Exhibit 10.5

AMENDMENT NO. 3 AND CONSENT

THIS AMENDMENT NO. 3 AND CONSENT (this “Amendment”), is dated as of June 8,
2009, and is entered into by and among AGY HOLDING CORP., a Delaware corporation
(“Parent Borrower”), the other Borrowers, KAGY HOLDING COMPANY, INC., a Delaware
corporation (“Holdings”), the Subsidiary Guarantors, the Lenders, and UBS AG,
STAMFORD BRANCH, as administrative agent (in such capacity, “Administrative
Agent”) for the Lenders (Parent Borrower, the other Borrowers, Holdings, the
Subsidiary Guarantors, the Lenders and the Administrative Agent, each,
individually, a “Party”, and, collectively, the “Parties”).

RECITALS:

WHEREAS, the Parties are parties to that certain Credit Agreement, dated as of
October 25, 2006 (as amended, supplemented, amended and restated or otherwise
modified prior to the date hereof, the “Credit Agreement”);

WHEREAS, (i) a wholly-owned Cayman Islands subsidiary of Parent Borrower, AGY
(Cayman) (“AGY Cayman Sub”), has entered into a Share Sale Agreement, dated as
of March 12, 2009 (the “Share Sale Agreement”), by and among AGY Cayman Sub,
Grace Technology Investment Co., Limited (“Grace”), and Grace THW Holding
Limited (“Grace Guarantor”), an executed copy of which Parent Borrower has
provided to the Administrative Agent, pursuant to which, among other things, AGY
Cayman Sub has agreed to purchase 70% of the share capital of Main Union
Industrial Limited, a Hong Kong corporation (“Main Union”), from Grace at
completion (the “Initial Grace Purchase”), and (ii) pursuant to the Share Sale
Agreement, AGY Cayman Sub agreed to enter into an Option Agreement, to be dated
as of June 8, 2009 (the “Grace Option Agreement”), with Grace and Main Union, a
draft of which Parent Borrower has provided to the Administrative Agent,
pursuant to which, among other things, (A) AGY Cayman Sub would have an option
to purchase from Grace, and (B) Grace would have the option to sell to AGY
Cayman Sub, in each of the foregoing instances, upon the terms and subject to
the conditions disclosed therein, the remaining 30% of the share capital of Main
Union (the “Secondary Grace Purchase”, and together with the Initial Grace
Purchase, the “Grace Transaction”);

WHEREAS, Main Union, in turn, owns 100% of the share capital of Shanghai Grace
Technology Co., Ltd., a wholly-owned foreign enterprise organized under the laws
of the Peoples’ Republic of China (the “PRC Affiliate”; the PRC Affiliate, Main
Union, Grace Guarantor, Grace and AGY Cayman Sub being, collectively, the “Grace
Companies”);

WHEREAS, Parent Borrower has guaranteed the obligations of AGY Cayman Sub under
the Grace Option Agreement (the “Secondary Grace Purchase Guaranty”), as well as
certain other obligations of AGY Cayman Sub (as set forth on Schedule I to this
Amendment) under a Framework Agreement, dated as of March 12, 2009 (the
“Framework Agreement”), by and among Grace Guarantor, Grace, Parent Borrower,
AGY Cayman Sub, Main Union, and the PRC Affiliate, an executed copy of which
Parent Borrower has provided to the Administrative Agent (the “Additional Parent
Borrower Guaranties”); and

WHEREAS, the Parties hereby agree to amend, and to provide certain consents with
respect to, the Credit Agreement, upon the terms and subject to the conditions
set forth herein.

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NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Parties hereto agree as follows:

SECTION 1. DEFINITIONS

1.1. All capitalized terms used herein (including in the introductory paragraph
and Recitals set forth above) and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement.

SECTION 2. CONDITIONS TO EFFECTIVENESS

The amendments and consent set forth in Section 4 of this Amendment shall be
effective on the date on which all of the following conditions precedent of this
Section 2.1 shall have been satisfied or waived (the “Effective Date”) on or
prior to June 11, 2009:

2.1. Administrative Agent shall have received this Amendment, executed and
delivered by a duly authorized officer of each of the Parties hereto.

2.2. The Administrative Agent, on behalf of the Lenders, shall have received the
amendment fee due and payable pursuant to Section 5.1 of this Amendment.

2.3. Borrower shall have paid Administrative Agent for all reasonable
out-of-pocket expenses incurred by it and invoiced on or prior to the Effective
Date in connection with the Credit Agreement (including the negotiation,
preparation and administration of this Amendment), including the reasonable
fees, charges and disbursements of counsel for the Administrative Agent.

2.4. The Administrative Agent shall have received an Officer’s Certificate
substantially in the form Exhibit A hereto.

2.5. Funds affiliated with Kohlberg and Company and its related co-investors
shall have contributed an aggregate amount of not less than $20,000,000 to the
common equity of Parent Borrower, which shall in turn have been contributed to
the equity of AGY Cayman Sub (the “Initial Grace Equity Contribution”).

SECTION 3. REPRESENTATIONS AND WARRANTIES

Each Loan Party represents and warrants to the Administrative Agent and each of
the Lenders that:

3.1. The execution, delivery and performance of this Amendment and the
consummation of the transactions contemplated hereby (including the Grace
Transaction) by each Loan Party and each of its Subsidiaries are within its
power and have been duly authorized by all necessary action on the part of such
Loan Party or Subsidiary.

3.2. This Amendment has been duly executed and delivered by each Loan Party and
constitutes a legal, valid and binding obligation of such Loan Party,
enforceable against each of the Loan Parties in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors’ rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.

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3.3. The execution, delivery and performance of this Amendment and the
consummation of the transactions contemplated hereby (including the Grace
Transaction) (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect, (b) will not
violate the Organizational Documents of any Company, (c) will not violate any
Requirement of Law, (d) will not violate or result in a default or require any
consent or approval under (i) the Senior Second Lien Note Documents or (ii) any
other indenture, agreement or other instrument binding upon any Company or its
property, or give rise to a right thereunder to require any payment to be made
by any Company, except, in the case of sub-clause (ii), for violations, defaults
or the creation of such rights that could not reasonably be expected to result
in a Material Adverse Effect, and (e) will not result in the creation or
imposition of any Lien on any property of any Company, except Liens created by
the Loan Documents and Permitted Liens.

3.4. Attached hereto as Schedule II is an accurate organizational chart showing
the ownership structure of Holdings, Parent Borrower and each Subsidiary, after
giving effect to the Initial Grace Purchase.

3.5. No information, report, financial statement, certificate, exhibit or
schedule furnished by or on behalf of any Company to the Administrative Agent or
any Lender in connection with the preparation, negotiation or execution of this
Amendment or the consummation of the Grace Transaction, taken as a whole,
contained or contains any material misstatement of fact or omitted or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were or are made, not misleading as of the
date such information is dated or certified; provided that to the extent any
such information, report, financial statement, exhibit or schedule was based
upon or constitutes a forecast or projection, each Company represents only that
it acted in good faith and utilized reasonable assumptions and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.

3.6. In connection with the Grace Transaction, no Company (other than a Grace
Company) is assuming or becoming liable with respect to, or will assume or
become liable with respect to, any Indebtedness or other liability (including
any material tax or pension type liability) of the business, person or
properties acquired or of the sellers thereof, other than the obligations of
Parent Borrower under the Secondary Grace Purchase Guaranty and the Additional
Parent Borrower Guaranties.

3.7. No Default or Event of Default has occurred and is continuing.

3.8. Each of the representations and warranties made by any Loan Party set forth
in Article III of the Credit Agreement or in any other Loan Document is true and
correct in all material respects (except that each representation and warranty
that is qualified as to “materiality” or “Material Adverse Effect” is true and
correct in all respects) on and as of the date of this Amendment with the same
effect as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.

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SECTION 4. AMENDMENTS TO CREDIT AGREEMENT; CONSENT

4.1. Section 1.01 of the Credit Agreement is hereby amended by adding the
following definitions in their proper alphabetical order:

“‘Additional Equity Proceeds’ shall mean the aggregate amount of net cash
proceeds received by Parent Borrower pursuant to an issuance of its common stock
(net of all taxes, fees, commissions, costs and other expenses incurred in
connection with such issuance) conducted during any period commencing on the
sixtieth (60th) day preceding an acquisition of the share capital of Main Union
pursuant to the Secondary Grace Purchase and ending on the date of such
acquisition, exclusive of any proceeds of the Initial Grace Equity
Contribution.”

“‘Additional Parent Borrower Guaranties’ shall have the meaning assigned thereto
in Amendment No. 3.

“‘AGY Cayman Sub’ shall have the meaning assigned thereto in Amendment No. 3.”

“‘Amendment No. 3’ shall mean Amendment No. 3 and Consent, dated as of June 8,
2009, by and among Parent Borrower, the other Borrowers, Holdings, the
Subsidiary Guarantors, the Lenders and the Administrative Agent.”

“‘Framework Agreement’ shall have the meaning assigned thereto in Amendment
No. 3.

