-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Af6PKzQx428+82gnnsAxpzEuk3NsQLln++clLCRTutn5uYZf2rRXMlzyY3iB72zY 2i5KQLpYuel5xJ6hh5OogA== 0000950152-03-006501.txt : 20030627 0000950152-03-006501.hdr.sgml : 20030627 20030627172100 ACCESSION NUMBER: 0000950152-03-006501 CONFORMED SUBMISSION TYPE: SC TO-I PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20030627 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: HAWK CORP CENTRAL INDEX KEY: 0000849240 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 341608156 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I SEC ACT: 1934 Act SEC FILE NUMBER: 005-54031 FILM NUMBER: 03762204 BUSINESS ADDRESS: STREET 1: 200 PUBLIC SQ. STREET 2: STE 30-5000 CITY: CLEVELAND STATE: OH ZIP: 44114 BUSINESS PHONE: 2168613553 MAIL ADDRESS: STREET 1: 200 PUBLIC SQUARE STREET 2: STE 30-5000 CITY: CLEVELAND STATE: OH ZIP: 44114-2301 FORMER COMPANY: FORMER CONFORMED NAME: HAWK GROUP OF COMPANIES INC DATE OF NAME CHANGE: 19950417 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HAWK CORP CENTRAL INDEX KEY: 0000849240 STANDARD INDUSTRIAL CLASSIFICATION: AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728] IRS NUMBER: 341608156 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC TO-I BUSINESS ADDRESS: STREET 1: 200 PUBLIC SQ. STREET 2: STE 30-5000 CITY: CLEVELAND STATE: OH ZIP: 44114 BUSINESS PHONE: 2168613553 MAIL ADDRESS: STREET 1: 200 PUBLIC SQUARE STREET 2: STE 30-5000 CITY: CLEVELAND STATE: OH ZIP: 44114-2301 FORMER COMPANY: FORMER CONFORMED NAME: HAWK GROUP OF COMPANIES INC DATE OF NAME CHANGE: 19950417 SC TO-I 1 l01706asctovi.txt HAWK CORP. SCHEDULE TO-I SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE TO (RULE 14d-100) TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Hawk Corporation - -------------------------------------------------------------------------------- (Name of Subject Company (Issuer)) Hawk Corporation (Offeror and Issuer) - -------------------------------------------------------------------------------- (Name of Filing Person(s) (Identifying Status as Offeror, Issuer or Other Person)) Class A Common Shares - -------------------------------------------------------------------------------- (Title of Class of Securities) 420089104 - -------------------------------------------------------------------------------- (CUSIP Number of Class of Securities) Marc C. Krantz or Michele L. Hoza Kohrman Jackson & Krantz P.L.L., 1375 East Ninth Street, 20th Floor, -------------------------------------------------------------------- Cleveland, OH 44114 (216-696-8700) ---------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Filing Persons) CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- Transaction valuation* Amount of filing fee* - -------------------------------------------------------------------------------- $ 2,565,446 $208 - -------------------------------------------------------------------------------- *Calculated solely for purposes of determining the filing fee. The amount assumes that options to purchase 278,550 shares of stock of Hawk will be exchanged pursuant to this offer. The average aggregate value of each option to purchase one share of common stock of Hawk is $9.21 as of June 25, 2003. The amount of the filing fee is calculated in accordance with Rule 0-11 of the Securities Exchange Act of 1934, as amended. |_| Check the box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: n/a Filing Party: n/a ---------------- ------------- Form of Registration No.: n/a Date Filed: n/a --------------- ------------- |_| Check the box if the filing related solely to preliminary communications made before the commencement of a tender offer. Check the appropriate boxes below to designate any transactions to which the statement relates: |_| third-party tender offer subject to Rule 14d-1. |X| issuer tender offer subject to Rule 13e-4. |_| going-private transaction subject to Rule 13e-3. |_| amendment to Schedule 13D under Rule 13d-2 Check the following box if the filing is a final amendment reporting the results of the tender offer: |_| ITEM 1. SUMMARY TERM SHEET. The information set forth under the section entitled "Summary Term Sheet" in the Offer to Exchange dated June 27, 2003 (the "exchange offer"), a copy of which is attached hereto as Exhibit (a)(1), is incorporated herein by reference. ITEM 2. SUBJECT COMPANY INFORMATION. (a) The issuer is Hawk Corporation, a Delaware corporation. The company's principal executive office is located at 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114 and our telephone number is 216-861-3553. (b) This tender offer statement on Schedule TO relates to Hawk's offer to exchange outstanding options having an exercise price of $6.00 per share or more under our 1997 Stock Option Plan and 2000 Long Term Incentive Plan for new options under our 1997 Stock Option Plan and 2000 Long Term Incentive Plan. Only employees of Hawk or one of our subsidiaries who are not members of our board of directors are eligible to participate in the offer to exchange. The information set forth in the subsection entitled "Source and Amount of Consideration; Terms of New Options" under "The Offer" section of the exchange offer is incorporated herein by reference. (c) The information set forth in the subsection entitled "Price Range of Shares Underlying the Options" under "The Offer" section of the exchange offer is incorporated herein by reference. ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSON. (a) The person filing this Schedule TO is the issuer, Hawk Corporation. The company's address, and the business address of all executive officers and directors of the company, is 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114 and our telephone number is 216-861-3553. The information set forth in the subsection entitled "Interests of Directors and Officers; Transaction and Arrangements Concerning the Options" under "The Offer" section and "Schedule A" of the exchange offer is incorporated herein by reference. ITEM 4. TERMS OF THE TRANSACTION. (a) The information set forth under the section entitled "Summary Term Sheet," "Certain Risks of Participating in the Offer," and the subsections entitled "Eligibility," "Number of Options; Expiration Date," "Procedures for Tendering Options," "Withdrawal Rights and Change of Election," "Acceptance of Options for Exchange and Issuance of New Options," "Conditions of the Offer," "Source and Amount of Consideration; Terms of New Options," "Status of Options Acquired by Us in the Offer; Accounting Consequences of the Offer," "Material Federal Income Tax Consequences," and "Extension of Offer; Termination; Amendment" under "The Offer" section of the exchange offer is incorporated herein by reference. (b) The information set forth in the subsection entitled "Interests of Directors and Officers; Transaction and Arrangements Concerning the Options" under "The Offer" section of the exchange offer is incorporated herein by reference. 2 ITEM 5. PAST CONTRACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS. (e) The information set forth in the subsection entitled "Interests of Directors and Officers; Transaction and Arrangements Concerning the Options" under "The Offer" section of the exchange offer is incorporated herein by reference. ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS. (a) The information set forth in the subsection entitled "Purpose of the Offer" under "The Offer" section of the exchange offer is incorporated herein by reference. (b) The information set forth in the subsection entitled "Status of Options Acquired by us in the Offer; Accounting Consequences of the Offer" under "The Offer" section of the exchange offer is incorporated herein by reference. (c) The company has no plans or proposals and is not involved in any negotiation that would result in any of the occurrences described in Item 1006(c) of Regulation M-A. ITEM 7. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) The information set forth in the subsection entitled "Source and Amount of Consideration; Terms of New Options" under "The Offer" section of the exchange offer is incorporated herein by reference. (b) None. (d) Not applicable. ITEM 8. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) The information set forth in the subsection entitled "Interests of Directors and Officers; Transaction and Arrangements Concerning the Options" under "The Offer" section and "Schedule A" of the exchange offer is incorporated herein by reference. (b) The information set forth in the subsection entitled "Interests of Directors and Officers; Transaction and Arrangements Concerning the Options" under "The Offer" section of the exchange offer is incorporated herein by reference. ITEM 9. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED. (a) Not applicable. ITEM 10. FINANCIAL STATEMENTS. (a) The information set forth in the subsections entitled "Information about Hawk" and "Additional Information" under "The Offer" section of the exchange offer is incorporated herein by reference. (b) Not applicable. 3 ITEM 11. ADDITIONAL INFORMATION. (a)(1) The information set forth in the subsection entitled "Interests of Directors and Officers; Transaction and Arrangements Concerning the Options" under "The Offer" section of the exchange offer is incorporated herein by reference. (2) The information set forth in the subsection entitled "Legal Matters; Regulatory Approvals" under "The Offer" section of the exchange offer is incorporated herein by reference. (3) Not applicable. (4) Not applicable. (5) None. (b) The information set forth under the section entitled "Certain Risks of Participating in the Offer," and the subsections entitled "Information about Hawk," "Fees and Expenses," and "Miscellaneous" is incorporated herein by reference. ITEM 12. EXHIBITS. (a) (1) Offer to Exchange dated June 27, 2003 (2) Letter from Ronald E. Weinberg, dated June 27, 2003 (3) Form of Election Form (4) Form of Withdrawal Form (5) Press Release dated June 27, 2003 (b) Not applicable. (d) (1) Hawk Corporation 1997 Stock Option Plan (in Exhibit 10.1 to the company's registration statement on Form S-1 as filed with the Securities and Exchange Commission (Reg. No. 333-40535)) (2) Hawk Corporation 2000 Long Term Incentive Plan (in Exhibit 10.15 to the company's annual report on Form 10-K for the year ended December 31, 2000 as filed with the Securities and Exchange Commission) (3) Stockholders' Voting Agreement, effective as of November 27, 1996, by and among the Company, Norman C. Harbert, the Harbert Family Limited Partnership, Ronald E. Weinberg, the Weinberg Family Limited Partnership, Byron S. Krantz and the Krantz Family Limited Partnership (in Exhibit 4.6 to the company's registration statement on Form S-4 as filed with the Securities and Exchange Commission (Reg. No. 333-18433)) (g) Not applicable. (h) Not applicable. 4 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Date: June 27, 2003 HAWK CORPORATION /s/ Thomas A. Gilbride -------------------------------------- Thomas A. Gilbride Vice President - Finance and Treasurer 5 EX-99.A.1 3 l01706aexv99waw1.txt EXHIBIT (A)(1) Exhibit (a)(1) HAWK CORPORATION OFFER TO EXCHANGE OUTSTANDING OPTIONS HAVING AN EXERCISE PRICE OF $6.00 PER SHARE OR MORE UNDER OUR 1997 STOCK OPTION PLAN AND 2000 LONG TERM INCENTIVE PLAN FOR NEW OPTIONS UNDER OUR 1997 STOCK OPTION PLAN AND 2000 LONG TERM INCENTIVE PLAN (THE "OFFER TO EXCHANGE") JUNE 27, 2003 THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, EASTERN TIME, ON JULY 28, 2003 UNLESS THE OFFER IS EXTENDED. Hawk Corporation ("Hawk," "we," "our" or "us") is offering employees of Hawk or one of our subsidiaries who are not members of our board of directors (collectively, the "eligible employees") the opportunity to exchange all outstanding options to purchase shares of Hawk Class A common stock, par value $0.01 per share (the "common stock"), having an exercise price of $6.00 per share or more for new options that we will grant under the 1997 Stock Option Plan (the "1997 plan") and 2000 Long Term Incentive Plan (the "2000 plan," and together with the 1997 plan, collectively, the "Hawk plans"). We are making the offer upon the terms and conditions described in this offer to exchange (the "offer to exchange"), the related letter from Ronald E. Weinberg dated June 27, 2003, the election form and the withdrawal form (which together, as they may be amended from time to time, constitute the "offer" or "program"). If you participate in this offer, the number of new options you will receive will depend on the exercise price at which your tendered options were granted. Your tendered options will be exchanged for new options as follows: - Tendered options with an exercise price per share between $6.00 and $16.99 will be replaced with new options equal to the number of options tendered by the eligible employee, and - Tendered options with an exercise price per share of $17.00 or greater will be replaced with new options equal to 90% of the total number of options tendered by the eligible employee. Subject to the terms and conditions of this offer, we will grant the new options on or about the first business day which is at least six months and one day after the date we cancel the options accepted for exchange. You may tender options for all, some or none of the outstanding, unexercised options you currently hold. All tendered options accepted by us through the offer will be canceled as promptly as practicable after 12:00 midnight on the date the offer ends. The offer is currently scheduled to expire on Monday, July 28, 2003 (the "expiration date"), and we expect to cancel the options on Tuesday, July 29, 2003, or as soon as possible thereafter (the "cancellation date"). The offer is not conditioned on a minimum number of options being tendered. Participation in the offer is completely voluntary. The offer is subject to conditions that we describe in the section entitled "Conditions of the Offer" of this offer to exchange. You may participate in the offer if you are an eligible employee. Members of our board of directors are not eligible to participate in the offer. In order to receive a new option pursuant to this offer, you must remain an employee as of the date on which the new options are granted, which will be at least six months and one day after the cancellation date. If you tender options for exchange as described in the offer, and we accept your tendered options, then, subject to the terms of this offer, we will grant you new options under the Hawk plans. The exercise price per share of the new options will be 100% of the fair market value on the date of grant, as determined by the closing price reported by the New York Stock Exchange on the date of grant. We expect that the date of grant will be six months and one day after the date we cancel the options accepted for exchange. Shares of Hawk common stock are traded on the New York Stock Exchange under the symbol "HWK." On June 26, 2003, the closing price of our common stock reported on the New York Stock Exchange was $3.32 per share. We cannot predict the exercise price of the new options. Each new option granted will vest in accordance with the vesting schedule of the canceled options, as follows: - any shares that were fully vested on the date that the offer expires will be fully vested, - all unvested options on the date the offer expires that would have been fully vested on or prior to the date the new options are granted (at least six months and one day from the date the offer expires) will be fully vested, and - all remaining unvested options will have a vesting schedule that is equivalent to what would have been in place had the cancelled options remained in effect. Although the Compensation Committee (the "committee") of our board of directors has approved the offer, neither we nor our board of directors or the committee makes any recommendation as to whether you should tender your options for exchange. You must make your own decision whether or not to tender your options. WE RECOMMEND THAT YOU EVALUATE CURRENT AND HISTORICAL MARKET PRICES FOR OUR COMMON STOCK, AMONG OTHER FACTORS, BEFORE DECIDING WHETHER TO TENDER YOUR OPTIONS. THIS OFFER TO EXCHANGE HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") OR ANY STATE SECURITIES COMMISSION NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS OFFER TO EXCHANGE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. You should direct questions about the offer or requests for assistance or for additional copies of this offer to exchange, the letter from Ronald E. Weinberg dated June 27, 2003, the election form and the withdrawal form to: Thomas A. Gilbride Vice President - Finance Hawk Corporation 200 Public Square Suite 30-5000 Cleveland, Ohio 44114 Telephone: 216-861-3553 TABLE OF CONTENTS
