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EXHIBIT 4.7
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT (this "Agreement") is made and entered
into on this 30th day of June, 1995, by and among THE HAWK GROUP OF COMPANIES,
INC., a Delaware corporation (the "Company"), XXXX XXXXXX ("Xxxxxx"), XXXXXXX X.
XXXXXX ("Berlin"), XXXXX X. XXXX ("Xxxx"), XXXXXX X. XXXXXXXX ("Xxxxxxxx"), XXXX
X. XXXXXX ("Xxxxxx"), XXXXXXX X. XXXXXXX ("Xxxxxxx"), XXXX XXXXXXXXX
("Xxxxxxxxx") and XXXXXXX X. XXXXXX ("Xxxxxx") (collectively, the
"Shareholders," and individually, a "Shareholder"), and HAWK CORPORATION, a
Delaware corporation ("Hawk"), XXXXXX X. XXXXXXX ("Xxxxxxx"), XXXXXX X. XXXXXXXX
("Xxxxxxxx") and XXXXX X. XXXXXX ("Xxxxxx") (Hawk, Harbert, Xxxxxxxx and Xxxxxx
are collectively, the "Hawk Shareholders").
WHEREAS, certain of the Shareholders were owners of record and
beneficially of shares of common stock of The Hawk Group of Companies, Inc., an
Ohio corporation and the predecessor to the Company;
WHEREAS, certain of the Shareholders were owners of record and
beneficially of shares of common and preferred stock of Xxxxxx, Inc., a Delaware
corporation which was merged with and into a wholly-owned subsidiary of the
Company; and in connection with the merger, the shares of common stock and
preferred stock of Xxxxxx, Inc. were cancelled and, in exchange therefore,
shares of the Company were issued to the Shareholders;
WHEREAS, each Shareholder is the legal and beneficial owner of the
number of shares of Series A Common Stock, $0.01 par value ("Common Stock"), and
Series B Preferred Stock, $0.01 par value ("Preferred Stock"), of the Company
(the Common Stock and Preferred Stock being collectively referred to herein as
the "Stock") as set forth opposite his name on Annex I attached hereto and
incorporated herein by reference;
WHEREAS, certain of the shares of Common Stock held by certain
Shareholders are subject to divestiture (such shares being hereinafter referred
to as the "Unvested Shares"), which divestiture is dependent upon the occurrence
of certain events;
WHEREAS, Annex II attached hereto and incorporated herein by reference
sets forth the current number of Unvested Shares and the events of divestiture
relating thereto;
WHEREAS, the Hawk Shareholders are the legal and beneficial owners of
the number of shares of Stock set forth opposite his or its name on Annex III
attached hereto and incorporated herein by reference;
WHEREAS, the parties believe that it is in their respective best
interests to make provisions for the voting of and the future disposition of the
Stock held by the Shareholders and certain other matters; and
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WHEREAS, the parties desire to set forth their understandings and
agreements in writing;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
promises hereinafter set forth and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. SCOPE OF AGREEMENT AND STOCK TRANSFER RESTRICTIONS.
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1.1 No Shareholder may sell, exchange, deliver, assign, pledge,
mortgage, hypothecate, encumber, transfer or permit to be transferred, whether
voluntarily, involuntarily or of operation of law, and whether resulting from
his death or disability or otherwise (collectively, "Transfer"), all or any part
of the Stock now owned or hereafter acquired by said Shareholder; provided,
however, that if such Shareholder desires to sell all (and not less than all) of
the shares of Stock which he owns of record or beneficially at any time
(including any Unvested Shares), he may offer said shares for sale to the Hawk
Shareholders, at the applicable "Purchase Price" set forth in Section 1.6
hereof, by giving notice (the "Notice") to each of the Hawk Shareholders and the
Company of his desire to do so. The Notice shall state the total number of
shares of Stock owned by such Shareholder and being offered for sale.
1.2 For a period of twenty (20) days after receipt of the Notice
(the "First Period"), Hawk shall have the right to purchase all (and not less
than all) of the shares so offered. If Hawk elects not to purchase the shares of
Stock, it shall give notice to the other Hawk Shareholders and to the
Shareholder offering such shares of Stock for sale.
1.3 If Hawk elects not to purchase all of the shares of Stock so
offered within the First Period, for a period of twenty (20) days after the
expiration of the First Period (the "Second Period"), the Hawk Shareholders
(other than Hawk) shall have the option to purchase, on the same terms and
conditions offered to Hawk, all (and not less than all) of such Shareholders'
shares of Stock (including any Unvested Shares). If one or all of the Hawk
Shareholders (other than Hawk) elect to purchase all of said shares, they shall
purchase said shares on a pro rata basis in accordance with their respective
holdings of the Company's Common Stock or on such other basis as they may
mutually agree.
