DIRECTOR DEFERRED COMPENSATION
PLAN
(Amended and Restated Effective October 23,
2008)
1. Establishment of the Plan .
Kaydon Corporation (“Corporation”) has adopted this
Director Deferred Compensation Plan for Directors
(“Plan”) effective January 1, 2001, to provide
certain members of the Board of Directors of the Corporation
(“Board”) with the opportunity to defer all or a
portion of their fees for services as a member of the Board or as a
member of any committee of the Board (“Deferred Fees”).
The Plan was previously amended and restated effective
October 25, 2007, by Board action, in compliance with the
provisions of Section 13 hereof, and is hereby amended and
restated, effective October 23, 2008, to reflect the
requirements of the final regulations under Section 409A of
the Internal Revenue Code of 1986, as amended (the
“Code”).
2. Participation . Any member of
the Board who is not an employee of the Corporation or any of its
affiliates (“Member”) may participate in the
Plan.
3. Plan Year . The Plan Year shall
be the 12 consecutive month period beginning on each January 1 and
ending on each December 31 (“Plan
Year”).
4. Election to Participate . A
Member wishing to participate in the Plan must file a complete
Notice of Election (Attachment A) with the Corporation during the
month prior to the start of the Plan Year. A Notice of Election
shall be effective only with respect to fees earned during the
following Plan Year. However, any individual who becomes a Member
after January 1, 2001, may irrevocably elect to defer fees for
the current Plan Year by filing a Notice of Election before
rendering any services and within 30 days after appointment to
the Board and provided that such Notice of Election shall only be
applicable to fees that are attributable to services performed
after the date such Notice of Election is filed. Except as set
forth in Section 9 below, a Notice of Election may not be
modified or terminated after it is filed. A Member must defer at
least 25% of his or her total annual fees for Board membership and
at least 25% of his or her total annual fees for committee
membership.
5. Member Accounts . Deferred Fees
shall be credited to a deferred compensation account maintained by
the Corporation for each Member (“Account”). Accounts
shall remain the general assets of the Corporation, and nothing in
this Plan shall be deemed to create a trust or fund of any kind or
any fiduciary relationship. A Member shall designate on the Notice
of Election whether to have all or any portion of the Account
either valued on the basis of Kaydon Corporation common stock in
accordance with Section 6 or to be credited with interest in
accordance with Section 7. The Corporation may, if necessary
or desirable, establish separate Accounts for a Member to properly
account for amounts deferred under the different alternatives and
years; and all such Accounts are collectively referred to herein as
the Account. The Account based on Kaydon Corporation common stock
shall be known as the “Common Stock Account” and the
interest bearing account shall be known as the “Interest
Bearing Account”. A Member may defer a portion of his or her
Deferred Fees into each type of account during the same Plan
Year.
6. Common Stock Account . If a
Member elects to have all or a portion of his or her Deferred Fees
deferred into the Common Stock Account, as of the last business day
of any quarter there shall be credited to such Account a
hypothetical number of shares of Kaydon Corporation common stock
(whole and fractional, rounded to the nearest 1/100
th of a share) as are equal to (a) the dollar
amount of such Deferred Fees payable for such quarter, plus all
dividends payable during such quarter on the number of hypothetical
shares of common stock previously credited to the Account as of the
first day of such calendar quarter, divided by (b) the market
value of the Kaydon Corporation common stock at the close of
business on the last business day of such calendar
quarter.
7. Interest Bearing Account . If a
Member elects to have all or a portion of his or her Deferred Fees
deferred in the Interest Bearing Account, there shall be added to
such Account as of the last business day of each calendar quarter
the dollar amount of such Deferred Fees payable for such calendar
quarter plus all interest payable on (a) the amount in the
Account at the beginning of such calendar quarter plus (b) the
Deferred Fees payable for such quarter, at a rate determined by the
product of (1) the rate paid for twelve-month certificates of
deposit issued by a financial institution designated by the
Corporation prior to the beginning of the Plan Year, and (2) a
fraction, the numerator of which is the number of days in the
calendar quarter and the denominator of which is 365.
8. Time and Method of Payment . A
Member may elect, on the Notice of Election for a particular Plan
Year, the date that the Member would like to receive payment of the
amounts held in his or her Account that relate to Deferred Fees
deferred during the Plan Year to which that Notice of Election
applies. The date elected may be any January 1st, provided that
actual payment may be made as soon as practicable after such date
(but not more than thirty (30) days thereafter, as determined
by the Corporation in its sole discretion). If no such election is
made, then the amounts held in the Account that relate to such Plan
Year shall be paid on the January 1st following the Member’s
Separation from Service (as defined below) with the Corporation, or
as soon as practicable after such date (but not more than thirty
(30) days thereafter, as determined by the Corporation in its
sole discretion).
Amounts credited to and held in a Member’s
Interest Bearing Account under Section 7 and that relate to
Deferred Fees deferred during a particular Plan Year shall be
distributed in cash, in accordance with the form of payment elected
by the Member on the Notice of Election for such Plan Year (lump
sum or annual installments of up to ten (10) years, with the
first installment being made on the date elected by the Member and
later installments on the anniversaries thereof). If no such
election is made, then such amount shall be paid in a cash lump
sum.
