KAYDON CORPORATION EXECUTIVE MANAGEMENT BONUS PROGRAM

Exhibit 10.1

KAYDON CORPORATION

EXECUTIVE MANAGEMENT BONUS PROGRAM

     1.       Definitions . The following terms have the meanings indicated unless a different meaning is clearly required by the context:

     “Approval Date” means March 2, 2005, which is the date on which this Bonus Plan was approved by the Board of Directors of the Company.

     “Bonus Plan” means this Kaydon Corporation Executive Bonus Program, as amended from time to time.

     “Cause” means a determination by the Company that a Participant has committed a fraud or felony, engaged in deliberate, willful or gross misconduct, or in conduct detrimental to the Company team effort, or was insubordinate, or performed in an overall unacceptable manner, or violated the policies of the Company as may be established by the Company from time-to-time, or committed an act of moral turpitude, or committed any other act that causes or may reasonably be expected to cause substantial injury to the Company or to its reputation.

     “Change in Control” means (i) the failure of the Continuing Directors at any time to constitute at least a majority of the Board of Directors of the Company, (ii) the acquisition by any Person other than an Excluded Holder of beneficial ownership (within the meaning of Rule 13d-3 issued under the Securities Exchange Act of 1934, as amended) of 20% or more of the outstanding Common Stock of the Company or the combined voting power of the Company’s outstanding voting securities, (iii) the approval by the stockholders of the Company of a reorganization, merger or consolidation unless with a Permitted Successor, or (iv) the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company or a sale or disposition of all or substantially all of its assets other than to a Permitted Successor.

     “Committee” means the Compensation Committee of the Company’s Board of Directors, each of the members of which is a “non-employee director” within the meaning of Rule 16b-3.

     “Company” means Kaydon Corporation and any of its wholly-owned subsidiaries or affiliates.

     “Continuing Directors” means the individuals constituting the Board of Directors of the Company on the Approval Date, and any subsequent directors whose election or nomination for election was approved by a vote of 2/3 or more 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 or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors of the Company.

     “Excluded Holder” means any Person who on the Approval Date was the beneficial owner of 20% or more of the outstanding Common Stock of the Company, a subsidiary of the Company, any employee benefit plan of the Company or any subsidiary of the Company or any trust holding such Common Stock pursuant to the terms of an employee benefit plan of the Company.

     “Executive Officer” means Brian P. Campbell, John F. Brocci, Kenneth W. Crawford, Peter C. DeChants, John R. Emling, John A. Madison and such other senior executive officers of the Company as the Committee shall designate from time to time.

     “Good Reason” means (a) the assignment of a Participant to any duties or responsibilities that are a reduction of, or are materially inconsistent with, the Participant’s position, duties, responsibilities or status on the Approval Date, (b) a change in a Participant’s reporting responsibilities or titles in effect on the Approval Date that results in a reduction of the Participant’s responsibilities or position, (c) the reduction of a Participant’s annual salary, level of benefits (except for a reduction uniformly applicable to all similarly situated executives), projected Supplemental Executive Retirement Plan benefits, or (d) transfer of the Participant to a location more than forty (40) miles from the Participant’s location of employment on the Approval Date which requires a change in residence or a material increase in the amount of travel normally required of the Participant in connection with his employment.

     “Permitted Successor” means a corporation that immediately after the consummation of a transaction described in the definition of “Change in Control” satisfies all of the following criteria: (a) at least 60% of the voting securities of such corporation is beneficially owned by Persons who were the beneficial owners of the Company’s Common Stock immediately prior to such transaction, (b) no Person other than an Excluded Holder beneficially owns, directly or indirectly, 20% or more of the outstanding voting securities of such corporation and (c) at least a majority of the Board of Directors of such corporation is comprised of Continuing Directors.

     “Person” means a natural person, corporation, partnership, limited liability company, government or political subdivision, agency or instrumentality of a government.

     2.       Purpose . The purpose of this Bonus Plan is to provide annual incentives to certain senior executive officers in a manner designed to reinforce the Company’s performance goals; to link a significant portion of participants’ compensation to the achievement of such goals; and to continue to attract, motivate and retain key executives on a competitive basis.