1.4 During the period on or before the second anniversary of the
effective date of this Agreement, if after the expiration of the Second Period,
the shares offered for sale by a Shareholder remain unsold, the Shareholder
shall continue to hold and own said shares and shall not thereafter Transfer
said shares (unless to the Hawk Shareholders and/or the Company as herein
provided). On and after the second anniversary of the effective date of this
Agreement, if after the expiration of the Second Period, the shares offered for
sale by the Shareholders remain unsold, the Shareholders may Transfer said
shares (but not any Unvested Shares).
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1.5 Any Transfer other than in accordance with the terms and
provisions of this Agreement shall be void and shall not Transfer any right,
title or interest in or to said Stock to the purported transferee.
1.6 For purposes of this Agreement, the purchase price ("Purchase
Price") of: (i) any Unvested Shares purchased hereunder shall be the book value
(hereinafter referred to as "Book Value") of each share, which Book Value shall
be the greater of the following amounts: (a) the purchase price paid by the
Shareholder for a share of Common Stock or (b) the amount determined by dividing
the amount shown as Common Stock and Retained Earnings Paid-In Capital on the
Company's balance sheet for the preceding year, as prepared and certified by the
certified public accounting firm servicing the Company, by the number of shares
of Common Stock issued and outstanding as of the end of such preceding year and
adjusted for any stock splits or stock dividends; and (ii) all other shares of
Common Stock purchased hereunder shall be determined pursuant to the formula set
forth in Annex IV attached hereto and incorporated herein by reference.
2. TRANSFER UPON DEATH OR DISABILITY OF SHAREHOLDER.
2.1 In the event of the death or mental or physical disability of
any Shareholder hereof, the Hawk Shareholders shall be required to purchase all
(and not less than all) of the shares of Stock (including any Unvested Shares)
owned of record or beneficially by such Shareholder, at the applicable Purchase
Price; provided, however, that the Hawk Shareholders shall be so required to
purchase such shares of Stock (including any Unvested Shares) in proportion to
the number of shares owned by him relative to the shares owned by the other Hawk
Shareholders, such proportion being determined immediately prior to the purchase
of such shares of Stock (or in such other proportion as they may mutually
agree).
2.2 In the event of the death of any Shareholder, the Hawk
Shareholders shall purchase the shares of Stock (including any Unvested Shares)
owned of record or beneficially by such Shareholder as of the date of his death.
All incidents of ownership of such shares, including but not limited to the
right to vote, attend meetings, execute written consents or perform any acts
with respect to said shares, shall vest in the Hawk Shareholders in proportion
to their shareholdings, on the date of such Shareholders' death. From and after
such date of death, the Hawk Shareholders, shall have and are hereby granted the
right, power and authority to exercise any such rights of ownership. The vesting
of such incidents of ownership shall occur in the Hawk Shareholders, on the date
of the death of such Shareholder even if the certificates representing the
shares of Stock have not yet been transferred to the Hawk Shareholders, and even
if no other act evidencing such transfer has yet been performed. Any and all
acts necessary to formally transfer the ownership of said Stock to the Hawk
Shareholders shall be performed as of the date of such Shareholders' death.
2.3 (a) In the event of the mental or physical disability of any
Shareholder, the Hawk Shareholders shall be required to purchase the shares of
Stock (including any Unvested Shares) of such Shareholder as of the date
occurring six (6) months after the date that such
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Shareholder's mental or physical disability commenced, so long as such
Shareholder is still mentally or physically disabled at that time. Any and all
acts necessary to formally transfer the ownership of Stock to the Hawk
Shareholders shall be performed as of the date occurring six (6) months after
the date of commencement of the Shareholder's disability.
(b) All incidents of ownership of a Shareholder's shares of
Stock, including but not limited to the right to vote, attend meetings, execute
written consents in lieu of any shareholders' meeting, execute any other
consents or perform any acts with respect thereto, shall vest in the Hawk
Shareholders in proportion to their shareholdings on the date of Shareholder's
disability as determined pursuant to Section 2.3 hereof. From and after such
date, the Hawk Shareholders shall have and are hereby granted the right, power
and authority to exercise any such incidents of ownership. Such ownership rights
shall continue in the Hawk Shareholders so long as such Shareholder is disabled
(until the Hawk Shareholders purchase the Stock pursuant to Section 2.1 hereof)
or so long as the term of that certain Irrevocable Proxy granted in Section 6.0
hereof for the benefit of the Hawk Shareholders shall not have expired,
whichever is longer. The vesting of such rights of ownership shall occur in the
Hawk Shareholders, on the date of such Shareholder's disability even if the
shares of Stock have not yet been transferred to the Hawk Shareholders, and even
if no other act evidencing such transfer has yet been performed.
