Document:

Filed by Bowne Pure Compliance

Exhibit 10.4

KAYDON CORPORATION

DIRECTOR DEFERRED COMPENSATION PLAN

(Amended and Restated Effective October 23, 2008)

1. Establishment of the Plan. Kaydon Corporation (“Corporation”) has adopted this
Director Deferred Compensation Plan for Directors (“Plan”) effective January 1, 2001, to provide
certain members of the Board of Directors of the Corporation (“Board”) with the opportunity to
defer all or a portion of their fees for services as a member of the Board or as a member of any
committee of the Board (“Deferred Fees”). The Plan was previously amended and restated effective
October 25, 2007, by Board action, in compliance with the provisions of Section 13 hereof, and is
hereby amended and restated, effective October 23, 2008, to reflect the requirements of the final
regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

2. Participation. Any member of the Board who is not an employee of the Corporation
or any of its affiliates (“Member”) may participate in the Plan.

3. Plan Year. The Plan Year shall be the 12 consecutive month period beginning on
each January 1 and ending on each December 31 (“Plan Year”).

4. Election to Participate. A Member wishing to participate in the Plan must file a
complete Notice of Election (Attachment A) with the Corporation during the month prior to the start
of the Plan Year. A Notice of Election shall be effective only with respect to fees earned during
the following Plan Year. However, any individual who becomes a Member after January 1, 2001, may
irrevocably elect to defer fees for the current Plan Year by filing a Notice of Election before
rendering any services and within 30 days after appointment to the Board and provided that such
Notice of Election shall only be applicable to fees that are attributable to services performed
after the date such Notice of Election is filed. Except as set forth in Section 9 below, a Notice
of Election may not be modified or terminated after it is filed. A Member must defer at least 25%
of his or her total annual fees for Board membership and at least 25% of his or her total annual
fees for committee membership.

5. Member Accounts. Deferred Fees shall be credited to a deferred compensation
account maintained by the Corporation for each Member (“Account”). Accounts shall remain the
general assets of the Corporation, and nothing in this Plan shall be deemed to create a trust or
fund of any kind or any fiduciary relationship. A Member shall designate on the Notice of Election
whether to have all or any portion of the Account either valued on the basis of Kaydon Corporation
common stock in accordance with Section 6 or to be credited with interest in accordance with
Section 7. The Corporation may, if necessary or desirable, establish separate Accounts for a
Member to properly account for amounts deferred under the different alternatives and years; and all
such Accounts are collectively referred to herein as the Account. The Account based on Kaydon
Corporation common stock shall be known as the “Common Stock Account” and the interest bearing
account shall be known as the “Interest Bearing Account”. A Member
may defer a portion of his or her Deferred Fees into each type of account during the same Plan
Year.

 

 

 

6. Common Stock Account. If a Member elects to have all or a portion of his or her
Deferred Fees deferred into the Common Stock Account, as of the last business day of any quarter
there shall be credited to such Account a hypothetical number of shares of Kaydon Corporation
common stock (whole and fractional, rounded to the nearest 1/100th of a share) as are
equal to (a) the dollar amount of such Deferred Fees payable for such quarter, plus all dividends
payable during such quarter on the number of hypothetical shares of common stock previously
credited to the Account as of the first day of such calendar quarter, divided by (b) the market
value of the Kaydon Corporation common stock at the close of business on the last business day of
such calendar quarter.

7. Interest Bearing Account. If a Member elects to have all or a portion of his or
her Deferred Fees deferred in the Interest Bearing Account, there shall be added to such Account as
of the last business day of each calendar quarter the dollar amount of such Deferred Fees payable
for such calendar quarter plus all interest payable on (a) the amount in the Account at the
beginning of such calendar quarter plus (b) the Deferred Fees payable for such quarter, at a rate
determined by the product of (1) the rate paid for twelve-month certificates of deposit issued by a
financial institution designated by the Corporation prior to the beginning of the Plan Year, and
(2) a fraction, the numerator of which is the number of days in the calendar quarter and the
denominator of which is 365.

8. Time and Method of Payment. A Member may elect, on the Notice of Election for a
particular Plan Year, the date that the Member would like to receive payment of the amounts held in
his or her Account that relate to Deferred Fees deferred during the Plan Year to which that Notice
of Election applies. The date elected may be any January 1st, provided that actual payment may be
made as soon as practicable after such date (but not more than thirty (30) days thereafter, as
determined by the Corporation in its sole discretion). If no such election is made, then the
amounts held in the Account that relate to such Plan Year shall be paid on the January 1st
following the Member’s Separation from Service (as defined below) with the Corporation, or as soon
as practicable after such date (but not more than thirty (30) days thereafter, as determined by the
Corporation in its sole discretion).

