1,600,000 Shares
               6.625% Series A Senior Convertible Preferred Stock
                     (Liquidation Amount $50.00 per Share)

                       AMENDMENT TO INVESTMENT AGREEMENT


                                                                October 28, 1998


Titanium Metals Corporation
TIMET Finance Management Company
1999 Broadway, Suite 4300
Denver, Colorado  80202


Ladies and Gentlemen:

          Reference is made to the Investment Agreement, dated July 8, 1998 (the
"Investment Agreement"), among Special Metals Corporation, a Delaware
corporation (the "Company"), Titanium Metals Corporation, a Delaware corporation
("TMC"), and TIMET Finance Management Company, a Delaware corporation and a
wholly-owned subsidiary of TMC (the "Investor"), relating to the proposed
issuance and sale by the Company to the Investor of shares (the "Shares") of the
Company's 6.625% Series A Senior Convertible Preferred Stock, liquidation amount
$50.00 per share (the "Convertible Preferred Securities").

          In consideration of the premises and mutual agreements contained
herein, and for other good and valuable consideration, the receipt and
<PAGE>

sufficiency of which are hereby acknowledged, the parties hereto agree to amend
the Investment Agreement pursuant to Section 19 thereof as follows:

          1.  Defined Terms.  Except as otherwise provided herein, capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Investment Agreement.  References herein to this
"Amendment" shall mean this Amendment to the Investment Agreement.  Unless the
context otherwise requires, references in the Investment Agreement to
"Convertible Preferred Securities" shall refer solely to the Shares of the
Company's 6.625% Series A Senior Convertible Preferred Stock being purchased by
the Investor pursuant to the Investment Agreement, as amended hereby, and shall
not include any shares being purchased by Inco Limited pursuant to the Inco
Investment Agreement (as hereinafter defined).

          2.  Amendments to Investment Agreement.

               (a)  The first paragraph of the Investment Agreement is hereby
    amended by deleting such paragraph in its entirety and replacing it with a
    new paragraph as follows:

               "Special Metals Corporation, a Delaware corporation (the
          "Company"), proposes to issue and sell to TIMET Finance Management
          Company, a Delaware corporation (the "Investor"), and a wholly-owned
          subsidiary of Titanium Metals Corporation, a Delaware corporation
          ("TMC"), 1,600,000 shares of its 6.625% Series A Senior Convertible
          Preferred Stock, liquidation amount $50.00 per share (the "Convertible
          Preferred Securities").  The Convertible Preferred Securities will be
          convertible into shares of the common stock, par value $.01 per share
          (the "Common Stock"), of the Company initially at the conversion price
          set forth herein and will rank, with respect to dividend rights and
          rights upon liquidation, winding up and dissolution, senior to the
          Common Stock, and each other class of capital stock or series of
<PAGE>

          preferred stock of the Company established after the original issuance
          of the Convertible Preferred Securities, and ~pari~passu~with the
          Convertible Preferred Securities to be issued under the Certificate of
          Designation referred to in Section 1 below to Inco Limited, a
          corporation continued under the laws of Canada ("Inco Limited),
          pursuant to the Investment Agreement to be entered into between Inco
          Limited and the Company (the "Inco Investment Agreement").

               (b)  Section 1 of the Investment Agreement is hereby amended by
     deleting such Section in its entirety and replacing it with a new Section 1
     as follows:

               "1.  Purchase and Sale.  On the terms and subject to the
          conditions and in reliance upon the representations and warranties set
          forth in this Agreement, the Company agrees to issue, sell and deliver
          to the Investor, and the Investor agrees to purchase from the Company,
          1,600,000 Convertible Preferred Securities, at a purchase price of
          $50.00 per Convertible Preferred Security, for an aggregate purchase
          price of $80,000,000 (the "Purchase Price").  Each Convertible
          Preferred Security shall be convertible at the option of the holder
          into shares of Common Stock of the Company following the Initial
          Conversion Date (as defined herein) at a conversion price equal to
          $16.50 per share.  Such conversion price will be subject to adjustment
          from time to time as set forth in the Certificate of Designation of
          Rights and Preferences establishing the terms and relative rights and
          preferences of the Convertible Preferred Securities substantially in
          the form set forth in Exhibit C hereto (the "Certificate of
          Designation").  The term "Initial Conversion Date" shall mean the
          latest of (i) 90 days following the date of original issuance of the
          Convertible Preferred Securities, (ii) the date on which approval is
          obtained in accordance with Regulation 14A of the Securities Exchange
          Act of 1934, as amended (the "Exchange Act"), by the stockholders of
<PAGE>

          the Company entitled to vote thereon (the "Stockholders Conversion
          Vote") of the issuance of Common Stock upon the conversion of the
          Convertible Preferred Securities upon the terms and conditions set
          forth in the Certificate of Designation and (iii) the date upon which
          all waiting periods under the Hart-Scott-Rodino Antitrust Improvements
          Act of 1976, as amended (the "Hart-Scott-Rodino Act"), have expired or
          been terminated."