(c) For purposes of this Section 2, a Shareholder shall become
"mentally or physically disabled" as of the time the Board of Directors of the
Company (the "Board") shall find, on the basis of medical evidence satisfactory
to the Board, that as a result of a mental or physical condition, the
Shareholder is unable to substantially perform his normal duties of employment
or is prevented from engaging in the same level of performance as he engaged in
prior to the onset of such condition. Shareholder shall submit to an examination
by a physician and/or psychiatrist, selected at the discretion of the Board, as
is necessary to obtain the medial evidence needed by the Board to determine
whether the Shareholder has become "mentally or physically disabled." Each
Shareholder 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 that
the Shareholder fails to submit to an examination or to take the necessary
action to disclose the results of an examination, the Shareholder shall be
deemed to be "mentally or physically disabled."
3.0 TRANSFER UPON RETIREMENT OR TERMINATION OF
EMPLOYMENT OF A SHAREHOLDER.
3.1 In the event of any Shareholder's retirement from the Company
or the termination of his employment with the Company or any corporation
controlled or managed by, controlling or managing, or under control or
management with the Company or the Hawk Shareholders (other than Hawk) (an
"Affiliated Company"), the Hawk Shareholders shall be required to purchase all
of the shares of Stock (including any Unvested Shares) owned by such retired or
terminated Shareholder, at the applicable Purchase Price; provided, however,
that if Shareholder is terminated from his employment "for cause" (as defined
below), then the Hawk Shareholders shall be required to purchase all of the
Stock (including Unvested Shares) then owned by Shareholder which shall be equal
to the lesser of Book Value or the price actually paid for such shares. Each
Hawk Shareholder shall purchase such shares of Stock in proportion to the number
of shares owned by him relative to the shares owned by the other Hawk
Shareholders, such proportion being
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determined immediately prior to the purchase of such shares of Stock (or in such
other proportion as they may mutually agree). "For cause" shall mean any one
or more of the following:
(i) Shareholder's engaging in fraud, embezzlement,
misappropriation of funds or like conduct against the Company or
any of its Affiliated Companies;
(ii) Shareholders' conviction (or plea of nolo contendere) on a
felony charge;
(iii) Shareholder's violation of any federal, state or local
law, regulation or ordinance relating to personal conduct in the
workplace, such as laws, regulations or ordinances pertaining to
discrimination or harassment;
(iv) Shareholder's breach of any confidentiality obligation
owed to the Company or its Affiliated Companies.
3.2 In the event of Shareholder's retirement from or the
termination of his employment with the Company or any of its Affiliated
Companies, the Hawk Shareholders shall purchase Shareholder's Stock pursuant to
this Section 3 as of the date of retirement by Shareholder or the date of
termination of Shareholder's employment, as the case may be.
3.3 All incidents of ownership of the shares of Stock, including
but not limited to the right to vote, attend meetings, execute written consents
in lieu of any shareholders' meeting, execute any other consent or perform any
acts with respect to said shares of Stock, shall vest in the Hawk Shareholders
in proportion of their shareholdings on the date of Shareholder's retirement
from or the termination of his employment, as the case may be, and from and
after such date, the Hawk Shareholders shall have and is hereby granted the
right, power and authority to exercise any such rights of ownership. The vesting
of such incidents of ownership shall occur in the Hawk Shareholders on the date
of Shareholder's retirement from or the termination of his employment, as the
case may be, even if the certificates representing Shareholder's shares of Stock
of the Company have not yet been transferred to the Hawk Shareholders and even
if no other act evidencing such transfer has yet been performed. Any and all
acts necessary to formally transfer the ownership of the shares of Stock of the
Company from Shareholder to the Hawk Shareholders.
3.4 In the event the Hawk Shareholders are incapable, for any
reason whatsoever, of purchasing the Stock of any Shareholder as required by
Section 2 or Section 3 hereof, then the Company shall be required to the extent
permitted by applicable law, to purchase the part (even to the extent of all) of
the Stock which the Hawk Shareholders are incapable of purchasing, upon the same
terms and conditions as would apply to the purchase by the Hawk Shareholders,
and all references herein to the Hawk Shareholders with respect to such purchase
shall be deemed to be references to the Hawk Shareholders and/or the Company.
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4. EXECUTION OF DOCUMENTS AND FURTHER ACTION.
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The parties hereto agree that, in the event any Shareholder's
shares of Stock are transferred pursuant to the terms and conditions of this
Agreement, each party shall execute all documents, deliver all certificates,
assignments, releases, consents, instruments and other documents and perform all
acts required to effectuate said transaction.
