Document:

Exhibit
10.17

[Execution]

AMENDMENT
NO. 2 TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT dated as of January 27, 2005 by and among Haynes
International, Inc., a Delaware corporation (“Haynes Parent”), Haynes Wire
Company, a Delaware corporation (“Haynes Wire” and together with Haynes Parent,
each individually, a “Borrower” and collectively, “Borrowers”), the parties
from time to time to the Loan Agreement (as hereinafter defined) as lenders
(each individually, a “Lender” and collectively, “Lenders”) and Congress
Financial Corporation (Central), an Illinois corporation, in its capacity as
agent for Lenders pursuant to the Loan Agreement (in such capacity, “Agent”).

WITNESSETH

WHEREAS, Borrowers have entered into financing
arrangements with Agent and Lenders pursuant to which Lenders (or Agent on
behalf of Lenders) have made and may make loans and advances and provide other
financial accommodations to Borrowers as set forth in, and subject to the terms
and conditions of, the Amended and Restated Loan and Security Agreement, dated
August 31, 2004, by and among Agent, Lenders, JPMorgan Chase Bank N.A.,
successor by merger to Bank One, NA, in its capacity as documentation agent for
Lenders, and Haynes Parent, as amended by Amendment No. 1 to Amended and
Restated Loan and Security Agreement, dated November 5, 2004, by and among
Borrowers, Lenders and Agent (as amended and supplemented hereby and as the
same may hereafter be further amended, modified, supplemented, extended,
renewed, restated or replaced, the “Loan Agreement”) and the other Financing
Agreements (as defined therein); and

WHEREAS, Borrowers, Agent and Lenders have agreed to
certain amendments to the Loan Agreement, subject to the terms and conditions
herein; and

WHEREAS, by this Amendment No. 2, Borrowers, Agent and
Lenders desire and intend to evidence such consents and amendments;

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

Section 1.               Definitions.

1.1           Defined Terms.  For purposes of this Amendment No. 2, unless
otherwise defined herein, all capitalized terms used herein shall have the
meanings assigned thereto in the Loan Agreement.

1.2           Additional
Definitions.  As used herein, the
following terms shall have the meanings given to them below, and the Loan
Agreement is hereby amended to include the following definitions:

(a)           “Amendment No. 2”
shall mean Amendment No. 2 to Amended and Restated Loan and Security Agreement
by and among Borrowers, Agent and Lenders, as it now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.

(b)           “Revolving Loan
Limit” shall mean the amount equal to: (i) the Maximum Credit minus (ii) the
then outstanding aggregate principal amount of the Equipment Purchase Loans.

(c)           “Revolving Loans”
shall mean the loans now or hereafter made by or on behalf of any Lender or by
Agent for the account of any Lender, on a revolving basis pursuant to the
Credit Facility (including advances, repayments and readvances), as set forth
in Section 2.1(a) hereof.

1.3           Amendments to
Definitions.  Each of the defined
terms below shall be deemed to be amended and restated in their entirety to
have the meaning as to such term set forth below:

(a)           “Commitment” shall
mean, with respect to each Lender, the principal amount set forth on Schedule
1.134 hereto for such Lender or for any party becoming a Lender after the date
hereof the amount of such Lender’s Commitment as set forth on Schedule 1 to the
Assignment and Acceptance Agreement pursuant to which such Lender may become a
Lender hereunder in accordance with the provisions of Section 13.7 hereof; as
the same may be adjusted in accordance with the terms hereof; sometimes being
collectively referred to as “Commitments”.

(b)           “Equipment Purchase
Loan Limit” shall mean at any time the lesser of (i) $10,000,000 or (ii) the
amount equal to: (A) the Maximum Credit minus (B) the sum of (1) the Revolving
Loans then outstanding, plus (2) the undrawn amount of Letter of Credit
Accommodations then outstanding.

