Contract
EXHIBIT
10.1
SECOND
AMENDED AND RESTATED
THIS
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and
entered into as of this 31st day of March, 2009, by and among HAWK CORPORATION,
a Delaware corporation (“Hawk”), Friction Products Co., an Ohio corporation
(together with Hawk, “Employer”) and XXXXXX X. XXXXXXXX
(“Employee”).
RECITALS
A. The
parties were previously parties to (i) an employment agreement dated
June 30, 1995 (the “Original Agreement”), (ii) Amendment No. 1 to
the Original Agreement dated October 24, 2000 (“OA Amendment No. 1”),
and (iii) Amendment No. 2 to the Original Agreement dated May 31,
2001 (“OA Amendment No. 2,” and together with the Original Agreement and OA
Amendment No. 1, the “Amended Original Agreement”).
B. The
parties amended and restated the Amended Original Agreement in the Amended and
Restated Employment Agreement dated as of December 31, 2001 (the “Effective
Date”) between Employer and Employee (the “Amended and Restated Employment
Agreement”).
C. The
parties amended the Amended and Restated Employment Agreement in Amendment
No. 1 to the Amended and Restated Employment Agreement dated as of
March 4, 2004 (“AREA Amendment No. 1”) and in Amendment No. 2 to the
Amended and Restated Employment Agreement dated as of December 31, 2008 (“AREA
Amendment No. 2,” and together with the Amended and Restated Agreement and AREA
Amendment No. 1, the “Amended AREA”).
D. The
parties desire to further amend and restate the Amended AREA in its entirety as
set forth in this Agreement.
NOW
THEREFORE, in consideration of the premises and the promises and agreements
contained herein and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, and intending to be legally bound,
Employer and Employee amend and restate the Amended AREA, as
follows:
1. EMPLOYMENT. Employer
hereby employs Employee and Employee agrees to be employed by Employer for a
period commencing on March 15, 2009 and terminating on December 31,
2014. Such period, together with the period of any extension or
renewal upon the mutual agreement of Employer and Employee of such employment,
is herein referred to as the “Employment Period.”
2. COMPENSATION AND
BENEFITS. Provided that Employee’s employment hereunder is not
terminated in accordance with this Agreement, during the Employment
Period
Employee
shall receive as compensation each of the following:
(a) Salary: Employee
shall receive a salary at the annual rate of $750,000, payable not less
frequently than semi-monthly in accordance with Employer’s payroll procedures
(as adjusted from time to time, “Base Wages”). To ensure compliance
with Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), and the Department of Treasury regulations and other interpretive
guidance issued thereunder, each as in effect from time to time (collectively,
“Section 409A”), in no event shall any portion of the Base Wages be paid
later than March 15 of the calendar year following the calendar year in
which the Base Wages were earned and accrued.
(b) Employee Benefit
Programs: Employee shall have the right to participate,
subject to any applicable eligibility requirements, in all corporate employee
benefit programs offered to executive employees by Employer and any other plans
made available by Employer in the future to its executives and key management
employees, including, if any, Employer’s 401(k) plan, health and life insurance
programs and non-contributory defined benefit plans.
(c) Executive
Bonus: During each year of the Employment Period, Employee may
receive a bonus as determined in the sole discretion of the Compensation
Committee of the Board of Directors (“Board”) of Employer) which bonus could be
pursuant to an annual incentive plan or otherwise. To ensure
compliance with Section 409A, the bonus payment payable under this Section
2(c) shall be paid no later than March 15 of the calendar year following
the calendar year in which the amount was earned and accrued.
(d) Business
Expenses: Employer shall promptly reimburse Employee for all
reasonable and necessary business expenses incurred by Employee on behalf of
Employer and its parent, wholly-owned subsidiaries or affiliated entities during
the Employment Period, or such other expenses as are approved from time to time
by the Compensation Committee. Employee shall submit to Employer
appropriate expense reports that detail such expenses and include copies of
receipts where appropriate. To ensure compliance with
Section 409A, reimbursed business expenses for each calendar year shall be
paid no later than March 15 of the calendar year following the calendar
year in which those expenses were incurred by Employee.
