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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of this
1st day of November, 1996, by and between HAWK CORPORATION, a Delaware
corporation ("Employer"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("Employee").
1. EMPLOYMENT. Employer hereby employs Employee and Employee agrees to be
employed by Employer for a period commencing on November 1, 1996 and terminating
on December 31, 2004. 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:
(a) Salary: Salary at the annual rate of $395,000, payable not less
frequently than semi-monthly (as adjusted from time to time, "Base Wages").
(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 and
health and life insurance programs.
(c) Executive Bonus Plan: Employee shall receive a bonus for fiscal
year 1996, and for each year thereafter throughout the Employment Period, based
on the incentive compensation program in effect for the Employer and its
subsidiaries, Friction Products Co. and
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▇▇▇▇▇ Metal Stampings, Inc., consistent with their respective customary and
historical executive incentive compensation programs. Throughout the Employment
Period, Employee shall also be entitled to receive a bonus under the executive
incentive compensation program to be developed and implemented for each of
Employer's other subsidiaries, ▇▇▇▇▇▇, Inc. and ▇.▇. ▇▇▇▇▇▇▇, each of which
shall be based upon the creation of an executive bonus pool derived from all
earnings which exceed certain targeted amounts, which targeted amounts are to be
determined by each of the boards of directors of ▇▇▇▇▇▇, Inc. and ▇.▇. ▇▇▇▇▇▇▇
Corp. (or the compensation committees thereof), as the case may be, and which
executive bonus pool shall be 27.5% to 30% of the available bonus pool.
(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. Employee shall submit to Employer appropriate expense
reports that detail such expenses and includes copies of receipts where
appropriate.
(e) Automobile Expenses: Employee shall be entitled to receive a car
allowance in the amount of $950 per month, 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.
3. ADJUSTMENTS TO COMPENSATION.
(a) The Board of Directors of Employer ("Board"), or the Compensation
Committee thereof, will review Employee's Base Wages no less than annually at
which time it will determine increases to Employee's Base Wages.
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(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 the
Chairman of the Board, President and Chief Executive Officer of Employer. During
the Employment Period, Employee shall perform such duties and responsibilities
as are customarily assigned to the Chairman of the Board, President and Chief
Executive Officer, including overseeing the strategic development and
profitability of the business, and Employee shall be primarily responsible for
all day-to-day management and operational matters. Employee shall be required to
devote substantially all of his time and efforts to the business and affairs of
Employer, provided that Employee may (i) serve on the boards of directors of
other companies and on the boards of trustees of charitable organizations, and
(ii) devote a portion of his time and efforts to the making and management of
personal investments, in each case for so long as Employee continues to
substantially perform his duties and functions hereunder 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 parent, subsidiaries or affiliated entities and in one or more
executive offices of any of Employer's parent, subsidiaries or affiliated
entities.
5. LIMITATIONS ON AUTHORITY.
(a) Notwithstanding anything else herein contained, Employee shall
adhere to the written limitations on authority as issued from time to time by
the Board. Nothing contained herein shall be deemed to restrict the power of the
Board to limit the authority of Employee. Any violation
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of the terms of this Section 5(a) shall be deemed to be a material violation of
a provision of this Employment Agreement.
(b) Notwithstanding anything else herein contained, the parties agree
that any of the matters set forth below shall be determined by Employee and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇▇") jointly:
(i) The (A) hiring and termination of all key management
employees; (B) evaluations of key management employees together with
salary reviews; and (C) increases in compensation of key management
employees;
(ii) The entering into and/or execution of contracts, agreements,
joint ventures and other commitments which would have a material
effect on the business, financial condition and affairs, properties,
assets, obligations, and operation of Employer and its subsidiaries on
either an individual or a combined basis;
(iii) The formulation of the annual budget and business plan of
Employer and its subsidiaries on both an individual and a combined
basis;
(iv) The formulation of the business goals of Employer and its
subsidiaries on both an individual and a combined basis;
(v) The merger, consolidation, combination, liquidation, or sale
of all or substantially all the assets or stock of Employer and its
subsidiaries on either an individual or a combined basis and the
acquisition or purchase of all or substantially all the assets or
stock of another company or entity;
(vi) The purchase of or investment in or acquisition of any
asset, product or business other than in the ordinary course of
business;
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(vii) The loan of any funds of Employer or any of its
subsidiaries other than in the ordinary course of business;
(viii) The purchase or sale by Employer or any of its
subsidiaries of any asset from or to any person, firm or corporation
related to or controlled by either Employee or ▇▇▇▇▇▇▇▇;
(ix) All contributions and payments by Employer or any of its
subsidiaries to bonus, retirement or similar plans; and
(x) Any other matter which would have a material effect on the
business, operations, financial condition or affairs, assets or
properties of Employer and its subsidiaries on either an individual or
a combined basis.
