Document:

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                                                                   EXHIBIT 10.20

                               FACILITY AGREEMENT

                              DATED 2nd APRIL 2004

                          HAYNES INTERNATIONAL LIMITED

                            BURDALE FINANCIAL LIMITED

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CONTENTS

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<S>   <C>                                                                     <C>
1     INTERPRETATION                                                           1

2     FACILITIES                                                              11

3     PURPOSE                                                                 11

4     CONDITIONS PRECEDENT                                                    12

5     RESTRICTIONS ON UTILISATION                                             12

6     UTILISATION OF FACILITIES                                               14

7     REPAYMENT AND PREPAYMENT                                                17

8     INTEREST AND COMMISSION                                                 20

9     COLLECTION OF RECEIVABLES                                               20

10       TAX                                                                  22

11       INCREASED COSTS                                                      23

12       REPRESENTATIONS AND WARRANTIES                                       24

13       GENERAL UNDERTAKINGS                                                 26

14       INFORMATION AND ASSET UNDERTAKINGS                                   31

15       GUARANTEE AND INDEMNITY                                              36

16       EVENTS OF DEFAULT                                                    38

17       COSTS, EXPENSES AND FEES                                             40

18       INDEMNITIES                                                          41

19       NOTICES                                                              42

20       MISCELLANEOUS PROVISIONS                                             43

21       GOODS AND DOCUMENTS                                                  44

22       CHANGES TO PARTIES                                                   45

23       GOVERNING LAW AND JURISDICTION                                       46
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                                                                    Contents (i)
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<S>                                                                           <C>
SCHEDULE 1 - THE OBLIGORS                                                     47

SCHEDULE 2 - CONDITIONS PRECEDENT                                             48

SCHEDULE 3 - FORMS OF REQUEST                                                 53

SCHEDULE 4 - FORMS OF REPORT                                                  58

SCHEDULE 5 - FORM OF ACCESSION LETTER                                         61
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                                                                   Contents (ii)
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FACILITY AGREEMENT

DATED

BETWEEN

(1)      HAYNES INTERNATIONAL LIMITED (the COMPANY) registered in England with
         number 01209891;

(2)      THE COMPANIES (if any) identified in Part I of Schedule 1 as Facility
         Companies;

(3)      THE COMPANIES (if any) identified in Part I of Schedule 1 as
         Guarantors;

(4)      BURDALE FINANCIAL LIMITED (BURDALE) registered in England with number
         2656007.

IT IS AGREED:

1        INTERPRETATION

1.1      DEFINITIONS

         In this Agreement:

         ACCESSION LETTER means a document substantially in the form set out in
         Schedule 5.

         ACTUAL DAY OF PAYMENT in relation to a Purchased Receivable means the
         date on which full payment in respect of that Purchased Receivable is
         made into a Blocked Account by the relevant account debtor or the
         relevant Facility Company.

         ADDITIONAL FACILITY COMPANY means each company which becomes an
         Additional Facility Company in accordance with Clause 22.2.

         ADDITIONAL GUARANTOR means each company which becomes an Additional
         Guarantor in accordance with Clause 22.3.

         ADDITIONAL OBLIGOR means each Additional Facility Company and each
         Additional Guarantor.

         AFFILIATE means, in relation to any person, a Subsidiary of that person
         or a Holding Company of that person or any other Subsidiary of that
         Holding Company.

         AVAILABILITY LIMITS means the restrictions on Utilisations set out in
         Clause 5.

         AVAILABILITY PERIOD means the period from the opening of business in
         London on today's date until close of business in London on the date
         falling five Business Days prior to the Final Repayment Date or such
         later date as Burdale may agree.

         BLOCKED ACCOUNTS means the following accounts of the Facility Companies
         with The Royal Bank of Scotland, Manchester Mosely Street branch:

         (a)      the Company's Sterling account number 20469010, sort code
                  16-00-01;

         (b)      the Company's euro account number HAYEINTE-EUR1;

         (c)      the Company's Dollar account number HAYEINTE-USD1;

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         (d)      any bank accounts of an Additional Facility Company specified
                  as Blocked Accounts in the relevant Accession Letter;

         in each case, (as the same may be redesignated, renumbered or renamed
         from time to time), or such other account(s) as previously approved by
         Burdale.

         BUSINESS DAY means any day not being a Saturday, Sunday or Bank holiday
         when banks are open for business in London.

         CASH REQUEST means a request for Burdale to pay to a Facility Company
         an amount of unpaid Purchase Price and/or the proceeds of a Loan in
         substantially the form set out in Part II of Schedule 3.

         CHARGED ACCOUNTS means the Blocked Accounts and the Other Accounts.

         CONGRESS means Congress Financial Corporation (Central) an Illinois
         corporation.

         CONSOLIDATED PROFIT means, for any period, the consolidated profit of
         the Company on ordinary trading activities before tax, adding back
         depreciation and amortisation but after deducting any exceptional or
         extraordinary profit and after adding back any non-cash exceptional
         write-offs during such period as all such terms are defined in
         accordance with GAAP (applied consistently with the accounting
         principles of the Obligors as at today's date) and all as determined
         from the most recent consolidated monthly management accounts of the
         Company delivered to Burdale pursuant to Clause 14.1(b).

         CONSOLIDATED TANGIBLE NET WORTH means the aggregate amount from time to
         time paid up or credited as paid up on the share capital of the Company
         and the amount standing to the credit of its consolidated capital and
         reserves (including any share premium account or capital redemption
         reserve, but excluding any goodwill (whether positive or negative)
         and/or any intangible assets) plus or minus the amount standing to the
         credit or debit of the consolidated profit or loss account of the
         Company all as determined from the most recent consolidated monthly
         management accounts of the Company delivered to Burdale pursuant to
         Clause 14.1(b).

         DEBENTURE means the debenture executed or to be executed by the Company
         in favour of Burdale.

         DEED OF PRIORITIES means the deed of priorities dated on or about the
         date of this Agreement between the Company, Burdale and the Trustees of
         the Haynes International Limited Pension Scheme.

         DEFAULT means any Event of Default and any event which with the giving
         of notice and/or lapse of time and/or as a result of any Utilisation
         and/or determination of materiality and/or fulfilment of any condition
         (or any combination of the foregoing) would constitute an Event of
         Default.

         DEFAULT RATE means the rate determined by Burdale to be 2% above the
         Interest Rate from time to time.

         DILUTION RATE means the monthly value of credit notes and non-cash
         credits issued by a Facility Company as a percentage of the monthly
         value of sales.

         DIP FINANCING DATE means the first date on which Congress makes funding
         available to Haynes US pursuant to a debtor-in-possession facility
         provided to it upon its commencement of a case under Chapter 11 of the
         United States Bankruptcy Code and Burdale has received (in a form and
         substance satisfactory to it) the documents, evidence and other items
         specified in Part II of Schedule 2.

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         DOCUMENTS means any and all documents which represent or relate to any
         Goods and/or the carriage of and/or possession of and/or ownership of
         and/or title to and/or insurance of and/or warehousing of and/or any
         other dealing in or with any Goods.

         DOLLARS and $ means the lawful currency for the time being of the
         United States of America.

         ELIGIBLE RECEIVABLES means, at any time, any Receivables at such time
         which are evidenced by an invoice rendered by a Facility Company to the
         relevant account debtors save for any Receivable:

         (a)      which does not arise from the actual and bona fide sale and
                  delivery of goods by the relevant Facility Company or
                  rendering of services by the relevant Facility Company in the
                  ordinary course of its business which transactions are
                  completed in accordance with the terms and provisions
                  contained in any documents relating to such transactions;

         (b)      which remains fully or partly unpaid after its Maturity Date
                  or such longer period as may be agreed by Burdale;

         (c)      owing by a single account debtor if Receivables representing
                  50% or more of the aggregate balance owing by such account
                  debtor to the Facility Companies are not Eligible Receivables
                  by reason of the operation of paragraph (b) above;

         (d)      with respect to which the account debtor is a director,
                  officer, employee or Affiliate of any Obligor;

         (e)      with respect to which the account debtor has or has asserted a
                  counterclaim or has a right of set off, to the extent of such
                  counterclaim or set off;

         (f)      as to which performance has not been completed by the relevant
                  Facility Company or as to which all goods and services in
                  connection with such Receivable have not been delivered to or
                  performed for the account debtor or which has not been
                  invoiced or is not fully assignable;

         (g)      with respect to which the account debtor is the subject of any
                  bankruptcy or insolvency proceeding in any jurisdiction or has
                  made an assignment for the benefit of creditors or whose
                  assets have been conveyed to a receiver, administrator,
                  trustee or other insolvency official;

         (h)      with respect to which the account debtor's obligation to pay
                  the Receivable is conditional upon the account debtor's
                  approval or is otherwise subject to any repurchase obligation
                  or right of return, as with sales made on a bill-and-hold,
                  guaranteed sale, sale-and-return, sale on approval (except
                  with respect to Receivables in connection with which account
                  debtors are entitled to return goods on the basis of the
                  quality of those goods) or consignment basis;

         (i)      owed by an account debtor incorporated or resident outside the
                  United Kingdom, unless Burdale otherwise agrees and such
                  Receivable is subject to valid and enforceable credit
                  insurance payable to Burdale issued by an insurer on terms and
                  in an amount acceptable to Burdale as determined by it in good
                  faith and the aggregate invoice values owed by that relevant
                  account debtor are within the insured limit;

         (j)      owed by an account debtor whose total indebtedness to the
                  Facility Companies exceeds any credit limit set by Burdale
                  from time to time with respect to that account debtor to the
                  extent such Receivable breaches that credit limit provided
                  that any reduction in the credit limit as to a particular
                  account debtor will not cause any Receivables owing by

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                  that account debtor as of the date of such reduction not to
                  qualify as Eligible Receivables;

         (k)      where there are proceedings or actions which are threatened or
                  pending against the account debtors with respect to such
                  Receivables which would result in any material adverse change
                  in any such account debtor's financial condition;

         (l)      where there are facts, events or occurrences which would
                  impair the validity, enforceability or collectability of that
                  Receivable or of reducing the amount payable or delaying
                  payment of that Receivable.

         ELIGIBLE STOCK means all Stock save for any Stock which, at any time:

         (a)      is obsolete, slow-moving, not in good condition or not
                  currently usable or saleable in the ordinary course of a
                  Facility Company's business;

         (b)      is held at third party premises but not held subject to
                  Warehouseman Association standard agreement;

         (c)      constitutes materials over which Burdale does not have a valid
                  first ranking fixed or floating charge under the Security
                  Documents;

         (d)      constitutes consumables used in a Facility Company's business
                  or constitutes packaging or shipping materials;

         (e)      constitutes returned, damaged or defective materials;

         (f)      is held by a Facility Company as consignee for a third party;

         (g)      is not the property of the relevant Facility Company by virtue
                  of retention of title or Romalpa provisions in favour of any
                  person;

         (h)      is spare parts or scrap or is only semi-finished or otherwise
                  constitutes work-in-progress;

         (i)      is in transit outside property which is owned and controlled
                  by any Obligor except in cases where they are (i) in transit
                  by a Facility Company or by a courier on its behalf between
                  such property and the aggregate value of such Stock does not
                  at any time exceed the sum of $15,000 or (ii) in transit to a
                  Facility Company and Burdale has in its possession all
                  originals of the bills of lading or other documents of title
                  with respect to such Stock and has received all such
                  agreements as Burdale requires in order to perfect first
                  ranking fixed or floating security in such Stock and to obtain
                  possession of such Stock from any third party having
                  possession of the same; or

         (j)      is determined in good faith by Burdale as being unsuitable for
                  forming the basis of a lending decision as a result of any
                  change in or introduction of or change in the interpretation
                  or application of any law, regulation, treaty or official
                  directive or official request having the force of law.

         END DATE in relation to an L/C means the earlier of the expiry date of
         such L/C and the date on which the L/C is drawn in full.

         EQUIPMENT means equipment, machinery, computers and computer hardware
         and software (whether owned or licensed), vehicles, tools, furniture
         and fixtures and all attachments, accessories and property now or in
         future relating to them or used in connection with them and
         replacements and substitutions for them.

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         EURO or EURO means the single currency of the Participating Member
         States.

         EVENT OF DEFAULT means any of the events specified in Clause 16.1.

         EXCHANGE RATE means the prevailing spot rate of exchange of such bank
         as Burdale may select for the purpose, at or around 11.00 a.m. on the
         date on which any conversion of currency is to be made under this
         Agreement. FACILITIES means the Receivables Finance Facility and the
         Revolving Credit Facility.

         FACILITY COMPANY means each company (if any) identified as a Facility
         Company in Part I of Schedule 1 and each Additional Facility Company.

         FACILITY LIMIT means $10,000,000 until the occurrence of the DIP
         Financing Date and thereafter $15,000,000.

         FINAL REPAYMENT DATE means the third anniversary of today's date.

         FINANCE DOCUMENTS means this Agreement, the Deed of Priorities, the
         Security Documents, all other agreements, documents and instruments at
         any time executed in favour of and/or delivered by any Obligor to
         Burdale and/or designated as a Finance Document by Burdale and the
         Company.

         FINANCIAL INDEBTEDNESS means any indebtedness for or in respect of:

         (a)      moneys borrowed;

         (b)      any amount raised by acceptance under any acceptance credit
                  facility;

         (c)      any amount raised pursuant to any note purchase facility or
                  the issue of bonds, notes, debentures, loan stock or any
                  similar instrument;

         (d)      the amount of any liability in respect of any lease or hire
                  purchase contract which would, in accordance with GAAP, be
                  treated as a finance or capital lease;

         (e)      receivables sold or discounted (other than any receivables to
                  the extent they are sold on a non-recourse basis);

         (f)      any amount raised under any other transaction (including any
                  forward sale or purchase agreement) having the commercial
                  effect of a borrowing;

         (g)      any derivative transaction entered into in connection with
                  protection against or benefit from fluctuation in any rate or
                  price (and, when calculating the value of any derivative
                  transaction, only the marked to market value shall be taken
                  into account);

         (h)      any counter-indemnity obligation in respect of a guarantee,
                  indemnity, bond, standby or documentary letter of credit or
                  any other instrument issued by a bank or financial
                  institution; and

         (i)      the amount of any liability in respect of any guarantee or
                  indemnity for any of the items referred to in paragraphs (a)
                  to (h) above.

         FOREIGN CURRENCY means any currency other than Sterling which is freely
         available and transferable.

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         FOREX EXPOSURE in relation to any unmatured Forex Transaction means the
         Forex Percentage of such transaction.

