Document:

Filed by Bowne Pure Compliance

Exhibit 10.2

KAYDON CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

As Amended and Restated

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I ESTABLISHMENT
	 	 	1	 
	1.1. Effective Date
	 	 	1	 
	1.2. Intent
	 	 	1	 
	1.3. Trust
	 	 	1	 
	ARTICLE II DEFINITIONS
	 	 	2	 
	2.1. Accrued Benefit
	 	 	2	 
	2.2. Active Participant
	 	 	2	 
	2.3. Actuarial Equivalent
	 	 	2	 
	2.4. Average Monthly Compensation
	 	 	2	 
	2.5. Board of Directors
	 	 	2	 
	2.6. Compensation
	 	 	3	 
	2.7. Committee
	 	 	3	 
	2.8. Complying Election
	 	 	3	 
	2.9. Covered Compensation
	 	 	3	 
	2.10. Disability
	 	 	3	 
	2.11. Disability Retirement Eligibility
	 	 	3	 
	2.12. Early Retirement Eligibility
	 	 	4	 
	2.13. Employer
	 	 	4	 
	2.14. Normal Retirement Eligibility
	 	 	4	 
	2.15. Plan Year
	 	 	4	 
	2.16. Separation from Service
	 	 	4	 
	2.17. Specified Employee
	 	 	5	 
	2.18. Vested Retirement Eligibility
	 	 	5	 
	2.19. Year of Credited Service
	 	 	6	 
	2.20. Year of Vesting Service
	 	 	7	 
	ARTICLE III BENEFITS
	 	 	7	 
	3.1. Normal Retirement Benefit
	 	 	7	 
	3.2. Early Retirement Benefit
	 	 	7	 
	3.3. Vested Retirement Benefit
	 	 	7	 
	3.4. Disability Benefit
	 	 	7	 
	3.5. Death Benefit
	 	 	8	 
	3.6. Benefit Limitations
	 	 	9	 

 

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TABLE OF CONTENTS
(continued)

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	3.7. Special Transfer Employee Rule
	 	 	10	 
	3.8. Change in Control Override
	 	 	10	 
	ARTICLE IV DISTRIBUTION
	 	 	11	 
	4.1. Time and Method of Payment
	 	 	11	 
	4.2. Method of Payment
	 	 	12	 
	4.3. Designation of Beneficiary
	 	 	13	 
	4.4. Claims Procedure
	 	 	13	 
	4.5. Facility of Payment
	 	 	14	 
	4.6. Offset
	 	 	14	 
	4.7. Distribution in the Event of Taxation
	 	 	14	 
	4.8. Permissible Distributions
	 	 	15	 
	ARTICLE V ADMINISTRATION
	 	 	15	 
	5.1. Committee
	 	 	15	 
	5.2. Limitation of Liability and Indemnification
	 	 	16	 
	ARTICLE VI AMENDMENT AND TERMINATION OF PLAN
	 	 	16	 
	6.1. Amendment or Termination
	 	 	16	 
	6.2. Change in Control Agreement
	 	 	17	 
	ARTICLE VII MISCELLANEOUS
	 	 	17	 
	7.1. Nonassignability
	 	 	17	 
	7.2. Employment Rights Not Enlarged
	 	 	17	 
	7.3. Participants’ Rights Limited
	 	 	17	 
	7.4. Interpretation and Construction
	 	 	18	 
	7.5. Governing Law
	 	 	18	 
	7.6. Arbitration
	 	 	18	 
	Appendix A Other Employers
	 	 	 	 
	Appendix B Active Participants
	 	 	 	 
	Appendix C Additional Credit Under Section 2.1 8(a)
	 	 	 	 
	Appendix D Discretionary Credit Under Section 2.18(b)
	 	 	 	 
	Appendix E Actuarial Factors
	 	 	 	 
	Appendix F Special Rules Applicable To Mr. O’Leary
	 	 	 	 

 

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KAYDON CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Kaydon Corporation and certain of its related entities identified in Appendix A (individually,
an Employer, or collectively, the Employers) amend and restate the Kaydon Corporation Supplemental
Executive Retirement Plan (the Plan) effective October 23, 2008.

ARTICLE I

Establishment

1.1. Effective Date. This Plan was generally effective as of January 1, 1994 as to Kaydon
Corporation and January 1, 1997 as to the other Employer or Employers. The Plan was amended and
restated in 1997 and 1998, in both cases to reflect amendments adopted by the Board November 7,
1996, was amended and restated effective January 1, 2005 to reflect Section 409A of the Internal
Revenue Code, and is now further amended and restated, effective October 23, 2008, to reflect the
final regulations under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
and to make certain other clarifying changes.

1.2. Intent. The Plan is intended to be an unfunded deferred compensation arrangement for
purposes of the Internal Revenue Code of 1986, as amended (the Code) and for purposes of Title I of
the Employee Retirement Income Security Act of 1974, as amended (ERISA).

(a) ERISA Exemption. The Plan is provided for the benefit of a select group of
management employees, is intended to result in taxation to participants only when amounts
are actually received under this Plan and is intended to be exempt from the participation,
funding, vesting and fiduciary requirements of ERISA.

(b) Unfunded. The Plan constitutes only a promise by each Employer to make benefit
payments in the future. Participants have the status of general unsecured creditors of
their Employer.

1.3. Trust. Any trust created by an Employer and any assets held by the trust to assist
the Employer in meeting its obligations under this Plan will conform, in general form, to the terms
of the model trust described in Rev. Proc. 92-64 as modified from time to time. Notwithstanding
that general rule, however, effective January 1, 2008, no new assets may be set aside in any such
trust (or any other arrangement) to fund benefits under this Plan for any Covered Employee during
any Restricted Period.

(a) Covered Employee. A Covered Employee is the Chief Executive Officer of the
Employer or any member of a controlled group that includes the Employer (or any individual
acting in that capacity) during the taxable year, the four highest compensated officers of
the Employer for the taxable year (in addition to the Chief Executive Officer), any other
individuals subject to Section 16(a) of the Securities Exchange Act of 1934 for the taxable
year, and any former employee of the Employer or any member of a controlled group that
includes the Employer who was a Covered Employee at the time of termination of employment
with the Employer or that controlled group member.

 

 

 

(b) Restricted Period. The Restricted Period is any period that a defined benefit
plan maintained by the Employer or any member of a controlled group that includes the
Employer is “at risk” as defined in Section 430(i) of the Code, any period the Employer is
in bankruptcy, or the 12 month period beginning six months before the termination of any
underfunded defined benefit plan maintained by the Employer or any member of a controlled
group that includes the Employer.

