Document:

exv10w1

 

EXHIBIT 10.1

RESTRICTED STOCK AGREEMENT

KAYDON CORPORATION

1999 Long Term Stock Incentive Plan

	 	 	 	 	 	 	 
	
Grantee:

	 	 

	 	 	Grant Date:
 
	 
	 
	 	 	 	 	 	 
	Address:
	 	
 

	 	 
	Number of Shares:
 
	 
	 
	 	 	 	 	 	 
	 

	 	 

	 	 	 	 

     This Restricted Stock Agreement (the “Agreement”) is made as of the Grant Date between KAYDON
CORPORATION, a Delaware corporation (the “Company”), and                                          (“Grantee”).

     The Kaydon Corporation 1999 Long Term Stock Incentive Plan (the “Plan”) is administered by the
Compensation Committee of the Company’s Board of Directors (the “Committee”). The Committee has
determined that Grantee is eligible to participate in the Plan.

     The Committee has granted restricted stock to Grantee, subject to the terms and conditions
contained in this Agreement and in the Plan.

     Grantee acknowledges receipt of a copy of the Prospectus for the Plan and accepts these shares
of restricted stock subject to all of the terms, conditions, and provisions of this Agreement and
the Plan.

     1. Grant of Restricted Stock. The Company grants to Grantee, effective as of the Grant Date
set forth above, and Grantee accepts, the shares of $0.10 par value Common Stock of the Company set
forth above, subject to the terms and conditions of this Agreement (the “Restricted Stock”).

     2. Conditions. The Company awards the Restricted Stock to Grantee subject to the conditions
described below and to a vesting schedule. Those conditions must be met or otherwise lapse, and
vesting must occur, before Grantee will receive any stock under this Agreement. If Grantee
breaches the terms of this Agreement or ceases to be employed by the Company for certain reasons as
described in this Agreement, if the applicable restrictions are not satisfied or do not lapse, or
if Grantee does not vest in some or all of the Restricted Stock, Grantee will promptly surrender to
the Company those shares of Restricted Stock as to which the restrictions have not lapsed or in
which Grantee’s interest has not vested pursuant to this Agreement as set forth below.

     3. Restrictions on Restricted Stock. If Grantee is then employed by the Company and has not
breached the terms of this Agreement, the restrictions on twenty percent (20%) of the initial
number of shares of Restricted Stock will lapse and the Grantee will vest in those shares

 

 

on each January 5 following the Grant Date, commencing with January 5,      . Vesting under
this provision will continue until all of the shares are vested, the Grantee is no longer employed
by the Company, or another provision of this Agreement supersedes this section, whichever occurs
first. The Committee may, in its sole discretion, accelerate the lapsing of restrictions and the
vesting of the Restricted Stock at any time before the restrictions would otherwise lapse or before
full vesting. As restrictions lapse and vesting occurs, a certificate for the number of shares of
Restricted Stock as to which restrictions have lapsed will be forwarded to the Grantee.

     4. Transferability. Unless the Committee otherwise consents or the Plan otherwise explicitly
provides, Grantee will not sell, exchange, transfer, pledge, or otherwise dispose of the Restricted
Stock at any time, whether voluntarily or involuntarily, by operation of law or otherwise. The
provisions of this paragraph will not apply to Restricted Stock that has vested pursuant to this
Agreement. If Grantee violates the restrictions in this Section, Grantee’s right to shares of
Restricted Stock remaining subject to restrictions or which have not yet vested will immediately
cease and terminate and Grantee will immediately forfeit and surrender all shares of Restricted
Stock that are still subject to restrictions or which have not yet vested to the Company.

     5. Rights as a Shareholder. Grantee will have certain rights as a shareholder with respect to
the Restricted Stock, including but not limited to the right to vote the Restricted Stock at
shareholders’ meetings, the right to receive, without restriction, all cash dividends paid with
respect to the Restricted Stock, and the right to participate with respect to the Restricted Stock
in any stock dividend, stock split, recapitalization, or other adjustment in the capital stock of
the Company, or any merger, consolidation, or other reorganization involving an increase, decrease,
or adjustment in the capital stock of the Company.

