Document:

<PAGE>   1
                                                                    EXHIBIT 10.3

                              SUPERVISORY AGREEMENT

This Supervisory Agreement (Agreement) is made and is effective this 26TH day of
JULY, 2001 (the Effective Date), by and between Metropolitan Bank and Trust
Company (Metropolitan or Institution), OTS Docket No. 06381, a state chartered
savings association having its main office located at 22901 Millcreek Boulevard,
Highland Hills, Ohio 44122, and the State of Ohio, Division of Financial
Institutions (ODFI) having its offices located at 77 South High Street, 21St
Floor, Columbus, Ohio 43215, acting through the Superintendent or his designee
(Superintendent), and the Office of Thrift Supervision (OTS), an office within
the United States Department of the Treasury, having its principal executive
offices located at 1700 G. Street, N. W., Washington, D.C., acting through its
Central Regional Director or his designee (Regional Director). It is understood
and agreed that this Agreement is a written agreement entered into with the ODFI
within the meaning of Section 1155.021 of the Ohio Revised Code and with the OTS
within the meaning of 12 U.S.C. Sections 1818 (b) (1) and (i)(2)1.

         WHEREAS, the ODFI is the state regulator of Metropolitan pursuant to
Chapter 1155.01 et seq. of the Ohio Revised Code; and

         WHEREAS, the OTS is the primary federal regulator of Metropolitan
pursuant to the Home Owners' Loan Act, 12 U.S.C. Sec. 1461 et seq. (HOLA); and

         WHEREAS, based on the Report of Examination, dated December 27, 2000
(Report of Examination), the ODFI and the OTS are of the opinion that
Metropolitan has engaged in acts and practices that are considered to be unsafe
and unsound; and

         WHEREAS, the ODFI and OTS are of the opinion that grounds exist for the
initiation of administrative proceedings against Metropolitan; and

         WHEREAS, the ODFI and OTS are of the view that it is appropriate to
take measures intended to ensure that Metropolitan will engage in safe and sound
practices; and

         WHEREAS, Metropolitan, acting through its Board of Directors (the
Board), without admitting or denying any unsafe and unsound practices, wishes to
cooperate with the ODFI and OTS and to evidence the intent to: (i) comply with
all applicable laws and regulations and (ii) engage in safe and sound practices.

(1) All references to the United States Code (U.S.C.) are as amended, unless
otherwise indicated.

<PAGE>   2

         NOW THEREFORE, in consideration of the above premises and the mutual
undertakings set forth herein, the parties hereto agree as follows:

                                     CAPITAL

(1) Capital Improvement and Risk Reduction Plan.
    --------------------------------------------

         A. By September 28, 2001, Metropolitan shall develop and submit to the
Superintendent and Regional Director for review and non-objection a
comprehensive Capital Improvement and Risk Reduction Plan (Plan). The Plan shall
contain quantitative goals and related timeframes for achieving the following:

         (i)   Increasing core and risk based capital in excess of "well
         capitalized" as defined in 12 C.F.R. Sec. 565.4(b)(1) by December 31,
         2001, provided that if Metropolitan is unable to achieve this result
         by December 31, 2001, despite its best efforts and/or for reasons
         beyond Metropolitan's control, then the Director and the
         Superintendent, in their joint discretion, may extend such date;

         (ii)  Increasing earnings;

         (iii) Maintaining at each quarter-end subsequent to the Effective
         Date of this Agreement the Allowance for Loan and Lease Losses (ALLL)
         at no less than the minimum level established by the Board approved
         policy in effect on April 30, 2001;

         (iv)  Reducing the investment in fixed assets, including office space
         leased to others and future branch sites, so that the investment in
         fixed assets (other than artwork) is no more than twenty five (25)
         percent of core capital by December 31, 2002;

         (v)   Reducing the investment in artwork by $1.3 million by no later
         than December 31, 2001, and by an additional $2.0 million by no later
         than December 31, 2002;

         (vi)  Attaining compliance with the Board approved limits in its
         interest rate risk policy in effect on April 30, 2001;

         (vii) Reducing the Institution's reliance on volatile funding
         sources, including but not limited to, brokered and out-of-state
         deposits;

         (viii) Reducing the level of loans in excess of the supervisory loan to
         value limits to no more than fifty (50) percent of core capital;

<PAGE>   3

         (ix)   Controlling credit risk, in part, by establishing aggregate
         limitations by loan type; and

         (x)    Restricting growth as prescribed in Section (6) A.

         B. The Plan shall also contain a detailed proforma balance sheet and
income statement, organized on a monthly basis, through at least, December 31,
2003. By September 30, 2002, and by September 30 of each year thereafter, the
proforma balance sheet and income statement shall be revised for the following
year ending December 31, and extended for the next following year ending
December 31.

         C. After review and non-objection by the Superintendent and Regional
Director, Metropolitan shall implement the Plan and adhere to it in all
respects.

         D. Any proposed major deviations from, or material changes to the Plan
shall be submitted to the Superintendent and the Regional Director at least
thirty (30) calendar days prior to such changes for their review and
non-objection. If no objection or request for additional information is received
by Metropolitan within five (5) days following the expiration of such thirty
(30) day period, Metropolitan may go forward with the proposed deviation or
change.

         E. On a quarterly basis, beginning with the calendar quarter ending
September 30, 2001, the Board shall review the progress of Metropolitan in
meeting the goals and timeframes set forth in the Plan and prepare a written
analysis detailing the actual progress against the projections in the Plan.
Minutes of the Board and committee meetings shall document the deliberations,
actions, and decisions regarding the analysis.

                                   MANAGEMENT

(2) Compliance Committee.
    ---------------------

         A. Within thirty (30) calendar days of the Effective Date of this
Agreement, the Board shall establish a Compliance Committee consisting of, at a
minimum, three outside directors. This committee shall be responsible for
assessing Metropolitan's progress in the following areas:

          (i) Compliance with each provision of this Agreement;

         (ii) Compliance with the items listed in Matters Requiring Board
         Attention on pages 5 and 6 of the Report of Examination;

<PAGE>   4

       (iii) Compliance with the other corrective actions noted with an asterisk
       on pages 7 through 46 of the Report of Examination; and

       (iv) Reviewing the Asset Liability Committee (ALCO) meeting minutes to
       ensure that the strategies employed by the ALCO are consistent with the
       Plan.

(3) Audit Committee.
    ----------------

         A. Within thirty (30) calendar days of the Effective Date of this
Agreement, the Board shall ensure that the responsibilities of the Audit
Committee include the following:

         (i) Assessing Metropolitan's progress in addressing exceptions noted
         by the independent auditors as a part of the annual independent
         audit;

         (ii) Assessing Metropolitan's progress in addressing exceptions noted
         by the internal audit department;

         (iii) Assessing the adequacy of the loan review process and the
         staffing level of the loan review unit on at least a semi-annual
         basis; and

         (iv) Requiring the loan review unit to report directly to the Audit
         Committee. The Audit Committee should review, on a monthly basis,
         reports containing the findings of the loan review unit. These
         reports shall, at a minimum, include comparative trends for
         delinquent and classified and special mention assets both in the
         aggregate and by loan portfolio type.

(4) Internal Reporting and Controls.
    --------------------------------

         A. Within sixty (60) calendar days of the Effective Date of this
Agreement, the Board shall develop and implement procedures to ensure the
following:

         (i) The accuracy of loan delinquency reports provided to the Board
         and/or used for the preparation of the Thrift Financial Report (TFR);

         (ii) The accuracy of any TFR, including the Consolidated Capital
         Requirement (CCR) and Consolidated Maturity and Rate (CMR) schedules,
         that are filed subsequent to the implementation of these procedures;
         and

         B. Within ninety (90) calendar days of the Effective Date of this
Agreement, the Board shall develop and implement procedures to ensure that
underwriting, documentation, and ongoing servicing of the loan portfolios are
in accordance

<PAGE>   5

with regulation, Board approved policies, and sound underwriting standards.
These procedures, at a minimum, shall include documentation exception logs and a
follow-up tickler system.

                           SENSITIVITY TO MARKET RISK

(5) Interest Rate Risk Management.
    ------------------------------

         A. Within one hundred and twenty (120) calendar days of the Effective
Date of this Agreement, the Board shall review and revise its internal interest
rate risk system to ensure that it reliably measures the Institution's exposure
to Net Portfolio Value (NPV) and earnings sensitivity. Within fifteen (15)
calendar days of completing this review of the internal interest rate risk
system, the Board shall provide the Superintendent and Regional Director with a
written report describing its findings and actions taken in connection with the
review.

         B. The reliability of the internal interest rate risk system shall be
verified by a quarterly reconciliation of the results of the system with those
of the OTS interest rate risk model, and by an annual assessment which includes
a review of the assumptions and methodologies used, an evaluation of the
system's accuracy, and recommendations to address any identified weaknesses.
Within seventy five (75) calendar days following the close of the end of each
calendar quarter, the Board shall provide the Superintendent and the Regional
Director with a written summary of the reconciliation. Within thirty (30)
calendar days following the completion of the annual assessment, the Board shall
provide the Superintendent and the Regional Director with a written summary of
the annual assessment.