5. TAG-ALONG.
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5.1 In the event the Hawk Shareholders desire to sell, in an
arm's-length transaction, all or any portion of the shares of Stock which they
own of record or beneficially (the "Sale"), they shall give notice (the
"Notice") of their intention to do so to the Shareholders. The Notice shall
include (a) the number of shares of Common Stock and Preferred to be sold by the
Hawk Shareholders in the Sale, (b) the principal terms of the Sale, including
the minimum price at which the shares are intended to be sold, (c) the
percentage which such amount of shares to be sold constitutes with respect to
the aggregate amount of shares held by all parties hereto, and (d) a demand by
the Hawk Shareholders (the "Demand") to cause the number of shares held by the
Shareholders to be included with their shares to be sold, on the same terms and
conditions as they shall sell their shares, which terms and conditions shall not
be materially less favorable to the Shareholders than as set forth in the
Notice.
Each of the Shareholders agrees that in the event the Hawk
Shareholders make such a Demand, he shall accept such Demand, which acceptance
shall be irrevocable and shall bind him to sell his shares simultaneously with
the Sale to the purchasers and on the same terms and conditions as the Hawk
Shareholders shall sell their shares. Each of the Shareholders shall be bound
and obligated to sell all of his shares, the number of which shall be set forth
in his written acceptance of the Demand.
Each party hereto shall take such actions and execute such
documents and instruments as shall be necessary or desirable to consummate the
Sale expeditiously.
5.2 Except as provided in Section 5.4 hereof, each of the Hawk
Shareholders agrees that he will not sell any or all of his shares of Stock
without effecting a sale of the Shareholders' shares of Stock on the same terms
and conditions, pursuant to Section 5.1 hereof. In the event that the Hawk
Shareholders sell less than all of their shares of Stock, the same proportion of
the Shareholders' shares of Stock shall also be sold.
5.3 Notwithstanding anything in this Agreement to the contrary,
none of the provisions of this Section 5 shall apply in the event that any of
the Hawk Shareholders desires to sell to any other Hawk Shareholder, or desires
to transfer to any family member or trust for the benefit of such Hawk
Shareholder or family member, all or any portion of the shares of Stock which he
or it owns of record or beneficially.
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5.4 Notwithstanding anything in this Agreement to the contrary,
none of the provisions of this Section 5 shall apply in the event that the
Company or the Hawk Shareholders shall cause the Sale to be effected pursuant to
an effective registration statement under the Securities Act or pursuant to Rule
144 under the Securities Act (or any comparable rule then in effect).
5.5 All costs and expenses incurred by the Hawk Shareholders in
connection with the Sale, including without limitation all attorneys' fees,
costs and disbursements and any finders' fees or brokerage commissions, together
with the reasonable fees and disbursements of one counsel representing the Hawk
Shareholders and the Shareholders in connection with the Sale, shall be
allocated pro rata between the Hawk Shareholders and the Shareholders with each
party paying that portion of costs and expenses which equals the percentage
obtained by dividing the amount of gross proceeds received by such party in the
Sale by the total amount of gross proceeds received by all parties to the Sale.
The portion of all costs and expenses allocable to each Shareholder which the
Hawk Shareholders shall have incurred or paid shall promptly be paid by such
Shareholder to the Hawk Shareholders, all disbursements for such costs and
expenses being made at or prior to the closing of the Sale.
6.0 IRREVOCABLE PROXY.
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6.1 Each Shareholder hereby irrevocably appoints Xxxxxxx, Xxxxxxxx
and Xxxxxx, or any of them, as his true and lawful attorneys and proxies, with
full power of substitution and resubstitution, for and in his name, to (i) vote
all of the shares of Common Stock of which such Shareholder is now or
hereinafter the record owner at all annual, special and other meetings of
shareholders of the Company, and at any other time, for the election of the
Board and any other matters presented to the shareholders of the Company for a
vote at any such meeting, (ii) execute written consents on behalf of such
Shareholder in lieu of any meetings of the shareholders of the Company for the
election of the Board and any other matters presented to the shareholders for
written consent, and (iii) execute any other consents, waivers or releases
requested by the Company of the shareholders of the Company.
6.2 It is understood and agreed that the aforesaid appointment and
proxy granted by each Shareholder is irrevocable and coupled with an interest
within the meaning of section 212 of the Delaware General Corporation Law and
section 1701.48 of the Ohio General Corporation Law. It is further understood
and agreed that the aforesaid appointment and proxy of each of Xxxxxxx,
Xxxxxxxx and Xxxxxx related to voting rights only with respect to each such
Shareholders shares of Common Stock and does not relate to any other rights
incident to his ownership of shares of Common Stock (including, without
limitation, the right to receive dividends and any other distributions on such
shares).
6.3 The tag along and irrevocable proxy set forth in Sections 5 and
6, respectively, shall remain in full force and effect until this Agreement is
terminated pursuant to Section 7 hereof and shall not terminate by operation of
law, whether by the death, bankruptcy or adjudication of
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incompetency or insanity of either Xxxxxxx, Xxxxxxxx or Xxxxxx, the Transfer of
all or any part of the shares of Stock now or hereafter held by any Shareholder
or the occurrence of any other event.
