EMPLOYMENT AGREEMENT
EXHIBIT
10.2
THIS
EMPLOYMENT AGREEMENT (the
“Agreement”) is made and entered into this 14th
day of
August, 2006, by and between XXXXXXX
PRODUCTS GROUP, INC., an
Ohio
corporation which maintains a place of business at 000 Xxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxxxx Xxxx 00000 (hereinafter referred to as “Employer”), and
B.
XXXXXXXXXXX XXXXXXXX,
an
individual who resides at 0000 Xxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxx 00000
(hereinafter referred to as “Employee”).
R
E C I T A L S :
A. Employer
is engaged in the business of designing, engineering, manufacturing and
marketing friction materials and powder metal components used in a wide variety
of aerospace, industrial, construction and other commercial applications (the
“Company Business”).
B. Employee
currently serves as an officer of the parent company of Employer, Hawk
Corporation (“Hawk”), is employed by Friction Products Co. (“Friction”), a
subsidiary of Hawk, and performs services for the foregoing and certain other
affiliates of Hawk and/or Employer. All of the foregoing employment is on an
“at
will” basis, and is terminable by either party at any time for any reason or no
reason.
C. The
work
of Employee for Hawk and/or Employer and/or one or more of the affiliates of
Hawk and Employer (all of the foregoing entities being referred to collectively
in this Agreement as “the Corporation”) has brought and is expected to continue
to bring Employee into close contact with many confidential affairs of the
Corporation not readily available to the public.
D. The
Hawk
and Employee are also contemplating entering into an agreement captioned “Change
in Control Agreement” (hereinafter, the “Control Agreement”), a copy of which is
attached hereto as Exhibit A.
E. The
parties now desire to modify the employment relationship and establish certain
protections and obligations, in the manner set forth in this Agreement and
in
the Control Agreement.
ACCORDINGLY,
in
consideration of the promises hereinafter set forth in this Agreement and in
the
Control Agreement, the parties agree as follows:
1. Effective
Date.
This
Agreement shall be effective on the first date after the execution by both
of
the parties of both this Agreement and the Control Agreement (the “Effective
Date”).
2. Position,
Duties and Responsibilities.
Employer
hereby employs Employee, and Employee agrees to be employed by Employer,
as its
President, or to such other senior management position as the parties may
define
by mutual agreement. During the “Employment Period” (as hereinafter defined),
the Chairman of the Board of Directors of Employer (the “Chairman”) shall be
entitled to establish the business hours, conditions of employment, reporting
relationships, job assignments, duties and responsibilities of Employee
hereunder, and to modify the foregoing from time to time. Those duties include,
without limitation, the duties set forth on the job description attached
hereto
as Exhibit B. Employee shall report to the Chairman. Employee shall devote
all
of his business efforts to the business of Employer.
3. Employment
Period.
The
term
of this Agreement shall be five (5) years, commencing on the Effective Date
(hereinafter referred to as the “Employment Period”). Thereafter, the Employment
Period may be extended for additional one year (1) periods, in each case
upon
the written agreement of the parties.
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4. Compensation.
For
services rendered pursuant to this Agreement, and for the covenants and
agreements of Employee set forth herein, Employee shall receive the following:
(i) a base salary at the rate of $25,000.00 per month (annual rate:
$300,000), which amount is subject to annual review and possible increase at
the
discretion of Chairman, with the advice and consent of the Compensation
Committee of the Board of Directors of Hawk (the “Compensation Committee”);
(ii) an opportunity to earn incentive compensation on annual basis, in such
amount and manner as may be determined by the Chairman, with the advice and
consent of the Compensation Committee, with respect to a particular year;
provided, however, that Employee must be actively employed by the Corporation
at
the end of a year in order to earn incentive compensation with respect to that
year; notwithstanding the foregoing, in the year of termination of Employee’s
employment, if the termination is under circumstances which entitle Employee
to
receive severance pay pursuant to the Control Agreement or Section 5(b) below,
Employee shall earn a pro rata portion (computed as the number of days worked
during the year divided by 365) of such incentive compensation for the year
in
which the termination occurs; (iii) four (4) weeks of vacation per year;
provided, however, that unused vacation may not be carried over to a subsequent
year; (iv) the right to participate in the standard benefits which Employer
provides to all of its employees; (v) the right to participate in the Hawk
Corporation 1997 Stock Option Plan and the 2000
Long
Term Incentive Plan
(collectively, the “Plans”) in accordance with and subject to all of the terms
and conditions contained in the Plans, subject to the execution of such
documents as may be required by the Committee appointed pursuant to the Plans;
and (vi) such other benefits and/or perquisites as may be provided at the
discretion of the Chairman from time to time.