     (a) Substitute Shares. Any shares or other security received as a result of any stock
dividend, stock split, or reorganization will be subject to the same terms, conditions, and
restrictions as those relating to the Restricted Stock granted under this Agreement.

     (b) Registration. Certificates for the shares of stock evidencing the Restricted Stock
will not be issued but the shares will be registered in Grantee’s name in book entry form as
soon as administratively feasible after Grantee’s acceptance of this Agreement.

     6. Termination of Employee Status. If Grantee ceases to be an employee of the Company:

     (a) Termination Due to Disability or Death. By reason of Permanent and Total
Disability (as defined in the Plan) (“Disability”) or death, the shares of Restricted Stock
will vest on the date of death or Disability.

     (b) Retirement. By reason of retirement at or after age 65, the shares of Restricted
Stock will continue to vest in the same manner as though employment had not terminated. If
unforfeited Restricted Stock remains unvested at Grantee’s death following retirement from
employment at or after attainment of age 65, the shares of Restricted Stock will vest on the
date of death.

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     (c) Termination for Reason Other Than Retirement, Disability or Death. For any reason
other than death, Disability, or retirement at or after age 65, with or without cause, no
further vesting of Restricted Stock will occur and any shares of Restricted Stock still
subject to restrictions or which have not yet vested as of the date of termination of
employment will automatically be forfeited and returned to the Company.

     Notwithstanding the foregoing, if at any time following termination of employment Grantee
engages in an activity which, in the sole judgment of the Committee, is detrimental to the
interests of the Company, all shares of Restricted Stock for which restrictions have not lapsed or
which have not yet vested will be forfeited to the Company.

     7. Employment by the Company. Nothing in this Agreement imposes upon the Company any
obligation to retain Grantee in the employ of the Company for any given period or upon any specific
terms of employment. Grantee acknowledges that, except as otherwise agreed by the Company in a
signed written agreement, Grantee’s employment is at will and terminable by Grantee or the Company
at any time and for any reason.

     8. Tax Withholding. Grantee authorizes the Company to:

     (a) Withhold. Withhold and deduct from future wages of Grantee (or from other amounts
that may be due and owing to Grantee from the Company, or make other arrangements for the
collection of, all amounts deemed necessary to satisfy any and all federal, state, and local
withholding and employment-related tax requirements attributable to an award of Restricted
Stock; or

     (b) Remit. Require Grantee promptly to remit the amount of such withholding to the
Company before taking any action with respect to the Restricted Stock.

     9. Acknowledgment. By signing this Agreement and accepting the Restricted Stock, Grantee:

     (a) Representation. Acknowledges acceptance of the Restricted Stock and receipt of the
documents referred to in this Agreement, represents that Grantee is familiar with the
provisions of the Plan and agrees to its incorporation in the Agreement, agrees to all of
the other terms and conditions of the Agreement and agrees to promptly provide any
information with respect to the Restricted Stock reasonably requested by the Company;

     (b) Taxes. Agrees to comply with the requirements of applicable federal and other laws
with respect to withholding or providing for the payment of required taxes;

     (c) Limitation of Rights. Acknowledges that all of Grantee’s rights to the Restricted
Stock are embodied in the Agreement and in the Plan;

     (d) Employment. Agrees that while Grantee is employed by the Company, the Grantee will
devote full business time and energies to the business and affairs of the Company and will
not, without the Company’s written consent, accept other employment

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or permit any personal business interests to interfere with the performance of
Grantee’s duties; and

     (e) Duties. Agrees to use Grantee’s best efforts, skill and abilities to promote the
interests of the Company, to work with other employees of the Company in a competent and
professional manner and generally to promote the interests of the Company and to perform
such other duties of a management or professional nature as may be assigned to Grantee.

