exhibit10_31.htm


    Exhibit
10.31

    SECOND
AMENDMENT

    TO
EMPLOYMENT AGREEMENT

    


    THIS SECOND AMENDMENT TO EMPLOYMENT
AGREEMENT (the “Amendment”) is made and entered into as of this 30th day of
December 2008, by and between WELLMAN PRODUCTS GROUP, INC.,
an Ohio corporation which maintains a place of business at 200 Public
Square, Suite 1500, Cleveland Ohio 44114 (hereinafter referred to as
“Employer”), and B. CHRISTOPHER
DISANTIS, an individual who resides at 8059 Long Forest Drive,
Brecksville, Ohio 44141 (hereinafter referred to as “Employee”).

    


    RECITALS:

    


    
      	
              A.  

            	
              Employer
      and Employee are parties to an Employment Agreement dated as of August 14,
      2006 (the “Original Agreement”).

            


    

    


    
      	
              B.  

            	
              Employer,
      Employee and Hawk Corporation, a Delaware corporation which maintains a
      place of business at 200 Public Square, Suite 1500, Cleveland Ohio 44114,
      amended the Original Agreement in Amendment to Agreements dated as of
      November 10, 2006 (the “OA Amendment No. 1,” and together with the
      Original Agreement, the “Amended Original
  Agreement”).

            


    

    


    
      	
              C.  

            	
              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, Employer and Employee
      desire to further amend the Amended Original Agreement as set forth in
      this Amendment.

            


    

    


    ACCORDINGLY, in consideration
of the promises hereinafter set forth in this Amendment, the parties agree as
follows:

    


    1. Changes
to Section 4 of the Amended Original Agreement. Employer and Employee hereby
agree that Section 4 of the Amended Original Agreement is hereby deleted from
the Amended Original Agreement in its entirety and is replaced by the following
new Section 4:

    


    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 $25,000.00 per month
(annual rate: $300,000) 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 Employer (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 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 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.

    


    (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 Section 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.

    


    2. Changes
to Section 5 of the Amended Original Agreement.  Employer and
Employee hereby agree that Section 5 of the Amended Original Agreement is hereby
amended as follows:

    


    
      	
              (a)  

            	
              The
      first two sentences of Section 5(b) are deleted from the Amended Original
      Agreement in their entirety and are replaced by the
    following:

            


    

    


    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 and (iii) will cause the Incentive
Stock Options which have been granted to Employee and are not exercisable, to
become immediately exercisable, effective on 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 (the “Vacation Severance Amount”).

     

    
      
        
        

      

      
        100

        
           

        

      

      
        
        

      

      
        


        
          	
                  (b)  

                	
                  The
      first sentence of Section 5(c) is deleted from the Amended Original
      Agreement in its entirety and is replaced by the
  following:

                


        

        


        The
continuation of Annual Salary, Basic Medical Coverage and Executive Medical
Benefits, the vesting of certain stock options, 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”).

         

      

    

    
      	
              (c)  

            	
              The
      third sentence of Section 5(c) is deleted from the Amended Original
      Agreement in its entirety and is replaced by the
  following:

            


    

    


    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
(the “Release”), and Employer’s obligation to provide the Severance Benefits
shall be conditioned upon the execution and delivery by Employee of such a
release.

    


    
      	
              (d)  

            	
              Section
      5(e) of the Amended Original Agreement is deleted from the Amended
      Original Agreement in its entirety and is replaced by the following new
      Section 5(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 (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 such a Severance Waiver, in a form to be
presented by Employer.

    


    
      	
              (e)  

            	
              The
      following is added in its entirety as Section 5(f) of the
      Agreement:

            


    

    


    (f)           Section
409A.  To ensure compliance with Section 409A, Employer shall
pay:

    


    (i) the
amount payable under Section 5(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 the Company under Section 5(b) above; and

    


    (iii) to the
extent that any continued payments or reimbursements of Basic Medical Coverage
and Executive Medical Benefits under Section 5(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.

