Cause, this Agreement shall terminate without further obligations to the Executive other than the
obligation to pay to the Executive (A) his Annual Base Salary through the Date of Termination, (B)
the amount of any compensation previously deferred by the Executive, and (C) Other Benefits, in
each case to the extent theretofore unpaid.

     (j) Other than for Good Reason. If the Executive voluntarily terminates employment
during the Term, excluding a termination for Good Reason, this Agreement shall terminate without
further obligations to the Executive, other than for Accrued Obligations and the timely

9

 

payment or provision of Other Benefits. In such case, all Accrued Obligations shall be paid
to the Executive in a lump sum in cash, subject to Section 11 below, within thirty (30) days
following the Date of Termination, or as soon thereafter as is reasonably practicable.

5. Termination of Employment Following a Change in Control.

     (a) Termination. In the event that Executive’s employment is terminated by the
Company other than for Cause, or is terminated by the Executive for Good Reason, (i) 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 complete
abandonment of that effort or (ii) at any time within three (3) years following the date on which a
Change in Control occurs, then the Company shall provide to Executive the rights and benefits
described in this Section 5 in lieu of all other benefits of a severance nature under Section 4(f)
of this Agreement. The specific arrangements referred to in this Section 5 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.

     (b) Accrued Benefits. The Company shall pay to the Executive in a lump sum in cash,
subject to Section 11 below, within 30 days after the Date of Termination, or as soon thereafter as
is reasonably practicable, the sum of (1) the Executive’s Annual Base Salary through the Date of
Termination to the extent not theretofore paid, (2) any accrued but unpaid Annual Bonus respecting
any completed fiscal year ending prior to the Date of Termination, (3) the product of (x) the
greater of (i) the Highest Annual Bonus, and (ii) the target bonus for the year during which the
Date of Termination occurs, and (y) a fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination, and the denominator of which is 365, and (4)
any compensation previously deferred by the Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in each case to the extent not theretofore paid.
Anything contained herein to the contrary notwithstanding, the timing of payment by the Company of
any deferred compensation shall remain subject to the terms and conditions of the applicable
deferred compensation plan and any payment election previously made by the Executive.

     (c) Additional Payment. The Company shall pay to the Executive in a lump sum in cash,
subject to Section 11 below, within 30 days after the Date of Termination, or as soon thereafter as
is reasonably practicable, an amount equal to three (3) times the sum of (x) the Executive’s Annual
Base Salary and (y) the greater of (A) the Highest Annual Bonus or (B) the target bonus for the
year during which the Date of Termination occurs.

     (d) Continuation of Benefits. For three (3) years after the Executive’s Date of
Termination, or such longer period as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue benefits to the Executive and/or the
Executive’s family at least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section 3(d) of this Agreement if the
Executive’s employment had not been terminated or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of

10

 

the Company and its affiliated companies and their families, provided, however, that if the
Executive becomes reemployed with another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the medical and other welfare benefits
described herein shall be secondary to those provided under such other plan during such applicable
period of eligibility. For purposes of determining eligibility (but not the time of commencement of
benefits) of the Executive for retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed until three (3) years after
the Date of Termination and to have retired on the last day of such period.

     If due to insurance company or Internal Revenue Service restrictions, the 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 or, if more favorable to the Executive, during the
three-year period thereafter, the Company shall provide such substantially equivalent benefits, or
such additional benefits as may be necessary to make the Executive whole through other sources.

     (e) Acceleration of Vesting. All stock options, restricted stock awards, long term
incentive plan benefits and any other benefits that are subject to vesting based upon the continued
employment of the Executive shall automatically become vested, unrestricted and/or exercisable, as
the case may be.

     (f) Outplacement Services. Full outplacement services provided by the professional
outplacement consulting firm of Executive’s choosing, to a maximum of $50,000, provided that all
expenses reimbursable under this subsection (vi) 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.

     (g) Other Benefits. To the extent not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to be paid or
provided or which the Executive is eligible to receive under any plan, program, policy or practice
or contract or agreement of the Company and its affiliated companies

     (h) Supplemental Executive Retirement Plan Benefits.