     10. Commitments of Grantee. Notwithstanding any other provisions of this Agreement or the
Plan, in consideration of the grant of Restricted Stock to Grantee, 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,
Grantee agrees that during the period commencing on the Grant Date and ending two years after the
date of termination of the Grantee’s employment by the Company, Grantee will not:

     (a) Compete. Engage in any business activities engaged in by the Company at any time
(“Business Activities”) (other than on behalf of the Company) whether such engagement is as
an officer, director, proprietor, employee, partner, investor (other than as a holder of
less than 1% of the outstanding capital stock of a publicly traded corporation), consultant,
advisor, agent or otherwise, in any geographic area in which the products or services of the
Company have been distributed or provided during the period commencing two years prior to
the Grant Date.

     (b) Customers. Other than on behalf of the Company supply products or provide services
(but only to the extent such restricted activities constitute Business Activities) to any
customer with whom the Company has done any business during the period commencing two years
prior to the Grant Date, whether as an officer, director, proprietor, employee, partner,
investor (other than as a holder of less than 1% of the outstanding capital stock of a
publicly traded corporation), consultant, advisor, agent or otherwise.

     (c) Assist. Assist others in engaging in any of the Business Activities in the manner
prohibited to the Grantee.

     (d) Employee Solicitation. Induce or attempt to induce employees of the Company to
engage in any activities prohibited to the Grantee or to terminate their employment.

     (e) Confidentiality. Disclose the contents of any Proprietary Information of the
Company. Proprietary Information means information or material of the Company which is not
generally available to or used by others or the utility or value of which is not generally
known or recognized as standard practice, whether or not the underlying details are in the
public domain. Proprietary Information includes, without limitation:

     (i) Information or materials which relate to the Company’s trade secrets,
manufacturing, methods, machines, articles of manufacture,

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compositions, inventions, engineering services, technological developments,
know-how, purchasing, accounting, merchandising or licensing;

     (ii) Software in various stages of development (source code, object code,
documentation, diagrams, flow charts), designs, drawings, specifications, models,
data and customer information; and

     (iii) Any information of the type described above which the Company obtained
from another party and which the Company treats as proprietary or designates as
confidential, whether or not owned or developed by the Company.

     (f) Cooperation. Fail to furnish such information and render such assistance and
cooperation as may reasonably be requested in connection with any litigation or legal
proceedings concerning the Company (other than any legal proceedings concerning Grantee’s
employment) provided the Company agrees to pay or reimburse Grantee for all reasonable
expenses incurred in cooperating with such requests.

     (g) Non-Disparagement. Disparage the Company or their respective officers, directors
or employees.

     The Grantee and the Company consider the commitments contained above to be reasonable for the
purpose of preserving the Company’s goodwill, proprietary rights, trade secrets, valuable
confidential business interests, relationships with specific prospective and existing customers and
going concern value, and to protect the Company’s business opportunities, markets and trade areas.
If a final judicial determination is made by a court having jurisdiction that the time or territory
or scope of restricted activities or any other commitment contained in this Section 10 is an
unenforceable restriction on the activities of Grantee, the provisions of this Agreement will not
be rendered void but will be deemed amended to apply as to such maximum time, restricted activities
and territory and to such other extent as the court may determine or indicate to be reasonable.

     Alternatively, if the court finds that any commitment contained in this Section 10 is
unenforceable, and the commitment cannot be amended so as to make it enforceable, that finding
shall not affect the enforceability of any of the other commitments contained here. In addition,
without limiting the generality of the preceding or the Company’s remedies for Grantee’s breach of
any of these commitments, upon Grantee’s material breach of any of these commitments, all shares of
Restricted Stock which have not at the time of breach been freed from restrictions and vested will
automatically be forfeited and returned to the Company.