ARTICLE II

Definitions

2.1. Accrued Benefit. A participant’s Accrued Benefit is the Retirement Benefit earned to
date under the Basic form taking into account the offset of the participant’s accrued benefit under
the Kaydon Corporation Retirement Plan from time to time.

(a) Calculation. The Accrued Benefit is based on the Average Monthly Compensation,
Years of Vesting Service, Years of Credited Service (to a maximum of 30), the benefit
formula and the remaining Plan provisions in effect at the earlier of termination of
employment, cessation of Active Participation, or other earlier computation date and, for
purposes of determining the accrued benefit under the Kaydon Corporation Retirement Plan,
the terms of that Plan in effect from time to time.

(b) Reduction. The Accrued Benefit of a participant who receives payment of any
benefits under the Plan is reduced by the Actuarial Equivalent of the payments.

2.2. Active Participant. An Active Participant is an employee of the Employer who has been
designated by the Board of Directors or by the Committee of the Board of Directors as eligible to
begin accruing benefits under this Plan and is identified in Appendix B.

(a) Cessation of Active Participation. An employee who becomes an Active
Participant remains an Active Participant until the earlier of the date on which the
Employee incurs a Separation of Service, and the date the employee is removed from this Plan
by the Board of Directors or the Committee.

(b) Participation. An individual who is or was an Active Participant remains a
participant until no further amounts are payable to the individual under this Plan.

2.3. Actuarial Equivalent. Actuarial Equivalence is determined under the assumptions and
methods set forth in Appendix E.

2.4. Average Monthly Compensation. Average Monthly Compensation is the participant’s
Average Monthly Compensation determined under the Kaydon Corporation Retirement Plan, calculated at
the earlier of termination of employment, cessation of Active Participation, or other earlier
computation date using the definition of Compensation contained in this Plan.

2.5. Board of Directors. The Board of Directors is the Board of Directors of Kaydon
Corporation.

 

2

 

2.6. Compensation. Compensation is Compensation as provided in the Kaydon Corporation
Retirement Plan, except that Compensation is determined without application of the Code Section
401(a)(17) Dollar Limit and the Compensation Dollar Limit of the Kaydon Corporation Retirement
Plan.

2.7. Committee. The Committee is the Compensation Committee of the Board of Directors.
Any members of the Committee who are employees may not receive compensation for their services to
the Committee relating to this Plan.

2.8. Complying Election. A Complying Election is an election that:

(a) 2006. If made prior to January 1, 2007, applies only to amounts that would not
otherwise be payable in 2006 and does not cause an amount to be paid in 2006 that would not
otherwise be payable in 2006; and

(b) 2007. If made on or after January 1, 2007 and before January 1, 2008, applies
only to amounts that would not otherwise be payable in 2007 and does not cause an amount to
be paid in 2007 that would not otherwise be payable in 2007.

2.9. Covered Compensation. Covered Compensation is Covered Compensation as provided in the
Kaydon Corporation Retirement Plan.

2.10. Disability. Disability is the occurrence of any medically determinable physical or
mental impairment that:

(a) Condition. Is expected to result in death or to last for a continuous period of
not less than 12 months;

(b) Cessation of Work. Causes the individual to cease active work with the
Employer;

(c) Approval. Is approved by the Board of Directors or the Committee in its
discretion, based on evidence satisfactory to it; and

(d) Effect. Causes the participant to:

(i) Activity. Be unable to engage in any substantial gainful activity; or

(ii) Benefit. Receive income replacement benefits for a period of not less
than three months under an accident and health plan covering employees of the
Employer.

Receipt of permanent and total disability benefits under the Social Security Act, as amended,
or a finding of Disability for purposes of the Kaydon Corporation Retirement Plan may be considered
by the Board or the Committee, but are not dispositive.

2.11. Disability Retirement Eligibility. Disability Retirement Eligibility is the
Disability of an Active Participant who has attained age 55 (in fact or based on a deemed age
determined at
date of hire) and completed at least ten (10) Years of Vesting Service or ten (10) Years of
Credited Service (without regard to any Additional or Discretionary Credit provided under Section
2.20(a) or (b) other than credit granted at date of hire).

 

3

 

2.12. Early Retirement Eligibility. Early Retirement Eligibility is the attainment of age
55 (in fact or based on a deemed age determined at date of hire) and the completion of at least ten
(10) Years of Vesting Service by an Active Participant.

2.13. Employer.

(a) Except as otherwise provided in part (b) of this Section, the term Employer means Kaydon
Corporation and any successor corporations. Employer shall also include affiliates and
subsidiaries of Kaydon Corporation, and any successor corporations, if the Committee
provides that such corporation shall participate in the Plan.

(b) For purposes of determining whether an Active Participant has experienced a Separation
from Service, the term Employer shall mean the entity for which the Active Participant
performs services and with respect to which the legally binding right to compensation
deferred or contributed under this Plan arises, and shall also include all other entities
with which such entity would be aggregated and treated as a single employer under Code
Section 414(b) (controlled group of corporations) and Code Section 414(c) (a group of trades
or businesses, whether or not incorporated, under common control), as applicable, provided
that an ownership threshold of 50% shall be substituted for the 80% minimum ownership
threshold that appears in, and otherwise must be used when applying, the applicable
provisions of (i) Code Section 1563 for determining a controlled group of corporations under
Code Section 414(b), and (ii) Treas. Reg. § 1.414(c)-2 for determining the trades or
businesses that are under common control under Code Section 414(c).

2.14. Normal Retirement Eligibility. Normal Retirement Eligibility is:

(a) General Rule. The attainment of age 65 (in fact or based on a deemed age
determined at date of hire) and the completion of at least ten (10) Years of Vesting Service
or ten (10) Years of Credited Service (without regard to any Additional or Discretionary
Credit provided under Section 2.18(a) or (b) other than credit granted at date of hire) by
an Active Participant; or

(b) Special Rule. The attainment of age 65 by an Active Participant who was first
employed by an Employer after age 55.

2.15. Plan Year. The Plan Year is an annual accounting period ending each December 31.

2.16. Separation from Service. Separation from Service shall mean the Active Participant’s
termination of employment with the Employer, whether voluntarily or involuntarily, as determined by
the Committee in accordance with Treas. Reg. § 1.409A-1(h). An Active Participant shall be
considered to have experienced a termination of employment when the facts and circumstances
indicate that the Active Participant and the Employer reasonably anticipate that either (i) no
further services will be performed for the Employer after a certain date, or (ii)
that the level of bona fide services the Active Participant will perform for the Employer 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 such Active Participant
(whether as an employee or independent contractor) over the immediately preceding 36-month period
(or the full period of services to the Employer if the Active Participant has been providing
services to the Employer for less than 36 months).

