EMPLOYMENT CONTINUATION,
CONSULTING
AND NONCOMPETE AGREEMENT
This EMPLOYMENT
CONTINUATION, CONSULTING AND NONCOMPETE AGREEMENT (this
“Agreement”) is made and entered into on the 27th day
of January, 2009 (the “Effective Date”), by and between
KAYDON CORPORATION , a Delaware corporation (the
“Company”), and KENNETH W. CRAWFORD , a resident
of the State of Michigan (“Crawford”).
WHEREAS ,
Crawford resigned his positions as Senior Vice President, Chief
Financial Officer and Corporate Controller of the Company, as well
as all positions he held as an officer and/or director of
subsidiaries of the Company, effective January 27,
2009;
WHEREAS,
the Company wishes to continue to employ Crawford with the title of
Senior Vice President, Chief Accounting Officer during the period
(the “Interim Period”) commencing on the date of this
Agreement and expiring on June 30, 2009, and Crawford is
willing to continue as an employee serving as the Company’s
Senior Vice President, Chief Accounting Officer during the Interim
Period;
WHEREAS ,
upon expiration of the Interim Period, Crawford’s employment
with the Company shall terminate;
WHEREAS,
following termination of Crawford’s employment, the Company
wishes to engage Crawford to render consulting services to the
Company and Crawford wishes to accept such engagement on the terms
set forth herein;
WHEREAS ,
in order to fully protect the Company’s confidential
information, including confidential information acquired by
Crawford during the period he was employed by the Company and in
partial consideration for the payments to be made to Crawford
hereunder, the Company and Crawford desire to provide for
Crawford’s agreement not to compete with the Company during
the Consulting Term hereof as specified herein; and
WHEREAS ,
the Company and Crawford desire to set forth herein the terms and
conditions on which the Company will utilize the services of
Crawford, and Crawford will accept the terms and conditions set
forth herein, including the terms of Crawford’s agreement not
to compete.
NOW,
THEREFORE , for and in consideration of the mutual covenants
and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1.
Interim Period Employment . Subject to the terms and
conditions of this Agreement, as consideration for the payments to
be made to Crawford hereunder, the Company agrees to employ
Crawford as, and Crawford hereby accepts employment as, the
Company’s Senior Vice President, Chief Accounting Officer
during the Interim Period. Crawford shall remain an employee of the
Company during the Interim Period.
2.
Interim Period Compensation and Benefits .
(a) Until the date designated by the Company after the Company
appoints a Chief Accounting Officer or another individual to
perform the job functions performed by Crawford (the
“Replacement Date”), Crawford’s base compensation
during the Interim Period shall be $20,833.33 per month, which
shall be paid in accordance with the Company’s normal payroll
practices.
(b) After
the Replacement Date, Crawford’s base compensation during the
Interim Period shall be $16,666.67 per month, which shall be paid
in accordance with the Company’s normal payroll
practices.
(c) During
the Interim Period, Crawford shall remain eligible to participate
in the Company’s retirement plans, life insurance plan,
medical, dental and prescription drug insurance plans, and other
employee benefit plans on the same terms in which he participated
in such benefit plans on the Effective Date. Crawford shall remain
eligible to participate in the Company’s executive
supplemental health care plan during the Interim Period.
(d) On
or before July 10, 2009, the Company shall pay Crawford an
amount in cash to compensate him for all vacation time he has
accrued but has not used as of June 30, 2009 in accordance
with its standard practices.
3.
Termination of Change in Control Compensation Agreement.
That certain Amended Kaydon Corporation Change in Control
Compensation Agreement (the “CIC Agreement”) made and
executed May 31, 2008 shall terminate and shall have no
further effect on and after July 1, 2009.
4.
Consulting Engagement and Term . Subject to the terms
and conditions of this Agreement, as further consideration for the
payments to be made to Crawford hereunder, the Company hereby
retains Crawford to provide the consulting and advisory services
described in Section 5 below, and Crawford hereby accepts such
engagement. The term of consulting hereunder shall commence on the
day following the expiration of the Interim Period (the
“Consulting Commencement Date”) and shall continue
thereafter until the earlier of (a) the date the Company
notifies Crawford that the consulting services to be provided
hereunder are no longer required, or (b) January 5, 2012,
subject to extension of the term hereof upon mutual agreement of
the Company and Crawford prior to January 5, 2012 (such term,
the “Consulting Term” and, together with the Interim
Period, the “Term”).
