AMENDMENT NO. 2 TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit
10.22
AMENDMENT
NO. 2 TO AMENDED AND
RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 2 TO AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (the “Amendment”) is made and entered into
as of this 31st day of
December 2008, by and between HAWK CORPORATION, a Delaware
corporation (“Hawk”), FRICTION
PRODUCTS CO., an Ohio corporation (together with Hawk, “Employer”) and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(“Employee”).
RECITALS:
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A.
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Employer
and Employee are parties to the Amended and Restated Employment Agreement
entered into as of December 31, 2001 (the “Restated
Agreement”).
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B.
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Employer
and Employee amended the Restated Agreement under Amendment No. 1 to
Amended and Restated Employment Agreement dated as of March 3, 2004 (the
“First Amendment,” and together with the Restated Agreement, the “Original
Amended Agreement”).
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C.
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In
order to ensure compliance with Section 409A of the Internal Revenue Code
of 1986, as amended, and the U.S. Department of Treasury regulations and
other interpretive guidance issued thereunder, the parties desire to amend
the Original Amended Agreement as set forth in this Amendment (the
Original Amended Agreement as amended by this Amendment is referred to
herein as the “Amended Agreement”).
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ACCORDINGLY, in consideration
of the promises hereinafter set forth in this Amendment, the parties agree as
follows:
1. Changes
to Section 2 of the Original Amended Agreement. Employer and Employee hereby
agree that Section 2 of the Original Amended Agreement is hereby amended as
follows:
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(a)
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Section
2(a) of the Original Amended Agreement is hereby deleted from the Original
Amended Agreement in its entirety and is replaced in the Amended Agreement
by the following new Section 2(a):
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(a) Salary: Employee
shall receive a salary at the annual rate of $418,625, payable not less
frequently than semi-monthly in accordance with Employer’s normal payroll
procedures (as adjusted from time to time the “Base Wages”), reduced commencing
October 1, 2006, or such other date as defined benefit plan payments
commence, by any payments made to Employee under any non-contributory defined
benefit plan maintained by Employer (“Defined Benefit Payments”). 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.
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(b)
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The
following is added in its entirety as the last sentence of Section 2(c)
titled “Executive Bonus Plan” of the Original Amended
Agreement:
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To ensure
compliance with Section 409A, any 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.
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(c)
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Section
2(c) of the Original Amended Agreement titled “Business Expenses” is
redesignated in its entirety as Section 2(d) of the Amended
Agreement.
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(d)
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Section
2(d) of the Original Amended Agreement titled “Automobile Expenses” is
redesignated in its entirety as Section 2(e) of the Amended
Agreement.
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(e)
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Section
2(e) of the Original Amended Agreement titled “Insurance” is redesignated
in its entirety as Section 2(f) of the Amended
Agreement.
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(f)
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The
following is added in its entirety as the last sentence of Section 2(d) of
the Amended Agreement:
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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.
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(g)
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The
following is added in its entirety as the last sentence of Section 2(e) of
the Amended Agreement:
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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.
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2. Changes
to Section 6 of the Original Amended Agreement. Employer and Employee hereby
agree that Section 6 of the Original Amended Agreement is hereby deleted from
the Original Amended Agreement in its entirety and is replaced in the Amended
Agreement by the following new Section 6 in its entirety:
6. DEATH OF
EMPLOYEE.
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(a)
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In
the event Employee should die during the Employment Period
and:
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(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 6(a)(i)(A) or 6(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 6(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 6(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.
3. Changes
to Section 7 of the Original Amended Agreement. Employer and
Employee hereby agree that Section 7 of the Original Amended Agreement is hereby
amended as follows:
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(a)
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Section
7(a) of the Original Amended Agreement is hereby deleted from the Original
Amended Agreement in its entirety and is replaced in the Amended Agreement
by the following new Section 7(a) in its
entirety:
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(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 after the onset of such disability 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. After the year of the onset of the disability and
until the end of the Employment Period (which for purposes of this sentence
shall be June 30, 2007), 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 (exclusive of any reduction for
Defined Benefit Payments) 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 and any Defined Benefit Payments made to Employee or
his spouse. If Employee shall die prior to June 30, 2007, but after
Employee becomes mentally or physically disabled, then the provisions of
Section 6 hereof shall apply.
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(b)
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The
following is added in its entirety as Section 7(c) of the Amended
Agreement:
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(c) To
ensure compliance with Section 409A, Employer shall pay:
(i) all
Disability Wage Continuation Payments payable under Section 7(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 7(a)(ii) on March 15
of the calendar year following the year in which each amount is earned and
accrued.
4. Changes
to Section 8 of the Original Amended Agreement. Employer and
Employee hereby agree that Section 8 of the Original Amended Agreement is hereby
amended as follows:
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(a)
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Section
8(c) of the Original Amended Agreement is hereby deleted from the Original
Amended Agreement in its entirety and is replaced in the Amended Agreement
by the following new Section 8(c) in its
entirety:
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(c) If
Employer terminates the employment of Employee:
(i) for
cause pursuant to Section 8(a), 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) pursuant
to Section 8(b) hereof, 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 8(a) hereof, 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 for the remainder of the Employment Period and
any bonuses he would have earned if still employed through the end of the
Employment Period, and shall be further obligated to continue to provide and/or
pay for the existing health care coverage to Employee for the remainder of the
Employment Period.
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(b)
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Section
8(d) of the Original Amended Agreement is hereby deleted from the Original
Amended Agreement in its entirety and is replaced in the Amended Agreement
by the following new Section 8(d) in its
entirety:
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(d) To
ensure compliance with Section 409A, Employer shall pay:
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(i) all
amounts payable under Sections 8(c)(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 8(c)(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;
(ii) all
amounts payable under Section 8(c)(iii): (A) constituting
Base Wages, semi-monthly in accordance with Employer’s payroll procedures as in
effect on the date of this Agreement beginning with the first pay period
(determined in accordance with Employer’s payroll procedures) following the date
of Employee’s termination, and (B) constituting bonus payments, on
March 15 of each calendar year following the calendar year to which each
amount relates; and
(iii) to
the extent that any continued payments or reimbursements of health care coverage
under Section 8(c)(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.
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(c)
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The
following is added in its entirety as Section 8(e) of the Amended
Agreement:
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In the
event that Employee’s employment with Employer is terminated by Employer or by
Employee, the parties agree that the provisions of Sections 8(c), 9, 10,
11, 12, 13, 14, 17, 18, 21, 25 and 26 hereof shall survive such termination and
continue in full force and effect.
5. Changes
to Section 22 of the Original Amended Agreement. Employer and
Employee hereby agree that Section 22 of the Original Amended Agreement is
hereby amended as follows:
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(a)
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Section
22 of the Original Amended Agreement is redesignated in its entirety as
Section 23 of the Amended
Agreement.
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(b)
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The
following is added in its entirety as Section 22 of the Amended
Agreement:
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22. 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 19(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 6(a)(ii)(A), 7(a), and 8(c)(iii)
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 6(a)(ii)(A), 7(a), and 8(c)(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).
(f) As
provided in Internal Revenue Notice 2007-86, notwithstanding any other
provision of this Agreement, with respect to an election or amendment to change
a time and form of payment under this Agreement that is subject to
Section 409A made on or after January 1, 2008 and on or before
December 31, 2008, the election or amendment may apply only to amounts that
would not otherwise be payable in 2008 and may not cause an amount to be paid in
2008 that would not otherwise be payable in 2008.
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6. Change to
Section 23 of the Original Amended Agreement. Employer and
Employee hereby agree that Section 23 of the Original Amended Agreement is
hereby redesignated in its entirety as Section 24 of the Amended
Agreement.
7. Change to
Section 24 of the Original Amended Agreement. Employer and
Employee hereby agree that Section 24 of the Original Amended Agreement is
hereby redesignated in its entirety as Section 25 of the Amended
Agreement.
8. Change to
Section 25 of the Original Amended Agreement. Employer and
Employee hereby agree that Section 25 of the Original Amended Agreement is
hereby redesignated in its entirety as Section 26 of the Amended
Agreement.
9. Change to
Section 26 of the Original Amended Agreement. Employer and
Employee hereby agree that Section 26 of the Original Amended Agreement is
hereby redesignated in its entirety as Section 27 of the Amended
Agreement.
10. Change to
Section 27 of the Original Amended Agreement. Employer and
Employee hereby agree that Section 27 of the Original Amended Agreement is
hereby redesignated in its entirety as Section 28 of the Amended
Agreement.
11. Change to
Section 28 of the Original Amended Agreement. Employer and
Employee hereby agree that Section 28 of the Original Amended Agreement is
hereby redesignated in its entirety as Section 29 of the Amended
Agreement.
12. Change to
Section 29 of the Original Amended Agreement. Employer and
Employee hereby agree that Section 29 of the Original Amended Agreement is
hereby redesignated in its entirety as Section 30 of the Amended
Agreement.
13. Full
Force and Effect. Except to the
extent specifically modified in this Amendment, each and every provision of the
Original Amended Agreement remains in full force and effect in the Amended
Agreement.
14. Miscellaneous. This Amendment
shall be governed by and construed in accordance with the substantive laws of
the State of Ohio. The parties intend to and do hereby confer
jurisdiction upon the courts of any jurisdiction within the State of Ohio to
determine any dispute arising out of or related to this Amendment, including the
enforcement and the breach hereof. This Amendment may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument. In the event of any conflict between the original terms
of the Original Amended Agreement and this Amendment, the terms of this
Amendment shall prevail.
IN WITNESS WHEREOF, the
undersigned have hereunto set their hands on the date first hereinabove
mentioned.
HAWK
CORPORATION
(“Employer”)
By: /s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Its:
Secretary
FRICTION
PRODUCTS CO.
By: /s/ ▇▇▇▇▇ ▇.
▇▇▇▇▇▇
Its:
Secretary
/s/ ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(“Employee”)
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