8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of

the Securities Act of 1934

Date of Report: February 2, 2007

(Date of earliest event reported)

Hawk Corporation

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation) 001-13797 (Commission File Number) 34-1608156 (I.R.S. Employer Identification Number)

200 Public Square, Suite 1500, Cleveland, Ohio 44114

(Address of principal executive offices including zip code)

(216) 861-3553

(Registrant’s telephone number, including area code)

      Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01Entry into a Material Definitive Agreement

On February 2, 2007, Hawk Corporation (“Hawk”) completed the sale of the stock of its wholly-owned precision components subsidiary, Hawk Precision Components Group, Inc. (“HPCG”), to PCG Holdings Group Inc. (“PCG Holdings”), as more fully described in Item 2.01. In connection with the sale, Hawk and certain of its subsidiaries modified Hawk’s existing credit facility by entering into the Amendment No. 2 and Consent to Credit and Security Agreement and Omnibus Amendment to Certain Other Loan Documents with KeyBank National Association (“KeyBank”) on February 2, 2007 (the “Amendment and Consent”). Pursuant to the Amendment and Consent, KeyBank consented to:

·   the sale of HPCG and its subsidiaries,

·   the release of liens on the stock or assets of HPCG and its subsidiaries,

·   if Hawk is required to use the proceeds of the sale of HPCG and its subsidiaries to redeem its 8¾% senior notes due 2014, the use of the sale proceeds for such redemption, and

·   the continuation during a transition period of certain guarantees made by Hawk until such guarantees are transferred to PCG Holdings.

In addition, all references to HPCG and its subsidiaries were deleted from Hawk’s credit facility and all existing pledge agreements, landlord waivers and limited license agreements between HPCG and its subsidiaries and KeyBank were terminated.

The description of the Amendment and Consent set forth above is not complete and is qualified in its entirety by reference to the full and complete terms of the Amendment and Consent, which is attached as Exhibit 10.1 to this Current Report on Form 8-K.

The disclosure under Item 2.01 of this Form 8-K is also responsive to Item 1.01 of this Form 8-K and is incorporated in this Item 1.01 by reference.

Item 2.01.Completion of Acquisition or Disposition of Assets.

On February 2, 2007, Hawk completed the sale of the stock of HPCG to PCG Holdings, an acquisition entity formed by Saw Mill Capital Partners, L.P. (“Saw Mill”) and certain members of HPCG’s management team for $94.2 million, consisting of $93.5 million in cash and the assumption by Saw Mill of $0.7 million in debt. The cash portion of the purchase price included proceeds from a preliminary working capital adjustment which remains subject to further adjustment by the parties. The sale of HPCG was made pursuant to the Purchase Agreement between Hawk and PCG Holdings dated as of December 21, 2006 (the “Purchase Agreement”), previously disclosed on the Current Report on Form 8-K dated December 21, 2006, filed with the Securities and Exchange Commission. A copy of the press release announcing the completion of the sale is attached as Exhibit 99.1 to this Form 8-K.

On February 2, 2007, Hawk also entered into a letter agreement (the “Letter Agreement”) with PCG Holdings amending the Purchase Agreement. Under the Letter Agreement, Hawk and Saw Mill agreed:

·   to allocate $9.35 million to the noncompetition, nonsolicitation and confidentiality agreement entered into by Hawk and $3.4 million to the operations of HPCG in China, and

·   to replace and supplement an exhibit and disclosure schedule attached to the Purchase Agreement.

The Letter Agreement and the Amendment and Consent were entered into on February 2, 2007 and were effective as of February 1, 2007.

The foregoing description of the Purchase Agreement and the Letter Agreement are not complete and are qualified in their entirety by reference to the full and complete terms of the Purchase Agreement and Letter Agreement. The Purchase Agreement was filed as Exhibit 10.1 to the Current Report on Form 8-K dated December 21, 2006 and the Letter Agreement is filed as Exhibit 10.3 to this Form 8-K. The Purchase Agreement and the Letter Agreement are incorporated herein by reference.

Item 9.01.Financial Statements and Exhibits.

(b)Pro Forma Financial Information

Included as Exhibit 99.2 to this Current Report on Form 8-K are:

·   unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2006 and the year ended December 31, 2005 that give effect to the sale of HPCG and its subsidiaries as if the sale had occurred on January 1, 2005, and

·   an unaudited pro forma condensed consolidated balance sheet as of September 30, 2006 that gives effect to the sale of HPCG and its subsidiaries as if the sale had occurred on September 30, 2006.

These unaudited pro forma financial statements are presented for illustrative purposes only and are not necessarily indicative of the operating results or the financial position that would have been achieved by Hawk had the sale of HPCG and its subsidiaries been completed as of the dates indicated or of the results that may be obtained in the future. These unaudited pro forma financial statements and the accompanying notes should be read together with Hawk’s annual report on Form 10-K for the year ended December 31, 2005 and Hawk’s quarterly report on Form 10-Q for the quarter ended September 30, 2006.

(d)Exhibits

10.1 Amendment No. 2 and Consent to Credit and Security Agreement and Omnibus Amendment to Certain Other Loan Documents, effective as of February 1, 2007 among Hawk Corporation, Allegheny Clearfield, Inc., Friction Products Co., Hawk MIM, Inc., Hawk Motors, Inc., Hawk Precision Components Group, Inc., Helsel, Inc., Logan Metal Stampings, Inc., Net Shape Technologies LLC, Quarter Master Industries, Inc., Sinterloy Corporation, S.K. Wellman Corp., S.K. Wellman Holdings, Inc., Tex Racing Enterprises, Inc., Wellman Products Group, Inc. and Wellman Products, LLC and KeyBank National Association, as Administrative Agent and LC Issuer

10.2 Stock Purchase Agreement by and between PCG Holdings Group Inc., as Buyer, and Hawk Corporation, as Selling Shareholder, dated as of December 21, 2006 (filed as Exhibit 10.1 to the Company’s Form 8-K, dated December 21, 2006, as filed with the Securities and Exchange Commission) is incorporated herein by reference

10.3 Letter Agreement, effective as of February 1, 2007 between Hawk Corporation and PCG Holdings Group, Inc.

99.1 Hawk Corporation Press Release dated February 2, 2007

99.2 Unaudited Pro Forma Financial Statements

(i)   Unaudited Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 2006

(ii)   Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2005

(iii)   Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2006

(iv)   Notes to Unaudited Pro Forma Consolidated Financial Statements

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HAWK CORPORATION
Date: February 8, 2007	By:	/s/ Thomas A. Gilbride
		Thomas A. Gilbride
		Vice President - Finance and Treasurer

EXHIBIT INDEX

Exhibit Number Description

10.1 Amendment No. 2 and Consent to Credit and Security Agreement and Omnibus Amendment to Certain Other Loan Documents, effective as of February 1, 2007 among Hawk Corporation, Allegheny Clearfield, Inc., Friction Products Co., Hawk MIM, Inc., Hawk Motors, Inc., Hawk Precision Components Group, Inc., Helsel, Inc., Logan Metal Stampings, Inc., Net Shape Technologies LLC, Quarter Master Industries, Inc., Sinterloy Corporation, S.K. Wellman Corp., S.K. Wellman Holdings, Inc., Tex Racing Enterprises, Inc., Wellman Products Group, Inc. and Wellman Products, LLC and KeyBank National Association, as Administrative Agent and LC Issuer 

10.2 Stock Purchase Agreement by and between PCG Holdings Group Inc., as Buyer, and Hawk Corporation, as Selling Shareholder, dated as of December 21, 2006 (filed as Exhibit 10.1 to the Company’s Form 8-K, dated December 21, 2006, as filed with the Securities and Exchange Commission) is incorporated herein by reference

10.3 Letter Agreement dated February 1, 2007 between Hawk Corporation and PCG Holdings Group, Inc.

99.1 Hawk Corporation Press Release dated February 2, 2007

99.2 Unaudited Pro Forma Financial Statements

(i)   Unaudited Pro Forma Consolidated Statement of Operations for the nine months ended September 30, 2006

(ii)   Unaudited Pro Forma Consolidated Statement of Operations for the year ended December 31, 2005

(iii)   Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2006

EX-10.1

EXHIBIT 10.1

AMENDMENT NO. 2 AND CONSENT

to

CREDIT AND SECURITY AGREEMENT

and

OMNIBUS AMENDMENT TO CERTAIN OTHER LOAN DOCUMENTS

This AMENDMENT NO. 2 AND CONSENT TO CREDIT AND SECURITY AGREEMENT AND OMNIBUS AMENDMENT TO CERTAIN OTHER LOAN DOCUMENTS, made as of February 1, 2007 (this “Amendment”), among HAWK CORPORATION, a Delaware corporation, ALLEGHENY CLEARFIELD, INC., a Pennsylvania corporation, FRICTION PRODUCTS CO., an Ohio corporation, HAWK MIM, INC., an Ohio corporation, HAWK MOTORS, INC., a Delaware corporation, HAWK PRECISION COMPONENTS GROUP, INC., an Ohio corporation, HELSEL, INC., a Delaware corporation, LOGAN METAL STAMPINGS, INC., an Ohio corporation, NET SHAPE TECHNOLOGIES LLC, a Delaware limited liability company, QUARTER MASTER INDUSTRIES, INC., a Delaware corporation, SINTERLOY CORPORATION, a Delaware corporation, S.K. WELLMAN CORP., a Delaware corporation, S.K. WELLMAN HOLDINGS, INC., a Delaware corporation, TEX RACING ENTERPRISES, INC., a Delaware corporation, WELLMAN PRODUCTS GROUP, INC., an Ohio corporation,and WELLMAN PRODUCTS, LLC, an Ohio limited liability company, each as a Borrower and collectively as the Borrowers, the LENDERS listed on the signature pages of this Agreement, KEYBANK NATIONAL ASSOCIATION, a national banking association, as Administrative Agent, and KEYBANK NATIONAL ASSOCIATION, a national banking association, as LC Issuer,

WITNESSETH:

WHEREAS, the Borrowers have been extended certain financial accommodations pursuant to that certain Credit and Security Agreement, dated as of November 1, 2004, as amended by that certain Amendment No. 1 to Credit and Security Agreement, dated as of August 31, 2006 (as so amended, the “Credit Agreement”), among the Borrowers, the Lenders, the Administrative Agent, and the LC Issuer;

WHEREAS, the Borrower Representative has informed the Administrative Agent that Hawk Corporation desires to sell Hawk Precision Components Group, Inc. and certain of its direct or indirect Subsidiaries, namely, Allegheny Clearfield, Inc., Hawk MIM, Inc., Helsel, Inc., Sinterloy Corporation, and Net Shape Technologies LLC, in one or more stock transactions (the “Sale”);

WHEREAS, the Borrower Representative has also informed the Administrative Agent that prior to the sale of Hawk Precision Components Group, Inc., certain subsidiaries of Helsel, Inc. shall be transferred to Wellman Products Group, Inc., namely Hawk Mauritius, Ltd. Hawk Motors, Inc., and Hawk Motors de Mexico, S. de R.L. de C.V. (the “Transfer”);

WHEREAS, the Borrowers have requested consent to the Sale and the Transfer and all releases and amendments required pursuant to such transactions; and

WHEREAS, the Lenders which are signatories hereto constitute all of the Lenders for the purposes of amending the Credit Agreement pursuant to Section 19.1 thereof;

NOW THEREFORE, in consideration of the mutual promises and agreements contained herein and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Borrowers, the Administrative Agent, the Lenders and the LC Issuer do hereby agree as follows:

Section 1.DEFINED TERMS.

Each defined term used herein and not otherwise defined herein shall have the meaning ascribed to such term in the Credit Agreement.

Section 2CONSENT.

2.1Consents. In accordance with Section 19.1 of the Credit Agreement, the Required Lenders hereby consent to:

(a)the transfer by Helsel, Inc. of the shares of Hawk Mauritius, Ltd., Hawk Motors, Inc., and Hawk Motors de Mexico, S. de R.L. de C.V to Wellman Products Group, Inc.;

(b)the transactions contemplated in that certain Stock Purchase Agreement, dated as of December 21, 2006 (the “Purchase Agreement”), among the Hawk Corporation, as Selling Shareholder, and PCG Holdings Group Inc., as Buyer (the “Buyer”), including the sale or other disposition of Hawk Precision Components Group, Inc., and its Subsidiaries: Allegheny Clearfield, Inc., Hawk MIM, Inc., Helsel, Inc., Sinterloy Corporation, and Net Shape Technologies LLC (Hawk Precision Components Group, Inc. together with such Subsidiaries collectively referred to as “Sold Subsidiaries”);

(c)the release of the Liens of the Administrative Agent for the benefit of the Lenders on (i) the stock or other equity interests of the Sold Subsidiaries and (ii) all of the personal property and assets of the Sold Subsidiaries which are being acquired by the Buyer pursuant to the terms of the Purchase Agreement;

(d)the application of any or all of the proceeds remaining one hundred eighty (180) days after the date the transactions contemplated in the Purchase Agreement are consummated to the redemption of Senior Notes in accordance with the terms and conditions set forth in the Senior Note Indenture; and;

(e)the continuation of certain guarantees provided by Hawk Corporation to secure indebtedness of Allegheny Clearfield, Inc. to the Pennsylvania Industrial Development Authority ("PIDA") during the transition period in which such obligations shall be transferred to Buyer; provided, however, that Hawk Corporation shall use its best efforts to obtain a full release from such guarantee obligations no later than April 30, 2007.

Section 3AMENDMENTS TO THE CREDIT AGREEMENT:

3.1Omnibus Amendment to Credit Agreement and Certain Other Loan Documents. All references to any of the Sold Subsidiaries in the recitals or signature pages of the Credit Agreement shall be deleted and the Sold Subsidiaries shall no longer be party to such documents.