Amounts credited to and held in a Member’s Interest Bearing Account under Section 7 and that
relate to Deferred Fees deferred during a particular Plan Year shall be distributed in cash, in
accordance with the form of payment elected by the Member on the Notice of Election for such Plan
Year (lump sum or annual installments of up to ten (10) years, with the first installment being
made on the date elected by the Member and later installments on the anniversaries thereof). If no
such election is made, then such amount shall be paid in a cash lump sum.

 

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Amounts credited to and held in a Member’s Common Stock Account under Section 6 may, at the
election of the Member (to be made no later than thirty (30) days before the date of distribution),
be distributed either in a cash lump sum or in fully taxable and freely transferable shares of
Kaydon Corporation common stock, provided that no fractional shares of such common stock shall be
issued, and any amounts held in such Account that represent a fractional share of
common stock shall be paid in a cash lump sum based on the fair market value of the
Corporation’s common stock at the close of business on the business day prior to the date of
payment to the Member. If the Member elects to receive his or her Common Stock Account value in
cash, the amount of the distribution shall be equal to the product of the number of hypothetical
shares of common stock credited to the Account as of the end of the calendar quarter prior to the
date of distribution multiplied by the fair market value of the Corporation’s common stock at the
close of business on the business day prior to the date of payment to the Member. If the Member
elects to receive his or her Common Stock Account value in common stock, the Corporation shall
cause its stock transfer agent and registrar to issue to the Member that number of shares of Kaydon
Corporation common stock equal to the number of hypothetical shares of common stock credited to the
Account as of the end of the calendar quarter prior to the date of distribution.

Unless a Member elects to the contrary, upon a Change in Control (as defined in Section 14),
but not more than thirty (30) days thereafter, the entire amount credited to a Member’s Account
shall be paid in a cash lump sum, based on the valuation as of the date of such Change in Control.
Notwithstanding anything herein to the contrary, no payments to which a Member becomes entitled on
account of the Member’s Separation from Service shall be paid to the Member prior to the earlier of
(i) the expiration of the six-month period measured from the date of the Member’s Separation from
Service with the Corporation, or (ii) the date of the Member’s death, if the Member is deemed at
the time of such Separation from Service a “Specified Employee” within the meaning of Code Section
409A, and such delayed commencement is otherwise required in order to avoid a prohibited
distribution under Code Section 409A(a)(2). Upon expiration of the applicable deferral period, all
payments deferred pursuant to this Section 8 shall be paid in a lump sum to the Member, without
interest, and any remaining payments due under this Plan shall be paid in accordance with the
remaining payment dates specified for them herein.

9. Withdrawals upon Unforeseeable Emergency. Upon receipt of a Notice of
Unforeseeable Emergency (Attachment B) indicating that a Member has experienced an unforeseeable
emergency and the subsequent withdrawal from the Member’s Account as a result of such emergency,
the Member’s Notice of Election with respect to any Deferred Fees shall be suspended for the
remainder of the taxable year and all such deferrals for that year shall cease. The term
“unforeseeable emergency” means: (a) a severe financial hardship resulting from an illness or
accident of the Member, or the Member’s spouse, beneficiary under the Plan, or dependents (as
defined in Code Section 152); (b) loss of the Member’s property due to casualty; or (c) other
similar extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the Member. The amount of the withdrawal will be limited to the amount reasonably
necessary to satisfy the emergency need, which may include amounts necessary to pay any Federal,
state, local or foreign income taxes or penalties reasonably anticipated to result from the
distribution. Distribution may not be made to the extent that the emergency is or may be relieved
through reimbursement or compensation from insurance or otherwise, or by liquidation of the
Member’s assets (to the extent such liquidation would not cause severe financial hardship), and
must take into account any additional compensation that is available from the cessation of
deferrals under the Plan. The Corporation may reasonably rely on the representation of a Member
regarding the availability of other financial resources.