5. Severance.
(a) The
parties acknowledge and agree that (i) certain severance benefits may be
provided to Employee pursuant to provisions of the Control Agreement, and (ii)
Employee shall not be entitled to any of the “Severance Benefits” described in
this Paragraph 5 if he is entitled to any severance benefits pursuant to the
terms of the Control Agreement.
(b) Subject
to the terms of subparagraph (a) above, in the event of the termination of
Employee’s employment by Employer for a reason other than for “Cause”, Employer
will continue to pay to Employee the “Annual Salary” for a period of twenty four
(24) months following the date of termination, and will continue to provide
to
Employee and his family “Basic Medical Coverage” and “Executive Medical
Benefits” (as hereinafter defined) for a period of twenty four (24) months
following the date of termination. In addition, Employee shall be entitled
to
receive payment for any earned vacation which he had not used as of the date
of
termination. For purposes of this Agreement, the definition of “Annual Salary”
shall be identical to the definition of “Annual Salary” set forth in Section
1.1(e) of the Control Agreement, and the definition of “Cause” shall be
identical to the definition of “Cause” set forth in Section 1.1(k) of the
Control Agreement, and each of those definitions is incorporated herein to
the
same extent as if it had been fully rewritten in this Agreement. For purposes
hereof, “Basic Medical Coverage” shall mean the same group medical insurance
coverage as is provided to all salaried employees, and “Executive Medical
Benefits” shall mean the additional medical benefits that are provided (if any)
from time to time to high level executives only, in each case on the same basis
as such benefits had been provided immediately prior to the termination and
subject to the provisions of the applicable plans.
(c) The
continuation of Annual Salary, Basic Medical Coverage and Executive Medical
Benefits described in subparagraph (b) above (collectively, the “Severance
Benefits”) are intended by the parties to be in settlement of any and all claims
of Employee arising out of or related to Employee’s employment with Employer,
including, without limitation, the termination of such employment, any express
or implied employment agreement, this Agreement, or the breach thereof
(collectively, “Employment Claims”). In consideration of Employer providing the
Severance Benefits, upon his acceptance of any of the Severance Benefits, and
without further action by Employee, Employee will be deemed to have released
and
waived any and all Employment Claims against Employer, and will be deemed to
have covenanted not to xxx Employer in connection with any Employment Claim,
and
Employee hereby so releases, waives and covenants. If Employer so requests,
employee shall execute a General Waiver and Release of Claims form substantially
the same as the “Release” which is attached to the Control Agreement as Exhibit
A thereto, in which event Employer’s obligation to provide the Severance
Benefits shall be conditioned upon the execution and delivery by Employee of
such a release.
(d) In
further consideration for such release and waiver and covenant not to xxx,
it is
agreed that Employee shall not be required to mitigate damages, by seeking
other
employment or otherwise, and Employer shall not be entitled to set off against
amounts payable to Employee pursuant to this subparagraph any amounts earned
by
Employee from other employment during the balance of the Employment
Period.
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(e) Employer’s
obligation to provide the Severance Benefits shall also be subject to, and
conditioned upon, Employee’s waiver of any other cash severance payment or other
benefits provided Employer or its affiliates pursuant to any other severance
agreement with Employee. No amount shall be payable under this Agreement to,
or
on behalf of, Employee unless and until the Employee has executed and delivered
such a waiver, in a form to be presented by Employer.
6. Death
of Employee.
