Document:

Exhibit 10.16

Exhibit 10.16

AMENDMENT TO MONITORING AGREEMENT

DATED OCTOBER 1, 2002

        WHEREAS, BLACKSTONE MANAGEMENT
PARTNERS L.P., a Delaware limited partnership (“BMP” and HAYNES
HOLDINGS, INC., a Delaware Corporation (“HHI”) and HAYNES
INTERNATIONAL, INC. A Delaware corporation (“Opco”) entered into a
MONITORING AGREEMENT (this “Agreement”) dated as of October 1,
2002.

        NOW, THEREFORE, in consideration
of the foregoing recital and conditions contained in this Amendment, the parties
hereto agree as follows:

	
 	
1.	
Effective January 1, 2003, Richard C. Lappin (“Lappin”) is serving as Chairman
of the Board of HHI and Opco.

	
 	
2.	
HHI and Opco have agreed to pay to Lappin a monthly fee of $20,833.33 (the
“Monthly Fee”) for such services and also to reimburse him for his reasonable
out-of-pocket expenses (as defined in the Agreement).

	
 	
3.	
BMP, HHI and Opco agree that the amount of all Monthly Fees paid to Lappin by
HHI and Opco during his tenure as Chairman will reduce the annual Monitoring Fee
(as defined in the Agreement).

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

	
BLACKSTONE MANAGEMENT PARTNERS L.P.

By:  Blackstone Management Partners L.L.C.,

            Its General Partner

By:  /s/ Chinh E. Chu

/s/  Chinh E. Chu

Name:  Chinh E. Chu

Title:  Senior Managing Director

	
HAYNES HOLDINGS, INC.

By:  Haynes International, Inc.

By:  /s/  Calvin S. McKay

/s/  Calvin S. McKay

Name:  Calvin S. McKay

Title:  Vice President-Finance, CFO

HAYNES INTERNATIONAL, INC.

By:  /s/  Calvin S. McKay

/s/  Calvin S. McKay

Name:  Calvin S. McKay

Title:  Vice President-Finance, CFOExhibit 10.17 - Haynes International, Inc.

Exhibit 10.17

SERVICES AGREEMENT 

        AGREEMENT, made and entered into
by and between HAYNES INTERNATIONAL, INC., a Delaware corporation (together with
its successors and assigns permitted under this Agreement, the "Company"), and
Richard C. Lappin (the "Chairman").

W I T N E S S E T H:

        WHEREAS, in light of current
conditions, the Company is considering various strategic initiatives, including
but not limited to a financial restructuring;

        WHEREAS, the Company believes
that the Chairman’s knowledge, skill and experience will be essential in
enabling the Company successfully to implement any such strategic
initiatives;

        WHEREAS, the Company accrued
fees payable to Blackstone Management Partners L.P pursuant to that certain
Monitoring Agreement by and among Haynes Holdings, Inc., Haynes International,
Inc. and Blackstone Management Partners L.P. dated October 1, 2001 and that
certain Monitoring Agreement by and among Haynes Holdings, Inc., Haynes
International, Inc. and Blackstone Management Partners L.P. dated October 1,
2002 (collectively, the “Monitoring Agreement”). The Company did not
pay the monitoring fees to Blackstone for fiscal 2002 or 2003. Payments made to
the Chairman, for services as Chairman in fiscal 2003, were credited by the
Company to the fees accruing in favor of Blackstone under the Monitoring
Agreement during such period. As of September 30, 2003, the Monitoring Agreement
terminated by its own terms; and

        WHEREAS, the Company desires to
enter into an agreement embodying the terms of the Chairman’s service to
the Company (this “Agreement”) and the Chairman desires to enter into
this Agreement and to perform such services, subject to the terms and provisions
of this Agreement;

        NOW, THEREFORE, in consideration
of the premises and mutual covenants contained herein and for other good and
valuable consideration, the receipt of which is mutually acknowledged, the
Company and the Chairman (individually a “Party” and together the
“parties”) agree as follows:

        1.        
Definitions.

             
     (a)        
“Annual Fee” shall have the meaning set forth in Section 5 hereof.

             
     (b)        
“Board” shall mean the Board of Directors of the Company.

             
     (c)        
“Cause” shall mean:

             
             
(i)        the Chairman is convicted of
a felony involving moral turpitude or any other felony (other than motor vehicle
related) in the case of such other felony the Chairman is unable to show that he
(A) acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company and (B) had no reasonable cause to
believe his conduct was unlawful; or

             
             
(ii)        the Chairman engages in
conduct that constitutes willful gross neglect or willful gross misconduct in
carrying out his duties under this Agreement, resulting, in either case, in
material harm to the Company, unless the Chairman believed in good faith that
such act or nonact was in, or was not opposed to, the best interests of the
Company.

             
     (d)        
“Disability” shall mean the Chairman’s inability to substantially
perform his duties and responsibilities under this Agreement by reason of any
physical or mental incapacity for a period of 180 consecutive
days.

             
     (e)        
“Effective Date” shall mean October 1, 2003.

             
     (f)        
“Term” shall mean the period commencing on the Effective Date and
ending on September 30, 2004.