“‘Initial Grace Equity Contribution’ shall have the meaning assigned thereto in
Amendment No. 3.

“‘Initial Grace Purchase’ shall have the meaning assigned thereto in Amendment
No. 3.”

“‘Main Union’ shall have the meaning assigned thereto in Amendment No.3.”

“‘Non-Recourse Indebtedness’ means Indebtedness:

(a) as to which neither Holdings nor any of its Subsidiaries (other than Main
Union and its Subsidiaries) (i) provides credit support of any kind (including
any undertaking, agreement or instrument that would constitute Indebtedness),
(ii) is directly or indirectly liable as a guarantor or otherwise, or
(iii) constitutes the lender, except, in each case, to the extent constituting
an Investment permitted under clause (h) or (i) of Section 6.04;

(b) no default (including any rights that the holders of the Indebtedness may
have to take enforcement action against Main Union or any of its Subsidiaries)
that would permit upon notice, lapse of time or both any holder of any other
Indebtedness (other than Indebtedness under this Agreement) of Holdings or any
of its Subsidiaries (other than Main Union and its Subsidiaries) to declare a
default on such other Indebtedness or cause the payment of such other
Indebtedness to be accelerated or payable prior to its stated maturity; and

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(c) as to which the lenders thereunder have been notified in writing that they
will not have any recourse to the stock or assets of Holdings or any of its
Subsidiaries (other than Main Union and its Subsidiaries).”

“‘Secondary Grace Purchase’ shall have the meaning assigned thereto in Amendment
No. 3.”

“‘Secondary Grace Purchase Guaranty’ shall have the meaning assigned thereto in
Amendment No. 3.”

4.2. Section 1.01 of the Credit Agreement is hereby further amended by modifying
clause (ii) of the definition of “Alternate Base Rate” to read in its entirety
as follows:

“‘Alternate Base Rate’ shall mean, for any day, a rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the greatest of
(a) the Base Rate in effect on such day, (b) the Federal Funds Effective Rate in
effect on such day plus 0.50%, and (c) the Adjusted LIBOR Rate for an Interest
Period of one month beginning on such day (or if such day is not a Business Day,
on the immediately preceding Business Day), plus 1.0%. If the Administrative
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability of failure of the Administrative Agent
to obtain sufficient quotations in accordance with the terms of the definition
thereof, the Alternate Base Rate shall be determined without regard to clause
(b) of the preceding sentence until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the Base Rate, the Federal Funds Effective Rate or the Adjusted LIBOR Rate
shall be effective on the effective date of such change in the Base Rate, the
Federal Funds Effective Rate or the Adjusted LIBOR Rate, respectively.”

4.3. Section 1.01 of the Credit Agreement is hereby further amended by modifying
clause (ii) of the definition of “Applicable Margin” to read in its entirety as
follows:

“‘Applicable Margin’ shall mean, for any day, with respect to any Loan,
(i) 0.75% on ABR Loans and (ii) 1.75% on Eurodollar Loans, provided that, at any
time during which the outstanding amounts of the Loans and LC Exposure exceeds
$25,000,000, the rate that is applicable to such excess amounts consisting of
(x) ABR Loans shall be 2.00% and (y) Eurodollar Loans (including, for the
avoidance of doubt, LC Exposure) shall be 3.00%.”

4.4. Section 1.01 of the Credit Agreement is hereby further amended by modifying
clause (v) of the definition of “Borrowing Base” by inserting therein the amount
“$10,000,000” in lieu of the amount “$7,500,000”.

4.5. Clause (e) of Section 6.01 of the Credit Agreement is hereby amended by
inserting therein the amount “$20,000,000” in lieu of the amount “$10,000,000”.

4.6. Clause (f) of Section 6.01 of the Credit Agreement is hereby amended to
read in its entirety as follows:

“(f)(x) Indebtedness incurred by Foreign Subsidiaries in an aggregate principal
amount not to exceed $10,000,000 at any time outstanding and (y) other
Indebtedness incurred by Main Union or any Foreign Subsidiary that is a
Subsidiary of Main Union in connection with the Grace Transaction provided that
the Indebtedness incurred in connection with this clause (y) shall be
Non-Recourse Indebtedness;”

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4.7. Clause (h) of Section 6.01 of the Credit Agreement is hereby amended to
read in its entirety as follows:

“(h) Contingent Obligations of any Loan Party in respect of Indebtedness
otherwise permitted under this Section 6.01, other than Contingent Obligations
of a Loan Party in respect of Indebtedness of a Foreign Subsidiary except to the
extent such Contingent Obligations in respect of Indebtedness of a Foreign
Subsidiary are permitted as an Investment under clause (h) or (i) of
Section 6.04;”

4.8. Clause (o) of Section 6.02 of the Credit Agreement is hereby amended by
deleting the reference to “Section 6.01(g)” therein and substituting therefor
“Section 6.01(f).”

