Document:

Exhibit 10.14

 

Exhibit 10.14

SIFCO INDUSTRIES, INC.

SEPARATION PAY AGREEMENT

     THIS AGREEMENT is made between SIFCO Industries, Inc. (the “Company”), and Frank A.
Cappello (the “Executive”), as of this 16th day of December, 2005 (the “Effective Date”).

     WHEREAS, the Company and the Executive have entered into two Change in Control Agreements, one
of which is dated September 28, 2000, and the other which is dated November 9, 2000; and

     WHEREAS, both the Board of Directors of the Company (the “Board”) and the Executive desire to
replace the Change in Control Agreement dated November 9, 2000, with a Separation Pay Agreement;
and

     WHEREAS, the Board has determined that it is appropriate to provide the Executive with
separation pay and certain welfare benefits in the event that the Executive’s employment with the
Company is terminated for reasons other than for Cause;

     NOW, THEREFORE, in consideration of the promises and agreements contained herein and other
good and valuable consideration, the sufficiency of which is hereby acknowledged, the Company and
the Executive hereby agree, as follows:

     1. Cancellation of the November 9, 2000 Agreement. As of the Effective Date, the Executive
and the Company agree that the Change in Control Agreement dated November 9, 2000, shall no longer
be in effect and that the Executive shall not be entitled to any benefits thereunder in the future.
Both parties agree, however, that the Change in Control Agreement dated September 28, 2000, shall
remain in effect.

     2. Definitions. Whenever used herein, the following terms shall have the meanings set forth
below:

          (a) The term “Beneficiary” shall mean the person or entity designated by the Executive (on
Exhibit B attached hereto) to receive any benefits to which he becomes eligible pursuant to
Paragraph 3 hereunder prior to his death. The Executive may change his designation of Beneficiary
by filing a revised Exhibit B with the Company prior to his death, and any such subsequent
designation shall be controlling in all events.

          (b) The term “Cause” shall mean any of the following:

	 	i.	 	the Executive’s engagement in unlawful acts
intended to result in substantial personal enrichment to the Executive
at the Company’s expense;
	 
	 	ii.	 	the Executive’s engagement in a material breach
of his or her responsibilities to the Company that results in a material
injury to the Company other than any such breach resulting from the
Executive’s Disability; or
	 
	 	iii.	 	an act or acts by the Executive that have been
found in an applicable court to constitute a felony.

          (c) The term “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.

          (d) The term “Disability” shall mean a disability within the meaning of Section 409A of the
Code.

          (e) The term “Retirement” shall mean the retirement of the Executive under a tax-qualified
retirement plan of the Company.

          (f) The terms “termination of employment,” “termination of the Executive’s employment,” and
any such similar phrase shall mean only a termination of employment that qualifies as a separation
from service, as defined in Section 409A of the Code.

     3. Separation Pay and Welfare Benefits. In the event of the Executive’s involuntary
termination of employment with the Company for reasons other than Cause, the Company shall pay the
Executive the separation pay and provide the welfare benefits described in Exhibit A attached
hereto and in the form and manner set forth in said Exhibit A.

     4. Death. Notwithstanding any provision of this Agreement to the contrary, if the Executive’s
employment

 

 

is terminated by reason of the Executive’s death, this Agreement shall terminate without
further obligations to the Executive, the Executive’s legal representative, or Beneficiary.

     5. Disability. Notwithstanding any provision of this Agreement to the contrary, if the
Executive’s employment is terminated by reason of the Executive’s Disability, this Agreement shall
terminate without further obligations to the Executive, the Executive’s legal representative, or
Beneficiary.

     6. Retirement. Notwithstanding any provision of this Agreement to the contrary, if the
Executive’s employment is terminated by reason of the Executive’s Retirement from the Company, this
Agreement shall terminate without further obligations to the Executive or the Executive’s legal
representative.

     7. No Tax Payments, Reimbursements, or Gross Ups. Notwithstanding anything to the contrary in
this Agreement, the Company shall not reimburse, pay, or otherwise gross up the Executive for any
taxes, penalties, or interest imposed by Sections 409A and/or 4999 of the Code. If any portion of
the compensation under this Agreement or under any other agreement or arrangement with, or plan of,
the Company (in the aggregate “Total Payments”) would constitute an “excess parachute payment”
under Section 280G of the Code, then the Total Payments, including payments under this Agreement,
shall be reduced to the maximum amount payable to the Executive that shall not result in the
imposition of a tax under Section 4999 of the Code; provided that such reduction(s) will provide a
more favorable after-tax result for the Executive with respect to the tax imposed by Section 4999
of the Code. The calculation of such potential tax liability, as well as the method in which any
compensation reduction is applied, shall be conducted and determined by the Company’s independent
accountants, whose determinations shall be binding on all parties.