         FOREX LIMIT means $nil.

         FOREX PERCENTAGE means:

         (a)      10% in relation to euros and United States Dollars; and

         (b)      20% in relation to all other currencies,

         or in each case, such higher percentage determined by Burdale having
         regard to the nature of the currencies involved in any Forex
         Transaction.

         FOREX REQUEST means a request for a Utilisation of the Revolving Credit
         Facility for the sale or purchase of a Foreign Currency substantially
         in the form set out in Part IV of Schedule 3.

         FOREX TRANSACTION means a foreign exchange transaction entered into as
         a Utilisation of the Revolving Credit Facility.

         GAAP means generally accepted accounting principles in the United
         Kingdom.

         GOODS means all Stock, produce, inventory and/or other goods which are
         the subject of a purchase by a Facility Company and in respect of which
         any L/C has been issued.

         GROUP means the Company and its Subsidiaries.

         GUARANTOR means each company (if any) identified as a Guarantor in
         Part II of Schedule 1 and each Additional Guarantor.

         HAYNES US means Haynes International, Inc, a Delaware corporation.

         HOLDING COMPANY means, in relation to a company or a corporation, any
         other company or corporation in respect of which it is a Subsidiary.

         INTEREST RATE means the aggregate of LIBOR, MLA Cost and the Margin.

         L/Cs means letters of credit, merchandise purchase or other guarantees
         which are from time to time either (a) issued or opened by Burdale for
         the account of a Facility Company or (b) with respect to which Burdale
         has agreed to indemnify the issuer or guaranteed to the issuer the
         performance by a Facility Company of its obligations to such issuer.

         L/C EXPOSURE in relation to any L/C means:

         (a)      if the proposed L/C is by way of a letter of credit and for
                  the purpose of purchasing Eligible Stock:

                  (i)     the face amount of the L/C; LESS

                  (ii)    the Stock Percentage TIMES the cost of such Eligible
                          Stock for which such L/C was drawn; PLUS

                  (iii)   freight, taxes, duty and other amounts which Burdale
                          estimates must be paid in connection with such Stock
                          upon arrival and for delivery to one of the relevant
                          Facility Company's locations for Eligible Stock within
                          the United Kingdom; and

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         (b)      if the proposed L/C is for any other purpose an amount equal
                  to 100% of the face amount of such L/C and all other
                  commitments and obligations made or incurred by Burdale with
                  respect to such L/C.

         L/C LIMIT means $1,000,000.

         L/C REQUEST means a request for a Utilisation of the Revolving Credit
         Facility by way of the issue of an L/C in substantially the form set
         out in Part III of Schedule 3.

         LIBOR means:

         (a)      in relation to an amount denominated in euro, the thirty day
                  LIBOR euro rate quoted on the first Business Day of each month
                  in the Financial Times, London edition as conclusively
                  determined by Burdale;

         (b)      in relation to an amount denominated in Sterling, the thirty
                  day LIBOR Sterling rate quoted on the first Business Day of
                  each month in the Financial Times, London edition as
                  conclusively determined by Burdale;

         (c)      in relation to an amount denominated in Dollars, the thirty
                  day LIBOR Dollar rate quoted on the first Business Day of each
                  month in the Financial Times, London edition as conclusively
                  determined by Burdale; or

         (d)      (if for any reason the Financial Times, London edition ceases
                  or fails to quote such a rate) Burdale's cost of funds from
                  whatever source it may reasonably request.

         LOAN means the principal amount of each borrowing under this Agreement
         from the Revolving Credit Facility (including any deemed borrowing
         pursuant to Clause 6.6) as reduced by repayment or prepayment from time
         to time.

         MARGIN means 3% per annum.

         MATERIAL ADVERSE EFFECT means an effect that results in or causes, or
         has a reasonable likelihood of resulting in or causing, a material
         adverse change in any of:

         (a)      the business, performance, operations or properties of the
                  Obligors taken either individually or as a whole; and/or

         (b)      the legality, validity or enforceability of any Finance
                  Document; and/or

         (c)      the perfection or priority of the Security Interests granted
                  to Burdale under the Finance Documents; and/or

         (d)      the ability of any Obligor to perform its respective
                  obligations under any of the Finance Documents; and/or

         (e)      the rights and remedies of Burdale under any Finance Document.

         MATURITY DATE means in respect of any Receivable the Business Day which
         is, or immediately succeeds the date which is the earlier of:

         (a)      120 days after the date of the invoice in respect of such
                  Receivable; and

         (b)      60 days after the due date for payment of such invoice.

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         MLA COST means the cost (expressed as a rate per annum) of the London
         branch of Wachovia N.A. (or any other bank from which Burdale obtains
         funding for its provision of the Facilities) of complying with the
         requirements of the Bank of England and/or the Financial Services
         Authority and/or any other applicable regulatory authority in respect
         of monetary control, liquidity or otherwise.

         NET STOCK VALUE means the net value of Stock as determined by the
         relevant Facility Company in accordance with its customary practices
         and procedures (as disclosed to Burdale prior to today's date and as
         the same may be varied from time to time with Burdale's written
         consent) and advised to Burdale from time to time.

         OBLIGORS means the Facility Companies and the Guarantors.

         OTHER ACCOUNTS means the bank accounts of the Obligors specified as
         Other Accounts in the Debenture and/or such other bank accounts of the
         Obligors as Burdale may permit.

         OUTSTANDING PURCHASE PRICE means the aggregate from time to time of the
         Purchase Prices of Receivables paid to the Facility Companies
         (including any deemed payment of Purchase Price pursuant to Clause 6.6)
         in respect of which Burdale has not received payment from the relevant
         account debtor or the relevant Facility Company.

         PARENT GUARANTEE means the guarantee of the obligations of the Company
         to Burdale executed and delivered by Haynes US and Haynes Holdings,
         Inc. on or about today's date.

         PARENT SECURITY means any document or documents by which Haynes US
         grants a Security Interest over its assets (other than the Share
         Mortgage) in favour of Burdale.

         PARTICIPATING MEMBER STATE means a member state of the European
         Community which has adopted or adopts the single currency in accordance
         with legislation of the European Community relating to Economic and
         Monetary Union.

         PAST DUE PAYABLE means any trade payable of any Obligor which remains
         outstanding more than 60 days after its original due date for payment.

         PERMITTED CURRENCY means euro, Sterling or Dollars.

         PURCHASE COMMISSION is defined in Clause 8.2.

         PURCHASE DATE in relation to a Purchased Receivable means the date of
         delivery of a Purchase Request by a Facility Company with respect to
         such Purchased Receivable.

         PURCHASE PRICE means the purchase price to be paid by Burdale for
         Purchased Receivables being 85% of the face value of each Eligible
         Receivable to be purchased under the Receivables Finance Facility less
         maximum discounts, credits and allowances of any nature which may be
         taken by or granted to any account debtor or other person in connection
         with such Eligible Receivable (all as determined by Burdale in
         accordance with Clause 6.1.3).

         PURCHASE REQUEST means a Request for a Utilisation of the Receivables
         Finance Facility in substantially the form set out in Part I of
         Schedule 3.

         PURCHASED RECEIVABLE means a Receivable purchased by Burdale from a
         Facility Company in accordance with the terms of this Agreement.

         RECEIVABLE means, at any time, the aggregate present and future
         obligations of an account debtor of a Facility Company for the payment
         of money to such Facility Company at such time together with all
         connected rights, claims, deposits and payments.

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         RECEIVABLES FINANCE FACILITY is defined in Clause 2(a).

         RECEIVABLES LIMIT means $10,000,000 until the occurrence of the DIP
         Financing Date and thereafter $15,000,000.

         REQUEST means a request substantially in the form set out in the
         relevant Part of Schedule 3 for a Utilisation of one of the Facilities.

         RESERVES is defined in Clause 5.5.

         REVOLVING CREDIT FACILITY is defined in Clause 2(b).

         REVOLVING CREDIT LIMIT means $5,000,000 until the occurrence of the DIP
         Financing Date and thereafter $7,500,000.

         SECURITY DOCUMENTS means the Debenture, the Share Mortgage, the Parent
         Guarantee, the Parent Security and any other guarantee or security
         documents executed in favour of Burdale from time to time in relation
         to the obligations or indebtedness of the Obligors (or any of them).

         SECURITY INTEREST means a mortgage, charge, pledge, lien or other
         security interest securing any obligation of any person, or any other
         agreement or arrangement having similar effect.

         SHARE MORTGAGE means the mortgage of the entire issued share capital of
         the Company to be executed and delivered by Haynes US on the DIP
         Financing Date.

         STERLING and L means the lawful currency for the time being of the
         United Kingdom.

         STOCK means each Facility Company's stock and inventory at any time.

         STOCK PERCENTAGE means 68%.

         SUBSIDIARY means a subsidiary within the meaning of Section 736 of the
         Companies Act 1985.

         TAX means any tax, levy, impost, duty or other charge or withholding of
         a similar nature (including any penalty or interest payable in
         connection with any failure to pay or delay in paying the same).

         TAX CREDIT means a credit against, relief or remission for, or
         repayment of any Tax.

         TAX DEDUCTION means a deduction or withholding for or on account of Tax
         from a payment under the Finance Documents.

         TAX PAYMENT means an increased payment made by an Obligor to Burdale
         under Clause 10.1.3 or 10.2.1.

         TOTAL RECEIVABLES AVAILABILITY means, at any time, 85% of the face
         value of the Eligible Receivables less maximum discounts, credits and
         allowances of any nature which may be taken by or granted to any
         account debtor or any other person in connection with the Eligible
         Receivables at such time.

         TOTAL STOCK AVAILABILITY means, at any time, the Stock Percentage of
         the Net Stock Value of Eligible Stock at such time.

         TRADING CASHFLOW means, for any period, the Consolidated Profit during
         such period but after deducting all amounts of capital expenditure by
         any member of the Group as all such terms are defined in accordance
         with GAAP (applied consistently with the accounting principles of the

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         Obligors as at today's date) and all as determined from the most recent
         consolidated monthly management accounts of the Company delivered to
         Burdale pursuant to Clause 14.1(b).

         TRUSTEES is defined in the Deed of Priorities.

         TRUSTEE AGREEMENT is defined in the Deed of Priorities.

         TRUSTEE MORTGAGE is defined in the Deed of Priorities.

         UTILISATION means a utilisation of a Facility under this Agreement
         (with the delivery of a Purchase Request and the payment of Purchase
         Price by Burdale pursuant to a Cash Request constituting separate
         Utilisations of the Receivables Finance Facility).

         UTILISATION DATE in relation to a Utilisation means the date on which
         such Utilisation is made (being in relation to any Utilisation of the
         Receivables Finance Facility, both the Purchase Date and the date on
         which any payment of Purchase Price is made to a Facility Company
         pursuant to a Cash Request).

         VAT means value added tax as provided for in the Value Added Tax Act
         1994 and any other tax of a similar nature.

1.2      CONSTRUCTION

1.2.1    Any reference in this Agreement to:

         (a)      ASSETS includes present and future properties, revenues and
                  rights of every description;

         (b)      an AUTHORISATION means an authorisation, consent, approval,
                  licence, resolution, filing or registration;

         (c)      a FINANCE DOCUMENT or any other agreement or instrument is a
                  reference to that Finance Document or other agreement or
                  instrument as amended or novated;

         (d)      INDEBTEDNESS includes any obligation (whether incurred as
                  principal or as surety) for the payment or repayment of money,
                  whether present or future, actual or contingent;

         (e)      a PERSON includes any person, firm, company, corporation,
                  government, state or agency of a state or any association,
                  trust or partnership (whether or not having separate legal
                  personality) or two or more of the foregoing;

         (f)      a REGULATION includes any regulation, rule, official
                  directive, request or guideline (whether or not having the
                  force of law) of any governmental, intergovernmental or
                  supranational body, agency, department or regulatory,
                  self-regulatory or other authority or organisation;

         (g)      a provision of law is a reference to that provision as amended
                  or re-enacted;

         (h)      words importing the singular shall include the plural and vice
                  versa; and

         (i)      unless a contrary indication appears, a time of day is a
                  reference to London time.

1.2.2    Clause and Schedule headings are for ease of reference only.

1.2.3    A Default (other than an Event of Default) is CONTINUING if it has not
         been remedied or waived and an Event of Default is CONTINUING if it has
         not been waived.

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1.2.4    If at any time there are no persons who are Guarantors, the term
         OBLIGORS shall be construed, whilst such circumstance is continuing, as
         a reference solely to the Facility Companies and if at any time the
         Company is the only Facility Company the references in this Agreement
         to FACILITY COMPANY shall, whilst such circumstance is continuing, be
         construed accordingly.

1.2.5    A person who is not party to this Agreement has no right under the
         Contracts (Rights of Third Parties) Act 1999 to enforce any term of
         this Agreement but this does not affect any right or remedy of a third
         party which exists or is available apart from the Contracts (Rights of
         Third Parties) Act 1999.

1.2.6    Where there is a reference in this Agreement to any amount, limit or
         threshold specified in Dollars, in ascertaining whether or not that
         amount, limit or threshold has been attained, broken or achieved, an
         amount denominated in a currency other then Dollars shall be counted on
         the basis of the equivalent in Dollars of that amount using the
         Exchange Rate.

2        FACILITIES

         Subject to the terms of this Agreement Burdale agrees to make available
         the following facilities:

         (a)      to the Facility Companies, a Receivables Finance Facility
                  pursuant to which Burdale will from time to time during the
                  Availability Period purchase Receivables from the Facility
                  Companies (the RECEIVABLES FINANCE FACILITY);

         (b)      to the Facility Companies, a revolving credit facility
                  pursuant to which Burdale will during the Availability Period
                  (i) make Loans to the Facility Companies (ii) issue, or
                  procure the issue of, L/Cs for the account of the Facility
                  Companies and (iii) buy or sell Foreign Currency spot and/or
                  for delivery at a future date on behalf of the Facility
                  Companies (the REVOLVING CREDIT FACILITY).

3        PURPOSE

3.1      GENERAL

3.1.1    The Company will use the Facilities:

         (a)      in making a loan to Haynes US in an amount not exceeding
                  $5,600,000 out of the initial Utilisations, and

         (b)      otherwise only for its general operating, working capital and
                  other proper corporate purposes and always in a manner which
                  is not inconsistent with the Finance Documents.

3.1.2    Each other Facility Company will use the Facilities only for its
         general operating, working capital and other proper corporate purposes
         and always in a manner which is not inconsistent with the Finance
         Documents.

3.2      NO OBLIGATION

         Without affecting the obligations of the Facility Companies in any way,
         Burdale is not obliged to monitor or verify the application of the
         Facilities.