(e) Automobile
Expenses: Employee shall be entitled to receive a car
allowance in the amount determined by the Compensation Committee, but not less
than the amount presently paid, payable semi-monthly. Employer shall
provide property and liability insurance on Employee’s automobile and reimburse
Employee for the reasonable maintenance and repair costs incurred with respect
to Employee’s automobile. To ensure compliance with
Section 409A, (i) car allowance amounts shall be paid no later than
March 15 of the calendar year following the calendar year in which
Employee’s right to each amount accrued and (ii) reimbursed maintenance and
repair costs shall be paid no later than March 15 of the calendar year
following the calendar year in which those expenses were incurred by
Employee.
(f) Insurance: For the
Employment Period (and any renewal thereof), Employer shall continue to maintain
and pay the premiums on the insurance policies issued by Massachusetts Mutual
(Policy Numbers 71395270 and 6251966), or such other similar policies as
may be agreed by Employee. Such insurance policies shall continue to be subject
to the applicable split-dollar agreements between Employer and Employee.
3. ADJUSTMENTS TO
COMPENSATION.
(a) The
Board, or the Compensation Committee, will review Employee’s Base Wages no less
than annually at which time it will determine increases, if any, to Employee’s
Base Wages. Base Wages cannot be reduced except by mutual agreement
between Employer and Employee.
(b) Employee
hereby authorizes Employer to withhold and withdraw from amounts payable to
Employee under this Agreement all applicable amounts required by federal, state
and local laws.
4. DUTIES. Employee
shall, during the Employment Period, serve as Chief Executive Officer, Chairman
of the Board or both Chairman of the Board and Chief Executive Officer of
Employer, as may be determined by Employee and Employer, or in any other
capacity as the Board may request and Employee shall mutually agree to serve
from time to time, provided, however, that Employee’s duties and
responsibilities shall be the same as are customarily assigned to the Chairman
of the Board and Chief Executive Officer, including overseeing the management,
operating strategies and profitability of the business. Employee
shall not be required to devote substantially all of his time and efforts to the
business and affairs of Employer so long as Employee substantially performs the
duties and functions provided for herein to the best of his ability and skill in
such a manner as to promote the best interests of Employer. Employee
further agrees to serve as a director on the boards of directors of Employer’s
subsidiaries or affiliated entities and in one or more executive offices of any
of Employer’s subsidiaries or affiliated entities.
5. DEATH OF
EMPLOYEE.
(a) In
the event Employee should die during the Employment Period and:
(i) at
the time of Employee’s death, Employee has a wife, then: (A) Employer
shall pay to Employee’s wife the amount of bonus which Employee would have
received under Section 2(c) hereof for the year of Employee’s death which
shall be prorated for the portion of the year ending upon the date of death; and
(B) Employer shall continue to provide and/or pay for the existing health care
coverage to Employee’s wife to the maximum extent allowable in all respects
under applicable law for the balance of the Employment Period or until
Employee’s surviving spouse attains the age of sixty-five (65) years, whichever
is longer; provided, however, that when
Employee’s surviving spouse attains the age of sixty-five (65) years, Medicare
shall be the primary provider of medical coverage and the existing health care
coverage shall be the secondary payor; and provided further,
however, that
the combined benefits of Medicare and the Medicare supplemental policy shall be
substantially the same as then available under the Employer’s existing health
care coverage for active employees; or
(ii) at
the time of Employee’s death, Employee has no wife, then Employer
shall: (A) for a period of two (2) years, continue to pay Employee’s
Base Wages at the same monthly amount earned by Employee immediately prior to
his death to Employee’s beneficiaries or estate; and (B) pay to Employee’s
beneficiaries or his estate, the amount of bonus which the Employee would have
received under Section 2(c) hereof for the year of Employee’s death which shall
be prorated for the portion of the year ending upon the date of
death.
