Exhibit 10.1
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED
EMPLOYMENT AGREEMENT (the “Agreement”) is made and
entered into as of this 21 st day of August, 2009, by
and among WELLMAN PRODUCTS GROUP, INC., an Ohio corporation
which maintains a place of business at 6180 Cochran Road, Solon,
Ohio 44139 (hereinafter referred to as “Wellman”),
HAWK CORPORATION , a Delaware corporation which maintains a
place of business at 200 Public Square, Suite 1500, Cleveland
Ohio 44114 (hereinafter referred to as “Hawk”), and
B. CHRISTOPHER DISANTIS , an individual who resides at 8059
Long Forest Drive, Brecksville, Ohio 44141 (hereinafter referred to
as “Employee”).
R E C I T A L S
:
A. Wellman and Employee
are parties to an Employment Agreement dated as of August 14,
2006 (the “Original Agreement”).
B. Wellman, Hawk and
Employee are parties to a certain Amendment to Agreements dated as
of November 10, 2006 (the “OA Amendment
No. 1”) which, among other things, amended the Original
Agreement.
C. Wellman and Employee
amended the Original Agreement and the OA Amendment No. 1 in a
Second Amendment to Employment Agreement dated December 30,
2008 (the “OA Amendment No. 2” and together with
the Original Agreement and the OA Amendment No. 1, the
“Amended Original Agreement”).
D. Hawk and Employee are
also parties to a Change in Control Agreement dated August 14,
2006, as amended by First Amendment to Change in Control dated
December 30, 2008 (hereinafter, the “Control
Agreement”).
E. The parties now
desire to modify and restate the Amended Original Agreement in the
manner set forth in this Agreement.
ACCORDINGLY , in consideration
of the promises hereinafter set forth in this Agreement, the
parties agree as follows:
1. Effective Date
. This Agreement shall be effective on the first date after the
execution by the parties of this Agreement (the “Effective
Date”).
2. Position, Duties and
Responsibilities . Hawk hereby employs Employee, and
Employee agrees to be employed by Hawk, as its President and Chief
Operating Officer, or to such other senior management position as
the parties may define by mutual agreement. In addition, Hawk
hereby employs Employee, and Employee agrees to be employed, in
senior management positions at those direct and indirect
subsidiaries and affiliates of Hawk as Hawk may designate from time
to time. Hawk and the direct and indirect subsidiaries and
affiliates of Hawk for which Employee is designated to provide
services (including but not limited to Wellman) are referred to
collectively hereinafter as the “Employer.” During the
“Employment Period” (as hereinafter defined), the
Chairman of the Board of Directors of Hawk (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. Employee shall report to
the Chairman, and only to the Chairman. Employee shall devote all
of his business efforts to the business of Employer; provided,
however, that Employee may serve on such boards and engage in such
civic activities as may be approved by the Chairman, and so long as
such service and activities do not interfere with Employee’s
performance of his duties and responsibilities to 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 (1) year periods, in each
case upon the written agreement of the parties.
4. Compensation
.
(a) 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 $32,083.33 per month (annual
rate: $385,000) payable in accordance with the normal payroll
procedures of Employer, 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 input from Employee and with the advice and consent
of the Compensation Committee, with respect to a particular year,
in a target amount which shall be consistent with past practice;
provided, however, that Employee must be actively employed by
Employer 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 due to death, disability or under
circumstances which entitle Employee to receive severance pay
pursuant to the Control Agreement or Paragraph 6(b) below, Employee
shall earn pro rata incentive compensation computed as follows: the
amount of annual incentive compensation earned by Employee (if any)
during the calendar year immediately prior to the year of
termination, multiplied by a fraction the numerator of which is the
number of days worked by Employee during the calendar year in which
the termination occurs and the denominator of which is 365;
(iii) five (5) 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, and in such additional benefits, if any, as Employer
provides to its senior management; (v) the right to
participate in the 1997 Stock Option Plan, the Amended and Restated
2000 Long Term Incentive Plan and the Deferred Compensation Plan
effective June 1, 2007 (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; (vi) an automobile allowance at the rate of $600 per
month (annual rate: $7,200), (vii) a special insurance benefit
package consisting of split dollar life insurance in the face
amount of $2,000,000 (conditioned upon the execution of a mutually
satisfactory agreement with respect thereto), term life insurance
in the face amount of $3,000,000, and supplemental disability
insurance (in addition to the other disability insurance provided
to all employees of Employer providing an additional benefit of
$10,000 per month), and (viii) such other benefits and/or
perquisites as may be provided at the discretion of the Chairman
from time to time.
(b) To ensure compliance with
Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), and the Treasury Regulations and other
interpretive guidance issued thereunder, each as in effect from
time to time (collectively, “Section 409A”), no
payment under Paragraph 4(a)(i) or 4(a)(ii) above shall be
made later than March 15 of the calendar year following the
calendar year in which the amount was earned and accrued.