SUMMARY TERM SHEET................................................................................................1 What Securities are We Offering to Exchange?..................................................................1 Who Is Eligible to Participate?...............................................................................1 Why Are We Making the Offer?..................................................................................1 What are the Conditions to the Offer?.........................................................................2 How Many New Options will You Receive in Exchange for Your Tendered Options?..................................2 When will You Receive Your New Options?.......................................................................2 Why won't You Receive your New Options Immediately after the Expiration Date of the Offer?....................2 If You Tender Options in the Offer, will You be Eligible to Receive other Option Grants before You Receive your New Options?................................................................................3 Will You be Required to Give Up all Your Rights to the Canceled Options?......................................3 What will the Exercise Price of the New Options be?...........................................................3 When will the New Options Vest?...............................................................................3 What if We Enter into a Merger or other Similar Transaction?..................................................4 If You Choose to Tender an Option that is Eligible for Exchange, Do You Have to Tender All the Shares in that Option?..........................................................................................5 What Happens to Options that You Choose Not to Tender or that Are Not Accepted for Exchange?..................5 What Happens if You Choose to Exercise Options that are not Subject to this Offer to Exchange or You Choose not to Tender?....................................................................................5 Will You Have to Pay Taxes if You Exchange Your Options in the Offer?.........................................5 If Your Current Options are Incentive Stock Options, Will Your New Options be Incentive Stock Options?........6 When will Your New Options Expire?............................................................................6 When does the Offer Expire? Can the Offer be Extended, and if so, How will You be Notified if it is Extended?................................................................................................6 How do You Tender Your Options?...............................................................................6 During What Period of Time May You Withdraw Previously Tendered Options?......................................7 Can You Change Your Election Regarding Particular Tendered Options?...........................................7 Whom Can You Talk to if You Have Questions About the Offer?...................................................7 CERTAIN RISKS OF PARTICIPATING IN THE OFFER.......................................................................8 Economic Risks................................................................................................8
Tax-Related Risks.............................................................................................9 THE OFFER........................................................................................................11 Eligibility..................................................................................................11 Number of Options; Expiration Date...........................................................................11 Purpose of the Offer.........................................................................................12 Procedures for Tendering Options.............................................................................13 Withdrawal rights and change of election.....................................................................14 Acceptance of options for exchange and issuance of new options...............................................15 Conditions of the offer......................................................................................16 Price Range of Shares Underlying the Options.................................................................18 Source and Amount of Consideration; Terms of New Options.....................................................18 Information About Hawk.......................................................................................24 Interests of Directors and Officers; Transactions and Arrangements Concerning the Options....................26 Status of Options Acquired by us in the Offer; Accounting Consequences of the Offer..........................27 Legal Matters; Regulatory Approvals..........................................................................27 Material Federal Income Tax Consequences.....................................................................28 Extension of Offer; Termination; Amendment...................................................................30 Fees and Expenses............................................................................................31 Additional Information.......................................................................................31 Miscellaneous................................................................................................32
ii SUMMARY TERM SHEET The following are answers to some of the questions that you may have about the offer. We urge you to read carefully the remainder of this offer to exchange and the other offer documents because the information in this summary is not complete, and additional important information is contained in the remainder of this offer to exchange and the other offer documents. We have included cross-references to sections of this offer to exchange where you can find a more complete description of the topics in this summary. WHAT SECURITIES ARE WE OFFERING TO EXCHANGE? We are offering to exchange all outstanding, unexercised options to purchase shares of common stock of Hawk having an exercise price of $6.00 per share or more held by eligible employees for new options we will grant under the Hawk plans. (See the section captioned "Number of Options; Expiration Date"). WHO IS ELIGIBLE TO PARTICIPATE? Employees are eligible to participate if they are employees of Hawk or any of our subsidiaries who are not members of our board of directors as of the date the offer commences and the date on which the tendered options are canceled. Members of our board of directors are not eligible to participate in the offer. In order to receive a new option, you must remain an employee as of the date the new options are granted, which will be at least six months and one day after the cancellation date for the tendered options. If Hawk does not extend the offer, we expect that the new options will be granted on or about January 30, 2004. (See the section captioned "Eligibility"). WHY ARE WE MAKING THE OFFER? We issued the options currently outstanding to provide our eligible employees with additional incentive, to promote the success of our business, and to encourage our eligible employees to continue their employment with us. Beginning in 2001, due to poor business conditions, our employees have forgone customary salary increases and performance bonuses. In addition, in 2001 and 2002, we eliminated our discretionary profit sharing contributions to our employees under our 401(k) plan. Nevertheless, our employees have remained committed to us in helping us achieve our long-term goals. We believe the offer to exchange is a valuable incentive for eligible employees to stay with Hawk and increase stockholder value. Most of our outstanding options, whether or not they are currently exercisable, have exercise prices that are significantly higher than the current market price of our shares. We believe these options are unlikely to be exercised in the foreseeable future. By making this offer to exchange outstanding options for new options that will have an exercise price equal to the market value of the shares on the new grant date, we intend to provide our eligible employees with the benefit of owning options that over time may have a greater potential to increase in value, which creates better performance incentives for eligible employees and thereby maximizes stockholder value. (See the section captioned "Purpose of the Offer"). WHAT ARE THE CONDITIONS TO THE OFFER? The offer is not conditioned on a minimum number of options being tendered. Participation in the offer is completely voluntary. The conditions are described in the section captioned "Procedures for Tendering Options - Conditions of the offer." HOW MANY NEW OPTIONS WILL YOU RECEIVE IN EXCHANGE FOR YOUR TENDERED OPTIONS? If you meet the eligibility requirements, and subject to the terms of this offer, the number of new options you will receive will depend on the exercise price at which your tendered options were granted. Your tendered options will be exchanged for new options as follows: - Tendered options with an exercise price per share between $6.00 and $16.99 will be replaced with new options equal to the number of options tendered by the eligible employee, or - Tendered options with an exercise price per share of $17.00 or greater will be replaced with new options equal to 90% of the total number of options tendered by the eligible employee. For example, if the option you elect to exchange is exercisable for 100 shares of our common stock with an exercise price of $6.00 per share, your new option will be exercisable for 100 shares of our common stock at the new exercise price. If the option you elect to exchange is exercisable for 100 shares of our common stock with an exercise price of $17.00 per share, your new option will be exercisable for 90 shares (90% of 100 tendered options) of our common stock. New options will be granted under the Hawk plans, unless prevented by law or applicable regulations. All new options will be subject to a new option agreement between you and us. You must execute the new option agreement before receiving new options. (See the section captioned "Number of Options; Expiration Date"). WHEN WILL YOU RECEIVE YOUR NEW OPTIONS? We will grant the new options on or about the first business day that is at least six months and one day after the date we cancel the options accepted for exchange. The committee will select the actual grant date for the new options. If we cancel tendered options on July 29, 2003, which is the scheduled date for the cancellation of the options, or the next business day following the expiration date of the offer, the new options will not be granted until January 30, 2004, at the earliest. (See the section captioned "Procedures for Tendering Options - Conditions of the offer"). WHY WON'T YOU RECEIVE YOUR NEW OPTIONS IMMEDIATELY AFTER THE EXPIRATION DATE OF THE OFFER? If we were to grant the new options on any date which is earlier than six months and one day after the date we cancel the options accepted for exchange, we would be required for financial 2 reporting purposes to treat the new options as variable awards. This means that, in every fiscal quarter, we would be required to record the non-cash accounting impact of decreases and increases in our share price as a compensation expense for the new options issued under this offer. We would have to continue this variable accounting for these new options until they were exercised, forfeited or terminated. The higher the market value of our shares, the greater the compensation expense we would have to record. By deferring the grant of the new options for at least six months and one day, we believe we will not have to treat the new options as variable awards. IF YOU TENDER OPTIONS IN THE OFFER, WILL YOU BE ELIGIBLE TO RECEIVE OTHER OPTION GRANTS BEFORE YOU RECEIVE YOUR NEW OPTIONS? If we accept options you tender in the offer, you may not receive any other option grants before you receive your new options. Because of accounting rules that could apply to interim option grants as a result of the offer, we will defer the grant of any additional options until the new option grant date to avoid incurring compensation expense against our earnings. If, for any reason, you do not remain an employee of Hawk or our subsidiaries through the date we grant the new options, you will not receive any new options or other consideration in exchange for your tendered options that have been accepted for exchange. This means that if you quit, with or without a good reason, or die, or we terminate your employment, with or without cause, prior to the date we grant the new options, you will not receive anything for the options that you tendered and we canceled. (See the section captioned "Procedure for Tendering Options - Acceptance of options for exchange and issuance of new options"). WILL YOU BE REQUIRED TO GIVE UP ALL YOUR RIGHTS TO THE CANCELED OPTIONS? Once we have accepted options tendered by you, your options will be canceled and you will no longer have any rights under those options. (See the section captioned "Procedure for Tendering Options - Acceptance of options for exchange and issuance of new options"). WHAT WILL THE EXERCISE PRICE OF THE NEW OPTIONS BE? The exercise price per share of the new options will be 100% of the fair market value on the date of grant, as determined by the closing price reported by the New York Stock Exchange on the date of grant. Accordingly, we cannot predict the exercise price of the new options. Because we will not grant new options until on or about the first business day that is at least six months and one day after the date we cancel the options accepted for exchange, the new options may have a higher exercise price than some or all of your current options. We recommend that you evaluate current and historical market quotes for our common stock, among other factors, before deciding whether or not to tender your options. (See the section captioned "Procedure for Tendering Options - Acceptance of options for exchange and issuance of new options"). WHEN WILL THE NEW OPTIONS VEST? The vesting of the new options will be in accordance with the vesting schedule of the canceled options. You will receive credit for vesting accrued prior to the cancellation of the tendered 3 options and will receive credit for the period between the cancellation of the tendered options and the grant of the new options. Each new option granted will vest as follows: - any shares that were fully vested on the date that the offer expires will be fully vested, - all unvested options on the date the offer expires that would have been fully vested on or prior to the date the new options are granted (at least six months and one day from the date the tendered options are canceled) will be fully vested, and - all remaining unvested options will have a vesting schedule that is equivalent to what would have been in place had the cancelled option remained in effect. WHAT IF WE ENTER INTO A MERGER OR OTHER SIMILAR TRANSACTION? We are not in discussions with anyone regarding a merger of Hawk or any other similar transaction. However, if we merge or consolidate with or are acquired by another entity between the expiration date and new option grant date, then we will endeavor to cause the resulting entity to be obligated to grant the new options under the same terms as provided in this offer. However, we may not be able to cause the resulting entity to assume the terms of this offer, including the obligation to grant new options. Further, if the resulting entity does agree to assume the terms of this offer, the type of security and the number of shares covered by each new option would be adjusted based on the consideration per share given to holders of options to acquire our common stock that are outstanding at the time of the acquisition. Such new option will have an exercise price at least equal to the fair market value of the acquiror's stock on the new option grant date. As a result of this adjustment, you may receive options for more or fewer shares of the acquiror's stock than (1) the number of shares subject to the eligible options that you exchange, or (2) the number of shares subject to new options you would have received upon exchange if no acquisition had occurred. If such a merger or similar transaction does occur, the new option grant date will be the first business day that is at least six months and one day after the cancellation date. Consequently, you may not be able to exercise your new options until after the effective date of the merger or similar transaction. If you submit your options in the offer to exchange and the merger or similar transaction occurs after the expiration date but before the new option grant date, you will not be able to exercise your options to purchase our common stock before the effective date of the merger or similar transaction. You should be aware that these types of transactions could significantly affect our stock price, including potentially substantially increasing the price of our shares. Depending on the timing and structure of a transaction of this type, you might lose the benefit of any price appreciation in our common stock resulting from a merger or similar transaction. The exercise price of new options granted to you after the announcement of a merger or similar transaction would reflect any appreciation in our stock price resulting from the announcement, and could therefore exceed the exercise price of your current options. This could result in option holders who do not participate in this offer receiving a greater financial benefit than option holders who do 4 participate. In addition, your new options may be exercisable for stock of the acquirer, not Hawk common stock, while option holders who decide not to participate in this offer could exercise their options before the effective date of the merger or similar transaction and sell their Hawk common stock before the effective date. IF YOU CHOOSE TO TENDER AN OPTION THAT IS ELIGIBLE FOR EXCHANGE, DO YOU HAVE TO TENDER ALL THE SHARES IN THAT OPTION? Yes. We are not accepting partial tenders of options. Accordingly, you may elect to tender one or more of your option grants, but you must elect to tender all of the unexercised shares subject to each grant or none of the shares for that particular grant. For example, if you hold (1) an option to purchase 1,000 shares at an exercise price of $6.75 per share, and (2) an option to purchase 2,000 shares at an exercise price of $17.00 per share, you may elect to exchange: - only your first option covering 1,000 shares; - only your second option covering 2,000 shares; - one of your two options; - both of your options; or - none of your options. These are your only choices in the above example. (See the section captioned "Procedure for Tendering Options - Acceptance of options for exchange and issuance of new options"). WHAT HAPPENS TO OPTIONS THAT YOU CHOOSE NOT TO TENDER OR THAT ARE NOT ACCEPTED FOR EXCHANGE? Nothing. Options that you choose not to tender for exchange or that we do not accept for exchange remain outstanding until they expire by their terms. WHAT HAPPENS IF YOU CHOOSE TO EXERCISE OPTIONS THAT ARE NOT SUBJECT TO THIS OFFER TO EXCHANGE OR YOU CHOOSE NOT TO TENDER OPTIONS IN THIS OFFER? You may exercise any option that you have that is not subject to this offer to exchange, provided the option is eligible to be exercised. In addition, you may exercise any option that you choose not to tender in this offer in accordance with your old option agreement. WILL YOU HAVE TO PAY TAXES IF YOU EXCHANGE YOUR OPTIONS IN THE OFFER? If you exchange your current options for new options, you should not be required under current law to recognize income for federal income tax purposes at the time of the exchange. Further, at the grant date of the new options, you will not be required under current law to recognize income for federal income tax purposes. We recommend that you consult with your own tax advisor with respect to the tax consequences of participating in the offer. (See the section captioned "Material Federal Income Tax Consequences"). 