Document:

EX-10.2 Incentive Plan Restricted Stock

 

Exhibit 10.2

KING PHARMACEUTICALS, INC.

INCENTIVE PLAN

RESTRICTED STOCK CERTIFICATE

     This Certificate, when executed by a duly authorized officer of King Pharmaceuticals, Inc.
(the “Company”), evidences the grant to the Participant named below of Restricted Common Stock of
the Company.

	 	 	 	 	 	 	 	 	 
	1.
	 	Name of Participant:	 	[Participant Name]
	
	 		 	
	2.
	 	Social Security Number of Participant:	 	[Social Security Number]
	
	 		 	
	3.
	 	Date of Grant:	 	[Grant Date]
	
	 		 	
	4.
	 	Type of Grant:	 	Restricted Stock
	 
	 	 	 	 	 	 	 
	
	 		 	
	5.
	 	Number of Shares:	 	[Number of Shares Granted]
	
	 		 	
	6.
	 	Vesting Schedule:	 	The restrictions upon the Restricted Stock shall lapse upon the 3rd
	 
	 	 	 	 	 	anniversary of the date of grant.
	
	 		 	
	7.
	 	Purchase Price:	 	$	0.00	 

This Restricted Stock is subject to and governed by the terms of this Restricted Stock Certificate,
the Restricted Stock Agreement attached hereto and incorporated by reference herein and the
Company’s Incentive Plan.

	 	 	 	 	 
	 	KING PHARMACEUTICALS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

 

 

	 	 	 	 	 

RESTRICTED STOCK GRANT AGREEMENT

PURSUANT TO THE KING PHARMACEUTICALS, INC.

INCENTIVE PLAN

     This Restricted Stock Grant Agreement (the “Agreement”) is made as of the date set forth on
the Restricted Stock Certificate attached hereto (the “Grant Date”) by King Pharmaceuticals, Inc.
(the “Company”) and the individual identified on the Restricted Stock Certificate (the
“Participant”) to effect an award of restricted stock by the Company to the Participant on the
terms and conditions set forth below:

     1. AWARD OF RESTRICTED STOCK. 

     As of the Grant Date, subject to the terms, conditions and restrictions set forth herein, the
Company grants and issues to the Participant the number of shares of the Company’s common stock
indicated on the Restricted Stock Certificate (the “Restricted Stock”).

     2. GOVERNING PLAN.

     The Restricted Stock shall be granted pursuant to and (except as specifically set forth
herein) subject in all respects to the applicable provisions of the King Pharmaceuticals, Inc.
Incentive Plan (“Plan”), which are incorporated herein by reference. Terms not otherwise defined in
this Agreement have the meanings ascribed to them in the Plan.

     3. RESTRICTIONS ON THE RESTRICTED STOCK.

     (a) No Transfer. The shares of Restricted Stock (including any shares received
by the Participant with respect to shares of Restricted Stock as a result of stock
dividends, stock splits or any other form of recapitalization or a similar transaction
affecting the Company’s securities without receipt of consideration) may not be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed of, alienated or
encumbered during the Restricted Period.

     (b) Vesting. The restrictions imposed under Section 3(a) will be removed from
the Restricted Stock at the end of the applicable Restricted Period. Removal of the
restrictions imposed under Section 3(a) from particular shares of Restricted Stock is
referred to as “vesting” of those shares and shares from which the restrictions have been
removed are referred to as “vested.”

     4. VOTING AND OTHER RIGHTS. 

     During the period prior to vesting, except as otherwise provided herein, the Participant will
have all of the rights of a shareholder with respect to all of the Restricted Stock, including
without limitation the right to vote such Restricted Stock and the right to receive all dividends
or other distributions with respect to such Restricted Stock. In connection with the payment of
such

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dividends or other distributions, the Company will be entitled to deduct from any amounts
otherwise payable by the Company to Participant (including without limitation salary or other
compensation) any taxes or other amounts required by any governmental authority to be withheld and
paid over to such authority for Participant’s account.

     5. CERTIFICATION, ESCROW AND DELIVERY OF SHARES.

     (a) Certificates. Each certificate representing the Restricted Stock will be
endorsed with a legend substantially as set forth below, as well as such other legends as
the Company may deem appropriate to comply with applicable laws and regulations:

The securities evidenced by this certificate are subject to certain limitations on
transfer and other restrictions as set forth in that certain Restricted Stock Grant
Agreement, dated as of ___, 200___, between the Company and the
holder of such securities, pursuant to the King Pharmaceutical, Inc. Incentive Plan
(copies of which are available for inspection at the offices of the Company).

     (b) Escrow. With respect to the Restricted Stock (including any shares
received by Participant with respect to shares of Restricted Stock that have not yet vested
as a result of stock dividends, stock splits or any other form of recapitalization or a
similar transaction affecting the Company’s securities without receipt of consideration),
the Secretary of the Company, or such other escrow holder as the Secretary may appoint, will
retain physical custody of the certificate representing such share until such share vests.

     (c) Delivery of Certificates. As soon as reasonably practicable after the
vesting of any Restricted Stock, the Company will release the certificate(s) representing
such vested Restricted Stock to Participant. If other still unvested shares of Restricted
Stock are also represented by the same stock certificate as vested shares, then such
certificate will be retired and new certificates representing the vested and unvested
portions of the Restricted Stock will be issued in place of the existing certificate. The
certificate representing the vested Restricted Stock will be delivered to Participant and
the certificate representing the still unvested shares of Restricted Stock will be retained
by the escrow holder.

     6. ADDITIONAL AGREEMENTS.

     (a) Tax Matters. The Restricted Stock is subject to appropriate income tax
withholding and other deductions required by applicable laws or regulations, and Participant
and his successors will be responsible for all income and other taxes payable as a result of
grant or vesting of the Restricted Stock or otherwise in connection with this Agreement.
The Company is not required to provide any gross-up or other tax assistance. Participant
understands that Participant may make an election pursuant to Section 83(b) of the Internal
Revenue Code (the “Code”) within thirty (30) days after the date Participant acquired the
Restricted Stock hereunder, or comparable provisions of any state tax law, to include in
Participant’s gross income the fair market value (as of the date

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		 	of acquisition) of the Restricted Stock. Participant may make such an election only
if, prior to making any such election, Participant (a) notifies the Company of Participant’s
intention to make such election, by delivering to the Company a copy of a fully-executed
Section 83(b) Election Form such as the Company may from time to time prescribe, and (b)
pays to the Company an amount sufficient to satisfy any taxes or other amounts required by
any governmental authority to be withheld or paid over to such authority for Participant’s
account, or otherwise makes arrangements satisfactory to the Company for the payment of such
amounts through withholding or otherwise. Participant understands that if Participant does
not make a proper and timely Section 83(b) election, generally under Section 83 of the Code,
at the time the Restricted Period lapses with respect to any portion of the Restricted
Stock, Participant will recognize ordinary income and be taxed in an amount equal to the
fair market value (as of the date the forfeiture restrictions lapse) of the Restricted Stock
less the purchase price paid for the Restricted Stock. Participant acknowledges that it is
Participant’s sole responsibility, and not the Company’s, to file a timely election under
Section 83(b). Participant is relying solely on Participant’s advisors with respect to the
decision as to whether or not to file a Section 83(b) election.

     (b) Independent Advice; No Representations. Participant acknowledges that (i)
(s)he was free to use professional advisors of his choice in connection with this Agreement,
has received advice from her/his professional advisors in connection with this Agreement,
understands its meaning and import, and is entering into this Agreement freely and without
coercion or duress; and (ii) (s)he has not received and is not relying upon any advice,
representations or assurances made by or on behalf of the Company or any Company affiliate
or any employee of or counsel to the Company regarding any tax or other effects or
implications of the Restricted Stock or other matters contemplated by this Agreement.

     (c) Value of Restricted Stock. No representations or promises are made to
Participant regarding the value of the Restricted Stock or Company’s business prospects.
Participant acknowledges that information about investment in Company stock, including
financial information and related risks, is contained in Company’s SEC reports which have
been made available for Participant’s review at any time before Participant’s acceptance of
this Agreement. Further, Participant understands that the Company does not provide tax or
investment advice and acknowledges Company’s recommendation that Participant consult with
independent specialists regarding such matters. Sale or other transfer of the Company stock
may be limited by and subject to Company policies as well as applicable securities laws and
regulations.

     (d) Adjustment in Capitalization. In the event of an Adjustment Event that is
a merger, consolidation, reorganization, liquidation, dissolution or other similar
transaction, then the Award pursuant to Section 1 of this Agreement shall be deemed to
pertain to the securities and other property, including cash, to which a holder of the
number of shares equal to the Restricted Stock would have been entitled to receive in
connection with such Adjustment Event; provided, that any securities issued to Participant
in respect of unvested Granted Shares will be subject to the same restrictions

4

 

	 	 	 	and vesting provisions that were applicable to the Restricted Stock in exchange for
which the securities were issued.

     (e) Change of Control. Upon a Change of Control, vesting shall occur with
respect to the Restricted Stock in accordance with Article 11 of the Plan.