3.2Amendment to Annex II to the Credit Agreement. Annex II to the Credit Agreement is hereby amended by deleting the existing definition of “Borrowers” and replacing it with the following new definition:

“Borrowers” means collectively, Hawk Corporation, a Delaware corporation, Friction Products Co., an Ohio corporation, Hawk Motors, Inc., a Delaware corporation, Logan Metal Stampings, Inc., an Ohio corporation, Quarter Master Industries, Inc., a Delaware corporation, S.K. Wellman Corp., a Delaware corporation, S.K. Wellman Holdings, Inc., a Delaware corporation, Tex Racing Enterprises, Inc., a Delaware corporation, Wellman Products Group, Inc., an Ohio corporation, and Wellman Products, LLC, an Ohio limited liability company.

3.3Amendment to Annex IV to Credit Agreement. Annex IV to the Credit Agreement is hereby amended by deleting the existing Annex IV and replacing it with the Annex IV attached hereto as Exhibit I. In addition, within thirty (30) days of the date of this Amendment, the Company shall deliver to the Administrative Agent, any additional updates to such Disclosure Schedules, in form and substance satisfactory to the Administrative Agent, provided, however, that the Borrowers understand that such updates shall not be permitted to include additions to Schedules 11.3(a), 11.3(c), 11.3(d), 11.3(i), or 11.3(l).

Section 4OMNIBUS AMENDMENTS TO CERTAIN OTHER LOAN DOCUMENTS:

4.1Omnibus Amendment to Certain Other Loan Documents. All references to any of the Sold Subsidiaries in the recitals or signature pages of the Notes, the Collateral Assignment of Security Interest Patents and Patent Applications, the Collateral Assignment of Security Interest in Trademarks and Licenses, the Collateral Assignment of Security Interest in Copyrights, the Advertising Permission Letter, the Blocked Account Control Letter, and the Acknowledgement of Blocked Accounts is hereby deleted and the Sold Subsidiaries shall no longer be party to such documents.

4.2Amendment to Certain Pledge and Security Agreements. The Pledge and Security Agreement between Hawk Corporation and the Administrative Agent and the Pledge Agreement between Wellman Products Group, Inc. and the Administrative Agent are each hereby amended to replace the respective Schedule I with the respective Schedule I attached hereto as Exhibit II.

4.3Termination of Certain Pledge and Security Agreements. The Pledge and Security Agreement between Hawk Precision Components, Inc. and the Administrative Agent and the Pledge Agreement between Helsel, Inc. and the Administrative Agent are each hereby terminated and released and the Pledged Shares (except with respect to the shares of Hawk Mauritius, Ltd. Hawk Motors, Inc., and Hawk Motors de Mexico, S. de R.L. de C.V to Wellman Products Group, Inc. which shall remain in the possession of the Administrative Agent) shall be promptly returned to the Sold Subsidiaries.

4.4Termination of Certain Landlord Waivers. The Landlord Waiver between Net Shape Technologies, Ltd. and Solon Road Properties, LLC and the Landlord Waiver between Sinterloy Corporation and Robert Sierkes, Trustee are each hereby terminated and released.

4.5Amendment to Certain Limited License Agreements. The Limited License Agreement between Hawk Corporation and the Administrative Agent is hereby amended to replace the respective Exhibit A with the respective Exhibit A attached hereto as Exhibit III.

4.6Termination of Certain Limited License Agreements. The Limited License Agreement between Allegheny Clearfield, Inc. and the Administrative Agent, the Limited License Agreement between Hawk MIM, Inc. and the Administrative Agent, the Limited License Agreement between Hawk Precision Components, Inc. and the Administrative Agent, the Limited License Agreement between Helsel, Inc. and the Administrative Agent, the Limited License Agreement between New Shape Technologies, LLC and the Administrative Agent, and the Limited License Agreement between Sinterloy Corporation and the Administrative Agent are each hereby terminated and released.

4.7Amendment to Certain Collateral Assignments of Security Interest in Patents and Patent Applications. The Collateral Assignment of Security Interest in Patent and Patent Applications by and among the Borrowers and the Administrative Agent is hereby amended to replace the respective Exhibit A with the respective Exhibit A attached hereto as Exhibit IV.

4.8Amendment to Certain Collateral Assignments of Security Interest in Trademarks and Licenses. The Collateral Assignment of Security Interest in Trademarks and Licenses by and among the Borrowers and the Administrative Agent is hereby amended to replace the respective Exhibit A with the respective Exhibit A attached hereto as Exhibit V.