 

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10. Designation of Beneficiary. Each Member may file a Beneficiary Designation
(Attachment C) naming one or more beneficiaries to whom payment shall be made in the event of the
Member’s death, provided that the form of payment does not differ between beneficiaries. A
beneficiary designation will be effective only if it is filed with the Corporation during the
Member’s lifetime, and the latest beneficiary designation on file shall supersede all other
beneficiary designations. If a primary beneficiary or a contingent beneficiary survives the Member
but dies before receiving all amounts due hereunder, the unpaid Account balance due to the
beneficiary shall be paid in accordance with the Member’s Notice of Election to the deceased
beneficiary’s estate. If a primary beneficiary predeceases the Member, then the beneficiary’s
share shall be distributed to the remaining primary beneficiaries on a pro rata basis. If all the
primary beneficiaries predecease the Member, the Member’s Account shall be paid to the contingent
beneficiary(ies). If a contingent beneficiary predeceases the Member, then the beneficiary’s share
shall be distributed to the remaining secondary beneficiaries on a pro rata basis. If a Member
fails to designate a beneficiary, or if all designated beneficiaries shall predeceased the Member,
the unpaid Account balance at the time of the Member’s death shall be paid in one cash lump sum to
the Member’s estate.

11. Nonalienation of Benefits. Neither a Member nor any designated beneficiary shall
have any right to alienate, assign, or encumber any amount that is or may be payable hereunder, or
any right or interest that may be deemed to exist hereunder. To the extent that any person
acquires a right to receive payments from the Corporation under the Plan, such right shall be no
greater than the right of any unsecured general creditor of the Corporation.

12. Administration. Full power and authority to construe, interpret, and administer
the Plan shall be vested in the Corporation. Decisions of the Corporation shall be final,
conclusive, and binding upon all parties.

13. Amendment and Termination. The Board may amend or terminate this Plan at any
time, provided, however, the Board complies with the following requirements of Code Section 409A:

(a) No payments made in connection with the termination of the Plan shall occur earlier
than 12 months following the Plan termination date other than payments the Plan would have
made irrespective of Plan termination;

(b) All payments made in connection with the termination of the Plan are completed
within 24 months following the Plan termination date;

(c) The Company does not establish a new plan of a similar type as defined in Treas.
Reg. §1.409A -1(c)(2)(i), within 3 years following the Plan termination date of the portion
of the Plan which has been terminated; and

(d) The Company meets any other requirements deemed necessary to comply with provisions
of the Code and applicable regulations which permit the acceleration of the time and form of
payment made in connection with plan terminations and liquidation.
Notwithstanding the foregoing, any amendment or termination of this Plan shall not affect
the rights of participants or beneficiaries to the amounts in each Account at the time of
such amendment or termination.

 

4

 

14. Definitions. Wherever used herein, the following terms shall have their
respective meanings set forth below:

“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 Corporation 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
Corporation;

(b) 35% Stock. The acquisition, by a person or Persons Acting as a Group, of
ownership of stock of the Corporation that constitutes 35% or more of the total voting power
of Corporation’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
Corporation’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 Corporation’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 Corporation, 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.

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

 

5

 

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

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

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

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

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

(a) Stock. Sixty percent (or fifty percent in the case of a transaction that
is an asset sale) 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 Corporation’s
outstanding common stock and outstanding securities entitled to vote generally in the
election of directors (respectively) immediately prior to the applicable transaction;

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

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

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

 

6

 

“Persons Acting as a Group” means owners of a corporation that enters into a merger,
consolidation, purchase or acquisition of stock (or assets), or similar business transaction with
the Corporation. If a person, including an entity, owns stock in both corporations that enter into
a merger, consolidation, purchase or acquisition of stock (or assets), or similar transaction, such
shareholder is considered to be acting as a group with other shareholders in a corporation prior to
the transaction giving rise to the change and not with respect to the ownership interest in the
other corporation. Persons will not be considered to be acting as a group solely because they
purchase or own stock of the same corporation at the same time or as a result of the same public
offering, or purchase assets of the sane corporation at the same time.

“Separation from Service” means the Member’s termination of membership on the Board, whether
voluntarily or involuntarily, as determined by the Committee in accordance with Treasury Regulation
Section 1.409A-1(h). A Member shall be considered to have experienced a termination of membership
on the Board when the facts and circumstances indicate that the Member and the Corporation
reasonably anticipate that either (i) no further services will be performed for the Corporation
after a certain date, or (ii) that the level of bona fide services the Member will perform for the
Corporation after such date will permanently decrease to no more than 20% of the average level of
bona fide services performed by such Member over the immediately preceding 36-month period (or the
full period of services to the Corporation if the Member has been providing services to the
Corporation for less than 36 months). If a Member is on military leave, sick leave, or other bona
fide leave of absence, the Member’s membership on the Board shall be treated as continuing intact,
provided that the period of such leave does not exceed six months, or if longer, so long as the
Member retains the right to continue the Member’s membership on the Board under an applicable
statute or by contract. If the period of a military leave, sick leave, or other bona fide leave of
absence exceeds six months and the Member does not retain a right to continue the Member’s
membership on the Board under an applicable statute or by contract, the membership on the Board
shall be considered to be terminated for purposes of this Plan as of the first day immediately
following the end of such six-month period. In applying the provisions of this paragraph, a leave
of absence shall be considered a bona fide leave of absence only if there is a reasonable
expectation that the Member will return to perform services for the Corporation.

