The Kaydon Corp
oration 1999 Long Term Stock Incentive Plan Committee (the Committee), pursuant
to the Corporation’s 1999 Long Term Stock Incentive Plan (the Plan), has granted to the Optionee,
on the date of this Agreement, an option under the Plan to purchase an aggregate of 250,000
of Common Stock of the Corporation par value $.10
per share (Common Stock). To evidence the option
and to set forth its terms and conditions as provided in the Plan, the Corporation and the Optionee
agree as follows.
1. Confirmation of Grant and Price. The Corporation, by this Agreement, evidences and
confirms its grant to the Optionee on the date of this Agreement of an option (the Option) to
purchase 250,000 shares of Common Stock, at an option price of $43.03 per share. The Option is
subject to all of the provisions of the Plan, whether or not explicitly stated in this Agreement,
except that the ability of the Board of Directors or the Committee to amend this Agreement without
the consent of Optionee is limited as provided in this Agreement, provided, however, in the event
of any conflict between the terms of this Agreement and the terms of Xx. X’Xxxxx’x Employment
Agreement effective March 26, 2007, the Employment Agreement shall govern and control.
2. Term for Exercise. The Option becomes available for exercise, subject to the
provisions of this Agreement, as to the percentage of the aggregate number of shares of Common
Stock subject to the Option and on the dates set forth below:
a. Percentage and Date Schedule
|Percentage of Number
||Date First Available
||One year after the date of grant
||Two years after the date of grant
||Three years after the date of grant
||Four years after the date of grant
||Five years after the date of grant
b. Later Exercise. The right to purchase is cumulative. If the full number of shares
exercisable in any period is not exercised, the balance may be exercised at any time or from time
to time after that date, as long as the exercise occurs prior to the expiration or termination of
c. Expiration. The Option expires March 22, 2017.
3. Non-Qualified Stock Option. The Option evidenced by this Agreement is not
intended to be an incentive stock option as that term is defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the Code).
4. Who May Exercise. During the lifetime of the Optionee, the Option may be exercised
only by the Optionee.
a. Death. If the Optionee dies, the Option may be exercised, to the extent of the
number of shares of Common Stock with respect to which the Optionee could have exercised the Option
on the date of the Optionee’s death, by the Optionee’s estate or a person who acquires the right to
exercise the Option by bequest or inheritance or by reason of the death of the Optionee, at any
time prior to the earlier of one year after the Optionee’s death and the expiration date specified
in Section 2.
b. Discretion To Amend. The Board of Directors or the Committee may, in its
discretion, amend this Agreement to accelerate the exercisability of any installments of the Option
which were not exercisable at the time of the Optionee’s death.
5. Exercise After Termination of Employment. If the Optionee ceases to be employed by
the Corporation or any parent or subsidiary (including termination by reason of the fact that an
entity is no longer a subsidiary), no further installments of the Option will become exercisable
except as provided below. It is not a termination of employment for purposes of this section if
the Optionee transfers employment from the Corporation to any subsidiary or vice versa, or from one
subsidiary to another,
without an intervening period, if the Optionee is absent on sick leave or is granted a
leave of absence (not to exceed one year), or if the Optionee changes status to become a consultant
to the Corporation or a subsidiary.
a. General Rule. Unless governed by a special rule, below, the Option, to the extent
of the number of shares of Common Stock with respect to which the Optionee could have exercised the
Option at the date of termination of employment, terminates on the earlier of the expiration date
specified in Section 2 and the date which is 10 days after the date of termination of employment.
b. Exceptions For Involuntary Termination and Disability. In the case of involuntary
termination of employment or a Permanent and Total Disability within the meaning of the Plan, the
Option, to the extent of the number of shares of Common Stock with respect to which the Optionee
could have exercised the Option at the date of termination of employment, terminates on the earlier
of the expiration date specified in Section 2 and the date which is three months after the date of
termination of employment.
c. Exception for Death. In the case of death, the Option, to the extent of the number
of shares of Common Stock with respect to which the Optionee could have exercised the Option on the
date of death, terminates on the earlier of the expiration date specified in Section 2 and the date
which is one year from the date of death.
d. Exception for Retirement. In the case of termination of employment by reason of
retirement, the Option will continue to vest in accordance with the Option vesting schedule in
effect on the date of retirement and will continue to be exercisable in accordance with its terms
as though the Optionee had continued in employment.
Notwithstanding the preceding rules, if the Committee determines that the Optionee engaged in
any activity detrimental to the interests of the Corporation or a subsidiary, the Committee may
terminate the unexercised portion of the Option concurrently with or at any time following the
termination of employment.
Further, nothing in the Plan or in this Agreement confers upon the Optionee any right to
continue in the employ of the Corporation or any of its affiliates, or interferes in any way with
the right of the Corporation or any of its affiliates to terminate the Optionee’s employment at any
time during the Option period or otherwise.
6. Restrictions on Exercise. The Option may be exercised only with respect to full
shares. No fractional shares of Common Stock will be issued.
a. General Limitation. The Option may not be exercised in whole or in part, and no
payment by the Corporation shall be made nor shall any certificates representing shares of Common
Stock subject to the Option be delivered, if:
i. Governmental Approval. At any time any requisite approval or consent of any
governmental authority of any kind having jurisdiction over the exercise of options has not been
ii. Registration. The shares are not effectively registered under the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended; or
iii. Withholding. Applicable federal, state and local tax withholding requirements
are not satisfied.
b. Representation. The Corporation may require as a condition to the exercise of the
Option in whole or in part at any time that the Optionee or any person exercising the Option after
the Optionee’s death in accordance with the provisions of Section 4 (the Holder) represent to the
Corporation in writing that the shares are being acquired for the Optionee’s or Holder’s own
account for investment only and not with a view to distribution or with any present intention of
. The Option is not exercisable for the period of at least twelve (12)
months to the extent provided under the hardship distribution provisions of the Kaydon Corp
Employee Stock Ownership and Thrift Plan or other Corporation or affiliate plan to the extent the
Optionee receives a hardship distribution from that plan.
d. Employment. Except as explicitly provided above, no part of an Option may be
exercised by an Optionee unless the Optionee is then in the employ of the Corporation or subsidiary
and was continuously so employed since the date of the grant.
7. Manner of Exercise. To the extent the Option has become and remains exercisable as
provided in this Agreement, and subject to any additional administrative regulations the Committee
may from time to time adopt, the Option may be exercised from time to time, in whole or in part, by
a signed written notice to the Secretary of the Corporation on a form supplied by the Corporation.
The notice must specify the number of shares of Common Stock with respect to which the Option is
being exercised and be accompanied by full payment of the option price for the shares.
a. Payment. Payment must be made in:
ii. Stock or Other Property. With the consent of the Committee, in whole or in part
in shares of Common Stock, represented by certificates duly endorsed to the Corporation or its
nominees, valued at fair market value, or other awards or property having a fair market value on
the exercise date equal to the exercise price;
iii. Instructions. With the consent of the Committee, by delivering with a properly
executed exercise notice irrevocable instructions to a third party to promptly deliver to the
Corporation the amount of sale or loan proceeds to pay the exercise price;
iv. Combination. With the consent of the Committee, a combination of the above; or
v. Other. With the consent of the Committee, other consideration.
b. Prior Holdings Limitation. The option price may not be paid in:
i. Option. Shares of Common Stock received upon the exercise of any option under
the Plan or any option under another stock option plan of the Corporation which shares have been
held by the Optionee or other Holder or for less than one year prior to payment; or
ii. Stock. Shares of Common Stock that have been held by the Optionee for less than
c. Withholding Limitation. The portion of the option price equal to the amount of any
applicable federal, state and local tax liability required to be withheld at the time of exercise
must be paid in cash.
d. Right to Exercise. In the event that the Option is exercised by a person other
than the Optionee in accordance with Section 4, the person must furnish to the Corporation evidence
satisfactory to it of the person’s right to exercise the Option.
e. Other Documents. The Corporation may require the Optionee or any other person
exercising the Option to furnish or execute any documents the Corporation deems necessary to
evidence the exercise or to comply with any requirements of this Agreement, the Plan, or any law.
f. Cash or Stock Alternative. The Committee may, in its discretion, at any time that
the fair market value of the Common Stock subject to the Option exceeds the option price, in lieu
of accepting payment of the option price and delivering any or all shares of Common Stock as to
which the Option has been exercised, elect to pay the Optionee or other Holder an amount in cash or
shares of Common Stock equal to the amount by which the fair market value on the date of exercise
of the shares of Common Stock as to which the Option has been exercised exceeds the option price
that would otherwise be payable by the Optionee or other Holder upon the exercise.
8. Repurchase. The Corporation may, at the election of the Corporation, repurchase
shares of Common Stock sold under the Plan then held by the Optionee at a price not to exceed the
higher of the option price for such shares plus twice the
increase, if any, in the book value of such shares from the date of the grant of the Option to the
date of such repurchase, and the fair market value of the shares at the time of repurchase.
9. Disposition of Shares. If the Optionee or other Holder disposes of any shares
received upon exercise of the Option, whether by sale, gift, or otherwise, within two years from
the date the Option was granted or within one year after the date the shares were transferred, the
Optionee or other Holder must notify the Secretary of the Corporation of the number of shares
disposed of, the date on which disposed, the manner of disposition and the amount, if any, realized
upon the disposition.
10. Non-Assignability. The Option may not be assigned, transferred or hypothecated by
the Optionee or other Holder except as provided below:
a. Acceptable Assignments. Subject to subsection b., the
Option may be assigned by the Optionee:
i. Death. By will or by the laws of descent and distribution to the extent provided
in section 4;
ii. Grantor Trust. To a revocable grantor trust established by the Optionee for the
Optionee’s sole benefit during the Optionee’s life, subject to the terms of the Plan; or
iii. Other. To a beneficiary designated by the Optionee in writing on a form
approved by the Committee.
b. Limitation. Notwithstanding those general rules, the Option may not be assigned
by Optionee if Optionee is a director or officer of the Corporation or an affiliate for purposes of
the securities laws, except as permitted under Rule 16b-3 of those laws.
11. Rights as Shareholders. The Optionee and any other Holder have no rights as a
shareholder with respect to any shares covered by the Option until the issuance of a certificate or
certificates to the Optionee or other Holder for the shares upon due exercise of the Option. No
adjustment will be made for dividends or other rights for which the record date is prior to the
issuance of the certificate or certificates.
12. Capital and Other Adjustments. In the event of any change in the number of
outstanding shares of Common Stock by reason of any stock dividend, stock split, combination or
exchange of shares, recapitalization, reclassification, merger, consolidation, reorganization, or
other similar transaction, the Committee may adjust the number, type and option price of shares of
Common Stock covered by the Option, by means of a grant of a substitute option or an additional
option or otherwise, as it in its discretion deems appropriate. In addition, in the event of any
unusual or nonrecurring event (including, but not limited to, the events described in the preceding
sentence) affecting the Corporation, any subsidiary, or the financial statements of the Corporation
or any subsidiary, or of changes in applicable laws, regulations, or accounting principles, the
Committee may adjust the terms and conditions of, and the criteria included in this Agreement if
the Committee determines that such adjustments are appropriate to prevent dilution or enlargement
of the benefits or potential benefits of the Option.
13. Change in Control. In the event of a Change in Control, the Option shall vest,
shall become exercisable in full and shall no longer be subject to any restrictions which would
prevent immediate exercise.
a. Additional Authority. In addition, in that circumstance, the Committee as
constituted before the Change in Control may, in its sole discretion:
i. Purchase. Provide for the purchase of the Option, at the Optionee’s request, for
an amount of cash equal to the amount that could have been attained upon exercise had the Option
been exercisable at that time;
ii. Adjust. Adjust the Option as the Committee deems appropriate to reflect the
Change in Control; and
iii. Cause Assumption. Cause the Option to be assumed, or replaced with a new
option, by the acquiring or surviving corporation after the Change in Control.
b. Change in Control. A Change in Control occurs if:
i. Ownership. Any person or group of persons (as used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934) other than pursuant to a transaction or agreement previously
approved by the Board of Directors of the Corporation, directly or indirectly purchases or becomes
the beneficial owner (as defined in Rule 13d-3 under the Act) or has the right to acquire such
beneficial ownership (whether or not such right is exercisable immediately, with the passage of
time, or subject to any condition) of voting securities of the Corporation representing 25% or more
of the combined voting power of all outstanding voting securities of the Corporation; or
ii. Control. During any period of twenty-four consecutive calendar months, the
individuals who at the beginning of that period constitute the Corporation’s Board of Directors,
and any new directors whose election by such Board or nomination for election by stockholders was
approved by a vote of at least two-thirds of the members of such Board who were either directors on
such Board at the beginning of the period or whose election or nomination for election as directors
was previously so approved, for any reason cease to constitute a majority of the Board of Directors
of the Corporation.
14. Change in Control Compensation Agreement. Notwithstanding the limitations of this
Agreement relating to vesting and exercisability, if the Condition below is met, each of Optionee’s
stock options governed by this Agreement outstanding at the time of a Change in Control (as defined
in this Section) will be immediately vested and exercisable upon such a Change in Control.
a. Condition. The acceleration of vesting and exercisability provided in this Section
shall occur only if Optionee is a party at the time of a Change in Control to an effective Change
in Control Compensation Agreement which explicitly provides for acceleration of vesting and
exercisability of options upon a Change in Control.
b. Change in Control. Notwithstanding the definition of Change in Control provided in
Section 13.b of this Agreement, for purposes of this Section a Change in Control has the meaning
provided in the Change in Control Compensation Agreement applicable to Optionee.
c. Effect. This acceleration is not subject to cancellation under the 1999 Long Term
Stock Incentive Plan. This acceleration is also irrevocable as long as the Optionee is a party to
an effective Change in Control Compensation Agreement.
15. Legality. The issuance or delivery of any shares of Common Stock pursuant to an
Option may be postponed by the Corporation for any period required to comply with any applicable
requirements under the Federal securities laws, any applicable listing requirements of any national
securities exchange or any requirements under any other applicable law or regulation. The
Corporation is not obligated to issue or deliver any shares if the issuance or delivery
constitutes, or in the opinion of counsel to the Corporation may constitute, a violation of any
provision of any law or of any regulation of any governmental authority or any national securities
16. Withholding of Taxes. Prior to the issuance or delivery of any shares of Common
Stock or any payment, payment of any taxes required by law must be made.
a. Withholding. The withholding obligation may not be satisfied by reducing the
number of shares of Common Stock otherwise deliverable.
b. Fractional Shares. Any fraction of a share of Common Stock required to satisfy a
tax obligation shall be disregarded and the amount due must be paid instead in cash.
17. Notice. Notice to the Secretary of the Corporation shall be deemed given if in
writing and mailed to the Secretary of the Corporation by first-class mail at the then principal
office of the Corporation.
18. Amendment. The Board of Directors or the Committee may amend the terms and
conditions of this Agreement as provided in the Plan, except that, without the consent of the
Optionee, no amendment may impair the rights of the Optionee or Holder relating to the Option or
amend Sections 13, 14, or 18 of this Agreement. Notwithstanding that, the Option
provided in this Agreement may be canceled in the Committee’s sole discretion, as long as the
Optionee is not a party to an effective Change in
Control Compensation Agreement as described in
Section 14(a), above, upon payment of the value of the Option to the Optionee or Holder in cash or
in another Option. That value may be determined by the Committee in its sole discretion.)
19. Governing Law
. The words “exercise”, “subsidiary”, “outstanding” and any other
words or terms used in this Agreement which are defined or used in Section 421, 422 or 425 of the
Code have the meanings assigned to them in those Sections, unless the context clearly requires
otherwise. In all other respects this Agreement shall be construed and enforced in accordance
with, and governed by, the laws of the State of Delaware
Executed this 4th day of April, 2007 effective as of the date first set forth above.
||/s/ Xxxx X. Xxxxxx
||Its: V.P. Administration and Secretary
|/s/ Xxxxx X’Xxxxx