(b) To
ensure compliance with Section 409A, Employer shall pay:
(i) any
amount payable under Section 5(a)(i)(A) or 5(a)(ii)(B) by no later than
March 15 of the calendar year following the year of Employee’s
death;
(ii) all
amounts payable under Section 5(a)(ii)(A) semi-monthly in accordance with
Employer’s payroll procedures as in effect on the date of this Agreement
beginning with the first month following the month of Employee’s death;
and
(iii) to
the extent that any continued payments or reimbursements of health care coverage
under Section 5(a)(i)(B) above are deemed to constitute taxable compensation,
any such payment due to Employee’s wife shall be paid on or before the last day
of the calendar year following the calendar year in which the related expense
was incurred. The amount of any such payments eligible for
reimbursement in one year shall not affect the payments or expenses that are
eligible for payment or reimbursement in any other taxable year, and the right
of Employee’s wife to such payments or reimbursement shall not be subject to
liquidation or exchange for any other benefit.
6. DISABILITY OF
EMPLOYEE.
(a) In
the event that Employee becomes “mentally or physically disabled” (as
hereinafter defined) during the Employment Period, Employer shall continue to
pay Employee’s Base Wages to Employee semi-monthly in accordance with Employer’s
payroll procedures as in effect on the date of this Agreement for the remainder
of the year during which the disability begins beginning with the first payroll
period after the onset of the disability, at the same monthly rate earned by
Employee immediately prior to his disability. The amount of the bonus
which Employee is to receive under Section 2(c) hereof for the year of the onset
of the disability shall be determined and paid as if Employee has not been
disabled. To ensure compliance with Section 409A, Employer shall
pay any bonus amount payable for the year of the onset of the disability by no
later than March 15 of the calendar year following the year of the onset of
the disability. In the event that Employee becomes “mentally or
physically disabled” (as hereinafter defined) during the Employment Period,
after the year of the onset of the disability, Employer shall provide the
following to Employee: (i) disability wage continuation payments, for
the remainder of Employee’s life, equal to, on an annual basis, sixty percent
(60%) of the average annual Employee’s Base Wages for the previous three
consecutive years of employment prior to the year of the onset of the disability
with Employer, less applicable withholding taxes, payable not less frequently
than semi-monthly (“Disability Wage Continuation Payments”) and (ii) annual
bonus payments, for the remainder of Employee’s life, equal to sixty percent
(60%) of Employee’s average annual bonus payment for the previous three
consecutive years of employment with the Employer (as such bonus is determined
in accordance with Section 2(c)), less applicable withholding taxes (“Bonus
Continuation Payments”); provided that the Disability Wage Continuation Payments
and Bonus Continuation Payments shall be reduced by the amount of any insurance
payments made to Employee or his spouse under any insurance plans provided and
paid for by Employer or any of its subsidiaries or affiliates. If
Employee shall die prior to December 31, 2014, but after Employee becomes
mentally or physically disabled, then the provisions of Section 5 hereof
shall apply.
(b) For
purposes of this Agreement, Employee shall become “mentally or physically
disabled” as of the time the Board shall find, on the basis of medical evidence
satisfactory to the Board, in its sole discretion, that as a result of a mental
or physical condition Employee is unable to substantially perform his normal
duties of employment hereunder or is prevented from engaging in substantially
the same level of performance as he engaged in prior to the onset of such
condition, and that such disability is likely to continue for a substantial
period of time. Employee shall submit to an examination by a
physician, selected at the discretion of the Board and paid for by the Employer,
as is necessary to obtain the medical evidence needed by the Board to determine
whether Employee has become “mentally or physically
disabled.” Employee hereby waives the confidentiality of the results
or conclusions of such medical examination and shall take such action as is
necessary to disclose the results or conclusions of such examination to the
Board. In the event Employee fails to submit to such examination or
to take the necessary action to disclose the results of the examination,
Employee shall be deemed to be “mentally or physically disabled.”
(c) To
ensure compliance with Section 409A, Employer shall pay:
(i) all
Disability Wage Continuation Payments payable under Section 6(a)(i)
semi-monthly in accordance with Employer’s payroll procedures as in effect on
the date of this Agreement beginning with the first month of the calendar year
after the year of the onset of the disability; and
(ii) all
Bonus Continuation Payments payable under Section 6(a)(ii) on March 15
of the calendar year following the year in which each amount is earned and
accrued.
7. TERMINATION.
(a) Employer
may terminate Employee’s employment under this Agreement at any time for cause,
which shall include only the following: (i) Employee’s engaging
in fraud, misappropriation of funds, embezzlement or like conduct committed
against Employer; (ii) Employee’s conviction of a felony; or (iii)
Employee’s willful or intentional material breach of this Agreement that has a
material economic effect on Employer.
