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EXHIBIT 10.12
(Version A)
KAYDON CORPORATION
CHANGE IN CONTROL COMPENSATION AGREEMENT
AGREEMENT made and executed
_________________________, 1995 between
KAYDON CORPORATION, a Delaware corporation, ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (Kaydon), and _______________________________, (the Executive).
The Board of Directors of Kaydon has recommended and approved that
Kaydon enter into agreements providing for compensation under certain
circumstances after a change in control.
Executive is a key executive of Kaydon or one or more of its
subsidiaries and has been selected by the Compensation Committee to enter into
this Agreement.
In the event Kaydon should become subject to any proposed or
threatened Change in Control (as defined below), the Board of Directors of
Kaydon believes it is imperative that Kaydon and the Board of Directors be able
to rely upon Executive to continue in his position, and that Kaydon be able to
receive and rely upon his advice, if requested, as to the best interests of
Kaydon and its stockholders, without concern that he might be distracted by the
personal uncertainties and risks created by such a proposal or threat.
In the event Kaydon should receive any such proposal, in addition to
Executive's regular duties, he may be called upon to assist in the assessment
of such proposals, advise management and the Board of Directors as to whether
such proposal would be in the best interests of Kaydon and its stockholders,
and to take such other actions above and beyond his regular duties as the Board
might determine to be appropriate.
To assure Kaydon that it will have the continued dedication of
Executive and the availability of his 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 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 (as defined below),
Executive agrees that he will not voluntarily leave the employ of
Kaydon or the subsidiary then employing him on less than three months
written notice to the Chairman of the Board of Kaydon, will render the
services expected of his position, and will act in all things related
to the interests of the shareholders 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 Following Change in Control. Except as provided in
Section 4, Kaydon will provide or cause to be provided to Executive
the rights and benefits described in Section 3 in the event that
Executive's employment is terminated under the circumstances stated in
(a) or
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(b) below at any time within three years following a Change in Control
(as that term is defined in this Section 2) which occurs during the
original term of this Agreement or prior to or during any renewal term
as set forth in Section 6:
(a) By Kaydon. By Kaydon or the subsidiary employing Executive
for reasons other than for "cause" (as such term is defined in
Section 4) and other than as a consequence of Executive's
death, permanent disability or attainment of the normal
retirement date as provided under the Kaydon Corporation
Retirement Plan (the Retirement Plan) as in effect immediately
preceding such date (Normal Retirement Date); or
(b) By Executive. By Executive following the occurrence of any of
the following events:
(i) The assignment of Executive to any duties or
responsibilities that are a reduction of or are
materially inconsistent with his position, duties,
responsibilities or status immediately preceding such
Change in Control; or a change in his reporting
responsibilities or titles in effect at such time
resulting in a reduction of his responsibilities or
position;
(ii) The reduction of Executive's annual salary, projected
or target annual bonus (including any deferred
portions of it), 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;
(iii) The transfer of Executive to a location at least
fifty miles from his present location requiring a
change in his residence or a material increase in the
amount of travel normally required of Executive in
connection with his employment.
(c) For purposes of this Agreement, a "Change in Control" is
deemed to have occurred as of the first day that any one or
more of the following conditions has been satisfied:
(i) Any person (as that term is used in Section 13 and
14(d)(2) of the Securities Exchange Act of
1934)(other than those persons in control of Kaydon
as of the effective date of the Change in Control
Agreement, or other than a trustee or other fiduciary
holding securities under an employee benefit plan of
Kaydon, or a corporation, partnership, or other
entity owned directly or indirectly by the
stockholders of Kaydon in substantially the same
proportions as their ownership of stock of Kaydon)
becomes the beneficial owner (as that term is used in
Section 13(d) of the Exchange Act), directly or
indirectly, of securities of Kaydon representing
twenty percent (20%) or more of the combined voting
power of Kaydon's then outstanding securities; or
(ii) During any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such
period constitute the Board (and any new Director,
whose election by Kaydon's stockholders was approved
by a vote of at least two-thirds (2/3) of the
Directors then still in office who either were
Directors at the beginning of the period or
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whose election or nomination for election was so
approved), cease for any reason to constitute a
majority thereof; or
(iii) The stockholders of Kaydon approve or there is
otherwise implemented: (A) a plan of complete
liquidation of Kaydon; (B) an agreement for the sale
or disposition of all or substantially all of
Kaydon's assets to a party not within a "controlled
group of corporations" (as defined in Section 1563 of
the Internal Revenue Code of 1986, as amended) in
which Kaydon is a member; or (C) a merger,
consolidation, or reorganization of Kaydon with or
involving any other corporation, other than a merger,
consolidation, or reorganization that would result in
the voting securities of Kaydon outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the surviving
entity), at least fifty percent (50%) of the combined
voting power of the voting securities of Kaydon (or
such surviving entity) outstanding immediately after
such merger, consolidation, or reorganization.
