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Exhibit 10.17
FORM OF
CONVERTIBLE
PROMISSORY NOTE
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Series H-1
[$_____________] No. ____
Cleveland, Ohio
January 2, 1997
FOR VALUE RECEIVED, the undersigned, HAWK CORPORATION, a Delaware
corporation (the "Corporation") promises to pay to the order of
[______________________], a(n) [ individual/corporation] ( the "Holder"), the
principal amount of ______________________________ Dollars ($_______________) in
two (2) installments, each payable annually on the anniversary of the Closing of
the Stock Purchase Agreement by and among the Corporation,
__________________________, __________________________,
__________________________ and Holder, dated November 7, 1996 ("Stock Purchase
Agreement"), with the first installment of _______________________________
Dollars ($__________) due on the first anniversary of the Closing on January 2,
1998 and with the last and final installment of ______________________________
Dollars ($_________) due on January 2, 1999, and to pay interest from the date
of this Promissory Note (the "Note") on such principal amount from time to time
outstanding at the rate per annum of eight percent (8%) until maturity, or
otherwise paid in full. Interest shall be computed on a 360-day year basis on
the actual number of days elapsed and shall be paid quarterly on the first
business day of April, July, October and January in each year.
The failure by the Corporation to make any payment of such interest or
principal on this Note on or before the date any such payment is due shall NOT
constitute an event of default ("Event of Default") unless:
1. Thirty days have elapsed from the payment due date without the
Corporation's payment of the amount due; and
2. Written notice listing the overdue amount has been sent by the
Holders via facsimile to Ronald E. Weinberg ("Weinberg") at
216-861- 4546, and Byron S. Krantz ("Krantz") at 216-621-6536;
and
3. Ten days has elapsed without payment of the amount due by the
Corporation from the date the Holder's written notice has been
sent to both Weinberg and Krantz by facsimile; and
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4. If notice is provided before the end of the thirty days
provided for in Paragraph 1 above, the Event of Default shall
occur at the later of the thirty (30) days or ten (10) days
after said notice has been faxed.
In the Event of Default, the Note and all interest then due shall be
due and payable and the Holder may exercise any or all of the remedies provided
by law. If the Note is not paid at maturity, whether maturity occurs by lapse of
time or acceleration, the principal of and the unpaid interest on this Note,
thereafter until paid shall be at the per annum rate of twelve percent (12%).
In the event, but only in the event, the Corporation undertakes an
initial public offering of its Class A common stock, the Holder shall be
entitled to elect to convert an amount of the outstanding principal under this
Note to the Class A common stock of the Corporation subject to the initial
public offering; PROVIDED, HOWEVER, in no event shall the aggregate principal
amount subject to conversion pursuant to this and all Series H-1 notes exceed
the sum of Five Hundred Thousand Dollars ($500,000.00), nor shall such Holder be
entitled to convert an amount of principal in excess of its proportionate share
of the Five Hundred Thousand Dollars, as set forth in Exhibit 2.4(a) to the
Stock Purchase Agreement. The exercise price for the conversion of principal
into Class A common stock of the Corporation shall be equal to the initial
public offering price of the Corporation's Class A common stock. This option to
convert shall be effective from the date of this Note through the maturity date
of the Note; PROVIDED, HOWEVER, should the Holder desire to extend the option to
convert for an additional nine month period beyond the maturity date of this
Note, the Holder shall provide written notice, not less than thirty (30) days
before the maturity date of the Note, of its intent to extend the maturity date
of this Note to the Corporation at its principal office, which notice shall
include a waiver of the maturity date to the date to coincide with the
additional nine month option to convert period. Any exercise of the conversion
option as herein provided shall be in writing, in form and substance as set
forth on Exhibit A, attached hereto and incorporated herein by reference, and
duly executed and delivered by Holder to the Corporation at its principal
office, accompanied by payment, by certified or official bank check payable to
the order of the Corporation. Any right or option to convert a principal sum of
this Note to the Corporation's Class A common stock is expressly contingent on
the Corporation's engaging in an initial public offering and does not grant,
either express or implied, to the Holder any preemptive rights or right to
require registration of the Corporation's securities. Any amount of principal so
converted shall be deemed to have been paid in full at the earlier of the date
the securities are properly recorded in the name of the Holder or Holder's
designee in the record book of the Corporation or the date certificates are
issued and delivered to the Holder. In the event the exercise of the option to
convert results in the issuance of any fractional share of Class A common stock,
then in such event, Holder shall be entitled to cash in lieu of such fractional
share.
This Note shall be governed by and construed in accordance with the
laws of the State of Delaware.
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Holder shall be entitled to reasonable attorney's fees and costs in the
event Holder is forced to pursue collection of this Note.
This Note is subject to set-off pursuant to the terms of the Stock
Purchase Agreement.
All capitalized terms not otherwise defined in this Note shall have the
meanings set forth in the Stock Purchase Agreement.
This Note may be assigned to the Corporation's wholly-owned subsidiary,
Houghton Acquisition Corporation d/b/a Hutchinson Foundry Products Company,
following the Closing of the Stock Purchase Agreement.
This Note has been duly executed and delivered for value by the duly
authorized officer(s) of the Corporation.
HAWK CORPORATION
By:
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Title:
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[EXHIBIT A]
FORM OF EXERCISE OF OPTION TO CONVERT
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(To Be Executed By The Holder If The Holder Desires to Exercise the Option
to Convert Evidenced By And Subject to The Terms of The Foregoing Note)
To:
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The undersigned hereby irrevocably elects to exercise his/her/its
option to convert _______________________________ Dollars of principal amount
outstanding under and evidenced by the Promissory Note of Corporation, dated
____________________, 199__, and to purchase thereunder, _________ shares of
Class A Common Stock of the Corporation, issuable upon exercise of the option to
convert and subject to the terms and conditions of the Note and accompanied
herewith by the surrender or other applicable assignment of the Note or relevant
portion thereof, and any applicable taxes payable by the undersigned pursuant to
the exercise of the option to convert.
The undersigned requests that certificate(s) for such shares are issued
in the name of:
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(Please Print Name and Address)
Dated: _____________, 199___ NAME OF HOLDER:
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(Print)
By:
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Name:
Title: