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Exhibit 10.28
FORM OF
AMENDED AND RESTATED
WAGE CONTINUATION AGREEMENT OF
HAWK CORPORATION
THIS AGREEMENT is made and entered into as of this ____ day of January,
1998, by and between Hawk Corporation, a Delaware corporation (hereinafter
referred to as the "Corporation"), and Xxxxxx X. Xxxxxxx, individually
(hereinafter referred to as the "Employee").
WHEREAS, the Employee is employed by the Corporation;
WHEREAS, the Corporation recognizes the valuable services heretofore
performed for it by the Employee and wishes to encourage his continued
employment by providing this additional compensation for the Employee's services
to the Corporation;
WHEREAS, the Employee has no present intention to retire;
WHEREAS, the Employee wishes to be assured that the spouse of the Employee
at the time of his death (the "Spouse") will be entitled to a certain minimum
amount of compensation for the lifetime of the Spouse after his death;
WHEREAS, the parties entered into a Wage Continuation Agreement dated June
30, 1995, as amended, which set forth the terms and conditions upon which the
Corporation would pay additional compensation to the Spouse after the Employee's
death;
WHEREAS, the parties will enter into a split-dollar insurance agreement in
conjunction with this Agreement, which provides that Employee's designee shall
receive certain insurance proceeds (the "Split-Dollar Death Benefit") upon
Employee's death;
WHEREAS, Employee intends to designate a certain trust (the "Trust") for
the primary benefit of the Spouse as the recipient of the Split-Dollar Death
Benefit;
WHEREAS, Employee intends that the trustee (the "Trustee") of the Trust
utilize the Split-Dollar Death Benefit to purchase a monthly annuity from an "A"
rated (or comparably rated)
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financial institution payable to the Spouse (or certain other beneficiaries upon
the Spouse's death) for the longer of the life of the Spouse or ten (10) years
(the "Monthly Spousal Annuity"), unless the Trustee determines not to purchase
the Monthly Spousal Annuity as provided in the Trust; and
WHEREAS, the parties hereto wish to provide terms and conditions upon which
the Corporation would supplement the Monthly Spousal Annuity after the
Employee's death;
NOW THEREFORE, in consideration of the premises and of the mutual promises
herein contained, the parties hereto agree as follows:
1. CONSIDERATION.
(a) In consideration of the Employee remaining in its employ, the
Corporation agrees that, in the event of death of the Employee (i) while the
Employee is in the active employ of the Corporation or (ii) while the Employee
is no longer in the active employ of the Corporation solely because the Employee
is mentally or physically disabled (as defined below), the Corporation shall pay
to the Spouse a monthly payment equal to the Tentative Payment Amount divided by
sixty percent (60%) (the "Wage Continuation Payment") less any applicable
withholding taxes. The term "Tentative Payment Amount" shall equal Twelve
Thousand Five Hundred Dollars ($12,500) less the After-Tax Monthly Spousal
Annuity and in no event shall be less than zero; the term "After-Tax Monthly
Spousal Annuity" shall mean the Monthly Spousal Annuity less Taxes Payable; and
the term "Taxes Payable" shall mean the portion of the Monthly Spousal Annuity
subject to federal income taxes multiplied by forty percent (40%). The phrase
"mentally or physically disabled" shall have the meaning ascribed to it in the
Employment Agreement entered into between the Corporation and the Employee on
November 1, 1996. If the Trustee makes a determination not to purchase the
Monthly Spousal Annuity upon the death of the Employee while the Spouse is
living or if the Employee designates someone other than the Spouse directly or
indirectly through the Trust as the beneficiary of the Split-
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Dollar Benefit, the Monthly Spousal Annuity will be deemed to equal the monthly
annuity amount that could otherwise have been purchased by the Trustee for the
Spouse if such a determination had not been made. The Wage Continuation Payment
shall be payable to the Spouse in equal monthly installments commencing with the
first day of the first month following the month of the Employee's death and
shall continue monthly until the death of the Spouse.
(b) For purposes of illustrating the operation of paragraph 1(a)
above, assume that the Split-Dollar Death Benefit paid to the Trust is $981,432,
the Spouse has a life expectancy of 22.5 years for purposes of calculating the
tax owed under Section 72 of the Internal Revenue Code of 1986, as amended, and
the Monthly Spousal Annuity equals $6,006.36. The tax free portion of each
monthly payment would equal $3,634.93 ($981,432 divided by 22.5 divided by 12).