Notwithstanding those rules, in no event shall a Change in
Control be deemed to have occurred, with respect to the
Executive, if the Executive is part of a purchasing group
which consummates the Change- in-Control transaction. The
Executive shall be deemed "part of a purchasing group" for
purposes of the preceding sentence if the Executive is an
equity participant in the purchasing company or group (except
for: (i) passive ownership of less than three percent (3%) of
the stock of the purchasing company; or (ii) ownership of
equity participation in the purchasing company or group which
is otherwise not significant, as determined prior to the
Change in Control by a majority of the nonemployee continuing
Directors).
3. Rights and Benefits Upon Termination. In the event of the termination
of Executive's employment under any of the circumstances set forth in
Section 2 (Termination), Kaydon agrees to provide or cause to be
provided to Executive the following rights and benefits:
(a) Salary and Other Payments at Termination. Executive shall be
entitled to receive payment in cash in the amount of 3 times
Executive's Compensation (as such term is defined in this
Section 3(a)).
(i) Payment shall be made in a lump sum no later than the
first day of the second month following Termination.
(ii) If Executive dies prior to the time all payments
which may otherwise have been due to Executive, under
this Section 3(a) or otherwise in this agreement,
have been made, then as soon as practicable after
such death but in no event later than three months
thereafter, Kaydon shall pay in a lump sum in cash
all sums not distributed 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
as such under the life insurance plan or plans
maintained by Kaydon on the date of Executive's
death. If no such beneficiary is
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named, such sums shall be paid to Executive's estate.
No reduction to present value of any such sums shall
be made.
For purposes of this Agreement, "Compensation" means the
greater of the Executive's base salary for the calendar year
in which the Termination occurs or the preceding calendar
year, plus the average bonus payable to Executive during 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.)
(b) Supplemental Executive Retirement Plan Benefits. Except to
the extent expressly prohibited by any applicable law or
regulation and notwithstanding, any restrictions or
requirements provided in the Kaydon Corporation Supplemental
Executive Retirement Plan (or any successor to it), Executive
shall be entitled to receive all benefits previously granted
to or accrued by him under that Plan, whether previously
vested or not increased as provided in this subsection and at
the time provided below. The Supplemental Executive
Retirement Plan benefits will be computed by:
(i) Adding three Years of Credited Service to the Years
of Credited Service otherwise credited to Executive
under that Plan; and
(ii) Ignoring any reduction for early commencement of
benefits imposed by that Plan.
The actuarial equivalent of the payments from the Supplemental
Executive Retirement Plan determined un that Plan and this
subsection (b) will be payable in a lump sum thirty (30) days
from Termination. The actuarially equivalent amount shall be
determined using reasonable actuarial assumptions.
The execution of this Change in Control Compensation Agreement
constitutes an amendment of the Supplemental Executive
Retirement Plan to effect these provisions.
(c) Incentive Compensation. The Executive shall receive any
incentive compensation (including but not limited to the right
to receive and exercise stock options and stock appreciation
rights and to receive restricted stock and grants thereof and
similar incentive compensation benefits) to which Executive is
entitled under all incentive compensation plans maintained by
Kaydon or to which Executive would be entitled to by virtue of
Executive's employment with the corporation or entity who
succeeds Kaydon after a Change in Control. Without limitation
of the above, the vesting and exercisability of any
outstanding stock option, stock appreciation, restricted
stock, or other similar incentive compensation rights shall
also be accelerated to extent authorized under the terms of
that option or other program and the plan under which the
option or other right was granted.