     (f) Termination of Employment. Upon a Termination of Employment, vesting or
forfeiture of the Restricted Stock shall be determined according to Section 8.7 of the Plan;
provided, however, that in the event of a Participant’s Separation from Service for Good
Reason then the Restricted Period will lapse as to a pro-rata portion of the Restricted
Stock as provided in Section 8.7(f) of the Plan. “Good Reason” shall mean the occurrence of
any one or more of the following circumstances, unless such circumstances are corrected by
the Company within ten (10) days following written notice thereof given by the Participant:
(i) Implementation of a material demotion or diminution in the nature or status of the
Participant’s authorities, duties, responsibilities, reporting relationships, title and/or
position from those in effect as of the Grant Date, determined in the context of the
individual’s relative position in the overall controlled group of corporations which
includes the Company as of the Grant Date as compared to the individual’s position in the
overall controlled group of corporations which includes the Company immediately before the
Separation from Service; (ii) Failure to pay promptly any material compensation when due;
(iii) Reduction in the rate of annual base salary without the Participant’s consent; (iv)
Material breach of any employment contract or other agreement as to the terms and conditions
of employment; (v) Requiring the Participant to be based at a work location in excess of
fifty (50) miles from the Participant’s principal job location or office as of the Grant
Date. The Participant’s right to effect a Separation from Service for Good Reason must be
exercised by the Participant within six (6) months after the date on which the Participant
knows or reasonably should have known of the occurrence that constitutes Good Reason,
otherwise the right to a Separation from Service on the basis of that occurrence shall be
deemed to have been waived. The Participant’s right to a Separation from Service for Good
Reason shall not be affected by the Participant’s temporary incapacity due to a physical or
mental/psychological condition. However, a Disability will not qualify as a Good Reason
unless accompanied by one or more “good reasons” hereinabove listed.

     (g) No Right to Continued Employment. This Agreement does not confer upon
Participant any right to continue as an employee of the Company or its subsidiary or to any
particular employment tenure, nor does it limit in any way the right of Company or its
subsidiary to terminate Participant’s services to the Company or its subsidiary at any time,
with or without cause.

     (h) Approved Retirement. “Approved Retirement” means, with respect to the
interpretation of the Plan and this Agreement, with the express consent of the Company at or
before the time of such Approved Retirement, any voluntary termination of employment by the
Participant after having reached the age of fifty-five (55) years and after having completed
at least fifteen (15) years of continuous employment with the Company.

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     7. GENERAL.

     (a) Successors and Assigns. This Agreement is personal in its nature and
Participant may not assign or transfer his/her rights under this Agreement.

     (b) Notices. Any notices, demands or other communications required or desired
to be given by any party shall be in writing and shall be validly given to another party if
served either personally or if deposited in the United States mail, certified or registered,
postage prepaid, return receipt requested. If such notice, demand or other communication
shall be served personally, service shall be conclusively deemed made at the time of such
personal service. If such notice, demand or other communication is given by mail, such
notice shall be conclusively deemed given forty-eight (48) hours after the deposit thereof
in the United States mail addressed to the party to whom such notice, demand or other
communication is to be given as hereinafter set forth:

	 	 	 
	To the Company:

	 	King Pharmaceuticals, Inc.
	 
	 	 
	 

	 	501 Fifth Street
	 
	 	 
	 

	 	Bristol, TN 37620
	 
	 	 
	 

	 	Attention: ____________

          To Participant: At his/her address of record as maintained in the Company’s files.

	 	 	Any party may change its address for the purpose of receiving notices, demands and other
communications by providing written notice to the other party in the manner described in this
paragraph.

     (c) Entire Agreement. Except as this Agreement may expressly provide
otherwise, this Agreement, the Restricted Stock Certificate and the Plan constitute the
entire agreement and understanding of the Company and Participant with respect to the
subject matter hereof and thereof, and supersede all prior written or verbal agreements and
understandings between Participant and the Company relating to such subject matter. This
Agreement may only be amended by written instrument signed by Participant and an authorized
officer of the Company.

     (d) Governing Law; Severability. This Agreement will be construed and
interpreted under the laws of the State of Tennessee applicable to agreements executed and
to be wholly performed within the State of Tennessee. If any provision of this Agreement as
applied to any party or to any circumstance is adjudged by a court of competent jurisdiction
to be void or unenforceable for any reason, the invalidity of that provision shall in no way
affect (to the maximum extent permissible by law) the application of such provision under
circumstances different from those adjudicated by the court, the application of any other
provision of this Agreement, or the enforceability or invalidity of this Agreement as a
whole. If any provision of this Agreement becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction by reason of the scope,

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	 	 	 	extent or duration of its coverage, then such provision shall be deemed amended to the
extent necessary to conform to applicable law so as to be valid and enforceable or, if such
provision cannot be so amended without materially altering the intention of the parties,
then such provision will be stricken and the remainder of this Agreement shall continue in
full force and effect.

     (e) Remedies. All rights and remedies provided pursuant to this Agreement or
by law shall be cumulative, and no such right or remedy shall be exclusive of any other. A
party may pursue any one or more rights or remedies hereunder or may seek damages or
specific performance in the event of another party’s breach hereunder or may pursue any
other remedy by law or equity, whether or not stated in this Agreement.

     (f) Interpretation. Headings herein are for convenience of reference only, do
not constitute a part of this Agreement, and will not affect the meaning or interpretation
of this Agreement. References herein to Sections are references to the referenced Section
hereof, unless otherwise specified.

     (g) Waivers; Amendments. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any later
breach of that provision. This Agreement may be modified only by written agreement signed
by Participant and the Company.

7EX-4.1

 

Exhibit 4.1

HAWK CORPORATION

DEFERRED COMPENSATION PLAN

(Effective June 1, 2007)

 

 

HAWK CORPORATION

DEFERRED COMPENSATION PLAN

(Effective June 1, 2007)

Table of Contents

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I
	 	 	1	 
	 
	 	 	 	 
	INTRODUCTION
	 	 	1	 
	1.1 Name of Plan
	 	 	1	 
	1.2 Purposes of Plan
	 	 	1	 
	1.3 “Top Hat” Pension Benefit Plan
	 	 	1	 
	1.4 Plan Unfunded
	 	 	1	 
	1.5 Effective Date
	 	 	1	 
	1.6 Administration
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II
	Error! Bookmark not defined.
	 
	 
	 	 	 	 
	DEFINITIONS AND CONSTRUCTION
	 	 	2	 
	2.1 Definitions
	 	 	2	 
	2.2 Number and Gender
	 	 	8	 
	2.3 Headings
	 	 	8	 
	 
	 	 	 	 
	ARTICLE III
	 	 	8	 
	 
	 	 	 	 
	PARTICIPATION AND ELIGIBILITY
	 	 	8	 
	3.1 Participation
	 	 	8	 
	3.2 Commencement of Participation
	 	 	8	 
	3.3 Cessation of Active Participation
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IV
	 	 	8	 
	 
	 	 	 	 
	CONTRIBUTIONS AND VESTING
	 	 	8	 
	4.1 Deferrals by Participants
	 	 	8	 
	4.2 Effective Date of Participation and Deferral Election Form
	 	 	10	 
	4.3 Modification or Revocation of Election by Participant
	 	 	10	 
	4.4 Discretionary Contributions
	 	 	10	 
	4.5 Suspension of Contributions
	 	 	10	 
	4.6 Vesting
	 	 	10	 
	 
	 	 	 	 
	ARTICLE V
	 	 	11	 
	 
	 	 	 	 
	ACCOUNTS
	 	 	11	 
	5.1 Establishment of Bookkeeping Accounts
	 	 	11	 
	5.2 Subaccounts
	 	 	11	 
	5.3 Earnings Elections
	 	 	11	 

i

 

	 	 	 	 	 
	 	 	Page	 
	5.4 Hypothetical Accounts and Creditor Status of Participants
	 	 	12	 
	5.5 Investments
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VI
	 	 	13	 
	 
	 	 	 	 
	PAYMENT OF ACCOUNT
	 	 	13	 
	6.1 Timing of Distribution of Accounts
	 	 	13	 
	6.2 Adjustment for Investment Gains and Losses Upon a Distribution
	 	 	13	 
	6.3 Form of Payment
	 	 	13	 
	6.4 Change in Date or Form of Distribution
	 	 	14	 
	6.5 Other Distributions
	 	 	15	 
	6.6 Designation of Beneficiaries
	 	 	15	 
	6.7 Change of Beneficiary Designation
	 	 	15	 
	6.8 Change in Marital Status
	 	 	15	 
	6.9 No Beneficiary Designation
	 	 	16	 
	6.10 Unclaimed Benefits
	 	 	16	 
	6.11 Withdrawals for Unforeseeable Emergency
	 	 	16	 
	6.12 Withholding
	 	 	17	 
	 
	 	 	 	 
	ARTICLE VII
	 	 	17	 
	 
	 	 	 	 
	ADMINISTRATION
	 	 	17	 
	7.1 Administrator
	 	 	17	 
	7.2 General Powers of Administration
	 	 	17	 
	7.3 Indemnification of Administrator, Claims Reviewer, and Board
	 	 	18	 
	 
	 	 	 	 
	ARTICLE VIII
	 	 	18	 
	 
	 	 	 	 
	DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND ADMINISTRATION
	 	 	18	 
	8.1 Claims
	 	 	18	 
	8.2 Claim Decision
	 	 	18	 
	8.3 Request for Review of a Denied Claim
	 	 	19	 
	8.4 Review of Decision
	 	 	20	 
	8.5 Discretionary Authority
	 	 	21	 
	8.6 Disability Claims
	 	 	21	 
	 
	 	 	 	 
	ARTICLE IX
	Error! Bookmark not defined.
	 
