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EXHIBIT 4.12
STOCKHOLDER'S AGREEMENT
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THIS STOCKHOLDERS' AGREEMENT (the "Agreement") is made and entered into
as of the 6th day of June, 1991, by and among HAWK CORPORATION, a Delaware
corporation ("Hawk"), XXXXXX X. XXXXXXX, XXXXXX X. XXXXXXXX and XXXXX X. XXXXXX
(collectively, the "Principal Stockholders" and each individually a "Principal
Stockholder") and XXX X. XXXXX ("Stockholder").
WHEREAS, Hawk has authorized capital stock consisting of 1,000 shares
of common stock, $.01 par value;
WHEREAS, Stockholder, in accordance with a Stock Subscription Agreement
of even date herewith (the "Stock Purchase Agreement"), has become the legal and
beneficial owner of ten (10) shares of common stock of Hawk (the "Stock");
WHEREAS, the Principal Stockholders own in the aggregate 734 shares of
common stock;
WHEREAS, the parties believe that it is in their best interest to make
provisions for the future disposition of the Stock held by Stockholder and
certain other matters; and
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. REPRESENTATIONS AND WARRANTIES IN CONNECTION WITH PURCHASE OF
STOCK. Stockholder hereby represents and warrants to Hawk that:
A. He is aware that no market exists for the resale of the
Stock, nor is it anticipated that a market will develop, and that he may be
required to hold the Stock indefinitely.
B. He is purchasing the Stock for investment and not for
distribution or resale.
C. He has reviewed, is aware of, and understands all restrictions
imposed upon further distribution or resale of the Stock, including the fact
that the certificates representing
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its shares of Stock will bear the legends set forth in Paragraph 9 hereof, and
he has reviewed all restrictions imposed by (i) the Certificate of Incorporation
and any amendments thereto; (ii) the Tag Along Agreement by and between Hawk and
Stockholder of even date herewith (the "Tag Along Agreement"); and (iii) the
Irrevocable Proxy executed by Stockholder in favor of the Principal Stockholders
of even date herewith (the "Proxy"). He is aware of the fact that no federal or
state agency has made any finding or determination as to the fairness for public
or private investment, nor have they made any recommendation or endorsement of
the securities of Hawk for investment.
E. He has reviewed the financial records of Hawk and is aware of
what other persons subscribing for securities of Hawk are paying for said
securities and is aware of the book value of the securities of Hawk.
F. He has made a thorough investigation of Hawk and has
independently evaluated the risk and rewards of owning securities in Hawk.
2. A. SCOPE OF AGREEMENT. This Agreement shall govern all transfers
of shares of Stock (now owned or hereafter acquired) by Stockholder, whether
voluntary, involuntary, by operation of law and shall supersede in all respects
all prior agreements, oral or written, relating to the Stock; provided, however,
that this Agreement shall not supersede any agreement executed contemporaneously
herewith, including (but not limited to) the Stock Subscription Agreement, the
Tag Along Agreement and the Proxy.
B. TRANSFERS TO IMMEDIATE FAMILY MEMBERS AND OTHERS BY PRINCIPAL
STOCKHOLDERS. Neither the Stockholder nor any Principal Stockholder shall be
precluded by the terms of this Agreement from transferring all or any part of
the shares of common stock of Hawk now owned or hereafter acquired by such
person to "Immediate Family Members", provided, however, that all of the
provisions of this Agreement shall continue to apply to the shares and to the
holder thereof, and provided further, however, that no such transfer shall be
made or be effective unless and until the transferee of such shares becomes a
party to this Agreement pursuant to Paragraph 6 hereof. "Immediate Family
Members" shall include each parent, spouse, child, brother, sister or the spouse
of a child, brother or sister of the individual, and each trust created for the
benefit of one or more of such persons and each custodian of property of one or
more such persons. The parties further agree that a transfer by the Stockholder
or a Principal Stockholder of the shares of Common Stock of Hawk into any
401(k), individual retirement account ("XXX") or other retirement or pension
plan shall not violate the terms and provisions of this Agreement, provided,
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however, that no such transfer shall be made or be effective unless and until
the transferee becomes a party to and agrees to be bound by the terms and
provisions of this Agreement and other agreements as provided in Paragraph 6.