(d) Executive Incentive Plan Benefits. Any award under the Kaydon
Management Incentive Compensation Plan for a prior Plan Year
which has not been paid to Executive at the time of his
Termination shall be paid to him within 30 days of his
Termination. This payment shall be accompanied by a payment
to Executive of an
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amount equal to 1/12 of the greater of the projected award for
the year in which Termination occurs or the award 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.
(e) Insurance and Other Special Benefits. Until the earlier of
the following: the Executive's Normal Retirement Date (as
defined in the Kaydon Corporation 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
Corporation, Executive shall continue to be covered by the
life insurance, medical and dental insurance, and accident and
disability insurance plans of Kaydon and its subsidiaries or
any successor plan or program in effect at or after
Termination for employees in the same class or category as was
Executive prior to his Termination, subject to the terms of
such plans (other than any exclusion preventing Executive's
participation because he is no longer an employee) and to
Executive's making any payments therefor required of employees
in the same class or category as was Executive prior to his
Termination.
(i) In the event Executive is ineligible to continue to
be so covered under the terms of any such benefit
plan or program (other than because of expiration of
the three year coverage period described below) or in
the event Executive is eligible but the benefits
applicable to Executive under any such plan or
program after Termination are not substantially
equivalent to the benefits applicable to Executive
immediately prior to Termination, then, until
Executive's Normal Retirement Date (or the later date
identified above), 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, through other
sources; provided, however, that if during such
period Executive should enter into the employ of
another company or firm which provides substantially
similar benefit coverage, Executive's participation
in the comparable benefit provided by Kaydon either
directly or through such other sources shall cease.
(ii) Nothing contained in this paragraph shall be deemed
to require or permit termination or restriction of
any Executive's coverage under any 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.
(f) Outplacement Services. Executive shall be entitled to full
outplacement services provided by the professional
outplacement consulting firm of Executive's choosing, to a
maximum cost of 15% of Executive's base salary for the
calendar year preceding the calendar year in which Termination
occurs.
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(g) Excise Tax Payment. If any portion 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 (in the
aggregate, Total Payments) would constitute an "excess
parachute payment," such that a golden parachute excise tax is
due, the Executive shall be entitled to, in cash, an
additional payment in an amount to cover the full cost of the
excise tax and the Executive's state and Federal income and
employment taxes on this excise tax payment, except to the
extent Kaydon is obligated to provide such additional payment
to the Executive under a separate plan or agreement. This
payment shall be made as soon as possible following the date
of the Executive's Termination, but in no event later than
thirty (30) calendar days of such date.
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 amount 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.
For purposes of this Agreement, the terms "golden parachute
excise tax" and "excess parachute payment," shall have the
meanings assigned to such terms in Sections 280G and 4999 of
the Internal Revenue Code.
The specific arrangements referred to in this Section 3 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.
In addition to the rights and benefits of this Section 3. and any
other rights or remedies available to Executive, Kaydon shall
reimburse Executive in full for all attorneys' fees and costs
reasonably incurred by Executive in enforcing or seeking enforcement
of this Agreement against Kaydon or in seeking damages for Kaydon's
failure to fully perform its obligations under this Agreement.
4. Conditions to the Obligations of Kaydon. Kaydon shall have no
obligation to provide or cause to be provided to Executive the rights
and benefits described in Section 3 if either of the following events
shall occur:
(a) Termination for Cause. Kaydon shall terminate Executive's
employment for "cause". For purposes of this Agreement,
termination of employment for "cause" shall mean termination
solely for conviction of a felony by Executive.
(b) Resignation as Director or Officer. Executive shall fail,
within a reasonable time after Termination 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 he is then serving as a director and/or officer.
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In all other events, Kaydon's obligation to pay or cause to be paid to
Executive the benefits and to make the arrangements provided in
Section 3 shall be 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 him or anyone else.