(c)           “Excess Availability”
shall mean at any time and without duplication, (i) the lesser of: (A) the
Borrowing Base and (B) the Revolving Loan Limit (in each case under (A) or (B)
after giving effect to any applicable Reserves), minus (ii) the sum of: (A) the
amount of the then outstanding and unpaid principal amount of the Revolving
Loans and the undrawn amount of Letter of Credit Accommodations, plus (B) the
aggregate amount of all payables or other obligations outstanding more than
forty-five (45) days after the due date therefor as of such time (and for this
purpose the due date for payables incurred prior to the commencement of the
Chapter 11 Case (or during the course thereof) will be the date for payment of
such payables as established pursuant to the Plan and the claims administration
process provided for in the Chapter 11 Case and as to those payables or other
obligations that are subject to a dispute or are not otherwise allowed, prior
to the establishment of the due date for such payables or other obligations
pursuant to the Plan and the claims administration process, such payables and
other obligations shall not be deemed outstanding more than forty-five (45)
days after the due date therefor for purposes of this definition), plus (C) the
amount of checks issued by Borrower to pay payables and other obligations which
are more than such number of days past due, but not yet sent (without
duplication of amounts included in clause (ii)(B) herein).

(d)           “Haynes Parent
Excess Availability” shall mean at any time and without duplication, the amount
calculated at such time equal to:

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(i)            the lesser of: (A)
the Haynes Parent Borrowing Base and (B) the amount equal to the Revolving Loan
Limit minus the then outstanding Loans to Haynes Wire (in each case under (A)
or (B) after giving effect to any applicable Reserves), minus

(ii)           the sum of: (A) the
amount of the then outstanding and unpaid principal amount of the Revolving
Loans to Haynes Parent and the undrawn amount of Letter of Credit
Accommodations issued on behalf or for the benefit of Haynes Parent, plus (B)
the aggregate amount of all payables or other obligations of Haynes Parent
outstanding more than forty-five (45) days after the due date therefor as of
such time (and for this purpose the due date for payables incurred prior to the
commencement of the Chapter 11 Case (or during the course thereof) will be the
date for payment of such payables as established pursuant to the Plan and the
claims administration process provided for in the Chapter 11 Case and as to
those payables or other obligations that are subject to a dispute or are not
otherwise allowed, prior to the establishment of the due date for such payables
or other obligations pursuant to the Plan and the claims administration
process, such payables and other obligations shall not be deemed outstanding
more than forty-five (45) days after the due date therefor for purposes of this
definition), plus (C) the amount of checks issued by Haynes Parent to pay
payables and other obligations which are more than such number of days past due,
but not yet sent (without duplication of amounts included in clause (ii)(B)
herein).

(e)           “Haynes Wire Excess
Availability” shall mean at any time and without duplication, the amount
calculated at such time equal to:

(i)            the lesser of: (A)
the Haynes Wire Borrowing Base and (B) the amount equal to the Revolving Loan
Limit minus the then outstanding Revolving Loans to Haynes Parent (in each case
under (A) or (B) after giving effect to any applicable Reserves), minus

(ii)           the sum of: (A) the
amount of the then outstanding and unpaid principal amount of the Revolving
Loans to Haynes Wire and the undrawn amount of Letter of Credit Accommodations
issued on behalf or for the benefit of Haynes Wire, plus (B) the aggregate
amount of all payables or other obligations of Haynes Wire outstanding more
than forty-five (45) days after the due date therefor as of such time, plus (C)
the amount of checks issued by Haynes Wire to pay payables and other
obligations which are more than such number of days past due, but not yet sent
(without duplication of amounts included in clause (ii)(B) herein).

(f)            “Inventory Loan
Limit” shall mean at any time, (i) as to Haynes Parent, the amount equal to (A)
$70,000,000 minus (B) the then outstanding amount of Revolving Loans to Haynes
Wire (and including Letter of Credit Accommodations to the extent provided in
Haynes Wire Borrowing Base) based on Eligible Inventory of Haynes Wire and (ii)
as to Haynes Wire, the amount equal to (A) $70,000,000 minus (B) the then
outstanding amount of Revolving Loans to Haynes Parent (and including Letter of
Credit Accommodations to the extent provided in Haynes Parent Borrowing Base)
based on Eligible Inventory of Haynes Parent.

(g)           “Loans” shall mean,
collectively, the Revolving Loans and the Equipment Purchase Loans.