5. Termination .
Employer may terminate Employee’s employment under this
Agreement at any time for “Cause” (as defined in
Section 1.1(k) of the Control Agreement, which definition is
incorporated herein as though fully rewritten). Upon a termination
for “Cause”, 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 salary.
6. 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 6
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 (i) will continue to pay to
Employee the “Annual Salary” for a period of twenty
four (24) months following the date of termination;
(ii) 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,
(iii) will cause each “Stock Award” of Employee
that is outstanding immediately before the date of termination
and
not yet exercised or forfeited (as the case may be) to
automatically accelerate and become fully vested, exercisable or
nonforfeitable upon the date of the termination, as though all
requisite time had passed, or all requisite performance goals had
been attained or satisfied, to fully vest the Stock Award or cause
it to become fully vested, exercisable or nonforfeitable, and
(iv) will cause any “Discretionary Contribution”
which had been credited to Employee’s account under the Hawk
Corporation Deferred Compensation Plan dated June 1, 2007 but
which had not yet vested as of the date of the termination to
automatically become fully vested and nonforfeitable on the date of
termination, as though all requisite time had passed to fully vest
such Discretionary Contribution. In addition, Employee shall be
entitled to receive payment for any earned vacation which he had
not used as of the date of termination (the “Vacation
Severance Amount”). 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, the definition of
“Cause” shall be identical to the definition of
“Cause” set forth in Section 1.1(k) of the Control
Agreement, the definition of “Stock Award” shall be
identical to the definition of “Stock Award” set forth
in Section 1.1(cc) of the Control Agreement, and the
definition of “Discretionary Contribution” shall be
identical to the definition of “Discretionary
Contribution” set forth in Section 2.1(q) of the Hawk
Corporation Deferred Compensation Plan dated June 1, 2007, 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, the
vesting of certain Stock Awards and Discretionary Contributions,
and the payment of the Vacation Severance Amount as 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 Hawk 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 sue Employer in connection with any
Employment Claim, and Employee hereby so releases, waives and
covenants. Employee shall execute a General Waiver and Release of
Claims substantially in the form of Exhibit A hereto
(the “Release”), and Employer’s obligation to
provide the Severance Benefits shall be conditioned upon the
execution and delivery by Employee of the Release.
(d) In further consideration
for such release and waiver and covenant not to sue, 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.
(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
substantially in the form of Exhibit B hereto (the
“Severance Waiver”). No amount shall be payable under
this Agreement to, or on behalf of, Employee unless and until the
Employee has executed and delivered the Severance Waiver.
(f) To ensure compliance with
Section 409A, Employer shall pay:
(i) the amount payable under
Paragraph 6(b)(i) in accordance with the normal payroll
procedures of Employer in effect as of the Effective Date;
(ii) the Vacation Severance
Amount in a lump sum payment by no later than March 15 of the
calendar year following the year of the termination of
Employee’s employment with Employer under Paragraph 6(b)
above; and
(iii) to the extent that any
continued payments or reimbursements of Basic Medical Coverage and
Executive Medical Benefits under Paragraph 6(b)(ii) 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.
7. Death of Employee
.
(a) If Employee should die
during the Employment Period, Employer (i) shall pay Annual
Salary 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 Annual
Salary earned by Employee immediately prior to his death,
(ii) shall continue to provide the Basic Medical Coverage and
Executive Medical Benefits (as defined in paragraph 6(b) above) to
Employee’s family for a period of one year, and
(iii) shall cause the Stock Awards to vest, in the same manner
as is provided in paragraph 6(b)(iii) above. Employer shall have no
further duties or obligations to Employee pursuant to this
Agreement.
(b) To ensure compliance with
Section 409A, Employer shall pay (i) all amounts payable
under Paragraph 7(a)(i) in accordance with the normal payroll
procedures of Employer in effect as of the Effective Date beginning
with the first pay period (determined in accordance with
Employer’s normal payroll procedures) following the date of
Employee’s death and (ii) to the extent that any
continued payments or reimbursements of Basic Medical Coverage and
Executive Medical Benefits under Paragraph 7(a)(ii) above are
deemed to constitute taxable compensation, any such payment due to
Employee’s family shall be paid on or before the last day of
the calendar 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 the right of Employee’s family to such payments or
reimbursement shall not be subject to liquidation or exchange for
any other benefit.
8. Disability of
Employee .
(a) In the event that Employee
shall become mentally or physically disabled (as hereinafter
defined) during the Employment Period, Employer shall pay Annual
Salary to Employee, at the rate of Annual Salary 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 to
terminate this Agreement, and Employer shall have no further duties
or obligations pursuant to this Agreement except for the following:
Employer (i) shall pay Annual Salary to Employee for a period
of one year, at the rate of Annual Salary earned by Employee
immediately prior to his disability, (ii) shall continue to
provide the Basic Medical Coverage a