If
Employee should die during the Employment Period, Employer (i) shall continue
to
pay compensation to Employee’s wife (or if at the time of Employee’s decease
Employee has no wife, then to his beneficiaries) for a period of one year,
at
the rate of compensation earned by Employee immediately prior to his death,
and
(ii) shall continue to provide the Basic Medical Coverage and Executive Medical
Benefits (as defined in paragraph 5(b) above) to Employee’s family for a period
of one year. Employer shall have no further duties or obligations to Employee
pursuant to this Agreement.
7. Disability
of Employee.
(a) In
the
event that Employee shall become mentally or physically disabled (as hereinafter
defined) during the Employment Period, Employer shall continue to pay
compensation to Employee, at the rate of compensation earned by Employee
immediately prior to his disability, for a period of one year after the onset
of
such disability. If, at the end of such period, Employee shall continue to
be so
disabled Employer may elect, upon ten days prior written notice, to discontinue
payments of compensation, and to terminate this Agreement, and Employer shall
have no further duties or obligations hereunder.
(b) For
purposes of this paragraph 7, Employee shall become “mentally or physically
disabled” if he is unable to perform the essential functions of his position,
with or without reasonable accommodation. In the event that Employee believes
that he would be able to perform the essential functions of his position with
a
reasonable accommodation, the parties shall engage in an interactive process
concerning such possible accommodation, in accordance with applicable law.
If
Employee submits information from one or more physicians in support of that
position, Employee hereby agrees to submit to examinations from one or more
physicians selected by Employer, so long as the physicians selected by Employer
are paid by Employer.
(c) The
date
on which the disability will be deemed to have occurred shall be the day after
Employee last performed the services for Employer which are required of him
pursuant to this Agreement, which performance of services was discontinued
because of the mental or physical disability described herein.
8. Restrictive
Covenants.
The
provisions of the restrictive covenants contained in Exhibit B to the Control
Agreement (hereinafter, the “Restrictive Covenants”) are incorporated herein to
the same extent as if they had been fully rewritten in this Agreement; except
that, for purposes of this Agreement only, certain of the Restrictive Covenants
shall be modified to provide as follows:
(a) The
definition of the “Restricted Period” which is set forth in the first sentence
of Section 3 of the Restrictive Covenants is hereby modified by changing the
phrase “one (1) year following the termination of such employment” to read “two
(2) years following the termination of such employment”.
(b) The
initial phrase of Section 6 of the Restrictive Covenants is hereby modified
by
changing the phrase “During
and for a period of two (2) years after the expiration of the Restricted Period”
to
read
“During the Restricted Period”.
The
Restrictive Covenants, as modified in this paragraph, shall survive the
termination of this Agreement, however caused.
9. Disclosure.
Employer
may notify anyone employing Employee or evidencing an intention to employ
Employee as to the existence and provisions of this Agreement.
10. Incorporation
by Reference from Control Agreement.
Whenever
the text of this Agreement contains language to indicate, in essence, that
a
portion of the Control Agreement is incorporated herein to the same extent
as if
it had been fully rewritten in this Agreement (or words of similar meaning),
and
the text so incorporated herein includes the term “Executive” or the
“Corporation”, such terms shall have the following meanings in this Agreement:
(i) “Executive” shall mean the Employee, and (ii) the Corporation shall mean
Hawk, the Employer, each of their subsidiary companies, each of the constituent
entities of any of the foregoing, individually and collectively, and any
successor of any of the foregoing (as described in Article V of the Control
Agreement).
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11. Governing
Law and Jurisdiction.
The
parties intend that the validity, performance and enforcement of this Agreement
shall be governed by the laws of the State of Ohio. In the event of any claim
arising out of or related to this Agreement, or the breach thereof, the parties
intend to and hereby confer jurisdiction to enforce the terms of this Agreement
upon the courts of any jurisdiction within the State of Ohio, and hereby
waive
any objections to venue in said courts.
12. Binding
Effect.
This
Agreement shall inure to the benefit of and be binding upon the parties hereto,
their heirs, representatives and successors.
13. 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.