“Specified Employee” means a service provider who, at any time during the 12-month period
ending on December 31 of each year (the “Identification Date”), is an:

(a) Officer. An officer of the Corporation (or any related entity) with annual
compensation greater than $150,000 in 2008 (as adjusted for future years as provided in
Section 416 of the Code);

(b) Five Percent Owner. A 5-percent owner of the Corporation (or any related entity);
or

(c) One Percent Owner. A 1-percent owner of the Corporation (or any related entity)
with annual compensation greater than $150,000,

in each case, to the extent that the Corporation was publicly traded on the date of the service
provider’s Separation from Service. Such a service provider is a Specified Employee for the 12-
month period beginning the first April 1 following the Identification Date and ending on March 31
of the following year.

 

7

 

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

15. Law Governing. The provisions of this Plan shall be interpreted and construed in
accordance with the laws of the State of Michigan.

	 	 	 	 	 
	 	KAYDON CORPORATION

 	 
	 	By:  	/s/ Debra K. Crane
 	 
	 	 	Its: Vice President and General Counsel 	 

Amended and Restated Effective: October 23, 2008

 

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ATTACHMENT A

NOTICE OF ELECTION

KAYDON CORPORATION

DIRECTOR DEFERRED COMPENSATION PLAN (“PLAN”)

I elect to participate in the Plan for the year beginning January 1, 20         , and ending
December 31, 20        , as follows:

I. Amount of Deferred Fees

I elect to defer the following percentages of my fees for year 20    . (Check one box
in each column):

	 	 	 	 	 	 	 	 	 	 	 
	 	 	Board of Directors Fees	 	Committee Fees	 	 
	 

	 	o
	 	 25%
	 	o
	 	 25%	 	 
	 

	 	o
	 	 50%
	 	o
	 	 50%	 	 
	 

	 	o
	 	 75%
	 	o
	 	 75%	 	 
	 

	 	o
	 	 100%
	 	o
	 	 100%	 	 

I understand that this election is effective only for fees earned during the year above, and
that it may not be changed or revoked.

II. Valuation of Account

I elect to have the year 20_____ 
deferred fees in my Account valued as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	o
	 	 25%
	 	o
	 	 50%
	 	o
	 	 75%
	 	o
	 	 100%
	 	as invested in the
Common Stock
Account and valued
based on the value
of Kaydon
Corporation Common
Stock
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	o
	 	 25%
	 	o
	 	 50%
	 	o
	 	 75%
	 	o
	 	 100%
	 	as invested in the
Interest Bearing
Account and valued
based on the rate
paid for 12-month
certificates of
deposit issued by a
financial
institution
designated by
Kaydon Corporation
on the preceding
January 1

III. Time of Payment

I elect to receive, or begin to receive, my year 20
_____ 
deferred fees on (Check one and complete
as indicated):

	 	 	 	 	 
	 

	 	o
	 	January 1, 20
_____; or
	 
	 	 	 	 
	 

	 	o
	 	January 1 after my Board membership terminates due to resignation,
retirement or removal
	 
	 	 	 	 
	 

	 	 	 	NOTE: Payment may be made at any time during the 30 day period beginning on the date
indicated above, as determined by Kaydon Corporation in its sole discretion.

 

9

 

IV. Form of Payment

My year 20     deferred fees credited to the Common Stock Account will be paid in the
form of fully taxable and freely transferable shares of Kaydon Corporation Common Stock (subject to
my election to receive a cash lump sum in lieu of shares, to be made no later than 30 days before
the date of distribution).

I elect to have my year 20     deferred fees invested in the Interest Bearing Account
to be paid as follows (Check one and complete as indicated):

	 	 	 	 	 
	 

	 	o
	 	Lump sum; or
	 
	 	 	 	 
	 

	 	o
	 	Annual installments for      years (cannot be greater than 10 years),
with the first installment being made on the date indicated above and
later installments on the anniversaries thereof.

V. Acknowledgement and Signature

I acknowledge that deferred fees remain the property of Kaydon Corporation. I have read the
Plan document and I understand that it alone governs all aspects of the administration of deferred
fees.

	 	 	 	 	 	 	 	 	 
	 

	 	Dated:              , 20_____ 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 

Witness
	 	 	 	 

Signature of Director
	 	 

VI. Acceptance

Accepted on                                         , 20    , by Kaydon Corporation.