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4        CONDITIONS PRECEDENT

4.1      INITIAL CONDITIONS

         No Request may be delivered unless Burdale shall have received all of
         the documents and evidence specified in Part I of Schedule 2 in a form
         and substance satisfactory to it.

4.2      FURTHER CONDITIONS

         The obligations of Burdale in respect of any Utilisation are subject to
         the further conditions precedent that both on the date of the relevant
         Request and the proposed Utilisation Date:

         (a)      the representations and warranties set out in Clause 12 to be
                  repeated on such dates are true and correct; and

         (b)      no Default has occurred and is continuing or would result from
                  the making of such Utilisation.

5        RESTRICTIONS ON UTILISATION

5.1      LOANS

         No Cash Request may be delivered which would involve the drawing of a
         Loan unless at the time of delivery either (a) the Receivables Finance
         Facility is or would be following the delivery of such Cash Request
         being utilised up to the Receivables Limit or (b) the Facility
         Companies have no Receivables with which to utilise the Receivables
         Finance Facility.

5.2      LETTERS OF CREDIT

         No Request may be delivered for an L/C to be issued pursuant to the
         Revolving Credit Facility unless and until the form of L/C has been
         approved by Burdale, the relevant issuer and the proposed beneficiary
         of such L/C.

5.3      OVERALL LIMIT

         The aggregate amount of:

         (a)      all Loans;

         (b)      Outstanding Purchase Price;

         (c)      all L/C Exposures; and

         (d)      all Forex Exposures,

         shall not at any time exceed the Facility Limit.

5.4      SPECIFIC LIMITS

5.4.1    RECEIVABLES FINANCE FACILITY: The Outstanding Purchase Price shall not
         at any time exceed the Receivables Limit.

5.4.2    REVOLVING CREDIT FACILITY: The aggregate amount of:

         (a)      all Loans;

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         (b)      all L/C Exposures; and

         (c)      all Forex Exposures,

         shall not at any time exceed the Revolving Credit Limit.

5.4.3    L/C UTILISATIONS: The aggregate amount of all L/C Exposures shall not
         at any time exceed the L/C Limit.

5.4.4    FOREIGN EXCHANGE UTILISATIONS: The aggregate amount of all Forex
         Exposures shall not at any time exceed the Forex Limit.

5.5      AVAILABILITY

         The aggregate amount of:

         (a)      Outstanding Purchase Price;

         (b)      all Loans;

         (c)      all L/C Exposures; and

         (d)      all Forex Exposures,

         shall not at any time exceed the sum of:

                  (i)     the Total Receivables Availability; PLUS

                  (ii)    the Total Stock Availability; LESS

                  (iii)   the amount of Reserves,

         at such time.

         For the purposes of this Clause 5.5, RESERVES means reserves
         established by Burdale from time to time:

         (a)      to reflect the full amount of the liabilities at such time
                  which have a right imposed to provide for payment ranking or
                  capable of ranking senior to or pari passu with the
                  liabilities of the Obligors under the Finance Documents and/or
                  having the benefit of any Security Interest over the assets of
                  any Obligor ranking or capable of ranking senior to or pari
                  passu with the Security Interests granted to Burdale under the
                  Finance Documents;

         (b)      to reflect Burdale's good faith belief that any report or
                  financial information provided by or on behalf of any Obligor
                  under the Finance Documents is or may have been incomplete,
                  inaccurate or misleading in any material respect; and

         (c)      in an amount of $1,000,000.

5.6      PROHIBITION

         No Utilisation may be made which would cause the provisions of this
         Clause 5 to be breached.

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5.7      PERCENTAGES

         Burdale may from time to time, following prior consultation with the
         Company:

         (a)      reduce the Purchase Price and/or the Total Receivables
                  Availability to the extent that the Dilution Rate has
                  increased;

         (b)      reduce the Total Stock Availability (or any component of it)
                  to the extent that:

                  (i)     the number of days of the turnover of the Stock for
                          any period has changed in any material respect; or

                  (ii)    the liquidation value of the Eligible Stock, or any
                          category of Eligible Stock, has decreased; or

                  (iii)   the nature and quality of the Stock has deteriorated;
                          and

                  (iv)    there is any change in seasonality with respect to
                          Stock and patterns of sales after today's date; or

                  (v)     there is any reduction in the Facility Limit pursuant
                          to Clause 7.7.

6        UTILISATION OF FACILITIES

6.1      AVAILABILITY OF RECEIVABLES FINANCE FACILITY

6.1.1    Subject to the terms of this Agreement, each Facility Company shall
         offer to sell its Receivables to Burdale by delivering to Burdale from
         time to time duly completed Purchase Requests (together with all deeds
         and documents referred to in such Purchase Request), delivery of which
         shall oblige such Facility Company to sell the Receivables stated in
         such Purchase Request upon the terms and subject to the conditions of
         this Agreement.

6.1.2    A Purchase Request will not be regarded as having been duly completed
         unless it is in substantially the form set out in Part I of Schedule 3.

6.1.3    As soon as reasonably practicable following delivery of a Purchase
         Request, Burdale shall determine the Purchase Price for the Receivables
         specified in such Purchase Request and will, upon being requested by
         the relevant Facility Company, advise such Facility Company of such
         determination.

6.2      UTILISATION OF RECEIVABLES FINANCE FACILITY AND REVOLVING CREDIT
         FACILITY

6.2.1    Subject to the terms of this Agreement, each Facility Company may from
         time to time request that Burdale pay sums in a Permitted Currency to
         such Facility Company of up to the aggregate of (i) the amount of any
         unpaid Purchase Price and (ii) the amount available for drawing by way
         of Loan, by delivering a duly completed Cash Request to Burdale not
         later than 11.00 a.m. on the proposed Utilisation Date for such
         payment.

6.2.2    A Cash Request will not be regarded as having been duly completed
         unless it is in substantially the form set out in Part II of Schedule 3
         and, in particular, specifies:

         (a)      the proposed Utilisation Date, being a Business Day falling
                  during the Availability Period;

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         (b)      the amount and the currency of the sum to be paid by Burdale
                  which must be less than or equal to the aggregate of the
                  amounts specified in Clause 6.2.1; and

         (c)      if not already notified to Burdale, the details of the Other
                  Account into which the payment is to be made on the
                  Utilisation Date.

6.2.3    Payments made by Burdale pursuant to a Cash Request shall be deemed to
         be first payments of any unpaid Purchase Price to the full extent of
         such unpaid Purchase Price and second, to the extent of any surplus, to
         be the drawing of a Loan.

6.2.4    Burdale's obligation to pay the Purchase Price of any Receivable (or
         any unpaid portion of it as the case may be) shall be terminated on the
         earlier of the Actual Day of Payment and the Maturity Date of such
         Receivable.

6.2.5    To the extent that any payments made by Burdale pursuant to a Cash
         Request to a Facility Company (the DEBTOR COMPANY) represent payment of
         Purchase Price in relation to the Purchased Receivables of another
         Facility Company (the CREDITOR COMPANY) then (without double counting
         with the provisions of Clause 7.2(e)(ii)) the Creditor Company shall be
         deemed to have made a loan to the Debtor Company in an amount equal to
         the amount of such payment by Burdale and in the same currency as such
         payment (an INTERCOMPANY LOAN). All Intercompany Loans shall bear
         interest at such rates as the relevant Creditor Companies may agree
         with the relevant Debtor Companies and all principal and interest on
         any Intercompany Loan shall be payable on demand.

6.3      L/C UTILISATIONS

6.3.1    Subject to the terms of this Agreement, a Facility Company may request
         the issue of an L/C by delivering a duly completed L/C Request to
         Burdale not later than 11.00 a.m. on the proposed Utilisation Date for
         that L/C.

6.3.2    An L/C Request will not be regarded as having been duly completed
         unless it is substantially in the form attached in Part III of Schedule
         3 and, in particular, specifies:

         (a)      the proposed Utilisation Date, being a Business Day falling
                  during the Availability Period;

         (b)      the amount of the L/C required, the L/C Exposure of which must
                  be equal to or less than the undrawn/unutilised amount of the
                  Revolving Credit Facility and within the relevant Availability
                  Limits as at the proposed Utilisation Date;

         (c)      if not already notified to Burdale, the details of the
                  beneficiary, payee or addressee of such L/C.

6.4      GENERAL PROVISIONS REGARDING L/Cs

6.4.1    Nothing in this Agreement shall be deemed or construed to grant any
         Facility Company any right or authority to pledge the credit of Burdale
         in any manner. Burdale shall have no liability of any kind with respect
         to any L/C provided by an issuer other than Burdale unless Burdale has
         duly executed and delivered to such issuer the application or a
         guarantee or indemnification in writing with respect to such L/C. Each
         Facility Company shall be bound by an interpretation made in good faith
         by Burdale, or any other issuer or correspondent under or in connection
         with any L/C or any documents, drafts or acceptances in relation to any
         L/C, notwithstanding that such interpretation may be inconsistent with
         any instructions of any Facility Company. Burdale shall have the sole
         and exclusive right and authority to, and no Facility Company shall:

         (a)      at any time an Event of Default exists or has occurred and is
                  continuing:

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                  (i)     approve or resolve any questions of non-compliance of
                          documents;

                  (ii)    give any instructions as to acceptance or rejection of
                          any documents or goods; or

                  (iii)   execute any and all applications for steamship or
                          airway guarantees, indemnities or delivery orders;

         (b)      at any time:

                  (i)     grant any extensions of the maturity of, time of
                          payment for, or time of presentation of, any drafts,
                          acceptances, or documents; and

                  (ii)    agree to any amendments, renewals, extensions,
                          modifications, changes or cancellations of any of the
                          terms or conditions of any of the applications, L/Cs,
                          or documents, drafts or acceptances in relation to any
                          L/C or any letters of credit provided as security to
                          Burdale. Burdale may take such actions either in its
                          own name or in the relevant Facility Company's name.

6.4.2    Any rights, remedies, duties or obligations granted or undertaken by
         any Facility Company to any issuer or correspondent in any application
         for any L/C, or any other agreement in favour of any issuer or
         correspondence relating to any L/C, shall be deemed to have been
         granted or undertaken by such Facility Company to Burdale. Any duties
         or obligations undertaken by Burdale to any issuer or correspondence in
         any application for any L/C, or any other agreement by Burdale in
         favour of any issuer or correspondence relating to any L/C, shall be
         deemed to have been undertaken by the relevant Facility Company to
         Burdale and to apply in all respects to such Facility Company.

6.4.3    None of Burdale, any L/C issuer (or any of their respective
         correspondents) or any advising, negotiating or paying bank with
         respect to any L/C shall be responsible in any way for:

         (a)      the performance by any beneficiary under any L/C of that
                  beneficiary's obligations to the relevant Facility Company; or

         (b)      the form, sufficiency, correctness, genuineness, authority of
                  any person signing or the legal effect of any documents called
                  for under any L/C if such documents appear on their face to be
                  in order.

6.5      FOREX UTILISATIONS

6.5.1    Subject to the terms of this Agreement, a Facility Company may request
         a Utilisation of the Revolving Credit Facility by way of the sale or
         purchase of Foreign Currency by delivering a duly completed Forex
         Request to Burdale not later than 11.00 a.m. on the proposed date of
         the contract for the sale or purchase of Foreign Currency.

6.5.2    A Forex Request will not be regarded as having been duly completed
         unless it is in substantially the form set out in Part IV of Schedule 3
         and, in particular, specifies:

         (a)      the proposed date of effect of the sale or purchase of Foreign
                  Currency being a Business Day falling during the Availability
                  Period; and

         (b)      the value of the contract for the sale or purchase of Foreign
                  Currency required and the Foreign Currency required to be
                  purchased which must be such that the Forex Exposure with
                  respect to such Utilisation when aggregated with all other
                  Forex Exposures is equal to or less than the Forex Limit as at
                  the proposed Utilisation Date.

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6.6      DEEMED UTILISATIONS

         All payments made by Burdale:

         (a)      in accordance with the terms of any L/C or any guarantee or
                  indemnity given by Burdale to the issuer of any L/C (as the
                  case may be); and

         (b)      on the maturity of any Forex Transaction,

         shall be deemed to be a payment to the relevant Facility Company in an
         amount equal to such payment, as if such Facility Company had lodged a
         Cash Request for such amount and subject to the provisions of this
         Agreement with respect to Utilisations of the Receivables Finance
         Facility and/or the Revolving Credit Facility (including, without
         limitation, as to interest, purchase commission and repayment).

7        REPAYMENT AND PREPAYMENT

7.1      RECEIVABLES FINANCE FACILITY

7.1.1    If in relation to a Purchased Receivable Burdale determines on the
         Maturity Date in respect of such Purchased Receivable that it has not
         received payment in accordance with Clause 9.1 of the full amount of
         such Purchased Receivable, the relevant Facility Company shall, on
         demand by Burdale pay to Burdale an amount equal to the Outstanding
         Purchase Price of such Purchased Receivable for which payment has not
         been received PROVIDED THAT this provision shall not restrict (nor
         oblige) Burdale in any way in or from pursuing and obtaining payment in
         respect of such Purchased Receivable from the account debtors or
         otherwise (which payment shall be made into a Blocked Account) and each
         Facility Company undertakes that it will do all such reasonable acts or
         things necessary or desirable to help Burdale in pursuing and obtaining
         such payment.

7.1.2    Burdale shall be entitled to deduct from payments made by account
         debtors and/or the Facility Companies into a Blocked Account in respect
         of Purchased Receivables the then Outstanding Purchase Price in respect
         of such Purchased Receivables and the balance remaining after such
         deduction shall be applied in accordance with Clause 7.2.

7.2      OTHER UTILISATIONS

         Subject as provided below all amounts standing to the credit of the
         Blocked Accounts from time to time following the deductions referred to
         in Clause 7.1.2 shall be applied as follows:

         (a)      FIRST in repayment of the outstanding principal amount of any
                  Loans;

         (b)      SECOND in payment of any fees, costs and expenses due from any
                  Obligor to Burdale under the Finance Documents;

         (c)      THIRD in payment of (i) all amounts of interest due on the
                  Loans (including any deemed borrowing pursuant to Clause 6.6)
                  and (ii) all Purchase Commission (or in making provision for
                  Purchase Commission which will fall due for payment on the
                  last Business Day of the current calendar month);

         (d)      FOURTH in or towards satisfaction of any other payment
                  obligation of any Obligor under the Finance Documents; and

         (e)      FIFTH to the relevant Facility Company by way of payment into
                  such Other Account as the relevant Facility Company may
                  specify to Burdale in writing from time to time.

