Haynes International - Exhibit 10.13




Exhibit 10.13








MONITORING  AGREEMENT  (this  "Agreement"),  dated as of October 1, 2002,  among
HAYNES  HOLDINGS INC., a Delaware  corporation  ("HHI"),  HAYNES  INTERNATIONAL,
INC., a Delaware corporation ("Opco"),  and BLACKSTONE MANAGEMENT PARTNERS L.P.,
a Delaware limited partnership ("BMP").




        WHEREAS,  BMP,  by  and  through
itself,   its  affiliates   and  their   respective   officers,   employees  and
representatives, has expertise in the areas of finance, strategy, investment and
acquisitions relating to the business of HHI and Opco; and




        WHEREAS,  HHI and Opco desire to
avail themselves, for the term of this Agreement, of the expertise of BMP in the
aforesaid areas and BMP wishes to provide the services to HHI and Opco as herein
set forth;



        NOW, THEREFORE, in consideration
of the foregoing recitals and the covenants and conditions contained herein, the
parties hereto agree as follows:


	
1.	
Appointment.  HHI and  Opco  hereby  appoint  BMP to  render  the  advisory  and
consulting  services  described  in  Section  2  hereof  for  the  term  of this
Agreement.






	
2.	
Services.  BMP hereby  agrees  that during the term of this  Agreement  it shall
render  to HHI and  Opco,  by and  through  itself,  its  affiliates,  and their
respective officers, employees and representatives as BMP in its sole discretion
shall designate from time to time,  advisory and consulting services in relation
to  the  affairs  of  HHI,  Opco  and  their  subsidiaries,  including,  without
limitation,  (i)  advice  in  operating  the  business  of HHI,  Opco and  their
subsidiaries on a day-to-day basis (ii) advice in designing financing structures
and advice regarding  relationships with HHI, Opco and their  subsidiaries’
lenders and bankers;  (iii) advice  regarding the structure and timing of public
offerings of debt and equity  securities  of HHI,  Opco and their  subsidiaries;
(iv) advice regarding property dispositions or acquisitions;  and (v) such other
advice  directly  related or ancillary to the above advisory  services as may be
reasonably  requested by HHI and Opco. It is expressly  agreed that the services
to be  performed  hereunder  shall  not  include  investment  banking  or  other
financial advisory services rendered by BMP or its affiliates to HHI and Opco in
connection   with  any  specific   acquisition,   divestiture,   refinancing  or
recapitalization by HHI, Opco or any of their subsidiaries.  BMP may be entitled
to receive additional  compensation for providing services of the type specified
in the preceding  sentence by mutual  agreement of HHI, Opco or such  subsidiary
and BMP.






	
3.
	
Fees. In consideration  of the services  contemplated by Section 2, for the term
of this Agreement,  HHI and Opco and their  respective  successors,  jointly and
severally, agree to pay to BMP an annual fee (the “Monitoring Fee”) of
$950,000,  payable in quarterly  installments  on December 31, March 31, June 30
and September 30 of each year  commencing on October 1, 2002 through the earlier
of either September 30, 2003 or the date (the  “Termination  Date”) on
which affiliates of BMP hold,  directly or indirectly,  beneficial  ownership of
less than 10% of the equity interests of HHI and Opco Date, or such earlier date
as HHI, Opco and BMP shall agree.  Any Monitoring Fee under this Agreement shall
be prorated for the period of such year ending on the  Termination  Date. To the
extent  required by any debt financing of HHI, Opco or their  subsidiaries,  the
Monitoring  Fee shall be deferred  until the earlier of (i)  dissolution of HHI,
and (ii) payment of such deferred  Monitoring  Fee is permitted  under such debt
financing.  Any  deferred  Monitoring  Fee shall bear  interest at a rate of ten
percent (10%) per annum, compounded annually, from the date deferred until paid.