Except as provided in Section 3(e), Executive's entitlement to
benefits under this plan shall not be subject to any duty to mitigate
his damages by seeking further employment nor offset by any
compensation which he may receive from future employment.
All amounts payable by or on behalf of Kaydon under this agreement
shall, unless specifically stated to the contrary in this agreement,
be paid without notice or demand. Each and every payment made
hereunder 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 such payment from Executive or from whomever shall be
entitled thereto.
5. Confidentiality; Non-Solicitation; Cooperation; Consultancy.
(a) Confidentiality. Executive agrees that at all times following
Termination, he will not, without the prior written consent of
Kaydon, disclose to any person, firm or corporation any
confidential information of Kaydon or its subsidiaries which
is now known to him or which hereafter (whether before or
after his Termination) may become known to him as a result of
his employment or association with Kaydon and which could be
helpful to a competitor; provided, however, that the foregoing
shall not apply to confidential information that becomes
publicly disseminated by means other than a breach of this
Agreement.
(b) Cooperation. Executive agrees that, at all times following
Termination, he 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 such cooperation, Kaydon will pay or reimburse Executive
for all reasonable expenses incurred in cooperating with such
requests.
(c) Remedies for Breach. It is recognized that damages in the
event of breach of this Section 5 by Executive would be
difficult, if not impossible, to ascertain, and it is
therefore agreed 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, and
Executive waives any and all defenses he may have 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.
6. Term of Agreement. Subject to Section 2 hereof, this Agreement shall
terminate on ______________, 1998; provided, however, that this
Agreement shall automatically renew for successive three-year terms
unless Kaydon notifies Executive in writing at least 180 days prior to
the expiration date that it does not desire to renew the Agreement for
an additional term; and provided further, however, that such notice
shall not be given and if given shall
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have no effect (i) within three years after a Change in Control or
(ii) 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 his efforts or plans to effect a Change in Control.
7. Miscellaneous.
(a) Assignment. No right, benefit or interest under this
agreement shall be 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; provided,
however, that Executive may assign any right, benefit or
interest under this Agreement if such 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. 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 him to change or reduce at
any time and from time to time his compensation, title,
responsibilities, location and other aspects of the employment
relationship or to discharge him prior to a Change in Control
shall remain wholly unaffected by the provisions of this
Agreement. 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. 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. This Agreement may not be amended, modified or
cancelled 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 there.
(e) Severability. In the event that any provision or portion of
this Agreement shall be 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 his personal representative and
heirs, and 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.
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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.
IN WITNESS, the parties have executed this Agreement as of the day and
year first above written.
KAYDON CORPORATION EXECUTIVE
By:
------------------------------------- ----------------------------
Its Name of Executive
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(VERSION B)
KAYDON CORPORATION
CHANGE IN CONTROL COMPENSATION AGREEMENT
AGREEMENT made and executed ___________________, 1995 between KAYDON
CORPORATION, a Delaware corporation, ▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ (Kaydon), and _______________________________, (the Executive).
The Board of Directors of Kaydon has recommended and approved that
Kaydon enter into agreements providing for compensation under certain
circumstances after a change in control.
Executive is a key executive of Kaydon or one or more of its
subsidiaries and has been selected by the Compensation Committee to enter into
this Agreement.
In the event Kaydon should become subject to any proposed or
threatened Change in Control (as defined below), the Board of Directors of
Kaydon believes it is imperative that Kaydon and the Board of Directors be able
to rely upon Executive to continue in his position, and that Kaydon be able to
receive and rely upon his advice, if requested, as to the best interests of
Kaydon and its stockholders, without concern that he might be distracted by the
personal uncertainties and risks created by such a proposal or threat.
In the event Kaydon should receive any such proposal, in addition to
Executive's regular duties, he may be called upon to assist in the assessment
of such proposals, advise management and the Board of Directors as to whether
such proposal would be in the best interests of Kaydon and its stockholders,
and to take such other actions above and beyond his regular duties as the Board
might determine to be appropriate.