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                  PROVIDED THAT:

                  (i)     notwithstanding the above, at all times whilst an
                          Event of Default is continuing, amounts standing to
                          the credit of a Blocked Account shall be applied to
                          such of the liabilities of the Obligors under the
                          Finance Documents and in such order as Burdale may in
                          its absolute discretion determine; and

                  (ii)    to the extent that any amount standing to the credit
                          of one Facility Company's Blocked Account is applied
                          to discharge the liabilities of another Obligor
                          pursuant to Clause 7.1.2 or this Clause 7.2 then
                          (without double counting) the provisions of Clause
                          6.2.5 shall apply to such application mutatis
                          mutandis.

7.3      CURRENCY

7.3.1    Any amount deducted by Burdale pursuant to Clause 7.1.2 shall first be
         used by Burdale in or towards paying the then Outstanding Purchase
         Price denominated in the same Permitted Currency as the payment from
         which such deduction was made and then (at Burdale's discretion) the
         remainder of any such deduction may be converted by Burdale at the
         Exchange Rate and used in or towards paying the then Outstanding
         Purchase Price denominated in any Permitted Currency (unless Burdale
         otherwise agrees).

7.3.2    Any amount applied pursuant to Clauses 7.2(a) to 7.2(d) (inclusive)
         above shall first be applied by Burdale in or towards satisfying the
         obligations of the Obligors under the Finance Documents denominated in
         the same Permitted Currency as the Permitted Currency of the funds so
         applied and then (at Burdale's discretion) the remainder of any such
         amount may be converted by Burdale at the Exchange Rate and used in or
         towards satisfying any such obligations denominated in any Permitted
         Currency (unless Burdale otherwise agrees).

7.4      REUTILISATION

7.4.1    RECEIVABLES FINANCE FACILITY: Subject to the terms of this Agreement,
         all amounts of Outstanding Purchase Price recovered and paid to
         Burdale, may be reutilised as Utilisations of the Receivables Finance
         Facility.

7.4.2    REVOLVING CREDIT FACILITY: Subject to the terms of this Agreement, all
         Loans repaid and all amounts recovered and paid to Burdale in relation
         to L/Cs and Forex Transactions, may be redrawn or reutilised as
         Utilisations of the Revolving Credit Facility.

7.5      PREPAYMENT

         If at any time the outstanding Utilisations or any part of them cause
         any Availability Limit to be exceeded then the Company will immediately
         repay or procure repayment of such amount of the Loans together with
         cash collateral in respect of Outstanding Purchase Price and/or any
         contingent obligation of Burdale in relation to any L/C or other
         Utilisation together with interest on the Loans, to the extent required
         to ensure compliance with that Availability Limit and, until such time
         as that Availability Limit is no longer breached, no further
         Utilisations may be requested (including, for the avoidance of doubt,
         pursuant to a Cash Request) or will, at Burdale's option, be made or
         issued.

7.6      ILLEGALITY

         If it becomes unlawful in any jurisdiction for Burdale to make
         available or maintain the Facilities (or any of them) or to give effect
         to its obligations under the Finance Documents, Burdale may give seven
         Business Days written notice to that effect to the Company whereupon
         the Facilities will be cancelled and all the provisions of this
         Agreement will apply as if the

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         cancellations or terminations had been a reduction of the Facility
         Limit to zero pursuant to Clause 7.7.

7.7      REDUCTION OF FACILITY LIMIT

7.7.1    At the request of the Company by giving not less than ten Business
         Day's prior written notice to Burdale, the Facility Limit may from time
         to time be reduced provided that on or before the effective date for
         such reduction the Company shall pay (or procure payment) to Burdale
         of:

         (a)      such amount as may be necessary in prepayment of the Loans
                  and/or as cash collateral for Outstanding Purchase Price
                  and/or Burdale's contingent obligations under any issued L/C
                  or unmatured Forex Transaction to ensure that the Facility
                  Companies remain in compliance with the Availability Limits
                  (as adjusted to take account of such amendments pursuant to
                  Clause 5.7); and

         (b)      a fee of 1% of the amount of the reduction of the Facility
                  Limit.

7.7.2    Any exercise by Burdale of its rights under Clause 16.2(b) and/or 16.3
         and/or the operation of Clause 7.6 shall be deemed for the purposes of
         paragraph 7.7.1(b) above to be a reduction in the Facility Limit in an
         amount equal to the amount of the Facility or Facilities so cancelled.

7.8      FINAL REPAYMENT

         The Company will, on the Final Repayment Date, pay (or procure payment)
         to Burdale in full all outstanding and unpaid liabilities under the
         Finance Documents (whether by way of principal, interest, commission,
         fees, costs, expenses or otherwise) and shall pay to Burdale such
         amount as is necessary to provide full cash collateral for Outstanding
         Purchase Price and any contingent obligations which Burdale may have in
         respect of any L/C, Forex Transaction or other outstanding Utilisation.
         If the amounts so paid are received by Burdale later than 1.00 p.m. on
         the Final Repayment Date then the Company will pay interest on such
         amounts to Burdale at the Default Rate until payment has been made in
         full.

7.9      CASH COLLATERAL

         If under this Agreement any Facility Company is required to provide and
         does provide cash collateral for any contingent liability, such cash
         collateral shall be held by Burdale in an interest bearing account for
         application against such contingent liability, provided that any sum
         remaining after settling such payments shall be applied first in
         settlement of any other amounts then due and payable to Burdale under
         the Finance Documents and any balance shall be promptly repaid to the
         relevant Facility Company or other person entitled to the balance.

8        INTEREST AND COMMISSION

8.1      INTEREST

8.1.1    Each Facility Company will pay Burdale interest on each Loan made to it
         by Burdale at the Interest Rate.

8.1.2    Except as otherwise provided in this Agreement, accrued interest on
         each Loan shall be paid by the relevant Facility Company in arrear on
         the last Business Day of each month and on the Final Repayment Date.
         All interest accruing on or after the date of any Event of Default or
         the Final Repayment Date shall be payable on demand.

8.1.3    Interest will be calculated on the basis of a 365 day year and actual
         days elapsed and will accrue and be calculated on a daily basis.

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8.2      PURCHASE COMMISSION

         Each Facility Company shall pay to Burdale commission in respect of
         each of its Purchased Receivables at a rate equivalent to the Interest
         Rate applied to the Outstanding Purchase Price for such Receivable from
         the date on which Burdale paid such Purchase Price to a Facility
         Company down to the Actual Day of Payment (the PURCHASE COMMISSION).
         Burdale shall calculate the Purchase Commission on a daily basis and it
         shall be paid by the relevant Facility Company monthly in arrears on
         the last Business Day of each month.

8.3      DEFAULT INTEREST

8.3.1    Upon the occurrence of an Event of Default and whilst the same is
         continuing, all amounts outstanding under this Agreement shall bear
         interest (both before and after judgment) at the Default Rate.

8.3.2    Interest at the Default Rate will be compounded at the end of each
         period designated by Burdale and will be determined by Burdale on the
         first Business Day of each such period.

9        COLLECTION OF RECEIVABLES

9.1      FLOW OF FUNDS

         Subject to Clause 9.2, each Facility Company undertakes that during the
         period commencing on the date of this Agreement and ending when all its
         liabilities under the Finance Documents have been discharged in full
         and Burdale is under no further obligation under any of the Finance
         Documents:

         (a)      such Facility Company will collect as agent and trustee for
                  Burdale all Receivables and immediately pay (or procure that
                  payment is made) all amounts due in respect of each Receivable
                  into a Blocked Account, provided however that until payment
                  into a Blocked Account it will hold all money so received upon
                  trust for Burdale and will not commingle in any Charged
                  Account any monies which are not Receivables or which are not
                  payable to Burdale;

         (b)      without prejudice to its obligations under Clause 13.14, in
                  the event that any account debtor makes a payment in respect
                  of Receivables into another Charged Account or other account
                  which is not a Blocked Account, such Facility Company will
                  ensure that the amounts representing such payment are promptly
                  transferred into a Blocked Account and will immediately direct
                  the relevant account debtor to make all future payments to a
                  Blocked Account; and

         (c)      all the transfers and collections referred to in paragraphs
                  (a) and (b) above shall be carried out daily prior to the
                  occurrence of any Default and thereafter at such intervals as
                  Burdale may, at its discretion, specify to the Company.

9.2      FAILURE OF DEBENTURE

         In the event that the Debenture is not, at any time, effective or is
         not in full force and effect in respect of any Charged Account, each
         Facility Company will (unless otherwise directed by Burdale and without
         prejudice to Burdale's rights and remedies under the Finance
         Documents), for so long as the Debenture is ineffective or not in full
         force and effect and ending on the date when all of its liabilities
         under the Finance Documents have been repaid or discharged in full and
         Burdale is under no further obligation under any of the Finance
         Documents, collect as agent and trustee for Burdale all Receivables
         which would otherwise have been payable into a

                                                                         Page 20
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         Blocked Account and immediately pay (or procure the payment of) all
         amounts due in respect of those Receivables directly to such bank
         account of Burdale as it may specify for this purpose.

9.3      DECLARATION OF TRUST

         If for any reason (including, without limitation, any prohibition or
         restriction on assignment contained in any agreement between a Facility
         Company and the relevant account debtor), title to any Receivable which
         is purchased by Burdale under this Agreement does not pass to Burdale
         then the relevant Facility Company shall hold such Receivable on trust
         for Burdale and shall collect and deal with such Receivable in
         accordance with the terms of Clauses 9.1 and 9.2.

9.4      REIMBURSEMENT

         Each Facility Company agrees to reimburse Burdale on demand for any
         liability of Burdale to any bank or other person involved in the
         transfer of funds to or from any Blocked Account arising out of
         Burdale's payments to or indemnification of that bank or person, and
         this obligation to reimburse shall survive the termination or
         non-renewal of this Agreement.

9.5      APPLICATION

         For the purposes of calculating the amount of the Loans available to
         the Facility Companies, the Receivables Limit and the Forex Limit such
         payments will be applied (conditional upon final collection) in
         satisfaction or reduction of the relevant Facility Company's
         liabilities under the Finance Documents on the Business Day of receipt
         by Burdale. For the purposes of calculating interest in respect of the
         Loans and for calculating any Purchase Commission or commission in
         respect of the Forex Transactions, payments or other funds received by
         Burdale will be applied (conditional upon final collection) in
         satisfaction or reduction of the relevant Facility Company's
         liabilities under the Finance Documents one Business Day following the
         date of receipt of funds by Burdale.

9.6      BUSINESS DAYS

         If any payment under the Finance Documents would otherwise be due on a
         day which is not a Business Day, it will be due on the next succeeding
         Business Day or, if that Business Day falls in the following month, on
         the preceding Business Day.

10       TAX

10.1     TAX GROSS-UP

10.1.1   Each Obligor shall make all payments to be made by it without any Tax
         Deduction, unless a Tax Deduction is required by law.

10.1.2   The Company shall promptly upon becoming aware that an Obligor must
         make a Tax Deduction (or that there is any change in the rate or the
         basis of a Tax Deduction) notify Burdale accordingly.

10.1.3   If a Tax Deduction is required by law to be made by an Obligor the
         amount of the payment due from that Obligor shall be increased to an
         amount which (after making any Tax Deduction) leaves an amount equal to
         the payment which would have been due if no Tax Deduction had been
         required.

10.1.4   If an Obligor is required to make a Tax Deduction, that Obligor shall
         make that Tax Deduction and any payment required in connection with
         that Tax Deduction within the time allowed and in the minimum amount
         required by law.

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10.1.5   Within thirty days of making either a Tax Deduction or any payment
         required in connection with that Tax Deduction, the Obligor making that
         Tax Deduction shall deliver to Burdale evidence reasonably satisfactory
         to Burdale that the Tax Deduction has been made or (as applicable) any
         appropriate payment paid to the relevant taxing authority.

10.2     TAX INDEMNITY

10.2.1   The Company shall (within three Business Days of demand by Burdale) pay
         to Burdale an amount equal to the loss, liability or cost which Burdale
         determines will be or has been (directly or indirectly) suffered for or
         on account of Tax.

10.2.2   Paragraph 10.2.1 above shall not apply with respect to any Tax assessed
         on Burdale if that Tax is imposed on or calculated by reference to the
         net income received or receivable (but not any sum deemed to be
         received or receivable) by Burdale.

10.3     TAX CREDIT

         If an Obligor makes a Tax Payment and Burdale determines that:

         (a)      a Tax Credit is attributable to that Tax Payment; and

         (b)      it has obtained, utilised and retained that Tax Credit,

         Burdale shall pay an amount to the Obligor which Burdale determines
         will leave it (after that payment) in the same after-Tax position as it
         would have been in had the Tax Payment not been made by the Obligor.

10.4     STAMP TAXES

         The Company shall pay and, within three Business Days of demand,
         indemnify Burdale against any cost, loss or liability that Burdale
         incurs in relation to all stamp duty, registration and other similar
         Taxes payable in respect of any Finance Document.

10.5     VALUE ADDED TAX

10.5.1   All consideration payable under a Finance Document by an Obligor to
         Burdale shall be deemed to be exclusive of any VAT. If VAT is
         chargeable, the Obligor shall pay to Burdale (in addition to and at the
         same time as paying the consideration) an amount equal to the amount of
         the VAT.

10.5.2   Where a Finance Document requires an Obligor to reimburse Burdale for
         any costs or expenses, that Obligor shall also at the same time pay and
         indemnify Burdale against all VAT incurred by Burdale in respect of the
         costs or expenses save to the extent that Burdale is entitled to
         repayment or credit in respect of the VAT.

11       INCREASED COSTS

11.1     INCREASED COSTS

11.1.1   Subject to Clause 11.3 the Company shall, within three Business Days of
         a demand by Burdale, pay to Burdale the amount of any Increased Costs
         incurred by Burdale or any of its Affiliates as a result of (i) the
         introduction of or any change in (or in the interpretation or
         application of) any law or regulation or (ii) compliance with any law
         or regulation made after the date of this Agreement.

11.1.2   In this Agreement INCREASED COSTS means:

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         (a)      a reduction in the rate of return from the Facilities (or any
                  of them) or on Burdale's (or its Affiliate's) overall capital;

         (b)      an additional or increased cost; or

         (c)      a reduction of any amount due and payable under any Finance
                  Document,

         which is incurred or suffered by Burdale or any of its Affiliates to
         the extent that it is attributable to Burdale having entered into this
         Agreement or funding or performing its obligations under any Finance
         Document.