4.9Amendment to Blocked Account Control Agreement. The Blocked Account Control Agreement by and among the Borrowers, the Administrative Agent, and JPMorgan Chase Bank is hereby amended to replace the respective Schedule 1 with Schedule 1 attached hereto as Exhibit VI.

4.10Amendment to Acknowledgement of Blocked Accounts. The Acknowledgement of Blocked Accounts by and among the Borrowers, the Administrative Agent, and KeyBank National Association, as the Bank is hereby amended to replace the respective Schedule I with Schedule I attached hereto as Exhibit VII.

Section 5REPRESENTATIONS AND WARRANTIES.

The Borrower hereby represents and warrants to the Lenders, the Administrative Agent and the LC Issuer as follows:

5.1The Amendment. This Amendment has been duly and validly executed by an authorized executive officer of the Borrowers and constitutes the legal, valid and binding obligation of the Borrowers enforceable against the Borrowers in accordance with its terms. The Credit Agreement, as amended by this Amendment, remains in full force and effect and remains the valid and binding obligation of the Borrowers enforceable against the Borrowers in accordance with its terms. Each Borrower hereby ratifies and confirms the Credit Agreement as amended by this Amendment.

5.2Nonwaiver. Except as expressly set forth herein, the execution, the execution, delivery, performance and effectiveness of this Amendment shall not operate nor be deemed to be nor construed as a waiver (i) of any right, power or remedy of the Lenders or the Administrative Agent under the Credit Agreement or any other Loan Document, or (ii) of any term, provision, representation, warranty or covenant contained in the Credit Agreement or any other documentation executed in connection therewith. Further, none of the provisions of this Amendment shall constitute, be deemed to be or construed as, a waiver of any Potential Default or Event of Default under the Credit Agreement, as amended by this Amendment.

5.3Reference to and Effect on the Credit Agreement. Upon the Effectiveness of this Amendment, each reference in the Credit Agreement amended hereby to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import shall mean and be a reference to the Credit Agreement, as amended by the prior amendments thereto and this Amendment and each reference to the Credit Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Credit Agreement shall mean and be a reference to the Credit Agreement, as amended by the prior amendments thereto and this Amendment.

Section 6CONDITIONS PRECEDENT TO EFFECTIVENESS

The effectiveness of this Amendment is subject to the condition precedent that:

6.1Amendment No. 2 and Consent to Credit and Security Agreement. The Administrative Agent shall have received an original counterpart of this Amendment No. 2 and Consent to Credit and Security Agreement, executed and delivered by a duly authorized officer of each Borrower, the Lenders and the LC Issuer.

6.2Release Agreement. The Administrative Agent shall have received an original counterpart of that certain Release Agreement, dated as of even date herewith, executed and delivered by a duly authorized officer of each Borrower which shall exist after the consummation of Sale and the Sold Subsidiaries.

Section 7CONDITIONS SUBSEQUENT TO EFFECTIVENESS

The effectiveness of this Amendment is subject to the condition subsequent that:

7.1Consummation of the Sale. The Administrative Agent shall have received written evidence in the form of a Borrower Certificate stating that the Sale has been consummated pursuant to the terms of the Purchase Agreement and certifying a true and complete copy of the Purchase Agreement. In the event that the Sale is not consummated on or before February 1, 2007, this Amendment shall be of no further force and effect.

Section 8MISCELLANEOUS.

8.1Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Ohio with out giving effect to the conflict of laws rules thereof.

8.2Severability. In the event any provision of this Amendment should be invalid, the validity of the other provisions hereof and of the Credit Agreement shall not be affected thereby.

8.3Counterparts. This Amendment may be executed in one or more counterparts, each of which, when taken together, shall constitute but one and the same agreement.

IN WITNESS WHEREOF, the Borrowers, the Administrative Agent, the Lenders and the LC Issuer have caused this Amendment No. 2 and Consent to Credit and Security Agreement to be duly executed by their respective officers or agents thereunto duly authorized as of the date first written above.

BORROWERS

HAWK CORPORATION

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

ALLEGHENY CLEARFIELD, INC.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

FRICTION PRODUCTS CO.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

HAWK MIM, INC.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

HAWK MOTORS, INC.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

HAWK PRECISION COMPONENTS GROUP, INC.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

HELSEL, INC.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

LOGAN METAL STAMPINGS, INC.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

NET SHAPE TECHNOLOGIES LLC

By: Hawk MIM, Inc., its sole member

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

QUARTER MASTER INDUSTRIES, INC.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

SINTERLOY CORPORATION

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

S.K. WELLMAN CORP.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

S.K. WELLMAN HOLDINGS, INC.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

TEX RACING ENTERPRISES, INC.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

WELLMAN PRODUCTS GROUP, INC.