To assure Kaydon that it will have the continued dedication of
Executive and the availability of his 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 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 (as defined below),
Executive agrees that he will not voluntarily leave the employ of
Kaydon or the subsidiary then employing him on less than three months
written notice to the Chairman of the Board of Kaydon, will render the
services expected of his position, and will act in all things related
to the interests of the shareholders 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 Following Change in Control. Except as provided in
Section 4, Kaydon will provide or cause to be provided to Executive
the rights and benefits described in Section 3 in the event that
Executive's employment is terminated under the circumstances stated in
(a) or
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(b) below at any time within three years following a Change in Control
(as that term is defined in this Section 2) which occurs during the
original term of this Agreement or prior to or during any renewal term
as set forth in Section 6:
(a) By Kaydon. By Kaydon or the subsidiary employing Executive
for reasons other than for "cause" (as such term is defined in
Section 4) and other than as a consequence of Executive's
death, permanent disability or attainment of the normal
retirement date as provided under the Kaydon Corporation
Retirement Plan (the Retirement Plan) as in effect immediately
preceding such date (Normal Retirement Date); or
(b) By Executive. By Executive following the occurrence of any of
the following events:
(i) The assignment of Executive to any duties or
responsibilities that are a reduction of or are
materially inconsistent with his position, duties,
responsibilities or status immediately preceding such
Change in Control; or a change in his reporting
responsibilities or titles in effect at such time
resulting in a reduction of his responsibilities or
position;
(ii) The reduction of Executive's annual salary, projected
or target annual bonus (including any deferred
portions of it), 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;
(iii) The transfer of Executive to a location at least
fifty miles from his present location requiring a
change in his residence or a material increase in the
amount of travel normally required of Executive in
connection with his employment.
(c) For purposes of this Agreement, a "Change in Control" is
deemed to have occurred as of the first day that any one or
more of the following conditions has been satisfied:
(i) Any person (as that term is used in Section 13 and
14(d)(2) of the Securities Exchange Act of
1934)(other than those persons in control of Kaydon
as of the effective date of the Change in Control
Agreement, or other than a trustee or other fiduciary
holding securities under an employee benefit plan of
Kaydon, or a corporation, partnership, or other
entity owned directly or indirectly by the
stockholders of Kaydon in substantially the same
proportions as their ownership of stock of Kaydon)
becomes the beneficial owner (as that term is used in
Section 13(d) of the Exchange Act), directly or
indirectly, of securities of Kaydon representing
twenty percent (20%) or more of the combined voting
power of Kaydon's then outstanding securities; or
(ii) During any period of two (2) consecutive years (not
including any period prior to the execution of this
Agreement), individuals who at the beginning of such
period constitute the Board (and any new Director,
whose election of Kaydon's stockholders was approved
by a vote of at least two-thirds (2/3) of the
Directors
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then still in office who either were Directors at the
beginning of the period or whose election or
nomination for election was so approved), cease for
any reason to constitute a majority thereof; or
(iii) The stockholders of Kaydon approve or there is
otherwise implemented: (A) a plan of complete
liquidation of Kaydon; (B) an agreement for the sale
or disposition of all or substantially all of
Kaydon's assets to a party not within a "controlled
group of corporations" (as defined in Section 1563 of
the Internal Revenue Code of 1986, as amended) in
which Kaydon is a member; or (C) a merger,
consolidation, or reorganization of Kaydon with or
involving any other corporation other than a merger,
consolidation, or reorganization that would result in
the voting securities of Kaydon outstanding
immediately prior thereto continuing to represent
(either by remaining outstanding or by being
converted into voting securities of the surviving
entity), at least fifty percent (50%) of the combined
voting power of the voting securities of Kaydon (or
such surviving entity) outstanding immediately after
such merger, consolidation, or reorganization.
Notwithstanding those rules, in no event shall a Change in
Control be deemed to have occurred, with respect to the
Executive, if the Executive is part of a purchasing group
which consummates the Change- in-Control transaction. The
Executive shall be deemed "part of a purchasing group" for
purposes of the preceding sentence if the Executive is an
equity participant in the purchasing company or group (except
for: (i) passive ownership of less than three percent (3%) of
the stock of the purchasing company; or (ii) ownership of
equity participation in the purchasing company or group which
is otherwise not ignificant, as determined prior to the Change
in Control by a majority of the nonemployee continuing
Directors).