11.2     INCREASED COST CLAIMS

         If Burdale intends to make a claim pursuant to Clause 11.1 it shall
         notify the Company of the event giving rise to the claim, and shall, as
         soon as practicable after a demand by the Company, provide a
         certificate confirming the amount of its Increased Costs.

11.3     EXCEPTIONS

         Clause 11.1 does not apply to the extent any Increased Cost is:

         (a)      attributable to a Tax Deduction required by law to be made by
                  an Obligor;

         (b)      compensated for by Clause 10.2 (or would have been compensated
                  for under Clause 10.2 but was not so compensated solely
                  because the exclusion in Clause 10.2.2 applied);

         (c)      compensated for by the payment of MLA Cost; or

         (d)      attributable to the wilful breach by Burdale or its Affiliates
                  of any law or regulation.

12       REPRESENTATIONS AND WARRANTIES

12.1     WARRANTIES

         Each Obligor makes the representations and warranties in this Clause 12
         to Burdale on today's date and such representations and warranties will
         be deemed repeated by the Obligors on each date:

         (a)      on which a Request is submitted;

         (b)      which is a Utilisation Date;

         (c)      on which any payment of interest or Purchase Commission is due
                  under the Finance Documents,

         as if made with reference to the facts and circumstances existing on
         such date.

12.2     STATUS

12.2.1   It is a corporation, duly incorporated and validly existing under the
         law of its jurisdiction of incorporation.

12.2.2   It has the power to own its assets and carry on its business as it is
         being conducted.

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12.3     BINDING OBLIGATIONS

         The obligations expressed to be assumed by it in each Finance Document
         are, subject to any principles of law affecting creditors' rights
         generally, legal, valid, binding and enforceable obligations.

12.4     NON-CONFLICT WITH OTHER OBLIGATIONS

         The entry into and performance by it of, and the transactions
         contemplated by, the Finance Documents do not and will not conflict
         with:

         (a)      any law or regulation applicable to it;

         (b)      its constitutional documents; or

         (c)      any agreement or instrument binding upon it or any of its
                  assets.

12.5     POWER AND AUTHORITY

         It has the power to enter into, perform and deliver, and has taken all
         necessary action to authorise its entry into, performance and delivery
         of, the Finance Documents to which it is a party and the transactions
         contemplated by those Finance Documents.

12.6     VALIDITY AND ADMISSIBILITY IN EVIDENCE

         All authorisations required or desirable:

         (a)      to enable it lawfully to enter into, exercise its rights and
                  comply with its obligations in the Finance Documents to which
                  it is a party; and

         (b)      to make the Finance Documents to which it is a party
                  admissible in evidence in its jurisdiction of incorporation,

         have been obtained or effected and are in full force and effect.

12.7     NO FILING OR STAMP TAXES

         Under the law of its jurisdiction of incorporation it is not necessary
         that the Finance Documents be filed, recorded or enrolled with any
         court or other authority in that jurisdiction or that any stamp,
         registration or similar tax be paid on or in relation to the Finance
         Documents or the transactions contemplated by the Finance Documents.

12.8     NO DEFAULT

12.8.1   No Event of Default is continuing or might reasonably be expected to
         result from the making of any Utilisation.

12.8.2   No other event or circumstance is outstanding which constitutes a
         default under any other agreement or instrument which is binding on it
         or to which its assets are subject which might have a Material Adverse
         Effect.

12.9     PARI PASSU RANKING

         Its payment obligations under the Finance Documents rank at least pari
         passu with the claims of all its other unsecured and unsubordinated
         creditors, except for obligations mandatorily preferred by law applying
         to companies generally.

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12.10    NO PROCEEDINGS PENDING OR THREATENED

         No litigation, arbitration or administrative proceedings of or before
         any court, arbitral body or agency which, if adversely determined,
         might reasonably be expected to have a Material Adverse Effect have (to
         the best of its knowledge and belief) been started or threatened
         against it or any of its Subsidiaries.

12.11    MATERIAL DISCLOSURES

         All information furnished by or on behalf of any Obligor in writing to
         Burdale in connection with the Finance Documents is true and correct in
         all material respects as of the date such information is dated or
         certified and does not omit any material information and is not
         misleading. No event or circumstance has occurred which has or could
         reasonably be expected to have a Material Adverse Effect which has not
         been fully and accurately disclosed to Burdale.

12.12    FINANCIAL STATEMENTS

         Its latest audited financial statements (i) have been reported upon by
         its auditors without qualification, (ii) have been prepared in
         accordance with GAAP and give a true and fair view of the results of
         its operations and its assets and liabilities for the relevant period
         and of the state of its affairs at the relevant date, and (iii) in
         particular, accurately disclose or reserve against all liabilities
         (actual or contingent), and there has been no change in its assets,
         financial condition or prospects since the date of those financial
         statements such that it may reasonably be expected to be unable to
         perform and comply with any one or more of its material obligations
         under any of the Finance Documents.

12.13    BANK ACCOUNTS

         All the accounts maintained or used by any Obligor at any bank or
         financial institution as at the date of this Agreement have been
         included within the definition of Charged Accounts.

13       GENERAL UNDERTAKINGS

13.1     DURATION

         The undertakings in this Clause 13 and in Clause 14 remain in force
         from the date of this Agreement for so long as any amount is
         outstanding under the Finance Documents or Burdale is under any
         obligation under any Finance Document.

13.2     AUTHORISATIONS

         Each Obligor shall promptly:

         (a)      obtain, comply with and do all that is necessary to maintain
                  in full force and effect; and

         (b)      supply certified copies to Burdale of,

         any authorisation required under any law or regulation of its
         jurisdiction of incorporation to enable it to perform its obligations
         under the Finance Documents and to ensure the legality, validity,
         enforceability or admissibility in evidence in its jurisdiction of
         incorporation of any Finance Document.

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13.3     COMPLIANCE WITH LAWS

         Each Obligor shall comply in all respects with all laws to which it may
         be subject, if failure so to comply would materially impair its ability
         to perform its obligations under the Finance Documents.

13.4     NEGATIVE PLEDGE

13.4.1   No Obligor shall create or permit to subsist any Security Interest over
         any of its assets.

13.4.2   No Obligor shall:

         (a)      sell, transfer or otherwise dispose of any of its assets on
                  terms whereby they are or may be leased to or re-acquired by
                  an Obligor;

         (b)      sell, transfer or otherwise dispose of any of its receivables
                  on recourse terms otherwise than pursuant to the Finance
                  Documents;

         (c)      enter into any arrangement under which money or the benefit of
                  a bank or other account may be applied, set-off or made
                  subject to a combination of accounts; or

         (d)      enter into any other preferential arrangement having a similar
                  effect,

         in circumstances where the arrangement or transaction is entered into
         primarily as a method of raising Financial Indebtedness or of financing
         the acquisition of an asset.

13.4.3   Paragraphs 13.4.1 and 13.4.2 above do not apply to:

         (a)      any lien arising by operation of law and in the ordinary
                  course of trading;

         (b)      any Security Interest in favour of Burdale.

13.5     MERGER

         No Obligor shall enter into any amalgamation, demerger, merger or
         corporate reconstruction.

13.6     CHANGE OF BUSINESS

         The Company shall procure that no substantial change is made to the
         general nature of the business of the Company or any Obligor from that
         carried on at the date of this Agreement.

13.7     DEFAULT

         Each Obligor will notify Burdale forthwith upon becoming aware of the
         occurrence of any Default and will provide Burdale with full details of
         any steps which it is taking, or is considering taking, in order to
         remedy or mitigate the effect of the Default.

13.8     DISPOSALS

         No Obligor shall enter into a single transaction or series of
         transactions (whether related or not) and whether voluntary or
         involuntary to sell, lease, transfer or otherwise dispose of any asset
         save for:

         (a)      the disposal of Stock in the ordinary course of trading; or

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         (b)      the application of cash in the purchase or acquisition of
                  goods and services in the ordinary course of trading or in any
                  manner not prohibited by any of the Finance Documents; or

         (c)      the disposal of obsolete assets where the proceeds of sale (if
                  any) are paid into a Blocked Account; or

         (d)      any disposal in respect of which Burdale has given its prior
                  written consent; or

         (e)      a disposal of the real property owned by the Company at
                  Openshaw, Manchester provided that:

                  (i)     any such disposal is on arm's length commercial terms
                          to an unrelated third party;

                  (ii)    no Default is continuing at the time of any such
                          disposal; and

                  (iii)   all proceeds of sale arising on any such disposal
                          (less the L 300,000 payable to the Trustees under the
                          Trustee Agreement) are paid into a Blocked Account; or

         (f)      the disposal of any asset where the higher of market value or
                  consideration receivable (when aggregated with the higher of
                  market value or consideration receivable for any other sale,
                  lease, transfer or other disposal (other than any permitted
                  under paragraphs (a) to (e) above)) does not exceed $15,000
                  (or its equivalent in another currency or currencies) in any
                  financial year and the proceeds of sale are paid into a
                  Blocked Account.

13.9     ACQUISITIONS

         No Obligor will, except in the ordinary course of its trade acquire any
         business, undertaking or assets of any kind whatsoever.

13.10    INTRA-GROUP ARRANGEMENTS

         No Obligor will, without obtaining Burdale's prior written consent:

         (a)      pay any dividend or make any other distribution of any of its
                  assets to its shareholders or any of them; or

         (b)      pay any other moneys, whether by way of interest, management
                  fees or otherwise howsoever, to any affiliate, subsidiary or
                  any shareholder, director or employee except for payments in
                  the ordinary course of, and pursuant to the reasonable
                  requirements of, trading and on arms length commercial terms
                  unless immediately following the making of any such payment
                  the amount available for Utilisation (less the aggregate
                  amount of Past Due Payables) would be at least $1,000,000.; or

         (c)      redeem any of its ordinary or preference share capital.

13.11    AUDITS BY BURDALE

         Each Obligor will permit Burdale or its appointed representatives or
         agents at the relevant Obligor's expense to conduct an audit of its
         financial records, systems and forecasts on a quarterly basis or,
         following a Default at more frequent intervals as Burdale may stipulate
         and will afford all co-operation to Burdale and its representatives or
         agents to enable such audit to take place.

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13.12    FINANCIAL INDEBTEDNESS

         No Obligor will incur any Financial Indebtedness other than:

         (a)      under the Finance Documents;

         (b)      under the Trustee Agreement and the Trustee Mortgage for such
                  time as the Deed of Priorities is in full force and effect;

         (c)      normal trade credit granted to it in the ordinary course of
                  business;

         (d)      equipment, vehicle and operating leases and hire purchase
                  transactions entered into in the ordinary course of business
                  where the total annual Financial Indebtedness for such leases
                  and transactions for the Obligors as a whole does not exceed
                  $50,000 at any one time; or

         (e)      with respect to loans made to it by another Obligor which is a
                  Chargor under the Debenture.

13.13    MAKING LOANS

         No Obligor will be a creditor with respect to any Financial
Indebtedness except for:

         (a)      the grant of normal trade credit in the ordinary course of its
                  trade;

         (b)      loans made by it to another Obligor which is a Chargor under
                  the Debenture; and

         (c)      loans made by the Company to Haynes US:

                  (i)     in an amount not exceeding $5,600,000 out of the first
                          Utilisations; and

                  (ii)    thereafter, provided that:

                          (aa)     for the period of 30 days immediately
                                   preceding the making of any such loan the
                                   minimum amount available for Utilisation was;
                                   and

                          (bb)     following the making of any such loan the
                                   amount available for Utilisation would be,

                          (in each case, less the aggregate of all Past Due
                          Payables) at least $1,000,000.

13.14    BANK ACCOUNTS

         No Obligor will, open or maintain any account of any type with any bank
         or financial institution providing like services other than the Charged
         Accounts.

13.15    INSURANCE

         Each Obligor will:

         (a)      as regards all its assets and property of any kind and
                  businesses arrange and maintain in full force and effect
                  insurances (including consequential loss, business
                  interruption and public liability and damage and other
                  insurances usually maintained by companies carrying on the
                  same type of business as its own business) with such insurers
                  as Burdale approves and on such terms and in such amounts as
                  Burdale may reasonably require and

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                  is customary for an enterprise engaged in the same or similar
                  business and in the same or similar localities and against
                  such risks as Burdale shall reasonably request;

         (b)      procure that Burdale's interest is noted on all policies
                  relating to insurances so arranged in such manner as Burdale
                  may in its absolute discretion require and will use all
                  reasonable endeavours to ensure that Burdale is named as sole
                  loss payee (but without having any obligation for premiums);

         (c)      ensure that every policy of insurance contains a standard
                  mortgagee clause, whereby such insurance will not be
                  invalidated, vitiated or avoided as against a mortgagee in the
                  event of any misrepresentation, act, neglect or failure to
                  disclose on the part of the insured provided that where the
                  insurers will not agree such terms, terms acceptable to
                  Burdale in Burdale's absolute discretion are agreed; and

         (d)      will supply to Burdale copies of all such policies of
                  insurance and all endorsements and renewals of such policies;

         (e)      duly and punctually pay all premiums in respect of its
                  insurances and not do or omit to do any act, matter or thing
                  whereby any such insurance may be or becomes void or voidable
                  at the option of the insurers or settle any claim in respect
                  of those insurances without the prior written consent of
                  Burdale, such consent not to be unreasonably withheld or
                  delayed;

         (f)      it shall comply with, enforce and not waive, release,
                  terminate or vary (or agree so to do) any obligations arising
                  under all policies of insurance and in particular, but without
                  limitation, it shall notify Burdale immediately upon receiving
                  notice from any insurer that the details of any insurance
                  policy are to change in any way and upon receiving notice from
                  any insurer terminating any insurance policies;

         (g)      in the event that it receives from any insurer notice that
                  such insurer is terminating any insurance policy, it shall use
                  all reasonable endeavours to enter into an agreement on
                  substantially the same terms as those contained in the
                  original insurance policy with such other insurer as approved
                  by Burdale and to the extent that the same terms or
                  substantially the same terms are not available from the
                  insurer, such terms as are acceptable to Burdale in its
                  absolute discretion, to take effect on or before the expiry of
                  such notice and shall use all reasonable endeavours to procure
                  that such insurer gives to Burdale such acknowledgements and
                  undertakings in relation to this Agreement as Burdale may in
                  its absolute discretion require;

         (h)      produce to Burdale on request copies of all policies and all
                  receipts for the current premiums with respect to the
                  insurance; and

         (i)      immediately give notice to Burdale of any occurrence which
                  gives rise, or might give rise, to a claim under any policy of
                  insurance.