5.
Description of Services . (a) During the period
between the Consulting Commencement Date and January 5, 2011
(the “Initial Consulting Term”), Crawford shall provide
upon the reasonable request of the Company, consulting and advisory
services relating generally to the business operations, strategy,
budgeting and financial management of the
Company,
including, but not limited to, consulting services regarding
financial and accounting issues for the Company and management and
acquisition related activities. The Company shall provide Crawford
with at least two (2) weeks prior notice of the
Company’s need for Crawford’s services hereunder where
feasible and in any event shall give such prior notice as is
practicable in the circumstances. Crawford shall be available to
provide a minimum of 160 hours of such services in each
quarter-year period of the Initial Consulting Term (measured as
consecutive three month periods commencing on the Consulting
Commencement Date and ending January 5, 2011), provided
, however , that if the Initial Consulting Term is not
evenly divisible into three month periods, then Crawford’s
obligation to be available to provide services under this Agreement
after the final full three month period of the Initial Consulting
Term shall be adjusted to reflect the length of the final period of
the Initial Consulting Term.
(b) During
the period between January 6, 2011 and January 5, 2012
(the “Subsequent Consulting Term”), Crawford shall
provide upon the reasonable request of the Company, consulting and
advisory services relating generally to the business operations,
strategy, budgeting and financial management of the Company,
including, but not limited to, consulting services regarding
financial and accounting issues for the Company and management and
acquisition related activities. The Company shall provide Crawford
with at least two (2) weeks prior notice of the
Company’s need for Crawford’s services hereunder where
feasible and in any event shall give such prior notice as is
practicable in the circumstances. Crawford shall be available to
provide up to 160 hours of such services in each quarter-year
period of the Subsequent Consulting Term (measured as consecutive
three month periods commencing on January 6, 2011 and ending
January 5, 2012).
(c) To
preserve Crawford’s availability to the Company to perform
the services described herein during the Consulting Term, Crawford
hereby agrees that he shall not accept full-time employment with
any other business or entity during the Consulting Term. Other than
the provisions of Section 10 hereof preventing certain
competitive activities, nothing herein shall prevent Crawford from
providing consulting services to, or accepting part-time employment
with, or membership on the board of directors of, any other
business or entity.
(d) Following
the Consulting Term, and upon the request of the Company, Crawford
shall endeavor in good faith to provide those services reasonably
requested by the Company to assist the Company in preparing,
defending, managing, or otherwise responding to any audit, lawsuit,
inquiry or investigation related to the Company’s financial,
tax, or accounting practices or policies. The Company shall pay
Crawford in the amount of $150 per hour worked for any such
services provided no later than 30 days after the end of the
month in which he provides such services.
6.
Place of Performance . The services to be performed by
Crawford pursuant to this Agreement shall be rendered at the
Company’s offices in Ann Arbor, Michigan and/or one or more
other suitable locations designated by the Company and acceptable
to Crawford.
7.
Compensation; Expenses . (a) As consideration for
Crawford’s consulting services during the Initial Consulting
Term hereunder, the Company shall make a payment to Crawford in the
annualized amount of $90,000.00 per year, or $22,500.00 per
quarter-year
period, payable
in equal monthly installments commencing on the Consulting
Commencement Date and continuing thereafter on the first day of
each month, provided , however , that if any such
installment is due for a period of less than one month, such
installment may be pro-rated to reflect the duration of the period
for which such installment is due. At the end of each month of the
Initial Consulting Term, Crawford shall submit to the Company a
description of work performed in a form reasonably acceptable to
the Company, along with documentation regarding the number of hours
of consulting services provided to the Company. If, during any
quarter-year period of the Initial Consulting Term Crawford
provides consulting services in excess of 160 hours (as adjusted in
accordance with Section 5(a) of this Agreement), Crawford will be
compensated for all such additional hours in the amount of $125 per
hour worked.