3. Rights and Benefits Upon Termination. In the event of the termination
of Executive's employment under any of the circumstances set forth in
Section 2 (Termination), Kaydon agrees to provide or cause to be
provided to Executive the following rights and benefits:
(a) Salary and Other Payments at Termination. Executive shall be
entitled to receive payment in cash in the amount of 3 times
Executive's Compensation (as such term is defined in this
Section 3(a)).
(i) Payment shall be made in a lump sum no later than the
first day of the second month following Termination.
(ii) If Executive dies prior to the time all payments
which may otherwise have been due to Executive, under
this Section 3(a) or otherwise in this agreement,
have been made, then as soon as practicable after
such death but in no event later than three months
thereafter, Kaydon shall pay in a lump sum in cash
all sums not distributed 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
as such under the life insurance plan or plans
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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. No reduction to
present value of any such sums shall be made.
For purposes of this Agreement, "Compensation" means the
greater of the Executive's base salary for the calendar year
in which the Termination occurs or the preceding calendar
year, plus the average bonus payable to Executive during 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).
(b) Incentive Compensation. The Executive shall receive any
incentive compensation (including but not limited to the right
to receive and exercise stock options and stock appreciation
rights and to receive restricted stock and grants thereof and
similar incentive compensation benefits) to which Executive is
entitled under all incentive compensation plans maintained by
Kaydon or to which Executive would be entitled to by virtue of
Executive's employment with the corporation or entity who
succeeds Kaydon after a Change in Control. Without limitation
of the above, the vesting and exercisability of any
outstanding stock option, stock appreciation, restricted
stock, or other similar incentive compensation rights shall be
accelerated to the extent authorized under the terms of that
option or other program and the plan under which the option
was granted.
(c) Executive Incentive Plan Benefits. Any award under the Kaydon
Management Incentive Compensation Plan for a prior Plan Year
which has not been paid to Executive at the time of his
Termination shall be paid to him within 30 days of his
Termination. This payment shall be accompanied by a payment
to Executive of an amount equal to 1/12 of the greater of the
projected award for the year in which Termination occurs or
the award 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.
(d) Insurance and Other Special Benefits. To the earlier of three
years from the date of Termination 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 Corporation, Executive shall
continue to be covered by the life insurance, medical and
dental insurance, and accident and disability insurance plans
of Kaydon and its subsidiaries or any successor plan or
program in effect at or after Termination for employees in the
same class or category as was Executive prior to his
Termination, subject to the terms of such plans (other than
any exclusion preventing Executive's participation because he
is no longer an employee) and to Executive's making any
payments therefor required of employees in the same class or
category as was Executive prior to his Termination.
(i) In the event Executive is ineligible to continue to
be so covered under the terms of any such benefit
plan or program (other than because of expiration of
the three year coverage period described above) or in
the event Executive is eligible but
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the benefits applicable to Executive under any such
plan or program after Termination are not
substantially equivalent to the benefits applicable
to Executive immediately prior to Termination, then,
until the expiration of that period, 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,
through other sources; provided, however, that if
during such period Executive should enter into the
employ of another company or firm which provides
substantially similar benefit coverage, Executive's
participation in the comparable benefit provided by
Kaydon either directly or through such other sources
shall cease.
(ii) Nothing contained in this paragraph shall be deemed
to require or permit termination or restriction of
any Executive's coverage under any 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.
(e) Outplacement Services. Executive shall be entitled to 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
occurs.
(f) Excise Tax Payment. If any portion 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 (in the
aggregate, Total payments) would constitute an "excess
parachute payment," such that a gold parachute excise tax is
due, the Executive shall be entitled to, in cash, an
additional payment in an amount to cover the full cost of the
excise tax and the Executive's state and Federal income and
employment taxes on this excise tax payment, except to the
extent Kaydon is obligated to provide such additional payment
to the Executive under a separate plan or agreement. This
payment shall be made as soon as possible following the date
of the Executive's Termination, but in no event later than
thirty (30) calendar days of such date.