               (c)  Section 3 of the Investment Agreement is hereby amended by
     deleting Section 3(h) in its entirety and replacing it with a new Section
     3(h) as follows:

               " (h)   The financing contemplated by (i) the new credit
          facility to be entered into by the Company, Credit Lyonnais
          New York Branch as agent and various lenders with respect to
          the Acquisition (the "New Credit Agreement"), (ii) the
          Investor's investment in the Convertible Preferred Securities
          as contemplated by this Agreement, (iii) Inco Limited's
          investment in $17,000,000 aggregate liquidation amount of
          Convertible Preferred Securities as contemplated by the Inco
          Investment Agreement, and (iv) Inco's agreement to pay Credit
          Lyonnais New York Branch, as agent, a fee of $10,000,000
          pursuant to the letter agreement dated October 5, 1998
          constitute the only financing arrangements to be entered into
          by or on behalf of the Company or any of its Subsidiaries in
          connection with the financing of the Acquisition other than
          indebtedness of Inco and/or its subsidiaries to be assumed in
          connection with the Acquisition."

               (d)  Section 3(q) of the Investment Agreement is hereby
     amended by inserting the words", the Inco Investment Agreement"

<PAGE>

     immediately after the words "this Agreement" on the 2nd line of
     such Section.

               (e)  Section 5 of the Investment Agreement is hereby
     amended by deleting such Section 5 in its entirety and replacing
     it with a new Section 5 as follows:

               "5.  Governance.  The Company agrees with the Investor and TMC
          that:

                    (a)  Immediately following the Closing Time, the Board of
          Directors of the Company (the "Board") shall increase the authorized
          number of Directors of the Board by a number sufficient to include as
          an additional director of the Company one Investor Nominee (as defined
          in Section 5(b) hereof) who has been designated by the Investor in the
          Investor Nominee Notice (as defined in Section 5(b) hereof) and shall
          appoint such Investor Nominees to the Board as a Class III Director in
          accordance with the Company's procedures for the appointment of
          directors.  Such Investor Nominee shall hold office for a term
          expiring at the annual meeting of stockholders at which the term of
          the class to which he or she has been elected expires or until his or
          her successor is duly elected and qualified.  So long as the Investor
          (together with TMC and any wholly-owned subsidiary of TMC)
          beneficially owns voting securities of the Company representing at
          least 10% of the outstanding voting securities of the Company
          (assuming for purposes of this Section 5, that any Convertible
          Preferred Securities owned by the Investor, TMC or such subsidiary
          have been converted into Common Stock), the Investor shall be entitled
          to designate one Investor Nominee to the Board.  If at any time the
          number of members constituting the entire Board shall exceed 10,
          including the Investor Nominee appointed pursuant to this Section 5
          but excluding all directors elected by holders of the Convertible
<PAGE>

          Preferred Securities pursuant to Section 9 of the Certificate of
          Designation, the Investor shall be entitled to designate pursuant to
          an Investor Nominee Notice, and the Board shall appoint to the Board,
          one additional Investor Nominee in accordance with the provisions of
          this Section 5.  In the event of a vacancy caused by the
          disqualification, removal, resignation or other cessation of service
          of any Investor Nominee from the Board, the Board shall elect as a
          director (to serve until the Company's immediately succeeding annual
          meeting of shareholders at which the term of the class to which such
          Investor Nominee has been elected expires) a new Investor Nominee who
          has been designated by the Investor in an additional Investor Nominee
          Notice that has been provided to the Company at least five days prior
          to the date of a regular meeting of the Board. The Investor shall
          nominate each Investor Nominee pursuant to an additional Investor
          Nominee Notice in advance of each meeting of shareholders at which
          such Investor Nominee is to be elected.  If the beneficial ownership
          by the Investor (together with the beneficial ownership by TMC or any
          wholly-owned subsidiary of TMC) of the outstanding voting securities
          of the Company decreases below 10% of the outstanding voting
          securities of the Company (assuming for purposes of this Section 5,
          that any Convertible Preferred Securities owned by the Investor, TMC
          and any such wholly-owned subsidiary of TMC have been converted into
          Common Stock) the Investor shall, at the request of the Company, cause
          all its Investor Nominees to resign from the Board, in accordance with
          the Company's procedures for the resignation of directors and
          applicable laws and regulations.

                    (b)  The Investor shall provide a designation notice to the
          Company (the "Investor Nominee Notice") as required by Section 5(a)
          above for each Investor Nominee, which notice shall contain the
          following information: (i) the name of the person(s) it has designated
          to become director(s) of the Company (each, an "Investor Nominee"),
<PAGE>

          and (ii) all information required by Regulation 14A and Schedule 14A
          under the Exchange Act with respect to each such Investor Nominee.
          Such Investor Nominee may be any person designated by the Investor,
          including, but not limited to, persons who are officers, directors or
          employees of the Investor.

