EXHIBIT 10.1

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into this 14th
day of August, 2006, by and between HAWK CORPORATION, a Delaware corporation
which maintains a place of business at 200 Public Square, Suite 1500, Cleveland
Ohio 44114 (hereinafter referred to as “Employer”), and JOSEPH J. LEVANDUSKI, an
individual who resides at 9979 Barr Road, Brecksville, Ohio 44141 (hereinafter
referred to as “Employee”).

R E C I T A L S :

A. Employer is engaged in the business of the business of designing,
engineering, manufacturing and marketing friction materials and powder metal
components used in a wide variety of aerospace, industrial, construction and
other commercial applications (the “Company Business”).

B. Employee is currently employed by Employer as its Chief Financial Officer, on
an “at will” basis, which employment is terminable by either party at any time
for any reason or no reason.

C. The work of Employee for Employer has brought and is expected to continue to
bring Employee into close contact with many confidential affairs of Employer not
readily available to the public.

D. The parties are also contemplating entering into an agreement captioned
“Change in Control Agreement” (hereinafter, the “Control Agreement”), a copy of
which is attached hereto as Exhibit A.

E. The parties now desire to modify the employment relationship and establish
certain protections and obligations, in the manner set forth in this Agreement
and in the Control Agreement.

ACCORDINGLY, in consideration of the promises hereinafter set forth in this
Agreement and in the Control Agreement, the parties agree as follows:

1. Effective Date. This Agreement shall be effective on the first date after the
execution by both of the parties of both this Agreement and the Control
Agreement (the “Effective Date”).

2. Position, Duties and Responsibilities. Employer hereby employs Employee, and
Employee agrees to be employed by Employer, as its Chief Financial Officer, or
to such other senior management position as the parties may define by mutual
agreement. During the “Employment Period” (as hereinafter defined), the Chairman
of the Board of Directors of Employer (the “Chairman”) or his designee shall be
entitled to establish the business hours, conditions of employment, reporting
relationships, job assignments, duties and responsibilities of Employee
hereunder, and to modify the foregoing from time to time. Those duties include,
without limitation, the duties set forth on the job description attached hereto
as Exhibit B. As of the date hereof, Employee shall report to the Chairman.
Employee shall devote all of his business efforts to the business of Employer.

3. Employment Period. The term of this Agreement shall be five (5) years,
commencing on the Effective Date (hereinafter referred to as the “Employment
Period”). Thereafter, the Employment Period may be extended for additional one
year (1) periods, in each case upon the written agreement of the parties.

 
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4. Compensation. For services rendered pursuant to this Agreement, and for the
covenants and agreements of Employee set forth herein, Employee shall receive
the following: (i) a base salary at the rate of $22,916.67 per month (annual
rate: $275,000), which amount is subject to annual review and possible increase
at the discretion of Chairman, with the advice and consent of the Compensation
Committee of the Board of the Corporation (the “Compensation Committee”);
(ii) an opportunity to earn incentive compensation on annual basis, in such
amount and manner as may be determined by the Chairman, with the advice and
consent of the Compensation Committee, with respect to a particular year;
provided, however, that Employee must be actively employed by Employer at the
end of a year in order to earn incentive compensation with respect to that year;
notwithstanding the foregoing, in the year of termination of Employee’s
employment, if the termination is under circumstances which entitle Employee to
receive severance pay pursuant to the Control Agreement or Section 5(b) below,
Employee shall earn a pro rata portion (computed as the number of days worked
during the year divided by 365) of such incentive compensation for the year in
which the termination occurs; (iii) four (4) weeks of vacation per year;
provided, however, that unused vacation may not be carried over to a subsequent
year; (iv) the right to participate in the standard benefits which Employer
provides to all of its employees; (v) the right to participate in the Hawk
Corporation 1997 Stock Option Plan and the 2000 Long Term Incentive Plan
(collectively, the “Plans”) in accordance with and subject to all of the terms
and conditions contained in the Plans, subject to the execution of such
documents as may be required by the Committee appointed pursuant to the Plans;
and (vi) such other benefits and/or perquisites as may be provided at the
discretion of the Chairman from time to time.

5. Severance. 

(a) The parties acknowledge and agree that (i) certain severance benefits may be
provided to Employee pursuant to provisions of the Control Agreement, and (ii)
Employee shall not be entitled to any of the “Severance Benefits” described in
this Paragraph 5 if he is entitled to any severance benefits pursuant to the
terms of the Control Agreement.