     8. Successors. (a) This Agreement is personal to the Executive and shall not be assignable by
the Executive otherwise than by will or the laws of descent and distribution. Subject to Sections
4, 5, and 6 hereof, this Agreement shall inure to the benefit of and be enforceable by the
Executive’s legal representative or Beneficiary, as applicable.

          (b) This Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns.

          (c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.

     9. Miscellaneous. (a) This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio without reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal representatives.

          (b) All notices and other communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:

	 	 	 	 	 
	 

	 	If to the Executive:
	 	Frank A. Cappello
	 

	 	 	 	34230 Rosewood Trail
	 

	 	 	 	Willoughby Hills, OH 44094
	 
	 	 	 	 
	 

	 	If to the Company:
	 	SIFCO Industries, Inc.
	 

	 	 	 	970 East 64th Street
	 

	 	 	 	Cleveland, Ohio 44103
	 

	 	 	 	Attention: Jeffrey P. Gotschall

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communication shall be effective when actually received by the addressee.

          (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.

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          (d) This Agreement is merely a separation pay agreement and is not intended to be covered by
Section 409a of the Code. Therefore, this Agreement shall be construed in accordance with such
intent, to the extent permitted by law.

          (e) The Company may withhold from any amounts payable under this Agreement such federal,
state, local and/or foreign taxes as shall be required to be withheld pursuant to any applicable
law or regulation.

          (f) The Executive’s or the Company’s failure to insist upon strict compliance with any
provision of this Agreement or the failure to assert any right the Executive or the Company may
have hereunder shall not be deemed to be a waiver of such provision or right or any other provision
or right of this Agreement.

     IN WITNESS WHEREOF, the undersigned have executed this Agreement effective as of the date
first written above.

	 	 	 	 	 	 	 	 	 
	SIFCO INDUSTRIES, INC.	 	 	 	EXECUTIVE	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Jeffrey P. Gotschall
	 	 	 	/s/ Frank A. Cappello	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	  Jeffrey P. Gotschall
	 	 	 	Frank A. Cappello	 	 
	 

	 	  President and CEO	 	 	 	 	 	 

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EXHIBIT A

TO

SEPARATION PAY AGREEMENT

     1. Amount of Separation Pay. In the event the Executive becomes eligible for separation pay
under Section 3 of the Agreement, the Company shall pay to the Executive, or, if applicable, to the
Executive’s legal representative or Beneficiary, an amount equal to one and one-half (1.5) times
the Executive’s annual base salary and the average of his cash bonus for each of the most recent
three fiscal years prior to his termination, less applicable withholdings and taxes, provided that
calculation of such amount shall be subject to the provisions of Section 7 of the Agreement.
Except as provided below, the payment of such separation pay under the Agreement shall be made in
cash to the Executive in a lump sum no later than 60 days following his date of termination.

     Notwithstanding any other provision of the Agreement to the contrary, in the event that the
separation pay payable to the Executive under Section 3 of the Agreement exceeds two times the
lesser of: (i) the Executive’s annual compensation (as defined for purposes of Section 409A of the
Code) for the calendar year preceding the calendar year in which the Executive’s termination of
employment occurs, or (ii) the maximum amount of compensation that may be taken into account under
a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which the Executive’s
termination of employment occurs, payment of the Executive’s separation pay under the Agreement
shall be made in a lump sum six months after the date on which the Executive’s termination of
employment occurs.

     2. Welfare Benefits. In the event the Executive becomes eligible for welfare benefits under
Section 3 of the Agreement, the Company shall provide the Executive and/or the Executive’s family
with welfare benefits for the 18-month period following the Executive’s date of termination that
are, at least equal, in the aggregate, to those welfare benefits which would have been provided to
them in accordance with the Company’s welfare benefit plans, programs, practices and policies, if
the Executive’s employment had not been terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company and
its affiliated companies and their families; provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive welfare benefits under another
employer-provided plan, the Company shall discontinue such otherwise provided benefits as of such
eligibility date. Furthermore, the Company shall pay for out placement services for Executive.

4AMEND 2: EXCESS PLAN FOR UK EMPLOYEES

 

Exhibit 10.1

AMENDMENT NO. 2

TO THE

NACCO MATERIALS HANDLING GROUP, INC.

EXCESS PLAN FOR UK TRANSFEREES

(EFFECTIVE AS OF OCTOBER 1, 2002)

     NACCO Materials Handling Group, Inc. hereby adopts this Amendment No. 2 to the NACCO Materials
Handling Group, Inc. Excess Plan for UK Transferees (Effective as of October 1, 2002), effective as
of the dates indicated herein. Words and phrases used herein with initial capital letters that are
defined in the Plan are used herein as so defined.

Section 1

     Effective as of January 1, 2005, Subsection (c) of Section 1.5 of the Plan (as added by
Amendment No. 1 to the Plan) is hereby deleted and replaced with the following provisions:

     “(c) The effective date of Amendment No. 1 to the Plan was December 31, 2004. Amendment No. 1
to the Plan temporarily froze the Excess Pension Benefits under the Plan effective as of December
31, 2004. Amendment No. 2 to the Plan retroactively eliminates this freeze so that Excess Pension
Benefits under the Plan will continue to accrue through December 31, 2005. Pursuant to Amendment
No. 2 to the Plan, Excess Pension Benefits under the Plan are hereby permanently frozen effective
December 31, 2005.

     (d) The Company intends to further amend the Plan in order to bring it into compliance with
the AJCA Guidance. Any Excess Pension Benefits that are deemed to have been deferred prior to
January 1, 2005 and that qualify for “grandfathered status” under Section 409A shall continue to be
governed by the law applicable to nonqualified deferred compensation prior to the additional of
Section 409A to the Code and, to the extent permitted by Code Section 409A, shall be subject to the
terms and conditions specified in the Plan as in effect prior to January 1, 2005.”

Section 2

     Effective December 31, 2005, the first sentence of Section 2.4 of the Plan is hereby amended
in its entirety to read as follows:

     “Compensation shall mean the actual US compensation received by the Participant from the
Controlled Group though December 31, 2005.”

Section 3

     Effective December 31, 2005, Section 2.10 of the Plan is hereby amended in its entirety to
read as follows:

     “Section 2.10 Plan Administrator shall mean the Administrative Committee appointed
under the NACCO Materials Handling Group, Inc. Profit Sharing Retirement Plan.”

 

 

Section 4

     Effective December 31, 2005, Section 2.13 of the Plan is hereby amended in its entirety to
read as follows:

     “Section 2.13
Targeted UK Pension Benefit shall mean an amount payable to the Participant in
British Pounds Sterling equal to the annual benefit that would have been paid to the Participant
under the UK Pension Plan if the Participant had continued to participate in the UK Pension Plan
until December 31, 2005, taking into account the Participant’s service with the US members of the
Controlled Group and all Compensation that would otherwise satisfy the definition of pensionable
earnings under the UK Pension Plan (converted to UK equivalent earnings) through such date.
Without limiting or expanding the foregoing, as applied to a Beneficiary, if the Participant dies
after December 31, 2005 but before terminating employment with all members of the Controlled Group,
the Targeted UK Pension Benefit payable to the Beneficiary shall be calculated as if the
Participant had died while an active member of the UK Pension Plan; provided, however, that the
Beneficiary shall not be entitled to receive the death in service lump sum benefit that would
otherwise have been payable with respect to the UK Pension Plan.”

Section 5

     Effective as of January 1, 2005, the first two sentences of the last paragraph of Section
3.1(a) of the Plan (as added by Amendment No. 1 to the Plan) are hereby amended in their entirety
to read as follows:

     “Notwithstanding any provision of the Plan to the contrary, all Excess Pension Benefits under
the Plan shall be frozen as of December 31, 2005. In furtherance of, but without limiting the
foregoing, a Participant shall not receive credit under this Plan for any service or compensation
that is earned after December 31, 2005.”

Section 6

     Effective as of January 1, 2005, Section 3.1(b)(ii) is hereby amended by adding the following
sentence to the end thereof, to read as follows:

     “The foregoing lump sum option shall only apply to Excess Pension Benefits that qualify for
“grandfathered status” under Code Section 409A.”

          EXECUTED this 14th day of December, 2005.

	 	 	 	 	 
	 	NACCO MATERIALS HANDLING

GROUP, INC.

 	 
	 	By:  	/s/ James M. Phillips
 	 
	 	 	Title:  Vice President of Human Resources 	 
	 	 	 	 
	 

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