	 
	 	 	 	 
	AMENDMENT AND TERMINATION
	 	 	22	 
	9.1 Power to Amend or Terminate
	 	 	22	 
	9.2 Distribution Upon Plan Termination
	 	 	22	 
	 
	 	 	 	 
	ARTICLE X
	Error! Bookmark not defined.
	 
	 
	 	 	 	 
	MISCELLANEOUS
	 	 	22	 
	10.1 Plan Not a Contract of Employment
	 	 	22	 
	10.2 Non-Assignability of Benefits
	 	 	23	 

ii

 

	 	 	 	 	 
	 	 	Page	 
	10.3 Severability
	 	 	23	 
	10.4 Governing Laws
	 	 	23	 
	10.5 Binding Effect
	 	 	23	 
	10.6 Entire Agreement
	 	 	23	 
	10.7 Code Section 409A
	 	 	24	 
	10.8 No Guaranty or Responsibility Regarding Tax or Legal Consequences
	 	 	24	 
	10.9 Use of Alternative Technologies to Make Elections
	 	 	24	 

iii

 

HAWK CORPORATION

DEFERRED COMPENSATION PLAN

(Effective June 1, 2007)

ARTICLE I

INTRODUCTION

     1.1 Name of Plan.

     Hawk Corporation (the “Company”) hereby adopts the Hawk Corporation Deferred Compensation Plan
(the “Plan”).

     1.2 Purposes of Plan.

     The purposes of the Plan are to provide deferred compensation for a select group of management
or highly compensated Employees, including the opportunity to make elective deferrals under this
arrangement to supplement their elective contributions to the Hawk Corporation 401(k) Retirement
Plan (the ‘401(k) Plan’), which are subject to certain limitations under the Code.

     1.3 “Top Hat” Pension Benefit Plan.

     The Plan is intended to be a plan that “is unfunded and is maintained by an employer primarily
for the purpose of providing deferred compensation for a select group of management or highly
compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The
Plan shall be administered and interpreted to the extent possible in a manner consistent with that
intent.

     1.4 Plan Unfunded.

     It is the intention of the Company that the Plan be unfunded for purposes of the Code and for
purposes of Title 1 of ERISA. No assets of the Company shall be held in any way as collateral
security for the fulfilling of the obligations of the Company under the Plan. No assets of the
Company shall be pledged or otherwise restricted in order to meet the obligations of the Plan. The
Company’s obligation under the Plan shall be merely that of an unfunded and unsecured promise of
the Company to pay money in the future, and the rights of the Participants and Beneficiaries shall
be no greater than those of unsecured general creditors. However, the Company may set aside, in a
separate account, “rabbi trust,” or similar financial vehicles, amounts intended to be used for the
payment of benefits hereunder, or may purchase insurance contracts in its own name for the purpose
of the payment of benefits hereunder. Such setting aside or purchase shall not, however, result in
this Plan being considered as “funded” either for federal income tax purposes or under ERISA.

     1.5 Effective Date.

     The Plan is effective as of the Effective Date.

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     1.6 Administration.

     The Plan shall be administered by the Administrator or its delegates, as set forth in Section
7.1.

DEFINITIONS AND CONSTRUCTION

     1.7 Definitions.

     For purposes of the Plan, the following words and phrases shall have the respective meanings
set forth below, unless their context clearly requires a different meaning:

          (a) “Account” means, with respect to any Participant, the bookkeeping account or accounts
maintained by the Company to reflect the Participant’s Base Salary Deferrals, Bonus Deferrals, and
Discretionary Contributions, together with all earnings, gains and losses thereon. Accounts shall
be subdivided into In-Service Distribution/Deferral Accounts, Retirement/Deferral Accounts and
Retirement/Company Contribution Accounts.

          (b) “Administrator” means the individual, entity, committee or Board named to administer the
Plan pursuant to Section 7.1.

          (c) “Affiliate” means any corporation or business organization during any period during which
it would be treated, together with the Company, as a single employer for purposes of Code Sections
414(b) or (c).

          (d) “Base Salary” means the base rate of cash compensation, including commissions, paid by the
Company to or for the benefit of a Participant for services rendered or labor performed while a
Participant, including base pay a Participant could have received in cash in lieu of (A) deferrals
pursuant to Section 4.1 and (B) contributions made on his behalf to any qualified plan maintained
by the Company or to any cafeteria plan under Section 125 of the Code maintained by the Company.

          (e) “Base Salary Deferral” means the amount of a Participant’s Base Salary which the
Participant elects to have withheld and credited to his Account pursuant to Section 4.1.

          (f) “Beneficiary” means the person or persons designated by the Participant in accordance with
Section 6.6 and related provisions or, in the absence of an effective designation, the person or
entity described in Section 6.9.

          (g) “Board” means the Board of Directors of the Company.

          (h) “Bonus Compensation” means the amount awarded to a Participant for a Plan Year under any
bonus arrangement maintained by the Company (provided that the Company designates amounts awarded
under such bonus arrangement as being eligible for deferral hereunder).

2

 

          (i) “Bonus Deferral” means the amount of a Participant’s Bonus Compensation which the
Participant elects to have withheld and credited to his Account pursuant to Section 4.1.

          (j) “Change in Control” means, with respect to any Participant, the happening of any of the
following events (but only if with respect to such Participant, such event would constitute a
change in the ownership or effective control of the corporation, or in the ownership of a
substantial portion of the assets of the corporation, as defined under Section 409A of the Code):

	 	(i)	 	a change in the ownership of
the Company (or any Affiliate which either employs the
Participant or is a direct or indirect parent of such employer)
by which any one person, or more than one person acting as a
group, acquires ownership of stock of the Company (or such an
Affiliate) that, together with stock held by such person or
group, constitutes more than Fifty Percent (50%) of the total
fair market value or total voting power of the stock of the
Company (or such an Affiliate). However, if any one person, or
more than one person acting as a group, is considered to own
more than 50% of the total fair market value or total voting
power of the stock of the Company (or such an Affiliate), the
acquisition of additional stock by the same person or persons
is not considered to cause a Change in Control. (An increase
in the percentage of stock owned by any one person, or persons
acting as a group, as a result of a transaction in which the
Company (or such an Affiliate) acquires its stock in exchange
for property will be treated as an acquisition of stock for
purposes of this definition. This subsection applies only when
there is a transfer of stock of the Company (or issuance of
stock of the Company) (or such an Affiliate) and stock in the
Company (or such an Affiliate) remains outstanding after the
transaction.)
	 
	 	(ii)	 	a change in effective control
of the Company (or any Affiliate which either employs the
Participant or is a direct or indirect parent of such employer)
by which:

	 	(A)	 	any one person, or more
than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of
the most recent acquisition by such person or persons)
ownership of stock of the Company (or such an Affiliate)
possessing Thirty Percent (30%) or more of the total voting
power of the stock of the Company (or such an Affiliate);
or

3

 

	 	(B)	 	a majority of members
of the Board of Directors is replaced during any 12-month
period by Directors whose appointment or election is not
endorsed by a majority of the members of the Board of
Directors before the date of the appointment or election.

	 	(iii)	 	a change in the ownership of a
substantial portion of the assets of the Company (or any
Affiliate which either employs the Participant or is a direct
or indirect parent of such employer) by which any one person,
or more than one person acting as a group, acquires (or has
acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) assets from
the Company (or such an Affiliate) that have a total gross fair
market value equal to or more than Forty Percent (40%) of the
total gross fair market value of all of the assets of the
Company (or such an Affiliate) immediately prior to such
acquisition or acquisitions. For this purpose, gross fair
market value means the value of the assets of the corporation,
or the value of the assets being disposed of, determined
without regard to any liabilities associated with such assets.

For purposes of this definition, persons will be considered to be acting as a group if they are
owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock,
or similar business transaction with the Company. If a person, including an entity, owns stock in
both corporations that enter into a merger, consolidation, purchase or acquisition of stock, or
similar transaction, such shareholder is considered to be acting as a group with other shareholders
only with respect to the ownership in that corporation before the transaction giving rise to the
change and not with respect to the ownership interest in the other corporation.

          (k) “Code” means the Internal Revenue Code of 1986, as amended from time to time, and all
lawful regulations and pronouncements promulgated thereunder. Whenever a reference is made to a
specific Section of the Code, such reference shall be deemed to include any successor Sections of
the Code having the same or similar purpose.

          (l) “Claims Reviewer” means the individual, committee or Board named to review denied claims
under the Plan pursuant to Section 8.3.

          (m) “Company” means Hawk Corporation and any successor thereto.

