Exhibit 10.1


    
      

    

    EXHIBIT
      10.1

    SECOND
      AMENDMENT TO LOAN AND SECURITY AGREEMENT

    


    This
      Second Amendment to Loan and Security Agreement, made as of June 5, 2007 (this
      “Amendment”),
      is
      between FANSTEEL INC., a Delaware corporation (“Fansteel”),
      and
      WELLMAN DYNAMICS CORPORATION, a Delaware corporation (“Wellman”,
      and
      together with Fansteel, “Borrowers”,
      and
      each a “Borrower”),
      and
      Fifth Third Bank (Chicago), a Michigan banking corporation (the “Lender”).
      Capitalized terms used in this Amendment and not otherwise defined herein have
      the meanings assigned to such terms in the Loan Agreement as defined
      below.

    


    


    WITNESSETH

    


    WHEREAS,
      The
      Borrowers and the Lender are parties to that certain Loan and Security Agreement
      dated as of July 15, 2005, as amended by that certain First Amendment to Loan
      and Security Agreement dated as of December 4, 2006 (as such agreement has
      been
      amended, restated, supplemented or otherwise modified from time to time, the
      “Loan
      Agreement”);

    


    WHEREAS,
      the
      Borrowers have requested a SOFA Line of Credit to and including September 30,
      2007;

    


    WHEREAS,
      the
      Lender is willing to modify the Loan Agreement and provide additional financing,
      all on the terms and subject to the conditions of this Amendment;

    


    NOW,
      THEREFORE,
      in
      consideration of the mutual agreements contained in this Amendment, and other
      good and valuable consideration, the receipt and sufficiency of which are
      acknowledged, the parties to this Amendment agree as follows:

    


    SECTION
      1. AMENDMENT
      TO LOAN AGREEMENT

    


    On
      the
      date this Amendment becomes effective, after satisfaction by the Borrowers
      of
      each of the conditions set forth in Section
      3
      (the
“Effective
      Date”),
      the
      Loan Agreement is amended as follows:

    


    1.1   Section
      1.57 of the Loan Agreement is hereby deleted in its entirety and in lieu thereof
      is inserted the following:

    


    “Maximum
      Revolving Loan Limit”
shall
      mean the total of all advances outstanding at any one time under the Revolving
      Loan and the SOFA Revolving Loan, which at no time, in the aggregate, shall
      exceed Twenty Two Million Five Hundred Thousand and No/100 Dollars
      ($22,500,000).

    


    1.2   Section
      1.79 of the Loan Agreement is hereby deleted in its entirety and in lieu thereof
      is inserted the following:

    


    “Revolving
      Loans”
shall
      have the meaning ascribed to it in Section 2.1
      of this
      Agreement, and where the context so requires shall also mean both the Revolving
      Loans and the SOFA Revolving Loan.

    


    1.3   The
      following definition is hereby added as Section 1.90 to the Loan
      Agreement:

    


    “SOFA
      Revolving Loan”
shall
      have the meaning ascribed to it in Section 2.1 of this Agreement.

    


    1.4   Section
      2.1
      of the
      Loan Agreement is hereby deleted in its entirety and in lieu thereof is inserted
      the following:

    


    2.1    Revolving
      Loan Facility.
      Lender
      may, in its good faith discretion, make available for Borrowers’ use from time
      to time during the term of this Agreement, upon Borrowers’ request therefor,
      certain loans and other financial accommodation, including letters of credit
      (the “Total
      Facility”).
      The
      Total Facility shall be subject to all of the terms and conditions of this
      Agreement and shall consist of (a) a Revolving Line of Credit consisting of
      discretionary Advances against Eligible Accounts, Eligible Inventory, and
      Borrowers’ Equipment (the “Revolving
      Loans”)
      in an
      aggregate principal amount not to exceed, at any time, the lesser of (i) Twenty
      Two Million Five Hundred Thousand and No/100 Dollars ($22,500,000), less the
      amount then outstanding under the SOFA Revolving Loan, less the greater of
      (x)
      One Million Five Hundred Thousand and No/100 Dollars ($1,500,000) or (y) the
      amount outstanding from time to time on any credit cards issued by Lender for
      the benefit of Borrowers, and (ii) the amount of Revolving Availability of
      Borrowers, which Revolving Loans shall be evidenced by a Revolving Loan Note,
      and (b) a SOFA Revolving Loan in the amount of $1,500,000, evidenced by a SOFA
      Revolving Loan Note (the “SOFA Revolving Loan”).