         C. Within one hundred and twenty (120) calendar days of the Effective
Date of this Agreement, the Board shall integrate the internal interest rate
risk system, required pursuant to Section (5) A., and the Plan, required
pursuant to Section (1), into its strategic planning process so that funding and
investment strategies are consistent with the Institution's overall goals for
reducing risk. Strategies employed by the ALCO shall be consistent with the Plan
and documented in the ALCO meeting minutes.

                                  MISCELLANEOUS

(6) Operating Restrictions.
    ----------------------

         A. Metropolitan's total assets at the end of any calendar quarter shall
not exceed the level existing at March 31, 2001, as reported on the March 31,
2001 Thrift Financial Report for Metropolitan, without the prior written consent
of the Regional Director and the Superintendent (OTS Regulatory Bulletin 3b).

<PAGE>   6

         B. Metropolitan shall not enter into any employment contract with any
director or senior executive officer without prior written approval of the
Regional Director and the Superintendent (OTS Thrift Activities Handbook, Sec.
310).

         C. Metropolitan must file a notice with the Regional Director and the
Superintendent prior to adding a director or hiring a senior executive officer
or changing the responsibilities of any senior executive officer so that the
person would assume a different senior executive position (12 C.F.R. Sec.
563.560(a)(1)(ii)).

         D. Metropolitan is prohibited from making any golden parachute
payments, unless the payment is otherwise permitted by regulation (12 C.F.R.
Sec. 359.1(f) and Sec. 359.2).

(7) Director Responsibility.
    ------------------------

         Notwithstanding the requirements of this Agreement that the Board
submit various matters to the Superintendent and Regional Director for the
purpose of receiving approval, non-objection or notice of acceptability, such
regulatory oversight does not derogate or supplant each individual member's
continuing fiduciary duty. The Board shall have the ultimate responsibility for
overseeing the safe and sound operation of Metropolitan at all times, including
compliance with the determinations of the Superintendent and Regional Director
as required by this Agreement.

(8) Compliance with Agreement.
    -------------------------

         A. The Board and officers of Metropolitan shall take immediate action
to cause Metropolitan to comply with the terms of this Agreement and shall take
all actions necessary or appropriate thereafter to cause Metropolitan to
continue to carry out the provisions of this Agreement.

         B. Beginning with the calendar quarter ending September 30, 2001, the
Board, on a quarterly basis, shall adopt a board resolution (the "Compliance
Resolution") formally resolving that, following a diligent inquiry of relevant
information (including reports of management), to the best of its knowledge and
belief, during the immediately preceding calendar quarter, Metropolitan has
complied with each provision of this Agreement currently in effect, except as
otherwise stated. The Compliance Resolution shall: (i) specify in detail how, if
at all, full compliance was found not to exist, and (ii) identify all notices of
exemption or non-objection issued by the Superintendent and the Regional
Director that were outstanding as of the date of its adoption.

         C. The minutes of the meeting of the Board shall set forth the
following information with respect to the adoption of each Compliance
Resolution: (i) the

<PAGE>   7

identity of each director voting in favor of its adoption; and (ii) the identity
of each director voting in opposition to its adoption or abstaining from voting
thereon, setting forth each such director's reasoning for opposing or
abstaining.

         D. The Board shall promptly respond to any request from the ODFI
and/or the OTS for documents to demonstrate compliance with this Agreement.

(9) Reporting Requirements.
    -----------------------

         A. Beginning no later than sixty (60) days from the Effective Date of
this Agreement, the Compliance Committee shall provide a written report of its
findings, as set forth in Section (2), to the full Board at each monthly Board
meeting. The minutes of the Board and Compliance Committee meetings shall
document the deliberations, actions, and decisions regarding the written report.

         B. On a quarterly basis, beginning with the quarter ending September
30, 2001, the Audit Committee shall provide a written report of its findings, as
set forth in Section (3), to the Board within sixty (60) calendar days following
the end of each quarter. The minutes of the Board and Audit Committee meetings
shall document the deliberations, actions, and decisions regarding the written
report.

         C. On a quarterly basis, the Board shall provide to the Superintendent
and the Regional Director, within 60 days following the close of each calendar
quarter, a written report that consists of the following:

         (i) Beginning with the calendar quarter ending September 30, 2001, a
         written analysis detailing the actual progress against the projections
         in the Plan described in Section (1);

         (ii) Beginning with the calendar quarter ending September 30, 2001, a
         written report regarding the findings of the Compliance Committee, as
         set forth in Section (2) and Section (9) A.

         (iii) Beginning with the calendar quarter ending September 30, 2001,
         a written report of the Audit Committee findings, as set forth in
         Section (3). and Section (9) B.

         (iv) Beginning with the calendar quarter ending September 30, 2001, a
         certified true copy of the Compliance Resolution, as set forth in
         Section (8). The Board, by virtue of Metropolitan's submission of a
         certified true copy of each such Compliance Resolution to the
         Superintendent and the Regional Director, shall be deemed to have
         certified to the accuracy of the statements set forth in each
         Compliance Resolution, except as provided below. In the event that one
         or more Directors do not agree with the representations set forth in a
         Compliance Resolution, such disagreement shall be noted in the minutes.

<PAGE>   8

(10) Definitions.
     ------------

         All technical words or terms used in this Agreement for which meanings
are not specified or otherwise provided by the provisions of this Agreement
shall, insofar as applicable, have meanings as defined in Chapter V of Title 12
of the Code of Federal Regulations, HOLA, Federal Deposit Insurance Act (FDIA),
or OTS Memoranda. Any such technical words or terms used in this Agreement and
undefined in said Code of Federal Regulations, HOLA, FDIA, or OTS Memoranda
shall have the meanings that are in accordance with the best custom and usage in
the savings and loan industry.

(11) Successor Statutes, Regulations, Guidance, Amendments.
     -----------------------------------------------------

         Reference in this Agreement to provisions of statutes, regulations, and
OTS Memoranda shall be deemed to include references to all amendments to such
provisions as have been made as of the Effective Date of this Agreement and
references to successor provisions as they become applicable.

(12) Notices.
     -------

         A. Except as otherwise provided herein, any request, demand,
authorization, direction, notice, consent, waiver or other document provided or
permitted by this Agreement to be made upon, given or furnished to, delivered
to, or filed with:

        (i) The ODFI and OTS, by the Institution, shall be sufficient for every
        purpose hereunder if in writing and mailed, first class, postage prepaid
        or sent via overnight delivery service or physically delivered, in each
        case addressed to the Superintendent, Division of Financial
        Institutions, 77 South High Street, 21St Floor, Columbus, Ohio 43215 or
        telecopied to (614) 644-1631 and the Regional Deputy Director, Office of
        Thrift Supervision, Department of the Treasury, One South Wacker Drive,
        Suite 2000, Chicago, Illinois 60606 or telecopied to (312) 917-5001 and
        confirmed by first class mail, postage prepaid, overnight delivery
        service or physically delivered, in each case to the above address; and

         (ii) The Institution, by the ODFI and/or OTS, shall be sufficient for
        every purpose hereunder if in writing and mailed, first class, postage
        prepaid, or sent via overnight delivery service or physically delivered,
        in each case addressed to Metropolitan at 22901 Millcreek Boulevard,
        Highland Hills, Ohio 44122 or telecopied to (216) 206-1770, and
        confirmed by first class mail, postage prepaid, overnight delivery
        service or physically delivered, in each case to the above address.

<PAGE>   9

         B. Notices hereunder shall be effective upon receipt, if by mail,
         overnight delivery service or telecopy, and upon delivery, if by
         physical delivery. If there is a dispute about the date on which a
         written notice has been received by a party to this Agreement, then, in
         the event such notice was sent by the United States mail, there shall
         be a presumption that the notice was received two business days after
         the date of the postmark on the envelope in which the notice was
         enclosed.

(13) Duration, Termination or Suspension of Agreement.
     ------------------------------------------------

         A. This Agreement shall become effective upon its Effective Date by the
         ODFI and OTS, through their authorized representatives whose signatures
         appear below. The Agreement shall remain in effect until terminated,
         modified or suspended, in writing, by the ODFI, acting through its
         Superintendent or authorized representative, and the OTS, acting
         through its Director or the Regional Director (including any authorized
         designee thereof).

         B. The Superintendent and the Regional Director in their sole joint
         discretion may, by written notice, suspend any or all provisions of
         this Agreement.

(14) Time Limits.
     ------------

         Time limitations for compliance with the terms of this Agreement run
from the Effective Date, unless otherwise noted. The Superintendent and the
Regional Director, in their joint discretion, may extend any of such time
limitations.

(15) Effect of Headings.
     ------------------

         The Section and paragraph headings herein are for convenience only and
shall not affect the construction hereof.

(16) Separability Clause.
     -------------------

         In case any provision in this Agreement is ruled to be invalid, illegal
or unenforceable by the decision of any Court of competent jurisdiction, the
validity, legality and enforceability of the remaining provisions hereof shall
not in any way be affected or impaired thereby, unless the Superintendent and
the Regional Director in their sole joint discretion determine otherwise.