The Taxes Payable would equal $948.57 ($6,006.36 less $3,634.93 multiplied by
40%). The After-Tax Monthly Spousal Annuity would equal $5,057.78 ($6,006.36
less $948.57). The Tentative Payment Amount would equal $7,442.22 ($12,500 less
$5,057.78). The Wage Continuation Payment would equal $12,403.70 ($7,442.22
divided by 60%).
(c) In the event that, upon the death of the Employee, the Spouse is
not then living, the Corporation shall not be obligated to make any payments
hereunder, and neither the Employee's estate, his heirs or his other
beneficiaries shall have any claim thereto.
2. TERMINATION. In the event that the employment of the Employee by the
Corporation is terminated for any reason other than his (i) death or (ii) the
Employee becoming mentally or physically disabled, this Agreement shall
thereupon terminate, and the Corporation shall have no further obligation
hereunder. Nothing contained herein shall be construed to be a contract of
employment for any term of years, nor as conferring upon the Employee the right
to continue in the employ of the Corporation in any capacity. It is expressly
understood by the parties thereto that this
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Agreement relates exclusively to salary continuation benefits in return for the
Employee's services and is not intended to be an employment contract.
3. PAYMENT. Nothing contained in the Agreement and no action taken pursuant
to its provisions by either party hereto shall create, or be construed to
create, a trust of any kind, or a fiduciary relationship between the Corporation
and the Employee or the Spouse. The payments to the Spouse (other than payment
derived from the Split-Dollar Death Benefit) shall be made from assets which
shall continue, for all purposes, to be a part of the general assets of the
Corporation, and no person, other than the Corporation, shall have, by virtue of
the provisions of this Agreement, any interest in such assets. To the extent
that any person acquires a right to receive payments from the Corporation under
the provisions hereof, such right shall be no greater than the right of any
unsecured general creditor of the Corporation.
4. INSURANCE. In the event that, in its discretion, the Corporation
purchases an insurance policy or policies (in addition to the policy providing
the Split-Dollar Death Benefit) insuring the life of the Employee to allow the
Corporation to recover, in whole, or in part, the cost of providing the benefits
hereunder, neither the Employee nor the Spouse shall have any rights whatsoever
therein. The Corporation shall be the sole owner and beneficiary thereof and
shall possess and may exercise all incidents of ownership therein.
5. PROHIBITIONS. Neither the Employee nor the Spouse shall have any power
or right to transfer, assign, anticipate, hypothecate or otherwise encumber any
part or all of the amounts payable hereunder, nor shall such amounts be subject
to seizure by any creditor of any such beneficiary, by a preceding by law or in
equity, and no such benefit shall be transferable by operation of law in the
event of bankruptcy, insolvency or death of the Employee or the Spouse.
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Any such attempted assignment or transfer shall be void and shall terminate this
Agreement, and the Corporation shall thereupon have no further liability
hereunder.
6. AMENDMENT. This Agreement may not be amended, altered or modified,
except by a written instrument signed by the parties hereto, or their respective
successors or assigns, and may not be otherwise terminated except as provided
herein.
7. BINDING. This Agreement shall be binding upon and inure to the benefit
of the Corporation and its successors and assigns, and the Employee and his
heirs, executors, administrators and the Spouse. Employee may not assign this
Agreement.
8. NOTICE. Any notice, consent or demand required or permitted to be given
under the provisions of the Agreement shall be in writing, and shall be signed
by the party giving or making the same. If such notice, consent or demand is
mailed to a party hereto, it shall be sent by United States certified mail,
postage prepaid, addressed to such party's last address as shown on the records
of the Corporation.
9. CONSTRUCTION. This Agreement, and the rights of the parties hereunder,
shall be governed by and construed in accordance with the laws of the State of
Delaware.
10. INTEGRATION. This Agreement supersedes all prior arrangements,
understandings, conversations and negotiations between the parties with respect
to the subject matter of this Agreement and shall constitute the entire
agreement between the parties with respect to such matter. Without limiting the
foregoing, the Wage Continuation Agreement dated June 30, 1995, between Employee
and Corporation is hereby terminated.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which shall
constitute one agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
ATTEST: HAWK CORPORATION
By: By:
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Xxxxx X. Xxxxxx Xxxxxx X. Xxxxxxxx
Secretary Vice-Chairman
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XXXXXX X. XXXXXXX
"Employee"
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