     (i) Accrued Benefit: In the event a Change in Control occurs, the Executive
shall be entitled to payment of the Actuarial Equivalent of the Executive’s vested Accrued
Benefit under the SERP, if any, adjusted as follows to the extent applicable to the
Executive:

     A. Additional Credit. Executive’s benefit and Accrued Benefit under
the SERP shall be computed by crediting the Executive with the Additional Credit
provided in Section 2.17(a) of the SERP; and

     B. Actuarial Equivalent. The Actuarial Equivalent of the payments from
the SERP determined under that Plan and this subsection shall be

11

 

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.

     (ii) Effect. The execution of this Agreement constitutes:

     A. An amendment of the SERP with respect to Executive to effect the provisions
of this Agreement;

     B. An 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 as of October 16, 2006, and to the amendments to the SERP
provided in this Agreement;

     C. An agreement by the Company and Executive that Executive may not be removed
from the Additional Credit provisions of the SERP; and

     D. An agreement by the Company and Executive that Executive’s employment with
any successor to the Company shall not cause forfeiture of Executive’s benefits
under the SERP under Section 3.6(a) of the SERP.

Payment of the SERP benefit as provided by this Agreement satisfies the Company’s
obligations to Executive, if any, under the SERP.

     (iii) Limitation. Notwithstanding any other provision of this Agreement, this
subsection (h) does not provide any SERP benefit to Executive if Executive was not an Active
Participant in the SERP at any time within six (6) months prior to the Change in Control,
unless Executive was removed as an Active Participant in the SERP or the SERP was amended or
terminated within six (6) months prior to the Change in Control.

     (i) Definitions. For purposes of this Section 5 of this Agreement:

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

     (ii) “Change in Control” means any one of the following:

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

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

12

 

     C. The approval by the stockholders of the Company of a reorganization, merger
or consolidation, unless with or into a Permitted Successor; or

     D. The approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company or the sale or disposition of all or substantially all
of its assets other than to a Permitted Successor.

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

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

     (v) “Permitted Successor” means a corporation which, immediately following the
consummation of a Change in Control above, satisfies all of the following criteria:

     A. 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 the 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. No Person 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; and

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

     (vi) “Person” has the same meaning as set forth in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended.

     (vii) “Persons Acting as a Group” means owners of a corporation that enters into a
merger, consolidation, purchase or acquisition of stock, or similar business transaction
with the corporation. If a person, including an entity, owns stock in both corporations
that enter into a merger, consolidation, purchase or acquisition of stock, or similar
transaction, such shareholder is considered to be acting as a group with other

13

 

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.

     (viii) “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.

6. Indemnification. The Company agrees to indemnify the Executive to the fullest extent
provided by Article VI of the Company’s Bylaws, as in effect on the Effective Date, regardless of
whether such Bylaw provisions are hereafter amended, eliminated or held to be invalid as a matter
of Delaware law. The Company’s indemnification obligations shall survive the expiration or
termination of the Term for any reason.

7. Employment Covenants.

     (a) Non-Solicitation. In recognition of the highly competitive nature of the
industries in which the Company conducts its business, and to further protect the goodwill of the
Company and to promote and preserve its legitimate business interests, the Executive agrees that
during the two year period following his termination of employment under circumstances that entitle
the Executive to receive payments under Section 4 or Section 5 of his Agreement, the Executive
shall not:

     (i) directly or indirectly (A) induce any current customer of the Company to patronize
any business directly or indirectly in competition with the Business conducted by the
Company; (B) request or advise any of the current customers to withdraw, curtail or cancel
any business with the Company; or

     (ii) directly or indirectly employ any person who was employed by the Company at or
within the prior six months, or in any manner seek to induce any such person to leave his or
her employment; provided, that, the Executive may hire an employee of the Company or any of
its affiliates who was terminated by the Company or resigned from employment with the
Company so long as the Executive did not directly or indirectly influence such termination
or resignation.