6.4 Neither Xxxxxxx, Xxxxxxxx nor Xxxxxx shall be liable to any
Shareholder by reason of any act or omission to act performed or omitted by any
of them in connection with any of the rights specified in this Section 6 other
than actual fraud, gross negligence or criminal conduct.
7. AMENDMENT, WAIVER AND TERMINATION.
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7.1 No change in, modification of or amendment to this Agreement
shall be valid unless the same is in writing and signed by all parties hereto.
7.2 No waiver of any provision of this Agreement shall be valid
unless in writing and signed by the person against whom it is sought to be
enforced. The failure of any party at any time to insist upon strict performance
of any condition, promise, agreement and understanding set forth herein shall
not be construed as a waiver or relinquishment of the right to insist upon
strict performance of the same condition, promise, agreement or understanding at
a future date.
7.3 This Agreement shall terminate upon the first to occur of any
of the following: (i) the purchase by the Company, Hawk, Harbert, Xxxxxxxx
and/or Xxxxxx of all of Common Stock owned by the Shareholders and the payment
in full therefor; (ii) the sale by Hawk, Harbert, Weinberg, and/or Xxxxxx of all
of their respective shares of Common Stock; or (iii) the mutual agreement of all
the parties hereto.
8. LEGENDS, NOTICES AND REMEDIES.
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8.1 The Company shall include on each certificate representing the
Stock held by any of the Shareholders (including any shares of Common Stock and
Preferred hereafter acquired by any of the Shareholders) legends in
substantially the form set forth in Annex V attached hereto and incorporated
herein by reference. Upon the termination of this Agreement pursuant to Section
7.3 hereof, each Shareholder shall surrender to the Company the certificate(s)
representing his shares of Stock which bear the legends required by this
Section, and the Company shall issue a new certificate in lieu thereof for an
equal number of shares without such legends.
8.2 All notices or other forms or communication provided for herein
shall be given in writing and sent by registered or certified U.S. mail, return
receipt requested, first-class postage prepaid, and to such party at the address
set forth below unless notice of a change of address is furnished to the other
parties in the manner provided in this Section.
If to any Shareholder: The address set forth below to his name on
Annex I hereto.
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If to the Company: The Hawk Group of Companies, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 00-0000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
With a copy to: Xxxxxxx Xxxxxxx & Xxxxxx
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Hawk: Hawk Corporation
000 Xxxxxx Xxxxxx, Xxxxx 00-0000
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
With a copy to: Xxxxxxx Xxxxxxx & Xxxxxx
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Xxxxxxx: Xxxxxx X. Xxxxxxx
c/o The Hawk Group of Companies, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 00-0000
Xxxxxxxxx, Xxxx 00000
With a copy to: Xxxxxxx Xxxxxxx & Xxxxxx
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Xxxxxxxx: Xxxxxx X. Xxxxxxxx
Xxxxxxxx Capital Corporation
000 Xxxxxx Xxxxxx, Xxxxx 00-0000
Xxxxxxxxx, Xxxx 00000
With a copy to: Xxxxxxx Xxxxxxx & Xxxxxx
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
If to Xxxxxx: Xxxxx X. Xxxxxx
Xxxxxxx Xxxxxxx & Xxxxxx
Xxx Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxxx 00000
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8.3 The parties hereto agree that the failure of any party to
observe the obligations provided by this Agreement will result in irreparable
damage to the non-defaulting party and that the non-defaulting party may seek
specific performance of such obligations in any state or federal court having
subject matter jurisdiction and located in Cleveland, Ohio.
8.4 For the purpose of any action or proceeding instituted with
respect to this Agreement, each Shareholder hereby irrevocably submits to the
jurisdiction of any state or federal court having subject matter jurisdiction
and located in Cleveland, Ohio. Each Shareholder also irrevocably consents to
the service or process out of said courts by mailing a copy thereof, by
registered mail, postage prepaid, to such Shareholder at his address set forth
in Annex I hereto or at such other address furnished to the other parties hereto
in the manner provided in Section 8.2 hereof, and each Shareholder hereby 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
the Company, Hawk, Harbert, Xxxxxxxx or Xxxxxx to serve process in any other
manner permitted by law or preclude the Company, Hawk, Harbert, Xxxxxxxx or
Xxxxxx from bringing an action or proceeding in respect hereof in any other
country, state, county or place having jurisdiction over such action. Each
Shareholder hereby irrevocably waives, to the fullest extent permitted by law,
any objection which he may have or hereafter 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.
9. MISCELLANEOUS PROVISIONS.
9.1 This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
9.2 The invalidity or unenforceability of any particular provision
of this Agreement shall not affect the other provisions hereof, and this
Agreement shall be construed in all respects as if such invalid or unenforceable
provisions were omitted.