(b) Subject to the terms of subparagraph (a) above, in the event of the
termination of Employee’s employment by Employer for a reason other than for
“Cause”, Employer will continue to pay to Employee the “Annual Salary” for a
period of twenty four (24) months following the date of termination, and will
continue to provide to Employee and his family “Basic Medical Coverage” and
“Executive Medical Benefits” (as hereinafter defined) for a period of twenty
four (24) months following the date of termination. In addition, Employee shall
be entitled to receive payment for any earned vacation which he had not used as
of the date of termination. For purposes of this Agreement, the definition of
“Annual Salary” shall be identical to the definition of “Annual Salary” set
forth in Section 1.1(e) of the Control Agreement, and the definition of “Cause”
shall be identical to the definition of “Cause” set forth in Section 1.1(k) of
the Control Agreement, and each of those definitions is incorporated herein to
the same extent as if it had been fully rewritten in this Agreement. For
purposes hereof, “Basic Medical Coverage” shall mean the same group medical
insurance coverage as is provided to all salaried employees, and “Executive
Medical Benefits” shall mean the additional medical benefits that are provided
(if any) from time to time to high level executives only, in each case on the
same basis as such benefits had been provided immediately prior to the
termination and subject to the provisions of the applicable plans.

(c) The continuation of Annual Salary, Basic Medical Coverage and Executive
Medical Benefits described in subparagraph (b) above (collectively, the
“Severance Benefits”) are intended by the parties to be in settlement of any and
all claims of Employee arising out of or related to Employee’s employment with
Employer, including, without limitation, the termination of such employment, any
express or implied employment agreement, this Agreement, or the breach thereof
(collectively, “Employment Claims”). In consideration of Employer providing the
Severance Benefits, upon his acceptance of any of the Severance Benefits, and
without further action by Employee, Employee will be deemed to have released and
waived any and all Employment Claims against Employer, and will be deemed to
have covenanted not to sue Employer in connection with any Employment Claim, and
Employee hereby so releases, waives and covenants. If Employer so requests,
employee shall execute a General Waiver and Release of Claims form substantially
the same as the “Release” which is attached to the Control Agreement as Exhibit
A thereto, in which event Employer’s obligation to provide the Severance
Benefits shall be conditioned upon the execution and delivery by Employee of
such a release.

(d) In further consideration for such release and waiver and covenant not to
sue, it is agreed that Employee shall not be required to mitigate damages, by
seeking other employment or otherwise, and Employer shall not be entitled to set
off against amounts payable to Employee pursuant to this subparagraph any
amounts earned by Employee from other employment during the balance of the
Employment Period.

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(e) Employer’s obligation to provide the Severance Benefits shall also be
subject to, and conditioned upon, Employee’s waiver of any other cash severance
payment or other benefits provided Employer or its affiliates pursuant to any
other severance agreement with Employee. No amount shall be payable under this
Agreement to, or on behalf of, Employee unless and until the Employee has
executed and delivered such a waiver, in a form to be presented by Employer.

6. Death of Employee. If Employee should die during the Employment Period,
Employer (i) shall continue to pay compensation to Employee’s wife (or if at the
time of Employee’s decease Employee has no wife, then to his beneficiaries) for
a period of one year, at the rate of compensation earned by Employee immediately
prior to his death, and (ii) shall continue to provide the Basic Medical
Coverage and Executive Medical Benefits (as defined in paragraph 5(b) above) to
Employee’s family for a period of one year. Employer shall have no further
duties or obligations to Employee pursuant to this Agreement.

7. Disability of Employee.
 
(a) In the event that Employee shall become mentally or physically disabled (as
hereinafter defined) during the Employment Period, Employer shall continue to
pay compensation to Employee, at the rate of compensation earned by Employee
immediately prior to his disability, for a period of one year after the onset of
such disability. If, at the end of such period, Employee shall continue to be so
disabled Employer may elect, upon ten days prior written notice, to discontinue
payments of compensation, and to terminate this Agreement, and Employer shall
have no further duties or obligations hereunder.

(b) For purposes of this paragraph 7, Employee shall become “mentally or
physically disabled” if he is unable to perform the essential functions of his
position, with or without reasonable accommodation. In the event that Employee
believes that he would be able to perform the essential functions of his
position with a reasonable accommodation, the parties shall engage in an
interactive process concerning such possible accommodation, in accordance with
applicable law. If Employee submits information from one or more physicians in
support of that position, Employee hereby agrees to submit to examinations from
one or more physicians selected by Employer, so long as the physicians selected
by Employer are paid by Employer.

(c) The date on which the disability will be deemed to have occurred shall be
the day after Employee last performed the services for Employer which are
required of him pursuant to this Agreement, which performance of services was
discontinued because of the mental or physical disability described herein.