         If any Obligor at any time fails to perform any of its obligations
         contained in this Clause, Burdale may effect or renew such insurance as
         Burdale thinks fit and such Obligor shall reimburse Burdale for the
         costs thereby incurred on demand.

13.16    FINANCIAL YEAR END AND CHANGE OF AUDITORS

         Except with the prior written consent of Burdale (not to be
         unreasonably withheld or delayed), no Obligor will alter its financial
         year end from that applicable at the date of this Agreement and each
         Obligor will procure that it has at all times appointed as its auditors
         a firm of auditors which is acceptable to Burdale.

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13.17    TAXES

         Each Obligor will promptly pay all Taxes as and when they fall due
         (other than in circumstances where such Taxes are the subject of a
         dispute being carried on properly and in good faith by the relevant
         Obligor where written details of such dispute have been supplied to
         Burdale (if requested, Burdale having been notified of the dispute) or,
         in the case of PAYE and National Insurance contributions, within any
         permitted grace period or, in the case of any other taxes, in
         accordance with any other arrangements agreed with the Inland Revenue
         or other taxing authority.

13.18    CHANGE OF NAME

         No Obligor will change its name without giving Burdale 30 days' prior
         written notice of the proposed new name and will supply a copy of the
         relevant certificate of incorporation on change of name to Burdale as
         soon as it becomes available.

13.19    NEW LOCATIONS

         No Obligor will move any of its assets to any new location without
         giving Burdale 30 days' prior written notice of the new location and
         executing and delivering to Burdale such access agreements, landlord
         waivers and other documents as Burdale may reasonably require in order
         to protect its interest in such assets.

13.20    STAMP DUTY

         Each Obligor will promptly pay any liability incurred in respect of any
         stamp, registration and similar Tax which is or becomes payable in
         connection with the entry into, registration, performance, enforcement
         or admissibility in evidence of any Finance Document and/or any
         amendment, supplement or waiver of any Finance Document. In the event
         of any breach of this undertaking the relevant Obligor shall
         immediately pay to Burdale by way of liquidated damages the amount of
         any liability that Burdale may incur as a result of or by reference to
         such Obligor's delay in paying or omission to pay any such Tax.

13.21    FINANCIAL COVENANTS

13.21.1  The Company shall procure that Consolidated Tangible Net Worth is at
         all times at least equal to $17,500,000.

13.21.2  The Company shall procure that, as at the end of each month (each a
         TEST DATE), Trading Cashflow for the period of 12 months ending on such
         Test Date (but ignoring any period prior to the date of this Agreement)
         is not less than $nil.

13.22    ADDITIONAL SECURITY DOCUMENTS

         The Company shall procure that the documents, evidence and other items
         specified in Part II of Schedule 2 are delivered to Burdale (in a form
         and substance satisfactory to Burdale) on the DIP Financing Date.

13.23    ROT SUPPLIERS

         The Company shall within 10 Business Days deliver to Burdale a list of
         all suppliers to the Obligors whose terms of business include retention
         of title provisions.

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14       INFORMATION AND ASSET UNDERTAKINGS

14.1     FINANCIAL INFORMATION

         The Company shall supply to Burdale:

         (a)      as soon as the same become available, but in any event within
                  120 days after the end of each of its financial years:

                  (i)     its audited consolidated financial statements for that
                          financial year; and

                  (ii)    the audited financial statements of each Obligor for
                          that financial year; and

         (b)      as soon as practicable and in any event within 30 days from
                  the end of each monthly management accounting period and in
                  each case in a format satisfactory to Burdale, full individual
                  and, if applicable, consolidated accounts in each case
                  prepared in Sterling in respect of that period for itself and
                  each other Obligor including Stock figures and valuations for
                  that month, a breakdown of the value and identity of
                  preferential creditors for that month (in substantially the
                  form set out in Part II of Schedule 4) and details of all
                  input and output VAT together with such calculations as may be
                  necessary to establish whether the Company is in compliance
                  with Clause 13.21;

         (c)      copies of all notices, circulars, reports and statements sent
                  to any Obligor's shareholders or creditors generally (or any
                  class of them) at the same time as they are made available to
                  such shareholders or creditors; and

         (d)      such further information relating to the financial condition
                  or operations of it or any Obligor which Burdale may
                  reasonably require at such time as Burdale may reasonably
                  require it.

14.2     REQUIREMENTS AS TO FINANCIAL STATEMENTS

         Each set of financial statements delivered by the Company pursuant to
         Clause 14.1 shall be certified by a director of the relevant company as
         fairly representing its financial condition as at the date as at which
         those financial statements were drawn up and the Company shall procure
         that each set of financial statements delivered pursuant to Clause 14.1
         is prepared using GAAP and consistently with the policies and practices
         adopted by the relevant company for the preparation of such accounts as
         at today's date.

14.3     REPORTING REGARDING RECEIVABLES, STOCK AND EQUIPMENT

         Each Facility Company will provide Burdale with the following documents
         with all amounts expressed in Sterling and otherwise in a form
         satisfactory to Burdale:

         (a)      on a daily basis with a schedule of Receivables, collections
                  received and credits issued and on a weekly basis with a stock
                  report substantially in the form set out in Part I of Schedule
                  4 and on an annual basis with an Equipment report together
                  with such further information reports and copies of documents
                  regarding Receivables, Stock and Equipment as Burdale may from
                  time to time reasonably request;

         (b)      as soon as practicable and in any event within 15 days of the
                  end of each month or more frequently as Burdale may reasonably
                  request:

                  (i)     ageings of creditors and Receivables with details of
                          all dated invoices;

                  (ii)    full details of all Stock by category, location and
                          supplier; and

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                  (iii)   reconciliations of Stock and Receivables listings to
                          the nominal ledger and the management accounts,

                  all in a format to be agreed with Burdale (acting reasonably).

         (c)      on a daily basis, details of any Receivables which have become
                  or are purported to be, by the relevant account debtor or
                  otherwise, subject to any prohibitions or restriction on
                  charge or assignment; and

         (d)      immediately upon becoming aware of the same, details of any
                  creditor of any Obligor whose ordinary terms of business
                  include title retention provisions which have not already been
                  notified to Burdale.

14.4     REPORTING REGARDING ACCOUNT DEBTORS

14.4.1   NOTIFICATION: Each Facility Company will notify Burdale promptly of:

         (a)      any material delay in such Facility Company's performance of
                  any of its obligations to any account debtor or the assertion
                  of any claims, offsets, defences or counterclaims by any
                  account debtor, or any material disputes with account debtors,
                  or any settlement, adjustment or compromise of any such
                  matter;

         (b)      all material adverse information known to such Facility
                  Company relating to the financial condition of any account
                  debtor; and

         (c)      any event or circumstance which, to such Facility Company's
                  knowledge, would cause Burdale to consider any then existing
                  Receivables as no longer constituting Eligible Receivables.

14.4.2   DISPUTES AND SETTLEMENTS WITH ACCOUNT DEBTORS: No credit, discount,
         allowance or extension or agreement for any of the foregoing will be
         granted to any account debtor without Burdale's consent, except in the
         ordinary course of the relevant Facility Company's business in
         accordance with proper practices and policies operated by the relevant
         Facility Company prior to the date of this Agreement. At any time while
         an Event of Default is continuing, Burdale will, at its option, have
         the exclusive right to settle, adjust or compromise any claim, offset,
         counterclaim or dispute with any account debtor and to grant any
         credits, discounts or allowances in relation to such matters.

14.4.3   RETURN OF STOCK: Each Facility Company will promptly report to Burdale
         any return of Stock by an account debtor where that Stock has a value
         in excess of $75,000. At any time that any Stock (irrespective of its
         value) is returned, reclaimed or repossessed, the related Receivable
         will be deemed not to be an Eligible Receivable. In the event any
         account debtor returns Stock when an Event of Default has occurred and
         is continuing, such Facility Company will, upon Burdale's request:

         (a)      hold the returned Stock on trust for Burdale;

         (b)      segregate all returned Stock from all of its other property;

         (c)      dispose of the returned Stock solely according to Burdale's
                  instructions; and

         (d)      not issue any credits, discounts or allowances with respect to
                  such returned stock without Burdale's prior written consent.

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14.5     VERIFICATION

         Burdale will have the right from time to time, in the name of any
         nominee, to verify the validity, amount or any other matter relating to
         any Receivable or other asset of any Obligor, by mail, telephone,
         facsimile or otherwise.

14.6     RIGHTS AFTER A DEFAULT

14.6.1   DEALING WITH ASSETS: Burdale may, at any time that a Default has
         occurred and is continuing and without prejudice to any of its rights
         under Clause 16.2 or otherwise under this Agreement or any other
         Finance Document:

         (a)      extend the time of payment of, compromise, settle or adjust
                  for cash, credit, return of merchandise or otherwise, and upon
                  any terms or conditions, any and all Receivables and thereby
                  discharge or release any account debtor or any other party or
                  parties in any way liable for payment of any Receivable
                  without affecting any of the Receivables, demand or enforce
                  payment of any Receivables, but without any duty to do so, and
                  Burdale will not be liable for its failure to enforce the
                  payment of any Receivable nor for the negligence of its agents
                  or attorneys with respect to any Receivable; and

         (b)      take whatever other action Burdale may deem necessary for the
                  protection of its interests in any assets subject to a
                  Security Interest under the Security Documents.

14.6.2   NOTICE TO DEBTORS: At any time that a Default is continuing, Burdale or
         its nominee may, at Burdale's discretion as the case may be do any of
         the following:

         (a)      having given prior notification to the Company, notify any or
                  all account debtors that the Receivables have been assigned to
                  Burdale and that payments in respect of Receivables are to be
                  redirected to such account as is specified by Burdale;

         (b)      request the relevant Facility Company to give the notification
                  referred to in Clause 14.6.2(a) above and/or to ensure that
                  all invoices and statements in respect of Receivables issued
                  to the account debtors state the information referred to in
                  Clause 14.6.2(a); and

         (c)      direct any or all relevant account debtors to make all
                  payments in respect of Receivables direct to Burdale at such
                  account as Burdale may specify.

14.6.3   ORIGINALS: At any time that an Event of Default is continuing, each
         Facility Company will deliver to Burdale the originals of all documents
         evidencing the sale and delivery of goods or the performance of
         services giving rise to any Receivables as Burdale may require.

14.7     UNDERTAKINGS REGARDING STOCK

         With respect to the Stock:

         (a)      each Facility Company will at all times maintain perpetual
                  stock records reasonably satisfactory to Burdale, keeping
                  correct and accurate records itemising and describing the
                  kind, type, quality and quantity of Stock, such Facility
                  Company's cost in relation to such Stock and daily withdrawals
                  from and additions to the Stock;

         (b)      each Facility Company will conduct a physical count of the
                  Stock at least once each year and at any time or times as
                  Burdale may request while an Event of Default is continuing,
                  and promptly following such physical count will supply Burdale
                  with a report in a form and containing such specific
                  information as may be reasonably satisfactory to Burdale
                  concerning such physical count;

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         (c)      no Facility Company will remove any Stock from property which
                  is owned and controlled by it or any other Obligor or to or
                  from a public warehouse without the prior written consent of
                  Burdale, except for sales of Stock in the ordinary course of
                  the relevant Facility Company's trade and except to move Stock
                  directly from such property to another location previously
                  agreed to by Burdale;

         (d)      upon Burdale's request, each Facility Company will, at its
                  expense, not more than once in any twelve month period, but at
                  any time or times as Burdale may request while an Event of
                  Default is continuing, deliver or cause to be delivered to
                  Burdale written reports or appraisals regarding the Stock in
                  form and substance acceptable to Burdale and by an appraiser
                  acceptable to Burdale, addressed to Burdale and upon which
                  Burdale is expressly permitted to rely;

         (e)      each Facility Company will produce, use, store and maintain
                  the Stock with all reasonable care and caution and in
                  accordance with applicable standards relating to any insurance
                  and in conformity with applicable laws and regulations;

         (f)      each Facility Company assumes all responsibility and liability
                  arising from or relating to the production, use, sale or other
                  disposition of the Stock;

         (g)      in respect of Stock exceeding $15,000, no Facility Company
                  will, without prior notice to Burdale, sell such Stock to any
                  customer on sale or return, or on any other basis which
                  entitles the customer to return or may oblige such Facility
                  Company or any other Obligor to repurchase such Stock; and

         (h)      each Facility Company will keep the Stock in good and
                  marketable condition and will not, without the prior written
                  consent of Burdale, acquire or accept any consignment Stock.

14.8     BURDALE'S RIGHT TO CURE

         Burdale may, at its option:

         (a)      after giving five days notice to the Company, cure any default
                  by any Facility Company under any agreement with an account
                  debtor in respect of a Receivable (other than bona fide
                  disputes in the ordinary course of the relevant Facility
                  Company's business where no Event of Default has occurred and
                  is continuing) or under any other agreement with a third party
                  as may be required by Burdale in good faith to facilitate the
                  collection of the Receivables or to enable Burdale to have
                  access to any assets subject to a Security Interest under the
                  Security Documents;

         (b)      after giving five days notice to the Company, pay or make a
                  bond in respect of or appeal any judgment entered into against
                  any Facility Company which, upon execution, attachment or the
                  exercise of any similar remedy in respect of such judgment,
                  would result in a Security Interest being imposed on the
                  assets of any Obligor or would impair Burdale's ability to
                  obtain possession of, realise or collect any assets subject to
                  a Security Interest under the Security Documents;

         (c)      discharge taxes, Security Interests or other encumbrances at
                  any time levied on or existing with respect to any assets of
                  any Obligor; and

         (d)      pay any amount, incur any expense or perform any act including
                  without limitation the payment to any creditors in respect of
                  plant and/or machinery, which, in Burdale's judgment, is
                  necessary or appropriate to reserve, protect, insure or
                  maintain the assets

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                  subject to a Security Interest under the Security Documents
                  and the rights of Burdale with respect to them.

         Any monies so expended or costs so incurred by Burdale shall be
         repayable by the relevant Obligor on demand. Burdale will be under no
         obligation to effect any such cure or payment or incur any such cost
         and will not, by doing so, be deemed to have assumed any obligation or
         liability of the Facility Company. Any payment made or other action
         taken by Burdale under this Clause will be without prejudice to any
         right it may have to assert an Event of Default under this Agreement
         and to proceed accordingly.