The Executive acknowledges that in the event of his breach of the foregoing covenant, money damages
would be an inadequate remedy. Accordingly, and notwithstanding any other provision of this
Agreement, without prejudice to the rights of the Company to seek such damages or other remedies
available to it, the Company shall be entitled to seek injunctive relief, specific performance or
other equitable relief in any proceeding which the Company may bring to enforce the foregoing
covenant not to compete on its express and explicit terms without the necessity of posting a bond.

     (b) Confidential Information. Executive agrees that all Confidential Information
shall be the sole property of the Company, and Executive agrees that he shall not during the Term
nor thereafter, use for his benefit or the benefit of others or disclose at any time Confidential

14

 

Information or take with him upon termination of this Agreement any records, papers, reports,
lists, computer tapes or disks or any other materials of any nature that contain any Confidential
Information. “Confidential Information” shall mean all information other than General Knowledge
(defined below) relating to the Company’s: (i) business or existing projects including all those in
various stages of research and development including all unpublished plans for new products or
services; (ii) financial information, internal business procedures and other information which
relate to the way the Company conducts its business and which are not publicly available; (iii)
data written by the Company’s employees or others, including source codes, object codes, marketing
and development plans, budgets, forecasts, forecast assumptions and future plans and potential
strategies of the Company which have been or are being discussed; (iv) unpublished pricing data;
(v) identity, buying habits and practices of the Company, its suppliers and customers to the extent
not publicly available; (vi) information regarding the skills or compensation of employees of the
Company; (vii) the Intellectual Property of the Company and any information pertaining thereto;
(viii) materials and information supplied by customers or clients to the Company that contain data
regarding any research, products, procedures or the like; and (ix) any other information deemed
confidential by the Company by marking such information with the word “Confidential” or similar
word; by orally advising the Executive that the information is confidential or by treating the
information in such a manner that the Executive should reasonably believe it to be deemed
confidential by the Company. “General Knowledge” shall mean (i) general skills or experience
gained during Executive’s employment with, consultation for or work for the Company; and (ii)
information and data publicly available.

     (c) Records. All files, records, memoranda and other documents regarding former,
existing or prospective customers of the Company or relating in any manner whatsoever to
Confidential Information (collectively, “Records”), whether prepared by Executive or otherwise
coming into his possession, shall be the exclusive property of the Company. All Records shall be
immediately placed in the physical possession of the Company upon the termination of Executive’s
employment with the Company, or at any other time specified by the Board. The retention and use by
Executive of duplicates in any form of Records is prohibited after the termination of Executive’s
employment with the Company.

     (d) Breach. Executive hereby recognizes and acknowledges that irreparable injury or
damage shall result to the Company in the event of a breach or threatened breach by Executive of
any of the terms or provisions of this Section 7, and Executive therefore agrees that the Company
shall be entitled to an injunction restraining Executive from engaging in any activity constituting
such breach or threatened breach. Nothing contained herein shall be construed as prohibiting the
Company from pursuing any other remedies available to the Company at law or in equity for such
breach or threatened breach, including but not limited to, the recovery of damages from Executive
and, if Executive is an employee of the Company, the termination of his employment with the Company
in accordance with the terms and provisions of this Agreement.

     (e) Survival. Notwithstanding the termination of the employment of Executive or the
termination of this Agreement, the provisions of this Section 7 shall survive and be binding upon
Executive unless a written agreement which specifically refers to the termination of the
obligations and covenants of this Section 7 is executed by the Company.

15

 

8. Mitigation. Except as otherwise provided in this Agreement pertaining to medical and
other welfare benefits, in no event shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement and such amounts shall not be reduced whether or not the Executive
obtains other employment. The Company agrees to pay as incurred, to the full extent permitted by
law, all reasonable legal fees and expenses which the Executive may reasonably incur as a result of
any contest by (i) the Company, provided that the Executive prevails in at least one material
issue, (ii) the Executive, provided that the Executive prevails in at least one material issue, or
(iii) others, of the validity or enforceability of, or liability under, any provision of this
Agreement (including, without limitation, as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement), plus in each case interest on any delayed
payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Internal
Revenue Code of 1986, as amended (the “Code”).

9. Successors.

     (a) This Agreement is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.

     (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no such succession had
taken place, and the failure of the Company to do so shall be deemed Good Reason. As used in this
Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation
of law, or otherwise.