     11. Change in Control. Notwithstanding the restrictions and vesting rules of this Agreement,
in the event of a Change in Control as defined in the Plan, the Restricted Stock will no longer be
subject to any restrictions and will vest. In addition, in that circumstance, the Committee as
constituted before the Change in Control may, in its sole discretion:

     (a) Purchase. Provide for the purchase of the shares of Restricted Stock by the
Company, at the Grantee’s request, for an amount of cash equal to the value of the shares
immediately prior to the Change in Control; and

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     (b) Adjust. Adjust the shares, at the Grantee’s request, as the Committee deems
appropriate to reflect the Change in Control.

     12. Change in Control Compensation Agreement or Employment Agreement. If the Grantee is a
party to a Change in Control Compensation Agreement or an Employment Agreement which explicitly
provides for immediate lapsing of restrictions and vesting of Restricted Stock upon a “Change in
Control,” all restrictions applicable to the Restricted Stock remaining at the time of a “Change in
Control” (as defined in the Change in Control Compensation Agreement or Employment Agreement
applicable to Grantee) will immediately lapse upon such a Change in Control, notwithstanding the
definition of Change in Control provided in the Plan. Such accelerated lapsing of restrictions is
not subject to cancellation under the Plan and is also irrevocable as long as the Grantee is a
party to such a Change in Control Compensation Agreement or Employment Agreement.

     13. Arbitration. Grantee and the Company agree that, except with respect to the enforcement
of the Company’s rights under Section 10 of this Agreement, any disagreement dispute, controversy,
or claim arising out of or relating to this Agreement, its interpretation, or validity, or the
terms and conditions of Grantee’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.

     (a) Rules. 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).

     (b) Arbitrator. 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.

     (c) Location. 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.

     (d) Procedure. 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
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.

     (e) Decision. 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

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wherever they may be found and that a judgment upon the arbitral award may be entered
in any court having jurisdiction.

     (f) Power. 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 Grantee’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.

     14. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of Michigan.

     15. Binding Effect and Amendment. This Agreement is the entire agreement between the parties
and will be binding upon, and will inure to the benefit of, the parties to this Agreement and their
respective heirs, successors, and assigns, and may be modified only by a writing signed by the
parties.

     16. Remedies. Grantee acknowledges that any breach of the promises in Section 10 of this
Agreement would cause the Company irreparable damage and therefore agrees that, in the event of a
breach of one or more of those commitments, the Company shall be entitled to preliminary and
permanent injunctive relief in addition to any direct, incidental, and consequential damages,
including lost profits, arising from that breach.

     17. Agreement Controls. The Plan is incorporated by reference into this Agreement.
Capitalized terms not defined in this Agreement have those meanings provided in the Plan. In the
event of any conflict between the terms of this Agreement and the terms of the Plan, the provisions
of this Agreement control as long as the applicable provision does not violate any law, change the
character or effect of the Plan or the Restricted Stock under federal or state, tax or securities
law, or exceed the Committee’s authority under the Plan. In that case, the terms of the Plan shall
control.

Executed this       day of                     .

	 	 	 	 	 	 	 	 	 	 	 
	KAYDON CORPORATION	 	 	 	GRANTEE	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 

	 	 
	 	 

	 	 
	Its:
	 	 	 	 	 	DATE:	 	 	 	 
	 
	 	 
	 	 	 	 	 	 	 	 

7exv10w2

 

EXHIBIT 10.2

KAYDON CORPORATION 1999 LONG TERM STOCK INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

     NON-QUALIFIED STOCK OPTION AGREEMENT, dated as of                     , 200   ; between KAYDON
CORPORATION, a Delaware corporation (the “Corporation”), and                                          (“Optionee”).