14.9     ACCESS TO PROPERTY

         From time to time as requested by Burdale on one Business Day's notice
         except in the case of emergency as determined by Burdale (but subject
         to Clause 17.1(d) regarding daily charge rates), at the cost and
         expense of the Company:

         (a)      Burdale or its nominee will have complete access to all of
                  each Obligor's premises during normal business hours and
                  having given prior notice to the Company, or at any time and
                  without notice to the Company if an Event of Default is
                  continuing, for the purposes of inspecting, verifying and
                  auditing the Obligors' books, records and assets;

         (b)      each Obligor will promptly furnish to Burdale or any such
                  nominee such copies of or extracts from such books and records
                  as may be reasonably requested from any Obligor.

15       GUARANTEE AND INDEMNITY

15.1     GUARANTEE AND INDEMNITY

         Each Guarantor irrevocably and unconditionally jointly and severally:

         (a)      guarantees to Burdale punctual performance by each Facility
                  Company of all that Facility Company's obligations under the
                  Finance Documents;

         (b)      undertakes with Burdale that whenever a Facility Company does
                  not pay any amount when due under or in connection with any
                  Finance Document, that Guarantor shall immediately on demand
                  pay that amount as if it was the principal obligor; and

         (c)      indemnifies Burdale immediately on demand against any cost,
                  loss or liability suffered by Burdale if any obligation
                  guaranteed by it is or becomes unenforceable, invalid or
                  illegal. The amount of the cost, loss or liability shall be
                  equal to the amount which Burdale would otherwise have been
                  entitled to recover.

15.2     CONTINUING GUARANTEE

         This guarantee is a continuing guarantee and will extend to the
         ultimate balance of sums payable by any Obligor under the Finance
         Documents, regardless of any intermediate payment or discharge in whole
         or in part.

15.3     REINSTATEMENT

         If any payment by an Obligor or any discharge given by Burdale (whether
         in respect of the obligations of any Obligor or any security for those
         obligations or otherwise) is avoided or reduced as a result of
         insolvency or any similar event:

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         (a)      the liability of each Obligor shall continue as if the
                  payment, discharge, avoidance or reduction had not occurred;
                  and

         (b)      Burdale shall be entitled to recover the value or amount of
                  that security or payment from each Obligor, as if the payment,
                  discharge, avoidance or reduction had not occurred.

15.4     WAIVER OF DEFENCES

         The obligations of each Guarantor under this Clause 15 will not be
         affected by an act, omission, matter or thing which, but for this
         Clause, would reduce, release or prejudice any of its obligations under
         this Clause 15 (without limitation and whether or not known to it or
         Burdale) including:

         (a)      any time, waiver or consent granted to, or composition with,
                  any Obligor or other person;

         (b)      the release of any other Obligor or any other person under the
                  terms of any composition or arrangement with any creditor of
                  any Obligor or any other person;

         (c)      the taking, variation, compromise, exchange, renewal or
                  release of, or refusal or neglect to perfect, take up or
                  enforce, any rights against, or security over assets of, any
                  Obligor or other person or any non-presentation or
                  non-observance of any formality or other requirement in
                  respect of any instrument or any failure to realise the full
                  value of any security;

         (d)      any incapacity or lack of power, authority or legal
                  personality of or dissolution or change in the members or
                  status of an Obligor or any other person;

         (e)      any amendment (however fundamental) or replacement of a
                  Finance Document or any other document or security;

         (f)      any unenforceability, illegality or invalidity of any
                  obligation of any person under any Finance Document or any
                  other document or security; or

         (g)      any insolvency or similar proceedings.

15.5     IMMEDIATE RECOURSE

         Each Guarantor waives any right it may have of first requiring Burdale
         to proceed against or enforce any other rights or security or claim
         payment from any person before claiming from that Guarantor under this
         Clause 15. This waiver applies irrespective of any law or any provision
         of a Finance Document to the contrary.

15.6     APPROPRIATIONS

         Until all amounts which may be or become payable by the Obligors under
         or in connection with the Finance Documents have been irrevocably paid
         in full, Burdale may:

         (a)      refrain from applying or enforcing any other moneys, security
                  or rights held or received by Burdale in respect of those
                  amounts, or apply and enforce the same in such manner and
                  order as it sees fit (whether against those amounts or
                  otherwise) and no Guarantor shall be entitled to the benefit
                  of the same; and

         (b)      hold in an interest-bearing suspense account any moneys
                  received from any Guarantor or on account of any Guarantor's
                  liability under this Clause 15.

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15.7     DEFERRAL OF GUARANTORS' RIGHTS

         Until all amounts which may be or become payable by the Obligors under
         or in connection with the Finance Documents have been irrevocably paid
         in full and unless Burdale otherwise directs, no Guarantor will
         exercise any rights which it may have by reason of performance by it of
         its obligations under the Finance Documents:

         (a)      to be indemnified by an Obligor;

         (b)      to claim any contribution from any other guarantor of any
                  Obligor's obligations under the Finance Documents; and/or

         (c)      to take the benefit (in whole or in part and whether by way of
                  subrogation or otherwise) of any of Burdale's rights under the
                  Finance Documents or of any other guarantee or security taken
                  pursuant to, or in connection with, the Finance Documents by
                  Burdale.

15.8     ADDITIONAL SECURITY

         This guarantee is in addition to and is not in any way prejudiced by
         any other guarantee or security now or subsequently held by Burdale.

16       EVENTS OF DEFAULT

16.1     DEFAULT

         Each of the events or circumstances specified below constitutes an
         Event of Default:

         (a)      PAYMENT DEFAULT: Any Obligor does not pay on its due date any
                  amount payable by it under the Finance Documents at the place
                  and in the currency in which it is expressed to be payable or,
                  where such failure is due to a technical or administrative
                  failure within the banking system (which is not attributable
                  to the relevant Obligor), within two Business Days of such due
                  date.

         (b)      Breach of Other Obligations:

                  (i)     Any Obligor does not comply with its obligations or
                          undertakings under, or there is a breach of any of
                          Clauses 13.4, 13.8, 13.12, 13.15, 13.21 or 13.22.

                  (ii)    Any Obligor does not comply with any of its
                          obligations or undertakings under any of the Finance
                          Documents (other than those referred to in Clause
                          16.1(a) or 16.1(b)(i)) and, where such failure is
                          capable of remedy, such Obligor fails to remedy the
                          same within ten Business Days of the relevant Obligor
                          becoming aware of the failure to comply.

         (c)      MISREPRESENTATION: Any representation or warranty made or
                  repeated in connection with any Finance Document or any other
                  document delivered by or on behalf of any Obligor under or in
                  connection with any Finance Document is or proves to have been
                  incorrect or misleading in any material respect when made or
                  deemed to be made.

         (d)      INVALIDITY: Any provision of any of the Finance Documents is
                  not, or is alleged by any Obligor not to be binding on or
                  enforceable against any Obligor or effective to create any
                  security intended to be created by it.

         (e)      CROSS-DEFAULT:

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                  (i)     Any Financial Indebtedness of any Obligor exceeding
                          $75,000 (or its equivalent in other currencies) in
                          aggregate is not paid when due.

                  (ii)    An event of default howsoever described occurs under
                          any document relating to Financial Indebtedness of any
                          Obligor exceeding $75,000 (or its equivalent in other
                          currencies).

                  (iii)   Any Security Interest securing Financial Indebtedness
                          over any asset of any Obligor becomes enforceable.

                  (iv)    An amount exceeding $75,000 in aggregate owed to trade
                          creditors of any Obligor remains outstanding following
                          the expiry of any relevant customary trade credit
                          period.

         (f)      CREDITORS' PROCESS: Any attachment, sequestration, distress or
                  execution affects any asset of any Obligor and is not
                  discharged within 14 days.

         (g)      INSOLVENCY:

                  (i)     Any Obligor is unable or admits inability to pay its
                          debts as they fall due, suspends making payments on
                          any of its debts or, by reason of actual or
                          anticipated financial difficulties, commences
                          negotiations with one or more of its creditors with a
                          view to rescheduling any of its indebtedness.

                  (ii)    The value of the assets of any Obligor is less than
                          its liabilities (taking into account contingent and
                          prospective liabilities).

                  (iii)   A moratorium is declared in respect of any
                          indebtedness of any Obligor.

         (h)      INSOLVENCY PROCEEDINGS:

                  (i)     Any corporate action, legal proceedings or other
                          procedure or step is taken in relation to:

                  (ii)    the suspension of payments, a moratorium of any
                          indebtedness, winding-up, dissolution, administration
                          or reorganisation (by way of voluntary arrangement,
                          scheme of arrangement or otherwise) of any Obligor;

                  (iii)   a composition, assignment or arrangement with any
                          creditor of any Obligor;

                  (iv)    the appointment of a liquidator, receiver,
                          administrator, administrative receiver, compulsory
                          manager or other similar officer in respect of any
                          Obligor or any of its assets; or

                  (v)     enforcement of any Security Interest over any assets
                          of any Obligor,

                  or any analogous procedure or step is taken in any
                  jurisdiction.

         (i)      CESSATION OF BUSINESS: Any Obligor ceases, or threatens to
                  cease, to carry on all or a substantial part of its business.

         (j)      AUTHORISATIONS: Any authorisation or other requirement
                  necessary to enable any Obligor to comply with any of its
                  obligations under the Finance Documents or for Burdale to
                  enter into this Agreement and make available and/or maintain
                  the Facilities

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                  or any of them is revoked or withheld or does not remain in
                  full force and effect or is materially and adversely modified.

         (k)      UNLAWFULNESS: It is or becomes unlawful for any Obligor to
                  perform any of its obligations under the Finance Documents.

         (l)      CHANGE OF CONTROL: Any single person or group of persons
                  acting in concert (as defined in the City Code on Takeovers
                  and Mergers) not having control of the Company directly or
                  indirectly as at today's date, acquires or agrees to acquire
                  control (as defined in Section 416 of the Income and
                  Corporation Taxes Act 1988) of the Company.

         (m)      CHARGED ACCOUNT ARRANGEMENTS: Any bank repudiates or purports
                  to terminate the arrangements set out in the Debenture in
                  relation to any Charged Account or a cash-sweep or payment
                  required to be made under any Finance Document from a Charged
                  Account is not made in the amount and manner required.

         (n)      MATERIAL ADVERSE EFFECT: An event or series of events occurs
                  which in Burdale's reasonable opinion constitutes or could
                  reasonably be expected to constitute a Material Adverse
                  Effect.

16.2     ACTION ON DEFAULT

         Upon the occurrence of any Event of Default and whilst the same is
         continuing, and without prejudice to any of Burdale's rights under this
         Agreement, Burdale may, by notice to the Company:

         (a)      declare that an Event of Default has occurred; and/or

         (b)      declare that the Facilities or any of them shall be cancelled,
                  whereupon the Facilities or such of them (as the case may be)
                  shall be so cancelled and all fees (including without
                  limitation pursuant to Clause 7.7.1(b)) payable in relation to
                  the Facilities or such of them (as the case may be) shall
                  become immediately due and payable; and/or

         (c)      declare that some or all of the Loans, together with accrued
                  interest and all other amounts accrued, be immediately due and
                  payable, whereupon they shall become immediately due and
                  payable; and/or

         (d)      declare that some or all of the Loans, together with accrued
                  interest and all other amounts accrued, be payable on demand,
                  whereupon they shall immediately become payable on demand (and
                  in the event of any such demand those Loans, such interest and
                  such other amounts shall be immediately due and payable);
                  and/or

         (e)      declare that the Company shall forthwith pay or procure the
                  payment to Burdale of a sufficient sum to cover the amount of
                  all Outstanding Purchase Price and/or any contingent
                  obligations of Burdale under any outstanding L/Cs and/or any
                  contingent obligation of Burdale under any Forex Transaction,
                  whereupon the same shall become immediately due and payable.

16.3     APPOINTMENT OF INSOLVENCY OFFICER

         If any liquidator, trustee in bankruptcy, judicial custodian,
         compulsory manager, receiver, administrative receiver, administrator or
         any other insolvency officer is appointed in respect of any Obligor or
         any part of its assets (whether on the application or with the consent
         of Burdale or otherwise) then Burdale may (with or without it first
         having exercised any of its other rights under the Finance Documents),
         by notice to the Company, declare that the fee specified in Clause
         7.7.1(b) be immediately due and payable or, at Burdale's option,
         payable upon demand

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         as if the Facility Limit at such time had been reduced to zero,
         whereupon such fee shall become immediately due and payable or payable
         on demand (as the case may be).

17       COSTS, EXPENSES AND FEES

17.1     INITIAL AND GENERAL COSTS

         The Company shall pay to Burdale on demand the amount of all costs and
         expenses (including legal fees) incurred by it:

         (a)      in the negotiation, preparation, printing and execution of the
                  Finance Documents (including any Finance Documents executed
                  after today's date);

         (b)      in relation to any amendment, waiver, consent or suspension of
                  rights requested by or on behalf of any Obligor relating to a
                  Finance Document;

         (c)      in remitting loan proceeds, collecting cheques and other items
                  of payment, and establishing and maintaining the Charged
                  Accounts, together with Burdale's associated and customary
                  charges and fees;

         (d)      as out-of-pocket expenses and costs from time to time
                  (including prior to today's date) during the course of
                  periodic field examinations of the Obligors' assets and
                  operations, plus a daily charge at the rate of $1,000 for
                  Burdale's examiners in the field and office for up to four
                  such periodic field examinations in any 12 month period prior
                  to a Default and for any other or additional field
                  examinations on and after the occurrence of a Default.

17.2     ENFORCEMENT COSTS

         The Company shall pay to Burdale on demand the amount of all costs and
         expenses (including legal fees and VAT) incurred by it in:

         (a)      the enforcement of, or the preservation of any rights under,
                  any Finance Document; or

         (b)      investigating any Default.

17.3     FEES

17.3.1   FACILITY FEE: The Company will pay to Burdale today a facility fee of
         $100,000 and on the DIP Financing Date a further facility fee of
         $25,000.

17.3.2   COMMITMENT FEE: The Company will pay to Burdale a commitment fee
         computed at the rate of 0.375% on the daily undrawn/unutilised balance
         of the Facility Limit. Accrued Commitment Fee shall be payable monthly
         in arrears from today's date and also on the date on which all the
         Facilities are terminated. Commitment fee shall accrue from day to day
         and be calculated on the basis of a 365 day year and for the actual
         number of days elapsed.

17.3.3   MONITORING FEE: The Company will pay to Burdale a monitoring fee of
         $2,500 quarterly in advance with the first payment to be made on
         today's date.

17.3.4   L/C FEE: Each Facility Company will pay to Burdale a fee equal to 2.25%
         per annum on the face amount of each L/C issued at such Facility
         Company's request in respect of the period between the date of issue of
         the L/C and the End Date of such L/C. The fee shall be calculated on
         the basis of a 365 day year and shall be paid monthly in arrears and on
         the End Date of such L/C.