	 	 	 	 	 
	 	By:  	
 	 
	 	 	 	 
	 	 	 	 
	 

 

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ATTACHMENT B

NOTICE OF UNFORESEEABLE EMERGENCY

KAYDON CORPORATION

DIRECTOR DEFERRED COMPENSATION PLAN (“PLAN”)

TO: Kaydon Corporation

I have experienced the “unforeseeable emergency” described below and I request that you
authorize the action requested below.

	 	I.	 	Description of Unforeseeable Emergency: (Describe the time and nature of your
emergency and the reason why the action requested is necessary to alleviate your severe
financial hardship. Use attachments if necessary).

	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 

	 
	 	 	 	 

	 	II.	 	Action Requested. (Choose either or both and complete as indicated).

	 	 	 	o Immediate cessation of deferrals (NOTE: this may be required)

	 
	 	 	 	o Payment(s) from my Account as follows (enter time and amount):                                                      
                             

	 
	 	 	 	 

	 	 	 	 	 	 	 
	 

Date

	 	 
	 	 

Signature of Director
	 	 

(Do not write below this line)

 

	 	 	 	 	 
	TO:
	 	 	 	 
	 

	 	 

	 	 
	DATE:
	 	 	 	 
	 

	 	 

	 	 

Your above request(s) is/are:      o DENIED;       o APPROVED, subject to the following:

 

 

	 	 	 	 	 	 	 
	 	 	KAYDON CORPORATION	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	 	 

	 	 
	 

	 	 	Its:	 	 	 
	 

	 	 	 	 

	 	 

 

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ATTACHMENT C

BENEFICIARY DESIGNATION

KAYDON CORPORATION DIRECTOR DEFERRED COMPENSATION PLAN (“PLAN”)

This is the only form of Beneficiary Designation which will be recognized under the Plan.
This designation, when validly signed, dated and witnessed, will control over any contrary
designation in any will, trust, agreement, or other instrument, whether executed before or after
this form.

	 	 	 	 	 	 	 	 	 
	Director’s Name:

	 	 	 	Date of Birth:	 	 	 	 
	 

	 	 

	 	 	 	 

	 	 

									
	Social Security No:

	 	 	 	Home Telephone:	 	 	 	 
	 

	 	 

	 	 	 	 

	 	 

	 	 	 	 	 	 	 	 	 
	Street Address:
	 	 	 	 	 	 	 	 
	 	 	 	 

	 	 	 	 	 	 	 	 	 
	City and State:

	 	 	 	Zip:	 	 	 	 
	 

	 	 

	 	 	 	 

	 	 

Subject to the conditions below, I wish to revoke any previous Beneficiary Designation of mine
and to direct that, upon my death, any amount payable on my behalf under the terms of the Plan
shall be paid in a cash lump sum to the Beneficiary(ies) designated below according to the
indicated percentages:

I. PRIMARY BENEFICIARY OR BENEFICIARIES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Percentage (must
	Name	 	Relationship	 	Address	 	Soe. Sec. No.	 	Date of Birth	 	total 100%)

If any one or more of the above-named Primary Beneficiaries is deceased or not in existence at
the time of my death, then each such Beneficiary’s share shall be distributed to the remaining
Primary Beneficiaries on a pro rata basis. If none of the Primary Beneficiaries is living or in
existence at the time of my death, then any amount payable from the Plan on my behalf shall be paid
to the Contingent Beneficiary or Beneficiaries named below. If a Primary Beneficiary survives me
but dies before his or her entire share is distributed, then any remaining balance shall be
distributed to the estate of the Primary Beneficiary.

 

 

II. CONTINGENT BENEFICIARY OR BENEFICIARIES

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Percentage (must
	Name	 	Relationship	 	Address	 	Soc. Sec. No.	 	Date of Birth	 	total 100%)
	 

	 	 	 
	*	 	If Beneficiary is a trust or estate, specify fiduciary name, address, tax I.D. number, if any, and
date of trust, if applicable.

If one or more of the above-named Contingent Beneficiaries is deceased or not in existence at
the time of death, then each such Beneficiary’s share shall be distributed to the remaining
Contingent Beneficiaries on a pro rata basis. If none of the Contingent Beneficiaries is living or
in existence at the time of my death, then any amount payable from the Plan on my behalf shall be
paid in a cash lump sum to my estate. If a Contingent Beneficiary survives me, but dies before his
or her entire share is distributed, then any remaining balance shall be distributed to the estate
of the Contingent Beneficiary.