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    


    As
      used
      in this Agreement, “Revolving Availability” with respect to each Borrower shall
      mean, and, at any particular time and from time to time, be equal to the sum
      of
      (i) up to eighty-five percent (85%) of the net amount (after deduction of such
      reserves as Lender deems proper and necessary in its sole discretion) of
      Eligible Accounts of such Borrower, plus
      (ii) up
      to the lesser of (A) Six Million Five Hundred Thousand and No/100 Dollars
      ($6,500,000) and (B) sixty percent (60%) of the lower of cost or market value
      of
      Eligible Inventory of such Borrower (net of such reserves as Lender deems proper
      and necessary in its sole discretion), plus
      (iii) up
      to the lesser of (A) Two Million Three Hundred Thirty Thousand Six Hundred
      Forty
      Five and No/100 Dollars ($2,330,645) and (B) seventy-five percent (75%) of
      the
      orderly liquidation value of such Borrower’s Equipment as determined by an
      appraiser acceptable to Lender in its sole discretion (net of such reserves
      as
      Lender deems proper and necessary in its sole discretion), less
      the face
      amount of any Letters of Credit issued on behalf of such Borrower and the amount
      of any drawn upon but unpaid Letters of Credit.

    


    At
      no
      time shall a Borrower borrow amounts under the Revolving Loan which in the
      aggregate exceed its respective Revolving Availability and in no event shall
      the
      amounts borrowed by Borrowers in the aggregate at any time exceed the Maximum
      Revolving Loan Limit.

    


    The
      Revolving Loans shall be repayable in full on January 5, 2009 and as provided
      in
Section 4.2
      of this
      Agreement. The SOFA Revolving Loan shall be repayable in full on September
      30,
      2007 and as provided in Section
      4.2
      of this
      Agreement. Subject to the foregoing limits and the other terms and conditions
      contained herein, and provided that no Default or Event of Default then exists,
      funds out of the Revolving Loan Facility and the SOFA Revolving Loan may be
      advanced, repaid and re-advanced.

    


    It
      is
      expressly understood and agreed by Borrowers that nothing contained in this
      Agreement shall, at any time, require Lender to make loans, advances or other
      extensions of credit (collectively, “Advances”)
      to
      Borrowers and the making and amount of such loans, advances or other extensions
      of credit to Borrowers under this Agreement shall at all times, be in Lender’s
      reasonable good faith discretion. Lender may, in the exercise of such
      discretion, at any time and from time to time, upon at least seven (7) days’
prior written notice to Borrowers, increase or decrease the advance percentages
      to be used in determining Revolving Availability, which are contained in this
      Section 2.1
      and, in
      the event such percentages are decreased, such decrease shall become effective
      seven (7) days following Borrowers receipt of such notice for the purpose of
      calculating the Revolving Availability. The amount of any decrease in the
      lending formulas shall have a reasonable relationship to the event, condition
      or
      circumstance which is the basis for such decrease as determined by Lender in
      good faith. In determining whether to reduce the advance percentages, Lender
      may
      consider events, conditions, contingencies or risks which are also considered
      in
      determining Eligible Accounts and Eligible Inventory.


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    


    1.5   Section
      2.5
      of the
      Loan Agreement is hereby deleted in its entirety and in lieu thereof is inserted
      the following:

    


    2.5    Interest.

     

    (a)    Subject
      to Section
      2.5(c),
      each
      Revolving Loan shall bear interest on the outstanding principal amount thereof
      from the date when made at a rate per annum equal to the Prime Rate, and each
      SOFA Revolving Loan shall bear interest on the outstanding principal amount
      thereof from the date when made at a rate per annum equal to the Prime Rate
      plus
      one per cent (1%).

     

    (b)    Interest
      on each Revolving Loan and SOFA Revolving Loan shall be paid in arrears on
      each
      Interest Payment Date. Interest shall also be paid on the date of any payment
      of
      the Revolving Loans and SOFA Revolving Loans in full and, during the existence
      of any Default or Event of Default, interest shall be payable on demand of
      Lender.

