exhibit10_4.htm


    Exhibit
10.4

    FIRST
AMENDMENT

    TO
HAWK CORPORATION

    1997
STOCK OPTION PLAN

    


    HAWK CORPORATION (the
“Company”), having adopted the Hawk Corporation 1997 Stock Option Plan (the
“Original Plan”) adopted as of November 1997 and effective as of May 1998,
hereby amends the Original Plan in accordance with this FIRST AMENDMENT TO HAWK CORPORATION
1997 STOCK OPTION PLAN, effective as of December 31, 2008 (the
“Amendment,” and together with the Original Plan, the “Amended Plan”), as
follows:

    


    1. Changes
to Section 1 of the Original Plan. The Company hereby amends
Section 1 of the Original Plan as follows:

    


    
      	
              (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.

            


    

    


    2. Changes
to Section 2 of the Original Plan. The Company hereby amends
Section 2 of the Original Plan as follows:

    


    
      	
              (a)  

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

            


    

    


    a. "Award"
means, individually or collectively, a grant under the Plan of Non-Statutory
Stock Options or Incentive Stock Options.

    


    
      	
              (b)  

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

            


    

    


    j. “Fair
Market Value” shall mean, as of a given date, the value of a Share determined as
follows (in order of applicability):  (i) if on the Grant Date or
other determination date the Share is listed on an established national or
regional stock exchange, is admitted to quotation on the NYSE Alternext or is
publicly traded on an established securities market, the Fair Market Value of a
Share shall be the closing price of the Share on that exchange or in that market
(if there is more than one such exchange or market the Committee shall determine
the appropriate exchange or market) on the Grant Date or such other
determination date (or if there is no such reported closing price, the Fair
Market Value shall be the mean between the highest bid and lowest asked prices
or between the high and low sale prices on that trading day) or, (ii) if no sale
of Shares is reported for that trading day, on the next preceding day on which
any sale has been reported.  If the Share is not listed on such an
exchange, quoted on such system or traded on such a market, Fair Market Value
shall be the value of the Share as determined by the determined by such methods
or procedures as shall be established from time to time by the Committee in good
faith in a manner consistent with Section 409A.

    


    
      	
              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:

            


    

    


    k. “Grandfathered
Options” shall mean all Options granted under the Plan which were earned and
vested on or before December 31, 2004.  Grandfathered Options are
subject to the provisions of Section 1.2 above.

    


    
      	
              m.  

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

            


    

    


    l. “Grant
Date” shall mean, as determined by the Committee, the latest to occur
of:  (i) the date as of which the Committee approves an Award, (ii)
the date on which the recipient of an Award first becomes eligible to receive an
Award under this Plan, or (iii) any other date as may be specified by the
Committee.

    


    
      	
              n.  

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

            


    

    


    r. “Option
Price” shall mean the price at which a Share may be purchased by an Optionee
pursuant to the exercise of an Option.

    
      
        
        

      

      
        72

        
        

      

      
        
        

      

      
        
          
            
              


              
                	
                        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 Section
1(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.

            


    

    


    3. Changes
to Section 5 of the Original Plan. The Company hereby amends
Section 5 of the Original Plan as follows:

    


    
      	
              (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:

            


    

    


    Each
Option shall be evidenced by a written agreement that may contain any term
deemed necessary or desirable by the Committee, subject to the provisions of
Section 409A and provided such terms are not inconsistent with this Plan or any
applicable law.

    


    
      	
              (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:

            


    

    


    The
Committee may from time to time in granting Options to Directors, Officers and
employees of the Company or its Subsidiaries under this Plan prescribe such
other terms and conditions concerning such Options as it deems appropriate,
subject to the provisions of Section 409A, including, without
limitation,

    


    4. Change to
Section 6 of the Original Plan. The Company hereby amends
Section 6 of the Original Plan by deleting Section 6 from the Original Plan in
its entirety and replacing it in the Amended Plan with the
following:

    


    6. OPTION
PRICE.  The Option Price per Share of any Option shall be any price
determined by the Committee but shall not be less than the par value per Share;
provided, however, that in no event shall the Option Price per Share of any
Option be less than the Fair Market Value of the Shares underlying such Option
on the date such Option is granted.

    


    5. Changes
to Section 7 of the Original Plan. The Company hereby amends
Section 7 of the Original Plan by deleting the first four sentences of Section 7
in their entirety from the Original Plan and replacing them in the Amended Plan
with the following:

    


    An Option
shall be deemed exercised when (i) the Company has received written notice of
such exercise in accordance with the terms of the Option, (ii) full payment of
the aggregate Option Price of the Shares as to which the Option is exercised has
been made, and (iii) arrangements that are satisfactory to the Committee in its
sole discretion have been made for the Optionee’s payment to the Company of an
amount that is sufficient to satisfy all applicable federal or state tax
withholding requirements relating to exercise of the Option, if
any.  Unless further limited by the Committee in any Option, the
Option Price of any Shares purchased shall be paid in cash, by certified or
official bank check, by money order, with Shares or by a combination of the
above; provided, however, that the Committee in its sole discretion may accept a
personal check in full or partial payment of any Shares and provided further,
that such form of payment does not constitute a deferral of compensation within
the meaning of Section 409A or otherwise cause the Option to be subject to the
requirements of Section 409A.  If the Option Price is paid in whole or
in part with Shares, the value of the Shares surrendered shall be their Fair
Market Value on the date the Option is exercised.  The Company in its
sole discretion may, on an individual basis or pursuant to a general program
established in connection with this Plan, lend money to an Optionee, guarantee a
loan to an Optionee, or otherwise assist an Optionee to obtain the cash
necessary to exercise all or a portion of an Option granted hereunder or to pay
any tax liability of the Optionee attributable to such exercise.  If
the Option Price is paid in whole or in part with Optionee’s promissory note,
such note shall (i) provide for full recourse to the maker, (ii)
be  collateralized by the pledge of the Shares that the Optionee
purchases upon exercise of such Option, (iii) bear interest at a rate no less
than the base lending rate of the Company’s principal lender or if there is no
such lender at a rate no less than the prime rate as published from time to time
in THE WALL STREET JOURNAL, and (iv) contain such other terms as the Committee
in its sole discretion shall reasonably require.