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

WELLMAN PRODUCTS, LLC

By: Wellman Products Group, Inc.,

its sole member

/s/ Thomas A. Gilbride

By: Thomas A. Gilbride

Its: Vice President - Finance

ADMINISTRATIVE AGENT

KEYBANK NATIONAL ASSOCIATION

as Administrative Agent

/s/ John P. Dunn

By: John P. Dunn

Its: Vice President

LENDERS

KEYBANK NATIONAL ASSOCIATION

as a Lender

/s/ John P. Dunn

By: John P. Dunn

Its: Vice President

LC ISSUER

KEYBANK NATIONAL ASSOCIATION

as LC Issuer

/s/ John P. Dunn

By: John P. Dunn

Its: Vice President

EX-10.3

EXHIBIT 10.3

LETTER AGREEMENT

This letter agreement (this “Agreement”) is dated as of February 1, 2007, by and between Hawk Corporation, a Delaware corporation (“Selling Shareholder”), and PCG Holdings Group Inc., a Delaware corporation (“Buyer”).

Reference is hereby made to the Stock Purchase Agreement by and between Buyer and Selling Shareholder, dated as of December 21, 2006 (as such agreement may be amended or otherwise modified from time to time, the “Purchase Agreement”). Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Purchase Agreement.

In consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

1.   Pursuant to Section 2.7(a) of the Purchase Agreement, each of Selling Shareholder and Buyer acknowledges and agrees that (i) ten percent (10%) of the Purchase Price shall be allocated to the covenants granted to Buyer pursuant to the Noncompetition Agreement and (ii) $3,400,000 shall be allocated to the operations of the Acquired Company in China.

2.   The document that was attached to the Purchase Agreement as Exhibit 2.3(a) on the date of execution of the Purchase Agreement shall be of no further force or effect and shall be replaced in its entirety with the document included under Annex I attached hereto.

          3. Pursuant to Section 5.4 of the Purchase Agreement, Schedule 3.26 shall be supplemented and replaced in its entirety with the Disclosure Schedule Supplement included under Annex II attached hereto.

          4. The terms and provisions of Sections12.4, 12.6, 12.7, 12.8, 12.11, 12.12, 12.13, 12.14 and 12.15 of the Purchase Agreement are expressly incorporated by reference into this Agreement.

          5. The effective time of the Closing is 12:01 a.m. on February 1, 2007

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first written above.

Buyer:

PCG HOLDINGS GROUP INC.

By:/s/ Scott A. Budoff

Name:Scott A. Budoff

Title:President

Selling Shareholder:

HAWK CORPORATION

By:/s/ Joseph J. Levanduski

Name:Joseph J. Levanduski

Title:Vice President - CFO

EX-99.1

EXHIBIT 99.1

Hawk Completes Sale of its

Precision Components Segment

CLEVELAND, Ohio - February 2, 2007 - Hawk Corporation (AMEX:HWK) announced today that the Company has completed the sale of its precision components segment to an entity formed by Saw Mill Capital Partners, L.P. and certain members of the segment’s management team for approximately $94.2 million consisting of $93.5 million in cash and the assumption by Saw Mill of $0.7 million in debt. The cash portion of the purchase price includes proceeds from a preliminary working capital adjustment which remains subject to further adjustment by the parties. Hawk intends to use the proceeds of the transaction for growth opportunities in the Company’s friction products and performance racing segments either internally or through acquisitions, to retire debt and for general corporate purposes, including the possibility of a limited stock buy-back, the details of which will be subsequently announced if Hawk determines to pursue a stock buy-back.

The precision components segment will be reflected as a discontinued operation in the Company’s December 31, 2006 financial results.

The Company

Hawk Corporation is a leading worldwide supplier of highly engineered products. Its friction products group is a leading supplier of friction materials for brakes, clutches and transmissions used in airplanes, trucks, construction and mining equipment, farm equipment, recreational and performance automotive vehicles. The Company’s performance racing group manufactures clutches and gearboxes for motorsport applications and performance automotive markets. Headquartered in Cleveland, Ohio, Hawk has approximately 1,100 employees at 11 manufacturing, research, sales and administrative sites in 5 countries.

Saw Mill Capital Partners, L.P.

Saw Mill Capital Partners, L.P. is an investment fund managed by Saw Mill Capital LLC, a middle market private equity firm founded in 1997 that acquires manufacturing and service companies with enterprise values of $25 to $150 million. To learn more about Saw Mill Capital, visit their website at www.sawmillcapital.com.