 

4

 

If an Active Participant is on military leave, sick leave, or other bona fide leave of
absence, the employment relationship between the Active Participant and the Employer 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 Active Participant retains a right to reemployment with the Employer
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 Active Participant does not retain a
right to reemployment under an applicable statute or by contract, the employment relationship 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
Active Participant will return to perform services for the Employer.

2.17. 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 the employer 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 Employer; or

(c) One Percent Owner. A 1-percent owner of the Employer with annual compensation
greater than $150,000,

in each case, to the extent that the Employer is a publicly traded company 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 on the first April 1 following the Identification Date and ending on
March 31 of the following year.

2.18. Vested Retirement Eligibility. Vested Retirement Eligibility is the attainment of a
vested interest in an Accrued Benefit. The Accrued Benefit is vested upon the earlier of:

(a) Age and Service. The attainment of age 55 while (or prior to becoming) an
Active Participant and the completion of either ten (10) Years of Vesting Service or ten
(10) Years of Credited Service (without regard to any Additional or Discretionary Credit
provided under Section 2.19(a) or (b)); or

(b) Age. The attainment of age 65 while (or prior to becoming) an Active
Participant.

 

5

 

2.19. Year of Credited Service. A Year of Credited Service is a Year of Credited Service
determined under the Kaydon Corporation Retirement Plan, including service credited prior to
participation in this Plan, except that:

(a) Additional Credit. For purposes of the Accrued Benefit once the individual
attains the Eligibility requirement below and for purposes of the computation of the Normal
Retirement, Early Retirement, Death, or Disability Benefit under Sections 3.1, 3.2, 3.4 and
3.5(b) only (and not for purposes of calculating the Accrued Benefit prior to the time the
individual attains the Eligibility requirement below, calculating the Vested Retirement
Benefit, or determining eligibility for a benefit, vesting, or any other purpose), Active
Participants identified in Appendix C as potentially eligible for Additional Credit who are
described in this subsection will be credited with Years of Credited Service as provided in
this subsection in addition to the Years of Credited Service already credited to the
participant.

(i) Eligibility. An individual is eligible for the additional credit
provided in subsection (ii) if the individual attains while an Active Participant in
this Plan Normal Retirement Eligibility, Disability Retirement Eligibility, or Early
Retirement Eligibility and age 62, or dies while an Active Participant in this Plan
with a Qualifying Spouse who is eligible for a benefit under Section 3.5(b).

(ii) Amount of Credit. The number of additional Years of Credited Service
credited is equal to the Active Participant’s Years of Credited Service actually
earned under the Kaydon Corporation Retirement Plan or credited under Section 3.7 of
this Plan (excluding, for example, Years of Credited Service imputed under the terms
of that Plan or this Plan, other than in accordance with Section 3.7 of this Plan).

(iii) Removal. An individual may be removed from the list of Active
Participants identified in Appendix C as potentially eligible for Additional Credit
at any time prior to the earlier of attainment of the Eligibility requirement,
above, and the date which is six months prior to the time the provisions of Section
3.8 of this Plan have operated with respect to the individual. Subject to that
limitation, that removal may occur in the discretion of the Board of Directors or
the Committee.

(b) Discretionary Credit. The Committee also has the authority, in its complete and
absolute discretion, to grant on a case by case basis additional Years of Credited Service
in addition to the Years of Credited Service already credited to the participant. Any Years
of Credited Service granted under this subsection (b) after October 1, 2004 other than at
date of hire may be granted for purposes of the computation of the Normal Retirement, Early
Retirement, Vested Retirement, Death, or Disability Benefit under Sections 3.1, 3.2, 3.3,
3.4 and 3.5(b) only (and not for purposes of determining eligibility for a benefit, vesting,
or any other purpose that could have the effect of accelerating the time of payment of
benefits under the Plan).

 

6

 

(c) Maximum. In every case, total Years of Credited Service (including any
Additional Credit under subsection (a) and any Discretionary Credit under subsection (b))
are limited to 30.

(d) Limitation. Years of Credited Service are not credited under this Plan after an
individual ceases to be an Active Participant in this Plan.

2.20. Year of Vesting Service. A Year of Vesting Service is a Year of Vesting Service
determined under the Kaydon Corporation Retirement Plan, except that Years of Vesting Service are
not credited under this Plan after an individual ceases to be an Active Participant in this Plan.

ARTICLE III

Benefits

3.1. Normal Retirement Benefit. An Active Participant who attains Normal Retirement
Eligibility is entitled to the following benefit, calculated in the Basic form, payable beginning
on the first day of the month following Separation from Service at or after attainment of Normal
Retirement Eligibility (or later, as required by Section 4.1(d)). The benefit is one percent (1%)
of Average Monthly Compensation plus fifty-eight hundredths percent (.58%) of Average Monthly
Compensation in excess of Covered Compensation, multiplied by Years of Credited Service (to a
maximum of 30 years), less the participant’s accrued benefit under the Kaydon Corporation
Retirement Plan, calculated in the Basic Form, as if payable beginning at the same date.

3.2. Early Retirement Benefit. A participant who retires and separates from service after
attaining Early Retirement Eligibility is entitled to a benefit computed in the same manner as the
Normal Retirement Benefit, payable beginning on the first day of the month following the later of
Separation from Service and attainment of Early Retirement Eligibility (or later, as required by
Section 4.l(d)). The benefit is calculated by subtracting from the Actuarial Equivalent
(determined under Appendix E) of the participant’s Accrued Benefit (calculated without the offset
of the benefit under the Kaydon Corporation Retirement Plan) the participant’s actuarially adjusted
benefit under the Kaydon Corporation Retirement Plan from time to time.

3.3. Vested Retirement Benefit. A participant who retires and separates from service after
attaining Vested Retirement Eligibility is entitled to a benefit calculated under the formula
provided in Section 3.1, calculated in the Basic form, payable beginning on the first day of the
month following the later of Separation from Service and attainment of age 65 (or later, as
required by Section 4.1(d)).