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(h)           “Monthly Average
Excess Availability” shall mean, at any time, the daily average of the
aggregate amount of the Excess Availability for the immediately preceding month
as calculated by Agent in good faith, with Excess Availability calculated for
this purpose without regard to the Revolving Loan Limit or the Maximum Credit.

(i)            “Pro Rata Share”
shall mean:

(i)            with respect to a
Lender’s obligation to make Loans and to acquire interests in Letter of Credit
Accommodations and receive payments of interest and principal with respect
thereto, the fraction (expressed as a percentage) the numerator of which is
such Lender’s Commitment and the denominator of which is the aggregate amount
of all of the Commitments, as adjusted from time to time in accordance with the
provisions of Section 13.7 hereof; provided, that, if the Commitments have been
terminated, the numerator shall be the unpaid amount of such Lender’s Loans and
its interest in the Letter of Credit Accommodations and the denominator shall
be the aggregate amount of all unpaid Loans and Letter of Credit
Accommodations;

(ii)           with respect to all
other matters (including the indemnification obligations arising under Section
11.5 hereof, the voting rights set forth in Section 11.3 hereof and the payment
of any fees for the account of Lenders), at any time, as to any Lender, except
as Agent and Lenders may otherwise agree, the fraction (expressed as a
percentage) the numerator of which is such Lender’s Commitment (provided, that,
if the Commitments have been terminated, the numerator shall be the unpaid
amount of such Lender’s Loans and its interest in the Letter of Credit
Accommodations) and the denominator of which shall be the amount equal to the
aggregate amount of all Commitments of Lenders, as adjusted from time to time
in accordance with the provisions of Section 13.7 hereof.

1.4           Deleted
Definitions.  The defined terms “Tranche
A Commitment”, “Tranche A Lender”, “Tranche A Loan Limit”, “Tranche A Loans”, “Tranche
B Borrowing Base”, “Tranche B Commitment”, “Tranche B Lender”, “Tranche B Loan
Limit” and “Tranche B Loans” contained in Section 1 of the Loan Agreement are
each hereby deleted.

Section 2.               Revolving Loans.  Section 2.1 of the Loan Agreement is hereby
deleted in its entirety and the following substituted therefor:

“(a)         Subject to and upon the terms and
conditions contained herein, each Lender severally (and not jointly) agrees to
make its Pro Rata Share of Revolving Loans to: (i) Haynes Parent from time to
time in amounts requested by Haynes Parent in the aggregate amount for the
Loans of all Lenders of up to the lesser of (A) the Borrowing Base of Haynes
Parent at such time or (B) the Commitments minus the then outstanding Revolving
Loans to Haynes Wire and (ii) Haynes Wire from time to time in amounts
requested by or on behalf of Haynes Wire in the aggregate amount for the
Revolving Loans of all Lenders of up to the lesser of: (A) the Borrowing Base
of Haynes Wire at such time or (B) the Commitments minus the then outstanding
Revolving Loans to Haynes Parent.

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(b)           Except in Agent’s discretion, with
the consent of all Lenders, or as otherwise provided herein, (i) the aggregate
amount of the Loans and the Letter of Credit Accommodations outstanding at any
time shall not exceed the Maximum Credit, (ii) the aggregate principal amount
of the Revolving Loans outstanding at any time shall not exceed the lesser of
the Borrowing Base and the Revolving Loan Limit, (iii) the aggregate principal
amount of the Revolving Loans outstanding at any time based on Eligible
Inventory consisting of work-in-process shall not exceed $40,000,000, (iv) the
aggregate principal amount of the Revolving Loans to Haynes Parent outstanding
at any time shall not exceed the Haynes Parent Borrowing Base, (v) the aggregate
principal amount of Revolving Loans to Haynes Wire outstanding at any time
shall not exceed the Haynes Wire Borrowing Base, (vi) the aggregate principal
amount of the Revolving Loans to Haynes Parent outstanding at any time based on
Eligible Inventory of Haynes Parent shall not exceed the Inventory Loan Limit
applicable to Haynes Parent, and (vii) the aggregate principal amount of the
Revolving Loans to Haynes Wire outstanding at any time based on Eligible
Inventory of Haynes Wire shall not exceed the Inventory Loan Limit applicable
to Haynes Wire.