3. A. RIGHT OF FIRST REFUSAL BY HAWK AND PRINCIPAL STOCKHOLDERS.
(i) In the event that Stockholder receives a Bona Fide
Offer (as hereinafter defined) to purchase all or a portion of his shares of
stock of Hawk and it is willing to accept such Bona Fide Offer, Stockholder
shall offer to sell such shares of stock to Hawk at the same price and upon the
same terms and conditions as are contained in the Bona Fide Offer by promptly
sending Notice of Sale (as hereinafter defined) to Hawk and the Principal
Stockholders.
(ii) For a period of ten (10) days from receipt of
the Notice of Sale pursuant to Section 3.B.(ii), Hawk shall have the right, at
its option, to purchase all (but not less than all) the shares of stock so
offered at the same price and on the same terms and conditions as set forth in
the Bona Fide Offer, by delivery of notice to such effect to Stockholder. If
Hawk shall not elect to purchase all the shares of stock offered within such ten
(10) day period for any reason whatsoever, then the Principal Stockholders of
Hawk on the date of the Notice of Sale shall have the right, at their option,
for a period of ten (10) days after the expiration of such ten (10) day period,
to purchase all (but not less than all) the shares of stock offered by
Stockholder at the same price and upon the same terms and conditions as are
contained in the Bona Fide Offer; PROVIDED, however, that each Principal
Stockholder shall purchase said shares in proportion to the number of shares
owned by him relative to the shares owned by all the Principal Stockholders,
such proportion being determined immediately prior to the exercise of the
purchase option in question. Any Principal Stockholder who does not desire to
purchase all of the shares to which he is entitled pursuant to the provisions
contained in this section shall be deemed to have assigned and does hereby
assign his right to purchase said shares proportionately to the other Principal
Stockholders. (Hawk and the Principal Stockholders shall collectively be
referred to as "Buyers" and may individually be referred to as "Buyer".)
(iii) Hawk shall, within the time period set forth in
Section 3.A.(ii) send to Stockholder either a notice of acceptance
("Acceptance") stating that it elects to purchase all the shares of stock
offered by Stockholder, or a notice of refusal ("Refusal") stating that it
elects to purchase no shares of stock offered by Stockholder. Hawk shall
promptly send a copy of any Refusal to each Principal Stockholder.
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The Principal Stockholders shall, within the time period set
forth in Section 3.A.(ii), send to Stockholder either an Acceptance that they as
a group elect to purchase all the shares of stock offered by Stockholder or a
Refusal that they as a group elect to purchase no shares of stock offered by
Stockholder.
(iv) The parties agree that during either option
period referred to in Section 3.A.(ii) Hawk and Principal Stockholders may agree
between themselves to purchase all (but not less than all) the shares of stock
offered by Stockholder.
(v) Notwithstanding any provision to the contrary
contained herein, if Stockholder shall not have timely received from Hawk or the
Principal Stockholders, or both, an Acceptance for the purchase of all shares at
issue by the end of the second option period set forth in Section 3.A.(ii),
(whether the reason for failure to deliver a Notice of Acceptance is the belief
that the offer to purchase is not a Bona Fide Offer because the Bona Fide
Offeror is allegedly financially incapable of carrying out the terms of such
offer, or otherwise), Hawk and Principal Stockholders shall be deemed to have
waived any and all rights with respect to Stockholder's sale of stock as set
forth in the Notice of Sale, and Stockholder shall be free to sell such shares
to the Bona Fide Offeror.
X. XXXX FIDE OFFER; NOTICE OF SALE.
(i) The term "Bona Fide Offer" shall mean an offer, in writing,
signed by an offeror or offerors, who must be a person or entity financially
capable of carrying out the terms of such Bona Fide Offer ("Bona Fide Offeror"),
which may contain conditions, contingencies and provisions as are reasonable or
customary in stock purchase transactions. The term "Notice of Sale" as used
herein shall mean a notice containing a true and complete copy of the Bona Fide
Offer, setting forth the price and all terms and conditions, with the name(s),
address(es), both home and office, and business(es) or other occupation(s) of
the offeror or offerors. Any Notice of Sale which does not contain substantially
all such requisite information shall not meet the requirements of this Paragraph
3.