    


    6. Change to
Section 8 of the Original Plan. The Company hereby amends
Section 8 of the Original Plan by deleting Section 8(c) in its entirety from the
Original Plan and replacing it in its entirety in the Amended Plan with the
following:

    


    
      
        
        

      

      
        73

        
        

      

      
        
        

      

       

      
        
          c. The
Committee may in its sole discretion accelerate the date on which any Option may
be exercised and may accelerate the vesting of any Shares subject to any Option
or previously acquired by the exercise of any Option; provided, however, that
any such acceleration of the exercisability of the Option or the vesting of any
Shares is subject to the limitations of Section 409A and, unless otherwise
determined by the Committee, any acceleration of the exercisability of the
Option or of the vesting of any Shares under this Section 8(c) shall comply with
Section 409A.


        

        7. Changes
to Section 10 of the Original Plan. The Company hereby amends
Section 10 of the Original Plan as follows:

        


        
          	
                  (a)  

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

                


        

         

      

      
        
          
            ii. appropriate
adjustment shall be made in the number of Shares and the exercise price per
Share thereof then subject to any outstanding Option, so that the same
percentage of the Company’s issued and outstanding Shares shall remain subject
to purchase at the same aggregate exercise price; provided, however, that no
adjustment shall be made under Section 10(a)(i) or 10(a)(ii) which will result
in any Option granted under this Plan becoming subject to the terms and
conditions of Section 409A or otherwise constitute an impermissible
acceleration, unless agreed upon by the Committee and the
Participant.

             

          

          
            	
                    (b)  

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

                  


          

           

        

        Notwithstanding
the foregoing, no amendment or modification shall be made under this Section
10(b) which will result in any Option granted under this Plan becoming subject
to the terms and conditions of Section 409A or otherwise constitute an
impermissible acceleration, unless agreed upon by the Committee and the
Participant.

         

      

    

    8. Change to
Section 16(a) of the Original Plan. The Company hereby amends
Section 16(a) of the Original Plan by adding the following in its entirety as
the last sentence of Section 16(a) in the Amended Plan:

    


    Notwithstanding
the foregoing, no amendment or modification shall be made under this Section
16(a) which will result in an Award becoming subject to the terms and conditions
of Section 409A or otherwise constitute an impermissible acceleration, unless
agreed upon by the Committee and the Optionee.

    


    9. Addition
of New Section 18 to the Amended Plan. The Company hereby adds
Section 18 to the Amended Plan in its entirety as follows:

    


    18. SECTION
409A.  The Plan is intended to comply with the requirements of Section
409A, without triggering the imposition of any tax penalty
thereunder.  To the extent necessary or advisable, the Board may amend
the Plan or any Award to delete any conflicting provisions and to add any such
other provisions as are required to fully comply with the applicable provisions
of Section 409A applicable to the Plan.  The Committee shall comply
with Section 409A in establishing the rules and regulations applicable to the
Plan.  Notwithstanding any provision of this Plan or any Award to the
contrary, if all or any portion of the payments and/or benefits under this Plan
or any Award are determined to be “nonqualified deferred compensation” subject
to Section 409A and the Optionee is a “specified employee” (within the meaning
of U.S. Treasury Regulation Section 1.409A-1(i)), as determined by the Committee
in accordance with Section 409A, as of the date of the Optionee’s separation
from service (within the meaning of U.S. Treasury Regulation Section
1.409A-1(h)), and the delayed payment or distribution of all or any portion of
such amounts to which the Optionee is entitled under this Plan and/or any Award
is required in order to avoid a prohibited distribution under Section
409A(a)(2)(B)(i) of the Code, then such portion deferred under this Section 18
shall be paid or distributed to the Optionee in a lump sum on the earlier of (a)
the date that is six (6) months following termination of the Optionee’s
employment, (b) a date that is no later than thirty (30) days after the date of
the Optionee’s death or (c) the earliest date as is permitted under Section
409A.  For purposes of clarity, the six (6) month delay shall not
apply in the case of severance pay contemplated by U.S. Treasury Regulation
Section 1.409A-1(b)(9)(iii) to the extent of the limits set forth
therein.  Any remaining payments due under this Plan and any Award
shall be paid as otherwise provided therein.

    


    10. Full
Force and Effect.  Except to the
extent specifically modified in this Amendment, each and every provision of the
Original Plan remains in full force and effect in the Amended Plan.

    


    11. Miscellaneous.  This Amendment
shall be governed by and construed in accordance with the substantive laws of
the State of Ohio.  In the event of any conflict between the original
terms of the Original Plan and this Amendment, the terms of this Amendment shall
prevail.

    


    


     

    
 

     

     

     

     

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