          (n) “Deferral Period” means the period of time with respect to any In-Service
Distribution/Deferral Account for which a Participant elects to defer receipt of the Base Salary
Deferrals and Bonus Deferrals credited to such In-Service Distribution/Deferral Account.

          (o) “Directors” means the Board of Directors of the Company.

          (p) “Disability” means, with respect to any Participant, that such Participant is, by reason
of any medically determinable physical or mental impairment which can

4

 

be expected to result in death or can be expected to last for a continuous period of not less
than 12 months, either (i) unable to engage in any substantial gainful activity, or (ii) receiving
income replacement benefits for a period of not less than 3 months under an accident and health
plan covering employees of the Company. Without limitation, for purpose of this Plan, a
Participant will be deemed to have a Disability if the Participant is determined to be totally
disabled by the Social Security Administration, or is determined to be disabled in accordance with
a disability insurance program of the Company or any Affiliate (provided that the definition of
disability applied under such disability insurance program complies with the requirements of
Section 409A).

          (q) “Discretionary Contribution” means the Company’s contribution, if any, made pursuant to
Section 4.4.

          (r) “Effective Date” means June 1, 2007, except where a different date is specifically set
forth.

          (s) “Employee” means any common-law employee of the Company or any person with whom the
Company would be considered a single employer under Code Section 414(b) or (c).

          (t) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time, and all lawful regulations and pronouncements promulgated thereunder. Whenever a reference
is made to a specific Section of ERISA, such reference shall be deemed to include any successor
Sections of ERISA having the same or similar purpose.

          (u) “401(k) Plan” means the Hawk Corporation 401(k) Retirement Plan, as amended and restated
on January 1, 2004, and as amended from time to time thereafter.

          (v) “In-Service Distribution/Deferral Account” means, with respect to any Participant, the
portion of the Participant’s Account to which Base Salary Deferrals and Bonus Deferrals which are
subject to an In Service Distribution Election of the Participant are credited pursuant to the
terms of the Plan, and all earnings, gains and losses thereon. A Participant may have only one (1)
In-Service Distribution/Deferral Account under the Plan at any one time, unless distribution has
commenced from such In Service Distribution/Deferral Account, in which case the Participant may
have one (1) additional In-Service Distribution/Deferral Account under the Plan.

          (w) “In-Service Distribution Election” means an election by a Participant to have all or a
portion of his Base Salary Deferrals and/or his Bonus Deferrals be distributed in an in-service
withdrawal on a fixed date or schedule, provided that a Separation from Service, death, Disability,
or Change in Control does not occur prior to such distribution.

          (x) “Latest Payment Date” means, with respect to any payment due hereunder, the latest date by
which such payment can be made so as to constitute payment on the date that such payment is
otherwise designated hereunder to be made under Code Section 409A, including under certain
provisions of such section which may be summarized as follows:

5

 

	 	(i)	 	The date designated for payment
under the terms of the Plan or a later date in the same calendar
year or, if later, the fifteenth (15th) day of the third
calendar month following the date designated for payment.
	 
	 	(ii)	 	If calculation of the amount of
the benefit is not administratively practicable due to events
beyond the control of the Participant (or the Participant’s
Beneficiary), any date within the first taxable year of the
Participant in which calculation of the payment is
administratively practicable.
	 
	 	(iii)	 	If making the payment on the
date designated under the terms of the Plan would jeopardize the
ability of the Company and Affiliates to continue as a going
concern, the first taxable year of the Participant in which
making the payment would not have such effect.
	 
	 	(iv)	 	If there is a delay in payment by
the Administrator other than with the express or implied consent
of the Participant, the first taxable year of the Participant in
which the dispute is resolved. The dispute shall be deemed
resolved on the earliest date upon which: (a) the Participant
and the Administrator or the Company enter into a legally
binding settlement, (b) the Administrator or the Company
concedes that an amount is payable, or (c) the Administrator or
the Company is required to make payment pursuant to a final
non-appealable judgment or other binding decision. The foregoing
provisions shall apply only if, during the period of the
dispute, the Participant accepts any portion of the payment the
Administrator or the Company is willing to make (unless
acceptance will result in relinquishment of the claim to any
remaining portion), and makes prompt and reasonable good faith
efforts to collect the remaining portion of the payment which
meet the requirements of Code Section 409A (including the timely
notice requirements).
	 
	 	(v)	 	In the event the payment fails to
fails to comply with Federal securities laws or other laws, the
earliest date at which the Company reasonably anticipates that
the making of the payment will not cause such violation.
	 
	 	(vi)	 	In the event the payment fails to
be deductible under Code Section 162(m), or meets other
conditions specified by the Commissioner of the Internal Revenue
Service, such later date as may be provided under Code Section
409A.

6

 

          (y) “Participant” means each Employee who has been selected for participation in the Plan and
who has become a Participant pursuant to Article III.

          (z) “Participation and Deferral Election Form” means the written agreement pursuant to which
the Participant elects the amount of his Base Salary and/or his Bonus Compensation to be deferred
pursuant to the Plan, makes any related In-Service Distribution Election, if applicable, elects the
deemed investment of amounts deferred and the time and form of payment of such amounts and
addresses such other matters as the Administrator shall determine from time to time.

          (aa) “Plan” means the Hawk Corporation Deferred Compensation Plan, as in effect on the
Effective Date, and as amended from time to time hereafter.

          (bb) “Plan Year” means the twelve-consecutive month period commencing January 1 of each year
ending on the following December 31.

          (cc) “Retirement/Company Contribution Account” means, with respect to any Participant, the
portion of the Participant’s Account to which Discretionary Contributions, and all earnings, gains
and losses thereon, are credited pursuant to the terms of the Plan.

          (dd) “Retirement/Deferral Account” means, with respect to any Participant, the portion of the
Participant’s Account to which Base Salary Deferrals and Bonus Deferrals which are not subject to
an In Service Distribution Election of the Participant are credited pursuant to the terms of the
Plan, and all earnings, gains and losses thereon.

          (ee) “Separation from Service” means, with respect to any Participant, the separation from
service within the meaning of Section 409A of the Code, of such Participant with the Company and
all of its Affiliates, for any reason, including without limitation, quit, discharge, or
retirement, or a leave of absence (including military leave, sick leave, or other bona fide leave
of absence such as temporary employment by the government if the period of such leave exceeds the
greater of six months, or the period for which the Participant’s right to reemployment is provided
either by statute or by contract) or permanent decrease in service to a level that is no more than
Twenty Percent (20%) of its prior level. For this purposes, whether a Separation from Service has
occurred is determined based on whether it is reasonably anticipated that no further services will
be performed by the Participant after a certain date or that the level of bona fide services the
Participant will perform after such date (whether as an employee or as an independent contractor)
would permanently decrease to no more than Twenty Percent (20%) of the average level of bona fide
services performed (whether as an employee or an independent contractor) over the immediately
preceding 36-month period (or the full period of services if the Participant has been providing
services less than 36 months).

          (ff) “Valuation Date” means each business day and each special valuation date designated by
the Administrator.

7

 

     1.8 Number and Gender.

     Wherever appropriate herein, words used in the singular shall be considered to include the
plural and words used in the plural shall be considered to include the singular. The masculine
gender, where appearing in the Plan, shall be deemed to include the feminine gender.

     1.9 Headings.

     The headings of Articles and Sections herein are included solely for convenience, and if there
is any conflict between such headings and the rest of the Plan, the text shall control.

ARTICLE II

PARTICIPATION AND ELIGIBILITY

     2.1 Participation.

     Participants in the Plan are those Employees who are (a) subject to the income tax laws of the
United States, (b) members of a select group of highly compensated or management Employees, and (c)
selected by the Board or its delegates, in its sole discretion, as Participants. The Board shall
notify each Participant of his selection as a Participant. An Employee who satisfies the
eligibility requirements set forth in subsections (a) and (b) shall remain eligible to continue
participation in the Plan for each Plan Year following his selection by the Board as a Participant.

     2.2 Commencement of Participation.

     Except as provided in the following sentence, an Employee shall become a Participant effective
as of the first day of the Plan Year following the date on which his Participation and Deferral
Election Form becomes effective. An Employee who is newly designated as eligible to become a
Participant completes a Participation and Deferral Election Form within 30 days of the date on
which he is selected by the Board to be eligible to participate shall become a Participant as of
the date on which his Participation and Deferral Election Form becomes effective under Section 4.2.

     2.3 Cessation of Active Participation.

     Notwithstanding any provision herein to the contrary, an individual who has become a
Participant in the Plan shall cease to be a Participant hereunder effective as of any date
designated by the Board.

ARTICLE III

CONTRIBUTIONS AND VESTING

     3.1 Deferrals by Participants.

     Before the first day of each calendar year, a Participant may file with the Administrator a
Participation and Deferral Election Form pursuant to which such Participant elects to make Base
Salary Deferrals. A Participant must file a Participation and Deferral

8

 

Election form to make Bonus Deferrals at a time prescribed by the Administrator which time
shall be not later than six (6) months before the end of the 12 month or longer period over which
the services upon which the Bonus Compensation is based are performed. A Participant shall be
entitled to defer a whole percent of his Base Salary or Bonus Compensation, subject to a maximum
deferral of seventy-five percent (75%) of Base Salary and one hundred percent (100%) of Bonus
Compensation.

