EXECUTION COPY

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of
June 8, 2007, by and between Haynes International, Inc. (the “Company”), a
Delaware corporation, and Francis J. Petro (the “Executive”).

PRELIMINARY STATEMENTS

WHEREAS, the Company and the Executive previously entered into that certain
Amended and Restated Executive Employment Agreement, dated as of August 31, 2007
(the “Prior Agreement”), which Prior Agreement shall terminate on September 30,
2007;

WHEREAS, the Company desires to continue to employ the Executive, and the
Executive desires to continue to be employed by the Company, on the terms and
conditions set forth herein such that this Agreement shall supersede and replace
the Prior Agreement effective as of October 1, 2007 (the “Effective Date”).

NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

AGREEMENT

Section 1. Employment.

(a) Prior Agreements. Effective as of the Effective Date, the Executive’s
employment with the Company and benefits upon a termination of employment shall
be governed by this Agreement, which supersedes and replaces the Prior
Agreement.

(b) Offer and Acceptance. During the “Employment Term” (as defined in Section
1(d) below), the Company agrees to employ the Executive in the position of
President and Chief Executive Officer of the Company upon the terms and subject
to the conditions set forth herein, and the Executive agrees to remain in the
employ of the Company on such terms and conditions.

(c) Duties. The Executive’s duties shall include those duties that are
consistent with his position as President and Chief Executive Officer of the
Company as well as those reasonably assigned to him from time to time, in good
faith, by the Board of Directors of the Company (the “Board”). The Executive
shall (i) devote his working hours, on a full-time basis, to his duties under
this Agreement; (ii) faithfully, industriously and loyally serve the Company;
(iii) comply in all material respects with the lawful and reasonable directions
and instructions given to him by the Board; (iv) use his reasonable best efforts
to promote and serve the interests of the Company; and (v) assist the Board with
succession planning. The Executive shall comply in all material respects with
all applicable laws, rules and regulations relating to the performance of the
Executive’s duties and responsibilities hereunder. The Executive agrees to serve
as (i) a member of the Board and on any of the board of directors of any
subsidiary or affiliate of the Company, and (ii) as an officer of any subsidiary
or affiliate of the Company, without any additional compensation while he is
employed by the Company. Upon termination of the Executive’s employment by the
Company for any reason, the Executive shall immediately resign from the Board
and any other position as a member of the board of directors or as an officer of
any such subsidiary or affiliate of the Company.

 
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(d) Employment Term. The Executive’s employment by the Company under this
Agreement shall commence on the Effective Date and shall continue thereafter and
shall terminate on September 30, 2008 (the “Employment Term”), unless renewed by
a subsequent written agreement of the parties. The Executive’s employment by the
Company shall be subject to termination at any time during the Employment Term
as provided in subsection (f) of this Section 1. As used herein, the term
“Employment Term” shall mean the actual period of time during which the
Executive is employed by the Company under the terms and conditions of this
Agreement.

(e) Compensation and Benefits. During the Employment Term, the Company shall pay
and provide the following compensation and other benefits to the Executive as
full compensation for all services rendered by the Executive as an employee of
the Company under the terms and conditions of this Agreement. All payments made
to the Executive hereunder shall be subject to appropriate payroll deductions
and other withholdings required by law.

(i) Annual Salary. During the Employment Term, the Company shall pay to the
Executive, in accordance with the then prevailing payroll practices of the
Company, a base salary (the “Annual Salary”) at the annual rate of Five Hundred
Twenty Thousand Dollars ($520,000) per year.

(ii) Bonuses. During the Employment Term, the Executive shall be eligible to
receive an annual bonus based upon the achievement by the Company of specific
performance requirements (e.g. earnings per share, EBITDA benchmarks and working
capital targets) which shall be determined by the Compensation Committee of the
Board (the “Committee”) in its sole and absolute discretion prior to or at the
commencement of the Employment Term (the “Bonus”). The target amount for the
Bonus shall be eighty percent (80%) of the Annual Salary (the “Target Bonus”);
provided, however, the Executive shall be eligible to receive a minimum Bonus in
an amount equal to forty percent (40%) of the Annual Salary if threshold
performance requirements are achieved and a maximum Bonus in an amount equal to
one hundred twenty percent (120%) of the Annual Salary if maximum performance
requirements are achieved. The Bonus, if any, shall be paid to the Executive by
the Company no later than December 15, 2008.