     The Kaydon Corporation 1999 Long Term Stock Incentive Plan Committee (the Committee), pursuant
to the Corporation’s 1999 Long Term Stock Incentive Plan (the Plan), has granted to the Optionee,
on the date of this Agreement, an option under the Plan to purchase an aggregate of                     
shares of Common Stock of the Corporation par value $0.10 per share (“Common Stock”). To evidence
the option and to set forth its terms and conditions as provided in the Plan, the Corporation and
the Optionee agree as follows.

     1. 
Confirmation of Grant and Price. The Corporation, by this Agreement, evidences and
confirms its grant to the Optionee on the date of this Agreement of an option (the Option) to
purchase
                                        
shares of Common Stock, at an option price of
$                     per share. The Option
is subject to all of the provisions of the Plan, whether or not explicitly stated in this
Agreement, except that the ability of the Board of Directors or the Committee to amend this
Agreement without the consent of Optionee is limited as provided in this Agreement.

     2. Term for Exercise. The Option becomes available for exercise, subject to the provisions
of this Agreement, as to the percentage of the aggregate number of shares of Common Stock subject
to the Option and on the dates set forth below:

(a) Percentage and Date Schedule

	 	 	 
	Percentage of Number	 	Date First Available
	of Shares	 	for Exercise
	20%

	 	One year after the date of grant
	20%

	 	Two years after the date of grant
	20%

	 	Three years after the date of grant
	20%

	 	Four years after the date of grant
	20%

	 	Five years after the date of grant

     (b) Later Exercise. The right to purchase is cumulative. If the full number of shares
exercisable in any period is not exercised, the balance may be exercised at any time or from
time to time after that date, as long as the exercise occurs prior to the expiration or
termination of the Option.

     (c) Expiration. The Option expires , 200 .

     3. Non-Qualified Stock Option. The Option evidenced by this Agreement is not intended to be
an incentive stock option as that term is defined in Section 422 of the Internal Revenue Code of
1986, as amended (the Code).

 

 

     4. Who May Exercise. During the lifetime of the Optionee, the Option may be exercised only by
the Optionee.

     (a) Death. If the Optionee dies, the Option may be exercised, to the extent of the
number of shares of Common Stock with respect to which the Optionee could have exercised the
Option on the date of the Optionee’s death, by the Optionee’s estate or a person who
acquires the right to exercise the Option by bequest or inheritance or by reason of the
death of the Optionee, at any time prior to the earlier of one year after the Optionee’s
death and the expiration date specified in Section 2.

     (b) Discretion to Amend. The Board of Directors or the Committee may, in its
discretion, amend this Agreement to accelerate the exercisability of any installments of the
Option which were not exercisable at the time of the Optionee’s death.

     5. Exercise After Termination of Employment. If the Optionee ceases to be employed by the
Corporation or any parent or subsidiary (including termination by reason of the fact that an entity
is no longer a subsidiary), no further installments of the Option will become exercisable except as
provided below. It is not a termination of employment for purposes of this section if the Optionee
transfers employment from the Corporation to any subsidiary or vice versa, or from one subsidiary
to another, without an intervening period, if the Optionee is absent on sick leave or is granted a
leave of absence (not to exceed one year), or if the Optionee changes status to become a consultant
to the Corporation or a subsidiary.

     (a) General Rule. Unless governed by a special rule, below, the Option, to the extent
of the number of shares of Common Stock with respect to which the Optionee could have
exercised the Option at the date of termination of employment, terminates on the earlier of
the expiration date specified in Section 2 and the date which is 10 days after the date of
termination of employment.

     (b) Exceptions for Involuntary Termination and Disability. In the case of involuntary
termination of employment or a Permanent and Total Disability within the meaning of the
Plan, the Option, to the extent of the number of shares of Common Stock with respect to
which the Optionee could have exercised the Option at the date of termination of employment,
terminates on the earlier of the expiration date specified in Section 2 and the date which
is three months after the date of termination of employment.

     (c) Exception for Death. In the case of death, the Option, to the extent of the number
of shares of Common Stock with respect to which the Optionee could have exercised the Option
on the date of death, terminates on the earlier of the expiration date specified in Section
2 and the date which is one year from the date of death.