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
computation 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.
For purposes of this Agreement, the terms "golden parachute
excise tax" and "excess parachute payment," shall have the
meanings assigned to such terms in Sections 280G and 4999 of
the Internal Revenue Code.
The specific arrangements referred to in this Section 3 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
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of Executive or to preclude other compensation or benefits as may be
authorized by the Board of Directors from time to time.
In addition to the rights and benefits of this Section 3. and any
other rights or remedies available to Executive, Kaydon shall
reimburse Executive in full for all attorneys' fees and costs
reasonably incurred by Executive in enforcing or seeking enforcement
of this Agreement against Kaydon or in seeking damages for Kaydon's
failure to fully perform its obligations under this Agreement.
4. Conditions to the Obligations of Kaydon. Kaydon shall have no
obligation to provide or cause to be provided to Executive the rights
and benefits described in Section 3 if either of the following events
shall occur:
(a) Termination for Cause. Kaydon shall terminate Executive's
employment for "cause". For purposes of this Agreement,
termination of employment for "cause" shall mean termination
solely for conviction of a felony by Executive.
(b) Resignation as Director or Officer. Executive shall fail,
within a reasonable time after Termination 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 he is then serving as a director and/or officer.
In all other events, Kaydon's obligation to pay or cause to be paid to
Executive the benefits and to make the arrangements provided in
Section 3 shall be 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 him or anyone else.
Except as provided in Section 3(d), Executive's entitlement to
benefits under this plan shall not be subject to any duty to mitigate
his damages by seeking further employment nor offset by any
compensation which he may receive from future employment.
All amounts payable by or on behalf of Kaydon under this agreement
shall, unless specifically stated to the contrary in this agreement,
be paid without notice or demand. Each and every payment made
hereunder 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 such payment from Executive or from whomever shall be
entitled thereto.
5. Confidentiality; Non-Solicitation; Cooperation; Consultancy.
(a) Confidentiality. Executive agrees that at all times following
Termination, he will not, without the prior written consent of
Kaydon, disclose to any person, firm or corporation any
confidential information of Kaydon or its subsidiaries which
is now known to him or which hereafter (whether before or
after his Termination) may become known to him as a result of
his employment or association with Kaydon and which could be
helpful to a competitor; provided, however, that the foregoing
shall not
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apply to confidential information that becomes publicly
disseminated by means other than a breach of this Agreement.
(b) Cooperation. Executive agrees that, at all times following
Termination, he 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 such cooperation, Kaydon will pay or reimburse Executive
for all reasonable expenses incurred in cooperating with such
requests.
(c) Remedies for Breach. It is recognized that damages in the
event of breach of this Section 5 by Executive would be
difficult, if not impossible, to ascertain, and it is
therefore agreed 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, and
Executive waives any and all defenses he may have 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.
6. Term of Agreement. Subject to Section 2 hereof, this Agreement shall
terminate on _______________, 1998; provided, however, that this
Agreement shall automatically renew for successive three-year terms
unless Kaydon notifies Executive in writing at least 180 days prior to
the expiration date that it does not desire to renew the Agreement for
an additional term; and provided further, however, that such notice
shall not be given and if given shall have no effect (i) within three
years after a Change in Control or (ii) 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 his efforts or plans to effect a
Change in Control.
7. Miscellaneous.
(a) Assignment. No right, benefit or interest under this
agreement shall be 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; provided,
however, that Executive may assign any right, benefit or
interest under this Agreement if such 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. 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 him to change or reduce at
any time and from time to time his compensation, title,
responsibilities, location and other aspects of the employment
relationship or to discharge him prior to a Change in Control
shall remain wholly unaffected by the provisions of this
Agreement.
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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. 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. This Agreement may not be amended, modified or
cancelled 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 there.
(e) Severability. In the event that any provision or portion of
this Agreement shall be 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 his personal representative and
heirs, and 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.
IN WITNESS, the parties have executed this Agreement as of the day and
year first above written.
KAYDON CORPORATION EXECUTIVE
By:
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Its Name of Executive
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