(b) Employee’s
employment under this Agreement may be terminated by Employer in the event of
Employee’s voluntarily leaving the employ of Employer.
(c) Employee
may terminate his employment under this Agreement for “Good
Reason.” For purposes of this Agreement, “Good Reason” shall mean the
occurrence of any of the following conditions (the “Good Reason Conditions”)
arising without the consent of Employee:
(i) Any
action by Employer which results in a material diminution in Employee’s
authority, duties or responsibilities;
(ii) A
material change in geographic location at which Employee must perform the duties
as set forth in Section 4 above;
(iii) A
material diminution in Employee’s Base Wages;
(iv) A
material diminution in the authority, duties, or responsibilities of any person
to which Employee is required to report, including a requirement that Employee
report to a corporate officer or employee instead of reporting directly to the
Board;
(v) A
material diminution in the budget over which Employee retains authority;
or
(vi) Any
other action or inaction that constitutes a material breach of the terms of this
Agreement, as amended.
In the
event of the occurrence of any Good Reason Condition, Employee shall provide to
Employer written notice of the existence of the Good Reason Condition within a
period not to exceed 90 days of its initial existence. Employer
shall have a period of not less than 60 days during which it may remedy the
Good Reason Condition.
(d) If
Employer terminates the employment of Employee:
(i) for
cause under Section 7(a) above, then Employer shall not be obligated to
make any further payments to Employee under this Agreement or otherwise
(including, without limitation, any accrued and unpaid bonuses and severance
benefits), except for amounts of any earned and unpaid Base Wages;
(ii) under
Section 7(b) above, then Employer and/or its successor (whether direct or
indirect, by purchase, merger, consolidation, by operation of law or otherwise),
shall be obligated to continue to pay Employee the Base Wages through the date
that Employee voluntarily leaves the employ of Employer; provided, however, that
Employee shall not be entitled to any bonus payments; or
(iii) for
any reason other than for cause as set forth in Section 7(a) above or in
the event of Employee’s voluntarily leaving the employ of Employer as set forth
in Section 7(b), then Employer and/or its successor (whether direct or
indirect, by purchase, merger, consolidation, by operation of law or otherwise),
shall continue to provide and/or pay for the existing health care coverage to
Employee for the remainder of the Employment Period and shall pay Employee, in a
lump sum payment within 30 days after Employee’s termination, (A) the Base Wages
for the remainder of the Employment Period, and (B) an amount equal to the total
annual bonuses that Employee received from Employer for the number of years
preceding the year of termination equal to the number of years remaining in the
Employment Period; provided, however, that, for purposes of calculating the
amounts due to Employee under this Section 7(d)(iii), in no event shall the
remainder of the Employment Period be deemed to be less than three (3)
years.
For
example purposes only, if Employer terminates Employee in accordance with this
Section 7(d)(iii) on January 1, 2010, then Employee would be entitled to (1)
continuing (provided or paid for) health care coverage until December 31, 2014
or for five (5) years, and (2) a lump sum payment within 30 days after
termination equal to (a) five (5) years of Employee’s Base Wages and (b) an
amount equal to his bonuses received for the five (5) years preceding his
termination date – 2005, 2006, 2007, 2008 and 2009. If Employer
terminates Employee in accordance with this Section 7(d)(iii) on January 1,
2012, , then Employee would be entitled to (1) continuing (provided or paid for)
health care coverage until December 31, 2014 or for two (2) years, and (2) a
lump sum payment within 30 days after termination equal to (a) three (3) years
of Employee’s Base Wages and (b) an amount equal to his bonuses received for the
three (3) years preceding his termination date – 2009, 2010, and
2011.
(e) If
Employee terminates Employee’s employment for “Good Reason” under
Section 7(c) above, then Employer and/or its successor shall have the same
obligations to Employee as are described in Section 7(d)(iii) above;
provided that the obligations under Section 7(d)(iii) shall be payable only
if Employee terminates Employee’s employment on a date not later than one year
following the initial existence of the Good Reason Condition constituting the
basis of Employee’s termination for Good Reason.
