| (a)   | Section      1 of the Original Plan is redesignated in its entirety as Section 1(a) of      the Amended Plan. |
|-----------------|---------------------------------------------------------------------------------------------------------------|

| (b)   | The      following is added in its entirety as Section 1(b) of the Amended      Plan: |
|-----------------|---------------------------------------------------------------------------------------|

| (b)   | This      Plan and any Options granted hereunder are intended to be exempt from the      requirements of Section 409A, and shall be interpreted and administered in      a manner consistent with those intentions.  Any provision of      this Plan to the contrary notwithstanding, Grandfathered Awards shall not      be governed by the provisions of this Plan but instead shall continue to      be governed by the provisions of the Hawk Corporation 1997 Stock Option      Plan adopted as of November 1997 and effective as of May 1998 (the      “Original Plan”) as in effect on December 31,  2004. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | The      following is added in its entirety as Section 2(a) of the Amended      Plan: |
|-----------------|---------------------------------------------------------------------------------------|

| (b)   | The      following is added in its entirety as Section 2(j) of the Amended      Plan: |
|-----------------|---------------------------------------------------------------------------------------|

| k.   | Sections      2(a), 2(b), 2(c), 2(d), 2(e), 2(f), 2(g), 2(h), 2(j), 2(k), 2(l), 2(m),      2(n), 2(o), 2(q), 2(r) and 2(s) of the Original Plan are redesignated in      their entirety as Sections 2(b), 2(c), 2(d), 2(e), 2(f), 2(g), 2(h),      2(i),  2(m), 2(n), 2(o), 2(p), 2(q), 2(s), 2(w), 2(x) and 2(y),      respectively, of the Amended Plan. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| l.   | The      following is added in its entirety as Section 2(k) of the Amended      Plan: |
|----------------|---------------------------------------------------------------------------------------|

| m.   | The      following is added in its entirety as Section 2(l) of the Amended      Plan: |
|----------------|---------------------------------------------------------------------------------------|

| n.   | The      following is added in its entirety as Section 2(r) of the Amended      Plan: |
|----------------|---------------------------------------------------------------------------------------|

| o.   | The      following is added in its entirety as Section 2(t) of the Amended      Plan: |
|----------------|---------------------------------------------------------------------------------------|

| t.   | “Original      Plan” has the meaning set forth in Section1(a). |
|----------------|----------------------------------------------------------------------------|

| p.   | The      following is added in its entirety as Section 2(u) of the Amended      Plan: |
|----------------|---------------------------------------------------------------------------------------|

| u.   | “Plan”      shall mean this 1997 Stock Option Plan of the Company, as      amended. |
|----------------|-------------------------------------------------------------------------------------------------|

| q.   | The      following is added in its entirety as Section 2(v) of the Amended      Plan: |
|----------------|---------------------------------------------------------------------------------------|

| v.   | “Section      409A” shall mean Section 409A of the Code and the U.S. Department of      Treasury regulations and other interpretive guidance issued      thereunder. |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | The      first sentence of Section 5(a) is deleted from the Original Plan and is      replaced in its entirety in the Amended Plan by the    following: |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The      last sentence of Section 5(b) (exclusive of subsections 5(b)(i), (ii), and      (iii) of the Original Plan) is deleted from the Original Plan and is      replaced in its entirety in the Amended Plan by the    following: |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (a)   | Section      10(a)(ii) is deleted from the Original Plan and is replaced in its      entirety in the Amended Plan by thefollowing: |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | The      following is added in its entirety as the last sentence of Section 10(b)      in the Amended Plan: |
|-----------------|-------------------------------------------------------------------------------------------------------------|