III. TERMS AND CONDITIONS

1. This designation is subject to all the terms and conditions of the Plan and shall be
effective only if received prior to the date of my death by the Plan Administrator. If it is not
received prior to the date of my death, my interest in the Plan shall be paid to my estate.

2. This designation shall be effective with respect to my entire interest, if any, under the
Plan remaining unpaid to me or to any Beneficiary at my death or the beneficiary’s death, as
applicable.

3. If a Beneficiary does not survive me or the prior Beneficiary, as applicable, for thirty or
more days, the Beneficiary will be presumed to have predeceased me or the prior Beneficiary, as
applicable.

4. This designation shall be governed by Michigan law, regardless of my current residence, my
residence at the date of my death, the residence of any Beneficiary, or the location of the Plan
trustee or of the Plan assets.

IV. DIRECTOR’S SIGNATURE

	 	 	 	 	 	 	 
	 

Date

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

Signature of Witness (other than a Beneficiary)

	 	 	 	 

Address of Witness
	 	 

	 	V.	 	RECEIVED ON BEHALF OF THE PLAN BY:

                         
 on, 20               .

	 	 	 
	*	 	If Beneficiary is a trust or estate, specify fiduciary name, address, tax I.D. number, if any, and
date of trust, if applicable.

 

2Filed by Bowne Pure Compliance

Exhibit 10.5

FORM OF
AMENDED AND RESTATED

KAYDON CORPORATION

CHANGE IN CONTROL COMPENSATION AGREEMENT

AGREEMENT made and executed October 23, 2008 between KAYDON CORPORATION, a Delaware
corporation, 315 East Eisenhower Parkway, Suite 300, Ann Arbor, Michigan
48108 (Kaydon), and
 _____ 

(the Executive). This Agreement was initially entered into
and effective
 _____, 200_.

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

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

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

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

2. Termination In Connection With or Following Change in Control. In the event that
Executive incurs a Separation from Service (as defined below) under the circumstances stated in
Subsection (a) during the period beginning on the date a third person begins a tender or exchange
offer, circulates a proxy to stockholders, or takes other steps to effect a Change in Control and
ending on the earlier of the complete abandonment of that effort, the date which is three years
following the date a Change in Control is deemed to have occurred or the date this Agreement ceases
to apply to Executive (the Protected Period), Kaydon will provide to Executive the rights and
benefits described in Subsection (b), except as provided in Subsection (c).

For purposes of this Agreement, “Separation from Service” or “Separates from Service” shall
mean Executive’s termination of employment, as determined in accordance with Treas. Reg.
§1.409A-1(h). Executive shall be considered to have experienced a termination of employment when
the facts and circumstances indicate that Executive and Kaydon reasonably anticipate that either
(i) no further services will be performed for Kaydon after a certain date, or (ii) that the level
of bona fide services Executive will perform for Kaydon after such date (whether as an employee or
as an independent contractor) will permanently decrease to no more than 20% of the average level of
bona fide services performed by Executive (whether as an employee or independent contractor) over
the immediately preceding 36-month period (or the full period of services to Kaydon if Executive
has been providing services to Kaydon for less than 36 months). If Executive is on military leave,
sick leave, or other bona fide leave of absence, the employment relationship between Executive and
Kaydon shall be treated as continuing intact, provided that the period of such leave does not
exceed six months, or if longer, so long as Executive retains a right to reemployment with Kaydon
under an applicable statute or by contract. If the period of a military leave, sick leave or other
bona fide leave of absence exceeds six months and Executive does not retain a right to reemployment
under an
applicable statute or by contract, the employment relationship shall be considered terminated
for purposes of this Agreement as of the first date immediately following the end of such six-month
period. In applying the provisions of this paragraph, the leave of absence shall be considered a
bona fide leave of absence only if there is a reasonable expectation that Executive will return to
perform services for Kaydon.

 

 

 

a. Circumstances. This Agreement applies if Executive’s Separation from Service occurs
as a result of:

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

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

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

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

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

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

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

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

A. Salary.              times the greater of the Executive’s base salary for the calendar
year in which the Separation from Service occurs or for the preceding calendar year; plus

B. Bonus.              times the greater of:

	•	 	The average bonus payable to Executive over the most recent three-year fiscal period (or
the period during which the Executive has been employed by Kaydon (or any of its
Subsidiaries) if less than three years); or

	•	 	Executive’s target bonus for the calendar year in which the Separation from Service
occurs.