(17) No Violations of Law, Rule, Regulation or Policy Statement Authorized;
     -----------------------------------------------------------------------
      ODFI and/or OTS Not Restricted.

         Nothing in this Agreement shall be construed as: (i) allowing the
Institution to violate any law, rule, regulation, or policy statement to which
it is subject or (ii)

<PAGE>   10

restricting the ODFI and OTS from taking such actions) that are appropriate in
fulfilling the responsibilities placed upon either by law, including, without
limitation, any type of supervisory, enforcement or resolution action that the
ODFI and/or OTS determine to be appropriate.

(18) Successors in Interest/Benefit.
     ------------------------------

         The terms and provisions of this Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their successors in interest.
Nothing in this Agreement, express or implied, shall give to any person or
entity, other than the parties hereto, and the Federal Deposit Insurance
Corporation and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.

(19) Integration Clause.
     ------------------

         This Agreement represents the final written agreement of the parties
with respect to the subject matter hereof and constitutes the sole agreement of
the parties, as of the Effective Date of this Agreement, with respect to such
subject matter.

(20) Enforceability of Agreement.
     ---------------------------

         Metropolitan represents and warrants that this Agreement has been duly
authorized, executed, and delivered, and constitutes, in accordance with its
terms, a valid and binding obligation of the Institution. Metropolitan
acknowledges that this Agreement is a "written agreement" entered into with the
ODFI within the meaning of Section 1155.021 of the Ohio Revised Code and with
OTS within the meaning of Section 8 of the FDIA, 12 U.S.C. sec.1818.

         IN WITNESS WHEREOF, the ODFI, acting by and through the Superintendent,
the OTS, acting by and through the Regional Director, and Metropolitan hereby
execute this Agreement as of the Effective Date.

DIVISION OF FINANCIAL
INSTITUTIONS

By: /s/ F. Scott O'Donnell
    ----------------------
        F. Scott O'Donnell, Superintendent

OFFICE OF THRIFT SUPERVISION

By:  /s/ Ronald N. Karr
     ------------------
         Ronald N. Karr,
         Regional Director

METROPOLITAN BANK AND TRUST COMPANY
By:  /s/ Malvin E. Bank                        By:  /s/ Robert R. Broadbent
     ------------------                             -----------------------
         Malvin E. Bank,                                Robert R. Broadbent,
         Director                                       Director

By:  /s/ Marjorie M. Carlson                   By:  /s/ Lois K. Goodman
     -----------------------                        -------------------
         Marjorie M. Carlson,                           Lois K. Goodman,
         Director                                       Director

<PAGE>   11

By:  /s/ Marguerite B. Humphrey                By:  /s/ James A. Karman
     --------------------------                     -------------------
         Marguerite B. Humphrey,                        James A. Karman,
         Director                                       Director

By:  /s/ Robert M. Kaye                        By:  /s/ Ralph D. Ketchum
     ------------------                             --------------------
         Robert M. Kaye,                                Ralph D. Ketchum,
         Director                                       Director

By:  /s/ Kenneth T. Koehler                    By:  /s/ Alfonse M. Mattia
     ----------------------                         ---------------------
         Kenneth T. Koehler,                            Alfonse M. Mattia,
         Director                                       Director

By:  /s/ David P. Miller
     -------------------
         David P. Miller,
         Director<PAGE>   1
                                                                  Exhibit 10.19

================================================================================

================================================================================

                                CREDIT AGREEMENT

                                   dated as of
                                 April 24, 2001

                                      among

                                HAWK CORPORATION,
                                as the Borrower,

                     THE LENDING INSTITUTIONS NAMED THEREIN,
                                   as Lenders,

                                       and

                          KEYBANK NATIONAL ASSOCIATION
                           as the Administrative Agent

                              ---------------------

                                 AMENDMENT NO. 2
                                       to
                                CREDIT AGREEMENT

                                   dated as of
                                  July 31, 2001

                              ---------------------

================================================================================

================================================================================
<PAGE>   2

                       AMENDMENT NO. 2 TO CREDIT AGREEMENT

      THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT, is dated as of July 31, 2001
("this Amendment"), among the following:

            (i)   HAWK CORPORATION, a Delaware corporation (the "Borrower");

            (ii) the Lenders a party to the Credit Agreement, as hereinafter
      defined; and

            (iii) KEYBANK NATIONAL ASSOCIATION, a national banking association,
      as the Administrative Agent under the Credit Agreement (the
      "Administrative Agent").

      PRELIMINARY STATEMENTS:

      (1) The Borrower, the Lenders and the Administrative Agent entered into
the Credit Agreement, dated as of May 1, 1998 (as amended and as the same may
from time to time be further amended, restated or otherwise modified, the
"Credit Agreement"; the terms defined therein are used herein as so defined).

      (2) The parties hereto desire to modify certain terms and provisions of
the Credit Agreement, all as more fully set forth below.

      NOW, THEREFORE, the parties hereby agree as follows:

      SECTION 1.  AMENDMENTS, ETC.

      1.1. Section 1.1 of the Credit Agreement is hereby amended to delete the
definitions of "Applicable Eurodollar Margin", "Applicable Facility Fee Rate",
"Consolidated Net Debt", "Credit Documents", "General Revolving Facility
Percentage", "Interest Coverage Ratio", "Loan", "Note", "Real Property", "Total
General Revolving Commitment" and "UCC" therefrom and to insert in place
thereof, respectively, the following:

            "Applicable Eurodollar Margin" shall mean:

            (a) for any date prior to July 31, 2001, as determined in accordance
      with section 2.8(h) of this Agreement as in effect prior to July 31, 2001;

            (b) from July 31, 2001 through August 31, 2001, (i) two hundred
      seventy-five (275) basis points for General Revolving Loans, and (ii)
      three hundred twenty-five (325) basis points for Term Loans; and

            (c) commencing with the fiscal quarter of the Borrower ended June
      30, 2001, and continuing with each fiscal quarter thereafter, the number
      of basis points determined by the Administrative Agent in accordance with
      the Pricing Grid Table, based upon the
<PAGE>   3
      Adjusted Leverage Ratio. Changes in the Applicable Eurodollar Margin shall
      become effective on the first day of the month following the receipt by
      the Administrative Agent, pursuant to Section 8.1(a) or (b) of the
      financial statements of the Borrower.

      Notwithstanding the foregoing, unless otherwise agreed by the Required
      Lenders, during any period when (A) the Borrower shall have failed to
      timely deliver its financial statements referred to in Section 8.1(a) or
      (b), (B) a Default under Section 10.1(a) shall have occurred and be
      continuing, or (C) an Event of Default shall have occurred and be
      continuing, the Applicable Eurodollar Margin for Loans shall be the
      highest number of basis points indicated therefor in the Pricing Grid
      Table, regardless of the Adjusted Leverage Ratio at such time. Any changes
      in the Applicable Eurodollar Margin for Loans shall be determined by the
      Administrative Agent in accordance with the above provisions and the
      Administrative Agent shall promptly provide notice of such determinations
      to the Borrower and the Lenders, which determination by the Administrative
      Agent shall be conclusive and binding absent manifest error.

            "Applicable Facility Fee Rate" shall mean:

            (a) for any date prior to July 31, 2001, as determined in accordance
      with section 2.8(h) of this Agreement as in effect prior to July 31, 2001;

            (b)   from July 31, 2001 through August 31, 2001, (i) fifty (50)
      basis points; and

            (c) commencing with the fiscal quarter of the Borrower ended June
      30, 2001, and continuing with each fiscal quarter thereafter, the number
      of basis points determined by the Administrative Agent in accordance with
      the Pricing Grid Table, based upon the Adjusted Leverage Ratio. Changes in
      the Applicable Facility Fee Rate shall become effective on the first day
      of the month following the receipt by the Administrative Agent, pursuant
      to Section 8.1(a) or (b) of the financial statements of the Borrower.

      Notwithstanding the foregoing, unless otherwise agreed by the Required
      Lenders, during any period when (A) the Borrower shall have failed to
      timely deliver its financial statements referred to in Section 8.1(a) or
      (b), (B) a Default under Section 10.1(a) shall have occurred and be
      continuing, or (C) an Event of Default shall have occurred and be
      continuing, the Applicable Facility Fee Rate shall be the highest number
      of basis points indicated therefor in the Pricing Grid Table, regardless
      of the Adjusted Leverage Ratio at such time. Any changes in the Applicable
      Facility Fee Rate shall be determined by the Administrative Agent in
      accordance with the above provisions and the Administrative Agent shall
      promptly provide notice of such determinations to the Borrower and the
      Lenders, which determination by the Administrative Agent shall be
      conclusive and binding absent manifest error.

            "Consolidated Net Debt" shall mean at any time of determination
      thereof (i) the principal amount (or Capitalized Lease Obligation, in the
      case of a Capital Lease) of Consolidated Total Debt that would appear on a
      consolidated balance sheet of the Borrower and its Subsidiaries at such
      time, reduced by (ii) the amount, if any, in excess of $5,000,000, of all
      unrestricted and unencumbered (other than the Lien of the

                                       2
<PAGE>   4
      Administrative Agent, for the benefit of the Lenders) cash and Cash
      Equivalents that would appear on a consolidated balance sheet of the
      Borrower and its Subsidiaries at such time.