(iii) Benefits. During the Employment Term, the Executive shall be eligible to
participate in all employee health and welfare benefit plans in which senior
executives of the Company are entitled to participate, but participation shall
be subject to all of the terms and conditions of such plans applicable to all
such senior executives, including all waiting periods, eligibility requirements,
contributions, exclusions and other similar conditions or limitations. In the
case of any disability plan, the Company agrees that such plan will provide the
benefits contemplated by Section 1(e)(iv) or in lieu of such plan participation,
the Company will provide to the Executive the disability insurance coverage
contemplated by Section 1(e)(iv).

 
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(iv) Insurance. During the Employment Term, the Executive shall be entitled to
receive long-term disability insurance coverage and the amount of the benefit
payments under such insurance coverage shall be not less than sixty percent
(60%) of the Annual Salary then in effect (the “Disability Insurance”). The
Company shall pay all premiums related to the Disability Insurance as long as
the Executive is employed by Company hereunder. In addition, the Company shall
provide the Executive with a life insurance policy in a face amount equal to
five (5) times the Annual Salary then in effect (the “Life Insurance”), which
policy shall be convertible to an individual policy at the election of the
Executive upon termination of the Executive’s employment by the Company. The
Company shall be the owner of the Life Insurance and shall pay all premiums
related thereto prior to termination of the Executive’s employment by the
Company.

(v) Expenses. The Company shall reimburse the Executive, in accordance with the
then prevailing reimbursement practices of the Company, for all reasonable and
customary business expenses incurred by the Executive in connection with his
employment by the Company, including, but not limited to, all reasonable and
customary travel-related expenses incurred in connection with periodic trips to
Syracuse, New York, provided, in any case, that the Executive complies with the
standard reporting and reimbursement policies as may be established by the
Company from time to time.

(vi). Vacation. The Executive shall be entitled to five (5) weeks of vacation,
measured on a calendar year basis. The Executive shall schedule vacation periods
at reasonable times in accordance with the Company’s vacation policy for senior
executives. The Executive shall accrue and receive full compensation and
benefits during his vacation periods. Unused vacation leave time shall not
entitle the Executive to any additional compensation and may not be carried over
to a subsequent calendar year.

(vii) SERP. The Executive shall be entitled to participate in the Company’s
Supplemental Executive Retirement Plan on the terms and conditions as set forth
in the Participation Agreement entered into by and between the Executive and the
Company dated December 13, 2002 as amended as of the date hereof (the “SERP”).

(viii) Company Car. During the Employment Term, the Company shall provide the
Executive with the use of an automobile owned or leased by the Company at its
expense for Company-related purposes (the “Company Car”). The Company shall pay
or reimburse the Executive for all expenses incurred in connection with the
Executive’s use of the Company Car, including, but not limited to, insurance,
gasoline, registration taxes and maintenance. The Company Car shall be a Buick
Lucerne or an automobile of a similar class. The Executive agrees that the use
of the Company Car for personal-related matters will result in imputed income to
the Executive and at the end of each calendar year, the Company and its
accountants shall reasonably determine the amount of such income to be included
in the Executive’s compensation in connection with the personal use of the
Company Car and the Executive agrees that he shall be responsible for any and
all taxes imposed on such imputed income.

 

 
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(ix) Country Club Membership. During the Employment Term, the Company shall
reimburse the Executive for all regular monthly membership dues and
business-related charges incurred by the Executive in connection with his
membership at a country club. The Executive agrees that he shall be responsible
for any and all taxes imposed on the reimbursements made pursuant to the
preceding sentence.

(x) Options. On March 30, 2007, the Executive was granted options to acquire
24,000 shares of the Company’s common stock pursuant to the terms of the
Company’s 2007 Stock Option Plan and the grant letter pursuant to which such
options were granted.

(xi) Death Benefit Plan. During the Employment Term, the Executive shall be
eligible to participate in the Company’s Death Benefit Plan, as amended,
pursuant to the terms and conditions set forth in such plan.

(f) Termination of Employment. Subject to the terms of Section 1(g) below, the
Executive’s employment by the Company may be terminated as follows:

(i) Termination upon the Expiration of the Employment Term. The Executive’s
employment shall terminate on September 30, 2008 unless terminated earlier
pursuant to this Section 1(f). In the event that the Executive’s employment
terminates upon the expiration of the Employment Term, then the Executive shall
be entitled to receive the compensation and benefits set forth in Section
1(g)(i).

(ii) Termination for Cause. The Company may immediately terminate, at any time,
Executive’s employment by the Company for “Cause”. A termination for “Cause”
means a termination by reason of the Board’s good faith determination that the
Executive (i) continually failed to substantially perform his duties with the
Company (other than a failure resulting from the Executive’s medically
documented incapacity due to physical or mental illness) including, without
limitation, repeated refusal to follow the reasonable directions of the Board,
knowing violation of the law in the course of performance of the Executive’s
duties with the Company, repeated absences from work without a reasonable
excuse, or intoxication with alcohol or illegal drugs while on the Company’s
premises during regular business hours, (ii) engaged in conduct which
constituted a material breach of Section 2 or Section 3 of this Agreement, (iii)
was indicted (or equivalent under applicable law), convicted of, or entered a
plea of nolo contendere to the commission of a felony or crime involving
dishonesty or moral turpitude, or (iv) engaged in conduct which is demonstrably
and materially injurious to the financial condition, business reputation, or
otherwise of the Company or its subsidiaries or affiliates, or (v) perpetuated a
fraud or embezzlement against the Company or its subsidiaries or affiliates, and
in each case the particular act or omission was not cured, if curable, in all
material respects by the Executive within thirty (30) days after receipt of
written notice from the Board which shall set forth in reasonable detail the
nature of the facts and circumstances which constitute Cause. Notwithstanding
the foregoing, the Executive shall not be deemed to have been terminated for
Cause unless there shall have been delivered to the Executive a copy of a
resolution duly adopted by the Board. If the Company has reasonable belief that
the Executive has committed any of the acts described above, it may suspend the
Executive (with or without pay) while it investigates whether it has or could
have Cause to terminate the Executive. The Company may terminate the Executive
for Cause prior to the completion of its investigation; provided, that, if it is
ultimately determined that the Executive has not committed an act which would
constitute Cause, the Executive shall be treated as if he were terminated
without Cause.

 
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(iii) Termination Without Cause. The Company, may, at any time, terminate the
Executive’s employment by Company without Cause by providing prior written
notice thereof to the Executive.

(iv) Resignation for Good Reason. The Executive may terminate his employment by
the Company for Good Reason (as defined below) by providing written notice
thereof to the Company (the “Resignation Notice”) at least forty-five (45) days
prior to the effective date of the resignation, which notice shall set forth in
reasonable detail the nature of the facts and circumstances which constitute
Good Reason and the Company shall have thirty (30) days after receipt of the
Resignation Notice to cure in all material respects the facts and circumstances
which constitute Good Reason. For purposes of this Agreement, “Good Reason”
shall mean the occurrence, during the Employment Term, of any of the following
actions or failures to act, but in each case only if it is not consented to by
the Executive in writing: (a) a material adverse change in the Executive’s
duties, reporting responsibilities, titles or elected or appointed offices as in
effect immediately prior to the effective date of such change; (b) a material
reduction by the Company in the Executive’s Base Salary or annual bonus
opportunity in effect immediately prior to the effective date of such reduction,
not including any reduction resulting from changes in the market value of
securities or other instruments paid or payable to the Executive; or (c) any
change of more than 50 miles in the location of the principal place of
employment of the Executive immediately prior to the effective date of such
change. For purposes of this definition, none of the actions described in
clauses (a) and (b) above shall constitute “Good Reason” with respect to the
Executive if it was an isolated and inadvertent action not taken in bad faith by
the Company and if it is remedied by the Company within thirty (30) days after
receipt of written notice thereof given by the Executive (or, if the matter is
not capable of remedy within thirty (30) days, then within a reasonable period
of time following such thirty (30) day period, provided that the Company has
commenced such remedy within said thirty (30) day period); provided that “Good
Reason” shall cease to exist for any action described in clauses (a) and (b)
above on the sixtieth (60th) day following the later of the occurrence of such
action or the Executive’s knowledge thereof, unless the Executive has given the
Company written notice thereof prior to such date.

 
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(v) Resignation Without Good Reason. The Executive may, at any time, terminate
the Executive’s employment by the Company without Good Reason by providing
thirty (30) days’ prior written notice thereof to the Company.

(vi) Death; Disability or Retirement. The Executive’s employment shall terminate
immediately upon the Executive’s death, Disability, or Retirement (each as
defined below). For purposes of this Agreement, “Disability” means the Executive
is totally and permanently disabled as defined in the Company’s Pension Plan and
“Retirement” means a resignation by the Executive after having reached age
fifty-five (55), but in no event prior to September 30, 2008.

(g) Effect of Termination

(i) Termination upon the Expiration of the Employment Term. Upon the termination
of the Executive’s employment pursuant to Section 1(f)(i), the Executive will be
entitled to (A) payment of that portion of the Executive’s then effective Annual
Salary which has been earned but not yet paid through and including the last day
of the Executive’s employment (the “Termination Date”); (B) payment of any Bonus
earned by the Executive under the terms and conditions of this Agreement prior
to the Termination Date that remains unpaid; (C) reimbursement of any
reimbursable business expenses under Section 1(e)(v), which were incurred by the
Executive through and including the Termination Date; (D) continuation of
benefits to which the Executive is entitled under Section 1(e)(iii) and Section
1(e)(iv) through and including the Termination Date and; (E) the SERP that the
Executive is entitled to under Section 1(e)(vii) (collectively, the “Accrued
Benefits”).

(ii) Termination for Cause or Resignation Without Good Reason. Upon the
Company’s termination of the Executive’s employment for Cause pursuant to
Section 1(f)(ii) or the Executive’s resignation without Good Reason pursuant to
Section 1(f)(v), Executive will be entitled to the Accrued Benefits.

Termination Without Cause or Resignation for Good Reason. Upon the Company’s
termination of the Executive’s employment without Cause pursuant to Section
1(f)(iii) or the Executive’s resignation for Good Reason pursuant to
Section 1(f)(iv), the Executive shall be entitled to receive the Accrued
Benefits and a lump sum payment equal to (A) the amount of the Annual Base
Salary the Executive would have earned if he had continued to be employed with
the Company during the period commencing on the day following the Termination
Date and ending on the expiration of the Employment Term (the “Severance
Period”) plus (B) the Target Bonus.

The Executive shall also be entitled to receive continuation of medical and
hospitalization benefits to which the Executive is entitled under Section
1(e)(iii) during the Severance Period; provided, however, that such benefits
shall terminate to the extent that the Executive obtains comparable benefits
coverage from another employer during the Severance Period.

 
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(iii) Death; Disability or Retirement. Upon termination of the Executive’s
employment pursuant to Section 1(f)(vi), the Executive or the Executive’s heirs,
estate, personal representative or legal guardian, as appropriate, will be
entitled to receive the Accrued Amounts.

(iv) Timing of Payment and Release. As a condition of receiving from the Company
the payments and benefits provided for under this Section 1(g) which the
Executive otherwise would not be entitled to receive, the Executive understands
and agrees that, on the Termination Date, he will be required to execute (and
not revoke) a release of all claims against the Company in substantially the
form attached hereto as Exhibit 1 (the “Release”) as may be modified by the
Company in good faith to reflect changes in law or its employment practices. The
Executive acknowledges that he has been advised in writing to consult with an
attorney prior to executing the Release. The Executive agrees that he will
consult with his attorney prior to executing the Release.  The Executive and the
Company agree that the Executive has a period of seven (7) days following the
execution of the Release within which to revoke the Release. The parties also
acknowledge and agree that the Release shall not be effective or enforceable
until the seven (7) day revocation period expires. The date on which this seven
(7) day period expires shall be the effective date of the Release (the “Release
Effective Date”). The Company shall make all payments required under this
Agreement, except to the extent that such payments are to be made over time,
within five (5) business days following the Release Effective Date. In the event
of a termination for Cause or by reason of the Executive’s death, the Company
shall make any payments under this Section 1(g) within five (5) business days of
the Termination Date, except to the extent that such payments are to be made
over time. The Executive understands that as used in this Section 1(g)(iv), the
“Company” includes its past, present and future officers, directors, trustees,
shareholders, employees, agents, subsidiaries, affiliates, distributors,
successors, and assigns, any and all employee benefit plans (and any fiduciary
of such plans) sponsored by the Company, and any other person related to the
Company.