    


    3. Changes
to Section 6 of the Amended Original Agreement.  Employer and
Employee hereby agree that Section 6 of the Amended Original Agreement is hereby
amended as follows:

    


    
      	
              (a)  

            	
              Section
      6 of the Amended Original Agreement is redesignated in its entirety as
      Section 6(a).

            


    

    


    
      	
              (b)  

            	
              The
      following is added in its entirety as Section 6(b) of the Amended Original
      Agreement:

            


    

    


    To ensure
compliance with Section 409A, Employer shall pay (i) all amounts payable under
Section 6(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
Section 6(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.

    


    


     

    
      
        
        

      

      
        101

        
        

      

      
        
        

      

      
        4. Changes
to Section 7 of the Amended Original Agreement.  Employer and
Employee hereby agree that the following is hereby added as the second sentence
of Section 7(a) of the Amended Original Agreement:

        


        To ensure
compliance with Section 409A, Employer shall pay all amounts payable under this
Section 7(a) 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 on
which the disability is deemed to have occurred (as determined under Section
7(c) below).

        


        5. Addition
of Section 20 to the Amended Original Agreement.  Employer and
Employee hereby agree that the following is hereby added in its entirety as
Section 20 of the Amended Original Agreement:

        


        20.           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 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 Treasury Regulation Section
      1.409A-1(h)), to the extent that any payments or benefits under this
      Agreement are subject to Section 409A and the delayed payment or
      distribution of all or any portion of such amounts to which Employee is
      entitled under this Agreement 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 20(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 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
herein.

            


    

    


    
      	
              (c)  

            	
              Notwithstanding
      anything to the contrary in this Agreement, Employer shall be under no
      obligation to provide the Severance Benefits described in Section 5(b) of
      this Agreement unless Employee shall have executed the Release and the
      Severance Waiver (and the applicable revocation period shall have expired)
      within fifty-five (55) days following the date of Employee’s termination
      of employment.  The payment of the amounts payable under Section
      5(b)(i) shall begin no later than sixty (60) days following the date of
      termination of employment or death, as
  applicable.

            


    

    


    
      	
              (d)  

            	
              For purposes of Section 409A (including, without
      limitation, for purposes of Treasury Regulation Section
      1.409A-2(b)(2)(iii)), Employee’s right to
      receive the installment payments described in Sections 5(b)(i)
      and 7(a) 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.

            


    

    


    
      	
              (e)  

            	
              Notwithstanding
      anything herein to the contrary, to the extent any of the amounts payable under Sections 5(b) and 7(a)
      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 Treasury Regulation Section 409A-1(h) (and any
      successor provision thereto).

            


    

     

    
      	
               
      

            	
              (f)

            	
              To
      the maximum extent permitted by applicable law, the amounts payable to
      Employee under this Agreement shall be made in reliance upon Treasury
      Regulation Section 1.409A-1(b)(9) (with respect to separation pay plans)
      or Treasury Regulation Section 1.409A-1(b)(4) (with respect to short-term
      deferrals).

            


    

    


    
      	
              (g)  

            	
              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.

            


    

    


    6. Full
Force and Effect.  Except to the
extent specifically modified in this Amendment, each and every provision of the
Amended Original Agreement remains in full force and effect.

    


    7. Miscellaneous.  The parties
intend that the validity, performance and enforcement of this Amendment shall be
governed by the laws of the State of Ohio.  In the event of any claim
arising out of or related to this Amendment, or the breach thereof, the parties
intend to and hereby confer jurisdiction to enforce the terms of this Amendment
upon the courts of any jurisdiction within the State of Ohio, and hereby waive
any objections to venue in said courts.  In the event of any conflict
between the original terms of the Amended Original Agreement and this Amendment,
the terms of this Amendment shall prevail.

     

     

    <Signature
follows>

    
      
        
        

      

      
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    IN WITNESS WHEREOF, the
undersigned have hereunto set their hands on the date first hereinabove
mentioned.

    


    WELLMAN
PRODUCTS GROUP, INC.

    (“Employer”)

    


    


    By:/s/ Byron S.
Krantz

    Its:
Secretary

    


    


    


    /s/ B. Christopher
DiSantis

    B. Christopher DiSantis
(“Employee”)

    


     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    
 

    
 

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