            "Credit Documents" shall mean this Agreement, the Notes, the
      Guaranties of Payment, the Security Documents and the Letter of Credit
      Documents.

            "General Revolving Facility Percentage" shall mean, for each Lender,
      such Lender's "General Revolving Facility Percentage" as set forth
      opposite such Lender's name on Annex I hereto, or the percentage of the
      Total General Revolving Commitment held by such Lender as set forth in the
      Lender Register.

            "Interest Coverage Ratio" shall mean, for the most recently
      completed four fiscal quarters of the Borrower, the ratio of (a)
      Consolidated EBIT to (b) Consolidated Interest Expense.

            "Loan" shall have the meaning in Sections 2A and 2.1 and shall
      include any Term Loan, General Revolving Loan, Swing Line Revolving Loan
      and Alternative Currency Advance.

            "Note" shall mean any Term Note, General Revolving Note, Swing Line
      Note or Alternative Currency Note, or any other promissory note executed
      in connection with this Agreement.

            "Real Property" shall mean each parcel of real property, or interest
      therein, owned or leased by a Credit Party (including, but not limited to,
      the Mortgaged Property), together with all improvements and buildings
      thereon and all appurtenances, easements or other rights belonging
      thereto.

            "Total General Revolving Commitment" shall mean Thirty Million
      Dollars ($30,000,000), or such lesser amount as may be determined pursuant
      to section 4.2, 4.3 or 10.2 hereof.

            "UCC" shall mean the Uniform Commercial Code, as in effect from time
      to time in the State of Ohio.

      1.2.  Section 1.1 of the Credit Agreement is hereby amended to add the
following new definitions thereto:

            "Adjusted Leverage Ratio" shall mean, for the most recently
      completed four fiscal quarters of the Borrower, the ratio of (a)
      Consolidated Net Debt to (b) Consolidated EBITDA.

            "Borrowing Base" shall mean an amount not in excess of (a) the sum
      of (i) eighty-five percent (85%) of the consolidated book value of net
      accounts receivable of the Borrower and its Subsidiaries, and (ii) sixty
      percent (60%) of the consolidated book value of inventory (as defined in
      the UCC) of the Borrower and its Subsidiaries, minus (b) the aggregate
      principal amount of all Term Loans then outstanding.

                                       3
<PAGE>   5
            "Capital Distribution" shall mean a payment made, liability incurred
      or other consideration given for the purchase, acquisition, redemption or
      retirement of any capital stock or other equity interest of the Borrower
      or any its Subsidiaries or as a dividend, return of capital or other
      distribution (other than any stock dividend, stock split or other equity
      distribution payable only in capital stock or other equity of the Borrower
      or any of its Subsidiaries in question) in respect of capital stock or
      other equity interest of the Borrower or any of its Subsidiaries, as the
      case may be.

            "Consolidated Fixed Charges" shall mean, for any period, on a
      consolidated basis for the Borrower and its Subsidiaries in accordance
      with GAAP, the aggregate of (a) Consolidated Interest Expense, (b)
      Consolidated Income Tax Expense, (c) current maturities of long term
      Indebtedness under this Agreement (other than optional prepayments of the
      General Revolving Notes), (d) Consolidated Capital Expenditures, and (e)
      Capital Distributions.

            "Covenant Compliance Date" shall mean the date on which the Interest
      Coverage Ratio shall have been at least 2.00 to 1.00 and the Leverage
      Ratio shall have been no more than 3.50 to 1.00 for two consecutive fiscal
      quarters of the Borrower.

            "Fixed Charge Coverage Ratio" shall mean, for the most recently
      completed four fiscal quarters of Borrower, the ratio of (a) Consolidated
      EBITDA to (b) Consolidated Fixed Charges.

            "Guarantor of Payment" shall mean each Subsidiary Guarantor and any
      other Person that shall execute and deliver a Guaranty of Payment to the
      Administrative Agent.

            "Guaranty of Payment" shall mean the Subsidiary Guaranty, as
      supplemented, and any other Guaranty of Payment of Obligations executed
      and delivered by a Person to the Administrative Agent in connection with
      this Agreement after the Closing Date, as any of the foregoing may from
      time to time be amended, restated, supplemented or otherwise modified or
      replaced.

            "Intellectual Property Security Agreement" shall mean each of the
      Intellectual Property Security Agreements, executed and delivered to the
      Administrative Agent by the Borrower or a Guarantor of Payment, as the
      case may be, after the Closing Date, pursuant to which the Borrower or
      such Guarantor of Payment shall have granted to the Collateral Agent a
      security interest in and an assignment of all intellectual property owned
      by the Borrower or such Guarantor of Payment, as the same may from time to
      time be amended, restated or otherwise modified.

            "Interest Coverage Period" shall mean any period for which the
      Interest Coverage Ratio shall be less than 2.00 to 1.00.

            "Leverage Ratio" shall mean, for the most recently completed four
      fiscal quarters of Borrower, the ratio of (a) Consolidated Total Debt to
      (b) Consolidated EBITDA.

                                       4
<PAGE>   6
            "Maximum Available Revolving Commitment" shall mean the obligation
      of the Lenders hereunder to make General Revolving Loans to the Borrower
      up to an aggregate principal amount outstanding at any time equal to the
      lesser of (a) the Total General Revolving Commitment or (b) the Borrowing
      Base.

            "Mortgage" shall mean a mortgage, deed of trust or other similar
      instrument, in form and substance satisfactory to the Administrative
      Agent, executed and delivered to the Administrative Agent by the Borrower
      or a Guarantor of Payment, as the case may be, after the Closing Date,
      with respect to a Mortgaged Property, as the same may from time to time be
      amended, restated or otherwise modified.

            "Mortgaged Property" shall mean each of the parcels of real property
      as set forth on Annex VII hereto, or interests therein, owned or leased by
      the Borrower or a Guarantor of Payment, together with each other parcel of
      real property that shall become subject to a Mortgage after the Closing
      Date, in each case together with all of the right, title and interest of
      the Borrower or such Guarantor of Payment, as the case may be, in the
      improvements and buildings thereon and all appurtenances, easements or
      other rights belonging thereto.

            "Pledge Agreement" shall mean each Pledge Agreement executed and
      delivered to the Administrative Agent by the Borrower or a Guarantor of
      Payment, as the case may be, after the Closing Date, as the same may from
      time to time be amended, restated or otherwise modified.

            "Pricing Grid Table" shall mean, (a) during an Interest Coverage
      Period, the following pricing grid table:

<TABLE>
<CAPTION>
                                          Applicable
                                       Eurodollar Margin
                                             for                                Applicable Eurodollar
                                       General Revolving        Applicable           Margin for
          Adjusted Leverage Ratio            Loans          Facility Fee Rate        Term Loans
         --------------------------------------------------------------------------------------------
<S>                                   <C>                   <C>                 <C>
         Greater than 3.50 to 1.00      275 basis points      50 basis points     325 basis points
         --------------------------------------------------------------------------------------------
         Greater than 3.00 to 1.00
          but less than or equal to
          3.50 to 1.00                  250 basis points      50 basis points     300 basis points
         --------------------------------------------------------------------------------------------
         Greater than 2.50 to 1.00
          but less than or equal to
          3.00 to 1.00                  225 basis points      50 basis points     275 basis points
         --------------------------------------------------------------------------------------------
         Greater than 2.00 to 1.00
          but less than or equal to
          2.50 to 1.00                  200 basis points      50 basis points     250 basis points
         --------------------------------------------------------------------------------------------
         Less than or equal to
          2.00 to 1.00                187.5 basis points    37.5 basis points     225 basis points
         --------------------------------------------------------------------------------------------
</TABLE>

      or, (b) at any time other than during an Interest Coverage Period, the
      following pricing grid table:

                                       5
<PAGE>   7
<TABLE>
<CAPTION>
                                           Applicable
                                        Eurodollar Margin
                                              for                                 Applicable Eurodollar
                                        General Revolving        Applicable             Margin for
           Adjusted Leverage Ratio           Loans            Facility Fee Rate         Term Loans
         ----------------------------------------------------------------------------------------------
<S>                                     <C>                   <C>                 <C>
         Greater than 3.50 to 1.00      225 basis points       50 basis points      275 basis points
         ----------------------------------------------------------------------------------------------
         Greater than 3.00 to 1.00
          but less than or equal to
          3.50 to 1.00                  175 basis points       50 basis points      225 basis points
         ----------------------------------------------------------------------------------------------
         Greater than 2.50 to 1.00
          but less than or equal to
          3.00 to 1.00                  160 basis points       40 basis points      200 basis points
         ----------------------------------------------------------------------------------------------
         Greater than 2.00 to 1.00
          but less than or equal to
          2.50 to 1.00                  140 basis points       35 basis points      175 basis points
         ----------------------------------------------------------------------------------------------
         Less than or equal to
          2.00 to 1.00                  120 basis points       30 basis points      150 basis points
         ----------------------------------------------------------------------------------------------
</TABLE>

            "Revolving Credit Exposure" shall mean, at any time, the sum of (a)
      the aggregate principal amount of all General Revolving Loans outstanding,
      (b) the aggregate principal amount of all Swing Line Revolving Loans
      outstanding, (c) the Dollar Equivalent of the Alternative Currency
      Outstandings, and (d) the Letter of Credit Outstandings.

