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Employment Agreement

EMPLOYMENT AGREEMENT

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

R E C I T A L S :

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

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

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

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

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

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

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

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

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

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