	
4.	
Reimbursements.  In addition to the fees payable pursuant to this Agreement, HHI
and Opco shall,  jointly and  severally,  pay directly or reimburse  BMP for its
Out-of-Pocket  Expenses (as defined below).  For the purposes of this Agreement,
the  term   “Out-of-Pocket   Expenses”   shall  mean  the   reasonable
out-of-pocket costs and expenses reasonably incurred by BMP or its affiliates in
connection  with the  services  rendered  hereunder  in  pursuing,  or otherwise
related to, the business of HHI or Opco, including, without limitation, (i) fees
and disbursements of any independent professionals and organizations,  including
independent accountants, outside legal counsel or consultants, (ii) costs of any
outside  services  or  independent   contractors  such  as  financial  printers,
couriers, business publications,  on-line financial services or similar services
and (iii)  transportation,  per diem  costs,  word  processing  expenses  or any
similar expense not associated with its ordinary operations.  All reimbursements
for Out-of-Pocket Expenses shall be made promptly upon or as soon as practicable
after presentation by BMP to HHI or Opco of a written statement thereof.







	
5.	
Indemnification.  HHI and Opco,  jointly and severally,  will indemnify and hold
harmless BMP, its  affiliates  and their  respective  partners (both general and
limited), members (both managing and otherwise), officers, directors, employees,
agents  and  representatives   (each  such  person  being  an  “Indemnified
Party”)  from  and  against  any  and  all  losses,   claims,  damages  and
liabilities, whether joint or several (the “Liabilities”), related to,
arising  out of or in  connection  with the  advisory  and  consulting  services
contemplated  by this  Agreement or the  engagement  of BMP pursuant to, and the
performance by BMP of the services  contemplated by, this Agreement,  whether or
not  pending  or  threatened,  whether or not an  Indemnified  Party is a party,
whether or not resulting in any liability and whether or not such action, claim,
suit,  investigation  or proceeding is initiated or brought by HHI or Opco.  HHI
and Opco,  jointly and severally,  will reimburse any Indemnified  Party for all
reasonable costs and expenses  (including  reasonable  attorneys’  fees and
expenses)  as they are incurred in  connection  with  investigating,  preparing,
pursuing,  defending  or assisting  in the defense of any action,  claim,  suit,
investigation or proceeding for which the Indemnified Party would be entitled to
indemnification  under  the terms of the  previous  sentence,  or any  action or
proceeding arising  therefrom,  whether or not such Indemnified Party is a party
thereto.  HHI and Opco will not be liable  under the  foregoing  indemnification
provision with respect to any  Indemnified  Party,  to the extent that any loss,
claim, damage,  liability,  cost or expense is determined by a court, in a final
judgment from which no further appeal may be taken,  to have resulted  primarily
from the gross negligence or willful  misconduct of BMP. If an Indemnified Party
is reimbursed  hereunder for any expenses,  such reimbursement of expenses shall
be  refunded  to  the  extent  it is  finally  judicially  determined  that  the
Liabilities in question resulted  primarily from the gross negligence or willful
misconduct of BMP.







	
6.	
Accuracy of Information.  HHI and Opco shall furnish or cause to be furnished to
BMP such  information as BMP believes  appropriate  to its  monitoring  services
hereunder and to the  ownership by affiliates of BMP of equity  interests of HHI
and/or    Opco    (all    such    information    so    furnished    being    the
“Information”).  HHI and Opco  recognize and confirm that BMP (i) will
use and rely  primarily on the  Information  and on  information  available from
generally  recognized public sources in performing the services  contemplated by
this Agreement  without having  independently  verified the same,  (ii) does not
assume  responsibility  for the accuracy or  completeness of the Information and
such  other  information  and (iii) is  entitled  to rely  upon the  Information
without independent verification.







	
7.	
Term. This Agreement shall be effective as of the date hereof and shall continue
until the earlier of the Termination  Date or September 30, 2003,  provided that
Section 4 shall remain in effect with respect to Out-of-Pocket Expenses incurred
prior to September 30, 2003. The provisions of Sections 5, 6 and 8 and otherwise
as the context so requires shall survive the termination of this Agreement.