4.9. Clause (e) of Section 6.04 of the Credit Agreement is hereby amended by
adding the following clause at the end thereof:

“, and investments by Parent Borrower in respect of either the Secondary Grace
Purchase Guaranty or the Additional Parent Borrower Guaranties to the extent
payments with respect thereto are subject to, and limited to, satisfaction of
the conditions set forth in Section 6.04(i)(ii)”

4.10. Clause (h) of Section 6.04 of the Credit Agreement is hereby amended to
read in its entirety as follows:

“(h) other Investments in an aggregate amount not to exceed $10,000,000 at any
time outstanding; provided that, of such $10,000,000, the aggregate amount of
Investments, directly or indirectly, in AGY Cayman Sub or any of its
Subsidiaries does not exceed $5,000,000 at any time outstanding; and”

4.11. Section 6.04 of the Credit Agreement is hereby amended by inserting
immediately after clause (h) thereof a new clause to read in its entirety as
follows:

“(i) other Investments made by the Borrower or any Subsidiary

(i) in the amount of $20,000,000 in respect of the Initial Grace Purchase to the
extent funded by the Initial Grace Equity Contribution, and

(ii) in an amount not exceeding the sum of $18,000,000 and the amount of
Additional Equity Proceeds in respect of the acquisition or acquisitions, in the
aggregate, of the share capital of Main Union pursuant to the Secondary Grace
Purchase; provided that (A) for the period of sixty (60) days ending on the date
on which each such acquisition is consummated, Excess Availability shall not
have been less than $10,000,000 at the end of any day during such period,
(B) immediately after giving effect to each such acquisition, Excess
Availability shall not be less than $12,500,000, (C) as a result of each such
acquisition,

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no Company (other than a Grace Company) shall assume or become liable with
respect to any Indebtedness or other liability (excluding the Secondary Grace
Purchase Guaranty and the Additional Parent Borrower Guaranties, but including
any material tax or pension type liability) of a Grace Company, (D) no Default
shall exist or would result from such acquisition, and (E) Parent Borrower shall
have delivered to the Agents and the Lenders a certificate, dated as of such
acquisition and in form and substance satisfactory to the Agents, certifying
that the provisions set forth in clauses (A) through (D) of this
Section 6.04(i)(ii) have been satisfied, with such supporting calculations as
the Agents may reasonably request.”

4.12. Clause (b) of Section 6.10 of the Credit Agreement is hereby amended by
adding the phrase “or the Grace Option Agreement, the Secondary Grace Purchase
Guaranty, or the Additional Parent Guaranties,” immediately prior to the phrase
“in each case in any manner that is adverse in any material respect to the
interest of the Lenders”.

4.13. Clause (f) of Section 8.01 of the Credit Agreement is hereby amended by
adding the phrase “, but inclusive of any failure to make payment in respect of
either the Secondary Grace Purchase Guaranty or the Additional Parent Borrower
Guaranties” after the phrase “other than the Obligations” in the second line
thereof.

4.14. The Lenders hereby consent to the Grace Transaction and acknowledge and
agree that, as a result of the Grace Transaction, none of the Grace Companies,
in accordance with Sections 5.10 and 5.11 of the Credit Agreement, shall be
required to become a Subsidiary Guarantor or grant to the Collateral Agent Liens
on its assets; provided that (a) Voting Stock representing 66% of the total
voting power of all outstanding Voting Stock of AGY Cayman Sub and (b) 100% of
the Equity Interests (if any) not constituting Voting Stock of AGY Cayman Sub
shall be pledged to the Collateral Agent in accordance with the terms of the
Loan Documents. The Lenders also hereby authorize the Administrative Agent and
the Co-Collateral Agents to execute and deliver such agreements, instruments and
documents as may be reasonably necessary or appropriate to effect the consent
set forth in this Section 4.14.

SECTION 5. MISCELLANEOUS

5.1. Upon execution of this Amendment by the Lenders, Parent Borrower shall pay,
without setoff, deduction or counterclaim, a non-refundable amendment fee to the
Administrative Agent equal to the product of 50.0 basis points and the aggregate
amount of the Lenders’ Revolving Commitments as of the date hereof, for the
account of the Lenders based on their respective Revolving Commitments.

5.2. Headings. Section headings in this Amendment are for convenience of
reference only, are not part of this Amendment and shall not affect the
construction of, or be taken into consideration in interpreting, this Amendment.
This Amendment shall constitute a “Loan Document” for purposes of the Credit
Agreement.