                    Notwithstanding the above, the Company shall not be
          obligated to perform the obligations under this Section 5 with respect
          to any Investor Nominee designated by the Investor if such Investor
          Nominee is (i) a director, officer, employee, shareholder, controlling
          person or otherwise affiliated with a Significant Competitor (as
          hereinafter defined), other than TMC or its affiliates, (ii) a person
          that is or theretofore has been engaged in material litigation adverse
          to the Company or any of its affiliates, (iii) a person (other than
          TMC and/or its wholly owned subsidiaries) who beneficially owns voting
          securities of the Company representing more than 10% of the
          outstanding voting securities of the Company, or (iv) a person (x)
          other than the person then serving as chief executive officer, chief
          financial officer or chief operating officer of TMC and/or as a
          director of TMC or (y) who the Board, after customary investigation of
          such person's qualifications, reasonably determines in good faith is
          not qualified or acceptable under standards applied fairly and equally
          to all nominees (it being understood that any person listed on
          Schedule 5(b) hereto or falling within subclause (x) of this clause
          (iii) shall be deemed qualified and acceptable hereunder).

               (c)  The Company agrees to cause to include the Investor Nominee
          which the Investor is entitled to designate pursuant to this Agreement
          in the slate of nominees recommended by the Board to the Company's
          shareholders for election as directors and shall use its reasonable
          best efforts to cause the election or reelection of each such Investor
          Nominee to the Board at each meeting of shareholders at which such
<PAGE>

          Investor Nominee is up for election, including soliciting proxies in
          favor of the election of such persons.  At the direction of the
          Investor, the Company shall use reasonable efforts to cause the
          removal from the Board of any Investor Nominee.

                    (d) Each Investor Nominee shall be reimbursed for his or her
          out-of-pocket expenses incurred in attending regular and special Board
          meetings and any meeting of any Board committee by the Company to the
          extent of, and in accordance with, the policies of the Company
          generally applicable to the reimbursement of expenses of directors of
          the Company.

                    (e)  The Board will not establish an executive committee
          authorized to exercise the power of the Board generally unless the
          Investor is granted representation on such committee proportional to
          its representation on the Board, nor will the Board establish or
          employ committees (unless the Investor is granted proportional
          representation thereon) as a means designed to circumvent or having
          the effect of circumventing the rights of the Investor under this
          Agreement to representation on the Board."

               (f)  Section 7(c) of the Investment Agreement is hereby amended
     by inserting the words", Inco" immediately after the word "TMC."

               (g)  Section 7(d) of the Investment Agreement is hereby amended
     by inserting the words", Inco" immediately after the word "TMC" on the 7th
     line of such Section.

               (h)  Section 9 of the Investment Agreement is hereby amended by
     inserting the words "(other than the Convertible Preferred Securities or
     Conversion Shares that are to be issued under the Inco Investment

<PAGE>

     Agreement)" immediately after the words "or other voting securities" on the
     3rd line from the top of such Section.

               (i)  Section 11 of the Investment Agreement is hereby amended by
     adding subsection (l) thereto as follows:

               " (l)   The terms of the Convertible Preferred Stock to be issued
          and sold to Inco Limited pursuant to the Inco Investment Agreement,
          and any additional rights granted to Inco with respect thereto or in
          connection therewith, shall be in all material respects as set forth
          in the attached Certificate of Designation, Inco Investment Agreement
          and registration rights agreement between the Company and Inco
          Limited."

               (j)  Section 12 of the Investment Agreement is hereby amended by
     deleting Section 12(b) in its entirety.

               (k)  The Investment Agreement is hereby amended by adding a
     Section 31 thereto as follows:

               "31.  Acknowledgment of Inco Investment Agreement.  The Investor
          hereby acknowledges that the Company has advised the Investor that, at
          the Closing Time, the Company and Inco Limited will enter into the
          Inco Investment Agreement pursuant to which the Company will issue
          under the Certificate of Designation, sell and deliver to Inco Limited
          340,000 Convertible Preferred Securities, at a purchase price of
          $50.00 per Convertible Preferred Security, for an aggregate purchase
          price of $17,000,000, and the Investor has agreed to such issuance to
          Inco Limited."



<PAGE>

          3.   Confirmation of Investment Agreement.  Except as otherwise
expressly provided herein, the Investment Agreement is and shall remain in full
force and effect and is hereby ratified and confirmed.

          4.   Governing Law. This Amendment shall be governed by, and
construed, in accordance with, the laws of the State of New York applicable to
contracts made and to be performed in that state.

          5.   Counterparts.  This Amendment may be executed in two or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same instrument.


<PAGE>

          If the foregoing is in accordance with your understanding of our
agreement with respect to the amendment of the Investment Agreement, please sign
and return to us the enclosed duplicate hereof, whereupon this Amendment and
your acceptance shall represent a binding agreement between the Company, on the
one hand, and the Investor and TMC, on the other hand.

                         Very truly yours,

                         SPECIAL METALS CORPORATION

                         By:    /s/ Donald R. Muzyka
                         Name:     Donald R. Muzyka
                         Title:    President


The foregoing Amendment is hereby
confirmed and accepted as of the
date first above written:

TIMET FINANCE MANAGEMENT COMPANY

By:  /s/ Susan E. Alderton
Name:  Susan E. Alderton
Title:    Treasurer

TITANIUM METALS CORPORATION

By:  /s/ J. Landis Martin
Name:  J. Landis Martin
Title:    Chief Executive Officer


<PAGE>


<PAGE>