14. Notices.
All
notices, requests, demands or other communications hereunder shall be sent
by
registered or certified mail to the parties at the addresses set forth on the
first page of this Agreement, or to such other address as a party may designate
by notice given pursuant to this paragraph.
15. Effect
of Captions.
The
captions in this Agreement are included for convenience only and shall not
in
any way effect the interpretation or construction of any provision
hereof.
16. Remedies
Cumulative; No Waiver.
All
remedies specified herein or otherwise available shall be cumulative and in
addition to any and every other remedy provided hereunder or now or hereafter
available. No waiver or failure (intentional or unintentional) to act with
respect to any breach or default hereunder shall be deemed to be a waiver with
respect to any subsequent breach or default, whether of a similar or different
nature.
17. Governing
Law; Jurisdiction: Limitations on Filing Actions.
This
Agreement shall be governed by and construed in accordance with the substantive
law of the State of Ohio. The parties intend to and hereby do confer
jurisdiction upon the courts of any jurisdiction within the State of Ohio to
determine any dispute arising out of or related to this Agreement, including
the
enforcement and the breach hereof. The parties agree that any claim arising
out
of or related to this Agreement, or the breach hereof, must be filed within
six
(6) months after the date of the alleged breach, and in any event within six
months after the date of termination of Employee’s employment, that any claim
which is not filed within such six month period is waived, and that any statute
of limitations to the contrary is hereby waived.
18. Acknowledgment.
Employee
acknowledges that: (i) he has carefully read all of the terms of this
Agreement, and that such terms have been fully explained to him; (ii) he
understands the consequences of each and every term of this Agreement;
(iii) he had other employment opportunities at the time he entered into
this Agreement; (iv) 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 (v) 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.
19. Entire
Agreement.
This
Agreement embodies the entire agreement and understanding between Employer
and
Employee and supersedes all prior agreements and understandings relating to
the
subject matter hereof.
IN
WITNESS WHEREOF,
the
undersigned have hereunto set their hands on the date first hereinabove
mentioned.
XXXXXXX
PRODUCTS GROUP, INC.
(“Employer”)
By:/s/
Xxxxxx X. Xxxxxxxx
Its:
Chairman
and Chief Executive Officer
/s/
B.
Xxxxxxxxxxx XxXxxxxx
B.
Xxxxxxxxxxx XxXxxxxx
(“Employee”)
52
EXHIBIT
A
THE
CONTROL AGREEMENT
See
attached document.
53
EXHIBIT
B
JOB
DESCRIPTION
Title: President
of U.S. and International Xxxxxxx Products Group (“WPG”)
Company: Xxxxxxx
Products Group includes two plants in Ohio (Medina, Akron), one in Tulsa,
Oklahoma, plants in China, Italy and Canada. Products of WPG are used in brakes,
clutches, and transmissions for vehicles ranging from jets and heavy trucks
to
construction vehicles and motorcycles.
Reporting
Relationship: Reports
directly to the Chairman of the Board & CEO/President of Hawk
Corporation
Education: Minimum
of a Bachelor’s Degree in Business, Economics or Marketing. A Master’s Degree in
Business or Economics is preferred.
Work
Experience: Minimum
of 15 years of progressive business and administrative experience with a highly
engineered product manufacturer supplying large OEM’s or its equivalent as
determined by the Chairman. Experience such as President, General Manager or
Team Leader for a multi-facility location in the U.S. or international company.
Knowledge of diverse manufacturing processes is essential.
Specific
Duties: Serve
as
the President of Xxxxxxx Products Group with P&L responsibility
for:
| · |
Directing
long-range and short-range planning with respect to business strategy
and
its implementation.
|
| · |
Managing
the functional areas of Xxxxxxx Products Group as organized, currently
including sales, operations, accounting, human resources and
R&D/Engineering to achieve targeted operating profitability
growth.
|
| · |
Reporting
to and consulting with the Chairman of Hawk Corporation, keeping
him
informed of business operations, both formally and
informally.
|
| · |
Developing
and maintaining indirect and direct customer
contacts.
|
| · |
Managing
the balance sheet and asset usage of the
business.
|
54