     

    (c)    While
      any
      Default or Event of Default exists and is continuing and/or after maturity
      of
      the Revolving Loans or SOFA Revolving Loans, as the case may be, (whether by
      acceleration or otherwise), unless Lender shall otherwise then agree, Borrowers
      shall pay interest (after as well as before entry of judgment thereon to the
      extent permitted by law) on the principal amount of all Liabilities due and
      unpaid, at a rate per annum equal to the Prime Rate plus two and one-half
      percent (2.5%), in the case of the Revolving Loans, and at a rate per annum
      equal to the Prime Rate plus three and one-half percent (3.5%), in the case
      of
      the SOFA Revolving Loan. 

     

    (d)    Anything
      herein to the contrary notwithstanding, the obligations of Borrowers hereunder
      shall be subject to the limitation that payments of interest shall not be
      required, for any period for which interest is computed hereunder, to the extent
      (but only to the extent) that contracting for or receiving such payment by
      Lender would be contrary to the provisions of any law applicable to Lender
      limiting the highest rate of interest which may be lawfully contracted for,
      charged or received by Lender, and in such event Borrowers shall pay Lender
      interest at the highest rate permitted by applicable law.

    


    (e)    Interest
      shall be based on the average daily outstanding loans for each month and shall
      be computed by applying the ratio of the annual interest rate over a year of
      360
      days, multiplied by such average daily outstanding principal balance, multiplied
      by the actual number of days such average daily principal balance is
      outstanding, and shall be payable on the applicable Interest Payment Date.
      Any
      change in the Prime Rate shall be effective as of the effective date stated
      in
      the announcement by Lender of such change. All sums paid, or agreed to be paid,
      by Borrowers which are, or hereafter may be construed to be, compensation for
      the use, forbearance or detention of money shall, to the extent permitted by
      applicable law, be amortized, prorated, spread and allocated throughout the
      full
      term of all such indebtedness until the indebtedness is paid in
      full.

    


    SECTION
      2. REPRESENTATIONS
      AND WARRANTIES

    


    To
      induce
      the Lender to enter into this Amendment, the Borrowers represent and warrant
      to
      the Lender that:

    


    2.1   Due
      Authorization: Authority; No Conflicts; Enforceability.
      The
      execution delivery and performance by the Borrowers of this Amendment and the
      other documents delivered under Section
      3
      (collectively the “Amendment Documents”) are within each of their respective
      corporate powers, have been duly authorized by all necessary corporate action,
      have received all necessary governmental, regulatory or other approvals (if
      any
      are required), and do not and will not contravene or conflict with any provision
      of (i) any law, (ii) any judgment, decree or order or (iii) its respective
      articles of incorporation or by-laws, and do not and will not contravene or
      conflict with, or cause any lien to arise under, any provision of any agreement
      or instrument binding upon the Borrowers or upon any of its respective
      properties. This Amendment, the Loan Agreement, as amended by this Amendment,
      and the other Amendment documents are the legal, valid and binding obligations
      of the Borrowers enforceable against the Borrowers in accordance with their
      respective terms.


    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    


    2.2   No
      Default: Representations and Warranties.
      As of
      the Effective Date, (i) no Default or Event of Default under the Loan Agreement
      has occurred and is continuing and (ii) the representations and warranties
      of
      the Borrowers contained in the Loan Agreement are true and correct.

    


    SECTION
      3. CONDITIONS
      TO EFFECTIVENESS

    


    The
      obligation of the Lender to make the amendments and modifications contemplated
      by this Amendment, and the effectiveness thereof, are subject to the
      following:

    


    3.1   Representations
      and Warranties.
      The
      representations and warranties of the Borrowers contained in this Amendment
      are
      true and correct as of the Effective Date.

    


    3.2   Documents.
      The
      Lender has received all of the following, each duly executed and dated as of
      the
      Effective Date (or such other date as is satisfactory to the Lender) in form
      and
      substance satisfactory to the Lender:

    


    (a)   Amendment.
      This
      Amendment.

    


    (b)   Revolving
      Note.
      The
      Revolving Note, the form of which is attached hereto as Exhibit
      A.

    


    (c)   SOFA
      Revolving Note.
      The
      SOFA Revolving Note, the form of which is attached hereto as Exhibit
      B.