(f) To
ensure compliance with Section 409A, Employer shall pay:
(i) all
amounts payable under Sections 7(d)(i) and (ii) semi-monthly in
accordance with Employer’s payroll procedures as in effect on the date of this
Agreement; provided, however that no amount payable under Section 7(d)(i)
or (ii) shall be paid later than March 15 of the calendar year
following the year of Employee’s termination of employment with Employer;
and
(ii) all
amounts payable under Section 7(d)(iii) constituting Base Wages and bonus
payments in a lump sum within 30 days after Employee’s termination; provided,
however, that no such amount shall be paid later than March 15 of the
calendar year following the year of Employee’s termination of employment with
Employer; and
(iii) to
the extent that any continued payments or reimbursements of health care coverage
under Section 7(d)(iii) above are deemed to constitute taxable compensation to
Employee, any such payment due to Employee shall be paid to Employee on or
before the last day of Employee’s taxable year following the taxable year in
which the related expense was incurred. The amount of any such
payments eligible for reimbursement in one year shall not affect the payments or
expenses that are eligible for payment or reimbursement in any other taxable
year, and Employee’s right to such payments or reimbursement shall not be
subject to liquidation or exchange for any other benefit.
(g) In
the event that Employee’s employment with Employer is terminated by Employer or
by Employee, the parties agree that the provisions of Sections 7(d), 7(e),
8 through 17 and 20 through 29 hereof shall survive such
termination and continue in full force and effect.
8. NON-COMPETITION. Employee
recognizes and acknowledges that the business of Employer is the manufacture,
marketing and development of friction materials, metal stampings, fuel cells and
businesses related thereto. Employee agrees that within the United
States, Canada, Italy and China and any other location in which Employer engaged
in all or part of the above-described business at any time during the Employment
Period, and for two (2) years from and after the date of the termination of
Employee’s employment hereunder (the “Restricted Period”), Employee shall not,
in any manner, directly or indirectly on behalf of himself or any other person,
firm, business or corporation:
(a) establish,
operate or engage in, financially or otherwise, as an owner, partner,
shareholder, officer, director, licensor, licensee, principal, agent, employee,
trustee, consultant or in any other relationship or capacity, the business of
the Employer; provided, however, that the
ownership of, or investments in, at no time exceeding 5% of the issued and
outstanding capital stock of an entity shall not constitute a breach of the
prohibitions hereunder;
(b) request
or instigate any account or customer of Employer or its subsidiaries or
affiliates to withdraw, diminish, curtail or cancel any of its business with
Employer or its subsidiaries or affiliates; or
(c) hire,
solicit, or encourage to either leave the employment of or cease working with
Employer or its subsidiaries or affiliates any then current employee of
Employer or its subsidiaries or affiliates.
In the
event of Employee’s breach of any provision of this Section, the running of the
Restricted Period shall be automatically tolled (i.e., no part of the
Restricted Period shall expire) from and after the date of the first such
breach.
9. CONFIDENTIAL
INFORMATION. Employee recognizes and acknowledges that
confidential information, including, without limitation, information, knowledge
or data: (a) of a business nature such as, but not limited to, information
about cost, price, rates, profits, purchasing, suppliers, advertising,
customers, sales, marketing, promotion, compensation, employment, personnel,
including information regarding present and prospective customers and the
business affairs and financial condition of Employer; (b) of a technical
nature such as, but not limited to, methods, know-how, processes and research;
(c) pertaining to future developments such as, but not limited to, research
and development projects and future marketing, advertising or promotion;
(d) pertaining to trade secrets of Employer; and including all other
matters which Employer treats as confidential (the items described above being
hereafter collectively referred to as “Confidential Information”), are valuable,
special and unique assets of Employer. During and after the
Restricted Period, Employee shall keep secret and retain in strictest
confidence, shall not use for the benefit of himself or others except in
connection with the business and affairs of Employer, any and all Confidential
Information learned or obtained by Employee before or after the date of this
Agreement, and shall not disclose such Confidential Information to anyone
outside of Employer either during or after employment by Employer, except as
required in the course of performing duties of his employment with Employer,
without the express written consent of Employer or as required by
law. For the purposes of the above disclosure exception, it is
expressly recognized that, during the Employment Period, Employee’s duties
include, without limitation, providing certain information about Employer to
bankers, investors, the press, governmental agencies, and other members of the
financial community in general, and such dissemination of information will not
constitute a violation of this Section 9. Notwithstanding
anything to the contrary, Employee shall not be obligated (a) to preserve
confidentiality of Confidential Information that becomes publicly available
other than by the unauthorized disclosure by Employer, or (b) of any
business or management process utilized by Employee during his employment,
provided that no trade secret is disclosed.