3.4. Disability Benefit. A participant who attains Disability Retirement Eligibility and
retires due to Disability is entitled to the individual’s Accrued Benefit, payable beginning on the
first day of the month following the later of Separation from Service and attainment of age 65 (or
later, as required by Section 4.1(d)), calculated based on the Years of Credited Service the
participant would have completed had employment continued to Normal Retirement Eligibility (with
additional Years of Credited Service credited under Section 2.20(a), if applicable, based only on
the individual’s actual Years of Credited Service and under Section 2.20(b), if applicable) and
Average Monthly Compensation determined on the first day of the month
coincident with or next following the occurrence of the Disability, reduced dollar for dollar by
any benefits being received by the participant under the Employer’s long term disability insurance
program (provided that program constitutes bona fide disability pay within the meaning of IRC Reg.
1.409A-1(a)(5)).

 

7

 

(a) Notice. A participant whose employment terminated as the result of a permanent
disability must advise the Committee within sixty (60) days should payment of Social
Security disability insurance benefits be discontinued.

(b) Examination. The Committee may require any participant whose employment
terminated as the result of a permanent disability to provide evidence the Committee
considers appropriate verifying the participant’s continued eligibility for disability
benefits under this Plan.

(c) Effect of Discontinuance. If the permanent disability of a participant ceases,
the Disability Benefit shall also cease and the participant shall receive no further Years
of Credited Service unless, in the case of a participant receiving an unreduced Disability
Benefit, the participant returns to the employ of an Employer within thirty (30) days after
the cessation of disability.

(i) Special Credit. In that event, the participant shall receive Years of
Credited Service for the entire period of permanent disability.

(ii) Other. If the participant does not return to the employ of an Employer
within thirty (30) days after the cessation of disability, or in the case of a
participant receiving a reduced Disability Benefit, the participant shall not
receive any Years of Credited Service for the period of permanent disability and
shall be entitled only to the benefit, if any, applicable on the date of
commencement of the permanent disability, determined as if employment with the
Employers had terminated as of that date.

3.5. Death Benefit. Death Benefits are payable only under this Section.

(a) Non-Eligible. If an individual dies before vesting, no benefit is payable under
this Plan.

(b) Eligible Death. The Qualifying Spouse (as defined in the Kaydon Corporation
Retirement Plan) of a participant who dies after vesting but before benefits are payable is
entitled to the Spousal Survivor Annuity. If the Spousal Survivor Annuity is not payable,
no benefit is payable under this Plan.

(i) Spousal Survivor Annuity. The Spousal Survivor Annuity is an equal
monthly benefit for the Qualifying Spouse’s life equal to the Qualifying Spouse’s
benefit under the Joint and Spousal Survivor form of benefits (as defined in the
Kaydon Corporation Retirement Plan) (with additional Years of Credited Service under
Sections 2.19(a) and 2.19(b), if applicable) less the Spousal Survivor Annuity
benefit payable under the Kaydon Corporation Retirement Plan from time to time.

 

8

 

(ii) Payment. The Spousal Survivor Benefit is payable at the earliest time
payment of the Spousal Survivor Annuity benefit under the Kaydon Corporation
Retirement Plan (as it existed on December 31, 2004) could commence (based on the
participant’s age in fact or a deemed age determined at date of hire) and is not
payable if the spouse does not survive until the actual commencement date. The
benefit is actuarially reduced as provided in Appendix E.

(c) Post-Benefit Death. The designated beneficiary of a participant who dies after
benefits are payable is entitled to a continuation of payment under the elected payment form
if the participant was properly receiving payments in the Joint and Spousal Survivor form,
the Joint and Survivor form, or the Period Certain form.

3.6. Benefit Limitations. Notwithstanding any other provision of the Plan (except as
provided in subsection (a)):

(a) Forfeiture of Vested Benefits. An individual forfeits all amounts payable under
the Plan, whether or not vested and whether or not benefits have yet commenced, if the
individual:

(i) For Cause. Is discharged For Cause;

(ii) Employment. Is employed other than by Kaydon Corporation, one of its
wholly-owned subsidiaries or a successor, or is self-employed, in any capacity to
any extent, prior to attainment of age 65, without prior written approval of the
Committee or the Board of Directors; or

(iii) Compete. Is employed other than by Kaydon Corporation, one of its
wholly-owned subsidiaries or a successor, or is self-employed, in any capacity to
any extent, at any age, in any industry determined by the Committee or the Board of
Directors in its discretion to be an industry in which Kaydon Corporation or any of
its subsidiaries competes.

Subsection (ii) shall not apply if Section 3.8 operates with respect to the individual.
For purposes of this Plan, discharge is For Cause if the participant, in connection with
the participant’s duties as an employee of the Employer 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
or any of its affiliates. For purposes of clarification, this use of this For Cause
standard for discharge affects the participant’s entitlement to benefits under this Plan
only and does not generally limit the ability of Kaydon or other employer to terminate
participant’s employment for any reason or for no reason at all.

(b) Receipt of Benefit. Receipt of any benefit under the Plan fully terminates the
employment relationship with the Employers.

(c) Kaydon Corporation Retirement Plan Benefit. Except where Section 3.8 operates,
an individual is entitled to a benefit under this Plan only if the individual has
accrued a benefit under the Kaydon Corporation Retirement Plan or would have accrued a
benefit under that Plan except that the individual’s Employer did not maintain that Plan.

 

9

 

(d) Single Benefit. A participant is eligible for only one (1) type of benefit
under the Plan. The receipt of a Plan benefit during any month precludes payment of another
type of benefit for the same month. Under no circumstances will the Plan pay duplicate
benefits with respect to the same participant or surviving spouse benefits in excess of the
actuarial present value of the benefits described in this Article III determined as of the
earlier of the commencement of benefits or the date of the participant’s death.

(e) Employment After Benefit Commencement. To the extent permitted under Section
409A of the Code, benefit payments under the Plan cease and are forfeited during any period
of reemployment with an Employer or a prior Employer and during any other period during
which benefits under the Kaydon Corporation Retirement Plan are suspended, but only if the
termination of employment immediately preceding the period of reemployment did not
constitute a Separation from Service.

(f) Withholding and Payroll Taxes. Benefit payments shall be reduced as determined
in the sole discretion of the Employer for any withholding for federal, state and local
income, employment and other taxes required to be withheld by the Employer in connection
with the benefits paid under this Plan.