10. Miscellaneous.

     (a) This Agreement shall be governed by and construed in accordance with the laws of the State
of Delaware, without reference to principles of conflict of laws. Any legal action, suit or
proceeding arising out of or relating to this Agreement shall be instituted in the state or federal
courts in the States of either Michigan or Delaware, and the parties agree not to assert, in any
action, suit or proceeding by way of motion, as a defense or otherwise, any claim that either party
is not personally subject to the jurisdiction of such court, or that such action, suit or
proceeding is brought in an inconvenient forum, or that the venue is improper or that the subject
matter hereof cannot be enforced in such court. The parties hereby irrevocably submit to the
jurisdiction of any such court in any such action, suit or proceeding and agree that service of all
process in any such action, suit or proceeding in any such court may be made by registered or
certified mail, return receipt requested, to its address set forth in this Agreement, such service
being hereby acknowledged by such party to be sufficient for personal jurisdiction in any action
against such party in any such court and to be otherwise effective and binding service in every
respect.

16

 

     (b) The captions of this Agreement are not part of the provisions hereof and shall have no
force or effect. This Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and legal representatives.

     (c) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party, by commercial overnight courier or by registered or certified
mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

James O’Leary

c/o Berkowitz, Trager & Trager, LLC

8 Wright Street, 2nd Floor

Westport, Connecticut 06880

Attention: Richard Berkowitz, Esq.

If to the Company:

Kaydon Corporation

315 East Eisenhower Parkway, Suite 300

Ann Arbor, Michigan 48108

Attention: Vice President-Human Resources

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.

     (d) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

     (e) The Company may withhold from any amounts payable under this Agreement such Federal,
state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or
regulation.

     (f) The Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or the Company may
have hereunder, including, without limitation, the right of the Executive to terminate employment
for Good Reason pursuant to Section 4(c) of this Agreement, shall not be deemed to be a waiver of
such provision or right or any other provision or right of this Agreement.

     (g) This Agreement supersedes any and all other prior or contemporaneous agreements, either
oral or in writing, between the parties hereto with respect to the subject matter hereof. This
Agreement may be executed via facsimile transmission signature and in counterparts, each of which
shall be deemed to be an original but all of which together will constitute one and the same
instrument.

11. Special Rules Regarding Section 409A of the Internal Revenue Code. Notwithstanding
anything herein to the contrary, in the event any payments or benefits required to be provided

17

 

hereunder are deemed to constitute payments of “nonqualified deferred compensation” that is subject
to the requirements of Section 409A of the Internal Revenue Code, then the time and manner in which
such payment or benefit is provided shall be adjusted, to the extent reasonably possible, so that
payment or distribution is made at a time and in a manner that is consistent with the requirements
of such Section 409A (and applicable proposed or final Treasury regulations or other guidance
issued or to be issued by the Internal Revenue Service). This Section 11 may, for example, require
that certain payments to Executive following his termination of employment be accumulated and
deferred without interest until the first day of the seventh month following the Date of
Termination, if, at the Date of Termination Executive was a “specified employee” (as that term is
used for purposes of Section 409A(2)(B)(i)).