8. Restrictive Covenants. The provisions of the restrictive covenants contained
in Exhibit B to the Control Agreement (hereinafter, the “Restrictive Covenants”)
are incorporated herein to the same extent as if they had been fully rewritten
in this Agreement; except that, for purposes of this Agreement only, certain of
the Restrictive Covenants shall be modified to provide as follows:

(a) The definition of the “Restricted Period” which is set forth in the first
sentence of Section 3 of the Restrictive Covenants is hereby modified by
changing the phrase “one (1) year following the termination of such employment”
to read “two (2) years following the termination of such employment”.

(b) The initial phrase of Section 6 of the Restrictive Covenants is hereby
modified by changing the phrase “During and for a period of two (2) years after
the expiration of the Restricted Period” to read “During the Restricted Period”.

The Restrictive Covenants, as modified in this paragraph, shall survive the
termination of this Agreement, however caused.

9. Disclosure. Employer may notify anyone employing Employee or evidencing an
intention to employ Employee as to the existence and provisions of this
Agreement.

10. Incorporation by Reference from Control Agreement. Whenever the text of this
Agreement contains language to indicate, in essence, that a portion of the
Control Agreement is incorporated herein to the same extent as if it had been
fully rewritten in this Agreement (or words of similar meaning), and the text so
incorporated herein includes the term “Executive” or the “Corporation”, such
terms shall have the following meanings in this Agreement: (i) “Executive” shall
mean the Employee, and (ii) the Corporation shall mean the Employer, each of its
subsidiary companies, each of the constituent entities of any of the foregoing,
individually and collectively, and any successor of any of the foregoing (as
described in Article V of the Control Agreement).
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11. Governing Law and Jurisdiction. The parties intend that the validity,
performance and enforcement of this Agreement shall be governed by the laws of
the State of Ohio. In the event of any claim arising out of or related to this
Agreement, or the breach thereof, the parties intend to and hereby confer
jurisdiction to enforce the terms of this Agreement upon the courts of any
jurisdiction within the State of Ohio, and hereby waive any objections to venue
in said courts. 

12. Binding Effect. This Agreement shall inure to the benefit of and be binding
upon the parties hereto, their heirs, representatives and successors.

13. Severability. In case any one or more of the provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect by a court of competent jurisdiction, such invalidity, illegality
or unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal, or unenforceable
provision had never been contained herein.

14. Notices. All notices, requests, demands or other communications hereunder
shall be sent by registered or certified mail to the parties at the addresses
set forth on the first page of this Agreement, or to such other address as a
party may designate by notice given pursuant to this paragraph.

15. Effect of Captions. The captions in this Agreement are included for
convenience only and shall not in any way effect the interpretation or
construction of any provision hereof.

16. Remedies Cumulative; No Waiver. All remedies specified herein or otherwise
available shall be cumulative and in addition to any and every other remedy
provided hereunder or now or hereafter available. No waiver or failure
(intentional or unintentional) to act with respect to any breach or default
hereunder shall be deemed to be a waiver with respect to any subsequent breach
or default, whether of a similar or different nature.

17. Governing Law; Jurisdiction: Limitations on Filing Actions. This Agreement
shall be governed by and construed in accordance with the substantive law of the
State of Ohio. The parties intend to and hereby do confer jurisdiction upon the
courts of any jurisdiction within the State of Ohio to determine any dispute
arising out of or related to this Agreement, including the enforcement and the
breach hereof. The parties agree that any claim arising out of or related to
this Agreement, or the breach hereof, must be filed within six (6) months after
the date of the alleged breach, and in any event within six months after the
date of termination of Employee’s employment, that any claim which is not filed
within such six month period is waived, and that any statute of limitations to
the contrary is hereby waived.

18. Acknowledgment. Employee acknowledges that: (i) he has carefully read all of
the terms of this Agreement, and that such terms have been fully explained to
him; (ii) he understands the consequences of each and every term of this
Agreement; (iii) he had other employment opportunities at the time he entered
into this Agreement; (iv) he specifically understands that by signing this
Agreement he is giving up certain rights he may have otherwise had, and that he
is agreeing to limit his freedom to engage in certain employment during and
after the termination of this Agreement, and (v) the limitations to his right to
compete contained in this Agreement represent reasonable limitations as to
scope, duration and geographical area, and that such limitations are reasonably
related to protection which Employer reasonably requires.

19. Entire Agreement. This Agreement embodies the entire agreement and
understanding between Employer and Employee and supersedes all prior agreements
and understandings relating to the subject matter hereof.