(ii) Whenever, in this Agreement, the term "Notice of Sale,"
"Acceptance" or "Refusal" is used, such term shall mean notice sent in
accordance with Paragraph 8.
C. RESTRICTION ON SALES TO BONA FIDE OFFEROR. Until Hawk or the
Principal Stockholders, as the case may be, have exercised their rights of first
refusal, as herein provided, or until Stockholder has consummated his sale to
the Bona Fide Offeror in the event any of the subject shares are not purchased
by the Buyers pursuant to their rights of first refusal, Buyers
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shall be prohibited from contacting, offering to sell, or selling their shares
of common stock of Hawk to any such Bona Fide Offeror so identified by
Stockholder.
D. SETTLEMENT AND COMPLIANCE.
(i) Settlement shall be held on the purchase of shares of Stock
within 10 days after the end of the option period provided for herein or on such
other date as the Buyer(s) and Stockholder may agree. At settlement, the party
exercising the option to purchase shall deliver cash or certified check or bank
check to Stockholder, which party shall deliver to the purchaser the original
certificate evidencing Stockholder's ownership of the shares, duly endorsed for
transfer, signature guaranteed.
(ii) Strict compliance shall be required with each and every
provision of this Agreement it being understood and agreed that Stockholder
shall not have the right or power to sell or assign any shares of common stock
of Hawk, or any interest therein, except as provided in this Agreement.
4. AGREEMENT BINDING UPON TRANSFEREES. In the event that, at any
time or from time to time, any shares of common stock of Hawk are transferred to
any party pursuant to and in accordance with the provisions of this Agreement,
the transferee shall take such shares of common stock pursuant to all
provisions, conditions and covenants of this Agreement, and, as a condition
precedent to the transfer of such shares of common stock, the transferee shall
agree (for and on behalf of himself or itself, his or its legal representatives
and his or its transferees and assigns) in writing to be bound, as the
transferor hereunder is bound, by all provisions of this Agreement as a party
hereto. Stockholder agrees that in the event he desires to make a transfer
within the provisions hereof, Stockholder shall furnish to Hawk evidence of his
compliance with this Agreement as may be required by the Board of Directors of,
counsel for, or governing body of, Hawk.
5. PUT.
A. Effective upon the sixth anniversary of the date of this
Agreement and continuing for a twenty-four month period thereafter, Stockholder
shall have the right, at his option, to demand the purchase by Hawk (the "Put")
of all, but not less than all, of the Stock of Hawk owned of record or
beneficially by Stockholder (the "Put Shares"), upon the terms and conditions
set forth in this Paragraph 5. At the closing of the purchase and sale of the
Put Shares, Stockholder, upon payment of the Put Purchase Price (as defined in
Paragraph 5.C below), will deliver to Hawk the certificates for the Put Shares
duly endorsed for transfer with signatures guaranteed.
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Notwithstanding the foregoing, Stockholder may exercise the Put only in the
event Hawk or The Hawk Group of Companies, Inc. has not had, or is not in the
process of, a public offering of its Common Stock or securities, as the case may
be, by the filing of a registration statement under the Securities Act of 1933,
as amended (the "Act").
B. In order to exercise the Put, Stockholder shall provide
written notice of such exercise to Hawk of its desire to do so, which notice
must be sent to Hawk in accordance with Paragraph 8 ("Put Notice").
