EXHIBIT 10.1
SECOND AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
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 RONALD E. WEINBERG
(“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 locatio