6. DEATH OF EMPLOYEE. In the event Employee should die during the
Employment Period and:
(a) at the time of Employee's death, Employee has a wife, then: (i)
payments shall be made pursuant to and in accordance with that certain Wage
Continuation Agreement between Employer and Employee dated June 30, 1995, as
amended or restated from time to time (the "Wage Continuation Agreement"), which
is herein incorporated by reference; (ii) 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 (iii) 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; 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
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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
(b) at the time of Employee's death, Employee has no wife, then
Employer shall: (i) for a period of two (2) years, continue to pay Employee's
Base Wages at the same monthly rate earned by Employee immediately prior to his
death to Employee's beneficiaries or estate; and (ii) 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.
7. 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 for the remainder of the
Employment Period after the onset of such 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 prorated for the portion of the year ending upon the
date of disability. If Employee shall die after Employee becomes mentally or
physically disabled, then the provisions of Section 6 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
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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."
8. TERMINATION.
(a) Employer may terminate Employee's employment hereunder at any time
for cause, which shall be deemed to include the following: (i) Employee's
engaging in fraud, misappropriation of funds, embezzlement or like conduct
committed against Employer; or (ii) Employee's conviction of a felony.
(b) Employee's employment hereunder may be terminated by Employer in
the event of Employee's voluntarily leaving the employ of Employer.
(c) If Employer terminates the employment of Employee 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. If Employer terminates
Employee's employment 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
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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. If
Employer terminates Employee's employment 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.
(d) 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, 24 and 25 hereof shall survive
such termination and continue in full force and effect.
9. NON-COMPETITION. Employee recognizes and acknowledges that the business
of Employer is the manufacture, marketing and development of friction materials,
metal stampings and powder metals. Employee agrees that within the United
States, Canada and Italy and any other location in which the 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;
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(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 (i) any current
employee of Employer or its subsidiaries or affiliates, or (ii) any employee who
has left the employment of or ceased working with Employer or its subsidiaries
or affiliates within one (1) year of the date of termination of such employee's
employment with Employer.
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.
10. CONFIDENTIAL INFORMATION. Employee recognizes and acknowledges that
confidential information, including, without limitation, information, knowledge
or data: (i) 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; (ii) of a technical nature such as, but not
limited to, methods, know-how, processes and research; (iii) pertaining to
future developments such as, but not limited to, research and development
projects and future marketing, advertising or promotion; and (iv) 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
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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 the Company 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 10.
11. PROPERTY OF EMPLOYER. Employee agrees to deliver promptly to the
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 the Employer which are in his
possession or under his control, and all copies thereof, (i) upon termination of
Employee's employment with Employer, or (ii) 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.
12. 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 9
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through 11 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.
13. 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.
14. 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.
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15. ASSIGNMENT. This Agreement is a personal services contract and it is
expressly agreed that 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).
16. 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.
17. 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.
18. BLUE-PENCILLING. 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.
19. 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
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exceeding 5% of the issued and outstanding capital stock of an entity with
annual revenues in excess of $20 million shall not constitute a breach of this
representation and warranty;
(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.
Excluded from the foregoing representations and warranties are (i) any and
all transactions related to ▇▇▇▇▇▇▇▇ Capital Corporation, (ii) any and all
transactions relating to the purchase and financing, as amended, of the assets
or stock, as the case may be, of ▇▇▇▇▇ Machine Co., ▇▇▇▇▇▇, Inc. and ▇.▇.
▇▇▇▇▇▇▇ Limited, Inc., (iii) any and all transactions relating to that certain
Shareholder Note, dated June 30, 1995 in favor of Employer, and (iv)
transactions disclosed to the Board done on terms at least as favorable to the
Company as those which it could otherwise have obtained from unrelated third
parties.
20. 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. Additionally, in the event that
Employer engages in or contemplates engagement in a transaction in which
Employee has a financial or personal interest, Employee shall, immediately upon
his learning of said engagement or contemplated engagement, disclose in writing
to the Board all material information relating to said interest.
21. 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
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understands the consequences of each and every term of this Agreement; (iii) he
has had sufficient time and an opportunity to consult with his own legal advisor
prior to signing this Agreement; (iv) he had other employment opportunities at
the time he entered into this Agreement; (v) 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 (vi) 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 the Employer reasonably
requires.
22. NOTICES. All notices, requests, demands or other communications
hereunder shall be sent by registered or certified mail to:
Employer: Board of Directors
Hawk Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.L.L.
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Employee: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Suite 29-2500
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
23. 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.
24. GOVERNING LAW. This Agreement shall be governed by, and construed and
enforced in accordance with the laws of the State of Ohio.
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25. 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, (i) shall be deemed in
every respect effective service of process upon him in any such suit, action or
proceeding, and (ii) 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.
26. 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.
27. AMENDMENT. This Agreement may be amended only in a writing executed by
both parties hereto.
28. ENTIRE AGREEMENT. This Agreement and the Wage Continuation Agreement
constitute the entire agreement between the parties and this Agreement
supersedes all prior and
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contemporaneous agreements, understandings, negotiations and discussions,
whether written or oral, of the parties hereto relating to the transactions
contemplated by this Agreement and the Wage Continuation Agreement. 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.
"EMPLOYER" "EMPLOYEE"
HAWK CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Vice-Chairman and Treasurer
Attested to:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Secretary
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