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18       INDEMNITIES

18.1     CURRENCY INDEMNITY

         If any amount payable by any Obligor under or in connection with any of
         the Finance Documents is received by Burdale in a currency other than
         that agreed to be payable under the Finance Documents, whether as a
         result of any judgment or order or other enforcement, the liquidation
         or bankruptcy of any Obligor or otherwise howsoever and the amount
         produced by converting the currency so received into the agreed
         currency is less than the relevant amount of the agreed currency, then
         the relevant Obligor will as an independent obligation indemnify
         Burdale for the deficiency and any loss sustained as a result. Such
         conversion will be made at the Exchange Rate, on such date and in such
         market as is determined by Burdale as being most favourable for such
         conversion. The relevant Obligor will in addition pay the costs of such
         conversion.

18.2     FOREIGN EXCHANGE INDEMNITY

         Each Facility Company will indemnify and hold Burdale harmless from and
         against any and all losses, claims, damages, liabilities, costs and
         expenses which Burdale may suffer or incur in connection with any Forex
         Transaction and any documents, drafts or financial information relating
         to such Forex Transaction, including, but not limited to, any losses,
         claims, damages, liabilities, costs and expenses due to any action
         taken by any counterparty with respect to any Forex Transaction, except
         for any such losses, claims, damages, liabilities, costs and expenses
         suffered or incurred by Burdale as a result of its gross negligence or
         wilful misconduct. Each Facility Company assumes all risks with respect
         to the acts or omissions of any counterparty to any Forex Transaction
         and for such purposes the counterparty will be deemed such Facility
         Company's agent. Each Facility Company assumes all risks for, and
         agrees to pay, all foreign and local taxes, duties and levies relating
         to any transaction pursuant to the Forex Transactions or any documents,
         drafts or financial information relating to such Forex Transaction.
         Each Facility Company releases and holds Burdale harmless from and
         against any acts, waivers, errors, delays or omissions, whether caused
         by such Facility Company, by any counterparty or otherwise with respect
         to or relating to any Forex Transaction.

18.3     OTHER INDEMNITIES

         The Company will (or will procure that an Obligor will) indemnify
         Burdale on demand against any loss or liability which Burdale incurs as
         a result of:

         (a)      the occurrence of any Default;

         (b)      any payment of principal or other amount being received from
                  any source otherwise than on its due date under this
                  Agreement;

         (c)      any Utilisation not being effected after a Facility Company
                  has delivered a Request in respect of such Utilisation other
                  than as a result of Burdale's negligence or default;

         (d)      any prepayment or provision of cash collateral by any Obligor
                  not being made in accordance with the terms of this Agreement.

         In each case the Company's liability includes (without limitation) any
         loss of margin or anticipated profits or other loss or expense on
         account of funds borrowed, contracted for or utilised to fund any
         amount payable under any Finance Document and on account of any
         security given by Burdale in relation to those funds and in relation to
         any amount repaid or prepaid in relation to any Finance Document.

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19       NOTICES

19.1     DELIVERY AND RECEIPT

19.1.1   Any communications to be made under or in connection with the Finance
         Documents shall be made in writing, may be made by letter or facsimile
         and shall be deemed to be given as follows:

         (a)      if by way of letter, when it has been left at the relevant
                  address or two Business Days after being deposited in the post
                  with postage prepaid in an envelope addressed to it at that
                  address; and

         (b)      if by facsimile, when received in legible form,

         save that any notice delivered or received on a non-Business Day or
         after business hours shall be deemed to be given on the next Business
         Day at the place of delivery or receipt.

19.1.2   Any communication or document made or delivered to the Company in
         accordance with this Clause will be deemed to have been made or
         delivered to each of the Obligors.

19.2     ADDRESSES

19.2.1   The Company's and each other Obligor's address and facsimile number for
         notices are:

         Parkhouse Street
         Openshaw
         Manchester

         Facsimile no:             0161 223 2412
         For the attention of:     Managing Director

         or such as the Company may notify to Burdale by not less than 10 days'
         notice.

19.2.2   Burdale's address and facsimile number for notices are:

         53 Queen Anne Street
         London W1G 9HP

         Facsimile no:             020 7935 5445
         For the attention of:     Company Secretary

         or such as Burdale may notify to the Company by not less than 10 days'
         notice.

20       MISCELLANEOUS PROVISIONS

20.1     REMEDIES AND WAIVERS

         The rights of Burdale under the Finance Documents:

         (a)      may be exercised as often as necessary;

         (b)      are cumulative and not exclusive of its rights under the
                  general law; and

         (c)      may be waived only in writing and specifically.

         Delay in exercising or non-exercise of any right shall not be deemed to
         be a waiver of that right.

                                                                         Page 42
<Page>

20.2     INVALIDITY

         If, at any time, any provision of any Finance Document is or becomes
         invalid, illegal or unenforceable in any respect under any law, the
         validity, legality and enforceability of the remaining provisions will
         not in any way be affected or impaired.

20.3     CHANGE OF CURRENCY

20.3.1   Unless otherwise prohibited by law, if more than one currency or
         currency unit are at the same time recognised by the central bank of
         any country as the lawful currency of that country, then:

         (a)      any reference in the Finance Documents to, and any obligations
                  arising under the Finance Documents in, the currency of that
                  country shall be translated into, or paid in, the currency or
                  currency unit of that country designated by Burdale (after
                  consultation with the Facility Companies); and

         (b)      any translation from one currency or currency unit to another
                  shall be at the official rate of exchange recognised by the
                  central bank for the conversion of that currency or currency
                  unit into the other, rounded up or down by Burdale (acting
                  reasonably).

20.3.2   If a change in any currency of a country occurs, this Agreement will,
         to the extent Burdale (acting reasonably and after consultation with
         the Facility Companies) specifies to be necessary, be amended to comply
         with any generally accepted conventions and market practice in the
         London interbank market and otherwise to reflect the change in
         currency.

20.4     ACCOUNTS

         In any litigation or arbitration proceedings arising out of or in
         connection with a Finance Document, the entries made in the accounts
         maintained by Burdale are prima facie evidence of the matters to which
         they relate.

20.5     CERTIFICATES AND DETERMINATIONS

         Any certification or determination by Burdale of a rate or amount under
         any Finance Document is, in the absence of manifest error, conclusive
         evidence of the matters to which it relates.

20.6     DISCLOSURE OF INFORMATION

         Burdale may disclose to any person with whom it is proposing to enter
         into (or has entered into) any kind of assignment or transfer in
         relation to this Agreement any information concerning the Obligors as
         Burdale may in its discretion think fit, and may advertise or publicise
         in such publications and to such persons as Burdale may in its
         discretion think fit such particulars of this transaction as Burdale
         may in its absolute discretion deem appropriate.

20.7     COUNTERPARTS

         This Agreement may be executed in any number of counterparts and all of
         such counterparts taken together will be deemed to constitute one and
         the same instrument.

21       GOODS AND DOCUMENTS

21.1     PLEDGE

         All Goods and Documents are hereby and shall upon despatch from the
         supplier of any Goods be deemed to be pledged by the relevant Facility
         Company to Burdale and the Goods and the

                                                                         Page 43
<Page>

         proceeds of all insurances in relation to them and all sales of them
         and all of the relevant Facility Company's rights as unpaid seller of
         them shall be a continuing security for the payment and discharge in
         full of all of the obligations of the relevant Facility Company under
         the Finance Documents.

21.2     PERFECTION OF PLEDGE

         Burdale shall be entitled at its option to obtain possession of the
         Goods in order to perfect the pledge made by Clause 21.1 and in this
         regard the relevant Facility Company assigns to Burdale its right,
         title and interest in and to the Documents and all claims and rights
         arising from them and the relevant Facility Company irrevocably and
         unconditionally authorises Burdale to do all such things as may be
         necessary to clear the Goods, take possession of them and realise the
         Goods in reduction of the relevant Facility Company's indebtedness to
         Burdale and in this regard the relevant Facility Company irrevocably
         appoints Burdale acting through any one of Burdale's directors as the
         relevant Facility Company's agent to sign all such documents and do all
         such things on the relevant Facility Company's behalf as may be
         necessary to give effect to the provisions of this Clause 21.2.

21.3     TRUST RECEIPTS

         The Goods and the Documents shall only be released to the relevant
         Facility Company by Burdale against receipt by Burdale of a duly
         executed trust receipt from the relevant Facility Company in Burdale's
         standard form (from time to time) and if, for any reason, no such trust
         receipt is executed by the relevant Facility Company in respect of any
         Goods or Documents, such Goods or Documents shall be deemed to be
         subject to a trust receipt in such form.

21.4     SEPARATION

         Each Facility Company undertakes to keep the Documents and the Goods
         separate and distinct from any other bills of lading, documents of
         title or goods.

22       CHANGES TO PARTIES

22.1     ASSIGNMENTS AND TRANSFER BY OBLIGORS

         No Obligor may assign any of its rights or transfer any of its rights
         or obligations under the Finance Documents.

22.2     ADDITIONAL FACILITY COMPANIES

         The Company may request that any of its Subsidiaries becomes an
         Additional Facility Company. That Subsidiary shall become an Additional
         Facility Company if:

         (a)      Burdale approves the addition of that Subsidiary as an
                  Additional Facility Company;

         (b)      the Company delivers to Burdale a duly completed and executed
                  Accession Letter;

         (c)      the Company confirms that no Default is continuing or would
                  occur as a result of that Subsidiary becoming an Additional
                  Facility Company; and

         (d)      Burdale has received all of the documents and other evidence
                  listed in Part III of Schedule 2 in relation to that
                  Additional Facility Company, each in form and substance
                  satisfactory to Burdale.

                                                                         Page 44
<Page>

22.3     ADDITIONAL GUARANTORS

         The Company shall procure that each of its Subsidiaries is a Guarantor.
         With respect to any company which becomes a Subsidiary of the Company
         after today's date, the Company shall procure that such Subsidiary
         becomes an Additional Guarantor by delivering to Burdale (promptly upon
         such company becoming a Subsidiary):

         (a)      a duly completed and executed Accession Letter; and

         (b)      all of the documents and other evidence listed in Part III of
                  Schedule 2 in relation to that Additional Guarantor, each in
                  form and substance satisfactory to Burdale.

22.4     REPETITION OF REPRESENTATIONS

         Delivery of an Accession Letter constitutes confirmation by the
         relevant Subsidiary that the representations and warranties in Clause
         12 are true and correct in relation to it as at the date of delivery as
         if made by reference to the facts and circumstances then existing.

22.5     TRANSFER BY BURDALE

         Burdale may at any time assign, transfer, delegate or offer
         participations in all or a proportion of all its rights and obligations
         under the Finance Documents to any other bank or financial institution.

23       GOVERNING LAW AND JURISDICTION

23.1     GOVERNING LAW

         This Agreement is governed by English law.

23.2     JURISDICTION

23.2.1   The courts of England have exclusive jurisdiction to settle any dispute
         arising out of or in connection with this Agreement (including a
         dispute regarding the existence, validity or termination of this
         Agreement) (a DISPUTE).

23.2.2   The parties agree that the courts of England are the most appropriate
         and convenient courts to settle Disputes and accordingly no party will
         argue to the contrary.

23.2.3   This Clause 23.2 is for the benefit of Burdale only. As a result,
         Burdale shall not be prevented from taking proceedings relating to a
         Dispute in any other courts with jurisdiction. To the extent allowed by
         law, Burdale may take concurrent proceedings in any number of
         jurisdictions.

23.3     SERVICE OF PROCESS

         Without prejudice to any other mode of service allowed under any
         relevant law, each Obligor (other than an Obligor incorporated in
         England and Wales):

         (a)      irrevocably appoints the Company as its agent for service of
                  process in relation to any proceedings before the English
                  courts in connection with any Finance Document; and

         (b)      agrees that failure by a process agent to notify the relevant
                  Obligor of the process will not invalidate the proceedings
                  concerned.

                                                                         Page 45
<Page>

         For the benefit of Burdale the Company expressly agrees and consents to
         its irrevocable appointment as process agent pursuant to this Clause
         23.3.

This Agreement has been entered into on the date stated at the beginning of this
Agreement.

                                                                         Page 46
<Page>

SIGNATORIES

THE COMPANY

HAYNES INTERNATIONAL LIMITED

By: /s/ P.J. Crawshaw
    ----------------------------

BURDALE

BURDALE FINANCIAL LIMITED

By: /s/ S.J. Chait
    ----------------------------

By: /s/ Brian Gitlin
    ----------------------------

[The exhibits and schedules have been omitted from this Agreement as filed with
the Securities and Exchange Commission (the "SEC"). The omitted information is
considered immaterial from an investor's perspective. The Registrant will
furnish supplementally a copy of any of the omitted exhibits or schedules to the
SEC upon request from the SEC.]

                                                                         Page 47<Page>

                                                                   EXHIBIT 10.21

                COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

OPTION GRANTS AND SALARIES OF EXECUTIVE OFFICERS:

Pursuant to the Long-Term Incentive Plan approved as part of the registrant's
First Amended Joint Plan of Reorganization (the "Plan of Reorganization"), the
following salaries and option grants were approved:

<Table>
<Caption>
                        POSITION                                SALARY       OPTION SHARES
------------------------------------------------------------------------------------------
<S>                                                          <C>                <C>
President & Chief Executive Officer                          $     480,000      200,000
Vice President Finance & Chief Financial Officer             $     190,000      100,000
Vice President Marketing & International                     $     190,000      100,000
Vice President Operations - Kokomo                           $     190,000      100,000
Vice President Information Technology & Business Planning    $     162,000       50,000
Vice President Corporate Affairs                             $     160,000       50,000
Vice President Engineering & Technology                      $     160,000       50,000
Controller & Chief Accounting Officer                        $     160,000       50,000
Vice President Sales                                         $     160,000       50,000
Vice President Manufacturing Planning                        $     125,000       50,000
General Manager Arcadia                                      $     155,000       50,000
</Table>

OPTION GRANTS AND FEES PAID TO DIRECTORS:

Also pursuant to the Plan of Reorganization, the following compensation schedule
for Directors was approved:

<Table>
<S>                                                  <C>
Annual Retainer:                                     $ 30,000
Stock Options (three year vesting):                    15,000 options (one time grant)
Attendance Fee per Meeting:                          $  1,000
Audit Committee Chairman (separate retainer):        $ 10,000
Chairman of the Board                                $ 15,000
All other Committee Chairmen:                        $  5,000
</Table>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}]]