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Amounts credited to and held in a Member’s
Common Stock Account under Section 6 may, at the election of
the Member (to be made no later than thirty (30) days before
the date of distribution), be distributed either in a cash lump sum
or in fully taxable and freely transferable shares of Kaydon
Corporation common stock, provided that no fractional shares of
such common stock shall be issued, and any amounts held in such
Account that represent a fractional share of common stock shall be
paid in a cash lump sum based on the fair market value of the
Corporation’s common stock at the close of business on the
business day prior to the date of payment to the Member. If the
Member elects to receive his or her Common Stock Account value in
cash, the amount of the distribution shall be equal to the product
of the number of hypothetical shares of common stock credited to
the Account as of the end of the calendar quarter prior to the date
of distribution multiplied by the fair market value of the
Corporation’s common stock at the close of business on the
business day prior to the date of payment to the Member. If the
Member elects to receive his or her Common Stock Account value in
common stock, the Corporation shall cause its stock transfer agent
and registrar to issue to the Member that number of shares of
Kaydon Corporation common stock equal to the number of hypothetical
shares of common stock credited to the Account as of the end of the
calendar quarter prior to the date of distribution.
Unless a Member elects to the contrary, upon a
Change in Control (as defined in Section 14), but not more
than thirty (30) days thereafter, the entire amount credited
to a Member’s Account shall be paid in a cash lump sum, based
on the valuation as of the date of such Change in Control.
Notwithstanding anything herein to the contrary, no payments to
which a Member becomes entitled on account of the Member’s
Separation from Service shall be paid to the Member prior to the
earlier of (i) the expiration of the six-month period measured
from the date of the Member’s Separation from Service with
the Corporation, or (ii) the date of the Member’s death,
if the Member is deemed at the time of such Separation from Service
a “Specified Employee” within the meaning of Code
Section 409A, and such delayed commencement is otherwise required
in order to avoid a prohibited distribution under Code
Section 409A(a)(2). Upon expiration of the applicable deferral
period, all payments deferred pursuant to this Section 8 shall
be paid in a lump sum to the Member, without interest, and any
remaining payments due under this Plan shall be paid in accordance
with the remaining payment dates specified for them
herein.
9. Withdrawals upon Unforeseeable
Emergency . Upon receipt of a Notice of Unforeseeable Emergency
(Attachment B) indicating that a Member has experienced an
unforeseeable emergency and the subsequent withdrawal from the
Member’s Account as a result of such emergency, the
Member’s Notice of Election with respect to any Deferred Fees
shall be suspended for the remainder of the taxable year and all
such deferrals for that year shall cease. The term
“unforeseeable emergency” means: (a) a severe
financial hardship resulting from an illness or accident of the
Member, or the Member’s spouse, beneficiary under the Plan,
or dependents (as defined in Code Section 152); (b) loss
of the Member’s property due to casualty; or (c) other
similar extraordinary and unforeseeable circumstances arising as a
result of events beyond the control of the Member. The amount of
the withdrawal will be limited to the amount reasonably necessary
to satisfy the emergency need, which may include amounts necessary
to pay any Federal, state, local or foreign income taxes or
penalties reasonably anticipated to result from the distribution.
Distribution may not be made to the extent that the emergency is or
may be relieved through reimbursement or compensation from
insurance or otherwise, or by liquidation of the Member’s
assets (to the extent such liquidation would not cause severe
financial hardship), and must take into account any additional
compensation that is available from the cessation of deferrals
under the Plan. The Corporation may reasonably rely on the
representation of a Member regarding the availability of other
financial resources.
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10. Designation of Beneficiary .
Each Member may file a Beneficiary Designation (Attachment C)
naming one or more beneficiaries to whom payment shall be made in
the event of the Member’s death, provided that the form of
payment does not differ between beneficiaries. A beneficiary
designation will be effective only if it is filed with the
Corporation during the Member’s lifetime, and the latest
beneficiary designation on file shall supersede all other
beneficiary designations. If a primary beneficiary or a contingent
beneficiary survives the Member but dies before receiving all
amounts due hereunder, the unpaid Account balance due to the
beneficiary shall be paid in accordance with the Member’s
Notice of Election to the deceased beneficiary’s estate. If a
primary beneficiary predeceases the Member, then the
beneficiary’s share shall be distributed to the remaining
primary beneficiaries on a pro rata basis. If all the primary
beneficiaries predecease the Member, the Member’s Account
shall be paid to the contingent beneficiary(ies). If a contingent
beneficiary predeceases the Member, then the beneficiary’s
share shall be distributed to the remaining secondary beneficiaries
on a pro rata basis. If a Member fails to designate a beneficiary,
or if all designated beneficiaries shall predeceased the Member,
the unpaid Account balance at the time of the Member’s death
shall be paid in one cash lump sum to the Member’s
estate.
11. Nonalienation of Benefits .
Neither a Member nor any designated beneficiary shall have any
right to alienate, assign, or encumber any amount that is or may be
payable hereunder, or any right or interest that may be deemed to
exist hereunder. To the extent that any person acquires a right to
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