3.7. Special Transfer Employee Rule. An Active Participant who is employed while an Active
Participant by a subsidiary of Kaydon Corporation which does not maintain the Kaydon Corporation
Retirement Plan:

(a) Service. Is credited with Years of Vesting Service and Years of Credited
Service under this Plan as though the subsidiary had maintained the Kaydon Corporation
Retirement Plan during the Active Participant’s employment by the subsidiary as an Active
Participant; and

(b) Benefit. Receives a benefit under this Plan calculated taking that imputed
service into account for purposes of this Plan. The benefit offset under this Plan is then
calculated based on the greater of:

(i) Pension Benefit. The participant’s benefit under the Kaydon Corporation
Retirement Plan based on the aggregate of the participant’s actual service under
that Plan and imputed service under Section 3.7(a) of this Plan; or

(ii) Other Benefit. The sum of the participant’s actual benefit under the
Kaydon Corporation Retirement Plan, the participant’s actual benefit under any other
Kaydon Corporation or other subsidiary defined benefit plan, and the Actuarial
Equivalent of the participant’s actual benefit under any other Kaydon Corporation or
other subsidiary defined contribution plan.

3.8. Change in Control Override. To the extent a participant is a party to an effective
Change in Control Agreement with an Employer which explicitly provides for amendment of this Plan
as to the participant, upon a Separation from Service triggering the operation of that
Change in Control Agreement as to the participant, except as provided in this Section 3.8, this
Plan shall be deemed amended as to that participant to the extent provided in the Change in Control
Agreement. Notwithstanding that general rule, the Change in Control Agreement may not amend this
Plan in a manner that causes this Plan to violate Section 409A of the Code in form or operation.

 

10

 

ARTICLE IV

Distribution

4.1. Time and Method of Payment. Except as otherwise explicitly provided in this Plan,
benefits under this Plan will be paid (other than in the case of death of the participant) in the
form of payment elected by the participant in a written Complying Election made on or before
December 31, 2007, or, in the case of an individual who first becomes a participant after December
31, 2007, prior to the beginning of the year in which the participant first renders service that is
taken into account under this Plan, commencing on the first day of the month following eligibility
for payment as provided and limited by this Plan.

(a) Automatic Change of Form. Notwithstanding the participant’s written election as
provided above, to the extent permitted by regulations under Section 409A of the Code, at
any time prior to the date an annuity payment has been made to the participant this Plan,
the participant may elect to change an annuity form of payment previously elected by the
participant to another form of annuity payment, provided that:

(i) Actuarial Equivalent. The annuities are actuarially equivalent applying
reasonable actuarial assumptions;

(ii) Date of Payment. The scheduled date for the first annuity payment is
not changed; and

(iii) Change of Beneficiary. The change does not affect the identity of a
beneficiary in a manner that accelerates the time of payment of any benefit.

(b) Other Change of Circumstances. Once payments have begun, no method of payment
may be revoked or modified, nor may the benefit be increased, by reason of a subsequent
divorce or death of the spouse of a participant before that of the participant or by reason
of the participant’s actual retirement after benefits have begun because of the
participant’s attainment of age 70.

(c) No Acceleration. Once elected, the time and manner of payment under this Plan
may not be accelerated except as permitted under Sections 4.7 and 4.8.

(d) Delay in Payment to Specified Employees. Notwithstanding any other provisions
of this Plan, no payment may be made to a Specified Employee (as defined in Section 2.18)
during the first six months following the Specified Employee’s Separation from Service with
the Employer if the payment is due to the Specified Employee as a result of a Separation
from Service with the Employer. Any such payments shall be accumulated and paid to the
Specified Employee, without interest, within the fourteen calendar days following the first
day of the seventh month following the date of the
Separation from Service. Thereafter, the Specified Employee shall receive any remaining
payments and benefits due under the Plan in accordance with the terms of this Plan (as if
there had not been prior delay in payments beforehand).

 

11

 

(e) Subsequent Deferrals of Payment Dates. A participant may elect to defer payment
of an annuity under this Plan for at least five years from the originally scheduled
commencement of the annuity, so long as the election is made in writing and at least twelve
months prior to the scheduled commencement of the annuity.

4.2. Method of Payment. Subject to Section 4.1, the participant may elect that benefits be
paid in one (1) of the following forms:

(a) Basic. An immediate, equal monthly benefit for the participant’s life. The
Basic form automatically applies if the participant does not have a Qualifying Spouse
(defined as provided in the Kaydon Corporation Retirement Plan, but without the one-year of
marriage requirement) and fails to adequately elect another form of payment.

(b) Joint and Spousal Survivor. An immediate, reduced equal monthly benefit for the
participant’s life and, if the participant is survived by a Qualifying Spouse (defined as
provided in the Kaydon Corporation Retirement Plan, but without the one-year of marriage
requirement) to whom the participant is married at the date of death or who is treated as a
Qualifying Spouse under a Qualified Order (also as defined in the Kaydon Corporation
Retirement Plan), fifty percent (50%) of the amount continued for that spouse’s life. The
Joint and Spousal Survivor form automatically applies if the participant has a Qualifying
Spouse (as defined for purposes of this Plan) and fails to effectively elect another form of
payment.

(c) Joint and Survivor. An immediate, reduced equal monthly benefit for the
participant’s life and, if the participant is survived by an individual Designated
Beneficiary (defined as provided in the Kaydon Corporation Retirement Plan), an equal (100%)
or lesser (50% or 66-2/3%) amount continued for that beneficiary’s life.

(d) Period Certain. An immediate, reduced equal monthly benefit for the
participant’s life, and if the participant dies before the end of a period certain of ten
years, an equal amount continued to the Designated Beneficiary (or successor) for the
remainder of that period certain. The ten year period certain may not be longer than the
applicable life expectancy, determined without recalculation.

(e) Lump Sum. To the extent provided in a governing Change in Control Agreement or
as provided here, payment of the Actuarial Equivalent of the participant’s vested Accrued
Benefit within one (1) taxable year of the recipient. The participant’s entire vested
Accrued Benefit will be paid to the participant in a lump sum upon the participant’s
Separation from Service if the Actuarially Equivalent lump sum is less than $10,000.

Each optional form and time of payment of benefits must be the Actuarial Equivalent of the
benefit payable under the Basic form. A married participant may elect a form of payment
other than the Joint and Spousal Survivor form only with the written consent of the
participant’s spouse.

 

12

 

4.3. Designation of Beneficiary. The participant must designate a beneficiary and
contingent beneficiary to receive amounts payable under the Plan (other than the Spousal Survivor
Annuity or the Spousal Survivor portion of the Joint and Spousal Survivor Annuity) in the event of
the participant’s death. The participant must designate the same beneficiary and contingent
beneficiary, respectively, applicable to the participant from time to time under the Kaydon
Corporation Retirement Plan. Any non-complying designation by the participant shall be
disregarded.

4.4. Claims Procedure. A participant or beneficiary, the Committee and the Board of
Directors must observe the following procedures for claims to benefits.

(a) Claim. If a participant, beneficiary or legal representative asserts that a
benefit which is payable has not been paid in a timely manner, the individual must file an
Application for Distribution with the Committee. The Committee must grant or deny the
request within ninety (90) days after receipt unless special circumstances require an
extension of time. The extension must not exceed an additional ninety (90) days. The
Committee must notify the applicant in writing of the extension and the reasons for the
extension.

(b) Denial of Claim. If a claim is denied, the Committee must provide to the
applicant a written notice containing the reason for the denial. If notice of a denial of
claim or an extension of time is not received by the applicant within ninety (90) days, the
claim is deemed denied.

(c) Employer Review. Within sixty (60) days after a denial is received, the
applicant may request a review upon written application to the Board of Directors. The
applicant may submit issues and comments in writing to the Board. The Board must make a
decision on review and notify the applicant of the decision within ninety (90) days of
receipt of the request for review unless circumstances require an extension of time. The
extension may not exceed an additional ninety (90) days.

(i) Pre-Change in Control. Prior to a Change in Control (as defined in a
Change in Control Agreement affecting a participant), except during any period of
time in anticipation of a Change in Control, the Board has the duty and power in
this regard to exercise discretionary authority to construe and interpret the Plan
and decide all questions of eligibility for benefits. The decision of the Board
upon review is final and binding on the applicant unless the applicant establishes
that the decision of the Board is arbitrary and capricious.

(ii) Post-Change in Control. After such a Change in Control and during any
period of time in anticipation of a Change in Control:

(A) Interpretation. The Board’s construction and interpretation of
the Plan and its decisions regarding eligibility for benefits with respect
to the
affected participant must be reasonable and consistent with the spirit and
intent of the Plan; and

(B) Standard. The decision of the Board upon review with respect to
the affected participant is subject to de novo review.

 

13

 

4.5. Facility of Payment. A payment made under this section fully discharges the Employer
and the Committee from all future liability with respect to the payment.

(a) Incapacity. If a person entitled to payment is legally, physically or mentally
incapable of receiving or acknowledging payment, the Committee may direct payment: directly
to the person; to the person’s legal representative; to the spouse, child or relative by
blood or marriage of the person; to the person with whom the person resides; or by expending
the payment directly for the benefit of the person. A payment made other than to the person
is intended to be used for the person’s exclusive benefit.

(b) Legal Representative. The Committee is not required to commence probate
proceedings or to secure the appointment of a legal representative.

(c) Determinations. The Committee may act upon affidavits in making any
determination. The Committee, in relying upon affidavits or having made a reasonable effort
to locate any person entitled to payment, is authorized to direct payment to a successor
beneficiary or another person. A person omitted from payment has no rights on account of
payments so made.

(d) Anti-Escheat. If the Committee cannot locate a person entitled to payment, the
amount is a forfeiture which is reinstated if a claim is made within the applicable
limitations period by a person entitled to payment.

4.6. Offset. The Committee shall be entitled to offset any participant’s benefit to
satisfy a debt owed by the participant to an Employer, where such debt was incurred in the ordinary
course of the employment relationship between the participant and the Employer, the entire amount
of the offset does not exceed $5,000 in any taxable year of the Employer, and the reduction is made
at the same time and in the same amount as the debt otherwise would have been due and collected
from the participant. In addition, in all cases the benefit payable under this Plan is reduced by
the benefit payable under the Kaydon Corporation Retirement Plan.

4.7. Distribution in the Event of Taxation. If, as a result of a failure of this Plan to
meet the requirements of Section 409A of the Code, all or any portion of the participant’s benefit
under this Plan becomes taxable to the participant prior to receipt of such benefit, the
participant may request a distribution of assets sufficient to meet the participant’s tax liability
(including additions to tax, penalties and interest), but not in excess of the amount required to
be included in income as a result of the failure to comply with Code Section 409A.

(a) Calculation. Upon receipt of the request, the Employer shall distribute to the
participant immediately available funds in an amount equal to the participant’s federal,
state and local tax liability associated with such taxation (not to exceed the lesser of the
participant’s Vested Accrued Benefit under the Plan and the amount required to be included
in income as a result of the failure to comply with Section 409A).

 

14

 

(b) Timing. Subject to Section 4.1(d) above, the tax liability distribution shall
be made within two and one-half months after the request unless the rules of Section 4.4
require a longer time for processing.

(c) Effect. The distribution shall affect and reduce the participant’s Accrued
Benefit and the benefits to be paid under this Plan.

4.8. Permissible Distributions. In addition, all or any portion of a participant’s benefit
under this Plan may be distributed in an amount sufficient to meet the participant’s needs as
follows:

(a) Conflicts of Interest. To comply with a certificate of divestiture as defined
in Code Section 1043(b)(2).

(b) Payment of Taxes. To pay Federal Insurance Contributions Act tax under Code
Sections 3101, 3121(a) and 3121(v)(2) on amounts payable under this Plan and income tax at
source on wages under Code Section 3401 or applicable state, local or foreign tax laws based
on the FICA amount.

(c) Plan Termination. To provide an accelerated payment of the participant’s
benefit under this Plan upon the termination of this Plan in accordance with Code Section
409A.

ARTICLE V

Administration

5.1. Committee. The Committee has responsibility for general administration of the Plan.

(a) Authority. The Committee has the duty and power to:

(i) Construction. Exercise discretionary authority to construe and
interpret the Plan and decide all questions of eligibility for participation and
benefits;

(ii) Procedures. Prescribe procedures and forms for the payment of
benefits; and

(iii) Benefit Authorization. Determine entitlement to and the amount of
benefits and authorize benefit payments.

(b) Procedure and Action. The Committee may elect one of its members as chairperson
and may designate a secretary. The Committee must keep a brief record of all meetings. Any
delegation of duties by the Committee must state the scope of the delegation with reasonable
specificity. The Committee acts by a majority of its members, either by vote at a meeting
or by signature to a writing. Action by the Committee must be evidenced by written and duly
executed instrument.

 

15

 

(c) Finality. Except as provided in subsection (d), the decision or action of the
Committee with respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan is final and conclusive and
binding on all persons having any interest in the Plan.