10. PROPERTY OF
EMPLOYER. Employee agrees to deliver promptly to Employer all
manuals, letters, notes, notebooks, reports, computer programs and files,
memoranda, customer and supplier lists and all other materials relating in any
way to the business of Employer and in any way obtained by Employee during the
period of his employment with Employer which are in his possession or under his
control, and all copies thereof, (a) upon termination of Employee’s
employment with Employer, or (b) at any other time at Employer’s
request. Employee further agrees that he will not make or retain any
copies of any of the foregoing and that he will so represent to Employer upon
termination of his employment hereunder.
11. RIGHTS AND REMEDIES UPON
BREACH. Both parties recognize that the rights and obligations
set forth in this Agreement are special, unique and of extraordinary
character. If Employee breaches, or threatens to commit a breach of
any of the provisions of Sections 8 through 10 hereof (hereinafter
referred to as the “Restrictive Covenants”), then Employer shall have the right
and remedy to injunctive relief which right and remedy shall be in addition to,
and not in lieu of, any other rights and remedies available to Employer pursuant
to this Agreement, any applicable law or in equity. The right and
remedy to have the Restrictive Covenants specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to Employer and that
money damages will not provide adequate remedy to Employer. As to the
covenants contained in Section 9 hereof, specific performance shall be for
a period of time equal to the unexpired portion of the Restricted Period, giving
full effect to the tolling provision of Section 9 hereof, and beginning on
the earlier of the date on which the court’s order becomes final and
nonappealable or the date on which all appeals have been exhausted.
12. DISCLOSURE. Employer
may notify anyone employing Employee or evidencing an intention to employ
Employee as to the existence and provisions of this Agreement and of the
Restrictive Covenants.
13. INDEMNIFICATION.
(a) Employer
shall indemnify Employee (and his legal representative or other successors) to
the fullest extent provided by the articles or certificate of incorporation and
by-laws or code of regulations (or other governing document) of Employer and any
wholly-owned subsidiary, as may be amended or restated from time to
time.
(b) Employee
shall indemnify Employer against any and all losses incurred by Employer as a
result of Employee’s acts of willful misconduct or fraud.
14. ASSIGNMENTS. This
Agreement is a personal services contract and it is expressly agreed that
(a) the rights and interests of Employee hereunder may not be sold,
transferred, assigned, pledged or hypothecated (other than by will or the laws
of descent and distribution), and (b) the rights and obligations of
Employer hereunder shall be assigned and shall be binding upon any successor to
the interests of Employer, whether direct or indirect, by purchase, merger,
consolidation, by operation of law or otherwise.
15. BINDING
EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto, their heirs, representatives and permitted
successors and assigns.
16. SEVERABILITY. In
case any one or more of the provisions contained in this Agreement shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal, or unenforceable provision had never
been contained herein.
17. BLUE-PENCILING. If
at any time it shall be determined that any of the provisions of this Agreement
are unreasonable as to time or area, or both, by any court of competent
jurisdiction, Employer shall be entitled to enforce such provision for such
period of time and within such area as may be determined to be reasonable by
such court.
18. REPRESENTATIONS OF
EMPLOYEE. Employee represents and warrants, on behalf of
himself, his immediate family and any person, firm or corporation in which he
has a substantial interest, that:
(a) they are
not indebted to Employer in any amount whatsoever;
(b) they do
not, and will not during the Restricted Period, have any direct or indirect
ownership interest in any entity with which Employer has a business relationship
or competes with Employer; provided, however, that the
ownership of, or investments in, at no time exceeding 5% of the issued and
outstanding capital stock of an entity shall not constitute a breach of this
representation and warranty and the question as to whether a company competes
with Employer shall be determined by the Board, and such determination shall be
final;
(c) they are
not and will not become, during the Employment Period, directly or indirectly,
interested in any material contract with Employer (other than this Agreement);
and
(d) the
execution of this Agreement or his employment by Employer will not breach any
agreement or covenant entered into by him that is currently in
effect.