    


    (d)   Consents.
      Etc.
      Certified copies of any documents evidencing any necessary corporate action,
      consents and governmental approvals, if any, with respect to this Amendment,
      the
      Amendment Documents or any other document provided for under this
      Amendment.

    


    (e)    Other.
      Such
      other documents as the Lender may reasonably request.

    


    SECTION
      4. MISCELLANEOUS

    


    4.1   Captions.
      The
      recitals to this Amendment (except for definitions) and the section captions
      used in this Amendment are for convenience only, and do not affect the
      construction of this Amendment.

    


    4.2   Governing
      Law: Severability.
      This
      Amendment is a contract made under and governed by the internal laws of the
      State of Illinois. Wherever possible, each provision of this Amendment will
      be
      interpreted in such manner as to be effective and valid under applicable law,
      but if any provision of this Amendment is prohibited by or invalid under such
      law, such provision will be ineffective to the extent of such prohibition or
      invalidity, without invalidating the remainder of such provision or the
      remaining provisions of this Amendment.

    


    4.3   Counterparts.
      This
      Amendment may be executed in any number of counterparts and by the different
      parties on separate counterparts, and each such counterpart will be deemed
      to be
      an original, but all such counterparts together constitute but one and the
      same
      Amendment.

    


    4.4   Successors
      and Assigns.
      This
      Amendment is binding upon the Borrowers, the Lender and their respective
      successors and assigns, and inures to the sole benefit of the Borrowers, the
      Lender and their successors and assigns. The Borrowers have no right to assign
      their rights or delegate their duties under this Amendment.

    


    4.5   References.
      From
      and after the Effective Date, each reference in the Loan Agreement to “this
      Agreement,” “hereunder,” hereof,” “herein “ or words of like import, and each
      reference in the Loan Agreement or any other Financing Agreement to the Loan
      Agreement or to any term, condition or provision contained “thereunder,”
“thereof,” “therein,” or words of like import, means and be a reference to the
      Loan Agreement (or such term, condition or provision, as applicable) as amended,
      supplemented, restated or otherwise modified by this Amendment.


    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    


    4.6   Continued
      Effectiveness.
      Notwithstanding anything contained in this Amendment, the terms of this
      Amendment are not intended to and do not serve to effect a novation as to the
      Loan Agreement. The parties to this Amendment expressly do not intend to
      extinguish the Loan Agreement. Instead, it is the express intention of the
      parties to this Amendment to reaffirm the indebtedness created under the Loan
      Agreement. The Loan Agreement remains in full force and effect and the terms
      and
      provisions of the Loan Agreement are ratified and confirmed.

    


    4.7   Costs.
      Expenses and Taxes.
      The
      Borrower affirms and acknowledges that Section 14.3 of the Loan Agreement
      applies to this Amendment and the transactions and agreements and documents
      contemplated under this Amendment.

    


    (remainder
      of page left intentionally blank; signature page follows)


    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    


    Delivered
      as of the day and year first above written.

    
      

        
          	 	
                  FIFTH
                    THIRD BANK (CHICAGO)

                
	 	 
	 	
                  By:

                	
                  /s/
                    Michael E. May

                
	 	
                  Name:

                	
                  Michael
                    E. May

                
	 	
                  Title:

                	
                  Vice
                    President

                
	 	 	 
	 	
                  WELLMAN
                    DYNAMICS CORPORATION

                
	 	 
	 	
                  By:

                	
                  /s/
                    David E. Leitten

                
	 	
                  Name:

                	
                  David
                    E. Leitten

                
	 	
                  Title:

                	
                  President

                
	 	
                   

                	 
	 	
                  FANSTEEL
                    INC.

                
	 	 
	 	
                  By:

                	
                  /s/
                    R. Michael McEntee

                
	 	
                  Name:

                	
                  R.
                    Michael McEntee

                
	 	
                  Title:

                	
                  Vice
                    President & CFO

                


        

      

       

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    


    EXHIBIT
      A

    to

    Loan
      and Security Agreement

    


    REVOLVING
      LOAN NOTE

    


    
      	
              $22,500,000

            	
              Chicago,
                Illinois

            
	 	
              as
                of June 5, 2007

            


    

    