     (d) Exception for Retirement. In the case of termination of employment by reason of
retirement, the Option will continue to vest in accordance with the Option vesting schedule
in effect on the date of retirement and will continue to be exercisable in accordance with
its terms as though the Optionee had continued in employment.

     Notwithstanding the preceding rules, if the Committee determines that the Optionee engaged in
any activity detrimental to the interests of the Corporation or a subsidiary, the

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Committee may terminate the unexercised portion of the Option concurrently with or at any time
following the termination of employment.

     Further, nothing in the Plan or in this Agreement confers upon the Optionee any right to
continue in the employ of the Corporation or any of its affiliates, or interferes in any way with
the right of the Corporation or any of its affiliates to terminate the Optionee’s employment at any
time during the Option period or otherwise.

     6. Restrictions on Exercise. The Option may be exercised only with respect to full shares.
No fractional shares of Common Stock will be issued.

     (a) General Limitation. The Option may not be exercised in whole or in part, and no
payment by the Corporation shall be made nor shall any certificates representing shares of
Common Stock subject to the Option be delivered, if:

     i. Governmental Approval. At any time any requisite approval or consent of any
governmental authority of any kind having jurisdiction over the exercise of options
has not been effectively secured;

     ii. Registration. The shares are not effectively registered under the
Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended; or

     iii. Withholding. Applicable federal, state and local tax withholding
requirements are not satisfied.

     (b) Representation. The Corporation may require as a condition to the exercise of the
Option in whole or in part at any time that the Optionee or any person exercising the Option
after the Optionee’s death in accordance with the provisions of Section 4 (the Holder)
represent to the Corporation in writing that the shares are being acquired for the
Optionee’s or Holder’s own account for investment only and not with a view to distribution
or with any present intention of reselling any.

     (c) Hardship. The Option is not exercisable for the period of at least twelve (12)
months to the extent provided under the hardship distribution provisions of the Kaydon
Corporation Employee Stock Ownership and Thrift Plan or other Corporation or affiliate plan
to the extent the Optionee receives a hardship distribution from that plan.

     (d) Employment. Except as explicitly provided above, no part of an Option may be
exercised by an Optionee unless the Optionee is then in the employ of the Corporation or
subsidiary and was continuously so employed since the date of the grant.

     7. Manner of Exercise. To the extent the Option has become and remains exercisable as
provided in this Agreement, and subject to any additional administrative regulations the Committee
may from time to time adopt, the Option may be exercised from time to time, in whole or in part, by
a signed written notice to the Secretary of the Corporation on a form supplied by the Corporation.
The notice must specify the number of shares of Common Stock with respect to which the Option is
being exercised and be accompanied by full payment

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of the option price for the shares.

     (a) Payment. Payment must be made in:

     i. Cash or Shares. Cash; provided, however, that with the consent of the
Committee, payment may be made in whole or in part with shares of Common Stock,
represented by certificates duly endorsed to the Corporation or its nominees, valued
at fair market value, or other awards or property having a fair market value on the
exercise date equal to the exercise price;

     ii. Instructions. With the consent of the Committee, by delivering with a
properly executed exercise notice irrevocable instructions to a third party to
promptly deliver to the Corporation the amount of sale or loan proceeds to pay the
exercise price;

     iii. Combination. With the consent of the Committee, a combination of the
above; or

     iv. Other. With the consent of the Committee, other consideration.

     (b) Prior Holdings Limitation. The option price may not be paid in:

     i. Option. Shares of Common Stock received upon the exercise of any option
under the Plan or any option under another stock option plan of the Corporation
which shares have been held by the Optionee or other Holder for less than one year
prior to payment; or

     ii. Stock. Shares of Common Stock that have been held by the Optionee for
less than six months.