        2.        
Engagement.

        The Company hereby engages the
services of the Chairman, and the Chairman hereby accepts such terms of service,
for the Term, on the terms and conditions set forth herein. Subject to the
provisions of Section 7(b) hereof, the Chairman may terminate this Agreement at
any time during the Term upon 30 days’ notice to the Company delivered in
accordance with Section 18 hereof.

        3.        
Position, Duties and Responsibilities.

             
     (a)        
During the Term, the Chairman shall serve as the non-executive Chairman of the
Board of the Company. The Chairman acknowledges and agrees that during the Term,
he shall not be considered or deemed to be an executive officer or employee of
the Company. The Chairman, in carrying out his duties under this Agreement,
shall report directly to the Board.

             
     (b)        
During the Term, the Chairman shall serve as Chairman of the Board, shall have
overall responsibility for managing and implementing the Company’s
restructuring initiatives and shall assist the Company’s Chief Executive
Officer. In addition, the Chairman shall act as a liaison between the Board and
the Company’s Chief Executive Officer and shall perform such other duties
as the Chairman and the Board shall agree from time to time. The Chairman shall
devote substantial business time, attention and skill to the performance of such
duties and responsibilities, and shall use his reasonable best efforts to
promote the interests of the Company. The Chairman shall not knowingly, without
the prior written approval of the Board, engage in any other business activity
which is in violation of written policies established from time to time by the
Company.

             
     (c)        
Anything herein to the contrary notwithstanding, nothing shall preclude the
Chairman from (i) serving on the boards of directors on which he currently
serves and on other corporate boards or the boards of a reasonable number of
trade associations and/or charitable organizations (subject to the reasonable
approval of the Board), (ii) engaging in charitable activities and community
affairs, and (iii) managing his personal investments and affairs, provided that
such activities do not materially interfere with the proper performance of his
duties and responsibilities hereunder.

        4.        
Independent Contractor.

        The Chairman shall perform the
services described in Section 3 hereof as an independent contractor. Except as
specifically provided herein, the Chairman hereby acknowledges his separate
responsibility for all federal and state withholding taxes, Federal Insurance
Contribution Act taxes and workers’ compensation and unemployment
compensation taxes, if applicable, and agrees to indemnify and hold the Company
harmless from any claim or liability therefor; provided, however, that the
Company shall indemnify and hold the Chairman harmless for any federal, state or
local income, employment or other tax he may be assessed as a result of being
classified as an “employee” or similar status with respect to the
Company.

        5.        
Annual Fee.

        During the Term, the Chairman
shall be paid an annual fee, payable in monthly installments, of $480,000 (the
“Annual Fee”). Installments of the Annual Fee shall be payable on the
first business day of each month during the Term. During the Term, the Chairman
shall not be eligible to receive fees or other compensation payable generally to
non-employee directors of the Company.

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        6.        
Reimbursement of Business and Other Expenses; Other Benefits.

             
     (a)        
The Chairman is authorized to incur reasonable expenses in carrying out his
duties and responsibilities under this Agreement and the Company shall promptly
reimburse him for all business expenses incurred in connection with carrying out
the business of the Company, subject to documentation in accordance with the
Company’s policy.

        7.        
Termination of Service.

             
     (a)        
Termination of Service by the Company. In the event the Chairman’s
services are terminated (i) by the Company other than for Disability or Cause or
(ii) subject to Section 9(c), by the Chairman because of a breach by the Company
of a material provision of this Agreement (including in the event the Chairman
is no longer serving as the Chairman of the Board), in either case, the Chairman
shall be entitled to receive promptly but in no event later than 10 days
following the effective date of such termination, a payment equal to the amount
of $40,000.

             
     (b)        
Termination of Service Other than as Provided Under Section 9(a). In the
event the Chairman’s services terminate for any reason other than as
provided under Section 9(a) above, the Chairman (or his estate or his
beneficiaries, as the case may be) shall be entitled to receive payment of the
Annual Fee through the end of the month during which the effective date of
termination occurs, or if the termination is by reason of the Chairman’s
Disability, through the end of the Term.

             
     (c)        
Termination Because of Company Breach. For a termination of the
Chairman’s service under clause (ii) of Section 9(a) to be effective, the
Chairman shall have given the Company written notice, within 60 days following
the occurrence of any event or circumstance constituting a breach of a material
provision of this Agreement, of the specific event or circumstance constituting
such breach, and the Company shall have failed to cure such breach within 30
days following receipt of such written notice.

        8.        
Restrictive Covenants.

             
     (a)        
The Chairman agrees that any right to receive any further payments or benefits
hereunder will cease if the Chairman breaches the provisions of Section 8(b) or
8(c) below.

             
     (b)        
Cooperation. The Chairman agrees to cooperate with the Company, during
the Term and thereafter (including following the cessation of the
Chairman’s services for any reason), by being reasonably available to
testify on behalf of the Company or any subsidiary or affiliate in any action,
suit, or proceeding, whether civil, criminal, administrative, or investigative,
and to assist the Company, or any subsidiary or affiliate, in any such action,
suit or proceeding, by providing information and meeting and consulting with the
Board or its representatives or counsel, or representatives or counsel to the
Company, or any subsidiary or affiliate, as reasonably requested. The Company
agrees to reimburse the Chairman for all expenses actually incurred by the
Chairman in connection with his provision of testimony or assistance.

