EXECUTIVE MANAGEMENT BONUS
PROGRAM
(Amended and Restated Effective
May 21, 2009)
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.
(i) any act or failure to act by
Participant done with the intent to harm in any material respect
the financial interests or reputation of the Company or any
affiliated companies;
(ii) Participant being convicted of (or
entering a plea of guilty or nolo contendere to) a felony
(other than a felony involving a motor vehicle not involving
alcohol or drugs);
(iii) Participant’s dishonesty,
misappropriation or fraud with regard to the Company or any
affiliated companies, including (but not limited to) any
falsification of company records or reports (other than good faith
expense account disputes);
(iv) a grossly negligent act or failure to
act by Participant which has a material adverse effect on the
Company or any affiliated companies; or
(v) the continued refusal to follow the
directives of the Board or its designees which are consistent with
Participant’s duties and responsibilities; provided that the
foregoing refusal shall not be “cause” if Participant
in good faith believes that such direction is illegal, unethical or
immoral and promptly so notifies the Board in writing.
“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 of 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 the Chief
Executive Officer (“CEO”), the Chief Financial Officer,
the Chief Operating Officer and such other Senior Vice Presidents
or 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 Participation Date, (b) a change in a Participant’s
reporting responsibilities or titles in effect on the Participation
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), or 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 Participation 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 or such other definition as is provided in any
Employment Agreement between the Company and a
Participant.
“Participation Date” means the date
on which a Participant first becomes a participant under the Bonus
Plan.
“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 the Executive Officers of the Company. The Committee
shall determine the effective date of a Participant’s
participation in this Bonus Plan and shall notify all Participants
of their selection for participation in writing.
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, as
further adjusted or defined by the Committee from time to time
(“EBITDA”) from continuing operations.
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 90th 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
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