12. Certain Additional Payments by the Company.

     (a) Tax Reimbursement Payment. Anything in this Agreement to the contrary
notwithstanding, in the event that any amount or benefit paid, payable, or to be paid, or
distributed, distributable, or to be distributed to or with respect to Executive by the Company
(whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with
the Company, or with any person whose actions result in a change of ownership covered by Code
Section 280G or any person affiliated with the Company or such person) as a result of a change in
ownership of the Company or a change in ownership of a direct or indirect parent thereof
(collectively, the “Covered Payments”) is or becomes subject to the excise tax imposed by or under
Section 4999 of the Code (or any similar tax that may hereafter be imposed), and/or any interest or
penalties with respect to such excise tax (such excise tax, together with such interest and
penalties, is hereinafter collectively referred to as the “Excise Tax”), then the Company shall pay
to Executive an additional amount (the “Tax Reimbursement Payment”) such that after payment by
Executive of all taxes (including, without limitation, any interest or penalties and any Excise Tax
imposed on or attributable to the Tax Reimbursement Payment itself) Executive retains an amount of
the Tax Reimbursement Payment equal to the sum of (i) the amount of the Excise Tax imposed upon the
Covered Payments, and (ii) without duplication, an amount equal to the product of (A) any
deductions disallowed for federal, state or local income tax purposes because of the inclusion of
the Tax Reimbursement Payment in Executive’s adjusted gross income, and (B) the highest applicable
marginal rate of federal, state or local income taxation, respectively, for the calendar year in
which the Tax Reimbursement Payment is made or is to be made. The intent of this Section 12 is
that (a) Executive, after paying his federal, state and local income tax and any payroll taxes on
Executive, will be in the same position as if he was not subject to the Excise Tax under Section
4999 of the Code and did not receive the extra payments pursuant to this Section 12, and (b) that
Executive should never be “out-of-pocket” with respect to any tax or other amount subject to this
Section 12, whether payable to any taxing authority or repayable to the Company, and this Section
12 shall be interpreted accordingly.

     (b) Certain Covered Payments. Except as otherwise provided in Section 12(a), for
purposes of determining whether any of the Covered Payments will be subject to the Excise Tax and
the amount of such Excise Tax,

     (i) such Covered Payments will be treated as “parachute payments” (within the meaning
of Section 280G(b)(2) of the Code) and such payments in excess of the Code

18

 

Section 280G(b)(3) “base amount” shall be treated as subject to the Excise Tax, unless,
and except to the extent that, the Company’s independent certified public accountants
appointed prior to the change in ownership covered by Code Section 280G(b)(2) or legal
counsel (reasonably acceptable to Executive) appointed by such public accountants (the
“Accountant”), deliver a written opinion to Executive, reasonably satisfactory to
Executive’s legal counsel, that Executive has a reasonable basis to claim that the Covered
Payments (in whole or in part) (A) do not constitute “parachute payments”, (B) represent
reasonable compensation for services actually rendered (within the meaning of Section
280G(b)(4) of the Code) in excess of the “base amount” allocable to such reasonable
compensation, or (C) such “parachute payments” are otherwise not subject to such Excise Tax
(with appropriate legal authority, detailed analysis and explanation provided therein by the
Accountants); and

     (ii) the value of any Covered Payments which are non-cash benefits or deferred payments
or benefits shall be determined by the Accountant in accordance with the principles of
Section 280G of the Code.

     (c) Applicable Tax Rates, Etc. For purposes of determining the amount of the Tax
Reimbursement Payment, Executive shall be deemed:

     (i) to pay federal, state and/or local income taxes at the highest applicable marginal
rate of income taxation for the calendar year in which the Tax Reimbursement Payment is made
or is to be made; and

     (ii) to have otherwise allowable deductions for federal, state and local income tax
purposes at least equal to those disallowed due to the inclusion of the Tax Reimbursement
Payment in Executive’s adjusted gross income.

     (d) Correction of Tax Reimbursement Payment; Refunds.

     (i) (A) In the event that prior to the time Executive has filed any of his tax returns
for the calendar year in which the change in ownership event covered by Code Section
280G(b)(2) occurred, the Accountant determines, for any reason whatever, the correct amount
of the Tax Reimbursement Payment to be less than the amount determined at the time the Tax
Reimbursement Payment was made, Executive shall repay to the Company, at the time that the
amount of such reduction in Tax Reimbursement Payment is determined by the Accountant, the
portion of the prior Tax Reimbursement Payment attributable to such reduction (including the
portion of the Tax Reimbursement Payment attributable to the Excise Tax and federal, state
and local income tax imposed on the portion of the Tax Reimbursement Payment being repaid by
Executive, using the assumptions and methodology utilized to calculate the Tax Reimbursement
Payment (unless manifestly erroneous)), plus interest on the amount of such repayment at the
rate provided in Section 1274(b)(2)(B) of the Code.