     3.       Participation . Participants in this Bonus Plan are those Executive Officers who are designated by the Committee to participate from time to time. The Committee shall also determine the effective date of a Participant’s participation in this Bonus Plan. Each Participant shall execute an Agreement annually, a form of which is attached hereto as Exhibit A, acknowledging his willingness to participate in this Bonus Plan and agreeing to preserve corporate opportunity with the Company for a period ending two years following receipt of the last bonus payment made pursuant to this Bonus Plan. The Company may modify and amend the Agreement at its discretion prior to each Bonus Plan year.

     4.       Performance Metric and Adjustments . The metric, or benchmark, against which Company performance shall be measured for purposes of determining whether bonuses shall be awarded to Participants, and the amount of such bonuses, shall be earnings before interest, taxes, depreciation and amortization (“EBITDA”) from continuing operations.

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     5.       Performance Objective . The performance objective for each year will be Target EBITDA, which shall be determined by the Committee each year at a regular Board of Directors meeting occurring prior to the 90 ^th day of the year for which Target EBITDA is to be determined. In conjunction with, or promptly after, the presentation of the annual budget for the following year, management will present to the Committee a recommended Target EBITDA for the following fiscal year. The Committee shall evaluate the recommended Target EBITDA and Budget and may determine the final Target EBITDA utilizing this information and any additional information that it deems relevant.

     6.       Bonus Calculations . Participant bonuses shall be based on the level of EBITDA achieved for the fiscal year, compared to Target EBITDA for that year, in accordance with the following:

     (a) No Bonus payout shall be made if EBITDA achieved is equal to or less than 80% of Target EBITDA;

     (b) Bonus payments will equal 3% of base salary for each Participant for each 1% that EBITDA achieved for the year exceeds 80% of Target EBITDA, up to 114% of Target EBITDA. An example would be:

     (c) A Participant’s bonus may not exceed 100% of the Participant’s base salary.

     7.       Discretionary Bonus Payments . In addition, at the discretion of the Committee, a discretionary cash bonus may be paid to any Participant in an amount up to 25% of base salary that shall be in addition to, or in lieu of, the bonus payment, if any, determined pursuant to Section 6.

     8.       Payment of Bonus Awards .

     (a) Conditions for Payment After Termination of Employment . If a Participant’s employment with the Company terminates, the following provisions shall apply:

          (i) Termination for Cause . If a Participant’s employment is terminated by the Company for Cause, no bonus shall be paid to the former Participant for any period prior to the date of termination.

          (ii) Termination by Participant . If a Participant terminates his or her employment without Good Reason, no bonus shall be paid to the former Participant for any period prior to the date of termination.

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          (iii) Termination Following Death, Disability or Retirement . If a Participant’s employment is terminated due to a Participant’s death, disability or retirement at the normal retirement age prior to payment of a bonus award, such bonus shall be paid (A) in the event of death, to the designated beneficiary of the Participant or, if no beneficiary shall have been designated, the representative of the Participant’s estate and (B) in the event of disability or retirement, to the former Participant, and if termination occurs during a fiscal year, the amount of bonus award shall be pro rated for that year based on the number of days worked prior to termination of employment.

          (iv) Termination without Cause or for Good Reason, etc . If a Participant’s employment is terminated without Cause, or the Participant terminates his or her employment for Good Reason following a Change in Control and prior to the payment of a bonus award, the Company shall nevertheless pay such bonus to the terminated Participant. If termination occurs during a fiscal year, the amount of bonus award shall be pro rated for that year based on the number of days worked prior to termination of employment.

     (b) Change in Control Payment . In the event of a Change in Control of the Company, a bonus for the year in which the Change in Control occurs, together with any unpaid bonus from the preceding year, shall be immediately payable on the date of the Change in Control. Such bonus shall be equal to 100% of a Participant’s base salary for the year in which a Change in Control occurs.

     9.       Administrative Provisions . This Bonus Plan shall be administered by the Committee. The Committee shall have full, exclusive and final authority in all determinations and decisions affecting this Bonus Plan and Participants, including sole authority to interpret and construe any provision of this Bonus Plan, to adopt such rules and regulations for administering this Bonus Plan as it may deem necessary or appropriate under the circumstances, and to make any other determination it deems necessary