Except as specifically provided in this Section 1(g) or required under
applicable law, the Executive will not be eligible to receive any salary, bonus
or other compensation or benefits described in Section 1(e) with respect to any
future periods after the Termination Date; provided, however, the Executive
shall have the right to receive all compensation and benefits to which he is
entitled under any benefit plans of the Company to the extent he is fully vested
as of the effective date of the termination of the Executive’s employment by the
Company pursuant to the terms and conditions of such employee benefit plans.

Section 2. Confidentiality. For purposes of this Section 2, the term “Company”
shall include, in addition to the Company, its affiliates, subsidiaries and any
of their respective predecessors, successors and assigns. The term “Company’s
Business” shall mean the business of developing, manufacturing, selling or
distributing high-performance alloys for service in severe corrosion and high
temperature applications.

 

 
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(a) Confidential Information. As used in this Agreement, “Confidential
Information” means any and all confidential, proprietary or other information,
whether or not originated by the Executive or the Company, which is in any way
related to the past or present Company’s Business and is either designated as
confidential or not generally known by or available to the public. Confidential
Information includes, but is not limited to (whether or not reduced to writing
or designated as confidential) (i) information regarding the Company’s existing
and potential customers and vendors; (ii) any contacts (including the existence
and contents thereof and parties thereto) to which the Company is a party or is
bound; (iii) information regarding products and services being purchased or
leased by or provided to the Company; (iv) information received by the Company
from third parties under an obligation of confidentiality, restricted,
disclosure or restricted use; (v) personnel and financial information of the
Company; (vi) information with respect to the Company’s products, services,
facilities, business methods, systems, trade secrets, technical know-how, and
other intellectual property; (vii) marketing and developmental plans and
techniques, price and cost data, forecasts and forecast assumptions, and
potential strategies of the Company; and (viii) any other information relating
to the Company which was obtained by the Executive in connection with his
employment by the Company, whether before, on or after the Effective Date.

(b) Non-Disclosure and Non-Use of Confidential Information. The Executive
acknowledges that the Confidential Information of the Company is a valuable,
unique asset of the Company and the Executive’s unauthorized use or disclosure
thereof could cause irreparable harm to the Company for which no remedy at law
could be adequate. Accordingly, the Executive agrees that he shall hold all
Confidential Information of the Company in strict confidence and solely for the
benefit of the Company, and that, he shall not, directly or indirectly, disclose
or use or authorize any third party to disclose or use any Confidential
Information except (i) as required for the performance of the Executive’s duties
hereunder, (ii) with the express written consent of the Company, (iii) to the
extent that any such information is in or becomes in the public domain other
than as a result of the Executive’s breach of any of his obligations hereunder,
or (iv) where required to be disclosed by court order, subpoena or other
government process and in such event, the Executive shall cooperate with the
Company in attempting to keep such information confidential. The Executive shall
follow all Company policies and procedures to protect all Confidential
Information and take any additional precautions necessary to preserve and
protect the use or disclosure of any Confidential Information at all times. The
Company shall reimburse the Executive for all reasonable expenses and costs he
may incur as a result of cooperating under this Section 2(b), upon receipt of
proper documentation.

(c) Ownership of Confidential Information. The Executive acknowledges and agrees
that all Confidential Information is and shall remain the exclusive property of
the Company, whether or not prepared in whole or in part by the Executive and
whether or not disclosed to or entrusted to the custody of the Executive. Upon
the termination or resignation of his employment by the Company, or at any other
time at the request of the Company, the Executive shall promptly deliver to the
Company all documents, tapes, disks, or other storage media and any other
materials, and all copies thereof in whatever form, in the possession of the
Executive pertaining to the Company’s Business, including, but not limited to,
any containing Confidential Information.

(d) Survival. The Executive’s obligations set forth in this Section 2, and the
Company’s rights and remedies with respect hereto, shall indefinitely survive
the termination of this Agreement and the Executive’s employment by the Company,
regardless of the reason therefor.

 
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Section 3. Restricted Covenants. For purposes of this Section 3, the term
“Company” shall include, in addition to the Company, its affiliates,
subsidiaries and any of their respective predecessors, successors and assigns.