(c)           In the event that the aggregate
principal amount of the Loans and Letter of Credit Accommodations outstanding
at any time exceeds the Maximum Credit, or the aggregate principal amount of
the Revolving Loans exceeds the lesser of the Borrowing Base or the Revolving
Loan Limit, or the aggregate amount of the outstanding Letter of Credit
Accommodations exceed the sublimit for Letter of Credit Accommodations set
forth in Section 2.2(e), or the aggregate principal amount of the Revolving
Loans applicable to Haynes Parent outstanding at any time exceed the Haynes
Parent Borrowing Base, or the aggregate principal amount of the Revolving Loans
to Haynes Wire outstanding at any time exceed the Haynes Wire Borrowing Base,
or the aggregate principal amount of the Revolving Loans to Haynes Parent
outstanding at any time based on Eligible Inventory of Haynes Parent exceed the
Inventory Loan Limit applicable to Haynes Parent, or the aggregate principal
amount of the Revolving Loans to Haynes Wire outstanding at any time based on
Eligible Inventory of Haynes Wire exceed the Inventory Loan Limit applicable to
Haynes Wire, in any case such event shall not limit, waive or otherwise affect
any rights of Agent or Lenders in such circumstances or on any future occasions
and Borrower shall, upon demand by Agent, which may be made at any time or from
time to time, immediately repay to Agent the entire amount of any such
excess(es) for which payment is demanded.”

Section 3.               Letter of Credit
Accommodations.

3.1           Section 2.2(a) of
the Loan Agreement is hereby deleted in its entirety and the following
substituted therefor:

“(a)         Subject to and upon the terms and
conditions contained herein, at the request of Borrower, Agent agrees, for the
ratable risk of each Lender according to its Pro Rata Share, to provide or
arrange for Letter of Credit Accommodations for the account of a Borrower
containing terms and conditions acceptable to Agent and the issuer
thereof.  Any payments made by or on
behalf of Agent or any Lender to any issuer thereof and/or related parties in
connection with the Letter of Credit Accommodations provided to or for

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the benefit of a Borrower shall constitute additional
Revolving Loans to such Borrower pursuant to this Section 2 (or in any event
Special Agent Advances as the case may be).”

3.2           Section 2.2(e) of
the Loan Agreement is hereby deleted in its entirety and the following
substituted therefor:

“(e)         Except in Agent’s discretion, with the
consent of all Lenders, the amount of all outstanding Letter of Credit
Accommodations and all other commitments and obligations made or incurred by
Agent or any Lender in connection therewith shall not at any time exceed
$10,000,000.”

Section 4.               Equipment Purchase Loans.  Section 2.3(d)(vi) of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:

“(vi)        as of the date of such Equipment
Purchase Loan, and after giving effect thereto, the aggregate amount of the
Loans and the Letter of Credit Accommodations shall not exceed the Maximum
Credit minus the sum of (A) the aggregate amount of the Revolving Loans then
outstanding, and (B) the aggregate amount of the undrawn Letter of Credit
Accommodations then outstanding;”

Section 5.               Payments.  Section 6.4(a) of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:

“(a)         All Obligations shall be payable to the
Agent Payment Account as provided in Section 6.3 or such other place as Agent
may designate from time to time.  The
foregoing shall not apply to payments with proceeds of Loans to a Bank Product
Provider for Obligations to such Bank Product Provider in connection with
checks or other items issued by Borrower drawn on such Bank Product Provider.  Subject to the other terms and conditions
contained herein, Agent shall apply payments received or collected from
Borrower or for the account of Borrower (including the monetary proceeds of
collections or of realization upon any Collateral) as follows: first, to
pay any fees, indemnities or expense reimbursements then due to Agent and
Lenders from Borrower; second, to pay interest due in respect of any
Loans (and including any Special Agent Advances); third, to pay or
prepay principal in respect of Special Agent Advances; fourth, to pay or
prepay principal in respect of the Loans or to pay or prepay Obligations
arising under or pursuant to any Hedge Agreement of Borrower that has been
approved in writing by Agent (up to the amount of any then effective Reserve
established in respect of such Obligations) on a pro rata basis; fifth,
to pay or prepay any other Obligations whether or not then due, in such order
and manner as Agent reasonably determines or to be held as cash collateral in
connection with any Letter of Credit Accommodations or other contingent
Obligations (but not including for purposes of this clause “fifth” any
Obligations arising under or pursuant to any Hedge Agreement or in connection
with any Bank Products); sixth, to pay or prepay any of the UK
Obligations after demand for payment under the Guarantee by Borrower in favor
of UK Lender; provided, that, any such amounts received for application to the
UK Obligations shall not be applied to such UK Obligations for a period of
sixty (60) days (or such longer period as UK Lender may agree) after the date
of such demand and shall be held as cash collateral in connection

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with the UK Obligations until the end of such sixty
(60) day period (or such longer period as UK Lender may agree); and seventh,
to pay or prepay any Obligations arising under or pursuant to Hedge Agreements
that have been approved in writing by Agent (other than to the extent provided
for above) and any Obligations then due to any Bank Provider arising from or in
connection with any Bank Products, as to all of such Obligations on a pro rata
basis.  Notwithstanding anything to the
contrary contained in this Agreement, except as Agent may from time to time
otherwise determine at any time an Event of Default exists or has occurred and
is continuing, payments with proceeds of Collateral of Haynes Parent shall be
applied to the payment of the Obligations of Haynes Parent and payments with
proceeds of Collateral of Haynes Wire shall be applied to the payment of the
Obligations of Haynes Wire.”

Section 6.               Amount of Lenders Commitments:
Schedule 1.134.  Schedule 1.134 of
the Loan Agreement is hereby amended and restated in its entirety by Amendment
and Restated Schedule 1.134 to this Amendment No. 2.

Section 7.               Representations and Warranties.  Each Borrower hereby represents and warrants
to Agent and Lenders the following (which shall survive the execution and
delivery of this Amendment No. 2, the truth and accuracy of which on the date
hereof are a continuing condition of the making of Loans and providing Letter
of Credit Accommodations to Borrowers:

7.1           This Amendment No. 2
has been duly authorized, executed and delivered by it, and has been authorized
by all necessary action on the part of such Borrower which is a party hereto
(and, if necessary, their respective stockholders) and each such agreement is
in full force and effect as of the date hereof, and the agreements and
obligations of Haynes Parent and Haynes Wire, as the case may be, contained
herein, constitute the legal, valid and binding obligations of such Borrower,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ rights
generally and by general principles of equity.

7.2           The execution,
delivery and performance of this Amendment No. 2 (a) are all within the
corporate powers of Haynes Parent and Haynes Wire and (b) are not in
contravention of law or the terms of such Borrower’s certificate of
incorporation, by-laws, or other organizational documentation, or any
indenture, agreement or undertaking to which such Borrower is a party or by
which such Borrower or its property are bound.

7.3           After giving effect
to this Amendment No. 2, no Default or Event of Default exists or has occurred
and is continuing.

Section 8.               Conditions Precedent.  The amendments contained herein shall only be
effective upon the receipt by Agent of each of the following, in each case in
form and substance reasonably satisfactory to Agent:

8.1           an executed original
or executed original counterparts of this Amendment No. 2 (as the case may be),
duly authorized, executed and delivered by the respective party or parties
hereto;

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8.2           a true and correct
copy of any consent, waiver or approval (if any) to or of this Amendment No. 2,
which any Borrower is required to obtain from any other Person;

8.3           such approvals of
Lenders, in form and substance satisfactory to Agent, to the terms and
conditions of this Amendment No. 2 as are required under the terms of the Loan
Agreement.

Section 9.               Provisions of General
Application.

9.1           Effect of this
Amendment.  Except as expressly
amended pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby specifically ratified, restated and confirmed by all
parties hereto as of the effective date hereof. 
To the extent that any provision of the Loan Agreement or any of the
other Financing Agreements are inconsistent with the provisions of this
Amendment No. 2, the provisions of this Amendment No. 2 shall control.  The Loan Agreement and this Amendment No. 2
shall be read and construed as one Agreement.