Forward Looking Statements

This press release includes forward-looking statements concerning the use of proceeds of the sale of the Company’s precision components segment, the possibility of a stock buy-back, the repayment of debt and other statements that involve risks and uncertainties. These forward-looking statements are based upon management's expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company that could cause actual results to differ materially from such statements. These risks, uncertainties and other factors include, but are not limited to, decisions by the Company regarding the use of proceeds from the sale, acquisition opportunities, the satisfaction of limitations on the use of proceeds contained in the Company’s financing arrangements and market conditions. Reference is made to Hawk’s filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2005, its quarterly reports on Form 10-Q, and other periodic filings, for a description of other factors that could cause actual results to differ materially from those in the forward-looking statements. Any forward-looking statement speaks only as of the date on which such statement is made, and the Company undertakes no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.

Contact Information

Ronald E. Weinberg, Chairman & CEO

(216) 861-3553

Joseph J. Levanduski, CFO

(216) 861-3553

Hawk Corporation is online at: www.hawkcorp.com

EX-99.2

EXHIBIT 99.2

HAWK CORPORATION

Pro Forma Condensed Consolidated Balance Sheet

September 30, 2006

(In Thousands)

			Pro Forma Adjustments
	September 30, 2006 (Unaudited)		Deconsolidate HPCG(1)			Sale of HPCG(2)			Pro Forma Consolidated (Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	5,893	$	(83	)	$	88,924		$	94,734
Accounts receivable, net		48,506		(12,641	)					35,865
Inventories		50,475		(10,034	)					40,441
Taxes receivable		42								42
Deferred income taxes		4,546					(859	)		3,687
Other current assets		5,245		(1,281	)					3,964
Assets of discontinued operations		3,980								3,980
Total current assets		118,687		(24,039	)		88,065			182,713
Investment in HPCG				71,564			(71,564	)		-
Property, plant and equipment, net		70,826		(33,076	)					37,750
Goodwill		32,495		(28,030	)					4,465
Finite-lived intangible assets		8,056		(55	)					8,001
Deferred income taxes		916					(451	)		465
Other assets		7,728		-						7,728
		49,195		(28,085	)		(451	)		20,659
Total assets	$	238,708	$	(13,636	)	$	16,050		$	241,122
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	31,785	$	(9,107	)				$	22,678
Other accrued expenses		23,524		(3,805	)	$	975			20,694
Short-term debt		1,146		-						1,146
Current portion of long-term debt		247		(121	)					126
Liabilities of discontinued operations		2,693								2,693
Total current liabilities		59,395		(13,033	)		975			47,337
Long-term debt		117,321		(603	)					116,718
Deferred income taxes		1,026								1,026
Pension liabilities		10,554								10,554
Other		3,580								3,580
Shareholders’ equity		46,832		-			15,075			61,907
Total liabilities and shareholders’ equity	$	238,708	$	(13,636	)	$	16,050		$	241,122

See accompanying notes to Pro Forma Condensed Consolidated Balance Sheet

HAWK CORPORATION

Pro Forma Consolidated Statement of Operations

Nine Months ended September 30, 2006 (Unaudited)

(In Thousands)

				Pro Forma Adjustments
	September 30, 2006 Consolidated			Deconsolidate HPCG (1)			Interest Income on Investment of Net Cash Proceeds		Pro Forma September 30, 2006
Net sales	$	228,375		$	(69,106	)	$	-	$	159,269
Cost of sales		180,114			(56,319	)		-		123,795
Gross profit		48,261			(12,787	)		-		35,474
Operating expenses:
Selling, technical and administrative expenses		31,898			(6,579	)		-		25,319
Amortization of finite-lived intangible assets		379			(8	)		-		371
Total operating expenses		32,277			(6,587	)		-		25,690
Income from operations		15,984			(6,200	)		-		9,784
Interest expense (2)		(8,508	)		14			-		(8,494	)
Interest income (3)		63			(2	)		3,335		3,396
Other income (expense), net		132			(41	)		-		91
Income from continuing operations, before income taxes		7,671			(6,229	)		3,335		4,777
Income tax provision (benefit)(4)		3,820			(2,398	)		1,284		2,706
Income from continuing operations, after income taxes		3,851			(3,831	)		2,051		2,070
Income from discontinued operations, net of tax		562			-			-		562
Net income	$	4,413		$	(3,831	)	$	2,051	$	2,632
Earnings per share:
Basic earnings per share:
Earnings from continuing operations, after income taxes	$	0.42							$	0.22
Discontinued operations		0.06								0.06
Net earnings per basic share	$	0.48							$	0.28
Diluted earnings per share:
Earnings from continuing operations, after income taxes	$	0.39							$	0.21
Discontinued operations		0.06								0.06
Net earnings per diluted share	$	0.45							$	0.27
Average shares outstanding - basic		8,988								8,988
Average shares and equivalents outstanding - diluted		9,518								9,518