     (c) Withholding Limitation. The portion of the option price equal to the amount of any
applicable federal, state and local tax liability required to be withheld at the time of
exercise must be paid in cash.

     (d) Right to Exercise. In the event that the Option is exercised by a person other
than the Optionee in accordance with Section 4, the person must furnish to the Corporation
evidence satisfactory to it of the person’s right to exercise the Option.

     (e) Other Documents. The Corporation may require the Optionee or any other person
exercising the Option to furnish or execute any documents the Corporation deems necessary to
evidence the exercise or to comply with any requirements of this Agreement, the Plan, or any
law.

     (f) Cash or Stock Alternative. The Committee may, in its discretion, at any time that
the fair market value of the Common Stock subject to the Option exceeds the option price, in
lieu of accepting payment of the option price and delivering any or all shares of Common
Stock as to which the Option has been exercised, elect to pay the Optionee or other Holder
an amount in cash or shares of Common Stock equal to the

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amount by which the fair market value on the date of exercise of the shares of Common
Stock as to which the Option has been exercised exceeds the option price that would
otherwise be payable by the Optionee or other Holder upon the exercise.

     8. Repurchase. The Corporation may, at the election of the Corporation, repurchase shares of
Common Stock sold under the Plan then held by the Optionee at a price not to exceed the fair market
value of the shares at the time of repurchase.

     9. Disposition of Shares. If the Optionee or other Holder disposes of any shares received
upon exercise of the Option, whether by sale, gift, or otherwise, within two years from the date
the Option was granted or within one year after the date the shares were transferred, the Optionee
or other Holder must notify the Secretary of the Corporation of the number of shares disposed of,
the date on which disposed, the manner of disposition and the amount, if any, realized upon the
disposition.

     10. Non-Assignability. The Option may not be assigned, transferred or hypothecated by the
Optionee or other Holder except as provided below:

     (a) Acceptable Assignments. Subject to subsection b., the Option may be assigned by
the Optionee:

     i. Death. By will or by the laws of descent and distribution to the extent
provided in section 4;

     ii. Grantor Trust. To a revocable grantor trust established by the Optionee
for the Optionee’s sole benefit during the Optionee’s life, subject to the terms of
the Plan; or

     iii. Other. To a beneficiary designated by the Optionee in writing on a form
approved by the Committee.

     (b) Limitation. Notwithstanding those general rules, the Option may not be assigned by
Optionee if Optionee is a director or officer of the Corporation or an affiliate for
purposes of the securities laws, except as permitted under Rule 16b-3 of those laws.

     11. Rights as Shareholders. The Optionee and any other Holder have no rights as a shareholder
with respect to any shares covered by the Option until the issuance of a certificate or
certificates to the Optionee or other Holder for the shares upon due exercise of the Option. No
adjustment will be made for dividends or other rights for which the record date is prior to the
issuance of the certificate or certificates.

     12. Capital and Other Adjustments. In the event of any change in the number of outstanding
shares of Common Stock by reason of any stock dividend, stock split, combination or exchange of
shares, recapitalization, reclassification, merger, consolidation, reorganization, or other similar
transaction, the Committee may adjust the number, type and option price of shares of Common Stock
covered by the Option, by means of a grant of a substitute option or an additional option or
otherwise, as it in its discretion deems appropriate. In addition, in the event of any unusual or
nonrecurring event (including, but not limited to, the events described in the

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preceding sentence) affecting the Corporation, any subsidiary, or the financial statements of
the Corporation or any subsidiary, or of changes in applicable laws, regulations, or accounting
principles, the Committee may adjust the terms and conditions of, and the criteria included in this
Agreement if the Committee determines that such adjustments are appropriate to prevent dilution or
enlargement of the benefits or potential benefits of the Option.