            "Security Agreement" shall mean each of the Security Agreements
      executed and delivered to the Administrative Agent by the Borrower or a
      Guarantor of Payment, as the case may be, after the Closing Date, as any
      of the foregoing may from time to time be amended, restated or otherwise
      modified.

            "Security Documents" shall mean each Security Agreement, each
      Intellectual Property Security Agreement, each Pledge Agreement, each
      Mortgage, and each UCC financing statement executed in connection with any
      of the foregoing, and any other documents relating to any of the
      foregoing, as any of the foregoing may from time to time be amended,
      restated or otherwise modified or replaced.

      1.3. The definition of "Permitted Acquisition" contained in Section 1 of
the Credit Agreement is hereby amended to delete subpart (v) therefrom and to
insert in place thereof the following:

            (v) after giving effect to such Acquisition, (A) the Borrower would
      be in compliance on a pro forma basis with the financial covenants
      contained in sections 9.8, 9.9 and 9.14, and (B) the Leverage Ratio shall
      be no greater than 3.25 to 1.00 prior to and after giving effect to such
      Acquisition; and

      1.4.  Section 2.1(b) of the Credit Agreement is hereby amended to add
the following new subpart (vii) thereto:

            and (vii) shall not be made if the amount of such Loan or Loans,
      when added to the Revolving Credit Exposure, shall exceed the Maximum
      Available Revolving Commitment.

                                       6
<PAGE>   8
      1.5.  Section 2.1(c) of the Credit Agreement is hereby amended to add
the following new subpart (x) thereto:

            and (x) shall not be made if the amount of such Loan or Loans, when
      added to the Revolving Credit Exposure, shall exceed the Maximum Available
      Revolving Commitment.

      1.6.  Section 2.8 of the Credit Agreement is hereby amended to delete
subsection (h) therefrom in its entirety.

      1.7. Section 2A.2 of the Credit Agreement is hereby amended to delete
subsection (a) therefrom and to insert in place thereof the following:

            (a) Alternative Currency Option. From time to time prior to the
      General Revolving Maturity Date, the Borrower or any Eligible Subsidiary
      may, as set forth in this section 2A, request the Lenders to make offers
      to make a loan (each, an "Alternative Currency Advance") to the Borrower
      or such Eligible Subsidiary, as applicable. Any Lender may, but shall have
      no obligation to, make such offers, and the Borrower or such Eligible
      Subsidiary, as applicable, may, but shall have no obligation to, accept
      any such offers in the manner set forth in this section 2A; provided that
      neither the Borrower nor any Eligible Subsidiary, as applicable, may
      accept any offer if, (i) the aggregate Alternative Currency Outstandings
      would exceed $5,000,000 after taking into account such requested
      Alternative Currency Advance, or (ii) after such requested Alternative
      Currency Advance is added to the Revolving Credit Exposure, the Revolving
      Credit Exposure would exceed the Maximum Available Revolving Commitment.

      1.8. Section 2A.10 of the Credit Agreement is hereby amended to delete
subsection (b) therefrom and to insert in place thereof the following:

            (b) Alternative Currency Advances, Other Loans and Letter of Credit
      Outstandings. If, on any date (after giving effect to any other payments
      on such date), the Revolving Credit Exposure shall exceed the Maximum
      Available Revolving Commitment, the Borrower shall immediately prepay,
      without any prepayment penalty or premium, on such date that principal
      amount of General Revolving Loans or Alternative Currency Advances and,
      after General Revolving Loans and Alternative Currency Advances shall have
      been paid in full, Unpaid Drawings, in an aggregate amount at least equal
      to such excess and conforming, in the case of partial prepayments of
      General Revolving Loans, to the requirements as to the amounts of partial
      prepayments of General Revolving Loans that are contained in section 5.1,
      and the Borrower shall be obligated to reimburse the Lenders pursuant to
      section 2A.12 and 2.11.

      1.9. Section 2A.17 of the Credit Agreement is hereby amended to add the
following new subparts (C), (D) and (E) thereto and the following new paragraph
thereto:

            and (C) the Borrower and each Guarantor of Payment shall have
      guaranteed the obligations of such Eligible Subsidiary under this
      Agreement pursuant to the terms of a Guaranty of Payment; (D) the Borrower
      and such Eligible Subsidiary shall have provided to the Administrative
      Agent such corporate governance and authorization documents and

                                       7
<PAGE>   9
      an opinion of counsel as may be deemed necessary or appropriate by the
      Administrative Agent; and (E) such Eligible Subsidiary shall have executed
      such other assumption agreements, documents, instruments or other
      agreements, as may be deemed necessary or appropriate by the
      Administrative Agent.

      Upon satisfaction by the Borrower and any such Foreign Subsidiary of the
      requirements set forth above, the Administrative Agent shall promptly
      notify the Borrower whereupon such Foreign Subsidiary shall be designated
      an "Eligible Subsidiary" pursuant to the terms and conditions of this
      Agreement, and such Eligible Subsidiary shall become bound by all
      representations, warranties, covenants, provisions and conditions of this
      Agreement and each other Credit Document applicable to an Eligible
      Subsidiary as if such Eligible Subsidiary had been the original party
      making such representations, warranties and covenants.

      1.10. Section 3.1(b)(i) of the Credit Agreement is hereby amended to
delete subpart (y) therefrom and to insert in place thereof the following:

            (y) when added to the Revolving Credit Exposure, an amount equal to
      the "Maximum Available Revolving Commitment".

      1.11. Section 4.1(a) of the Credit Agreement is hereby amended to delete
subpart (ii) therefrom in its entirety.

      1.12. Section 5.3 of the Credit Agreement is hereby amended to delete
subsections (a) and (b) therefrom and to insert in place thereof the following:

            (a) If Outstanding Loans and Letter of Credit Outstandings Exceed
      Maximum Available Revolving Commitment. If, on any date (after giving
      effect to any other payments on such date), (i) the Revolving Credit
      Exposure shall exceed (ii) the Maximum Available Revolving Commitment then
      in effect, the Borrower shall prepay on such date that principal amount of
      General Revolving Loans and, after General Revolving Loans have been paid
      in full, Unpaid Drawings, in an aggregate amount at least equal to such
      excess and conforming in the case of partial prepayments of General
      Revolving Loans to the requirements as to the amounts of partial
      prepayments of General Revolving Loans that are contained in section 5.1.
      If, after giving effect to the prepayment of General Revolving Loans and
      Unpaid Drawings, the aggregate amount of Letter of Credit Outstandings
      shall exceed the Maximum Available Revolving Commitment then in effect,
      the Borrower shall pay to the Administrative Agent an amount in cash
      and/or Cash Equivalents equal to such excess and the Administrative Agent
      shall hold such payment as security for the reimbursement obligations of
      the Borrower hereunder in respect of Letters of Credit, pursuant to a cash
      collateral agreement to be entered into in form and substance reasonably
      satisfactory to the Administrative Agent and the Borrower (which shall
      permit certain investments in Cash Equivalents satisfactory to the
      Administrative Agent and the Borrower until the proceeds shall be applied
      to the secured obligations).

            (b) If Outstanding Swing Line Revolving Loans Exceed Maximum
      Available Revolving Commitment. If, on any date (after giving effect to
      any other payments on such

                                       8
<PAGE>   10
      date), the aggregate outstanding principal amount of Swing Line Revolving
      Loans shall exceed an amount equal to the difference between (i) the
      Maximum Available Revolving Commitment, minus (ii) the difference between
      (A) the Revolving Credit Exposure, and (B) the aggregate outstanding
      principal amount of Swing Line Revolving Loans, the Borrower shall prepay
      on such date Swing Line Revolving Loans an aggregate amount at least equal
      to such excess and conforming in the case of partial prepayments of Swing
      Line Revolving Loans to the requirements as to the amounts of partial
      prepayments of Swing Line Revolving Loans that are contained in section
      5.1.

      1.13. Section 8.1 of the Credit Agreement is hereby amended to delete the
clause that reads "and the computation of its ratio of Consolidated Net Debt as
of the end of such fiscal period to Consolidated EBITDA for the Testing Period
then ended," from subsection (c) and insert in place thereof the following
clause:

      "and the computation of the Adjusted Leverage Ratio,"

      1.14. Section 8.10(a) of the Credit Agreement is hereby amended to delete
subpart (i) therefrom and to insert in place thereof the following:

            (i)   a Guaranty of Payment, in form and substance satisfactory to
      the Administrative Agent,

      1.15.       Section 8 of the Credit Agreement is hereby amended to add
the following new subsections 8.14, 8.15 and 8.16 thereto:

            8.14. Guaranties of Payment. On or before August 10, 2001 (or such
      later date as shall be agreed to in writing by the Administrative Agent),
      each Subsidiary of Borrower that is not a Foreign Subsidiary shall have
      executed and delivered to the Administrative Agent, a Guaranty of Payment,
      in form and substance satisfactory to the Administrative Agent.