          (B) In the event that the determination set forth in (A) above is made by the
Accountant after the filing by Executive of any of his tax returns for the calendar year in
which the change in ownership event covered by Code Section 280G(b)(2)

19

 

occurred but prior to one (1) year after the occurrence of such change in ownership,
Executive shall file at the request of the Company an amended tax return in accordance with
the Accountant’s determination, but no portion of the Tax Reimbursement Payment shall be
required to be refunded to the Company until actual refund or credit of such portion has
been made to Executive, and interest payable to the Company shall not exceed the interest
received or credited to Executive by such tax authority for the period it held such portion
(less any tax Executive must pay on such interest and which he is unable to deduct as a
result of payment of the refund).

          (C) In the event Executive receives a refund pursuant to (B) above and repays such
amount to the Company, Executive shall thereafter file for refunds or credits by reason of
the repayments to the Company.

          (D) Executive and the Company shall mutually agree upon the course of action, if any,
to be pursued (which shall be at the expense of the Company if Executive’s claim for refund
or credit is denied.

     (ii) In the event that the Excise Tax is later determined by the Accountants or the
Internal Revenue Service to exceed the amount taken into account hereunder at the time the
Tax Reimbursement Payment is made (including by reason of any payment the existence or
amount of which cannot be determined at the time of the Tax Reimbursement Payment), the
Company shall make an additional Tax Reimbursement Payment in respect of such excess (plus
any interest or penalties payable with respect to such excess) once the amount of such
excess is finally determined.

     (iii) In the event of any controversy with the Internal Revenue Service (or other
taxing authority) under this Section 12, subject to subpart (d)(i)(D) above, Executive shall
permit the Company to control issues related to this Section 12 (at its expense), provided
that such issues do not potentially materially adversely affect Executive, but Executive
shall control any other issues. In the event the issues are interrelated, Executive and the
Company shall in good faith cooperate so as not to jeopardize resolution of either issue,
but if the parties cannot agree Executive shall make the final determination with regard to
the issues. In the event of any conference with any taxing authority as to the Excise Tax
or associated income taxes, Executive shall permit the representative of the Company to
accompany him and Executive and his representative shall cooperate with the Company and its
representative.

     (iv) With regard to any initial filing for a refund or any other action required
pursuant to this Section 12 (other than by mutual agreement) or, if not required, agreed to
by the Company and Executive, Executive shall cooperate fully with the Company, provided
that the foregoing shall not apply to actions that are provided herein to be at the sole
discretion of Executive.

     (e) Time of Payment. The Tax Reimbursement Payment, or any portion thereof, payable
by the Company shall be paid not later than the fifth (5th) day following the determination by the
Accountant, and any payment made after such fifth (5th) day shall bear interest at the rate
provided in Code Section 1274(b)(2)(B). The Company shall use its best

20

 

efforts to cause the Accountant to promptly deliver the initial determination required
hereunder and, if not delivered, within ninety (90) days after the change in ownership event
covered by Section 280G(b)(2) of the Code, the Company shall pay Executive the Tax Reimbursement
Payment set forth in an opinion from counsel recognized as knowledgeable in the relevant areas
selected by Executive, and reasonably acceptable to the Company, within five (5) days after
delivery of such opinion. The amount of such payment shall be subject to later adjustment in
accordance with the determination of the Accountant as provided herein.

     (f) Fees, Etc. The Company shall be responsible for all charges of the Accountant and
if clause (e) above is applicable the reasonable charges for the opinion given by Executive’s
counsel.

     (g) Further Agreement. The Company and Executive shall mutually agree on and
promulgate further guidelines in accordance with this Section 12 to the extent, if any, necessary
to effect the reversal of excessive or shortfall Tax Reimbursement Payments. The foregoing shall
not in any way be inconsistent with Section 12(d)(i)(D) hereof.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the date
first written above.

	 	 	 	 	 
	 	KAYDON CORPORATION

 	 
	 	By:  	/s/ Debra K. Crane
 	 
	 	Name:  	Debra K. Crane 	 	 
	 	Title:  	Vice President General Counsel 	 	 
	 
	 	EXECUTIVE:

 	 
	 	/s/ James O’Leary 
 	 
	 	JAMES O’LEARY 	 
	 	 	 
	 

21

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]