(b) As
consideration for Crawford’s consulting services during the
Subsequent Consulting Term hereunder, the Company shall pay
Crawford $150 per hour worked for any services provided hereunder
no later than 30 days after the end of the month in which he
provides the services. At the end of each month of the Subsequent
Consulting Term, Crawford shall submit to the Company a description
of work performed in a form reasonably acceptable to the Company,
along with documentation regarding the number of hours of
consulting services provided to the Company.
(c) The
Company shall reimburse Crawford for reasonable out-of-pocket
expenses, such as travel expenses and telephone, facsimile and
telex expenses incurred by Crawford directly in the performance by
him of the services hereunder in a manner consistent with the
Company’s then reimbursement policies and procedures;
provided that (i) Crawford timely files expense reports on
forms designated by the Company to obtain reimbursement,
(ii) Crawford provides copies of receipts and other evidence
substantiating all claimed expenses, and (iii) the expenses
are reimbursed no later than the end of the calendar year following
the calendar year in which the expenses are incurred.
(d) If,
pursuant to Section 4 of this Agreement, the Company elects to
terminate this Agreement prior to January 5, 2011, the Company
shall pay Crawford the amount in a cash lump sum equal to the
aggregate minimum amount which he would have received pursuant to
Section 7(a) had the Initial Consulting Term continued to
January 5, 2011. The Company shall pay such amount to Crawford
no later than thirty calendar days after the Company elects to
terminate this Agreement.
8.
Taxes ; 409A Compliance
(a) Crawford
shall not, by virtue of this Agreement, be considered an employee
of the Company after the Interim Period. After the Interim Period,
Crawford shall for all purposes be considered an independent
contractor as set forth in Section 13 hereof. Any and all
sales, service, income and other taxes applicable to any payments
made by the Company to Crawford under this Agreement shall be the
sole responsibility and liability of Crawford. While the payments
under this Agreement are intended to be exempt from or comply with
the requirements of Section 409A of the Internal Revenue Code
(“Section 409A”), neither the Company nor any of
its employees or agents shall have any obligation to indemnify or
hold Crawford harmless from any taxes Crawford may incur under
Section 409A.
(b) Notwithstanding
anything herein to the contrary, if any amounts payable to Crawford
under this Agreement as a result of Crawford’s cessation of
employment or service with the Company constitute
“nonqualified deferred compensation” within the meaning
of Section 409A, payment of such amounts shall commence when
Crawford incurs a “separation from service” within the
meaning of Treasury Regulation § 1.409A-1(h)
(“Separation from Service”) from the Company and all
entities considered a single employer with the Company under Code
Section 414(b) or 414(c). If, at the time of Crawford’s
Separation from Service, Crawford is a “specified
employee” (under Internal Revenue Code Section 409A),
any amount that constitutes “nonqualified deferred
compensation” within the meaning of Code Section 409A
that becomes payable to Crawford on account of his Separation from
Service will not be paid until after the earlier of (i) the
expiration of the six-month period measured from the date of his
Separation from Service, or (ii) the date of his death (the
“409A Suspension Period”). Within 14 calendar days
after the end of the 409A Suspension Period, Crawford shall be paid
a lump sum payment in cash equal to any payments delayed because of
the preceding sentence, without interest. Thereafter, Crawford
shall receive any remaining benefits as if there had not been an
earlier delay. For the purposes of this Agreement, each payment
that is part of a series of installment payments shall be as a
right to a series of separate payments within the meaning of Code
Section 409A.
9.
Confidentiality . Crawford acknowledges and agrees that
the Trade Secrets (as defined below) and the Confidential
Information (as defined below), of the Company and any parent or
subsidiary of the Company and all physical embodiments thereof
(collectively referred to as the “Proprietary
Information”) are valuable, special and unique assets of the
business of the Company and have been developed by the Company and
its subsidiaries and will continue to be developed by the Company
and its subsidiaries at considerable time and expense. Crawford
further acknowledges that access to such Proprietary Information is
essential to the performance of Crawford’s duties and
responsibilities under this Agreement. T
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