(a) Non-Competition. During the Restricted Period and within the Restricted Area
(each as defined in subsection (c) below), the Executive shall not, directly or
indirectly, perform on behalf of any Competitor (as defined in subsection (c)
below) the same or similar services as those that the Executive performed for
the Company during the Executive’s employment by the Company or otherwise. In
addition, the Executive shall not, during the Restricted Period or within the
Restricted Area, directly or indirectly engage in, own, manage, operate, join,
control, lend money or other assistance to, or participate in or be connected
with (as an officer, director, member, manager, partner, shareholder,
consultant, employee, agent, or otherwise), any Competitor.

(b) Non-Solicitation. During the Restricted Period, the Executive shall not,
directly or indirectly, for himself or on behalf of any Person (as defined in
subsection (c) below), (i) solicit or attempt to solicit any Customers (as
defined in subsection (c) below) or prospective Customers with whom the
Executive had contact at any time during the Executive’s employment by the
Company; (ii) divert or attempt to divert any business of the Company to any
other Person; (iii) solicit or attempt to solicit for employment, endeavor to
entice away from the Company, recruit, hire, or otherwise interfere with the
Company’s relationship with, any Person who is employed by or otherwise engaged
to perform services for the Company (or was employed or otherwise engaged to
perform services for the Company, as of any given time, within the immediately
preceding twenty-four (24) month period); (iv) cause or assist, or attempt to
cause or assist, any employee or other service provider to leave the Company; or
(v) otherwise interfere in any manner with the employment or business
relationships of the Company or the business or operations then being conducted
by the Company.

(c) Definitions. For purposes of this Section 3, the following definitions have
the following meanings:

(i) “Competitor” means any Person that engages in a business that is the same
as, or similar to, the Company’s Business.
 
(ii) “Customer” means any Person which, as of any given date, used or purchased
or contracted to use or purchase any services or products from Company within
the immediately preceding twenty-four (24) month period.

(iii) “Person” means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust or
unincorporated organization, or any governmental agency, officer, department,
commission, board, bureau, or instrumentality thereof.

 

 
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(iv) “Restricted Area” means, because the market for the Company’s Business is
global or has the potential of being global, and is not dependent upon the
physical location or presence of the Company, the Executive, or any individual
or entity that may be in violation of this Agreement, the broadest geographic
region enforceable by law (excluding any location where this type of restriction
is prohibited by law) as follows: (A) everywhere in the world that has access to
the Company’s Business because of the availability of the Internet; (B)
everywhere in the world that the Executive has the ability to compete with the
Company’s Business through the Internet; (C) each state, commonwealth,
territory, province and other political subdivision located in North America;
(D) each state, commonwealth, territory and other political subdivision of the
United States of America; (E) Indiana and any state in which the Executive has
performed any services for the Company; (F) any geographical area in which the
Company has performed any services or sold any products; (G) any geographical
area in which the Company or any of its subsidiaries have engaged in the
Company’s Business which has resulted in aggregate sales revenue of at least
$25,000 during any year in the five (5) year period immediately preceding the
commencement of the Restricted Period; (H) any state or other jurisdiction where
the Company had an office at any time during the Executive’s employment by the
Company; (I) within one hundred (100) miles of any location in which the Company
had an office at any time during the Executive’s employment by the Company; and
(J) within one hundred (100) miles of any location in which the Executive
provided services for the Company.

(v) “Restricted Period” means the period of time during the Executive’s
employment by the Company plus a period of twelve (12) months from the
Termination Date. In the event of a breach of this Agreement by the Executive,
the Restricted Period will be extended automatically by the period of the
breach.

(d) Survival. The Executive’s obligations set forth in this Section 3, and the
Company’s rights and remedies with respect thereto, will remain in full force
and effect during the Restricted Period and until full resolution of any dispute
related to the performance of the Executive’s obligations during the Restricted
Period.

(e) Public Company Exception. The prohibitions contained in this Section 3 do
not prohibit the Executive’s ownership of stock which is publicly traded
provided that (1) the investment is passive, (2) the Executive has no other
involvement with the company, (3) the Executive’s interest is less than five
percent (5%) of the shares of the company, and (4) the Executive makes full
disclosure to the Company of the stock at the time that the Executive acquires
the shares of stock.

Section 4. Assignment of Inventions. Any and all inventions, improvements,
discoveries, designs, works of authorship, concepts or ideas, or expressions
thereof; whether or not subject to patents, copyrights, trademarks or service
mark protections, and whether or not reduced to practice, that are conceived or
developed by the Executive while employed with the Company and which relate to
or result from the actual or anticipated business, work, research or
investigation of the Company (collectively, “Inventions”), shall be the sole and
exclusive property of the Company. The Executive shall do all things reasonably
requested by the Company to assign to and vest in the Company the entire right,
title and interest to any such Inventions and to obtain full protection
therefor. Notwithstanding the foregoing, the provisions of this Agreement do not
apply to an Invention for which no equipment, supplies, facility, or 
Confidential Information of the Company was used and which was developed
entirely on the Executive’s own time, unless (a) the Invention relates (i) to
the Company’s Business, or (ii) or the Company’s actual or demonstrably
anticipated research or development, or (b) the Invention results from any work
performed by the Executive for the Company.

 
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Section 5. General

(a) Reasonableness. The Executive has carefully considered the nature, extent
and duration of the restrictions and obligations contained in this Agreement,
including, without limitation, the geographical coverage contained in Section 3,
and the time periods contained in Section 2 and Section 3, and acknowledges and
agrees that such restrictions are fair and reasonable in all respects to protect
the legitimate interests of the Company and that these restrictions are designed
for the reasonable protection of the Company’s Business.

(b) Remedies. The Executive recognizes that any breach of this Agreement shall
cause irreparable injury to the Company, inadequately compensable in monetary
damages. Accordingly, in addition to any other legal or equitable remedies that
may be available to the Company, the Executive agrees that the Company shall be
able to seek and obtain injunctive relief in the form of a temporary restraining
order, preliminary injunction, or permanent injunction, in each case without
notice or bond, against the Executive to enforce this Agreement. The Company
shall not be required to demonstrate actual injury or damage to obtain
injunctive relief from the courts. To the extent that any damages are calculable
resulting from the breach of this Agreement, the Company shall also be entitled
to recover damages, including, but not limited to, any lost profits of the
Company and/or its affiliates or subsidiaries. For purposes of this Agreement,
lost profits of the Company shall be deemed to include all gross revenues
resulting from any activity of the Executive in violation of this Agreement and
all such revenues shall be held in trust for the benefit of the Company. Any
recovery of damages by the Company shall be in addition to and not in lieu of
the injunctive relief to which the Company is entitled. In no event will a
damage recovery be considered a penalty in liquidated damages. In addition, in
any action at law or in equity arising out of this Agreement, the prevailing
party shall be entitled to recover, in addition to any damages caused by a
breach of this Agreement, all costs and expenses, including, but not limited to,
reasonable attorneys’ fees, expenses, and court costs incurred by such party in
connection with such action or proceeding. Without limiting the Company’s rights
under this Section 5(b) or any other remedies of the Company, if a court of
competent jurisdiction determines that the Executive breached any of the
provisions of Section 2 or Section 3, Company will have the right to cease
making any payments or providing any benefits otherwise due to the Executive
under the terms and conditions of this Agreement.

(c) Claims by Executive. The Executive acknowledges and agrees that any claim or
cause of action by the Executive against the Company shall not constitute a
defense to the enforcement of the restrictions and covenants set forth in this
Agreement and shall not be used to prohibit injunctive relief.

(d) Amendments. This Agreement may not be modified, amended, or waived in any
manner except by an instrument in writing signed by both parties to this
Agreement.

 
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(e) Waiver. The waiver by either party of compliance by the other party with any
provision of this Agreement shall not operate or be construed as a waiver of any
other provision of this Agreement (whether or not similar), or a continuing
waiver, or a waiver of any subsequent breach by a party of any provision of this
Agreement.

(f) Governing Law; Jurisdiction. The laws of the State of New York shall govern
the validity, performance, enforcement, interpretation, and other aspects of
this Agreement, notwithstanding any state’s choice of law provisions to the
contrary. The parties intend the provisions of this Agreement to supplement but
not displace, their respective obligations and responsibilities under the New
York and Indiana Uniform Trade Secrets Act. Any proceeding to enforce,
interpret, challenge the validity of, or recover for the breach of any provision
of, this Agreement may be filed in the courts of the State of Indiana or the
United States District Court sitting in Indianapolis, Indiana, and the parties
hereto expressly waive any and all objections to personal jurisdiction, service
of processor venue in connection therewith.