See accompanying notes to Pro Forma Consolidated Statements of Operations

HAWK CORPORATION

Pro Forma Consolidated Statement of Operations

Year ended December 31, 2005 (Unaudited)

(In Thousands)

				Pro Forma Adjustments
	December 31, 2005 Consolidated			Deconsolidate HPCG (1)			Interest Income on Investment of Net Cash Proceeds		Pro Forma December 31, 2005
Net sales	$	265,434		$	(83,576	)	$	-	$	181,858
Cost of sales		213,013			(67,816	)		-		145,197
Gross profit		52,421			(15,760	)		-		36,661
Operating expenses:
Selling, technical and administrative expenses		37,874			(8,922	)		-		28,952
Restructuring		4,962			-					4,962
Employee benefit curtailment (income)		(424	)		-					(424	)
Amortization of finite-lived intangible assets		734			(10	)		-		724
Total operating expenses		43,146			(8,932	)		-		34,214
Income from operations		9,275			(6,828	)		-		2,447
Interest expense (2)		(10,588	)		26			-		(10,562	)
Interest income (3)		40			-			4,446		4,486
Other income (expense), net		98			2			-		100
Loss from continuing operations, before income taxes		(1,175	)		(6,800	)		4,446		(3,529	)
Income tax provision (benefit) (4)		201			(2,618	)		1,712		(705	)
Loss from continuing operations, after income taxes		(1,376	)		(4,182	)		2,734		(2,824	)
Income from discontinued operations, net of tax		32			-			-		32
Net loss	$	(1,344	)	$	(4,182	)	$	2,734	$	(2,792	)
Loss per share:
Basic loss per share:
Loss from continuing operations, after income taxes	$	(0.17	)						$	(0.34	)
Discontinued operations		-								-
Net loss per basic share	$	(0.17	)						$	(0.34	)
Diluted loss per share:
Loss from continuing operations, after income taxes	$	(0.17	)						$	(0.34	)
Discontinued operations		-								-
Net loss per diluted share	$	(0.17	)						$	(0.34	)
Average shares outstanding - basic		8,869								8,869
Average shares and equivalents outstanding - diluted		8,869								8,869

See accompanying notes to Pro Forma Consolidated Statements of Operations

Hawk Corporation

Notes to Pro Forma Condensed Consolidated Balance Sheet

(Unaudited)

(1)   Reflects the deconsolidation of the assets and liabilities of the precision components segment of Hawk that have been sold to PCG Holdings. Net equity (including intercompany payables and intercompany debt) of the precision components segment is included in the line item “Investment in HPCG.”

(2)   Reflects the sale of the precision components segment of Hawk assuming the sale occured on September 30, 2006, including:

a.   Net cash received of $88,924, equal to gross proceeds on the sale of $94,157, decreased by funded debt, assumed liabilities, and preliminary sales price adjustments for net working capital and other closing adjustments of $3,033, and less $2,200 for estimated legal and professional fees related to the sale,

b.   A pretax gain of $17,360 and related tax expense of $2,285, for an after-tax gain of $15,075. The pro forma gain and tax information was developed by comparing the net cash received at February 2, 2007 to the balance sheet at September 30, 2006, and

c.   Income tax expense of $2,285, equal to the sum of (i) income tax currently payable of $975 and (ii) $1,310 of deferred tax expense (reducing current deferred tax assets by $859 and reducing long-term deferred tax assets by $451) related to the utilization of net operating loss carryforwards and the reversal of net deferred tax liabilities associated with sold assets and liabilities.

The proceeds included in the pro forma condensed consolidated balance sheet are equal to the amount of cash received on the closing date, including an estimate of net working capital as of that date. No later than 90 days after the closing date, the purchase price will be adjusted to reflect the actual net working capital at the closing date. Any adjustments to proceeds along with other changes in the balance sheet from September 30, 2006 through the closing date will change the actual gain to be recorded in the first quarter of 2007.

Hawk Corporation

Notes to Pro Forma Consolidated Statements of Operations

(Unaudited)

(1)   Reflects the deconsolidation of revenues and expenses of the precision components segment of Hawk for the year ended December 31, 2005 and the nine months ended September 30, 2006, assuming the sale of the precision components segment occurred on January 1, 2005. Administrative expenses historically allocated to the precision components segment that will be retained by Hawk are not included in the precision components elimination.

(2)   The elimination of interest expense reflects interest on debt assumed by PCG Holdings.

(3)   Interest income on the net cash received of $88,924 is calculated at an assumed annual investment rate of return of 5% for the year ended December 31, 2005 and the nine months ended September 30, 2006.

(4)   Reflects an effective tax rate of 38.5% on all Pro Forma adjustments.