9.2           Governing Law.  The validity, interpretation and enforcement
of this Amendment No. 2 and the other Financing Agreements (except as otherwise
provided therein) and any dispute arising out of the parties hereto, whether in
contract, tort, equity or otherwise, shall be governed by the internal laws of
the State of Illinois, but excluding any principles of conflicts of law or
other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of Illinois.

9.3           Binding Effect.  This Amendment No. 2 shall be binding upon
and inure to the benefit of each of the parties hereto and their respective
successors and assigns.  Any
acknowledgments or consents contained herein shall not be construed to
constitute a consent to any other or further action by a Borrower or to entitle
such Borrower to any other consent.

9.4           Further
Assurances.  Each Borrower shall
execute and deliver such additional documents and take such additional action
as may be reasonably requested by Agent and Lenders to effectuate the
provisions and purposes of this Amendment No. 2.

9.5           Headings.  The headings listed herein are for
convenience only and do not constitute matters to be construed in interpreting
this Amendment No. 2.

9.6           Counterparts.  This Amendment No. 2 may be executed in any
number of counterparts, each of which shall be an original but all of which
taken together shall constitute one and the same Agreement.  Delivery of an executed counterpart of this
Amendment No. 2 by telefacsimile shall have the same force and effect as the
delivery of an original executed counterpart of this Amendment No. 2.  Any party delivering an executed counterpart
of this Amendment No. 2 by telefacsimile shall also deliver an originally
executed counterpart of this Amendment No. 2, but the failure to do so shall
not affect the validity, enforceability or binding effect of this Amendment No.
2.

[REMAINDER
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IN WITNESS WHEREOF, the parties hereto have caused
this Amendment No. 1 to be duly executed and delivered by their authorized
officers as of the date and year first above written.

	
  

  	
  CONGRESS FINANCIAL CORPORATION (CENTRAL), as Agent
  and as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vicky Geist

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HAYNES INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marcel Martin

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HAYNES WIRE COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marcel Martin

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
  JPMORGAN CHASE BANK N.A.

  	
   

  
	
  successor by merger to BANK ONE, NA (Main Office
  Chicago)

  
	
   

  
	
  By:

  	
  /s/ John Freeman

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  WESTERNBANK PUERTO RICO

  	
   

  	
   

  
	
  BUSINESSCREDIT DIVISION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Miguel A. Vasquez

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
  PresidentExhibit
10.18

[Execution]

AMENDMENT NO. 3 TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

AMENDMENT NO. 3 TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT dated as of May 1, 2005 by and
among Haynes International, Inc., a Delaware corporation (“Haynes Parent”),
Haynes Wire Company, a Delaware corporation (“Haynes Wire” and together with
Haynes Parent, each individually, a “Borrower” and collectively, “Borrowers”),
the parties from time to time to the Loan Agreement (as hereinafter defined) as
lenders (each individually, a “Lender” and collectively, “Lenders”) and
Wachovia Capital Finance Corporation (Central), formerly known as Congress
Financial Corporation (Central), an Illinois corporation, in its capacity as
agent for Lenders pursuant to the Loan Agreement (in such capacity, “Agent”).

W I T N E S S E T H

WHEREAS, Borrowers
have entered into financing arrangements with Agent and Lenders pursuant to
which Lenders (or Agent on behalf of Lenders) have made and may make loans and
advances and provide other financial accommodations to Borrowers as set forth
in, and subject to the terms and conditions of, the Amended and Restated Loan
and Security Agreement, dated August 31, 2004, by and among Agent, Lenders,
JPMorgan Chase Bank N.A., successor by merger to Bank One, NA, in its capacity
as documentation agent for Lenders, and Haynes Parent, as amended by Amendment
No. 1 to Amended and Restated Loan and Security Agreement dated November 5,
2004, and Amendment No. 2 to Amended and Restated Loan and Security Agreement
dated as of January 27, 2005 (as amended and supplemented hereby and as the
same may hereafter be further amended, modified, supplemented, extended,
renewed, restated or replaced, the “Loan Agreement”) and the other Financing
Agreements (as defined therein); and

WHEREAS,
Borrowers, Agent and Lenders have agreed to certain amendments to the Loan
Agreement, subject to the terms and conditions herein; and

WHEREAS, by this
Amendment No. 3, Borrowers, Agent and Lenders desire and intend to evidence such
consents and amendments;

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

Section 1.               Definitions.

1.1           Defined Terms. For purposes of this Amendment No.
3, unless otherwise defined herein, all capitalized terms used herein shall
have the meanings assigned thereto in the Loan Agreement.

1.2           Amendment to Definition. The defined term below
shall be deemed to be amended and restated in its entirety to have the meaning
as to such term set forth below:

“Applicable Margin” shall mean, at any time, as to the
interest rate for Prime Rate Loans, the interest rate for Prime Rate Fixed
Asset Loans, the interest rate for Eurodollar Rate Loans, the interest rate for
Eurodollar Rate Fixed Asset Loans, the interest rate for Prime Rate Equipment
Purchase Loans, the interest rate for Eurodollar Rate Equipment Purchase Loans
and the Letter of Credit Fee, the applicable percentage (on a per annum basis)
set forth below indicated for the Monthly Average Excess Availability for the immediately
preceding month is at or within the amounts indicated for such percentage:

	
  

  	
   

  	
   

  	
   

  	
  Loans Based on Accounts

  and Inventory

  	
   

  	
  Loans Based on Fixed Asset

  Availability and Equipment

  Purchase Loans

  	
   

  	
   

  	
   

  
	
  Tier

  	
   

  	
  Monthly

  Average

  Excess

  Availability

  	
   

  	
  Applicable

  Prime Rate

  Margin

  	
   

  	
  Applicable

  Eurodollar

  Margin

  	
   

  	
  Applicable

  Prime Rate

  Margin

  	
   

  	
  Applicable

  Eurodollar

  Margin

  	
   

  	
  L/C

  Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  $20,000,000 or
  more

  	
   

  	
  .50

  	
  %

  	
  2.00

  	
  %

  	
  1.00

  	
  %

  	
  2.50

  	
  %

  	
  1.75

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Greater than or equal to $10,000,000 and less than
  $20,000,000

  	
   

  	
  .75

  	
  %

  	
  2.25

  	
  %

  	
  1.25

  	
  %

  	
  2.75

  	
  %

  	
  2.00

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Less than $10,000,000

  	
   

  	
  1.00

  	
  %

  	
  2.50

  	
  %

  	
  1.50

  	
  %

  	
  3.00

  	
  %

  	
  2.25

  	
  %

  

 

provided, that, the
Applicable Margin shall be calculated and established on the first day of each
month (commencing on May 1, 2005) and shall remain in effect until adjusted
thereafter at the beginning of the next month.”

Section 2.               Representations and Warranties.
Each Borrower hereby represents and warrants to Agent and Lenders the following
(which shall survive the execution and delivery of this Amendment No. 3, the
truth and accuracy of which on the date hereof are a continuing condition of
the making of Loans and providing Letter of Credit Accommodations to
Borrowers):

2.1           This Amendment No. 3 has been duly authorized, executed
and delivered by it, and has been authorized by all necessary action on the
part of such Borrower which is a party hereto (and, if necessary, their
respective stockholders) and each such agreement is in full force and effect as
of the date hereof, and the agreements and obligations of Haynes Parent and
Haynes Wire, as the case may be, contained herein, constitute the legal, valid
and binding obligations of such Borrower, enforceable against it in accordance
with its terms, except as such enforceability may be limited by any applicable
bankruptcy; insolvency, reorganization, 

 2
 

moratorium or similar laws affecting
creditors’ rights generally and by general principles of equity.

2.2           The execution, delivery and performance of this Amendment
No. 3 (a) are all within the corporate powers of each Borrower and (b) are not
in contravention of law or the terms of such Borrower’s certificate of
incorporation, by-laws, or other organizational documentation, or any
indenture, agreement or undertaking to which such Borrower is a party or by
which such Borrower or its property are bound.