(g) Complete Agreement; Release. This Agreement constitutes a complete and total
integration of the understanding of the parties with respect to the subject
matter hereof and thereof and supersedes all prior or contemporaneous
negotiations, commitments, agreements, writings, and discussions with respect to
the subject matter of this Agreement, including but not limited to the Prior
Agreement. The Executive hereby unconditionally releases and discharges the
Company from any and all claims, causes of action, demands, lawsuits or other
charges whatsoever, known or unknown, directly or indirectly related to the
Prior Agreement.

(h) Severability. If a court having proper jurisdiction holds a particular
provision of this Agreement unenforceable or invalid for any reason, that
provision shall be modified only to the extent necessary in the opinion of such
court to make it enforceable and valid and the remainder of this Agreement shall
be deemed valid and enforceable and shall be enforced to the greatest extent
possible under the then existing law. In the event the court determines such
modification is not possible, the provision shall be deemed severable and
deleted, and all other provisions of this Agreement shall remain unchanged and
in full force and effect.

(i) Enforceability in Jurisdictions. The parties hereto intend to and herby
confer jurisdiction to enforce the covenants contained in Section 2 and 3 above
upon the courts of any state within the geographical scope of such covenants. If
the courts of any one or more of such states shall hold any of the previous
covenants unenforceable by reason of the breadth of such scope or otherwise, it
is the intention of the parties hereto that such determination not bar or in any
way affect the Company’s rights to the relief provided above in the courts of
any other states within the geographical scope of such covenants, as to breaches
of such covenants in such other respective jurisdictions, the above covenants as
they relate to each state being, for this purpose, severable into diverse and
independent covenants.

(j) Fair Dealing. The Executive acknowledges that the Company has negotiated
this Agreement in good faith and has been fair in its dealing with the
Executive. The Executive shall not raise any defense and expressly waives any
defense against the Company based upon any alleged breach of good faith or fair
dealing by the Company in connection with this Agreement.

 
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(k) Counterparts. This Agreement may be executed in two (2) counterparts, each
of which shall be deemed an original but both of which together shall constitute
one and the same Agreement. Facsimile transmission of the executed version of
this Agreement or any counterpart hereof shall have the same force and effect as
the original.

(l) Executive Warranties. The Executive warrants and represents to the Company
that the execution and performance of this Agreement does not and shall not
violate any express or implied obligations of the Executive to any other person
and that all Executive shall inform any prospective employer about the existence
of this Agreement before accepting employment by such employer.

(m) Headings. The heads of the Sections of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction of this Agreement.

(n) Third Party Beneficiaries. The Company’s affiliates and subsidiaries are
expressly made third party beneficiaries of this Agreement.

(o) Notices. Any notice required or permitted hereunder shall be personally
delivered or mailed by certified mail, return receipt requested, to the
addresses of the parties set out on the signature page hereto, or as changed
from time to time by notice as provided herein.

(p) Successors and Assigns. The Executive shall not assign or transfer any of
his rights or obligations under this Agreement to any individual or entity. The
Company may assign its rights hereunder to any of its affiliates or to any
individual or entity who or that shall acquire or succeed to, by operation of
law, or otherwise, all or substantially all of the assets of the Company or the
Company’s Business. All provisions of this Agreement are binding upon, shall
inure to the benefit of, and are enforceable by or against, the parties and
their respective heirs, executors, administrators or other legal representatives
and permitted successors and assigns.

(q) OPPORTUNITY TO CONSUULT COUNSEL. THE EXECUTIVE ACKNOWLEDGES THAT HE HAS
CAREFULLY READ THIS AGREEMENT AND HAS BEEN GIVEN ADEQUATE OPPORTUNITY, AND HAS
BEEN ENCOURAGED BY THE COMPANY, TO CONSULT WITH LEGAL COUNSEL OF HIS CHOICE
CONCERNING THE TERMS HEREOF BEFORE EXECUTING THIS AGREEMENT.

[SIGNATURE PAGE FOLLOWS].

 
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IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first written above.

 
HAYNES INTERNATIONAL, INC.
             
By:
/ss/ John C. Corey
 
Name: John C. Corey
Title: Chairman, Board of Directors
               
EXECUTIVE
             
By:
/ss/ Francis J. Petro
   
Francis J. Petro
   
4957 Belrush Road
   
Syracuse, NY 13215

 
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