     13. Change in Control. In the event of a Change in Control (as defined in the Plan), the
Option shall vest, shall become exercisable in full and shall no longer be subject to any
restrictions which would prevent immediate exercise. In addition, in that circumstance, the
Committee as constituted before the Change in Control may, in its sole discretion:

     (a) Purchase. Provide for the purchase of the Option, at the Optionee’s request, for
an amount of cash equal to the amount that could have been attained upon exercise had the
Option been exercisable at that time;

     (b) Adjust. Adjust the Option as the Committee deems appropriate to reflect the Change
in Control; and

     (c) Cause Assumption. Cause the Option to be assumed, or replaced with a new option,
by the acquiring or surviving corporation after the Change in Control.

     14. Change in Control Compensation Agreement or Employment Agreement. If the Optionee is a
party to a Change in Control Compensation Agreement or an Employment Agreement which explicitly
provides for acceleration of vesting and exercisability of options upon a “Change in Control,” each
of Optionee’s stock options governed by this Agreement outstanding at the time of a “Change in
Control” (as defined in the Change in Control Compensation Agreement or Employment Agreement
applicable to Optionee) will be immediately vested and exercisable upon such a Change in Control,
notwithstanding the definition of Change in Control provided in Section 13 of this Agreement. Such
acceleration is not subject to cancellation under the Plan and is also irrevocable as long as the
Optionee is a party to such a Change in Control Compensation Agreement or Employment Agreement.

     15. Legality. The issuance or delivery of any shares of Common Stock pursuant to an Option
may be postponed by the Corporation for any period required to comply with any applicable
requirements under the Federal securities laws, any applicable listing requirements of any national
securities exchange or any requirements under any other applicable law or regulation. The
Corporation is not obligated to issue or deliver any shares if the issuance or delivery
constitutes, or in the opinion of counsel to the Corporation may constitute, a violation of any
provision of any law or of any regulation of any governmental authority or any national securities
exchange.

     16. Withholding of Taxes. Prior to the issuance or delivery of any shares of Common Stock or
any payment, payment of any taxes required by law must be made.

     (a) Withholding. The withholding obligation may not be satisfied by reducing the
number of shares of Common Stock otherwise deliverable.

     (b) Fractional Shares. Any fraction of a share of Common Stock required to

6

 

satisfy a tax obligation shall be disregarded and the amount due must be paid instead
in cash.

     17. Notice. Notice to the Secretary of the Corporation shall be deemed given if in writing
and delivered to the Secretary of the Corporation at the then principal office of the Corporation
in accordance with the Sarbanes—Oxley Accounting/Corporate Responsibility Act of 2002 (such Notice
must be delivered in a timely manner in order for the Corporation to meet its reporting
requirements).

     18. Amendment. The Board of Directors or the Committee may amend the terms and conditions of
this Agreement as provided in the Plan, except that, without the consent of the Optionee, no
amendment may impair the rights of the Optionee or Holder relating to the Option or amend Sections
13, 14 or 18 of this Agreement. Notwithstanding that, the Option provided in this Agreement may be
canceled in the Committee’s sole discretion, as long as the Optionee is not a party to an effective
Change in Control Compensation Agreement, as described in Section 14 above, upon payment of the
value of the Option to the Optionee or Holder in cash or in another Option, and such value may be
determined by the Committee in its sole discretion.

     19. Governing Law. The words “exercise”, “subsidiary”, “outstanding” and any other words or
terms used in this Agreement which are defined or used in Section 421, 422 or 425 of the Code have
the meanings assigned to them in those Sections, unless the context clearly requires otherwise. In
all other respects this Agreement shall be construed and enforced in accordance with, and governed
by, the laws of the State of Delaware.

Executed       day of                     , effective as of the date first set forth above.

	 	 	 	 	 	 	 	 	 	 	 
	KAYDON CORPORATION	 	 	 	OPTIONEE	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By 	 	 	 	 	 	 	 	 
	Name:
	 	
 	 	 	 	 	 	 	 	 
	
Its:

	 	 
	 	 	 	 	 	 	 	 

7

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