C. The per share purchase price to be paid by Hawk for
each of the Put Shares ("Put Purchase Price") shall be an amount equal to (A)
the "Hawk Group Purchase Price" (as hereinafter defined), multiplied by (B) the
result obtained upon dividing (i) the number of shares of The Hawk Group of
Companies, Inc. ("Hawk Group") owned by Hawk by (ii) the total number of
outstanding shares of Hawk Group, on a fully diluted basis, including shares
exercisable upon the exercise of all outstanding warrants to purchase Hawk Group
common stock PLUS (C) Hawk's investment in Hawk Group preferred stock LESS (D)
Hawk's indebtedness, divided by (E) the total number of outstanding shares of
Hawk on a fully diluted basis. The "Aggregate Purchase Price" shall be an amount
equal to the product obtained by multiplying the Put Purchase Price by the
number of Put Shares being sold.
The "Hawk Group Purchase Price" shall be an amount (as of the most
recently completed twelve-month period ended December 31) equal to the product
obtained by multiplying eight and one-half (8 1/2) by (i) the "EBDIT" of The
Hawk Group of Companies, Inc. (earnings before depreciation and amortization,
interest and income taxes), LESS (ii) the sum of debt, preferred stock and
accrued preferred stock dividends reduced by warrant exercise proceeds and cash.
D. The Aggregate Purchase Price shall be paid by Hawk as follows:
(i) in the event the Aggregate Purchase Price is greater than the amount paid
for the Put Shares initially, $20,300 per share multiplied by the number of Put
Shares (the "Initial Purchase Price"), an amount equal to the Initial Purchase
Price shall be paid on the closing of the Put in immediately available funds and
the remainder of the Aggregate Purchase Price, (A) if twenty-five percent (25%)
or less than the Aggregate Purchase Price, shall be paid on the first year
anniversary of the closing of the Put, (B) if less than fifty percent (50%) but
greater than twenty-five percent (25%) of the Aggregate Purchase Price, shall be
paid in two equal annual installments on the first and second year
anniversaries of the closing of the Put, and (C) if greater than fifty percent
(50%) of the Aggregate Purchase Price, shall be paid in three equal
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annual installments on the first, second and third year anniversaries of the
closing of the Put, together with accrued and unpaid interest at the prime rate
of interest announced by Xxxxxxxx Xxxx Xxxx, Xxxxxxxxx, Xxxx as of the closing
of the Put which interest shall commence to accrue on the closing of the Put;
the foregoing obligation to be evidenced by promissory note(s) in favor of
Stockholder, and (ii) in the event the Aggregate Purchase Price is less than or
equal to the Initial Purchase Price of the Put Shares, the Aggregate Purchase
Price shall be paid on the closing of the Put in immediately available funds.
E. Notwithstanding any provision to the contrary contained herein,
the Principal Stockholders hereby jointly and severally guarantee
unconditionally the payment and performance obligations of Hawk under this
Paragraph 5. The Principal Stockholders further covenant and agree as follows:
(i) All obligations of the Principal Stockholders hereunder
shall remain in full force and effect until all of the duties and obligations of
Hawk under Paragraph 5 have been met in full.
(ii) Upon the occurrence of a default in payment under this
Xxxxxxxxx 0, Xxxxxxxxxxx may proceed hereunder and shall have the right to
proceed first and directly against the Principal Stockholders without proceeding
against or exhausting any other remedies which Stockholder may have.
(iii) This guaranty is an unconditional and absolute guaranty,
irrespective of the validity or enforceability of the Agreement in which it is
contained, or any circumstances which might otherwise constitute a legal or
equitable discharge or defense of the Principal Stockholders.
(iv) Stockholder shall not be deemed, by any act of omission
or commission, to have waived any of his rights or remedies hereunder unless
such waiver is in writing. A waiver with reference to one event shall not be
construed as continuing or as a bar to or waiver of any right or remedy as to
any subsequent event.
(v) All terms, provisions, and agreements contained in this
Paragraph shall inure to the benefit of and be enforceable by Stockholder, his
successors and assigns, and shall be binding upon the Principal Stockholders and
their respective successors and assigns.
6. PARTIES TO DO ALL ACTS NECESSARY TO TRANSFER PURSUANT TO
THE TERMS OF THIS AGREEMENT. The parties agree that in the event Stockholder's
Stock is transferred pursuant to the terms and conditions of this Agreement,
each party will execute
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all documents, deliver all certificates, assignments, releases, consents,
instruments and other documents and perform all acts required to effectuate said
transaction.