 
 
 
 

 
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the date
first hereinabove mentioned.

HAWK CORPORATION
(“Employer”)

By: /s/ Ronald E. Weinberg  
Its: Chairman and Chief Executive Officer

/s/ Joseph J. Levanduski   
Joseph J. Levanduski (“Employee”)
 
 
 
 
 
 
EXHIBIT A

THE CONTROL AGREEMENT

See attached document.

 
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EXHIBIT B

JOB DESCRIPTION

Title: Chief Financial Officer (CFO) for Hawk Corporation

Reporting Relationship:
Reports to the CEO

Education: 
Bachelor’s degree in accounting, plus a successful combination of training and
work experience in a manufacturing environment, and a CPA is required. Master’s
degree in finance / accounting is desirable.

Personal Characteristics: 
Excellent interpersonal skills (verbal and written); team player; able to work
across organization lines to achieve results; good business skills; analytical
and able to solve technical problems; able to visualize and conceptualize
concepts ideas; able to quickly grasp and understand technical concepts and
application; able to work up and down and across organization structure; able to
work in a matrix/team based organization environment; high sense of urgency;
outstanding problem solver; good analysis skills; strong personal computer
skills Excel Access; high level of integrity; commitment to continuous
improvement; understanding of modern accounting control and manufacturing theory
and practice.

Work Experience:  Minimum of 10 to 15 years of progressively responsible work
experience resulting in a controller’s role for a publicly traded manufacturing
company with an integrated computer system.

Principal Area of Responsibility:  The primary focus of the CFO’s position is to
direct the finance, accounting, information systems and control functions of the
Company, maintain relationships with the investment and banking community,
establish consistent policies and procedures throughout the organization to
ensure timely and accurate financial information, oversee the Controllers
consolidation of the divisional financial information, and ensure that all
financial information is prepared in accordance with all GAAP and SEC reporting
requirements. The CFO will establish, coordinate and administer an effective,
on-going plan for the fiscal control of the operation including full P&L and
Balance Sheet. The plan will include, but is not limited to, budgeting, cost
control, profit maximization, SOX compliance, capital investing, cost standards,
and SEC compliance. Further, the CFO will participate as a senior member of
management in aligning the company’s financial goals and operations with its
overall strategy.

Specific Duties:
 

·  
Financial reporting: Provide oversight and guidance to controllers in order to
maintain accurate general ledger, balance sheet, in accordance with GAAP.

 

·  
Assure that financial reports are established that are required to properly
manage the operations.

 

·  
Provide timely reporting of financial performance to SEC in according to GAAP.

 

·  
Establish the appropriate control environment to ensure compliance with Sarbanes
Oxley requirements, and that are sufficient to provide a basis to provide
appropriate certifications under Section 302 of the law.

 

·  
Review and consolidate the Annual Operating and Capital Budgets for Hawk
Corporation and each of its divisions.

 

·  
Lead in the preparation of SEC disclosure information, and ensure that the
divisional finance team is trained to understand SEC requirements.

 

·  
Conduct timely reviews of financial data submitted by facilities / divisions as
necessary.

 

·  
Coordinate the preparation of all necessary information for external and
internal audits.

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·  
Work with manufacturing sites on elimination of errors and misrepresentation of
information.

 

·  
Maintain integrity of informational systems used in the organization.

 

·  
Facilitate the effectiveness of the information systems used at the divisional
level, including QAD; and the financial consolidation package used at Hawk
Corporation.

·  
Ensure proper documentation of manufacturing processes is developed and
maintained for accurate inventory standards, inventory valuations, and control.

·  
Be a point of contact for external auditors, and ensure efficient audits and
quarterly reviews.

 

·  
Interpret manufacturing variances, and develop strategies to eliminate
unfavorable results.

·  
Administratively direct the group and site controllers and all staff associated
with the department.

·  
Provide input to the divisional controllers as they write annual performance
appraisals and career planning processes for their staff.

·  
Investigate and provide corrective action for any issues uncovered during the
course of the job.

·  
Facilitate and provide leadership on company initiatives towards continuous
improvement, including best cost initiatives.

·  
Establish, monitor and report on cost reduction programs;

 

·  
Support Operations in all financial related issues including short-term problem
solving and long-term systems issues.

 

·  
Provide strategic input and leadership on corporate development projects
(acquisitions, divestitures, etc.,)

 

·  
Provide the organization with appropriate financial structure to carry out
strategic initiatives including bank and high yield debt, and equity options.

 

·  
Develop and maintain appropriate communications and relationships with the
investment community.

 

 
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