    FOR
      VALUE
      RECEIVED, the undersigned, FANSTEEL INC., a Delaware corporation (“Fansteel”),
      and
      WELLMAN DYNAMICS CORPORATION, a Delaware corporation (“Wellman”,
      and
      together with Fansteel, “Borrowers”,
      and
      each a “Borrower”),
      hereby jointly and severally unconditionally promise to pay to the order of
      FIFTH THIRD BANK (CHICAGO), a Michigan banking corporation (“Lender”),
      at
      Lender’s office at 222 South Riverside Plaza, 33rd
      Floor,
      Chicago, Illinois 60606, or at such other place as Lender may from time to
      time
      designate in writing, in lawful money of the United States of America and in
      immediately available funds, the principal sum of TWENTY TWO MILLION FIVE
      HUNDRED THOUSAND AND NO/100 DOLLARS ($22,500,000), or the aggregate unpaid
      principal amount of all advances made pursuant to subsection
      2.1
      of the
      Loan Agreement (as hereinafter defined) at such times as are specified in and
      in
      accordance with the provisions of the Loan Agreement. This Revolving Loan Note
      (this “Note”)
      is
      referred to in and was executed and delivered pursuant to that certain Second
      Amendment to Loan and Security Agreement dated as of even date herewith by
      and
      among Borrowers and Lender (as amended, restated, modified or supplemented
      and
      in effect from time to time, the “Loan
      Agreement”),
      to
      which reference is hereby made for a statement of the terms and conditions
      under
      which the loan and other advances evidenced hereby were made and are to be
      repaid and for a statement of Lender’s remedies. All terms which are capitalized
      and used herein (which are not otherwise specifically defined herein) and which
      are defined in the Loan Agreement shall be used in this Note as defined in
      the
      Loan Agreement.

    


    Borrowers
      promise to pay interest, including default interest, on the outstanding unpaid
      principal amount hereof, as provided in the Loan Agreement. If demand is not
      sooner made, all accrued interest and principal, if not sooner paid, shall
      be
      due and payable on January 5, 2009.

    


    Interest
      on this Note shall be payable at the rates and from the dates specified in
      the
      Loan Agreement, on the date of any prepayment hereof, at maturity, whether
      due
      by acceleration or otherwise, and as otherwise provided in the Loan Agreement.
      Interest shall be payable on the last Business Day of each month
      hereafter.

    


    This
      Note
      is secured pursuant to the Loan Agreement and the other Ancillary Agreements
      referred to therein, and reference is made thereto for a statement of the terms
      and conditions of such security.

    


    Lender
      shall have the continuing exclusive right to apply and to reapply any and all
      payments hereunder against the Liabilities of Borrowers, in accordance with
      the
      terms of the Loan Agreement.

    


    Each
      Borrower hereby waives demand, presentment, protest, notice of demand,
      presentment, protest and nonpayment. Each Borrower also waives all rights to
      notice and hearing of any kind upon the occurrence of a Default or an Event
      of
      Default prior to the exercise by Lender, of its rights to repossess the
      Collateral without judicial process or to replevy, attach or levy upon the
      Collateral without notice or hearing.

    


    In
      addition to and not in limitation of the foregoing and the provisions of the
      Loan Agreement, the undersigned further agrees, subject only to any limitation
      imposed by applicable law, to pay all expenses, including reasonable attorneys’
fees and legal expenses, incurred by the holder of this Note in endeavoring
      to
      collect any amounts payable hereunder which are not paid when due whether by
      acceleration or otherwise.

    


    THIS
      NOTE SHALL BE DEEMED TO HAVE BEEN MADE AT CHICAGO, ILLINOIS AND SHALL BE
      INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED
      IN
      ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS)
      AND DECISIONS OF THE STATE OF ILLINOIS. WHENEVER POSSIBLE EACH PROVISION OF
      THIS
      NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
      APPLICABLE LAW, BUT IF ANY PROVISION OF THIS NOTE SHALL BE PROHIBITED BY OR
      INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE EXTENT
      OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF SUCH
      PROVISION OR THE PROVISIONS OF THIS NOTE. ALL
      REFERENCES TO THE SINGULAR SHALL BE DEEMED TO INCLUDE THE PLURAL, AND VICE
      VERSA, WHERE THE CONTEXT SO REQUIRES.
      WHENEVER IN THIS NOTE REFERENCE IS MADE TO LENDER OR A BORROWER OR BORROWERS,
      SUCH REFERENCE SHALL BE DEEMED TO INCLUDE AS APPLICABLE, A REFERENCE TO THEIR
      RESPECTIVE SUCCESSORS AND ASSIGNS. THE PROVISIONS OF THIS NOTE SHALL BE BINDING
      UPON AND SHALL INURE
      TO
      THE BENEFIT OF SUCH SUCCESSORS AND ASSIGNS. EACH BORROWER’S SUCCESSORS AND
      ASSIGNS SHALL INCLUDE, WITHOUT LIMITATION, A RECEIVER, TRUSTEE OR DEBTOR IN
      POSSESSION OF OR FOR SUCH BORROWER. EACH
      BORROWER SHALL BE JOINTLY AND SEVERALLY OBLIGATED
      HEREUNDER.


    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    


    This
      Revolving Note replaces that certain Revolving Note in the original principal
      amount of $21,500,000, dated December 4, 2006, and does not constitute payment
      thereof or a novation therefor.

    


    


    [Remainder
      of page intentionally left blank; signature page follows]


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, each Borrower has caused its duly authorized representative
      to
      execute this Revolving Loan Note as of the date first set forth
      above.

     

     

    
      
        
          	 	
                  FANSTEEL
                    INC.

                
	 	 
	 	
                  By:

                	
                  /s/
                    R. Michael McEntee

                
	 	
                  Name:

                	
                  R.
                    Michael McEntee

                
	 	
                  Title:

                	
                  Vice
                    President & CFO

                
	 	
                   

                	 
	 	
                  WELLMAN
                    DYNAMICS CORPORATION

                
	 	 
	 	
                  By:

                	
                  /s/
                    David E. Leitten

                
	 	
                  Name:

                	
                  David
                    E. Leitten

                
	 	
                  Title:

                	
                  President

                


        

      

    

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    EXHIBIT
      B

    to

    Loan
      and Security Agreement

    


    SOFA
      REVOLVING LOAN NOTE

    


    
      	
              $1,500,000

            	
              Chicago,
                Illinois

            
	 	
              as
                of June 5, 2007

            


    

    


    FOR
      VALUE
      RECEIVED, the undersigned, FANSTEEL INC., a Delaware corporation (“Fansteel”),
      and
      WELLMAN DYNAMICS CORPORATION, a Delaware corporation (“Wellman”,
      and
      together with Fansteel, “Borrowers”,
      and
      each a “Borrower”),
      hereby jointly and severally unconditionally promise to pay to the order of
      FIFTH THIRD BANK (CHICAGO), a Michigan banking corporation (“Lender”),
      at
      Lender’s office at 222 South Riverside Plaza, 33rd
      Floor,
      Chicago, Illinois 60606, or at such other place as Lender may from time to
      time
      designate in writing, in lawful money of the United States of America and in
      immediately available funds, the principal sum of ONE MILLION FIVE HUNDRED
      THOUSAND AND NO/100 DOLLARS ($1,500,000), or the aggregate unpaid principal
      amount of all advances made pursuant to subsection
      2.1
      of the
      Loan Agreement (as hereinafter defined) at such times as are specified in and
      in
      accordance with the provisions of the Loan Agreement. This SOFA Revolving Loan
      Note (this “Note”)
      is
      referred to in and was executed and delivered pursuant to that certain Second
      Amendment to Loan and Security Agreement dated as of even date herewith by
      and
      among Borrowers and Lender (as amended, restated, modified or supplemented
      and
      in effect from time to time, the “Loan
      Agreement”),
      to
      which reference is hereby made for a statement of the terms and conditions
      under
      which the loan and other advances evidenced hereby were made and are to be
      repaid and for a statement of Lender’s remedies. All terms which are capitalized
      and used herein (which are not otherwise specifically defined herein) and which
      are defined in the Loan Agreement shall be used in this Note as defined in
      the
      Loan Agreement.

    


    Borrowers
      promise to pay interest, including default interest, on the outstanding unpaid
      principal amount hereof, as provided in the Loan Agreement. If demand is not
      sooner made, all accrued interest and principal, if not sooner paid, shall
      be
      due and payable on September 30, 2007.

    


    Interest
      on this Note shall be payable at the rates and from the dates specified in
      the
      Loan Agreement, on the date of any prepayment hereof, at maturity, whether
      due
      by acceleration or otherwise, and as otherwise provided in the Loan Agreement.
      Interest shall be payable on the last Business Day of each month
      hereafter.

    


    This
      Note
      is secured pursuant to the Loan Agreement and the other Ancillary Agreements
      referred to therein, and reference is made thereto for a statement of the terms
      and conditions of such security.

    


    Lender
      shall have the continuing exclusive right to apply and to reapply any and all
      payments hereunder against the Liabilities of Borrowers, in accordance with
      the
      terms of the Loan Agreement.

    


    Each
      Borrower hereby waives demand, presentment, protest, notice of demand,
      presentment, protest and nonpayment. Each Borrower also waives all rights to
      notice and hearing of any kind upon the occurrence of a Default or an Event
      of
      Default prior to the exercise by Lender, of its rights to repossess the
      Collateral without judicial process or to replevy, attach or levy upon the
      Collateral without notice or hearing.

    


    In
      addition to and not in limitation of the foregoing and the provisions of the
      Loan Agreement, the undersigned further agrees, subject only to any limitation
      imposed by applicable law, to pay all expenses, including reasonable attorneys’
fees and legal expenses, incurred by the holder of this Note in endeavoring
      to
      collect any amounts payable hereunder which are not paid when due whether by
      acceleration or otherwise.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      THIS
        NOTE SHALL BE DEEMED TO HAVE BEEN MADE AT CHICAGO, ILLINOIS AND SHALL BE
        INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED
        IN
        ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS)
        AND DECISIONS OF THE STATE OF ILLINOIS. WHENEVER POSSIBLE EACH PROVISION
        OF THIS
        NOTE SHALL BE INTERPRETED IN SUCH MANNER AS TO BE EFFECTIVE AND VALID UNDER
        APPLICABLE LAW, BUT IF ANY PROVISION OF THIS NOTE SHALL BE PROHIBITED BY
        OR
        INVALID UNDER APPLICABLE LAW, SUCH PROVISION SHALL BE INEFFECTIVE TO THE
        EXTENT
        OF SUCH PROHIBITION OR INVALIDITY, WITHOUT INVALIDATING THE REMAINDER OF
        SUCH
        PROVISION OR THE PROVISIONS OF THIS NOTE. ALL
        REFERENCES TO THE SINGULAR SHALL BE DEEMED TO INCLUDE THE PLURAL, AND VICE
        VERSA, WHERE THE CONTEXT SO REQUIRES.
        WHENEVER IN THIS NOTE REFERENCE IS MADE TO LENDER OR A BORROWER OR BORROWERS,
        SUCH REFERENCE SHALL BE DEEMED TO INCLUDE AS APPLICABLE, A REFERENCE TO THEIR
        RESPECTIVE SUCCESSORS AND ASSIGNS. THE PROVISIONS OF THIS NOTE SHALL BE BINDING
        UPON AND SHALL INURE
        TO
        THE BENEFIT OF SUCH SUCCESSORS AND ASSIGNS. EACH BORROWER’S SUCCESSORS AND
        ASSIGNS SHALL INCLUDE, WITHOUT LIMITATION, A RECEIVER, TRUSTEE OR DEBTOR
        IN
        POSSESSION OF OR FOR SUCH BORROWER. EACH
        BORROWER SHALL BE JOINTLY AND SEVERALLY OBLIGATED
        HEREUNDER.

       

    

    [Remainder
      of page intentionally left blank; signature page follows]


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, each Borrower has caused its duly authorized representative
      to
      execute this SOFA Revolving Loan Note as of the date first set forth
      above.

     

    
      
        
          	 	
                  FANSTEEL
                    INC.

                
	 	 	 
	 	
                  By:

                	
                  /s/
                    R. Michael McEntee

                
	 	
                  Name:

                	
                  R.
                    Michael McEntee

                
	 	
                  Title:

                	
                  Vice
                    President & CFO

                
	 	 	 
	 	
                  WELLMAN
                    DYNAMICS CORPORATION

                
	 	 	 
	 	
                  By:

                	
                  /s/
                    David E. Leitten

                
	 	
                  Name:

                	
                  David
                    E. Leitten

                
	 	
                  Title:

                	
                  President

                


        

      

    

     

     

    12