     A Participant’s Participation and Deferral Election Form may include an In-Service Deferral
Election under which the Participant may elect for all or a portion of his Base Salary Deferrals
and all or a portion of his Bonus Deferrals to be credited to an In-Service Distribution/Deferral
Account. In order to be valid, the initial In-Service Deferral Election with respect to any
In-Service Distribution/Deferral Account must specify the date on or about which payment of amounts
in such In-Service Distribution/Deferral Account shall be paid or shall commence to be paid and the
form of such payment under Section 6.3.

     On or after the commencement of distribution of amounts from a Participant’s existing
In-Service Distribution/Deferral Account, the Participant may not make any further election to make
further Base Salary Deferrals or Bonus Deferrals into such In-Service Distribution/Deferral
Account. However, at any time on or after the commencement of distribution of amounts from a
Participant’s existing In-Service Distribution/Deferral Account that the Participant files a
Participation and Deferral Election Form, the Participant may make an initial In-Service Deferral
Election to establish a second In-Service Distribution/Deferral Account, and, in order to be valid,
such election shall specify the date on or about payment of amounts in such second In-Service
Distribution/Deferral Account shall be paid or shall commence to be paid and the form of such
payment under Section 6.3. At any time during which a Participant has two (2) In-Service
Distribution/Deferral Accounts in pay status, the Participant shall not be permitted to elect to
make any further deferrals to an In-Service Distribution/Deferral Account.

     Deferral elections, In-Service Deferral Elections, and all other elections under the Plan
shall be subject to any such rules as may be prescribed by the Administrator in its sole
discretion, subject to the terms of this Plan.

     Base Salary Deferrals will be credited to the Retirement/Deferral Account (and/or In-Service
Distribution/Deferral Account if so elected) of each Participant as soon as practicable following
each pay date, if and to the extent that the Participant earned such Base Salary as an Employee for
such pay date. Bonus Deferrals will be credited to the Retirement/Deferral Account (and/or
In-Service Distribution/Deferral Account if so elected) of each Participant not later than the last
day of the month in which such Bonus Compensation otherwise would have been paid to the Participant
in cash, provided that the Participant is an Employee at the time such Bonus Compensation would
have been paid. A Participant whose employment terminates prior to or during the calendar month in
which his Bonus Compensation would have been paid to him in cash will be paid his Bonus Deferral in
cash. Such termination of employment shall not affect Base Salary Deferrals and Bonus Deferrals
previously credited to the Account of the affected Participant.

9

 

     3.2 Effective Date of Participation and Deferral Election Form.

     Except as provided below with respect to a new Participant, a Participant’s Participation and
Deferral Election Form shall become effective on the first day of the Plan Year to which it
relates. The Participation and Deferral Election Form of an Employee who first becomes eligible to
participate in the Plan during a Plan Year shall become effective with respect to services to be
performed subsequent to the election which shall be made within thirty (30) days after the date the
Employee first becomes eligible to participate in the Plan. If an Employee fails to timely
complete a Participation and Deferral Election Form, the Employee shall be deemed to have elected
not to make Base Salary Deferrals and/or Bonus Deferrals for such Plan Year.

     3.3 Modification or Revocation of Election by Participant.

     A Participant may not prospectively change the amount of his Base Salary Deferrals or Bonus
Deferrals during a Plan Year unless the Administrator determines that he has suffered an
unforeseeable emergency as is more fully described in Section 6.11. Unless required or permitted
by law, under no circumstances may a Participant’s Participation and Deferral Election Form be
made, modified or revoked retroactively.

     3.4 Discretionary Contributions.

     For each Plan Year, the Retirement/Company Contribution Account of each eligible Participant
shall be credited with such Discretionary Contribution, if any, as the Company may determine to
credit for such eligible Participant for such Plan Year, and such Discretionary Contribution shall
be credited at such time during such Plan Year or during the following Plan Year, as the Company
may determine.

     3.5 Suspension of Contributions.

     Anything contained herein to the contrary notwithstanding, a Participant who receives a
distribution from the Plan due to an unforeseeable emergency shall not be eligible to make
deferrals hereunder for a six (6) month period after receipt of such distribution. If required by
the terms of the 401(k) Plan, a Participant who receives a hardship distribution under the 401(k)
Plan shall not be eligible to make deferrals under this Plan for a six (6) month period after
receipt of the hardship distribution.

     3.6 Vesting.

     A Participant shall be 100% vested at all times in that portion of his Retirement/Deferral
Account and/or In-Service Distribution/Deferral Account. The Discretionary Contribution for each
Plan Year shall vest in accordance with the following schedule, based on the Plan Year during which
such Discretionary Contribution is credited to the Retirement/Company Contribution Account of such
Participant:

10

 

	 	 	 	 	 
	Vesting Date	 	Vested Percentage
	Plan Year in which Discretionary Contribution is Credited
	 	 	0	%
	1st January 1 following such Plan Year
	 	 	33	%
	2nd January 1 following such Plan Year
	 	 	67	%
	3rd January 1 following such Plan Year
	 	 	100	%

Notwithstanding the foregoing, all Discretionary Contributions shall be 100% vested immediately
upon death, Disability, attainment of age 65 while still employed with the Company or an Affiliate,
or a Change in Control. Any provisions of the Plan relating to the distribution of a Participant’s
Account shall mean only the vested portion of such Account. Upon Separation from Service, a
Participant shall forfeit any portion of the Participant’s Account which is not vested, and shall
have no further claim against the Company with respect thereto. All forfeitures shall inure to the
benefit of the Company and shall not be reallocated to the Accounts of other Participants.

ARTICLE IV

ACCOUNTS

     4.1 Establishment of Bookkeeping Accounts.

     A separate bookkeeping Account or Accounts shall be maintained for each Participant. Such
Account(s) shall be credited with the Base Salary Deferrals and Bonus Deferrals made by the
Participant pursuant to Section 4.1, Discretionary Contributions made pursuant to Section 4.4, and
transferred to this Plan, credited (or charged, as the case may be) with the hypothetical
investment results determined pursuant to Section 5.3, and charged with distributions made to or
with respect to a Participant.

     4.2 Subaccounts.

     Within each Participant’s bookkeeping Account, separate subaccounts shall be maintained to the
extent necessary or desirable for the administration of the Plan. In particular, separate
bookkeeping accounts shall be maintained for distributions to be made upon a Participant’s
Retirement and for distributions to be made upon attainment of the future calendar year
distribution dates selected by the Participant.

     4.3 Earnings Elections.

     Amounts credited to a Participant’s Account shall be credited or charged with earnings and
losses based on hypothetical investments elected by the Participant. A Participant may elect
different investment allocations for new contributions and existing Account balances. Only whole
percentages may be elected, the minimum percentage for any allocation is 1%, and the total
elections must allocate 100% of all new contributions and 100% of all existing Account balances.
Investment elections may be changed daily, by written direction. The hypothetical investment
alternatives and the procedures relating to the election of such investments, other than those set
forth in this Section 5.3, shall be determined by the Administrator from time to time. A
Participant’s Account shall be adjusted as of each Valuation Date to reflect investment gains and
losses.

11

 

     Notwithstanding the foregoing provisions of this Section 5.3, if investment in Company Stock
is permitted hereunder, the Company in its sole discretion, shall have the authority to place such
restrictions upon the investment directions of any person who is subject to Section 16(b) of the
Securities Exchange Act of 1934 as amended (“Insider”) as shall be appropriate to comply with such
section. Such restrictions shall include, but shall not be limited to the following: Insiders
shall be permitted to submit investment directions relating to Company Stock only on a “semi-annual
date” which is no less than six (6) months after the date of the most recent investment direction
received from such Insider relating to Company Stock. For purposes of this Section 5.3, the term
“semi-annual date” shall mean a date which is within the period that begins the third business day
following the date on which the Company’s first fiscal quarter and third fiscal quarter summary
statements of sales and earnings shall be released and which ends on the twelfth business day
following such release date.

     4.4 Hypothetical Accounts and Creditor Status of Participants.

     The Accounts established under this Article V shall be hypothetical in nature and shall be
maintained for bookkeeping purposes only, so that Base Salary Deferrals, Bonus Deferrals, and
Discretionary Contributions can be credited to the Participant and so that earnings and losses on
such amounts so credited can be credited (or charged, as the case may be). Neither the Plan nor
any of the Accounts (or subaccounts) shall hold any actual funds or assets. The right of any
person to receive one or more payments under the Plan shall be an unsecured claim against the
general assets of the Company. Any liability of the Company to any Participant, former
Participant, or Beneficiary with respect to a right to payment shall be based solely upon
contractual obligations created by the Plan. Neither the Company, the Board, nor any other person
shall be deemed to be a trustee of any amounts to be paid under the Plan. Nothing contained in the
Plan, and no action taken pursuant to its provisions, shall create or be construed to create a
trust of any kind (other than a “rabbi trust”), or a fiduciary relationship, between the Company
and a Participant, former Participant, Beneficiary, or any other person.

