2003 NON-EMPLOYEE DIRECTORS
EQUITY PLAN
NONSTATUTORY STOCK OPTION
AGREEMENT
THIS NONSTATUTORY STOCK OPTION
AGREEMENT (the
“Option Agreement”) is made and entered into as of
_____ by and between KAYDON CORPORATION , a
Delaware corporation (the “Company”), and (the
“Optionee”). The Company has granted to the Optionee an
option to purchase certain shares of Stock, upon the terms and
conditions set forth in this Option Agreement (the
“Option”).
1. Definitions and Construction .
Capitalized terms not defined herein shall have the meaning given
to them in the Director Plan. Whenever used herein, the following
terms shall have their respective meanings set forth
below:
(a)
“Annual Grant Date” means _____,
20_____.
(b) “Director Plan” means the
Kaydon Corporation 2003 Non-Employee Directors Equity Plan, as
approved by stockholders of the Company on May 9,
2003.
(c) “Number of Option Shares”
means _____ ( ) shares of Stock, as adjusted from time
to time pursuant to Section 14.
(d) “Exercise Price” means $
per share of Stock, as adjusted from time to time pursuant to
Section 14.
(e)
“Option Expiration Date” means the tenth, (10th)
anniversary after the Annual Grant Date.
(f)
“Securities Act” means the Securities Act of 1933, as
amended.
(g)
“Service” means the Optionee’s service as a
director.
2. Tax Status of the Option . This
Option is intended to be a nonstatutory stock option and shall not
be treated as an incentive stock option within the meaning of
Section 422(b) of the Code.
3. Administration . All questions
of interpretation concerning this Option Agreement shall be
determined by the Committee of the Board. All determinations by the
Board shall be final and binding upon all persons having an
interest in the Option.
4. Exercise
of the Option .
(a) Except as otherwise provided herein,
the Option shall become fully vested and exercisable on and after
the first anniversary of the Annual Grant Date and prior to the
termination of the Option (as provided in Section 11) in an
amount not to exceed the Number of Option Shares less the number of
shares previously acquired upon exercise of the Option. In no event
shall the Option be exercisable for more shares than the Number of
Option Shares. Notwithstanding the foregoing, in the event that the
adoption of the Plan or any amendment of the Plan is subject to the
approval of the Company’s stockholders in order for the Plan
or the grant of the Option to comply with the requirements of
Rule 16b-3, the Option shall not be exercisable prior to such
stockholder approval.
(b) Exercise of the Option shall be by
written notice to the Company which must state the election to
exercise the Option, the number of whole shares of Stock for which
the Option is being exercised and such other representations and
agreements as to the Optionee’s investment intent with
respect to such shares as may be required pursuant to the
provisions of this Option Agreement. The written notice must be
signed by the Optionee and must be delivered in person, by
certified or registered mail, return receipt requested, by
confirmed facsimile transmission, or by such other means as the
Company may permit, to the Vice President and General Counsel of
the Company, or other authorized representative of the Company,
prior to the termination of the Option as set forth in
Section 11, accompanied by full payment of the aggregate
Exercise Price for the number of shares of Stock being purchased.
The Option shall be deemed to be exercised upon receipt by the
Company of such written notice and the aggregate Exercise
Price.
5. Payment of Consideration .
Except as otherwise provided below, payment of the aggregate
Exercise Price for the number of shares of Stock for which the
Option is being exercised shall be made (i) in cash, by check,
or cash equivalent or, (ii) by tender to the Company of whole
shares of Stock owned by the Optionee having a Fair Market Value
not less than the aggregate Exercise Price, or (iii) by any
combination of the foregoing. Notwithstanding the foregoing, the
Option may not be exercised by tender to the Company of shares of
Stock to the extent such tender of Stock would constitute a
violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company’s stock. The Option
may not be exercised by tender to the Company of shares of Stock
unless such shares either have been owned by the Optionee for more
than six (6) months or were not acquired, directly or indirectly,
from the Company.
6. Tax Withholding and Deferred
Compensation . The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable upon the
exercise of an Option, or to accept from the Optionee the tender
of, a number of whole shares of Stock having a Fair Market Value
equal to all or any part of the federal, state, local and foreign
taxes, if any, required by law (including, any taxes arising under
Sections 409A or 4999 of the Code) to be withheld by the
Company with respect to such Option or the shares acquired upon
exercise thereof. Alternatively or in addition, in its sole
discretion, the Company shall have the right to require the
Optionee to make adequate provisions for any such tax withholding
obligations of the Company arising in connection with the Option or
the shares acquired upon exercise thereof. The Company shall have
no obligation to deliver shares of Stock until the Company’s
tax withholding obligations have been satisfied. Neither the
Company nor any of its employees, officers, directors, or service
providers shall have any obligation whatsoever to pay such taxes,
to prevent the Optionee from incurring them, or to mitigate or
protect the Optionee from any such tax liabilities. Nevertheless,
if the Company reasonably determines that the Optionee’s
receipt of payments or benefits pursuant to Sections 5 or 6 of
the Plan constitutes “nonqualified deferred
compensation” within the meaning of Section 409A,
payment of such amounts shall not commence until the Optionee
incurs a “separation from service” within the meaning
of Treasury Regulation § 1.409A-1(h) (“Separation from
Service”). If, at the time of the Optionee’s Separation
from Service, the Optionee 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 the
Optionee on account of the Optionee’s Separation from Service
(including any amounts payable pursuant to the preceding sentence)
will not be paid until after the end of the sixth calendar month
beginning after the Optionee’s Separation from Service (the
“409A Su
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