9.3 This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
9.4 This Agreement, which includes the Annexes attached hereto,
sets forth all of the promises, agreements, conditions and understandings among
the parties hereto with respect to the subject matter hereof, and supersedes and
is intended to be an integration of any and all prior agreements or
understandings.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first set forth above.
THE HAWK GROUP OF COMPANIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxx
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Its: Chairman Xxxxx X. Xxxx
XXXX CORPORATION /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxxxx
By /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Its: Chairman /s/ Xxxx X. Xxxxxx
-------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxx Xxxxxxxxx
------------------------------- -------------------------------
Xxxxxxx X. Xxxxxxx Xxxx Xxxxxxxxx
/s/ Xxxxxxx Xxxxxx /s/ Xxxxxx X. Xxxxxxx
------------------------------- -------------------------------
Xxxxxxx Xxxxxx Xxxxxx X. Xxxxxxx
/s/ Xxxx Xxxxxx /s/ Xxxxxx X. Xxxxxxxx
------------------------------- -------------------------------
Xxxx Xxxxxx Xxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxxxx
------------------------------- -------------------------------
Xxxxx X. Xxxxxx Xxxxxxx X. Xxxxxx
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ANNEX I
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SHARES OF CLASS A SHARES OF SERIES B
SHAREHOLDER COMMON STOCK PREFERRED STOCK
------------- ------------------- -------------------
Xxxx Xxxxxx 1,735
Xxxxxxx X. Xxxxxx 80,417 13
Xxxxx X. Xxxx 3,817 3
Xxxxxx X. Xxxxxxxx 5,429 1
Xxxx X. Xxxxxx 1,735
Xxxxxxx X. Xxxxxxx 1,735
Xxxx Xxxxxxxxx 8,817 3
Xxxxxxx X. Xxxxxx 13,817 3
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ANNEX II
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SHAREHOLDER CURRENT NUMBER OF "UNVESTED SHARES"
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Xxxxxxx X. Xxxxxx 1,200(1)/47,050(2)
Xxxxxx X. Xxxxxxxx 1,800(1)
Xxxx Xxxxxxxxx 3,000(1)
Xxxxxxx X. Xxxxxx 6,000(1)
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(1) Until December 21, 1997, the Unvested Shares of any of these Shareholders
are subject to divestiture upon the earlier to occur of (i) the sale of all
of his shares of Stock to any of the Hawk Shareholders pursuant to Section
1 of the Shareholders' Agreement, (ii) his death, (iii) the date he is
deemed by the Board of Directors of the Company, or any corporation
controlled or managed by, controlling or managing, or under control or
management with the Company or the Hawk Shareholders (other than Hawk) (an
"Affiliated Company"), to have become "mentally or physically disabled" (as
defined in Section 2.3(c) of the Shareholders' Agreement), or (iv) his
retirement from, or the termination (with or without cause) of his
employment with, the Company or any Affiliated Company (each of the
foregoing events being hereinafter referred to as an "Event of
Termination"), in accordance with the following schedule:
Occurrence of an Percentage of
Event of Termination Shares Divested
-------------------- ---------------
Prior to 12/21/95 60%
Prior to 12/21/96 40%
Prior to 12/21/97 20%
After 12/21/97 0%
Upon the occurrence of any Event of Termination, such Shareholder shall
automatically cease to own and to have any rights whatsoever (including
but not limited to the rights to vote and receive dividends and
distributions) with respect to the then applicable number of Unvested
Shares.
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(2) Until June 29, 1998, the Unvested Shares of this Shareholder are subject to
divestiture upon the occurrence of an Event of Termination in accordance
with the following schedule:
Occurrence of an Percentage of
Event of Termination Shares Divested
-------------------- ---------------
Prior to 6/29/96 60%
Prior to 6/29/97 40%
Prior to 6/29/98 20%
After 6/29/98 0%
Upon the occurrence of any Event of Termination, such Shareholder shall
automatically cease to own and to have any rights whatsoever (including
but not limited to the rights to vote and receive dividends and
distributions) with respect to the then applicable number of Unvested
Shares.
15
ANNEX III
---------
SHARES OF CLASS A
SHAREHOLDER COMMON STOCK SHARES OF PREFERRED STOCK
----------- ------------ -------------------------
SERIES A SERIES B
Hawk Corporation 4,900 1,250
Xxxxxx X. Xxxxxxx 164,457 000
Xxxxx X. Xxxxxx 36,474 35
Xxxxxx X. Xxxxxxxx 164,457 158
16
ANNEX IV
--------
The "Purchase Price" per share of the Common Stock (other than any
Unvested Shares) shall be calculated as of the applicable valuation date by
dividing (A) an amount equal to (i) the product of (a) the average of the
Company's "Adjusted Operating Profit" (as defined below) for the two (2) most
recent twelve (12) month periods ended December 31, and (b) the number five (5)
LESS (ii) the amount of "Funded Indebtedness" (as defined below) as of the end
of the most recent twelve (12) month period ended December 31, by (B) the total
number of shares of Common Stock then outstanding on a fully diluted basis
(including all shares issuable upon the exercise of any warrants or options to
purchase Common Stock).