(d) Post-Change in Control. After a Change in Control (as defined in a Change in
Control Agreement affecting a participant) or during any period of time in anticipation of a
Change in Control:

(i) Interpretation. The Committee’s construction and interpretation of the
Plan and its decisions regarding eligibility for benefits with respect to the
affected participant must be reasonable and consistent with the spirit and intent of
the Plan; and

(ii) Standard. The decisions of the Committee with respect to the affected
participant are subject to de novo review.

5.2. Limitation of Liability and Indemnification. As a condition of participation in the
Plan, each participant agrees that neither the Employers’ officers and agents, the Committee, the
Board of Directors, nor their individual members shall in any way be subject to any suit,
litigation, or legal liability for any cause or reason in connection with the Plan or its
operation, and each participant releases the Employers’ officers and agents, the Committee, the
Board of Directors and their individual members from any and all such liability or obligation. The
Board of Directors, the Committee and their respective individual members shall not be liable for
any act, omission, determination, construction, or communication made by that individual or any
other party. Each shall be indemnified by Kaydon Corporation against any and all liabilities
arising by reason of any act or failure to act made in good faith pursuant to the provisions of the
Plan, including expenses reasonably incurred in the defense of any claim of liability.

ARTICLE VI

Amendment and Termination of Plan

6.1. Amendment or Termination. The Board of Directors of Kaydon Corporation may amend or
terminate the Plan at any time and the Board of Directors of each Employer may amend or terminate
the Plan as to that Employer at any time. Except as explicitly limited, no individual has any
right to continuation of the Plan, to continued participation in the Plan, or to continued accrual
under the Plan.

(a) Limitation. No amendment or termination may, without the consent of the
participant, modify Section 4.4(c)(ii) or 5.1(d) of this Plan or retroactively decrease the
vested Accrued Benefit of a participant:

(i) Regular Vesting. Who completed ten (10) Years of Credited Service
(without regard to any Additional Credit provided under Section 2.18(a) or any
Discretionary Credit provided under Section 2.18(b)) or ten (10) Years of Vesting
Service and attained age 55 while (or prior to becoming) an Active Participant and
prior to the amendment or termination;

 

16

 

(ii) Age Vesting. Who attained age 65 while (or prior to becoming) an
Active Participant and prior to the amendment or termination; or

(iii) Change in Control. Upon or after the occurrence of a Change in
Control or in anticipation of a Change in Control, if the participant is at that
time a party to an effective Change in Control Agreement.

(b) Benefits, Rights and Features. No amendment or termination upon or after the
occurrence of a Change in Control or in anticipation of a Change in Control may, without the
consent of the participant, adversely affect the benefits, rights or features of this Plan
(determined in accordance with Section 411(d) of the Code and applicable regulations) at the
time of the Change in Control (or the action in anticipation of a Change in Control) with
respect to a participant who is at that time:

(i) Change in Control. A party to an effective Change in Control Agreement;
and

(ii) This Plan. An Active Participant in this Plan.

(c) Automatic. Subject to subsections (a) and (b), above, any freeze of benefit
accrual or termination of the Kaydon Corporation Retirement Plan shall automatically effect
a freeze or termination of this Plan, as the case may be. Distribution at termination may
not occur, however, except to the extent permitted by Section 409A.

6.2. Change in Control Agreement. Subject to the limitations of Section 3.8, this Plan may
also be amended as to a participant by an effective Change in Control Agreement or other written
document which explicitly amends this Plan and which is signed by the participant and authorized
representatives of Kaydon Corporation or the participant’s Employer. Notwithstanding that general
rule, the Change in Control Agreement may not amend this Plan in a manner that causes this Plan to
violate Section 409A of the Code in form or operation.

ARTICLE VII

Miscellaneous

7.1. Nonassignability. Benefits are not subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, attachment, garnishment, execution, or levy
(Assignment), before actual receipt, by creditors of the participant or the participant’s
beneficiary. Any assignment which violates this section is void. The right to receive a benefit
is not an asset for insolvency or bankruptcy.

7.2. Employment Rights Not Enlarged. The Plan does not create any employment rights or
restrict an Employer’s right to discharge an employee.

7.3. Participants’ Rights Limited. The Plan does not give any participant or beneficiary:
any interest in any Employer’s assets, business or affairs; the right to question any Employer
action or policy; or the right to examine Employer books and records. The rights of all
participants are limited to the right to receive payment of benefits when due. The Employer’s
obligation under the Plan is simply an unfunded and unsecured promise to pay money in the
future and its assets remain the general, unpledged and unrestricted assets of the Employer.
Notwithstanding these limits and any other provision of this Plan, the Employer shall not be a
party to any merger, consolidation, or reorganization unless its obligations under this Plan are
expressly assumed by its successor. This Plan shall inure to the benefit of and shall be binding
upon the successors and assigns of the Employer and each participant.

 

17

 

7.4. Interpretation and Construction. The use of the singular includes the plural where
applicable, and vice versa. The headings in the Plan do not limit or extend the provisions of the
Plan. Capitalized terms, except where capitalized solely for grammar, have the meanings as
provided in the Plan. If a provision is unenforceable in a legal proceeding, the provision is
severed only for that proceeding.

7.5. Governing Law. The Plan is governed by the applicable laws of the United States of
America (including the Code, ERISA, securities law, labor law, age discrimination law, and civil
rights law) and, to the extent not preempted, by the laws of Michigan.

7.6. Arbitration. Any claim which cannot be resolved under this Plan shall be submitted to
arbitration.

(a) Rules. The arbitration shall be conducted by the American Arbitration
Association under its commercial arbitration rules within the county where the Employer
maintains its registered office.

(b) Award. The Arbitrator’s decision shall be embodied in an award which shall be
final and binding on the parties. In making an award, the arbitrator may include any remedy
contemplated by this Agreement and shall allocate the fees and expenses of the arbitration.

 

18

 

KAYDON CORPORATION and

KAYDON RING & SEAL, INC.

	 	 	 	 	 
	By

	 	/s/ James O’Leary
 

James O’Leary, President and

Chief Executive Officer, Kaydon Corporation

Vice-President, Kaydon Ring & Seal, Inc.
	 	 
	 
	 	 	 	 
	And

	 	/s/ Debra Crane
 

Debra Crane, Secretary of Kaydon Ring & Seal, Inc.

Secretary, Kaydon Corporation
	 	 

 

19

 

APPENDIX A

OTHER EMPLOYERS

Kaydon Ring & Seal, Inc.