19. CONFLICTS
OF INTEREST. In the event that Employee engages in or
contemplates engagement in a transaction which does affect or could affect the
business of Employer, Employee agrees to immediately disclose in writing to the
Board all material information relating to same.
20. SECTION 409A.
(a) To
the extent applicable, this Agreement shall be interpreted in accordance with
Section 409A.
(b) If
Employee is a “specified employee” (within the meaning of U.S. Treasury
Regulation Section 1.409A-1(i)), as determined by Employer in accordance with
Section 409A, as of the date of Employee’s separation from service (within
the meaning of U.S. Treasury Regulation Section 1.409A-1(h)), to the extent that
the payments or benefits under this Agreement are subject to Section 409A
and the delayed payment or distribution of all or any portion of those amounts
to which Employee is entitled under this Agreement, exclusive of any amount that
is permitted to be distributed under U.S. Treasury Regulation
Section 1.409A-1(b)(9)(iii) (regarding the two-times, two year exception),
is required in order to avoid a prohibited distribution under
Section 409A(a)(2)(B)(i) of the Code, then such portion deferred under this
Section 20(b) shall be paid or distributed (without interest) to Employee
in a lump sum on the earlier of (i) the date that is six (6) months
following termination of Employee’s employment, (ii) a date that is no
later than thirty (30) days after the date of Employee’s death, or
(iii) the earliest date as is permitted under
Section 409A. For purposes of clarity, the six (6) month delay
shall not apply in the case of severance pay contemplated by U.S. Treasury
Regulation Section 1.409A-1(b)(9)(iii) to the extent of the limits set forth
therein. Any remaining payments due under this Agreement shall be
paid as otherwise provided in this Agreement.
(c) For
purposes of Section 409A (including, without limitation, for purposes of U.S.
Treasury Regulation Section 1.409A-2(b)(2)(iii)), Employee’s right to receive
the installment payments described in Sections 5(a)(ii)(A) and 6(a) shall be
treated as a right to receive a series of separate payments and, accordingly,
each installment payment shall at all times be considered a separate and
distinct payment.
(d) Notwithstanding
anything herein to the contrary, to the extent any of the amounts payable under
Sections 5(a)(ii)(A), 6(a), and 7(d)(iii) are treated as non-qualified deferred
compensation subject to Section 409A, then no portion of such amounts shall be
payable to Employee unless Employee’s termination of employment constitutes a
“separation from service,” as defined in U.S. Treasury Regulation Section
409A-1(h) (and any successor provision thereto).
(e) To
the maximum extent permitted by applicable law, the amounts payable to Employee
under this Agreement shall be made in reliance upon U.S. Treasury Regulation
Section 1.409A-1(b)(9) (with respect to separation pay plans) or U.S. Treasury
Regulation Section 1.409A-1(b)(4) (with respect to short-term
deferrals).
21. PARACHUTE
PROVISIONS. If any amount payable to or other benefit
receivable by the Employee pursuant to this Agreement is deemed to constitute a
Parachute Payment (as defined below), alone or when added to any other amount
payable or paid to or other benefit receivable or received by Employee which is
deemed to constitute a Parachute Payment (whether or not under an existing plan,
arrangement or other agreement), and would result in the imposition on the
Employee of an excise tax under Section 4999 of the Code, then, in addition to
any other benefits to which the Employee is entitled under this Agreement, the
Employee shall be paid by the Employer an amount in cash equal to the sum of the
excise taxes payable by the Employee by reason of receiving Parachute Payments
plus the amount necessary to put the Employee in the same after-tax position
(taking into account any and all applicable federal, state and local excise,
income or other taxes at the highest applicable rates on such Parachute Payments
and on any payments under this Section 21) as if no excise taxes had been
imposed with respect to Parachute Payments. The amount of any payment
under this Section 21 shall be computed by a certified public accounting firm
mutually and reasonably acceptable to the Employee and the Employer, the
computation expenses of which shall be paid by the
Employer. “Parachute Payment” shall mean any payment deemed to
constitute a “parachute payment” as defined in Section 280G of the
Code.