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

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

 

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

	•	 	The projected incentive compensation plan awards for the year in which termination of
employment occurs; or

	•	 	The incentive compensation plan awards to the Executive for the most recently ended plan
year,

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

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

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

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

	•	 	Is age 55 or older at the time of the Change in Control; and

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

B. Additional Credit. Executive’s benefit and Accrued Benefit under the SERP will be
computed by crediting the Executive with the Additional Credit provided in Section 2.19(b) and the
Discretionary Credit provided in Section 2.19(b) of the SERP if the Executive qualifies for that
credit at that time or, if the Executive does not otherwise qualify for that credit at the time of
the Change in Control under the terms of that Section 2.19(a) or (b), the Executive:

	•	 	Has been (and remains) identified in the SERP as an individual eligible for that Additional
or Discretionary Credit or was removed as an individual eligible for that Credit in
anticipation of the Change in Control; and

	•	 	Is vested in the Executive’s Accrued Benefit under the SERP under the terms of the SERP or
subsection A, above.

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

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

	•	 	An amendment of the SERP with respect to Executive to effect these provisions;

	•	 	Agreement by Executive to the terms of, and consent in accordance with Section 6.1(a) of
the SERP to, the amended and restated SERP adopted by the Board of Directors on May 17, 2007
and to the amendments to the SERP provided in this Agreement;

	•	 	Agreement by Kaydon and Executive that Executive may not be removed from the Additional
Credit provisions of the SERP once steps to effect a Change in Control have commenced; and

	•	 	Agreement by Kaydon and Executive that Executive’s employment with any successor to Kaydon
shall not cause forfeiture of Executive’s benefits under the SERP under Section 3.6(a) of the
SERP.

 

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

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

F. Acceleration. This Subsection (ii) may not accelerate the time, or modify the form,
of any payment to Executive unless Executive incurs a Separation from Service within two years
after a Change in Control as defined in Section 5.b. occurs. If the Executive’s Separation from
Service occurs within two years after a Change in Control as defined in Section 5.b., the
Executive’s SERP benefit will be paid as a lump sum payment within 30 days of the date the
Separation from Service occurs. If the Executive’s Separation from Service occurs other than as
provided above, the Executive’s SERP benefit will be paid at the time and in the form provided in
the SERP without regard to the acceleration of payment and change to the lump sum form provided by
this Agreement, but within the other modifications provided here.

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

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

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

	•	 	One year from the date of termination of Executive’s employment;

	•	 	The Executive’s Normal Retirement Date (as defined in the Retirement Plan) (and, in the
case of medical insurance, until Executive is eligible for Parts A and B of Medicare or their
equivalent, if later); or

	•	 	The date Executive obtains reasonably comparable life insurance, medical insurance, dental
insurance, accident insurance, or disability insurance, as the case may be, at no greater cost
to Executive than was the case at Kaydon.

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

	•	 	Is age 55 or older at the time of the Change in Control; and

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

 

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

	•	 	The in kind benefits and the amount eligible for reimbursement during a taxable year of
Executive may not affect the in kind benefits to be provided or reimbursement in any other
taxable year, except that the lifetime and other benefit limits of the medical, dental and
prescription drug plans continue to apply.

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

	•	 	The right to this in kind benefit or reimbursement is not subject to liquidation or
exchange for any other benefit.

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

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

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

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

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

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

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

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

 

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

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

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

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

viii. Attorney’s Fees. Reimbursement in full for Executive’s attorney’s fees and costs
reasonably incurred at any time during Executive’s life or within ten years after Executive’s death
in enforcing this Agreement against Kaydon or a successor or in seeking damages for Kaydon’s (or a
successor’s) failure to fully perform its obligations under this Agreement.

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

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

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

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

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

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

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

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

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

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

 

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

A. For Cause. For purposes of this Agreement, termination of employment is For Cause
if Executive, in connection with the Executive’s duties as an employee of Kaydon, its
Subsidiaries, or any of its affiliates, committed a fraud or any felony, engaged in
deliberate, willful or gross misconduct, or committed any other act which causes or may reasonably
be expected to cause substantial injury to Kaydon, a Subsidiary, or any of its affiliates.

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

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

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

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

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

a. Confidentiality. Executive will not, without the prior written consent of Kaydon,
disclose to any person, firm or corporation any confidential information of or about Kaydon or its
Subsidiaries which is now known to Executive or which (whether before or after termination)
may become known to Executive as a result of Executive’s employment or association with Kaydon and
which could be helpful to a competitor. This limitation does not apply, however, to confidential
information that becomes publicly disseminated by means other than a breach of this Agreement.