 

 

 

APPENDIX B

ACTIVE PARTICIPANTS

	 	 	 	 	 	 	 
	 	 	 	 	 	 	Effective Date of
	 	 	 	 	Effective Date of	 	Cessation of
	Name	 	Employer	 	Active Participation	 	Active Participation
	 
	 	 	 	 	 	 
	Arthur
Ridler

	 	Kaydon Ring & Seal,
Inc.

	 	January 1, 1994

	 	 
	

James O’Leary

	 	
Kaydon
Corporation
	 	
March 26, 2007
	 	 

 

 

 

APPENDIX C

ADDITIONAL CREDIT UNDER SECTION 2.18(A)

	 	 	 	 	 
	 	 	 	 	Effective Date of
	 	 	 	 	Eligibility for
	 	 	 	 	Additional Credit
	Name	 	Employer	 	Under Section 2.19(a)
	 
	 	 	 	 
	James O’Leary

	 	Kaydon Corporation
	 	March 26, 2007 (1)

	 	 	 
	(1)	 	For each day of actual Credited Service on and after March 26, 2007, one additional day
of Credited Service (subject to the Plan’s maximum of 30 Years of Credited Service), per the
terms of Appendix F and Mr. O’Leary’s Employment Agreement effective March 26, 2007.

 

 

 

APPENDIX D

DISCRETIONARY CREDIT UNDER SECTION 2.18(B)

	 	 	 	 	 	 	 
	 	 	 	 	Effective Date of	 	 
	 	 	 	 	Eligibility for Additional Credit	 	 
	Name	 	Employer	 	Under Section 2.19(b) Amount of Credit	  	 Amount of Credit
	 
	 	 	 	 	 	 
	James O’Leary

	 	Kaydon Corporation
	 	March 26, 2007
	 	10 Years (1)

	 	 	 
	(1)	 	Subject to the Plan’s maximum of 30 Years of Credited Service, per the terms of
Appendix F and Mr. O’Leary’s Employment Agreement effective March 26, 2007.

 

 

 

APPENDIX E

ACTUARIAL FACTORS

1. Time of Payment Actuarial Equivalence. Actuarially reduced from age 62 based on:

(a) Interest Rate. 7.5%

(b) Mortality. 1983 Group Annuity Mortality (GAM) with annuity values based on 75%
male and 25% female mortality.

2. Form of Payment Actuarial Equivalence.

(a) Interest Rate. 7.5%

(b) Mortality. 1983 Group Annuity Mortality (GAM) with annuity values based on 75%
male and 25% female mortality.

(c) Lump Sum Override. For purposes of determining lump sum actuarial equivalence
under this Plan, the interest rate, mortality and other factors applicable for purposes of
determining lump sum actuarial equivalence under the Kaydon Corporation Retirement Plan from
time to time and, to the extent not addressed by that Plan, the applicable mortality table
and applicable interest rate as described in Code Section 417(e)(3) shall be used instead of
the interest rate and mortality factors provided in this Appendix E.

3. Other. For any other purpose for which Actuarial Equivalence is specified:

(a) Interest Rate. 7.5%

(b) Mortality. 1983 Group Annuity Mortality (GAM) with annuity values based on 75%
male and 25% female mortality.

 

 

 

APPENDIX F

SPECIAL RULES APPLICABLE TO MR. O’LEARY

Notwithstanding the corresponding limiting provisions of this Plan:

1 Eligibility. Mr. O’Leary is eligible for benefits under the Plan on March 26, 2007
and, for all purposes of the Plan, is deemed to be sixty-five (65) years of age on that date and
each succeeding date until he is actually sixty-five (65) years of age. He shall remain a
participant in the Plan during the Term of his employment.

2 Vesting. Mr. O’Leary is 100% vested under the Plan on March 26, 2007, regardless of
whether he is vested under the Retirement Plan.

3 Lump Sum. Mr. O’Leary is entitled to a lump sum payment from the Plan upon his
Separation from Service within two years following a Change in Control (as defined in Section 6 of
this Appendix F), in cash, payable thirty (30) days following his Separation from Service (or
later, if required by Section 4.1(d) of the Plan).

4 Additional Credit. Mr. O’Leary is credited with ten (10) years of additional
Credited Service on March 26, 2007 and, thereafter, each day of his actual Credited Service shall
entitle him to one (1) day of additional Credited Service, subject to a maximum of thirty (30)
years of Credited Service.

5 Appendix C. Mr. O’Leary is deemed to be a person identified in Appendix C as
eligible for additional Credited Service.

6 Definition of Change in Control. For the purposes of this Appendix F, “Change in
Control” means any one of the following (capitalized terms set forth in this definition shall have
the meanings assigned to them in Mr. O’Leary’s Employment Agreement effective March 26, 2007):

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

B. 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;

C. 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

D. 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) substantially all of the assets
of the Company.

 

 

 

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

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

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

Exhibit 10.3

FIRST AMENDMENT OF THE KAYDON CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT TRUST

This First Amendment of the Kaydon Corporation Supplemental Executive Retirement Trust, dated
as of March 3, 1998 (the “Trust Agreement”), by and between Kaydon Corporation (the “Company”) and
Wachovia Bank, N.A. (the “Trustee” and together with the Company, the “Parties”), is hereby made as
of the 23rd day of October, 2008, by and between the Company and the Trustee:

WHEREAS, Section 6.3 of the Trust Agreement authorizes the Company and Trustee to amend the
Trust Agreement via a writing signed by the Parties; and

WHEREAS, the Parties desire to amend the Trust Agreement to ensure that the Trust is operated
in accordance with Section 409A(b)(3)(A) of the Internal Revenue Code of 1986, as amended (the
“Code”).

NOW, THEREFORE, the Parties hereby agree that Section 1(g) is added to the Trust Agreement as
follows, effective immediately:

(g) Prohibition on Trust Funding During any Restricted
Period. Notwithstanding anything in this Trust to the contrary,
no contributions shall be made to the Trust during any “restricted
period” within the meaning of Section 409A(b)(3)(B) of the Internal
Revenue Code of 1986, as amended, or any successor provision.

IN WITNESS WHEREOF, the parties hereto have executed this First Amendment and such First
Amendment shall be effective as of the date first above written.

	 	 	 	 	 	 	 
	 	 	KAYDON CORPORATION
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Debra K. Crane
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Its
	 	Vice President and General Counsel
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	WACHOVIA BANK, N.A.
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Stephen Howell	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	Its	 	Vice President, Relationship Manager

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