     4.5 Investments.

     The Company may, in its sole discretion, set aside, in a separate account, “rabbi trust,” or
similar vehicle, amounts intended to be used for the payment of benefits hereunder, or acquire
insurance policies, annuities or other financial vehicles for the purpose of providing future
assets to the Company to meet its anticipated liabilities under the Plan. Such accounts, “rabbi
trusts,” policies, annuities, or other investments, shall at all times be and remain unrestricted
general property and assets of the Company or otherwise be subject to the claims of unsecured
creditors of the Company. Participants and Beneficiaries shall have no rights, other than as
general creditors, with respect to any such accounts, “rabbi trusts,” policies, annuities or other
acquired assets.

12

 

ARTICLE V

PAYMENT OF ACCOUNT

     5.1 Timing of Distribution of Accounts.

     Distribution of a Participant’s In-Service Distribution/Deferral Account shall be made or
shall commence to be made following the expiration of the Deferral Period selected by the
Participant for such Account. Notwithstanding the foregoing, upon a Separation from Service,
death, Disability, or Change in Control, all amounts remaining in a Participant’s In-Service
Distribution/Deferral Account(s) shall be transferred to the Participant’s Retirement/Deferral
Account and shall thereafter be distributed according to the time and form applicable for
distribution of the Participant’s Retirement/Deferral Account.

     A Participant’s Retirement/Deferral Account and Retirement/Company Contribution Account shall
be distributed to him (or his Beneficiary in the event of his death) as soon as practicable
following the earliest to occur of the following:

	 	(i)	 	the Participant’s death;
	 
	 	(ii)	 	the Participant’s Disability;
	 
	 	(iii)	 	a Change in Control; or
	 
	 	(iv)	 	six months after the
Participant’s Separation from Service.

     Distributions shall be made, or commence to be made, as soon as practicable after such
earliest event (in the case of the Retirement/Deferral Account and Retirement/Company Contribution
Account) or after the end of the Deferral Period (in the case of an In-Service
Distribution/Deferral Account), except as may otherwise be elected pursuant to Section 6.4, and
shall be made in such form as is applicable under Sections 6.3 and 6.4. Any distribution under
this Plan shall be treated as made on the date otherwise provided for such payment if it is made
not later than the Latest Payment Date with respect to such payment.

     5.2 Adjustment for Investment Gains and Losses Upon a Distribution.

     The balance of a Participant’s Account shall be determined as of the Valuation Date
immediately preceding the date of any distribution hereunder.

     5.3 Form of Payment.

     Except as provided below, the distribution of a Participant’s Retirement/Deferral Account and
Retirement/Company Contribution Account due to the Participant’s Separation from Service or
Disability and the distribution from a Participant’s In-Service Distribution/Deferral Account shall
be paid in one of the following forms as elected by the Participant:

13

 

	 	(a)	 	A single lump sum amount which is equal to the
applicable Account balance; or
	 
	 	(b)	 	Substantially equal annual installments, which
shall be treated as separate payments for purposes of Code Section
409A, amortized over a period of five (5) years. Gains and losses on
the unpaid balance shall continue to be credited or charged to the
Account in accordance with the provisions of Section 5.3. The amount
of the installments payable shall be changed annually to reflect
investment results.

The form so elected by a Participant with respect to his Retirement/Deferral Account and his
Retirement/Company Contribution Account shall apply to both of such Accounts, combined, and the
form so elected by a Participant with respect to an In-Service Distribution/Deferral Account shall
apply to such Account. In the event that a Participant fails to elect the form of payment for his
Retirement/Deferral Account and/or his Retirement/Company Contribution Account, such Account(s)
shall be paid in a single lump sum.

     In the event of a Change in Control, a Participant’s Account(s) shall be paid in a single lump
sum.

     In the event of death of a Participant (whether prior to or after the commencement of benefit
payment), the Participant’s Account(s) shall be paid in a single lump sum to the Participant’s
Beneficiary.

     Notwithstanding any elections made under this Plan, if there is a distributable event
described in Section 6.1 and the Participant’s total Account value is not more than Ten Thousand
Dollars ($10,000), then such benefit shall be paid in a single lump sum as soon as practicable
following distributable event.

     5.4 Change in Date or Form of Distribution.

     A Participant may elect to change the form of distribution of payable from his combined
Retirement/Deferral Account and Retirement/Company Contribution Account due to his Separation from
Service or Disability to another form available under Section 6.2 (or the date of one or more
installment payments otherwise provided hereunder) as many as two times, in accordance with such
procedures as may be adopted by the Administrator subject to Code Section 409A. A Participant may
also elect to change the time of commencement of distribution of his In-Service
Distribution/Deferral Account (or the date of one or more installment payments otherwise provided
hereunder) to another date or dates as many as two times, in accordance with such procedures as may
be adopted by the Administrator subject to Code Section 409A. Any such revision to the date or
form of any lump sum or installment payment under this section shall be made at least 12 months
prior to the distribution date previously in effect with respect to such amount and shall delay
distribution of such amount by at least 5 years from the date the payment would have otherwise been
made hereunder.

14

 

     5.5 Other Distributions.

     To the extent the Administrator determines to be consistent with Code Section 409A, the
Administrator may distribute all or part of a Participant’s Accounts (a) to pay employment taxes,
and any tax withholding as a result of the payment of such employment taxes, (b) to the extent that
all or such part of a Participant’s Accounts have become taxable under Code Section 409A or (c) to
the extent that acceleration of benefits is permissible in other limited circumstances pursuant to
regulations and other guidance under Code Section 409A.

     5.6 Designation of Beneficiaries.

     Each Participant shall have the right, at any time, to designate one (1) or more persons or an
entity as Beneficiary (both primary as well as secondary) to whom benefits under this Plan shall be
paid in the event of a Participant’s death prior to complete distribution of the Participant’s
Account. Each Beneficiary designation shall be in a written form prescribed by the Administrator
and will be effective only when filed with the Administrator during the Participant’s lifetime.
Designation by a married Participant of a Beneficiary other than the Participant’s spouse shall not
be effective unless the spouse executes a written consent that acknowledges the effect of the
designation and is witnessed by a notary public, or the consent cannot be obtained because the
spouse cannot be located.

     5.7 Change of Beneficiary Designation.

     Except as provided below, any nonspousal designation of Beneficiary may be changed by a
Participant without the consent of such Beneficiary by the filing of a new designation with the
Administrator. The filing of a new designation shall cancel all designations previously filed.

     5.8 Change in Marital Status.

     If the Participant’s marital status changes after the Participant has designated a
Beneficiary, the following shall apply:

	 	(a)	 	If the Participant is married at death but was
unmarried when the designation was made, the designation shall be void
unless the spouse has consented to it in the manner prescribed above.
	 
	 	(b)	 	If the Participant is unmarried at death but
was married when the designation was made:

	 	(i)	 	The designation shall be void if
the spouse was named as Beneficiary. The designation shall
remain valid if a nonspouse Beneficiary was named.
	 
	 	(ii)	 	If the Participant was married
when the designation was made and is married to a different
spouse at death, the designation shall be void unless the new
spouse has consented to it in the manner prescribed above.

15

 

     5.9 No Beneficiary Designation.

     If any Participant fails to designate a Beneficiary in the manner provided above, or if the
Beneficiary designated by a deceased Participant dies before the Participant or before complete
distribution of the Participant’s benefits, the Participant’s Beneficiary shall be the person in
the first of the following classes in which there is a survivor:

	 	(a)	 	The Participant’s surviving spouse;
	 
	 	(b)	 	The Participant’s children in equal shares,
except that if any of the children predeceases the Participant but
leaves issue surviving, then such issue shall take by right of
representation the share the parent would have taken if living;
	 
	 	(c)	 	The Participant’s parents;
	 
	 	(d)	 	The Participant’s estate.

     5.10 Unclaimed Benefits.

     In the case of a benefit payable on behalf of a Participant, if the Administrator is unable to
locate the Participant or Beneficiary to whom such benefit is payable, such benefit may be
forfeited to the Company, upon the Administrator’s determination. Notwithstanding the foregoing, if
subsequent to any such forfeiture the Participant or Beneficiary to whom such benefit is payable
makes a valid claim for such benefit, such forfeited benefit shall be paid by the Company or
restored to the Plan by the Company.

     5.11 Withdrawals for Unforeseeable Emergency.

     A Participant may apply in writing to the Administrator for, and the Administrator may permit,
a withdrawal of all or any part of a Participant’s Account constituting Base Salary, Bonus
Deferrals, and vested Discretionary Contributions, together with all earnings, gains and losses
thereon, if the Administrator, in its sole discretion, determines that the Participant has incurred
an unforeseeable emergency resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in section 152 of the Code without regard to Code
Sections 152(b)(1), (b)(2), and (d)(1)(B)) of the Participant, loss of the Participant’s property
due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result
of events beyond the control of the Participant. The amount that may be withdrawn shall be limited
to the amount reasonably necessary to relieve the emergency upon which the request is based, plus
the federal and state taxes due on the withdrawal, as determined by the Administrator. The
Administrator may require a Participant who requests a withdrawal on account of an unforeseeable
emergency to submit such evidence as the Administrator, in its sole discretion, deems necessary or
appropriate to substantiate the circumstances upon which the request is based.