            8.15. Collateral Matters.

            (a) On or before August 10, 2001 (or such later date as shall be
      agreed to in writing by the Administrative Agent), the Borrower and each
      Guarantor of Payment shall have executed and delivered to the
      Administrative Agent (i) a Mortgage with respect to each Mortgaged
      Property of the Borrower or any such Guarantor of Payment (as applicable),
      together with such other information, documents or agreements as may be
      deemed necessary or advisable by the Administrative Agent in connection
      with such Mortgage, including, but not limited to, the items set forth in
      subpart (b) hereof, (ii) a Security Agreement, (iii) an Intellectual
      Property Security Agreement, (iv) such UCC financing statements as the
      Administrative Agent shall request, which shall be in form and substance
      satisfactory to the Administrative Agent, and (v) such corporate
      governance and authorization documents and opinions of counsel as the
      Administrative Agent shall request.

                                       9
<PAGE>   11
            (b) On or before August 10, 2001 (or such later date as shall be
      agreed to in writing by the Administrative Agent), the Borrower and each
      Guarantor of Payment that directly owns a Foreign Subsidiary shall have
      executed and delivered to the Administrative Agent a Pledge Agreement,
      pledging sixty-five percent (65%) of the stock or other equity interest of
      such Foreign Subsidiary; provided that any stock certificates (or the
      foreign equivalent thereof) pledged under any Pledge Agreement shall be
      delivered to the Administrative Agent within forty-five (45) days after
      the date of such Pledge Agreement, or such later date as shall be agreed
      to in writing by the Administrative Agent.

            (c) With respect to each Mortgaged Property, within thirty (30) days
      of the Administrative Agent's written request after the occurrence of a
      Default or Event of Default, the Borrower shall deliver to the
      Administrative Agent:

            (i) a loan policy of title insurance, ALTA 1970 Form B (amended
      10/17/70 and 10/17/84) (unless such form is unavailable in any particular
      state, in which case the Borrower shall have provided such other form of a
      loan policy of title insurance as may reasonably requested by the
      Administrative Agent) issued by a title company satisfactory to the
      Administrative Agent and the Required Lenders (collectively, the "Loan
      Policies" and, individually, a "Loan Policy") in an amount equal to the
      fair market value of such Mortgaged Property, insuring each Mortgage to be
      a valid first priority Lien on such Mortgaged Property, free and clear of
      all defects and encumbrances except such matters of record as permitted
      pursuant to this Agreement, with such endorsements and affirmative
      insurance as the Administrative Agent and the Required Lenders may
      request;

            (ii) environmental reports or studies prepared by environmental
      engineering firms acceptable to the Administrative Agent and the Required
      Lenders (the "Reports"), which Reports shall be in form acceptable to the
      Administrative Agent and the Required Lenders;

            (iii) a current (certified not more than thirty (30) days prior to
      the date of such request) "as-built" survey of the such Mortgaged
      Property, prepared by a licensed surveyor acceptable to the Administrative
      Agent and the Required Lenders, certified to the Administrative Agent, on
      behalf of the Lenders, and the title company pursuant to certificate of
      survey acceptable to the Administrative Agent and the Required Lenders;
      such survey shall be in form and substance acceptable to the
      Administrative Agent and the Required Lenders and shall be made in
      accordance with the "Minimum Standard Detail Requirements for Land Title
      Surveys" adopted by the American Land Title Association in 1999;

            (iv)  a copy of the certificate of occupancy for each building
      located on such Mortgaged Property;

            (v) evidence of compliance in all material respects with all
      building and zoning codes applicable to such Mortgaged Property and
      evidence of the availability and adequacy of utilities for the buildings
      located on such Mortgaged Property; and

                                       10
<PAGE>   12
            (vi) evidence, reasonably satisfactory to the Administrative Agent
      and the Required Lenders, that no portion of any of such Mortgaged
      Property is located in a Special Flood Hazard Area or is otherwise
      classified as Class A or Class BX on the Flood Maps maintained by the
      Federal Emergency Management Agency.

            (d) On or before September 30, 2001, or such later date as the
      Administrative Agent shall consent to in writing, (i) each Eligible
      Subsidiary shall have executed and delivered such security agreements,
      mortgages and other documents, instruments or agreements, in form and
      substance satisfactory to the Administrative Agent, as the Administrative
      Agent shall have deemed necessary or appropriate to secure the Alternative
      Currency Outstandings, and (ii) the Borrower and each Guarantor of Payment
      (as applicable) shall deliver to the Administrative Agent, a landlord's
      waiver, in form and substance satisfactory to the Administrative Agent,
      for each leased location at which the Borrower or such Guarantor of
      Payment maintains assets (other than locations owned by the Borrower or a
      Guarantor of Payment).

            8.16. Right to Take Additional Collateral. In addition to any other
      right that the Administrative Agent and the Lenders may have pursuant to
      this Agreement or otherwise, upon written request of the Administrative
      Agent, whenever made, Borrower shall, and shall cause each Subsidiary of
      Borrower or each Subsidiary of a Guarantor of Payment to grant to the
      Administrative Agent, as additional security for the obligations of
      Borrower, a first priority (to the extent not otherwise encumbered)
      security interest in or Lien on any real or personal property of Borrower
      or any such Subsidiary, as the case may be, and shall execute and deliver
      to the Administrative Agent such agreements and other documents,
      including, but not limited to, any of the documents referenced in section
      8.14(a) and (b) hereof, as the Administrative Agent shall request.

      1.16. Section 9.2 of the Credit Agreement is hereby amended to delete
subsection (b) therefrom and to insert in place thereof the following:

            (b) Permitted Acquisitions. On the Covenant Compliance Date and
      thereafter, provided that no Default or Event of Default shall have
      occurred and be continuing or would result therefrom, the Borrower or any
      Subsidiary may make any Acquisition that is a Permitted Acquisition,
      provided that the aggregate consideration for all such Permitted
      Acquisitions for Borrower and all Subsidiaries, including the principal
      amount of any assumed Indebtedness and (without duplication) any
      Indebtedness of the acquired person or persons, shall not exceed
      $5,000,000.

      1.17. Section 9.3 of the Credit Agreement is hereby amended to add the
following new subsection (d) thereto:

            and (d) Liens granted to the Administrative Agent in connection
      with this Agreement;

      1.18. Section 9.5 of the Credit Agreement is hereby amended to delete
subsection (o) therefrom and to insert in place thereof the following:

                                       11
<PAGE>   13
            (o) any other loans, advances, investments (whether in the form of
      cash or contribution of property, and, if in the form of a contribution of
      property, such property shall be valued for purposes of this clause at the
      fair value thereof as reasonably determined by the Borrower), including,
      without limitation, in or to or for the benefit of, Subsidiaries, joint
      ventures, or other persons, not otherwise permitted by the foregoing
      clauses (such loans, advances and investments, collectively, "Basket
      Investments"), provided that (i) at the time of making any such Basket
      Investment no Default or Event of Default shall have occurred and be
      continuing, or would result therefrom, and (ii) (A) prior to the Covenant
      Compliance Date, no Basket Investments shall be permitted, except that the
      Borrower may (1) repurchase shares of its outstanding capital stock up to
      an aggregate amount of $2,500,000, and (2) make investments in Net Shape
      Technologies LLC up to an aggregate amount of $1,000,000, and (B) after
      the Covenant Compliance Date, the maximum aggregate cumulative amount of
      Basket Investments that are so made and outstanding at any time shall not
      exceed an aggregate amount of $5,000,000, taking into account the
      repayment of any loans or advances comprising such Basket Investments.

      1.19. Section 9 of the Credit Agreement is hereby amended to delete
section 9.8 therefrom and to insert in place thereof the following:

            9.8. Leverage Ratio. The Borrower shall not permit at any time the
      Leverage Ratio to exceed (i) 3.80 to 1.00 on the Closing Date through
      December 30, 1998, (ii) 3.50 to 1.00 on December 31, 1998 through June 29,
      2001, (iii) 4.10 to 1.00 on June 30, 2001 through September 29, 2001, (iv)
      4.30 to 1.00 on September 30, 2001 through December 30, 2001, (v) 4.00 to
      1.00 on December 31, 2001 through March 30, 2002, (vi) 3.75 to 1.00 on
      March 31, 2002 through June 29, 2002, and (vii) 3.50 to 1.00 on June 30,
      2002 and thereafter.