7. SUBMISSION TO JURISDICTION. The parties agree that failure of
any party to observe the obligations provided by this Agreement will result in
irreparable damage to the non-defaulting party and that specific performance of
these obligations may be sought by the non-defaulting party 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 this
Agreement, Stockholder hereby irrevocably submits to the jurisdiction of such
courts. Stockholder further irrevocably consents to the service of process out
of said courts by mailing a copy thereof, by registered mail, postage prepaid,
to Stockholder at the address set forth below or at the address furnished to the
other parties hereto in the manner provided in Paragraph 8 hereof and
Stockholder 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 Hawk to serve process in any other manner permitted by
law or preclude Hawk from bringing an action or proceeding in respect hereof in
any other country, state, county or place having jurisdiction over such action.
Stockholder 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.
8. NOTICES. All notices or other forms of 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 all other parties in the manner provided in this Paragraph 8.
If to Hawk or the Hawk Corporation
Principal Stockholders: BP America Building
Suite 29-2500
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxx
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With a Copy to: Xxxxxxx Xxxxxxx & Xxxxxx
One Cleveland Center
20th Floor
0000 Xxxx 0xx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxx
If to Stockholder: Xxx X. Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxx 00000
With a Copy to: Xxxxxx, Halter & Xxxxxxxx
0000 Xxxxxxx Xxxxxxxx
Xxxxxxxxx, Xxxx 00000
Attn: Xxxx Xxxx Xxxx
9. ENDORSEMENT ON STOCK CERTIFICATES. Hawk shall include on each
certificate representing the Stock (including any shares of common stock of Hawk
hereafter acquired by Stockholder) an appropriate investment warranty legend
and, in addition thereto, a statement in substantially the following form:
The encumbering, transfer or other disposition of the shares of stock
evidenced by the within Certificate is restricted under the terms of
that certain Stockholders' Agreement dated June 6, 1991 by and between
Hawk Corporation, Xxxxxx X. Xxxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxx X.
Xxxxxx and Xxx X. Xxxxx, a copy of which agreement is on file at the
principal office of Hawk Corporation. Upon the written request of the
holder hereof, Hawk Corporation shall furnish a copy of such agreement,
without charge.
10. Termination of Agreement. This Agreement shall terminate upon
the occurrence of either of the following events:
A. The purchase by Hawk and/or Principal Stockholders of
all the shares of Stock owned by Stockholder and the payment in full therefor;
or
B. The agreement of all the parties hereto.
Upon the termination of this Agreement, Stockholder shall surrender to
Hawk the stock certificates representing his shares of Stock which bear the
restrictive endorsement referred to in Paragraph 9 hereof, and Hawk shall issue
a new certificate in lieu thereof for an equal number of shares without the
restrictive endorsement referred to in Paragraph 9.
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11. INVALID OR UNENFORCEABLE PROVISIONS. 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.
12. AMENDMENTS. 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. 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.
13. GOVERNING LAW. This Agreement shall be construed and enforced
in accordance with the laws of the State of Ohio.
14. EXECUTION IN COUNTERPARTS. 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.
15. ENTIRE AGREEMENT. Except for the terms of the Tag Along
Agreement and the Proxy, this Agreement sets forth all of the promises,
agreements, conditions, understandings, warranties and representations between
the parties hereto with respect to the subject matter hereof and this Agreement
revokes all prior agreements or understandings with respect to the subject
matter hereof and is, and is intended to be, an integration of any and all prior
agreements or understandings, oral or written, with respect to the subject
matter hereof.
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Dated the day and year first above set forth.
HAWK CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
______________________________
Its: Chm.
______________________________
/s/ Xxxxxx X. Xxxxxxxx
______________________________________
Xxxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxx
______________________________________
Xxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxx
______________________________________
Xxxxx X. Xxxxxx
/s/ Xxx X. Xxxxx
______________________________________
Xxx X. Xxxxx
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