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     5.12 Withholding.

     All deferrals and distributions shall be subject to legally required income and employment tax
withholding.

ARTICLE VI

ADMINISTRATION

     6.1 Administrator.

     The Plan shall be administered by the Administrator, which shall be such individual, entity or
committee as may be appointed by the Board, which may include a committee of the Board, or the
entire Board. The Administrator shall be responsible for the general operation and administration
of the Plan and for carrying out the provisions thereof. The Administrator may delegate to others
certain aspects of the management and operational responsibilities of the Plan including the
employment of advisors and the delegation of ministerial duties to qualified individuals, provided
that such delegation is in writing. No member of the Administrator who is a Participant shall
participate in any matter relating to his status as a Participant or his rights or entitlement to
benefits as a Participant.

     6.2 General Powers of Administration.

     The Administrator shall be the Plan Administrator under ERISA. The Administrator will be
responsible for the general administration of the Plan and will have all powers as may be necessary
to carry out the provisions of the Plan and may, from time to time, establish rules for the
administration of the Plan and the transaction of the Plan’s business. In addition to any powers,
rights and duties set forth elsewhere in this Plan, it will have the following powers and duties:

	 	(a)	 	To enact rules, regulations, and procedures and
to prescribe the use of such forms as it deems advisable;
	 
	 	(b)	 	To appoint or employ agents, attorneys,
actuaries, accountants, assistants or other persons (who may also be
Participants in this Plan or be employed by or represent the Company)
at the expense of the Company, as it deems necessary to keep its
records or to assist it in taking any other action authorized or
required under the Plan;
	 
	 	(c)	 	To interpret the Plan, and to resolve
ambiguities, inconsistencies and omissions, to determine any question
of fact, to determine the right to benefits of, and the amount of
benefits, if any, payable to, any person in accordance with the
provisions of the Plan and to resolve all questions arising under the
Plan;
	 
	 	(d)	 	To administer the Plan in accordance with its
terms and any rules and regulations it establishes; and

17

 

	 	(e)	 	To maintain records concerning the Plan as it
deems sufficient to prepare reports, returns and other information
required by the Plan or by law; and
	 
	 	(f)	 	To direct the Company to pay benefits under the
Plan, and to give other directions and instructions as may be necessary
for the proper administration of the Plan.

     Any decision, interpretation or other action made or taken by the Administrator arising out of
or in connection with the Plan, will be within the absolute discretion of the Administrator, and
will be final, binding and conclusive on the Company, and all Participants and Beneficiaries and
their respective heirs, executors, administrators, successors and assigns. The Administrator’s
determinations under the Plan need not be uniform, and may be made selectively among Participants,
whether or not they are similarly situated.

	 	6.3	 	Indemnification of Administrator, Claims Reviewer, and Board.

     The Company shall indemnify the Administrator, Claims Reviewer, Board (and any members
thereof) and their respective members, and any officers or employees of the Company or any
Affiliate to whom the Administrator, Claims Reviewer, Board, or the Company, delegates any of their
respective powers or authority under this Plan, against any and all claims, losses, damages,
expenses, including attorney’s fees, incurred by them, and any liability, including any amounts
paid in settlement with their approval, arising from their action or failure to act under this
Plan, except when the same is attributable to their gross negligence or willful misconduct.

ARTICLE VII

DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND ADMINISTRATION

	 	7.1	 	Claims.

     A Participant, Beneficiary or other person who believes that he or she is being denied a
benefit to which he or she is entitled (hereinafter referred to as “Claimant”), or his or her duly
authorized representative, may file a written request for such benefit with the Administrator
setting forth his or her claim. The request must be addressed to the Administrator at the Company
at its then principal place of business.

	 	7.2	 	Claim Decision.

     Upon receipt of a claim, the Administrator shall advise the Claimant that a reply will be
forthcoming within a reasonable period of time, but ordinarily not later than ninety (90) days, and
shall, in fact, deliver such reply within such period. However, the Administrator may extend the
reply period for an additional ninety days for reasonable cause. If the reply period will be
extended, the Administrator shall advise the Claimant in writing during the initial 90-day period
indicating the special circumstances requiring an extension and the date by which the Administrator
expects to render the benefit determination.

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     If the claim is denied in whole or in part, the Administrator will render a written opinion,
using language calculated to be understood by the Claimant, setting forth:

	 	(a)	 	the specific reason or reasons for the denial;
	 
	 	(b)	 	the specific references to pertinent Plan
provisions on which the denial is based;
	 
	 	(c)	 	a description of any additional material or
information necessary for the Claimant to perfect the claim and an
explanation as to why such material or such information is necessary;
	 
	 	(d)	 	appropriate information as to the steps to be
taken if the Claimant wishes to submit the claim for review, including
a statement of the Claimant’s right to bring a civil action under
Section 502(a) of ERISA following an adverse benefit determination on
review; and
	 
	 	(e)	 	the time limits for requesting a review of the
denial under Section 8.3 and for the actual review of the denial under
Section 8.4.

     If no notice is provided, the claim will be deemed denied. The interpretations,
determinations and decisions of the Administrator will be final and binding upon all persons with
respect to any right, benefit and privilege hereunder, subject to the review procedures set forth
in this Article.

	 	7.3	 	Request for Review of a Denied Claim.

     The Claims Reviewer shall be such individual, entity or committee as the Board may appoint
from time to time, which may include a committee of the Board, or the entire Board. Within sixty
(60) days after the receipt by the Claimant of the written opinion described above, the Claimant
may request in writing that the Claims Reviewer review the Administrator’s prior determination.
Such request must be addressed to the Claims Reviewer at the Company at its then principal place of
business. The Claimant or his or her duly authorized representative may submit written comments,
documents, records or other information relating to the denied claim, which information shall be
considered in the review under this Section without regard to whether such information was
submitted or considered in the initial benefit determination.

     The Claimant or his or her duly authorized representative shall be provided, upon request and
free of charge, reasonable access to, and copies of, all documents, records and other information
which (i) was relied upon by the Administrator in making its initial claims decision, (ii) was
submitted, considered or generated in the course of the Administrator making its initial claims
decision, without regard to whether such instrument was actually relied upon by the Administrator
in making its decision or (iii) demonstrates compliance by the Administrator with its
administrative processes and safeguards designed to ensure and to verify that benefit claims
determinations are made in accordance with governing Plan documents and that, where appropriate,
the Plan provisions have been applied consistently with respect to similarly situated claimants. If
the Claimant does not request a review of the Administrator’s determination within such 60-day
period, he or she shall be barred and estopped from challenging such determination.

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	 	7.4	 	Review of Decision.

     Within a reasonable period of time, ordinarily not later than sixty (60) days, after the
Claims Reviewer’s receipt of a request for review, it will review the Administrator’s prior
determination. If special circumstances require that the sixty-day time period be extended, the
Claims Reviewer will so notify the Claimant within the initial 60-day period indicating the special
circumstances requiring an extension and the date by which the Claims Reviewer expects to render
its decision on review, which shall be as soon as possible but not later than 120 days after
receipt of the request for review. In the event that the Claims Reviewer extends the determination
period on review due to a Claimant’s failure to submit information necessary to decide a claim, the
period for making the benefit determination on review shall not take into account the period
beginning on the date on which notification of extension is sent to the Claimant and ending on the
date on which the Claimant responds to the request for additional information.

     Benefits under the Plan will be paid only if the Claims Reviewer decides in its discretion
that the Claimant is entitled to such benefits. The decision of the Claims Reviewer shall be final
and non-reviewable, unless found to be arbitrary and capricious by a court of competent review.
Such decision will be binding upon the Company and the Claimant.

     If the Claims Reviewer makes an adverse benefit determination on review, the Claims Reviewer
will render a written opinion, using language calculated to be understood by the Claimant, setting
forth:

	 	(a)	 	the specific reason or reasons for the denial;
	 
	 	(b)	 	the specific references to pertinent Plan
provisions on which the denial is based;
	 
	 	(c)	 	a statement that the Claimant is entitled to
receive, upon request and free of charge, reasonable access to, and
copies of, all documents, records and other information which (i) was
relied upon by the Claims Reviewer in making its decision, (ii) was
submitted, considered or generated in the course of the Claims Reviewer
making its decision, without regard to whether such instrument was
actually relied upon by the Claims Reviewer in making its decision or
(iii) demonstrates compliance by the Claims Reviewer with its
administrative processes and safeguards designed to ensure and to
verify that benefit claims determinations are made in accordance with
governing Plan documents, and that, where appropriate, the Plan
provisions have been applied consistently with respect to similarly
situated claimants; and
	 
	 	(d)	 	a statement of the Claimant’s right to bring a
civil action under Section 502(a) of ERISA following the adverse
benefit determination on such review.

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	 	7.5	 	Discretionary Authority.

     The Administrator and Claims Reviewer shall both have discretionary authority to determine a
Claimant’s entitlement to benefits upon his claim or his request for review of a denied claim,
respectively, including full power and authority to interpret the Plan, to resolve ambiguities,
inconsistencies and omissions, to determine any question of fact, to determine the right to
benefits of, and the amount of benefits, if any, payable to, any person in accordance with the
provisions of the Plan and to resolve all questions arising under the Plan.