For purposes of computing the Purchase Price, the term:
"Adjusted Operating Profit" means an amount equal to
the Company's "Net Income" (as defined below) for the most recent
twelve (12) month period ended December 31 before deduction of any
amounts which, in conformity with generally accepted accounting
principles ("GAAP"), are set forth on the Company's consolidated
statement of income for such fiscal period opposite the captions (a)
"depreciation," (b) "amortization," (c) "extraordinary pre-tax gain,"
(d) "extraordinary pre-tax loss," (e) "interest expense," (f) "income
tax expense" and (g) "deferred income taxes," or any like captions, to
the extent the foregoing amounts are actually deducted by the Company
and its subsidiaries from net revenues on a consolidated basis, in
conformity with GAAP, in determining Net Income for such fiscal period.
"Funded Indebtedness" means (a) all indebtedness of
the Company and its subsidiaries, on a consolidated basis, solely for
money borrowed and owing, PLUS (b) the aggregate liquidation preference
payable under the Company's Certificate of Incorporation, as amended
and restated through the date of this Agreement, with respect to all
shares of its Serial Preferred Stock, $0.01 par value ("Preferred
Stock"), then outstanding in the event of a liquidation of the Company,
pLUS (c) all accrued but unpaid dividends on its Preferred Stock then
outstanding, LESS (d) the aggregate amount of all cash, cash
equivalents and warrant and option exercise proceeds of the Company and
its subsidiaries other than the amount of any indebtedness of the
Company that is convertible into Common Stock.
"Net Income" means the consolidated net income or
loss of the Company and its subsidiaries, as it would appear on a
consolidated statement of income of the Company and its subsidiaries
for any fiscal period, prepared in conformity with GAAP.
The following is an example of the calculation of the Purchase Price
that assumes that the Adjusted Operating Profit for the last two years was
$6,290,000.00 and $6,800,000.00, respectively, that the Funded Indebtedness for
the previous year was $26,457,000.00 and that there are 9,500 shares of Common
Stock outstanding (on a fully diluted basis) on the applicable valuation date:
17
Page 2 of 2
Adjusted Operating Profit:
Year A $ 6,290,000.00
Year B 6,800,000.00
---------------
Total $13,090,000.00
==============
Average $ 6,545,000.00
Market Valuation (5 times
average Adjusted Operating
Profit): $32,725,000.00
Less Funded Indebtedness: $26,457,000.00
Total: $ 6,268,000.00
==============
Purchase Price per share: $ 659.79
==============
18
ANNEX V
-------
THE ENCUMBERING, TRANSFER OR OTHER DISPOSITION OF THE SHARES OF STOCK
EVIDENCED BY THIS CERTIFICATE IS RESTRICTED UNDER THE TERMS OF THAT
CERTAIN SHAREHOLDERS' AGREEMENT DATED AS OF JUNE 30, 1995, AS MAY BE
AMENDED FROM TIME TO TIME, THE PROVISIONS OF WHICH ARE HEREIN
INCORPORATED BY REFERENCE. SUCH SHAREHOLDERS' AGREEMENT PROVIDES, AMONG
OTHER THINGS, THAT THIS SECURITY MAY NOT BE SOLD OR TRANSFERRED TO ANY
PERSON WHO HAS NOT EXPRESSLY ASSUMED THE OBLIGATIONS OF SUCH AGREEMENT
AND CONTAINS, AMONG OTHER PROVISIONS, PROVISIONS WHICH COULD LIMIT THE
TRANSFER OF THIS SECURITY. A COPY OF THIS AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY. UPON THE WRITTEN REQUEST OF THE HOLDER
HEREOF, THE COMPANY SHALL FURNISH A COPY OF SUCH AGREEMENT, WITHOUT
CHARGE.
19
[LOGO]
INSTRUMENT OF JOINDER
To: Chairman of the Board
Hawk Corporation
000 Xxxxxx Xxxxxx, Xxxxx 00-0000
Xxxxxxxxx, Xxxx 00000-0000
Re: Shareholders' Agreement, dated as of June 30, 1995 and amended through the
date hereof (the "Agreement"), among Hawk Corporation, a Delaware
corporation f.k.a. The Hawk Group of Companies, Inc. (the "Company"),
Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx, Xxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxx, Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxxx, Xxxx Xxxxxxxxx and Xxxxxxx X. Xxxxxx
The undersigned hereby agrees to become a party to, and to be bound by the
terms and conditions of, the Agreement, effective on the transfer of 342,905
shares of Class A Common Stock, par value $0.01 per share, of the Company from
Xxxxxx X. Xxxxxxx to the undersigned.