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

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

 

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4. Release. In exchange for benefits under this Agreement, Executive agrees that, upon
acceptance of those benefits, Executive will release all claims against Kaydon and its
Subsidiaries which might then exist and will execute a reasonable and customary release of
any such claims. Executive shall execute and deliver such release to Kaydon within 21 days of the
date of Executive’s Separation from Service. Unless such release is timely executed and delivered
in accordance herewith and such release becomes effective in accordance with applicable law
following the expiration of any applicable revocation period, no benefits under this Agreement
shall be provided to Executive.

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

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

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

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

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

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

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

i. The failure of the Continuing Directors within any 12-month period to constitute at
least a majority of the members of the Board;

ii. The acquisition by any Person or Persons Acting as a Group of beneficial ownership
(within the meaning of Rule 13d-3 issued under the Act) of the Company’s stock representing more
than 50% of the total fair market value or total voting power of the Company’s outstanding stock;

iii. The date any Person or Persons Acting as a Group, acquires (or has acquired during
the 12-month period ending on the date of the most recent acquisition by such Person or Persons)
stock of the Company possessing 30% or more of the total voting power of the Company’s outstanding
stock; or 

iv. The date any Person or Persons Acting as Group (other than a Permitted Successor)
acquires (or has acquired during the 12-month period ending on the date of the most recent
acquisition by such Person or Persons) assets of the Company that have a total gross fair market
value equal to or more than 40 person of the total gross fair market value of all the assets of the
corporation immediately before such acquisition or acquisitions.

For the purposes of this definition, “Permitted Successor” means any one of the following:

A. A shareholder of the Company (immediately before the asset transfer) in exchange for or
with respect to its stock in the Company;

B. A Subsidiary;

 

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C. A Person or Persons Acting as a Group that owns, directly, or indirectly 50% or more of the
total value or voting power of all of the Company’s outstanding stock; or

D. Any entity, at least 50% of the total value or voting power of which is owned, directly or
indirectly by a Person or Persons Acting as a Group described in paragraph C above;

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

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

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

iii. Permitted Successor. Except as set forth in Section 5(b) above, Permitted
Successor means a corporation which, immediately following the consummation of a transaction
specified in the definition of “Change in Control” above, satisfies each of the following criteria:

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

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

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

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

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

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

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

 

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

6. Term of Agreement. Subject to Section 2 and the remainder of this Section 6, this
Agreement shall terminate on December 31 of the year in which it is effective.

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

i. Special Rules Regarding Section 409A of the Internal Revenue Code. Notwithstanding
anything herein to the contrary, no payments to which Executive becomes entitled on account of
Executive’s Separation from Service shall be paid to Executive prior to the earlier of (i) the
expiration of the six-month period measured from the date of Executive’s Separation from Service
with Kaydon, or (ii) the date of the Executive’s death, if the Executive is deemed at the time of
such Separation from Service a “specified employee” within the meaning of Code Section 409A, and
such delayed commencement is otherwise required in order to avoid a prohibited distribution under
Code Section 409A(a)(2). Upon expiration of the applicable deferral period, all payments deferred
pursuant to this Section 7(i) shall be paid in lump sum to Executive, without interest, and any
remaining payments due under this Agreement shall be paid in accordance with the remaining dates
specified for them herein.

ii. Specified Employee. Specified Employee means a service provider who, at any time
during the 12-month period ending on December 31 of each year (the “Identification Date”), is:

A. Officer. An officer of Kaydon (or any related entity) with annual compensation
greater than $150,000 in 2008 (as adjusted for future years as provided in Section 416 of the
Internal Revenue Code);

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

C. One Percent Owner. A 1-percent owner of Kaydon (or any related entity) with annual
compensation greater than $150,000,

in each case, to the extent that Kaydon is publicly traded on the date of such service provider’s
Separation from Service. Such a service provider is a Specified Employee for the 12-month period
beginning the first April 1 following the Identification Date and ending on March 31 of the
following year.

iii. Death. If Executive dies prior to the time all payments due to Executive under
this Agreement have been made, then as soon as practicable after Executive’s death (but in no event
later than 90 days after), Kaydon shall pay in a lump sum in U.S. Dollars all sums not paid to
Executive prior to his death. Payment shall be made to the beneficiary or beneficiaries (in
addition to the amount of life insurance proceeds payable to each beneficiary) named under the life
insurance plan or plans maintained by Kaydon on the date of Executive’s death. If no such
beneficiary is named, such sums shall be paid to Executive’s estate. Except as provided in
Subsection 2(b)(iii), no reduction to present value of any such sums shall be made.

 

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IN WITNESS, the parties have executed this Agreement this 23rd day of October, 2008.

	 	 	 	 	 	 	 	 	 
	KAYDON CORPORATION	 	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 	 	 
	By
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 

	 	 

 

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