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8.	
Permissible  Activities.  Subject to applicable law, nothing herein shall in any
way preclude BMP, its affiliates or their respective  partners (both general and
limited), members (both managing and otherwise), officers, directors, employees,
agents or  representatives  from  engaging in any  business  activities  or from
performing  services  for its or their own account or for the account of others,
including for companies that may be in competition  with the business  conducted
by HHI or Opco.







	
9.	
Miscellaneous.










	
	
(a)	
No amendment or waiver of any  provision  of this  Agreement,  or consent to any
departure  by either party  hereto from any such  provision,  shall be effective
unless the same shall be in writing and signed by all of the parties hereto. Any
amendment,  waiver or consent shall be effective  only in the specific  instance
and for the  specific  purpose for which  given.  The waiver by any party of any
breach of this Agreement  shall not operate as or be construed to be a waiver by
such party of any subsequent breach.







	
	
(b)	
Any notices or other  communications  required or permitted  hereunder  shall be
sufficiently  given  if  delivered  personally  or  sent by  facsimile,  Federal
Express,  or other  overnight  courier,  addressed  as  follows or to such other
address of which the parties may have given notice:










	
	
If to BMP:

	
c/o The Blackstone Group L.P.

345 Park Avenue, 31st Floor

New York, New York 10154

Attention: Chinh E. Chu

Facsimile: (212) 583-5722




	
	
If to HHI or to Opco:
	
Haynes International, Inc.

1020 West Park Avenue

P. O. Box 9013

Kokomo, IN 46904-9013

Attention: Calvin S. McKay

Facsimile: (765) 456-6985







	
	
	
Unless otherwise specified herein, such notices or other communications shall be
deemed  received (i) on the date delivered,  if delivered  personally or sent by
facsimile,  and (ii) one  business  day after  being sent by Federal  Express or
other overnight courier.







	
	
(c)	
This Agreement shall  constitute the entire  agreement  between the parties with
respect to the subject matter hereof,  and shall supersede all previous oral and
written (and all contemporaneous oral) negotiations, commitments, agreements and
understandings relating hereto.







	
	
(d)	
This Agreement shall be governed by, and construed and interpreted in accordance
with,  the laws of the  State of New York.  This  Agreement  shall  inure to the
benefit of, and be binding upon, BMP, HHI, Opco and their respective  successors
and  assigns.  The  provisions  of Section 5 shall  inure to the benefit of each
Indemnified Party.







	
	
(e)	
This  Agreement may be executed by one or more parties to this  Agreement on any
number of separate  counterparts,  and all of said  counterparts  taken together
shall be deemed to constitute one and the same instrument.







	
	
(f)	
The waiver by any party of any breach of this Agreement  shall not operate as or
be construed to be a waiver by such party of any subsequent breach.







	
	
(g)	
Any  provision of this  Agreement  that is prohibited  or  unenforceable  in any
jurisdiction  shall,  as to such  jurisdiction,  be ineffective to the extent of
such  prohibition  or  unenforceability   without   invalidating  the  remaining
provisions  hereof,  and  any  such  prohibition  or   unenforceability  in  any
jurisdiction shall not invalidate or render  unenforceable such provision in any
other jurisdiction.








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IN WITNESS  WHEREOF,  the parties have caused this  Agreement to be executed and
delivered by their duly authorized officers or agents as of the date first above
written.


	
	
BLACKSTONE MANAGEMENT

PARTNERS L.P.

By:  Blackstone Management Partners

L.L.C., its General Partner

By:  /s/   Chinh E. Chu







/ss/   Chinh E. Chu

Name:  Chinh E. Chu

Title:  Senior Managing Director







HAYNES HOLDINGS, INC.

By:  Haynes International, Inc.

By:  /s/   Calvin S. McKay







/ss/   Calvin S. McKay

Name:  Calvin S. McKay

Title:  Chief Financial Officer







HAYNES INTERNATIONAL, INC.

By:  /s/   Calvin S. McKay







/ss/   Calvin S. McKay

Name:  Calvin S. McKay

Title:  Chief Financial Officer








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