5 In addition, if you exchange your current options for new options and you are subject to taxation in a foreign jurisdiction, whether by reason of nationality, residence or otherwise, you should consult with your own tax advisor regarding the tax consequences of participating in the offer. If you are subject to tax in the United States, but are also subject to the tax laws in another country, you should be aware that there may be other tax consequences which may apply to you; you should be certain to consult your own tax advisors. IF YOUR CURRENT OPTIONS ARE INCENTIVE STOCK OPTIONS, WILL YOUR NEW OPTIONS BE INCENTIVE STOCK OPTIONS? If your current options are incentive stock options, your new options will be granted as incentive stock options to the maximum extent they qualify as incentive stock options under the tax laws on the date of the grant. For options to qualify as incentive stock options under the current tax laws, the value of shares subject to options that first become exercisable by the option holder in any calendar year cannot exceed $100,000, as determined using the option exercise price. The excess value is deemed to be a non-qualified stock option, which is an option that is not qualified to be an incentive stock option under the current tax laws. (See the section captioned "Material Federal Income Tax Consequences"). WHEN WILL YOUR NEW OPTIONS EXPIRE? Your new options will expire ten years from the date of the original grant date, or earlier if your employment with Hawk terminates. WHEN DOES THE OFFER EXPIRE? CAN THE OFFER BE EXTENDED, AND IF SO, HOW WILL YOU BE NOTIFIED IF IT IS EXTENDED? The offer expires on July 28, 2003, at midnight, Eastern Time, unless it is extended by us. We may, in our discretion, extend the offer at any time, but we cannot assure you that the offer will be extended or, if extended, for how long. If the offer is extended, we will make a public announcement of the extension no later than 8:00 a.m., Eastern Time, on the next business day following the previously scheduled expiration of the offer period. (See the section captioned "Extension of Offer; Termination; Amendment"). HOW DO YOU TENDER YOUR OPTIONS? If you decide to tender your options, you must deliver, before midnight, Eastern Time, on July 28, 2003 (or such later date and time as we may extend the expiration of the offer), a properly completed and executed election form and any other documents required by the election form by fax to 216-861-4546, US mail, or hand delivery to Thomas A. Gilbride, Vice President - Finance, at 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114. This is a one-time offer, and we will strictly enforce the tender offer period. We reserve the right to reject any or all tenders of options that we determine are not in appropriate form or those we determine are unlawful to accept. Subject to our rights to extend, terminate and amend the offer, we currently expect that we will accept and cancel all properly tendered options promptly after the expiration of the offer. (See the section captioned "Procedures of Tendering Options"). 6 DURING WHAT PERIOD OF TIME MAY YOU WITHDRAW PREVIOUSLY TENDERED OPTIONS? You may withdraw your tendered options at any time before the offer expires at midnight, Eastern Time, on July 28, 2003. If we extend the offer beyond that time, you may withdraw your tendered options at any time until the extended expiration of the offer. In addition, although we currently intend to cancel validly tendered options promptly after the expiration of this offer, if we have not accepted and canceled your tendered options by August 25, 2003, you may withdraw your tendered options at any time after August 25, 2003. To withdraw tendered options, you must deliver to us by fax to 216-861-4546, US mail, or hand delivery to Thomas A. Gilbride a signed withdrawal form, with the required information, while you still have the right to withdraw the tendered options. Once you have withdrawn options, you may re-tender options only by again following the delivery procedures described above. (See the section captioned "Procedures for Tendering Options - Withdrawal rights and changes of election"). CAN YOU CHANGE YOUR ELECTION REGARDING PARTICULAR TENDERED OPTIONS? You may change your election regarding particular tendered options at any time before the offer expires at midnight, Eastern Time, on July 28, 2003. If we extend the offer beyond that time, you may change your election regarding particular tendered options at any time until the extended expiration of the offer. In order to change your election, you must deliver to us by fax to 216-861-4546, US mail, or hand delivery to Thomas A. Gilbride at 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114, a new election form, which includes the information regarding your new election, and is clearly dated after your original election form. (See the section captioned "Procedures for Tendering Options - Withdrawal rights and changes of election"). WHOM CAN YOU TALK TO IF YOU HAVE QUESTIONS ABOUT THE OFFER? For additional information or assistance, you should contact: Thomas A. Gilbride Vice President - Finance Hawk Corporation 200 Public Square, Suite 30-5000 Cleveland, OH 44114 Telephone: 216-861-3553 7 CERTAIN RISKS OF PARTICIPATING IN THE OFFER Participation in the offer involves a number of potential risks, including those described below. This list briefly highlights some of the risks. Eligible participants should carefully consider these and other risks and are encouraged to speak with an investment and tax advisor as necessary before deciding whether and to what extent to participate in the offer. In addition, we strongly urge you to read the rest of this offer to exchange, along with the other documents, before deciding whether and to what extent to participate in the exchange offer. ECONOMIC RISKS Participation in the offer will make you ineligible to receive any option grants until January 30, 2004 at the earliest. Employees are generally eligible to receive option grants at any time that the committee chooses to make them. However, if you participate in the offer, you will not be eligible to receive any option grants until January 30, 2004 at the earliest. If the stock price increases after the date your tendered options are canceled, your canceled options might have been worth more than the replacement options that you have received in exchange for them. For example, if you cancel options with a $6.00 exercise price per share and Hawk's stock price appreciates to $7.00 before the replacement grants are made, your replacement option will have a higher exercise price than the canceled option. Our ability to maintain the listing of our common stock on the New York Stock Exchange may affect the price of our stock. In January 2003, the New York Stock Exchange accepted our business plan for continued listing on the exchange. We are subject to quarterly monitoring to the goals outlined in our plan presented to the New York Stock Exchange. Our plan includes steps to comply with the New York Stock Exchange's listing criteria of maintaining stockholders' equity of not less than $50.0 million over a 30 trading-day period. Failure to achieve the plan's goal by March 2004 will result in our common stock being subject to New York Stock Exchange delisting which may adversely impact the price of our common stock. Our total market capitalization based on the 8.6 million shares of common stock and the $2.58 per share closing price of our common stock on March 31, 2003 was approximately $22.2 million. As of June 26, 2003, based on the closing price of our common stock of $3.32 per share, our total market capitalization was approximately $28.5 million. Our shareholders' equity at March 31, 2003 was $45.6 million. We can provide no assurance regarding whether or not our common stock will continue to be listed on the New York Stock Exchange. If your employment terminates prior to the grant of the replacement option, you will receive neither a replacement option nor the return of your canceled option 8 Once your tendered option grants are cancelled in the offer, you will no longer have any rights with respect to those grants. In addition, unless you are actively employed with us on the new option grant date, you will not receive any new option grants. Accordingly, if your employment with us terminates for any reason, even a general reduction-in-force, prior to the new option grant date, you will not have the benefit of or any right to either your canceled option grants or any new option grants. If we are acquired by another company, your canceled option grants might have been worth more than the new option grants that you receive in exchange for them or you may not receive any new options A merger or consolidation with or an acquisition of Hawk by another entity between the expiration date and the new option grant date could have a substantial effect on the price of our common stock, including significantly increasing the price of our common stock. Depending on the structure and terms of any such transaction, eligible employees who participate in the offer might be deprived of the appreciation in the price of our common stock resulting from the merger or similar transaction. This could result in a greater financial benefit for those eligible employees who decided not to participate in the offer compared to those who did participate in the offer. TAX-RELATED RISKS Your replacement option may be a nonqualified stock option, whereas your canceled option may have been an incentive stock option If your canceled option was an incentive stock option, your new option will be an incentive stock option, but only to the extent it qualifies as such under the Internal Revenue Code of 1986, as amended. For options to qualify as incentive stock options, the value of shares subject to options that first become exercisable by the option holder in any calendar year cannot exceed $100,000, as determined using the option exercise price. By participating in this exchange and because of the new exercise price which may exceed your old exercise price, your options may exceed this limit and will be treated as nonqualified stock options. In general, nonqualified stock options are less favorable to you from a tax perspective. For more detailed information, please read the rest of the offer to exchange, and see the tax disclosure set forth in the prospectus for Hawk dated September 17, 1998 pursuant to the 1997 plan and the prospectus for Hawk dated September 29, 2000 pursuant to the 2000 plan. In addition, see "Additional Information" for instructions on how you can obtain copies of the documents referred to in this section. Your replacement incentive stock options will be subject to a new holding period for certain favorable tax treatment Holders of incentive stock options receive certain favorable tax treatment under the Internal Revenue Code. First, you will not incur ordinary income tax when you exercise an incentive stock option (although you may be subject to alternative minimum tax). Second, any profit you realize when you sell shares acquired upon the exercise of an incentive stock option will be taxed at the capital gains rate if you do not sell your option shares earlier than one year after the date of exercise and two years after the date of grant. If you participate in the offer, you will be canceling your existing options and receiving a new grant. Therefore, you will lose the benefit 9 of any holding period under the old options and you will begin a new holding period under the new options. If you want to receive the tax benefits accorded to incentive stock options, you will likely not be able to sell your option shares before January 30, 2006. Please see the section captioned "Material Federal Income Tax Consequences," below for a more detailed description of the tax treatment of incentive stock options. You should consult with your tax advisor for further information about this risk. IMPORTANT If you wish to tender your options for exchange, you must complete and sign the election form in accordance with its instructions, and fax, US mail, or hand deliver it and any other required documents to Thomas A. Gilbride at Hawk, 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114, fax number 216-861-4546, no later than midnight, Eastern Time, on July 28, 2003. We are not making the offer to, and we will not accept any tender of options from or on behalf of, option holders in any jurisdiction in which the offer or the acceptance of any tender of options would not be in compliance with the laws of that jurisdiction. However, we may, at our discretion, take any actions necessary for us to make the offer to option holders in any of these jurisdictions. WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER YOU SHOULD TENDER OR NOT TENDER YOUR OPTIONS THROUGH THE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION IN THIS DOCUMENT OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THE OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT AND IN THE RELATED LETTER FROM RONALD E. WEINBERG DATED JUNE 27, 2003, THE ELECTION FORM AND THE WITHDRAWAL FORM. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US. 10 THE OFFER ELIGIBILITY Persons holding options are eligible employees if they are employees of Hawk or one of our subsidiaries who are not members of the board of directors as of the date the offer commences and the date on which the tendered options are canceled. Members of our board of directors are not eligible to participate in the offer. Our executive officers and directors are identified on Schedule A to this offer to exchange. In order to receive a new option, you must remain an employee who is not a member of our board of directors of the date the new options are granted, which will be at least six months and one day after the cancellation date. If Hawk does not extend the offer, the new options will be granted on or shortly after January 30, 2004. NUMBER OF OPTIONS; EXPIRATION DATE Subject to the terms and conditions of the offer, we will exchange all outstanding, unexercised options of our common stock having an exercise price of $6.00 or more per share held by eligible employees that are properly tendered and not validly withdrawn in accordance with the section captioned "Procedures for Tendering Options" before the expiration date in return for new options. If you meet the eligibility requirements and subject to the terms of this offer, the number of new options you will receive will depend on the exercise price at which your tendered options were granted, subject to adjustments for any stock splits, reverse stock splits, stock dividends and similar events. Your tendered options will be exchanged for new options as follows: - Tendered options with an exercise price per share between $6.00 and $16.99 will be replaced with new options equal to the number tendered by the eligible employee, and - Tendered options with an exercise price per share of $17.00 or greater will be replaced with new options equal to 90% of the total number of options tendered by the eligible employee. For example, if the option you elect to tender covers 100 shares of our common stock with an exercise price of $6.00 per share, your new option will be exercisable for 100 shares of our common stock at the new exercise price. If the option you elect to exchange is exercisable for 100 shares of our common stock granted at an exercise price of $17.00 per share, your new option will be exercisable for 90 shares (90% of 100 tendered options) of our common stock. All new options will be subject to the terms of the Hawk plans, and to a new option agreement between you and us. If, for any reason, you do not remain an employee of Hawk or one of our subsidiaries through the date we grant the new options, you will not receive any new options or other consideration in exchange for your tendered options that have been accepted for exchange. 11 This means that if you quit, with or without a good reason, or die, or we terminate your employment, with or without cause, prior to the date we grant the new options, you will not receive anything for the options that you tendered and we canceled. The offer to exchange will expire at midnight, Eastern Time, July 28, 2003, unless and until we, in our discretion, have extended the period of time during which the offer will remain open, in which event the term expiration date refers to the latest time and date at which the offer, as so extended, expires. See the section captioned "Extension of Offer; Termination; Amendment" of this offer to exchange for a description of our rights to extend, delay, terminate and amend the offer. We will also notify you of any other material change in the information contained in this offer to exchange. For purposes of the offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, Eastern Time. PURPOSE OF THE OFFER We issued the options outstanding to provide our eligible employees with additional incentive, to promote the success of our business, and to encourage our eligible employees to continue their employment with us. Beginning in 2001, due to poor business conditions, our employees have forgone customary salary increases and performance bonuses. In addition, in 2001 and 2002, we eliminated our discretionary profit sharing contributions to our employees under our 401(k) plan. Nevertheless, our employees have remained committed to us in helping us achieve our long-term goals. We believe the offer to exchange is a valuable incentive for eligible employees to stay with Hawk and increase stockholder value. Most of our outstanding options, whether or not they are currently exercisable, have exercise prices that are significantly higher than the current market price of our shares. We believe these options are unlikely to be exercised in the foreseeable future. By making this offer to exchange outstanding options for new options that will have an exercise price equal to the market value of the shares on the grant date, we intend to provide our eligible employees with the benefit of owning options that over time may have a greater potential to increase in value, create better performance incentives for employees and thereby maximize stockholder value. However, because we will not grant new options until at least six months and one day after the date we cancel the options accepted for exchange, the new options may have a higher exercise price than some or all of our current outstanding options. Neither the committee nor our board of directors makes any recommendation as to whether you should tender or not tender your options, nor have we authorized any person to make any such recommendation. You are urged to evaluate carefully all of the information in this offer to exchange and to consult your own investment and tax advisors. You must make your own decision whether or not to tender your options for exchange. 12 PROCEDURES FOR TENDERING OPTIONS Proper tender of options To validly tender your options through the offer, you must, in accordance with the terms of the election form, properly complete, execute and deliver the election form to us by fax to 216-861-4546, US mail, or hand delivery to Thomas A. Gilbride, Hawk Corporation, 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114 along with any other required documents. Mr. Gilbride must receive all of the required documents before the expiration date which is midnight, Eastern Time on July 28, 2003. THE DELIVERY OF ALL DOCUMENTS, INCLUDING ELECTION FORMS AND WITHDRAWAL FORMS AND ANY OTHER REQUIRED DOCUMENTS, IS AT YOUR RISK. Determination of validity; rejection of options; waiver of defects; no obligation to give notice of defects We will determine, in our discretion, all questions as to the form of documents and the validity, form, eligibility, including time of receipt, and acceptance of any tender of options. Our determination of these matters will be final and binding on all parties. We reserve the right to reject any or all tenders of options that we determine are not in appropriate form or those we determine are unlawful to accept. Otherwise, we will accept properly and timely tendered options that are not validly withdrawn. We also reserve the right to waive any of the conditions of the offer or any defect or irregularity in any tender of any particular options or for any particular option holder. No tender of options will be deemed to have been properly made until all defects or irregularities have been cured by the tendering option holder or waived by us. Neither we nor any other person is obligated to give notice of any defects or irregularities in tenders, nor will anyone incur any liability for failure to give any notice. This is a one-time offer, and we will strictly enforce the offer period, subject only to an extension which we may grant in our sole discretion. Our acceptance constitutes an agreement Your tender of options pursuant to the procedures described above constitutes your acceptance of the terms and conditions of the offer. OUR ACCEPTANCE FOR EXCHANGE OF THE OPTIONS TENDERED BY YOU THROUGH THE OFFER WILL CONSTITUTE A BINDING AGREEMENT BETWEEN US AND YOU UPON THE TERMS AND SUBJECT TO THE CONDITIONS OF THE OFFER. Subject to our rights to extend, terminate and amend the offer, we currently expect that we will accept promptly after the expiration of the offer all properly tendered options that have not been validly withdrawn. 13 Withdrawal rights and change of election You may only withdraw your tendered options or change your election in accordance with the provisions of this section. You may withdraw your tendered options at any time before midnight, Eastern Time, on July 28, 2003. If we extend the offer beyond that time, you may withdraw your tendered options at any time until the extended expiration of the offer. In addition, if we have not accepted your tendered options for exchange by midnight, Eastern Time, on August 25, 2003, you may withdraw your tendered options at any time thereafter. To validly withdraw tendered options, you must deliver to Thomas A. Gilbride by fax to 216-861-4546, US mail, or hand delivery, in accordance with the procedures listed above, a signed and dated withdrawal form, with the required information, while you still have the right to withdraw the tendered options. To validly change your election regarding the tender of particular options, you must deliver a new election form to Thomas A. Gilbride by fax to 216-861-4546, US mail, or hand delivery, in accordance with the procedures listed above. If you deliver a new election form that is properly signed and dated, it will replace any previously submitted election form, which will be disregarded. The new election form must be signed and dated and must specify: - the name of the option holder who tendered the options, - the original number of shares for which each tendered option was exercisable, and - the grant date of each option to be tendered. Except as described in the following sentence, the withdrawal form and the election form must be executed by the option holder who tendered the options exactly as the option holder's name appears on the option agreement or agreements evidencing such options. If the signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or another person acting in a fiduciary or representative capacity, the signer's full title and proper evidence of the authority of such person to act in that capacity must be indicated on the withdrawal form. If you change your mind and wish to exchange some or all of your options you have withdrawn, you must properly re-tender the withdrawn options before the expiration date by following the procedures described in the section captioned "Procedures for Tendering Options." Otherwise, any options you withdraw will thereafter be deemed not properly tendered for purposes of the offer and will remain outstanding. Neither we nor any other person is obligated to give notice of any defects or irregularities in any withdrawal form or any election form, nor will anyone incur any liability for failure to give any notice. We will determine, in our discretion, all questions as to the form and validity, including time of receipt, of any withdrawal form or election form. Our determination of these matters will be final and binding. 14 Acceptance of options for exchange and issuance of new options Upon the terms and conditions of the offer and as promptly as practicable following the expiration date, we will accept for exchange and cancel options properly tendered and not validly withdrawn before the expiration date. Once the options are cancelled, you will no longer have any rights with respect to those options. Subject to the terms and conditions of this offer, if your options are properly tendered and accepted for exchange, these options will be canceled as of the date of our acceptance, which we anticipate to be July 29, 2003, and you will be granted new options on or about the first business day that is at least six months and one day after the date we cancel the options accepted for exchange. The exercise price per share of the new options will be 100% of the fair market value on the date of grant, as determined by the closing price reported on the New York Stock Exchange on the date of grant. Accordingly, we cannot predict the exercise price of the new options. We recommend that you evaluate current and historical market quotes for our common stock, among other factors, before deciding whether or not to tender your options. If the options you tendered were incentive stock options, your new options will also be incentive stock options, to the extent they qualify as incentive stock options under the Internal Revenue Code of 1986. All other newly granted options will be nonqualified stock options. Thus, subject to the terms and conditions of this offer, if your options are properly tendered by July 28, 2003, the scheduled expiration date of the offer, and accepted for exchange and canceled on July 29, 2003, you will be granted new options on or about January 30, 2004. If we accept and cancel options properly tendered for exchange after July 29, 2003, the period in which the new options will be granted will be similarly delayed. If we accept options you tender in the offer, we will defer any grant to you of additional options for which you may be eligible before the new option grant date until after the new option grant date, so that you will be granted no new options for any reason until at least six months and one day after any of your tendered options have been canceled. We will defer the grant to you of any additional options in order to avoid incurring compensation expense against our earnings as a result of accounting rules that could apply to these interim option grants as a result of the offer. If you participate in this offer, the number of new options you will receive will depend on the exercise price at which your tendered options were granted. Your tendered options will be exchanged for new options as follows: - Tendered options with an exercise price per share between $6.00 and $16.99 will be replaced with new options equal to the number of options tendered by the eligible employee, and - Tendered options with an exercise price per share of $17.00 or greater will be replaced with new options equal to 90% of the total number of options tendered by the eligible employee. If, for any reason, you are not an employee of Hawk or one of our subsidiaries through the date we grant the new options, you will not receive any new options or other consideration in exchange for your tendered options which have been canceled pursuant to this offer. 15 We are not accepting partial tenders of options. Accordingly, you may elect to tender one or more of your option grants, but you must elect to tender all of the unexercised shares subject to each grant or none of the shares for that particular grant. For example, if you hold (1) an option to purchase 1,000 shares at an exercise price of $6.75 per share, and (2) an option to purchase 2,000 shares at an exercise price of $17.00 per share, you may elect to exchange: - only your first option covering 1,000 shares, - only your second option covering 2,000 shares, - one of your two options, - both of your options, or - none of your options. These are your only choices in the above example. For purposes of the offer, we will be deemed to have accepted options for exchange that are validly tendered and not properly withdrawn as of the time when we give oral or written notice to the option holders of our acceptance for exchange of such options, which notice may be made by press release or otherwise. Subject to our rights to extend, terminate and amend the offer, we currently expect that we will accept promptly after the expiration of the offer all properly tendered options that are not validly withdrawn. Conditions of the offer We will not accept for exchange options held by members of our board of directors. In addition, notwithstanding any other provision of the offer, we will not be required to accept any options tendered for exchange, and we may terminate or amend the offer, or postpone our acceptance and cancellation of any options tendered for exchange, in each case, subject to Rule 13e-4(f)(5) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), if at any time on or after June 27, 2003, and prior to the expiration date, any of the following events has occurred, or has been determined by us to have occurred, and, in our reasonable judgment in any case and regardless of the circumstances giving rise to the event, including any action or omission to act by us, the occurrence of such event or events makes it inadvisable for us to proceed with the offer or with such acceptance and cancellation of options tendered for exchange: - there shall have been threatened or instituted or be pending any action or proceeding by any governmental, regulatory or administrative agency or authority that directly or indirectly challenges the making of the offer, the acquisition of some or all of the tendered options pursuant to the offer, or the issuance of new options, or otherwise relates in any manner to the offer, or that, in our reasonable judgment, could materially and adversely affect our business, condition, income, operations or prospects or materially impair the contemplated benefits of the offer to Hawk, any of our subsidiaries or you, - there shall have been any action threatened, pending or taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be enforced relating to 16 the offer Hawk, or any of our subsidiaries, by any court or any authority, agency or tribunal that, in our reasonable judgment, would or might directly or indirectly: (i) make the acceptance for exchange of, or issuance of new options for, some or all of the tendered options illegal or otherwise restrict or prohibit consummation of the offer or that otherwise relates in any manner to the offer, (ii) delay or restrict our ability, or render us unable to accept for exchange, or issue new options for, some or all of the tendered options, (iii) materially impair the contemplated benefits of the offer to Hawk, or any of our subsidiaries, or (iv) materially and adversely affect Hawk or any or our subsidiaries' business, condition, income, operations or prospects or materially impair the contemplated benefits of the offer to Hawk or any of our subsidiaries; - there shall have occurred any change, development, clarification or position taken in generally accepted accounting standards that could or would require us to record compensation expense against our earnings in connection with the offer for financial reporting purposes, - a tender or exchange offer for some or all of our common stock, or a merger or acquisition proposal for Hawk, shall have been proposed, announced or made by another person or entity or shall have been publicly disclosed, or - any change or changes shall have occurred in Hawk or any of our subsidiaries' business, condition, assets, income, operations, prospects or stock ownership that, in our reasonable judgment, is or may be material to Hawk or any of our subsidiaries or may materially impair the contemplated benefits of the offer to Hawk or any of our subsidiaries. The conditions to the offer are for Hawk's benefit. We may assert them in our discretion regardless of the circumstances giving rise to them before the expiration date. We may waive them, in whole or in part, at any time and from time to time prior to the expiration date, in our discretion, whether or not we waive any other condition to the offer. Our failure at any time to exercise any of these rights will not be deemed a waiver of any such rights. The waiver of any of these rights with respect to particular facts and circumstances will not be deemed a waiver with respect to any other facts and circumstances. Any determination we make concerning the events described in this section will be final and binding upon all persons. 17 PRICE RANGE OF SHARES UNDERLYING THE OPTIONS The shares underlying your options are currently traded on the New York Stock Exchange under the symbol "HWK". The following table shows, for the periods indicated, the high and low sale prices per share of our common stock as reported by the New York Stock Exchange. Quarterly Stock Prices
Quarter Ended High Low ------------- ---- --- 2003 March 31, 2003 $2.75 $1.90 2002 March 31, 2002 $5.20 $3.41 June 30, 2002 $5.35 $3.55 September 30,2002 $3.80 $2.26 December 31, 2002 $2.66 $1.70 2001 March 31, 2001 $7.25 $5.31 June 30, 2001 $7.20 $5.37 September 30, 2001 $6.29 $3.95 December 31, 2001 $4.20 $2.65
As of June 26, 2003, the last reported sale price during regular trading hours of our common stock, as reported by the New York Stock Exchange, was $3.32 per share. As of June 26, 2003, 8,571,626 shares of our common stock were outstanding. WE RECOMMEND THAT YOU EVALUATE CURRENT AND HISTORICAL MARKET QUOTES FOR OUR COMMON STOCK, AMONG OTHER FACTORS, BEFORE DECIDING WHETHER TO TENDER YOUR OPTIONS. SOURCE AND AMOUNT OF CONSIDERATION; TERMS OF NEW OPTIONS Consideration We will issue new options to purchase shares of common stock under the Hawk plans in exchange for outstanding options properly tendered and accepted for exchange by us, which options will be canceled. The number of new options you will receive will depend on the exercise price at which your tendered options were granted. Your tendered options will be exchanged for new options as follows: - Tendered options with an exercise price per share between $6.00 and $16.99 will be replaced with new options equal to the number of options tendered by the eligible employee, and 18 - Tendered options with an exercise price per share of $17.00 or greater will be replaced with new options equal to 90% of the total number of options tendered by the eligible employee. For example, if the option you elect to tender covers 100 shares of our common stock with an exercise price of $6.00 per share, your new option will be exercisable for 100 shares of our common stock at the new exercise price. If the option you elect to exchange is exercisable for 100 shares of our common stock granted at an exercise price of $17.00 per share, your new option will be exercisable for 90 shares (90% of 100 tendered options) of our common stock. If we receive and accept tenders of all outstanding options from eligible employees, subject to the terms and conditions of this offer we will grant new options to purchase a total of up to approximately 265,530 shares of common stock. The shares issuable upon exercise of these new options would equal approximately 3% of the total shares of our common stock outstanding as of June 26, 2003. Terms of new options The new options will be granted under the Hawk plans. A new option agreement will be entered into between Hawk and each option holder who has tendered options in the offer for every new option granted. The terms and conditions of the new options may vary from the terms and conditions of the options tendered for exchange, but generally this variation will not substantially and adversely affect the rights of option holders. Because we will not grant new options until at least six months and one day after the date we cancel the options accepted for exchange, the new options may have a higher exercise price than some or all of the options, including as a result of a merger, consolidation or other significant corporate event. The following description summarizes the material terms of our 1997 plan and the 2000 plan and the options to be granted under the 1997 plan and the 2000 plan. 1997 Plan The maximum number of shares available for issuance through the exercise of options granted under our 1997 plan is 700,000. Our 1997 plan permits the granting of options intended to qualify as incentive stock options under the Internal Revenue Code and options that do not qualify as incentive stock options, referred to as nonqualified stock options. Administration. The 1997 plan is administered by the committee appointed by our board of directors. Subject to the other provisions of the 1997 plan, the committee has the power to determine the terms and conditions of the options granted, including the exercise price, the number of shares subject to the option and the exercisability of the options. Term. Options generally have a term of ten years for optionees. Incentive stock options granted to an employee who, at the time the incentive stock option is granted, owns stock representing more than 10% of the voting rights of all classes of stock of Hawk have a term of no more than five years. 19 Termination. Except as your option agreement otherwise provides, the unexercised portion of any option shall terminate at the time of the earliest to occur of the following: (i) three months after the date on which your employment is terminated for any reason other than by reason of cause, a mental or physical disability or death, (ii) upon termination of your employment for cause, (iii) one year after the date your employment is terminated by reason of a mental or physical disability, or (iv) one year after the date of termination of your employment by reason of death. The termination of your option under the circumstances specified in this section will result in the termination of your interests in the 1997 plan. In addition, your option may terminate, together with our 1997 plan and all other outstanding options issued to other employees, following the occurrence of certain corporate events, as described below. Exercise price. The committee determines the exercise price at the time the option is granted. For all eligible employees, the exercise price per share of the new options will be 100% of the fair market value on the date of grant, as determined by the closing price reported on the date of grant by the New York Stock Exchange or if our common stock is not then listed on the New York Stock Exchange on any securities quotation system or any stock exchange on which our common stock is then quoted or listed. However, the exercise price may not be less than 110% of the closing price per share reported by the New York Stock Exchange on the date of grant for options intended to qualify as incentive stock options granted to an employee who, at the time the incentive stock option is granted, owns stock representing more than 10% of the voting rights of all classes of stock of Hawk. Vesting and exercise. Each stock option agreement specifies the term of the option and the date when the option becomes exercisable. The terms of vesting are determined by the committee. Options granted by us to employees generally vest at a rate of one-half of the shares subject to the option after twelve months, and then the remaining one-half of the total shares subject to the option vest the following year, provided the employee remains continuously employed by Hawk. The new options granted through the offer will vest as follows: - any shares that were fully vested on the date that the offer expires will be fully vested, - all unvested options on the date the offer expires that would have been fully vested on or prior to the date the new options are granted (at least six months and one day from the date this offer expires) will be fully vested, and 20 - all remaining unvested options will have a vesting schedule that is equivalent to what would have been in place had the canceled option remained in effect. Payment of exercise price. The permissible methods of payment of the option exercise price generally include the following: - cash, - certified or official bank check, - certain other shares of our common stock, or - a combination of the foregoing methods. Adjustments upon certain events. If there is a change in our capitalization, such as a stock split, reverse stock split, stock dividend or other similar event, and the change results in an increase or decrease in the number of issued shares without receipt of consideration by us, an appropriate adjustment will be made to the price of each option and the number of shares subject to each option. Transferability of options. Incentive stock options may not be transferred, other than by will or the laws of descent and distribution. Nonqualified stock options may be transferred only as follows: (i) to the spouse or any children or grandchildren of such person that receives the nonqualified stock option, (ii) as a charitable contribution or gift, (iii) to any trust, partnership, limited liability company or other entity in which the optionee acts as trustee, managing partner, managing member or otherwise controls, or (iv) by will or the laws of intestate succession. In the event of your death, options may be exercised by a person who acquires the right to exercise the option by bequest or inheritance. Termination of employment. If, for any reason, you are not an employee of Hawk from the date you tender options through the date we grant the new options, you will not receive any new options or any other consideration in exchange for your tendered options that have been accepted for exchange. This means that if you quit, with or without good reason, or die, or we terminate your employment, with or without cause, before the date we grant the new options, you will not receive anything for the options that you tendered and which we canceled. Registration of option shares. All of the 700,000 shares of common stock issuable upon exercise of options under our 1997 plan have been registered under the Securities Act of 1933, as amended (the "Securities Act"), on a registration statement on Form S-8 filed with the SEC. All the shares issuable upon exercise of all new options to be granted before the offer will be registered under the Securities Act. Unless you are one of our affiliates, you will be able to sell your option shares free of any transfer restrictions under applicable U.S. securities laws. Federal income tax consequences. You should refer to the section of this offer captioned "Material Federal Income Tax Consequences" to exchange for a discussion of the federal income 21 tax consequences of the new options and the options tendered for exchange, as well as the consequences of accepting or rejecting the new options under this offer to exchange. 2000 Plan The maximum number of shares available for issuance through the exercise of options granted under our 2000 plan is 700,000. Our 2000 Stock Plan permits the granting of options intended to qualify as incentive stock options under the Internal Revenue Code and options that do not qualify as incentive stock options, referred to as nonqualified stock options. In addition, the 2000 plan provides for the granting of stock appreciation rights, restricted stock awards and performance-based awards. Administration. The 2000 plan is administered by the committee. Subject to the other provisions of the 2000 plan, the committee has the power to determine the terms and conditions of the options and awards granted, including the exercise price, the number of shares subject to the option and the exercisability of the options. Term. Options generally have a term of ten years for optionees. Termination. Except as your option agreement otherwise provides, the unexercised portion of any option shall terminate at the time of the earliest to occur of the following: (i) three months after the date on which your employment is terminated for any reason other than by reason of cause, a mental or physical disability or death, (ii) upon termination of your employment for cause, (iii) one year after the date your employment is terminated by reason of a mental or physical disability, or (iv) one year after the date of termination of your employment by reason of death. The termination of your option under the circumstances specified in this section will result in the termination of your interests in the 2000 plan. In addition, your option may terminate, together with the 2000 plan and all other outstanding options issued to other employees, following the occurrence of certain corporate events, as described below. Exercise price. The committee determines the exercise price at the time the option is granted. For all eligible employees, the exercise price per share of the new options will be 100% of the fair market value on the date of grant, as determined by the closing price reported on the date of grant by the New York Stock Exchange or if our common stock is not then listed on the New York Stock Exchange on any securities quotation system or any stock exchange on which our common stock is then quoted or listed. Vesting and exercise. Each stock option agreement specifies the term of the option and the date when the option becomes exercisable. The terms of vesting are determined by the 22 committee. Options granted by us to employees generally vest at a rate of one-half of the shares subject to the option after twelve months, and then the remaining one-half of the total shares subject to the option vest the following year, provided the employee remains continuously employed by Hawk. The new options granted through the offer will vest as follows: - any shares that were fully vested on the date that the offer expires will be fully vested, - all unvested options on the date the offer expires that would have been fully vested on or prior to the date the new options are granted (at least six months and one day from the date this offer expires) will be fully vested, and - all remaining unvested options will have a vesting schedule that is equivalent to what would have been in place had the canceled option remained in effect. Payment of exercise price. The permissible methods of payment of the option exercise price generally include the following: - cash, - certified or official bank check, - certain other shares of our common stock, or - a combination of the foregoing methods. Adjustments upon certain events. The incentive stock options will become immediately fully vested and fully exercisable upon a change in control of Hawk as defined in the 2000 plan. Transferability of options. Incentive stock options may not be transferred, other than by will or the laws of descent and distribution. In the event of your death, options may be exercised by a person who acquires the right to exercise the option by bequest or inheritance. Termination of employment. If, for any reason, you are not an employee of Hawk from the date you tender options through the date we grant the new options, you will not receive any new options or any other consideration in exchange for your tendered options that have been accepted for exchange. This means that if you quit, with or without good reason, or die, or we terminate your employment, with or without cause, before the date we grant the new options, you will not receive anything for the options that you tendered and which we canceled. Registration of option shares. All of the 700,000 shares of common stock issuable upon exercise of options under our 2000 plan have been registered under the Securities Act, on a registration statement on Form S-8 filed with the SEC. All the shares issuable upon exercise of all new options to be granted before the offer will be registered under the Securities Act. Unless 23 you are one of our affiliates, you will be able to sell your option shares free of any transfer restrictions under applicable U.S. securities laws. Federal income tax consequences. You should refer to the section of this offer captioned "Material Federal Income Tax Consequences" to exchange for a discussion of the federal income tax consequences of the new options and the options tendered for exchange, as well as the consequences of accepting or rejecting the new options under this offer to exchange. Our statements in this offer to exchange concerning the Hawk plans and the new options are merely summaries and do not purport to be complete. The statements are subject to, and are qualified in their entirety by reference to, all provisions of the Hawk plans and the forms of option agreement under the Hawk plans. Please contact us at Hawk Corporation, 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114, Attention: Thomas A. Gilbride, to receive a copy of the Hawk plans and the forms of option agreement thereunder. We will promptly furnish you copies of these documents at our expense. INFORMATION ABOUT HAWK Hawk Corporation, a Delaware corporation, founded in 1989, is a leading supplier of friction products and precision components for industrial, agricultural and aerospace applications. We focus on designing, manufacturing and marketing products requiring sophisticated engineering and production techniques for applications in markets in which we have achieved a significant market share. Friction Products We believe that, based on net sales, we are one of the top worldwide manufacturers of friction products used in industrial, agricultural and aerospace applications. Our friction products segment manufactures products made from proprietary formulations of composite materials that primarily consist of metal powders, synthetic and natural fibers. Friction products are the parts used in brakes, clutches and transmissions to absorb vehicular energy and dissipate it through heat and normal mechanical wear. The principal markets served by our friction products segment include construction vehicles, agricultural vehicles, trucks, recreational vehicles, commercial aviation and general aviation. We believe we are: - a leading domestic supplier of friction products for construction equipment, agricultural equipment and trucks, - the only independent supplier of friction materials for braking systems for new and existing series of many commercial aircraft models, including the Boeing 737 and 757 and the MD-80, and several regional jets used by commuter airlines, including the Canadair regional jet series, - the largest supplier of friction materials for the growing general aviation market, including numerous new and existing series of Gulfstream, Cessna, Lear and Beech aircraft, and 24 - a leading domestic supplier of friction products into specialty markets such as motorcycles, all terrain vehicles (ATVs) and snowmobiles. Precision Components We are a leading supplier of powder metal components for industrial equipment, lawn and garden equipment, appliances, hand tools and trucks. We use composite metal alloys in powder form to manufacture high quality custom-engineered metal components. Our precision components segment serves four specific areas of the powder metal marketplace: - tight tolerance fluid power components such as pump elements and gears, - large powder metal components used primarily in construction equipment, agricultural equipment and trucks, - high volume parts for the lawn and garden, appliance and other markets, and - metal injected molded parts for a variety of industries, including small hand tools and telecommunications. Performance Racing We engineer, manufacture and market premium branded clutch and drive-train components for the performance racing market. Through this segment, we supply parts for the National Association for Stock Car Auto Racing (NASCAR), the Championship Auto Racing Teams (CART) and the Indy Racing League (IRL) racing series as well as for the weekend enthusiasts in the Sports Car Club of America (SCCA), the American Speed Association (ASA) racing clubs and other road racing and competition cars. Motor We design and manufacture die-cast aluminum rotors for fractional and sub-fractional horsepower electric motors. These parts are used in a wide variety of motor applications, including appliances, business equipment, pumps and fans. We believe our motor segment is the largest independent U.S. manufacturer of die-cast aluminum rotors for use in fractional and sub-fractional horsepower electric motors. The financial information included in our annual report on Form 10-K for the fiscal year ended December 31, 2002 and in our quarterly report on Form 10-Q for the quarter ended March 31, 2003 is incorporated herein by reference. See "Additional Information" for instructions on how you can obtain copies of our SEC filings, including filings that contain our financial statements. We had a book value per share of $5.32 at March 31, 2003. 25 The following chart represents the ratio of earnings to fixed charges for the applicable periods:
(Dollars in Thousands) Three Months Ended March 31, Year Ended December 31, ------------------------------------------------------------ 2003 2002 2002 2001 ------------------------------------------------------------ Fixed Charges $2,818 $2,534 $10,071 $10,458 Earnings available for $3,116 $1,322 $7,530 $4,624 Fixed Charges Ratio of Earnings 1.11 -- -- -- to Fixed Charges
For the three month period ended March 31, 2002 and the years ended December 31, 2002 and 2001, our earnings were insufficient to cover fixed charges. The additional earnings required to cover fixed charges would have been $1,212 for the three month period ended March 31, 2002 and $2,541 and $6,194 for the years ended December 31, 2002 and 2001, respectively. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OPTIONS A list of our directors and executive officers and the number of options owned by each is attached to this offer to exchange as Schedule A. As of June 26, 2003, our executive officers and directors (eleven persons) as a group owned options to purchase a total of 291,377 shares, which represented approximately 3% of the shares plus all options outstanding as of that date. However, of this group, only executive officers who are not members of our board of directors are eligible to participate in the offer. Mr. Ronald E. Weinberg, Mr. Norman C. Harbert and Mr. Bryron S. Krantz are parties to a stockholder's voting agreement that provides to the extent any of them is the legal or beneficial owner of any of our voting stock, including our common stock or Series D preferred stock, they will vote these shares: - in favor of electing Mr. Weinberg, Mr. Harbert and Mr. Krantz (so long as each desires to serve) or their respective designees to our board of directors, - in favor of electing such other directors to the board as a majority of Mr. Weinberg, Mr. Harbert and Mr. Krantz or their respective designees shall direct, and - with respect to such matters as are submitted to a vote of our stockholders as a majority of Mr. Weinberg, Mr. Harbert and Mr. Krantz or their respective designees shall direct. If any of Mr. Weinberg, Mr. Harbert and Mr. Krantz or their respective affiliates sells more than 50% of our common stock beneficially owned by such individual on May 12, 1998, the obligation of the other parties to continue to vote their shares of common stock and Series D preferred stock for the selling stockholder or his designee as a director will terminate. The agreement will terminate upon the first to occur of the mutual written agreement of the parties to 26 terminate the agreement or the death of the last to die of Mr. Weinberg, Mr. Harbert or Mr. Krantz or their respective designees; provided that the provisions described in first two clauses above will terminate sooner in the event that none of Mr. Weinberg, Mr. Harbert and Mr. Krantz (or any designee thereof) remains on our board of directors. On May 23, 2003, the Harbert Foundation, an Oho non-profit corporation, of which Mr. Harbert is one of its trustees, sold 2,500 shares of our common stock. For purposes of Section 13 of the Exchange Act, Mr. Harbert may be deemed to be the beneficial owner of our common stock held by the Harbert Foundation. However, Mr. Harbert disclaims such beneficial ownership. There have been no transactions in options to purchase our shares or in our shares which were affected during the 60 days prior to June 27, 2003 by Hawk or any of our directors or executive officers. STATUS OF OPTIONS ACQUIRED BY US IN THE OFFER; ACCOUNTING CONSEQUENCES OF THE OFFER Options we acquire through the offer will be canceled and the shares subject to those options will be returned to the pool of shares available for grants of new options under the Hawk plans. To the extent these shares are not fully reserved for issuance upon exercise of the new options to be granted in connection with the offer, the shares will be available for future awards to employees and other eligible plan participants without further stockholder action, except as required by applicable law or the rules of the New York Stock Exchange or any other securities quotation system or any stock exchange on which our common stock is then quoted or listed. We believe that we will not incur any compensation expense as a result of the transactions contemplated by the offer because: - we will not grant any new options until a business day that is at least six months and one day after the date that we accept and cancel options tendered for exchange, and - the exercise price of all new options will equal the market value of the shares of common stock on the date we grant the new options. LEGAL MATTERS; REGULATORY APPROVALS We are not aware of any license or regulatory permit that appears to be material to our business that might be adversely affected by our exchange of options and issuance of new options as contemplated by the offer, or of any approval or other action by any government or governmental, administrative or regulatory authority or agency, domestic or foreign, that would be required for the acquisition or ownership of our options as contemplated herein. Should any such approval or other action be required, we presently contemplate that we will seek such approval or take such other action. We cannot assure you that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions, or that the failure to obtain any such approval or other action might not result in adverse consequences to our business. Our obligation under the offer to accept tendered options for exchange and to issue new options for tendered options is subject to the conditions described in the section captioned "Conditions of the Offer." 27 If we are prohibited by applicable laws or regulations from granting new options immediately after the day that is six months and one day from the date that we cancel the options accepted for exchange, when we currently expect to grant the new options, we will grant such new options as soon as is permissible. We are unaware of any such prohibition at this time, and we will use reasonable efforts to affect the grant, but if the grant is prohibited we will not grant any new options and you will not get any other consideration for the options you tendered. MATERIAL FEDERAL INCOME TAX CONSEQUENCES The following is a general summary of the material federal income tax consequences of the exchange of options pursuant to the offer. This discussion is based on the Internal Revenue Code, its legislative history, Treasury Regulations thereunder and administrative and judicial interpretations thereof as of the date of the offer, all of which are subject to change, possibly on a retroactive basis. This summary does not discuss all of the tax consequences that may be relevant to you in light of your particular circumstances, nor is it intended to be applicable in all respects to all categories of option holders. Option holders who exchange outstanding options for new options should not be required to recognize income for federal income tax purposes at the time of the exchange. We believe that the exchange will be treated as a non-taxable exchange. WE ADVISE ALL OPTION HOLDERS CONSIDERING EXCHANGING THEIR OPTIONS TO MEET WITH THEIR OWN TAX ADVISORS WITH RESPECT TO THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF PARTICIPATING IN THE OFFER. Incentive Stock Options Under current law, an option holder will not realize taxable income upon the grant of an incentive stock option under the Hawk plans. In addition, an option holder generally will not realize taxable income upon the exercise of an incentive stock option. However, an option holder's alternative minimum taxable income will be increased by the amount that the aggregate fair market value of the shares underlying the option, which is generally determined as of the date of exercise, exceeds the aggregate exercise price of the option. Except in the case of an option holder's death or disability, if an option is exercised more than three months after the option holder's termination of employment, the option ceases to be treated as an incentive stock option and is subject to taxation under the rules that apply to non-qualified stock options. If an option holder sells the option shares acquired upon exercise of an incentive stock option, the tax consequences of the disposition depend upon whether the disposition is qualifying or disqualifying. The disposition of the option shares is qualifying if it is made: - at least two years after the date the incentive stock option was granted, and - at least one year after the date the incentive stock option was exercised. The two-year and one-year periods described above are referred to as "holding periods." 28 If the disposition of the option shares is qualifying, any excess of the sale price of the option shares, over the exercise price of the option will be treated as long-term capital gain taxable to the option holder at the time of the sale. Any such capital gain will be taxed at the long-term capital gain rate in effect at the time of sale. If the disposition is not qualifying, which we refer to as a "disqualifying disposition," the excess of the fair market value of the option shares on the date the option was exercised, over the exercise price will be taxable income to the option holder at the time of the disposition. Of that income, the amount up to the excess of the fair market value of the shares at the time the option was exercised over the exercise price will be ordinary income for income tax purposes and the balance, if any, will be long-term or short-term capital gain, depending upon whether or not the shares were sold more than one year after the option was exercised. Unless an option holder engages in a disqualifying disposition, we will not be entitled to a deduction with respect to an incentive stock option. If an option holder engages in a disqualifying disposition, we will be entitled to a deduction equal to the amount of compensation income taxable to the option holder. If you tender incentive stock options and those options are accepted for exchange, the new options will be granted as incentive stock options to the maximum extent they qualify. However, you will begin a new holding period for purposes of determining whether any disposition of the underlying shares is a qualifying disposition as described above. For options to qualify as incentive stock options, the value of shares subject to options that first become exercisable in any calendar year cannot exceed $100,000, as determined using the option exercise price. The excess value is deemed to be a non-qualified stock option. You should note that if the new options have a higher exercise price than some or all of your current options, or if a significant number of options are vested on the date of grant (to equal your current vesting schedule), the new options may exceed the limit for incentive stock options. Non-Qualified Stock Options Under current law, an option holder will not realize taxable income upon the grant of an option which is not qualified as an incentive stock option, also referred to as a nonqualified stock option. However, when an option holder exercises the option, the difference between the exercise price of the option and the fair market value of the shares subject to the option on the date of exercise will be compensation income taxable to the option holder. We will be entitled to a deduction equal to the amount of compensation income taxable to the option holder if we comply with eligible reporting requirements. Non-U.S. Residents If you exchange your current options for new options and you are subject to taxation 29 in a foreign jurisdiction, whether by reason of nationality, residence or otherwise, you should consult with your own tax advisor regarding the tax consequences of participating in the offer. If you are subject to tax in the United States, but are also subject to the tax laws in another country, you should be aware that there may be other tax consequences which may apply to you; you should be certain to consult you own tax advisor. WE RECOMMEND THAT YOU CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF PARTICIPATING IN THE OFFER. EXTENSION OF OFFER; TERMINATION; AMENDMENT We expressly reserve the right, in our discretion, at any time and from time to time, and regardless of whether or not any event listed in the section captioned "Conditions of the Offer" has occurred or is deemed by us to have occurred, to extend the period of time during which the offer is open and thereby delay the acceptance for exchange of any options by giving oral or written notice of such extension to the option holders or making a public announcement thereof. We also expressly reserve the right, in our reasonable judgment, prior to the expiration date to terminate or amend the offer and to postpone our acceptance and cancellation of any options tendered for exchange upon the occurrence of any of the events listed in the section captioned "Conditions of the Offer," by giving oral or written notice of such termination or postponement to you or by making a public announcement thereof. Our reservation of the right to delay our acceptance and cancellation of options tendered for exchange is limited by Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires that we must pay the consideration offered or return the options tendered promptly after termination or withdrawal of a tender offer. Subject to compliance with applicable law, we further reserve the right, in our discretion, and regardless of whether any event listed in the section captioned "Conditions of the Offer" has occurred or is deemed by us to have occurred, to amend the offer in any respect, including, without limitation, by decreasing or increasing the consideration offered in the offer to option holders or by decreasing or increasing the number of options being sought in the offer. Amendments to the offer may be made at any time and from time to time by public announcement of the amendment. In the case of an extension, the amendment must be issued no later than 8:00 a.m., Eastern Time, on the next business day after the last previously scheduled or announced expiration date. Any public announcement made through the offer will be disseminated promptly to option holders in a manner reasonably designated to inform option holders of the change. Without limiting the manner in which we may choose to make a public announcement, except as required by applicable law, we have no obligation to publish, advertise or otherwise communicate any such public announcement other than by making a press release to the Dow Jones News Service. If we materially change the terms of the offer or the information concerning the offer, or if we waive a material condition of the offer, we will extend the offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the Exchange Act. These rules require that the minimum period during which an offer must remain open following material changes in the terms of the 30 offer or information concerning the offer, other than a change in price or a change in percentage of securities sought, will depend on the facts and circumstances, including the relative materiality of such terms or information. If we decide to take any of the following actions, we will publish notice or otherwise inform you in writing of these actions: - we increase or decrease the amount of consideration offered for the options, - we decrease the number of options eligible to be tendered in the offer, or we increase the number of options eligible to be tendered in the offer by an amount that exceeds 2% of the shares issuable upon exercise of the options that are subject to the offer immediately prior to the increase. If the offer is scheduled to expire at any time earlier than the tenth business day from, and including, the date that notice of such increase or decrease is first published, sent or given in the manner specified in this section, we will extend the offer so that the offer is open at least ten business days following the publication, sending or giving of notice. For purposes of the offer, a "business day" means any day other than a Saturday, Sunday or federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, Eastern Time. FEES AND EXPENSES We will not pay any fees or commissions to any broker, dealer or other person for soliciting tenders of options pursuant to this offer to exchange. ADDITIONAL INFORMATION This offer to exchange is part of a Tender Offer Statement on Schedule TO that we have filed with the SEC. You should read this offer to exchange and the related letter from Ronald E. Weinberg dated June 27, 2003, the election form, the withdrawal form and the information incorporated by reference, including all of the financial statements and other information. We file annual, quarterly and special reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC's web site at www.sec.gov and on our web site at www.hawkcorp.com. You may also read and copy any document we file at the SEC's public reference room at 450 Fifth Street, N.W., Room 1024, Washington, DC 20549. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. We file information with the New York Stock Exchange. These reports, proxy statements and other information may be read and copied at New York Stock Exchange, Inc., 11 Wall Street, New York, New York 10005 We have elected to incorporate by reference into this offer to exchange some of the financial statements and other information we file with the SEC. This means that we are disclosing important information to you by referring you to those filings. The following materials are 31 hereby incorporated by reference and are considered part of this offer to exchange: - Our Annual Report on Form 10-K for the fiscal year ended December 31, 2002, - Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2003, - Hawk Corporation 1997 Stock Option Plan (in Exhibit 10.1 to Hawk's registration statement on Form S-1 (Reg. No. 333-40535)), and - Hawk Corporation 2000 Long Term Incentive Plan (in Exhibit 10.15 to Hawk's annual report on Form 10-K for the year ended December 31, 2000. Each person to whom a copy of this offer to exchange is delivered may obtain a copy of any or all of the documents to which we have referred you, at no cost, by writing to us at Hawk Corporation, 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114, Attention: Thomas A. Gilbride or telephoning us at 216-861-3553. MISCELLANEOUS Statements that are not historical facts, including statements about our confidence in our prospects and strategies and our expectations about growth of existing markets and our ability to expand into new markets, to identify and acquire complementary businesses and to attract new sources of financing, are forward-looking statements that involve risks and uncertainties. In addition to statements which are forward-looking by reason of context, the words "believe," "expect," "anticipate," "intend," "designed," "goal," "objective," "optimistic," "will" and other similar expressions identify forward-looking statements. In light of the risks and uncertainties inherent in all future projections, the inclusion of the forward-looking statements should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. Many factors could cause our actual results to differ materially and adversely from those in the forward-looking statements, including the following: - our ability to continue to meet the terms of our senior debt and bank facility which contain a number of significant financial covenants and other restrictions; - the effect of our debt service requirements on funds available for operations and future business opportunities and our vulnerability to adverse general economic and industry conditions and competition; - the continuing impact of the reduction in air travel, the bankruptcy filings by a number of major airline companies and the weak financial condition of other airlines on our aerospace business, including the decline in gross profit margins in this market as a result of the retirement of many older airplanes that used our friction brake products; - the impact on our gross profit margins as a result of a decline in sales in the aerospace market; 32 - our ability to effectively utilize all of our manufacturing capacity as the industrial and commercial end-markets we serve gradually improve or if improvement is not achieved as we anticipate; - our ability to generate profits at our facility in Mexico, including our ability to resolve the manufacturing inefficiencies being incurred at that facility; - the effect of competition by manufacturers using new or different technologies; - the effect on our international operations of unexpected changes in legal and regulatory requirements, export restrictions, currency controls, tariffs and other trade barriers, difficulties in staffing and managing foreign operations, political and economic instability, fluctuations in currency exchange rates, difficulty in accounts receivable collection and potentially adverse tax consequences; - our ability to negotiate new agreements, as they expire, with our unions representing certain of our employees, on terms favorable to us or without experiencing work stoppages; - the effect of any interruption in our supply of raw materials or a substantial increase in the price of any of the raw materials; - the continuity of business relationships with major customers; - the ability of our products to meet stringent Federal Aviation Administration criteria and testing requirements; - our ability to comply with the NYSE's continued listing standards. We are not aware of any jurisdiction where the making of the offer is not in compliance with applicable law. If we become aware of any jurisdiction where the making of the offer is not in compliance with any valid applicable law, we will make a good faith effort to comply with such law. If, after such good faith effort, we cannot comply with such law, the offer will not be made to, nor will tenders be accepted from or on behalf of, the option holders residing in such jurisdiction. WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER YOU SHOULD TENDER OR NOT TENDER YOUR OPTIONS THROUGH THE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION IN THIS DOCUMENT OR DOCUMENTS TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN 33 THIS DOCUMENT, THE LETTER FROM RONALD E. WEINBERG DATED JUNE 27, 2003, THE ELECTION FORM AND THE WITHDRAWAL FORM. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US. June 27, 2003 HAWK CORPORATION 34 SCHEDULE A INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF HAWK CORPORATION The directors and executive officers of Hawk, their positions and offices as of June 26, 2003, and the number of options held by each such person are set forth in the following table:
BENEFICIAL OWNERSHIP (1) --------------------------------------------------------------------- CLASS A COMMON SERIES D PREFERRED RIGHT TO NAMES AND ADDRESS (2) SHARES ACQUIRE PERCENTAGE SHARES PERCENTAGE - ---------------------------------------------------- -------------- -------------- -------------- ---------- ------------- Ronald E. Weinberg (4) (5) Chairman of the Board, Chief Executive Officer and Director 1,243,998 73,983 (3) 15.2% 689 45% Norman C. Harbert (4) (6) Senior Chairman of the Board, Director and Founder 1,221,475 59,596 (3) 14.8% 689 45% Byron S. Krantz (4) (7) Secretary and Director 283,972 15,484 (3) 3.5% 152 10% Dan T. Moore, III Director 31,209 15,484 (3) * -- -- Andrew T. Berlin Director 24,159 -- * -- -- Paul R. Bishop Director 23,603 15,484 (3) * -- -- Jack Kemp (8) Director 7,669 13,484 (3) * -- -- Steven J. Campbell President - Wellman Products Group, Inc. 11,000 38,338 (3) * -- -- W. Michael Corkran President - Hawk Precision Components Group, Inc. -- 19,353 (3) * -- -- Thomas A. Gilbride Vice President - Finance and Treasurer 38,168 21,812 (3) * -- -- Joseph J. Levanduski Vice President - Corporate Controller 25,000 24,359 (3) * -- -- All directors and executive officers as a group (11 individuals) 2,840,253 297,377 (3) 36.4% 1,530 100%
- ----------------- *Less than 1% (1) Unless otherwise indicated, we believe that all persons named in the table have sole investment and voting power over the shares of capital stock owned. (2) Unless otherwise indicated, the address of each of the beneficial owners identified is c/o Hawk Corporation, 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114. (3) Shares of Class A common stock the directors and executive officers have the right to acquire through stock options that are or will become exercisable within 60 days. A-1 (4) Each of these stockholders is a party to an agreement governing the voting and disposition of all shares of voting stock of which such stockholders are the legal or beneficial owners. Each such stockholder disclaims beneficial ownership of the shares of voting stock owned by the other such stockholders. (5) Includes 1,078,153 shares of Class A common stock held by the Weinberg Family Limited Partnership, an Ohio limited partnership, of which Mr. Weinberg is the managing general partner. Also includes 150 shares of Series D preferred stock held by the Weinberg Family Limited Partnership. (6) Includes 70,000 shares held by the Harbert Foundation, an Ohio non-profit corporation, of which Mr. Harbert is one of the trustees, and 1,032,561 shares of Class A common stock held by the Harbert Family Limited Partnership, an Ohio limited partnership, of which Mr. Harbert is the managing general partner, and 35,000 shares of Class A common stock held by a defined benefit plan for the benefit of Mr. Harbert. Also includes 150 shares of Series D preferred stock held by the Harbert Family Limited Partnership. For purposes of Section 13 of the Exchange Act, Mr. Harbert may be deemed to be the beneficial owner of the shares held by the Harbert Foundation. However, Mr. Harbert disclaims such beneficial ownership. (7) Includes 243,876 shares of Class A common stock held by the Krantz Family Limited Partnership, an Ohio limited partnership, of which Mr. Krantz is the managing general partner. Also includes 33 shares of Series D preferred stock held by the Krantz Family Limited Partnership. (8) Shares held by the Jack F. Kemp Revocable Trust U/A dated June 22, 2000, Jack F. Kemp, Trustee. Of the directors and executive officers listed in this Schedule A, only our executive officers who are not members of our board of directors are eligible to participate in the offer. Accordingly, only Mr. Campbell, Mr. Corkran, Mr. Gilbride and Mr. Levanduski will be eligible to participate in the offer. A-2 EX-99.A.2 4 l01706aexv99waw2.txt EXHIBIT (A)(2) Exhibit (a)(2) June 27, 2003 Dear Fellow Stockholders: The economy during the last three years has been difficult and we are aware that some of you have forgone customary salary increases and performance bonuses and that we eliminated discretionary profit sharing contributions in 2001 and 2002 under our 401(k) plan. Despite the difficulties and distractions, you have remained focused and committed to achieving Hawk's long-term goals. Accordingly, Hawk's Board of Directors wishes to create an opportunity and incentive for you to benefit from our successful future performance with options that over time may have a greater potential to increase in value than those that you currently hold. As a result, I am happy to announce that Hawk is offering you the opportunity to cancel your existing stock options which have an exercise price of $6.00 or greater, in exchange for new options to be granted in early 2004 under Hawk's existing option plans. You may exchange all or any portion of these options for new options. However, you must tender all of the options in any of the exercise price categories you choose to tender. You also have the right to choose not to tender any of your options. The exact number of new options you will receive in exchange for old options will depend on the exercise price of the old options. Tendered options with an exercise price per share between $6.00 and $16.99 will be replaced with new options for a number of shares equal to the number of shares under those options, while tendered options with an exercise price per share of $17.00 or greater will be replaced with new options for a number of shares equal to 90% of the total number of shares covered by those options. The exercise price per share of the new options will be 100% of the fair market value on the date we grant the new options, as determined by the closing price reported by the New York Stock Exchange on the date we grant the new options. We cannot predict the exercise price of the new options. The price will depend on the market price in early 2004 when the new options are granted. Accordingly, your new options may have a higher exercise price than some or all of your current options. We expect to grant the new options at least six months and one day after the date we cancel the options tendered and accepted for exchange. If we accept and cancel the tendered options on July 29, 2003, as currently scheduled, we will grant the new options on approximately January 30, 2004. The terms and conditions of the new options will be substantially the same as the terms and conditions of your current options, except the per share exercise price of all new options will equal the last reported sales price of our common stock on the New York Stock Exchange on the date we grant the new options. You must be an employee of Hawk from the date you tender options through the date we grant the new options in order to receive the new options. If you do not remain an employee, you will not receive any new options or any other consideration for the options tendered by you and cancelled by Hawk. Neither the Compensation Committee nor the Board of Directors makes any recommendation as to whether you should tender or refrain from tendering your options in the offer. You must make your own decision whether to tender your options. We will be mailing to your home address the formal Offer to Exchange containing information about your options which are eligible for this program, and instructions for completing and returning the necessary documentation. You may make your election to tender your options at any time during the offer period but the necessary documentation must be received by Hawk by midnight, Eastern Time, on July 28, 2003. If you have any questions about the offer, please contact Thomas A. Gilbride, Vice President - Finance, at 216-861-3553. We thank you for your continued efforts on behalf of Hawk. Sincerely, /s/ Ronald E. Weinberg Ronald E. Weinberg Chairman and CEO EX-99.A.3 5 l01706aexv99waw3.txt EXHIBIT (A)(3) EXHIBIT (a)(3) HAWK CORPORATION OFFER TO EXCHANGE OPTIONS FORM OF ELECTION FORM [Employee Name] [Employee Address] Before signing this election form, please make sure you have received, read and understand the documents that make up the offer to exchange all outstanding options held by employees of Hawk or one of our subsidiaries who are not members of our board of directors, to purchase shares of Hawk Corporation Class A common stock having an exercise price of $6.00 per share or more for new options which we will grant under our 1997 Stock Option Plan and 2000 Long Term Incentive Plan, including the offer to exchange and the related letter from Ronald E. Weinberg, both dated June 27, 2003, this election form, and the withdrawal form. The offer is subject to the terms of these documents as they may be amended. The offer provides eligible employees the opportunity to exchange outstanding stock options for options issued under our 1997 Stock Option Plan and 2000 Long Term Incentive Plan. The new options will be exercisable at the fair market value on the date of grant, which is expected to be the first business day that is six months and one day after your tendered options are canceled. This offer is currently scheduled to expire at midnight, Eastern Time, on July 28, 2003. In accordance with the terms outlined in the offer documents, the number of new options you receive will vary depending on the exercise price of your tendered options. Participation in the offer is completely voluntary. However, if you participate in this offer, you must elect to tender all of the unexercised options subject to each option grant or none of the shares for that particular grant. New options granted in exchange for canceled options that were fully vested on the date the offer expires, or would have been fully vested on or prior to the date the new options are granted, will be fully vested. All remaining new, unvested options will vest in accordance with the vesting schedule of the canceled options, as more fully described in the offer documents. You will lose your rights to all old options that are canceled under this offer. You should also be aware that we cannot predict the exercise price of your new options and, accordingly, your new options may have a higher exercise price than some or all of your current options. In addition, your canceled options will not be reinstated and you will not receive new options if your employment with the company ends for any reason before the new options are granted. BY PARTICIPATING, YOU AGREE TO ALL TERMS OF THE OFFER AS SET FORTH IN THE OFFER DOCUMENTS. If you would like to participate in this offer, please indicate your election by checking the appropriate box in the table below and completing and signing this election form. PLEASE ALSO READ AND FOLLOW THE INSTRUCTIONS ATTACHED TO THIS ELECTION FORM. You may withdraw this election by submitting a properly completed and signed withdrawal form by midnight, Eastern Time, on July 28, 2003. Below is a summary of your stock option grants that are eligible for exchange pursuant to this offer. Please carefully review your grants and check the box labeled "Election Column" next to ONLY those grants you wish to tender for exchange.
ELECTION COLUMN GRANT DATE NUMBER OF TENDERED OPTIONS NUMBER OF (CHECK IF OPTIONS ARE NEW OPTIONS TENDERED) ---------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------
PLEASE RETURN THIS ELECTION FORM TO THOMAS A. GILBRIDE BY FAX TO 216-861-4546, US MAIL, OR BY HAND DELIVERY TO MR. GILBRIDE'S OFFICE AT HAWK CORPORATION, 200 PUBLIC SQUARE, SUITE 30-5000, CLEVELAND, OHIO 44114 BY MIDNIGHT, EASTERN TIME, ON JULY 28, 2003. We expect to cancel all tendered options accepted by us on July 29, 2003, or as soon as possible thereafter. - ---------------------------------------- Signature - ---------------------------------------- Print Name - ---------------------------------------- Date 2 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. DELIVERY OF ELECTION FORM. A properly completed and executed original or facsimile of this election form, and any other documents required by this election form, must be received by Thomas A. Gilbride by fax to 216-861-4546, US mail, or by hand delivery to Mr. Gilbride's office at Hawk Corporation, 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114 by midnight, Eastern Time, on July 28, 2003. The method by which you deliver any required documents is at your option and risk, and the delivery will be deemed made only when actually received by the company. In all cases, you should allow sufficient time to ensure timely delivery. 2. WITHDRAWAL. Tenders of options made through the offer may be withdrawn at any time before the expiration date. If we extend the offer beyond that time, you may withdraw your tendered options at any time until the extended expiration of the offer. In addition, if we have not accepted your tendered options for exchange by midnight, Eastern Time, August 25, 2003, you may withdraw your tendered options at any time thereafter. To withdraw tendered options you must deliver a signed and dated withdrawal form or a facsimile of the withdrawal form, with the required information to Hawk while you still have the right to withdraw the tendered options. Withdrawals may not be rescinded and any options withdrawn will be deemed not properly tendered for purposes of the offer unless the withdrawn options are properly re-tendered before the expiration date by delivery of a new election form following the procedures described in these instructions. Tenders of options made through the offer may be changed at any time before the expiration date. If we extend the offer beyond that time, you may change your election regarding particular tendered options at any time until the extended expiration of the offer. To change your election regarding particular tendered options while continuing to elect to participate in the offer, you must deliver a signed and dated new election form, with the required information, following the procedures described in these instructions. Upon the receipt of such a new, properly signed and dated election form, any previously submitted election form will be disregarded and will be considered replaced in full by the new election form. 3. NO PARTIAL TENDERS. As more fully set forth in the offer, Hawk will not accept any partial tenders of any option grant. All tendering option holders, by signing this election form, waive any right to receive any notice of the acceptance of their tender, except as provided for in the offer. 4. SIGNATURES ON ELECTION FORM. If this election form is signed by the holder of the eligible options, the signature must correspond with the name as written on the face of the option agreement or agreements to which the options are subject without alteration, enlargement or any change whatsoever. If your name has been legally changed since your option agreement was signed, please submit proof of the legal name change. If this election form is signed by a trustee, executor, administrator, guardian, 3 attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, that person should so indicate when signing, and proper evidence satisfactory to Hawk of the authority of that person to so act must be submitted with this election form. In addition to signing this election form, you must print your name and indicate the date on which you signed. 5. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests for assistance, as well as requests for additional copies of the exchange offer and related documents, including this election form, may be directed to Thomas A. Gilbride, Vice President - Finance, Hawk Corporation, 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114. Copies will be furnished promptly at Hawk's expense. 6. IRREGULARITIES. All questions as to the number of option shares subject to options to be accepted for exchange, and the validity, form, eligibility (including time of receipt) and acceptance for exchange of any tender of options will be determined by Hawk in its discretion, which determination shall be final and binding on all parties. Hawk reserves the right to reject any or all tenders of options the company determines not to be in proper form or the acceptance of which may, in the opinion of the our counsel, be unlawful. We also reserve the right to waive any of the conditions of the offer and any defect or irregularity in the tender of any particular options, and Hawk's interpretation of the terms of the offer (including these instructions) will be final and binding on all parties. No tender of options will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with tenders must be cured within such time as the company shall determine. Neither Hawk nor any other person is or will be obligated to give notice of any defects or irregularities in tenders, and no person will incur any liability for failure to give any such notice. IMPORTANT: THE ELECTION FORM, TOGETHER WITH ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE COMPANY ON OR BEFORE MIDNIGHT, EASTERN TIME, ON JULY 28, 2003. 7. ADDITIONAL DOCUMENTS. You should be sure to read the offer to exchange, all documents referenced therein, and the letter from Ronald E. Weinberg dated June 27, 2003 before deciding to participate in the offer. 8. IMPORTANT TAX INFORMATION. You should refer to the section of the exchange offer entitled "Material Federal Income Tax Consequences," which contains important federal income tax information. We also recommend that you consult with your personal advisors before deciding whether to participate in this offer. 9. ACKNOWLEDGMENT AND WAIVER. By accepting this offer, you acknowledge that: (i) your acceptance of the offer is voluntary; (ii) your acceptance of the offer shall not create a right to further employment with your employer and shall not interfere with the ability of your employer to terminate your employment 4 relationship at any time with or without cause; and (iii) the offer, the outstanding options and the new options are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments. 5 EX-99.A.4 6 l01706aexv99waw4.txt EXHIBIT (A)(4) EXHIBIT (a)(4) HAWK CORPORATION OFFER TO EXCHANGE OPTIONS FORM OF WITHDRAWAL FORM (TO BE USED ONLY TO RESCIND AN ELECTION FORM SUBMITTED TO HAWK CORPORATION) You previously received the documents that make up our offer to exchange all outstanding options held by employees of Hawk or one of our subsidiaries who are not members of our board of directors to purchase shares of Hawk Corporation Class A common stock having an exercise price of $6.00 per share or more for new options which we will grant under our 1997 Stock Option Plan and 2000 Long Term Incentive Plan, including the offer to exchange and the related letter from Ronald E. Weinberg, both dated June 27, 2003, the election form, and this withdrawal form. You signed and returned the election form in which you elected to ACCEPT Hawk's offer to exchange some or all of your outstanding options. You should submit this form only if you now wish to change that election and REJECT Hawk's offer to exchange those options. To withdraw your election to exchange options, you must sign, date and deliver this withdrawal form to Thomas A. Gilbride by fax to 216-861-4546, US mail, or by hand delivery to Mr. Gilbride's office at Hawk Corporation, 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114 by midnight, Eastern Time, on July 28, 2003. You should note that if you withdraw your acceptance of the offer, you will not receive any new options pursuant to the offer in replacement for the withdrawn options. You will keep all of the options that you withdraw. These options will continue to be governed by the stock option plan under which they were granted and by the existing option agreements between you and the company. You may change this withdrawal, and again elect to exchange eligible options by submitting a new election form to Mr. Gilbride by fax, US mail, or hand delivery by midnight, Eastern Time, on July 28, 2003. Please check the box below and sign this withdrawal form where indicated if you do not want to exchange your eligible options for new options: |_| I wish to WITHDRAW all the options listed on my election form and instead REJECT the offer to exchange options. I do not wish to exchange any options. Please sign this withdrawal form and print your name exactly as it appears on your election form. - ---------------------------------------- Signature - ---------------------------------------- Print Name - ---------------------------------------- Date RETURN THIS WITHDRAWAL FORM TO THOMAS A. GILBRIDE BY FAX TO 216-861-4546, US MAIL, OR BY HAND DELIVERY TO MR. GILBRIDE'S OFFICE AT HAWK CORPORATION, 200 PUBLIC SQUARE, SUITE 30-5000, CLEVELAND, OHIO 44114 BY MIDNIGHT, EASTERN TIME, ON JULY 28, 2003. INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. DELIVERY OF WITHDRAWAL FORM. A properly completed and executed original or facsimile of this withdrawal form must be received by Thomas A. Gilbride by fax to 216-861-4546, or by hand delivery to Mr. Gilbride's office at Hawk Corporation, 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114 by midnight, Eastern Time, on July 28, 2003. If the company extends the offer, this withdrawal form must be received by us by the date and time of the extended expiration of the offer. The delivery of all required documents, including withdrawal forms and any new election forms, is at your risk. Delivery will be deemed made only when actually received by Hawk. In all cases, you should allow sufficient time to ensure timely delivery. Although by submitting a withdrawal form you have withdrawn all of your previously tendered options from the offer, you may change your mind and re-elect to exchange some or all of the withdrawn options until the expiration of the offer. You should note that you may not rescind any withdrawal, and any eligible options withdrawn will be deemed not properly tendered for purposes of the offer, unless you properly re-elect to exchange those options before the expiration date. Tenders to re-elect to exchange options may be made at any time before the expiration date. If we extend the offer beyond that time, you may re-tender your options at any time until the extended expiration of the offer. To re-elect to tender the withdrawn options, you must deliver a later dated and signed election form with the required information to Thomas A. Gilbride by fax to 216-861-4546, or by hand delivery to Mr. Gilbride's office at Hawk Corporation, 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114 by midnight, Eastern Time, on July 28, 2003. Your options will not be properly tendered for purposes of the offer unless the withdrawn options are properly re-tendered before the expiration date by delivery of the new election form following the procedures described in the instructions to the election form. This new election form must be signed and dated after your original election form and any withdrawal form you have submitted. Upon the receipt of a new, properly filled out, signed and dated election form, any previously submitted election form or withdrawal form will be disregarded and will be considered replaced in full by the new election form. You will be bound by the last properly tendered election or withdrawal form we receive before the expiration date. 2. SIGNATURES ON WITHDRAWAL FORM. If this withdrawal form is signed by the holder of the outstanding options, the signature must correspond with the name as written on the face of the option agreement or agreements to which the options are subject without alteration, enlargement or any change whatsoever. If your name has been legally changed since your option agreement was signed, please submit proof of the legal name change. If this withdrawal form is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, that person should so indicate when signing, and proper evidence satisfactory to Hawk of the authority of that person so to act must be submitted with this withdrawal form. 2 In addition to signing this withdrawal form, you must print your name and indicate the date on which you signed. 3. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests for assistance, as well as requests for additional copies of the exchange offer and related documents, including this withdrawal form, may be directed to Thomas A. Gilbride, Vice President - Finance, Hawk Corporation, 200 Public Square, Suite 30-5000, Cleveland, Ohio 44114. Copies will be furnished promptly at Hawk's expense. 4. IRREGULARITIES. All questions as to the validity, form, eligibility (including time of receipt) and acceptance of this withdrawal from the offer will be determined by Hawk in its discretion, which determination shall be final and binding on all parties. Hawk reserves the right to reject any or all withdrawals the company determines not to be in proper form or the acceptance of which may, in the opinion of the our counsel, be unlawful. We also reserve the right to waive any of the conditions of the offer and any defect or irregularity in the withdrawal of any particular options, and Hawk's interpretation of the terms of the offer (including these instructions) will be final and binding on all parties. No withdrawal of options will be deemed to be properly made until all defects and irregularities have been cured or waived. Unless waived, any defects or irregularities in connection with withdrawal of options must be cured within such time as the company shall determine. Neither Hawk nor any other person is or will be obligated to give notice of any defects or irregularities in tenders, and no person will incur any liability for failure to give any such notice. IMPORTANT: THE WITHDRAWAL FORM TOGETHER WITH ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE COMPANY, ON OR BEFORE MIDNIGHT, EASTERN TIME, ON JULY 28, 2003. 5. ADDITIONAL DOCUMENTS. You should be sure to read the offer to exchange, all documents referenced therein, and the letter from Ronald E. Weinberg dated June 27, 2003 before deciding to participate in the offer. 6. IMPORTANT TAX INFORMATION. You should refer to the section of the exchange offer entitled "Material Federal Income Tax Consequences," which contains important federal income tax information. We also recommend that you consult with your personal advisors before deciding whether to participate in this offer. 3 EX-99.A.5 7 l01706aexv99waw5.txt EXHIBIT (A)(5) Exhibit (a)(5) HAWK Corporation HAWK OFFERS TO EXCHANGE EMPLOYEE STOCK OPTIONS CLEVELAND, Ohio - June 27, 2003 - Hawk Corporation (NYSE: HWK) today announced that it is offering employees of Hawk and its subsidiaries who are not members of its board of directors the opportunity to cancel their existing stock options having an exercise price of at least $6.00 per share in exchange for new options to be granted under Hawk's existing option plans. This offer is not available to the Company's board of directors, including its senior executive officers who are members of the board. The Company is making the offer because many of its valued employees hold stock options with an exercise price that is significantly higher than the current market price of the Company's common stock. As a result, those options are no longer providing those employees with a realistic performance incentive. Ronald E. Weinberg, Hawk's Chairman and Chief Executive Officer, said, "The economy during the last three years has been difficult. We are aware that some of our employees have forgone salary increases and performance bonuses and that we eliminated discretionary 401(k) profit sharing contributions in 2001 and 2002. Despite these difficulties and distractions, our employees have remained focused and committed to achieving Hawk's long-term goals. We believe the offer to exchange is an important and appropriate incentive for our valued employees who have been granted options. The Company expects to grant the new options at least six months and one day after the date of cancellation of the options accepted for exchange. The new options will have the same vesting schedules as the options for which they are exchanged, but will have an exercise price equal to the closing price of the Company's common stock as reported by the New York Stock Exchange on the date of the new option grant. The exact number of new options issuable in exchange for old options will depend on the exercise price of the old options. Tendered options with an exercise price per share between $6.00 and $16.99 will be replaced with new options equal to the number of those options, while tendered options with an exercise price per share of at least $17.00 will be replaced with new options equal to 90% of the total number of those tendered options. The total number of options available for exchange is approximately 264,000 shares, or 23%, of the total number of options outstanding. The offer is currently scheduled to expire on July 28, 2003, and the Company expects to cancel tendered options on July 29, 2003, or as soon as possible thereafter. The offer is not conditioned on a minimum number of options being tendered, and participation in the offer is completely voluntary. Hawk is filing a tender offer statement with the Securities and Exchange Commission today that will provide additional information, including detailed terms and conditions, about the option exchange offer. The terms and conditions of the offer are subject to change during the offering period, and the offering period may be extended by Hawk in its discretion. The Company - ----------- Hawk Corporation is a leading worldwide supplier of highly engineered products. Its friction products group is a leading supplier of friction materials for brakes, clutches and transmissions used in airplanes, trucks, construction equipment, farm equipment and recreational vehicles. Through its precision components group, the Company is a leading supplier of powder metal and metal injected molded components for industrial applications, including pump, motor and transmission elements, gears, pistons and anti-lock sensor rings. The Company's performance automotive group manufactures clutches and gearboxes for motorsport applications and performance automotive markets. The Company's motor group designs and manufactures die-cast aluminum rotors for fractional and subfractional electric motors used in appliances, business equipment and HVAC systems. Headquartered in Cleveland, Ohio, Hawk has approximately 1,700 employees and 16 manufacturing sites in five countries. Forward-Looking Statements This press release includes forward-looking statements that involve risks and uncertainties. These forward-looking statements are based upon management's expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company that could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to: the ability of the Company to meet the existing terms of its senior debt and bank credit facilities which contain a number of financial covenants and other restrictions; the effect of the Company's debt service requirements on funds available for operations and future business opportunities and the Company's vulnerability to adverse general economic and industry conditions and competition; the continuing impact of the reduction in air travel, the bankruptcy filings by a number of major airline companies and the weak financial condition of other airlines on the Company's aerospace business, including the decline in gross profit margins in this market as a result of the retirement of many older airplanes that used the Company's friction brake products; the impact on the Company's gross profit margins as a result of a decline in sales in the aerospace market; the effect of any interruption in the Company's supply of raw materials or a substantial increase in the price of any of the raw materials; the continuity of business relationships with major customers; and the Company's ability to comply with the NYSE's continued listing standards. Actual results and events may differ significantly from those projected in the forward-looking statements. Reference is made to Hawk's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2002, its quarterly reports on Form 10-Q, and other periodic filings, for a description of the foregoing and other factors that could cause actual results to differ materially from those in the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. Contact Information - ------------------- Ronald E. Weinberg, Chairman and CEO (216) 861-3553 Thomas A. Gilbride, Vice President - Finance (216) 861-3553 Hawk Corporation is online at: www.hawkcorp.com ---------------- 2 -----END PRIVACY-ENHANCED MESSAGE-----