5.3. Governing Law, Jurisdiction, Venue.

(a) Governing Law. This Amendment shall be construed in accordance with and
governed by the law of the State of New York, without regard to conflicts of law
principles that would require the application of the laws of another
jurisdiction.

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(b) Submission to Jurisdiction. Each Loan Party hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Amendment or any Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State
court or, to the fullest extent permitted by applicable law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Amendment or any other Loan Document shall affect any right that
the Administrative Agent, the Issuing Bank or any Lender may otherwise have to
bring any action or proceeding relating to this Amendment or any other Loan
Document against any Loan Party or its properties in the courts of any
jurisdiction.

(c) Waiver of Venue. Each Loan Party hereby irrevocably and unconditionally
waives, to the fullest extent permitted by applicable Requirements of Law, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Amendment or any other
Loan Document in any court referred to in Section 5.3(b). Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by applicable
Requirements of Law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

5.4. Counterparts. This Amendment may be executed in counterparts (and by
different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single instrument. Delivery of an executed counterpart of a signature page of
this Amendment by telecopier shall be effective delivery of a manually executed
counterpart of this Amendment.

5.5. Continued Effectiveness. Except as expressly set forth in this Amendment,
the terms of the Credit Agreement and each of the other Loan Documents remain
unchanged, and all such Loan Documents shall remain in full force and effect and
are hereby confirmed and ratified.

5.6. No Novation. This Amendment shall not be deemed or construed to be a
satisfaction, reinstatement, novation or release of the Credit Agreement or of
any of the other Loan Documents or a waiver by Lender of any of its rights and
remedies under the Credit Agreement or any of the other Loan Documents, or any
of them, or at law or in equity.

5.7. Reaffirmation. Each Loan Party hereby reaffirms each and every covenant,
condition, obligation and provision set forth in the Loan Documents (except
those conditions set forth in Section 4.01 of the Credit Agreement), as modified
hereby. Each Loan Party has executed and delivered one or more of the Loan
Documents in which such Loan Party has granted liens or security interests in
certain of its property. Each Loan Party hereby ratifies and reaffirms all of
its respective payment and performance obligations, contingent or otherwise,
under the Loan Documents to which it is a party and, to the extent such Loan
Party has granted liens on or security interests in any of its property pursuant
to any of the Loan Documents as security for the Obligations and the Secured

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Obligations. Each Loan Party hereby ratifies and reaffirms such payment and
performance obligations, grant of security interests and liens and confirms and
agrees that such security interests and liens hereafter secure all of the
Obligations and the Secured Obligations owed to the Administrative Agent, each
Collateral Agent, the Issuing Bank and each Lender and any of its and their
successors and assignees. Each Loan Party agrees that each of the Loan Documents
remains in full force and effect and is hereby ratified and reaffirmed, and
agrees that this Amendment shall not (a) operate as a waiver of any right, power
or remedy of the Administrative Agent, the Collateral Agent, the Issuing Bank or
any Lender under the Loan Documents or (b) constitute a waiver of any provision
of any of the Loan Documents or serve to effect a novation of the Obligations
and the Secured Obligations.

5.8. Waiver of Jury Trial. Each Loan Party hereby waives, to the fullest extent
permitted by applicable Requirements of Law, any right it may have to a trial by
jury in any legal proceeding directly or indirectly arising out of or relating
to this Amendment, any other Loan Document or the transactions contemplated
hereby (whether based on contract, tort or any other theory). Each Party hereto
(a) certifies that no representative, agent or attorney of any other Party has
represented, expressly or otherwise, that such other Party would not, in the
event of litigation, seek to enforce the foregoing waiver and (b) acknowledges
that it and the other Parties hereto have been induced to enter into this
Amendment by, among other things, the mutual waivers and certifications in this
Section.

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IN WITNESS WHEREOF, the duly authorized representatives of the Parties have
caused this Amendment to be executed and acknowledge that they have read and
understood this Amendment.

 

AGY HOLDING CORP. By:  

 

Name:   Title:   KAGY HOLDING COMPANY, INC. By:  

 

Name: Title: AGY AIKEN LLC By:  

 

Name: Title: AGY HUNTINGDON LLC By:  

 

Name: Title:

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UBS AG, STAMFORD BRANCH, as Administrative Agent By:  

 

Name:   Title:   By:  

 

Name:   Title:   UBS LOAN FINANCE LLC, as Lender By:  

 

Name:   Title:   BANK OF AMERICA, N.A., as a Lender By:  

 

Name:   Title: