Exhibit 10.3
SPLIT-DOLLAR
AGREEMENT
THIS SPLIT-DOLLAR AGREEMENT
(“Agreement”) made and entered into as of this 21
st day of August, 2009, by and between HAWK
CORPORATION , a Delaware corporation with principal offices and
place of business in the State of Ohio (the
“Corporation”), and B. CHRISTOPHER DISANTIS , an
individual residing in the State of Ohio (the
“Employee”).
WITNESSETH
THAT:
WHEREAS, the Employee is employed by
the Corporation;
WHEREAS, the Employee wishes to
provide life insurance protection for his family in the event of
his death under a policy of life insurance insuring his life (the
“Policy”), that is described in Exhibit A attached
hereto and by this reference made a part hereof, and that is being
issued by Pacific Life Insurance Company (the
“Insurer”);
WHEREAS, the Corporation is willing
to pay the premiums due on the Policy as an additional employment
benefit for the Employee on the terms and conditions hereinafter
set forth;
WHEREAS, the Corporation is the owner
of the Policy and, as such, possesses all incidents of ownership in
and to the Policy; and
WHEREAS, the Corporation wishes to
retain such ownership rights in order to secure the repayment of
the amounts that it will pay toward the premiums on the Policy.
NOW, THEREFORE, in consideration of
the premises and of the mutual promises contained herein, the
parties hereto agree as follows:
1. Purchase of Policy .
The Corporation shall, contemporaneously herewith, purchase the
Policy from the Insurer in the total face amount of $2,000,000. The
parties hereto agree that they will take all necessary action to
cause the Insurer to issue the Policy, and shall take any further
action which may be necessary to cause the Policy to conform to the
provisions of this Agreement. The parties hereto agree that the
Policy shall be subject to the terms and conditions of this
Agreement and of the endorsement to the Policy filed with the
Insurer, which endorsement shall be consistent with the terms and
conditions of this Agreement. In the event of any inconsistency
between the terms and conditions set forth in this Agreement and
the endorsement, the terms and conditions set forth in this
Agreement shall govern.
2. Ownership of Policy .
The Corporation shall be the sole and absolute owner of the Policy,
and may exercise all ownership rights granted to the owner thereof
by the terms of the Policy, except as may otherwise be provided
herein.
3. Election of Settlement
Option and Beneficiary . The Employee may select the settlement
option for payment of the death benefit provided under the Policy
and the beneficiary or beneficiaries to receive the portion of
policy proceeds to which the Employee is entitled hereunder, and to
change either or both of those selections from time to time, by
specifying the same in a written notice to the Corporation. Upon
receipt of such notice, the Corporation shall execute and deliver
to the Insurer the forms necessary to elect the requested
settlement option and/or to designate the requested person, persons
or entity as the beneficiary or beneficiaries to receive the death
proceeds of the Policy in excess of the amount to which the
Corporation is entitled hereunder. The parties hereto agree to take
all action necessary to cause the beneficiary designation and
settlement election provisions of the Policy to conform to the
provisions hereof. The Corporation shall not terminate, alter or
amend such designation or election without the express written
consent of the Employee.
4. Payment of Premiums .
On or before the due date of each Policy premium, or within the
grace period provided therein, the Corporation shall pay the full
amount of the premium to the Insurer, and shall, upon request,
promptly furnish the Employee evidence of timely payment of such
premium. The Corporation shall annually furnish the Employee a
statement of the amount of income reportable by the Employee for
federal and state income tax purposes, which amount shall be
computed in accordance with applicable regulations of the Internal
Revenue Service.
5. Designation of Policy
Beneficiary/Endorsement . Contemporaneously with the execution
of this Agreement, the Corporation has executed a beneficiary
designation form and/or an endorsement to the Policy, under the
form used by the Insurer for such designations, in order to secure
the Corporation’s recovery of the amount of the premiums on
the Policy paid by the Corporation hereunder. Such beneficiary
designation or endorsement shall not be terminated, altered or
amended by the Corporation, without the express written consent of
the Employee. The parties hereto agree to take all action necessary
to cause such beneficiary designation or endorsement to conform to
the provisions of this Agreement.
6. Limitations on
Corporation’s Rights in Policy . Except as otherwise
provided herein, the Corporation shall not sell, assign, transfer,
surrender or cancel the Policy, nor change the beneficiary
designation provision thereof, without, in any case, the express
written consent of the Employee.
7. Policy Loans . The
Corporation may pledge or assign the Policy, subject to the terms
and conditions of this Agreement, for the sole purpose of securing
a loan from the Insurer or from a third party. The amount of such
loan, including accumulated interest thereon, shall not exceed the
greater of (i) the amount of the premiums on the Policy paid
by the Corporation hereunder, or (ii) the cash surrender value
of the Policy (as defined therein) as of the date to which premiums
have been paid. Interest charges on such loan shall be paid by the
Corporation. If the Corporation so encumbers the Policy, other than
by a policy loan from the Insurer, then, upon the death of the
Employee or upon the election of the Employee hereunder to purchase
the Policy from the Corporation, the Corporation shall promptly
take all action necessary to secure the release or discharge of
such encumbrance.
8. Collection of Death
Proceeds .
a. Upon the death of the
Employee, the Corporation shall cooperate with the beneficiary or
beneficiaries designated by the Employee to take whatever action is
necessary to collect the death benefit provided under the Policy.
When such benefit has been collected and paid as provided herein,
this Agreement shall terminate.
b. Upon the death of the
Employee, the Corporation shall have the unqualified right to
receive a portion of such death benefit equal to the greater of the
total amount of the premiums paid by it hereunder or the then cash
surrender value of the Policy, reduced by any indebtedness against
the Policy existing at the death of the Employee (including any
interest due on such indebtedness). The balance of the death
benefit provided under the Policy, if any, shall be paid directly
to the beneficiary or beneficiaries designated by the Corporation
at the direction of the Employee, in the manner and in the amount
or amounts provided in the beneficiary designation provision of the
Policy. In no event shall the amount payable to the Corporation
hereunder exceed the Policy proceeds payable at the death of the
Employee. No amount shall be paid from such death benefit to the
beneficiary or beneficiaries designated by the Corporation at the
direction of the Employee until the full amount due the Corporation
hereunder has been paid. The parties hereto agree that the
beneficiary designation provision of the Policy shall conform to
the provisions hereof.
c. Notwithstanding any
provision hereof to the contrary, in the event that, for any reason
whatsoever, no death benefit is payable under the Policy upon the
death of the Employee and in lieu thereof the Insurer refunds all
or any part of the premiums paid for the Policy, the Corporation
and the Employee’s beneficiary or beneficiaries shall have
the unqualified right to share such premiums based on their
respective cumulative contributions thereto.
9. Termination of the
Agreement during the Employee’s Lifetime.
a. This Agreement shall
terminate, during the Employee’s lifetime, without notice,
upon the occurrence of any of the following events: (i) total
cessation of the Corporation’s business;
(ii) bankruptcy, receivership or dissolution of the
Corporation; or (iii) termination of Employee’s
employment by the Corporation (other than for reason of
Employee’s death or Employee becoming mentally or physically
disabled). The phrase “mentally or physically disabled”
shall have the meaning ascribed to it in the Employment Agreement
between the Corporation (or its affiliate) and the Employee dated
August 14, 2006, as thereafter amended from time to time.
b. In addition, the Employee
may terminate this Agreement by written notice to the Corpor