IN WITNESS WHEREOF, the undersigned has executed this Instrument of Joinder
on this 21st day of November, 1996.
XXXXXXX FAMILY LIMITED PARTNERSHIP
/s/ Xxxxxx X. Xxxxxxx
---------------------------------
(Signature)
00000 Xxxxxxxx Xxxx
---------------------------------
(Street Address)
Xxxxx, XX 00000
---------------------------------
(City, State and Zip Revised Code)
000-000-0000
---------------------------------
(Area Code and Telephone Number)
Applied for
---------------------------------
(Social Security or Employer
Identification Number)
20
[LOGO]
INSTRUMENT OF JOINDER
To: Chairman of the Board
Hawk Corporation
000 Xxxxxx Xxxxxx, Xxxxx 00-0000
Xxxxxxxxx, Xxxx 00000-0000
Re: Shareholders' Agreement, dated as of June 30, 1995 and amended through the
date hereof (the "Agreement"), among Hawk Corporation, a Delaware
corporation f.k.a. The Hawk Group of Companies, Inc. (the "Company"),
Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx, Xxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxx, Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxxx, Xxxx Xxxxxxxxx and Xxxxxxx X. Xxxxxx
The undersigned hereby agrees to become a party to, and to be bound by
the terms and conditions of, the Agreement, effective on the transfer of 333,800
shares of Class A Common Stock, par value $0.01 per share, of the Company from
Xxxxxx X. Xxxxxxxx to the undersigned.
IN WITNESS WHEREOF, the undersigned has executed this Instrument of
Joinder on this 21st day of November, 1996.
XXXXXXXX FAMILY LIMITED PARTNERSHIP
/s/ Xxxxxx X. Xxxxxxxx
---------------------------------
(Signature)
000 Xxxxxxxx Xxx
---------------------------------
(Xxxxxx Xxxxxxx)
Xxxxx Xxxxx, XX 00000
---------------------------------
(City, State and Zip Revised Code)
000-000-0000
---------------------------------
(Area Code and Telephone Number)
Applied for
---------------------------------
(Social Security or Employer
Identification Number)
21
[LOGO]
INSTRUMENT OF JOINDER
To: Chairman of the Board
Hawk Corporation
000 Xxxxxx Xxxxxx, Xxxxx 00-0000
Xxxxxxxxx, Xxxx 00000-0000
Re: Shareholders' Agreement, dated as of June 30, 1995 and amended through the
date hereof (the "Agreement"), among Hawk Corporation, a Delaware
corporation f.k.a. The Hawk Group of Companies, Inc. (the "Company"),
Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx, Xxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxx, Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxxx, Xxxx Xxxxxxxxx and Xxxxxxx X. Xxxxxx
The undersigned hereby agrees to become a party to, and to be bound by the
terms and conditions of, the Agreement, effective on the transfer of 75,505
shares of Class A Common Stock, par value $0.01 per share, of the Company from
Xxxxx X. Xxxxxx to the undersigned.
IN WITNESS WHEREOF, the undersigned has executed this Instrument of Joinder
on this 21st day of November, 1996.
XXXXXX FAMILY LIMITED PARTNERSHIP
/s/ Xxxxx X. Xxxxxx
---------------------------------
(Signature)
825-50 Windward
---------------------------------
(Street Address)
Xxxxxx, XX 00000
---------------------------------
(City, State and Zip Revised Code)
000-000-0000
---------------------------------
(Area Code and Telephone Number)
Applied for
---------------------------------
(Social Security or Employer
Identification Number)
22
[LOGO]
INSTRUMENT OF JOINDER
To: Chairman of the Board
Hawk Corporation
000 Xxxxxx Xxxxxx, Xxxxx 00-0000
Xxxxxxxxx, Xxxx 00000-0000
Re: Shareholders' Agreement, dated as of June 30, 1995 and amended through the
date hereof (the "Agreement"), among Hawk Corporation, a Delaware
corporation f.k.a. The Hawk Group of Companies, Inc. (the "Company"),
Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxx X. Xxxxxx, Xxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxx, Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxx,
Xxxxxxx X. Xxxxxxx, Xxxx Xxxxxxxxx and Xxxxxxx X. Xxxxxx
The undersigned hereby agrees to become a party to, and to be bound by the
terms and conditions of, the Agreement, effective on the issuance of 632 shares
of Class A Common Stock, par value $0.01 per share, of the Company to the
undersigned.
IN WITNESS WHEREOF, the undersigned has executed this Instrument of Joinder
on this 20th day of November, 1996.
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
---------------------------------
(Signature)
0000 X. Xxxxxxxxx Xx.
---------------------------------
(Street Address)
Xxxxxxxxxxx, Xxxx 00000
---------------------------------
000-000-0000
---------------------------------
(Area Code and Telephone Number)
###-##-####
---------------------------------
(Social Security or Employer
Identification Number)