- 3 -

             
     (c)        
The provisions of this Section 8 shall survive any termination of this Agreement
and the Term, and the existence of any claim or cause of action by the Chairman
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of the covenants and
agreements of this Section.

        9.        
Indemnification.

             
     (a)        
The Company agrees that if the Chairman is made a party, or is threatened to be
made a party, to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative other than
an action by or in the right of the Company by reason of the fact that he is or
was a director or independent contractor of the Company or is or was serving at
the request of the Company as a director, independent contractor or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorney’s fees) judgments, fines and amounts
paid in settlement actually and reasonably incurred by the Chairman in
connection with such action suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Company, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

             
     (b)        
The Company agrees to continue and/or maintain a directors and officers’
liability insurance policy covering the Chairman to the same extent the Company
provides such coverage for its executive officers and other
directors.

        10.        
Assignability; Binding Nature.

        This Agreement shall be binding
upon and inure to the benefit of the Parties and their respective successors,
heirs (in the case of the Chairman) and assigns. No rights or obligations of the
Company under this Agreement may be assigned or transferred by the company
except that such rights of obligations may be assigned or transferred pursuant
to a merger or consolidation in which the Company is not the continuing entity,
or the sale or liquidation of all or substantially all of the assets of the
Company. No rights or obligations of the Chairman under this Agreement may be
assigned or transferred by the Chairman other than his rights to payments
hereunder, which may be transferred only by will or operation of law.

        11.        
Representations.

        The Company represents and
warrants that it is fully authorized and empowered by action of the Board to
enter into this Agreement, and that the performance of its obligations under
this Agreement will not violate any agreement between it and any other person,
firm or organization.

        12.        
Entire Agreement. 

        This Agreement contains the
entire understanding and agreement between the Parties concerning the subject
matter hereof and supersedes all prior agreements, understandings, discussions,
negotiations and undertakings, whether written or oral, between the Parties with
respect thereto (but not including his other services as a director).

- 4 -

        13.        
Amendment or Waiver.

        No provision in this Agreement
may be amended unless such amendment is agreed to in writing and signed by the
Chairman and an authorized officer or director of the Company. No waiver by
either Party of any breach by the other Party of any condition or provision
contained in this Agreement to be performed by such other Party shall be deemed
a waiver of a similar or dissimilar condition or provision at the same or any
prior or subsequent time. Any waiver must be in writing and signed by the
Chairman or an authorized officer or director of the Company, as the case may
be.

        14.        
Severability.

        In the event that any provision
or portion of this Agreement shall be determined to be invalid or unenforceable
for any reason, in whole or in part, the remaining provisions of this Agreement
shall be unaffected thereby and shall remain in full force and effect to the
fullest extent permitted by law.

        15.        
Survival.

        The respective rights and
obligations of the Parties hereunder shall survive any termination of the
Chairman’s services to the extent necessary to the intended preservation of
such rights and obligations.

        16.        
Governing Law/Jurisdiction.

        This Agreement shall be governed
by and construed and interpreted in accordance with the laws of Delaware without
reference to principles of conflict of laws.

        17.        
Resolution of Disputes.

        Any disputes arising under or in
connection with this Agreement shall, at the election of the Chairman or the
Company, be resolved by binding arbitration, to be held in Chicago, Illinois, in
accordance with the rules and procedures of the American Arbitration
Association. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. All costs and expenses of any
arbitration or court proceeding (including fees and disbursements of counsel)
shall be borne by the respective party incurring such costs and expenses, but
the Company shall reimburse the Chairman for such reasonable costs and expenses
to the extent he prevails in such arbitration or court proceeding.

        18.        
Notices.

        Any notice given to a Party
shall be in writing and shall be deemed to have been given when delivered
personally or sent by certified or registered mail, postage prepaid, return
receipt requested, duly addressed to the Party concerned at the address
indicated below or to such changed address as such Party may subsequently give
such notice of:

        If to the Company:

	 	
Haynes International, Inc.

1020 West Park Avenue

Kokomo, Indiana  46901

Attention:  Chief Financial Officer

- 5 -

        If to the Chairman:

	 	
Richard C. Lappin

560 Oak Knoll

Barrington, Illinois  60010

        19.        
Headings.

        The headings of the sections
contained in this Agreement are for convenience only and shall not be deemed to
control or affect the meaning or construction of any provision of this
Agreement.

        20.        
Counterparts.

        This Agreement may be executed
in two or more counterparts.

        IN WITNESS WHEREOF, the
undersigned have executed this Agreement on the dates provided below, to be
effective as of the Effective Date.

	 	
HAYNES INTERNATIONAL, INC.

By:

HAYNES INTERNATIONAL, INC.

By:

Audit Committee Chairman

CHAIRMAN

Richard C. Lappin

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