	 	7.6	 	Disability Claims.

     To the extent that the Administrator or the Claims Reviewer determines that the provisions of
applicable law or regulations require, or that it would otherwise be appropriate, with respect to
any claim or type of claim, that different or additional claims adjudication procedures be followed
under this Plan, then such different or additional claims adjudication procedures shall be followed
hereunder by the Administrator, Claims Reviewer, and as applicable, the Claimant and any other
party. Without limiting the generality of the forgoing, to the extent the determination of
Disability is made pursuant to a claim hereunder, rather than by the Social Security Administration
or in accordance with a disability insurance program of the Company or any Affiliate, then the
procedures set forth above shall be modified to the extent necessary to conform with the
requirements applicable for determinations of disability benefits under 29 CFR Section 2560.503-1,
including:

	 	(a)	 	The time for the initial determination of
benefit under Section 8.2 shall be 45 days (instead of 90 days), and
may be extended for two additional periods of 30 days each (instead of
one additional period of 90 days). A notice to the Claimant of any
such extension shall be provided prior to the start of the extension
and shall indicate that the Administrator has determined that the
extension is necessary due to matters beyond the control of the Plan,
the circumstances requiring the extension, the date by which a decision
is expected, the standards upon which entitlement to a Disability
benefit is based, the unresolved issues that prevent a decision on the
claim and the additional information needed to resolve the claim. The
Claimant shall be afforded at least 45 days in which to provide the
specified information (during which time, the period for the
Administrator to make a determination shall be tolled).
	 
	 	(b)	 	To the extent any internal rule, guideline,
protocol or similar criterion is relied upon in making an initial
adverse claims determination, then a copy of such rule, guideline,
protocol or criterion shall be available to the Claimant upon request,
free of charge.
	 
	 	(c)	 	The time for requesting a review under Section
8.3 of an initial adverse claims determination shall be 180 days
(instead of 60 days).

21

 

	 	(d)	 	The review under Section 8.4 by the Claims
Reviewer shall be made by a person or entity which is neither the
individual nor a subordinate of the individual who made the initial
determination of benefit. If the initial determination of benefit was
based in whole or in part on a medical judgment, the Claims Reviewer
shall consult with an appropriate health care professional who was not
consulted in the initial determination of benefit and who is not the
subordinate of the individual consulted in the initial claims
determination. In addition, the identity of the health care
professionals consulted in connection with the initial determination
and the determination on appeal shall be available to the Claimant upon
request.
	 
	 	(e)	 	The time for a decision to be rendered by the
Claims Reviewer on a request for review shall be 45 days (instead of 60
days), and may be extended for an additional 45 days (instead of 60
days).

AMENDMENT AND TERMINATION

	 	7.7	 	Power to Amend or Terminate.

     The Company reserves the right to retroactively or prospectively amend, modify or terminate
this Plan at any time, for any reason, as to any or all Participants, as evidenced by an instrument
in writing executed in the name of the Company by a proper officer or officers of the Company,
acting pursuant to authorization or ratification by the Board, but no such amendment, modification
or termination shall reduce the amounts credited to any Participant’s Accounts, as determined as of
the earlier of the date of such amendment, modification or termination or the date which the
Company notifies Participants is the effective date of such amendment, modification or termination.

	 	7.8	 	Distribution Upon Plan Termination.

     In the event that the Plan is terminated and distribution is permitted by Code Section 409A,
the balance in a Participant’s Account shall be paid to such Participant or his Beneficiary in such
manner as the Company may determine is in accordance with the provisions of Code Section 409A.
Until distribution, gains and losses shall continue to be credited or charged to the Account in
accordance with the provisions of Section 5.3.

MISCELLANEOUS

	 	7.9	 	Plan Not a Contract of Employment.

     The adoption and maintenance of the Plan shall not be or be deemed to be a contract between
the Company or any Affiliate and any person or to be consideration for the employment of any
person. Nothing herein contained shall give or be deemed to give any person the right to be
retained in the employ of the Company or any Affiliate or to restrict the right of the Company or
any Affiliate to discharge any person at any time.

22

 

	 	7.10	 	Non-Assignability of Benefits.

     No Participant, Beneficiary or distributee of benefits under the Plan shall have any power or
right to transfer, assign, anticipate, hypothecate or otherwise encumber any part or all of the
amounts payable hereunder, which are expressly declared to be unassignable and non-transferable.
Any such attempted assignment or transfer shall be void. No amount payable hereunder shall, prior
to actual payment thereof, be subject to seizure by any creditor of any such Participant,
Beneficiary or other distributee for the payment of any debt, judgment, or other obligation, by a
proceeding at law or in equity, nor transferable by operation of law in the event of the
bankruptcy, insolvency or death of such Participant, Beneficiary or other distributee hereunder.

	 	7.11	 	Severability.

     If any provision of this Plan shall be held illegal or invalid for any reason, said illegality
or invalidity shall not affect the remaining provisions hereof; instead, each provision shall be
fully severable and the Plan shall be construed and enforced as if said illegal or invalid
provision had never been included herein, and the Company may, in its sole discretion, amend the
provision or term in a manner which it determines is valid and enforceable and which most nearly
carries out the intent and purpose of the original provision.

	 	7.12	 	Governing Laws.

     All provisions of the Plan shall be construed in accordance with the internal laws (but not
the choice of laws) of Ohio, except to the extent preempted by federal law.

	 	7.13	 	Binding Effect.

     This Plan shall be binding on each Participant and his heirs and legal representatives and on
the Company and its successors and assigns.

	 	7.14	 	Entire Agreement.

     This writing constitutes the final and complete embodiment of the Plan, and all prior
understandings and communications between the Company, any Affiliate, Participants and any other
party hereunder, oral or written, concerning the Plan are hereby renounced, revoked, and
superseded. No oral or written communications or documents, other than written Plan amendments
duly adopted hereunder, may alter or vary the terms of this Plan, except that the Company may, by
written agreement with an employee or beneficiary, resolve any dispute or issue regarding the
application of the Plan to such individual, or the Company may, as evidenced in writing signed by
two officers of the Company other than the individual affected (and acting pursuant to
authorization or ratification by the Board), stipulate to special provisions applicable only to
such individual.

23

 

	 	7.15	 	Code Section 409A.

     Notwithstanding anything to the contrary in the provisions of this Plan regarding the benefits
payable hereunder and the time and form thereof, this Plan is intended to meet any applicable
requirements of Code Section 409A and this Plan shall be construed and administered in accordance
with Section 409A of the Code, Department of Treasury regulations and other interpretive guidance
issued thereunder, including without limitation any such regulations or other guidance that may be
issued after the Effective Date. In the event that the Company determines that any provision of
this Plan or the operation thereof may violate Section 409A of the Code and related Department of
Treasury guidance, the Company may in its sole discretion adopt such amendments to this Plan and
appropriate policies and procedures, including amendments and policies with retroactive effect, or
take such other actions, as the Company determines necessary or appropriate to comply with the
requirements of Section 409A of the Code.

	 	7.16	 	No Guaranty or Responsibility Regarding Tax or Legal
Consequences.

     Notwithstanding any provision of this Plan to the contrary (including without limitation
Section 10.7), the Company, Affiliates, Board, Administrator, and Claims Reviewer make no
representation, warranty, commitment, or guaranty, and assume no responsibility, concerning the
income, employment, or other tax consequences, or any other legal, tax, or other implications or
effects under federal, state, or local law, of the Plan, participation in the Plan, or any Plan
Accounts or benefits. Participants and Beneficiaries shall be solely responsible for any and all
legal, tax, or other implications or effects of the Plan on them or their estates, heirs,
successors or assigns. The Company, Affiliates, Board, Administrator, and Claims Reviewer, and any
person acting as a delegatee or assistant of any of them hereunder, shall have no obligation,
liability or responsibility to a Participant or Beneficiary in connection with the Plan except as
expressly provided hereunder.

	 	7.17	 	Use of Alternative Technologies to Make Elections.

     Notwithstanding any provision of this Plan to the contrary, the Administrator may adopt rules
and procedures to permit or require any elections or consents by Participants, former Participants,
or Beneficiaries (including those regarding deferrals, investments, designation of beneficiaries,
withdrawals and distributions) to be made in such form (including in writing, orally,
telephonically, or electronically) as the Administrator may determine, in its sole discretion,
regardless of whether this Plan would otherwise require such elections to be in writing.

24

 

     IN WITNESS WHEREOF, the Company has caused this Plan to be executed on this 1st day
of June, 2007.

	 	 	 	 	 
	 	HAWK CORPORATION

 	 
	 	By  	/s/ Ronald E. Weinberg
 	 
	 	 	Ronald E. Weinberg, Chairman, 	 
	 	 	President and CEO 	 
	 

	 	 	 	 	 
	 	 	 
	 	And  	                                                      /s/ Thomas A. Gilbride
 	 
	 	 	Thomas A. Gilbride, Vice President – 	 
	 	 	Finance and Treasurer 	 
	 

25

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