      1.20. Section 9 of the Credit Agreement is hereby amended to delete
section 9.9 therefrom and to insert in place thereof the following:

            9.9. Interest Coverage Ratio. The Borrower shall not permit at any
      time the Interest Coverage Ratio to be less than (a) 2.00 to 1.00 on the
      Closing Date through June 29, 2001, (b) 1.20 to 1.00 on June 30, 2001
      through September 29, 2001, (c) 1.00 to 1.00 on September 30, 2001 through
      December 30, 2001, (d) 1.15 to 1.00 on December 31, 2001 through March 30,
      2002, (e) 1.25 to 1.00 on March 31, 2002 through June 29, 2002, (f) 1.70
      to 1.00 on June 30, 2002 through September 29, 2002, and (g) 2.00 to 1.00
      on September 30, 2002 and thereafter.

      1.21. Section 9 of the Credit Agreement is hereby amended to add the
following new section 9.14 thereto:

            9.14. Fixed Charge Coverage Ratio.  The Borrower shall not permit
      at any time the Fixed Charge Coverage Ratio to be less than 1.00 to
      1.00, commencing on June 30, 2001 and thereafter.

      1.22. Subsection 10.1 of the Credit Agreement is hereby amended to delete
subsection (f) therefrom and to insert in place thereof the following:

                                       12
<PAGE>   14
            (f) Other Credit Documents: any of the Credit Documents (once
      executed and delivered) shall cease for any reason (other than termination
      in accordance with its terms) to be in full force and effect; or any
      Credit Party shall default in any payment obligation thereunder; or any
      Credit Party shall default in any material respect in the due performance
      and observance of any other obligation thereunder and such default shall
      continue unremedied for a period of at least 30 days after notice by the
      Administrative Agent or the Required Lenders; or any Credit Party shall
      (or seek to) disaffirm or otherwise limit its obligations thereunder
      otherwise than in strict compliance with the terms thereof; or

      1.23. The Credit Agreement is hereby amended to delete Annex I therefrom
and to insert in place thereof a new Annex I thereto in the form of Annex I
attached hereto.

      1.24. The Credit Agreement is hereby amended to add a new Annex VII
thereto in the form of Annex VII attached hereto.

      1.25. The Borrower, the Administrative Agent and the Lenders hereby agree
that, unless otherwise consented to by the Holders, as defined in the Indenture
(as hereinafter defined), under the Indenture, the amount secured under the
Security Documents shall not exceed an amount equal to the greater of (a)
Twenty-Five Million Dollars ($25,000,000), or (b) the sum, as determined on the
date that the Obligations under the Credit Agreement shall have been incurred or
such other date on which a greater amount of the Obligations under the Credit
Agreement would be permitted to be secured under the Indenture (it being the
intent of the parties to secure the highest amount of the Obligations), of (i)
eighty-five percent (85%) of the consolidated book value of net accounts
receivable of the Borrower and its Subsidiaries, plus (ii) sixty percent (60%)
of the consolidated book value of inventory (as defined in the UCC) of the
Borrower and its Subsidiaries. As used herein, "Indenture" shall mean the
Indenture, dated as of November 27, 1996, among Borrower, the Guarantors, as
defined in the Indenture, and the Trustee, as the same may from time to time be
amended, restated, supplemented or otherwise modified.

      1.26. The Borrower has informed the Administrative Agent and the Lenders
that Hutchinson Products LLC, a Delaware limited liability company
("Hutchinson"), desires to convert its form of organization from a limited
liability company to a corporation organized under the laws of Delaware (the
"Conversion"), and the name of Hutchinson would be changed to Hawk Motors, Inc.
Pursuant to Section 8.5 of the Credit Agreement, the Borrower has requested that
Administrative Agent and the Required Lenders consent to the Conversion.
Administrative Agent and the Required Lenders, by signing this Amendment, hereby
consent to the Conversion. Concurrently with the Conversion, Hutchinson shall
deliver to the Administrative Agent such replacements or amendments to the
Guaranty of Payment and Security Documents that it previously executed as may be
deemed necessary or appropriate by the Administrative Agent.

      1.27. The Borrower has also informed the Administrative Agent and the
Lenders that Wellman Friction Products U.K. Corp., a Guarantor of Payment, which
is an inactive Subsidiary of the Borrower that owns no real or personal
property, desires to dissolve and terminate its existence as a corporation on or
before December 31, 2001 (the "Corporate Termination"). Pursuant to Section 8.5
of the Credit Agreement, the Borrower has requested that Administrative Agent
and the Required Lenders consent to the Termination. Administrative Agent and
the Required Lenders, by signing this Amendment, hereby consent to the
Termination, provided that the Borrower shall

                                       13
<PAGE>   15
deliver to the Administrative Agent five Business Days' prior written notice of
such Corporate Termination.

      SECTION 2. REPRESENTATIONS AND WARRANTIES.

      The Borrower represents and warrants as follows:

      2.1. Authorization and Validity of Amendment. This Amendment has been duly
authorized by all necessary corporate action on the part of the Borrower, has
been duly executed and delivered by a duly authorized officer of the Borrower,
and constitutes the valid and binding agreement of the Borrower, enforceable
against the Borrower in accordance with its terms.

      2.2. Representations and Warranties. The representations and warranties of
the Credit Parties contained in the Credit Agreement or in the other Credit
Documents are true and correct in all material respects on and as of the date
hereof, as though made on and as of the date hereof, except to the extent that
such representations and warranties expressly relate to an earlier specified
date, in which case such representations and warranties are hereby reaffirmed as
true and correct in all material respects as of the date when made.

      2.3. No Event of Default. No Default or Event of Default exists or
immediately hereafter will begin to exist.

      2.4. Compliance. The Borrower is in full compliance with all covenants and
agreements contained in the Credit Agreement, as amended hereby, and the other
Credit Documents to which it is a party.

      2.5. No Claims. The Borrower is not aware of any claim or offset against,
or defense or counterclaim to, any of its or any Subsidiary's obligations or
liabilities under the Credit Agreement or any other Credit Document.

      SECTION 3. RATIFICATIONS.

      Except as expressly modified and superseded by this Amendment, the terms
and provisions of the Credit Agreement are ratified and confirmed and shall
continue in full force and effect.

      SECTION 4. BINDING EFFECT.

      Concurrently herewith:

      (a) the Borrower shall have caused each Guarantor of Payment to consent
and agree to and acknowledge the terms of this Amendment;

      (b) Borrower shall have caused each Subsidiary of Borrower that is not a
Foreign Subsidiary to execute and deliver to the Administrative Agent, a
Guaranty of Payment, in form and substance satisfactory to the Administrative
Agent;

                                       14
<PAGE>   16
      (c) Borrower and any Guarantor of Payment that directly owns a Foreign
Subsidiary shall have executed and delivered to the Administrative Agent a
Pledge Agreement, in form and substance satisfactory to the Administrative
Agent;

      (d) the Borrower shall have executed and delivered, and shall have caused
each Guarantor of Payment to execute and deliver, to the Administrative Agent,
for the benefit of the Lenders, (i) a Mortgage with respect to each Mortgaged
Property set forth on Annex VII to the Credit Agreement owned by the Borrower or
any such Guarantor of Payment (as applicable), (ii) a Security Agreement, (iii)
an Intellectual Property Security Agreement, (iv) such UCC financing statements
as the Administrative Agent shall request, all to be in form and substance
satisfactory to the Administrative Agent and the Lenders;

      (e) with respect to the property owned or leased by the Borrower and each
Subsidiary of the Borrower, the Borrower shall have provided to the
Administrative Agent (i) the results of UCC, federal and state tax lien and
judicial lien searches and other lien searches satisfactory to the
Administrative Agent and the Lenders, and (ii) UCC termination statements or, if
applicable, other termination statements, reflecting termination of all
financing and registration statements previously filed by any other party having
a security interest in any part of any property of the Borrower or any
Subsidiary and not permitted under the Credit Agreement;

      (f) the Borrower shall have provided to the Administrative Agent and the
Lenders an officer's certificate certifying the names of the officers of the
Borrower and each Guarantor of Payment authorized to sign this Amendment and the
Security Documents to which the Borrower or such Guarantor of Payment is a
party, together with the true signatures of such officers and certified copies
of the resolutions of the board of directors or executive committee of the
Borrower or such Guarantor of Payment, evidencing approval of the execution and
delivery of this Amendment and the Security Documents to which the Borrower or
such Guarantor of Payment is a party;

      (g) the Borrower shall have provided to the Administrative Agent and the
Lenders such opinions of counsel for the Borrower and each Guarantor of Payment,
in form and substance satisfactory to the Administrative Agent and the Lenders,
as the Administrative Agent and the Lenders may deem necessary or appropriate;

      (h) the Borrower shall have paid to the Administrative Agent, for the pro
rata benefit of the Lenders, an amendment fee in the amount of One Hundred
Thousand Dollars ($100,000);

      (i) the Borrower shall have paid all legal fees and expenses of the
Administrative Agent in connection with this Amendment and the documents
executed in connection herewith; and

      (j) the Borrower shall have provided such other items and shall have
satisfied such other conditions as may be reasonably required by the
Administrative Agent and the Lenders.

      SECTION 5. MISCELLANEOUS.

                                       15
<PAGE>   17
      5.1. Survival of Representations and Warranties. All representations and
warranties made in this Amendment shall survive the execution and delivery of
this Amendment, and no investigation by the Administrative Agent or any Lender
or any subsequent Loan or other Credit Event shall affect the representations
and warranties or the right of the Administrative Agent or any Lender to rely
upon them.