22. ACKNOWLEDGMENT. Employee
acknowledges that: (a) he has carefully read all of the terms of
this Agreement, and that such terms have been fully explained to him;
(b) he understands the consequences of each and every term of this
Agreement; (c) he has had sufficient time and an opportunity to consult
with his own legal advisor prior to signing this Agreement; (d) he had
other employment opportunities at the time he entered into this Agreement;
(e) he specifically understands that by signing this Agreement he is giving
up certain rights he may have otherwise had, and that he is agreeing to limit
his freedom to engage in certain employment during and after the termination of
this Agreement; and (f) the limitations to his right to compete contained
in this Agreement represent reasonable limitations as to scope, duration and
geographical area, and that such limitations are reasonably related to
protection which Employer reasonably requires.
23. NOTICES. All
notices, requests, demands or other communications hereunder shall be sent by
registered or certified mail to:
Employer: Board
of Directors
Hawk Corporation
000 Xxxxxx Xxxxxx, Xxxxx
0000
Xxxxxxxxx, Xxxx
00000-0000
Copy
to: Xxxxx
X. Xxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxx
PLL.
One Cleveland Center
0000 Xxxx Xxxxx Xxxxxx, 00
Xxxxx
Xxxxxxxxx, Xxxx 00000
Employee: Xxxxxx
X. Xxxxxxxx
000 Xxxxxxxx Xxx
Xxxxx Xxxxx, Xxxx 00000
24. CAPTIONS. The
captions in this Agreement are included for convenience only and shall not in
any way affect the interpretation or construction of any provision
hereof.
25. GOVERNING
LAW. This Agreement shall be governed by, and construed
and enforced in accordance with the laws of the State of Ohio.
26. SUBMISSION TO
JURISDICTION. Employer may enforce any claim arising
out of or relating to this Agreement, or arising from or related to the
employment relationship existing in connection with this Agreement in any state
or federal court having subject matter jurisdiction and located in Cleveland,
Ohio. For the purpose of any action or proceeding instituted with
respect to any such claim, Employee hereby irrevocably submits to the
jurisdiction of such courts and irrevocably consents to the service of process
out of said courts by mailing a copy thereof, by registered mail, postage
prepaid, to Employee and agrees that such service, to the fullest extent
permitted by law, (a) shall be deemed in every respect effective service of
process upon him in any such suit, action or proceeding, and (b) shall be
taken and held to be valid personal service upon and personal delivery to
him. Nothing herein contained shall affect the right of Employer to
serve process in any other manner permitted by law or preclude Employer from
bringing an action or proceeding in respect hereof in any other country, state
or place having jurisdiction over such action, Employee irrevocably waives, to
the fullest extent permitted by law, any objection which he has or may have to
the laying of the venue of any such suit, action or proceeding brought in any
such court located in Cleveland, Ohio, and any claim that any such suit, action
or proceeding brought in such a court has been brought in an inconvenient
forum.
27. WAIVER OF
BREACH. The waiver by either party of a breach of any
provisions of this Agreement shall not operate or be construed as a waiver of
any subsequent breach.
28. AMENDMENT. This
Agreement may be amended only in a writing executed by both parties
hereto.
29. ENTIRE
AGREEMENT. This Agreement constitutes the entire agreement
between the parties and this Agreement supersedes all prior and contemporaneous
agreements, understandings, negotiations and discussions, whether written or
oral, of the parties hereto relating to the transactions contemplated by this
Agreement, including without limitation the Amended AREA. No course
of conduct or dealing between the parties shall be deemed to amend this
Agreement.
IN WITNESS WHEREOF, the
undersigned have hereunto set their hand as of the date first written
above.
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“EMPLOYER”
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“EMPLOYEE” | |||
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/s/Xxxxx
X. Xxxxxx
|
/s/
Xxxxxx X. Xxxxxxxx
|
|||
|
Name:
Xxxxx X. Xxxxxx
|
Name:
Xxxxxx X. Xxxxxxxx
|
|||
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Title:
Secretary
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