2.3           After giving effect to this Amendment No. 3, no Default or
Event of Default exists or has occurred and is continuing.

Section 3.               Conditions Precedent. The
amendments contained herein shall only be effective upon the receipt by Agent
of each of the following, in each case in form and substance reasonably
satisfactory to Agent:

3.1           an executed original or executed original counterparts of
this Amendment No. 3 (as the case may be), duly authorized, executed and
delivered by the respective party or parties hereto;

3.2           a true and correct copy of any consent, waiver or approval
(if any) to or of this Amendment No. 3, which any Borrower is required to
obtain from any other Person;

3.3           such approvals of Lenders, in form and substance
satisfactory to Agent, to the terms and conditions of this Amendment No. 3 as
are required under the terms of the Loan Agreement.

Section 4.               Provisions of General
Application.

4.1           Effect of this Amendment. Except as expressly
amended pursuant hereto, no other changes or modifications to the Financing
Agreements are intended or implied and, in all other respects, the Financing
Agreements are hereby specifically ratified, restated and confirmed by all
parties hereto as of the effective date hereof. To the extent that any provision
of the Loan Agreement or any of the other Financing Agreements are inconsistent
with the provisions of this Amendment No. 3, the provisions of this Amendment
No. 3 shall control. The Loan Agreement and this Amendment No. 3 shall be read
and construed as one Agreement.

4.2           Governing Law. The validity, interpretation and
enforcement of this Amendment No. 3 and the other Financing Agreements (except
as otherwise provided therein) and any dispute arising out of the parties
hereto, whether in contract, tort, equity or otherwise, shall be governed by
the internal laws of the State of Illinois, but excluding any principles of
conflicts of law or other rule of law that would cause the application of the
law of any jurisdiction other than the laws of the State of Illinois.

4.3           Binding Effect. This Amendment No. 3 shall be
binding upon and inure to the benefit of each of the parties hereto and their
respective successors and assigns. Any acknowledgments or consents contained
herein shall not be construed to constitute a consent to any other or further
action by a Borrower or to entitle such Borrower to any other consent.

 3
 

4.4           Further Assurances. Each Borrower shall execute and
deliver such additional documents and take such additional action as may be
reasonably requested by Agent and Lenders to effectuate the provisions and
purposes of this Amendment No. 3.

4.5           Headings. The headings listed herein are for
convenience only and do not constitute matters to be construed in interpreting
this Amendment No. 3.

4.6           Counterparts. This Amendment No. 3 may be executed
in any number of counterparts, each of which shall be an original but all of
which taken together shall constitute one and the same Agreement. Delivery of
an executed counterpart of this Amendment No. 3 by telefacsimile shall have the
same force and effect as the delivery of an original executed counterpart of
this Amendment No. 3. Any party delivering an executed counterpart of this
Amendment No. 3 by telefacsimile shall also deliver an originally executed counterpart
of this Amendment No. 3, but the failure to do so shall not affect the
validity, enforceability or binding effect of this Amendment No. 3.

[REMAINDER OF THIS
PAGE INTENTIONALLY LEFT BLANK]

 4
 

IN WITNESS
WHEREOF, the parties hereto have caused this Amendment No. I to be duly
executed and delivered by their authorized officers as of the date and year
first above written.

	
  

  	
  WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL),
  formerly known as Congress Financial Corporation (Central), as Agent, and as
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vicky Geist

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
  HAYNES INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marcel Martin

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  	
   

  
	
   

  	
  HAYNES WIRE COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Marcel Martin

  
	
   

  	
  Title:

  	
  CFO

  
	
   

  	
   

  
	
  JPMORGAN CHASE BANK N.A.

  successor by merger to BANK ONE, NA (Main Office Chicago)

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ John Freeman

  	
   

  
	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  
	
  WESTERNBANK PUERTO RICO

  BUSINESS CREDIT DIVISION

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Julia Frentis

  	
   

  
	
  Title:

  	
  SVP Portfolio Manager

  	
   

  

 

 5

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