      5.2. Reference to Credit Agreement. The Credit Agreement and any and all
other agreements, instruments or documentation now or hereafter executed and
delivered pursuant to the terms of the Credit Agreement as amended hereby, are
hereby amended so that any reference therein to the Credit Agreement shall mean
a reference to the Credit Agreement as amended hereby.

      5.3. Severability. Any term or provision of this Amendment held by a court
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the term or provision so held to be invalid or unenforceable.

      5.4. Applicable Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of Ohio without regard to conflicts of
laws provisions.

      5.5. Headings. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.

      5.6. Entire Agreement. This Amendment is specifically limited to the
matters expressly set forth herein. This Amendment and all other instruments,
agreements and documentation executed and delivered in connection with this
Amendment embody the final, entire agreement among the parties hereto with
respect to the subject matter hereof and supersede any and all prior
commitments, agreements, representations and understandings, whether written or
oral, relating to the matters covered by this Amendment, and may not be
contradicted or varied by evidence of prior, contemporaneous or subsequent oral
agreements or discussions of the parties hereto. There are no oral agreements
among the parties hereto relating to the subject matter hereof or any other
subject matter relating to the Credit Agreement. Except as set forth herein, the
Credit Agreement shall remain in full force and effect and be unaffected hereby.

      5.7. Waiver of Claims. The Borrower, by signing below, hereby waives and
releases Administrative Agent and each of the Lenders and their respective
directors, officers, employees, attorneys, affiliates and subsidiaries from any
and all claims, offsets, defenses and counterclaims of which Borrower is aware,
such waiver and release being with full knowledge and understanding of the
circumstances and effect thereof and after having consulted legal counsel with
respect thereto.

      5.8. Counterparts. This Amendment may be executed by the parties hereto
separately in one or more counterparts and by facsimile signature, each of which
when so executed shall be deemed to be an original, but all of which when taken
together shall constitute one and the same agreement.

                                       16
<PAGE>   18
      5.9. JURY TRIAL WAIVER. EACH OF THE PARTIES TO THIS AMENDMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AMENDMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO
HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AMENDMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

      IN WITNESS WHEREOF, this Amendment has been duly executed and delivered as
of the date first above written.

                                                HAWK CORPORATION

                                                By: /s/ Thomas A. Gilbride
                                                   ---------------------------
                                                Name: Thomas A. Gilbride
                                                     -------------------------
                                                Title: Vice President-Finance
                                                      ------------------------

                                                KEYBANK NATIONAL
                                                ASSOCIATION,
                                                  as the Administrative Agent
                                                  and as a Lender

                                                By: /s/ Thomas J. Purcell
                                                   ----------------------------
                                                Name: Thomas J. Purcell
                                                     --------------------------
                                                Title: Senior Vice President
                                                      -------------------------

                                                NATIONAL CITY BANK

                                                By: /s/ Eric R. Giesecke
                                                   ----------------------------
                                                Name: Eric R. Giesecke
                                                     --------------------------
                                                Title: Assistant Vice President
                                                      -------------------------

                                                LASALLE BANK NATIONAL
                                                ASSOCIATION

                                                By: /s/ Jefferson M. Green
                                                   ----------------------------
                                                Name: Jefferson M. Green
                                                     --------------------------
                                                Title: First Vice President
                                                      -------------------------

                              Signature Page 1 of 2
<PAGE>   19
                                                COMERICA BANK

                                                By: /s/ Jeffrey J. Judge
                                                   ---------------------------
                                                Name: Jeffrey J. Judge
                                                     -------------------------
                                                Title: Vice President
                                                      ------------------------

                                                BANK ONE, N.A.

                                                By: /s/ Moses R. Jhirad
                                                   ---------------------------
                                                Name: Moses R. Jhirad
                                                     -------------------------
                                                Title: Vice President
                                                      ------------------------

                                                HARRIS TRUST AND SAVINGS
                                                BANK

                                                By: /s/ Kirby M. Law
                                                   ---------------------------
                                                Name: Kirby M. Law
                                                     -------------------------
                                                Title: Vice President
                                                      ------------------------

                              Signature Page 2 of 2
<PAGE>   20
                                     ANNEX I

                           INFORMATION AS TO LENDERS

<TABLE>
<CAPTION>
                           GENERAL            GENERAL
                     REVOLVING FACILITY      REVOLVING         SWING LINE          TERM LOAN            NOTICE ADDRESS
  NAME OF LENDER         PERCENTAGE         COMMITMENT         COMMITMENT         COMMITMENT            FOR THE LENDERS
--------------------------------------------------------------------------------------------------------------------------
<S>                  <C>                   <C>                <C>               <C>                  <C>
KeyBank National
 Association            26.470588238%      $7,941,176.47      $5,000,000.00     $9,264,705.8833      KeyBank National
                                                                                                     Association
                                                                                                     127 Public Square
                                                                                                     Cleveland, Ohio 44114
                                                                                                     Attn: Large Corporate
                                                                                                     Banking
--------------------------------------------------------------------------------------------------------------------------
LaSalle Bank
 National
 Association            20.588235294%      $6,176,470.59      $        0.00     $7,205,882.3529

--------------------------------------------------------------------------------------------------------------------------
Bank One, N.A.          14.705882352%      $4,411,764.71      $        0.00     $5,147,058.8232
--------------------------------------------------------------------------------------------------------------------------
Comerica Bank           14.705882352%      $4,411,764.71      $        0.00     $5,147,058.8232
--------------------------------------------------------------------------------------------------------------------------
National City Bank      11.764705882%      $3,529,411.76      $        0.00     $4,117,647.0587
--------------------------------------------------------------------------------------------------------------------------
Harris Trust and
 Savings Bank           11.764705882%      $3,529,411.76      $        0.00     $4,117,647.0587
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                 Annex I Page 1
<PAGE>   21
                                    ANNEX VII

                             REAL PROPERTY LOCATIONS

<TABLE>
<CAPTION>
OWNER                             ADDRESS                       COUNTY
--------------------------------------------------------------------------
<S>                               <C>                           <C>
Friction Products Co.             920 Lake Road                 Medina
                                  Medina OH 44256
--------------------------------------------------------------------------
Logan Metal Stampings, Inc.       570 Wolf Ledges Pkwy.         Summit
                                  Akron OH 44311
--------------------------------------------------------------------------
Helsel, Inc.                      596 Oak Street                Washington
                                  Campbellsburg IN 47108
--------------------------------------------------------------------------
Hutchinson Products LLC           4131 Alby Street              Madison
                                  Alton IL 62002
--------------------------------------------------------------------------
S.K. Wellman Corp.                5372 W. 130th Street          Cuyahoga
                                  Brook Park OH 44142
--------------------------------------------------------------------------
Allegheny Powder                  Route 950                     Jefferson
Metallurgy, Inc.                  PO Box 376
                                  Falls Creek PA 15840
--------------------------------------------------------------------------
Clearfield Powdered               PO Box 1072                   Clearfield
Metals, Inc.                      Clearfield PA 16830
--------------------------------------------------------------------------
</TABLE>

                                Annex VII Page 1
<PAGE>   22
                            GUARANTOR ACKNOWLEDGMENT

      The undersigned consents and agrees to and acknowledges the terms of the
foregoing Amendment No. 2 to Credit Agreement. The undersigned specifically
agrees to the waivers set forth in such agreement, including, but not limited
to, the jury trial waiver. The undersigned further agrees that the obligations
of the undersigned pursuant to the Guaranty of Payment executed by the
undersigned shall remain in full force and effect and be unaffected hereby.

      The undersigned hereby waives and releases the Administrative Agent and
the Lenders and the directors, officers, employees, attorneys, affiliates and
subsidiaries of the Administrative Agent and the Lenders from any and all
claims, offsets, defenses and counterclaims of which the undersigned is aware,
such waiver and release being with full knowledge and understanding of the
circumstances and effect thereof and after having consulted legal counsel with
respect thereto.

                                          FRICTION PRODUCTS CO.
                                          S.K. WELLMAN CORP.
                                          HELSEL, INC.
                                          LOGAN METAL STAMPINGS, INC.
                                          HUTCHINSON PRODUCTS LLC
                                          SINTERLOY CORPORATION
                                          HAWK BRAKE, INC.
                                          S.K. WELLMAN HOLDINGS, INC.
                                          WELLMAN FRICTION PRODUCTS U.K.
                                           CORP.
                                          CLEARFIELD POWDERED METALS,
                                           INC.
                                          ALLEGHENY POWDER METALLURGY,
                                           INC.
                                          QUARTER MASTER INDUSTRIES, INC.
                                          HAWK MIM, INC.
                                          TEX RACING ENTERPRISES, INC.
                                          NET SHAPE TECHNOLOGIES LLC

                                          By: /s/ Thomas A. Gilbride
                                             ----------------------------------
                                          Name: Thomas A. Gilbride
                                               --------------------------------
                                               Vice President-Finance of each of
                                               the foregoing companies

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