Document:

SEVERANCE AGREEMENT

     THIS AGREEMENT is made and entered into as of the ______ day of July, 2000,
by  and  between  Haynes  International,   Inc.  (the  "Company"),   a  Delaware
corporation  having  a place  of  business  at 1020 W.  Park  Ave.,  Kokomo,  IN
46904-9013,  and the  undersigned  [insert  Officer's  name from Exhibit A] (the
"Employee"), an officer of the Company.

                                     RECITAL

     The Board of Directors of the Company (the "Board") and the shareholders of
the Company  holding  more than 75% of the voting  power of all the  outstanding
capital  stock of the Company,  and the Board of  Directors of Haynes  Holdings,
Inc.,  the  sole  shareholder  of  the  Company  ("Haynes   Holdings")  and  the
shareholders of Haynes Holdings holding more than 75% of the voting power of all
the  outstanding  capital stock of Haynes Holdings have determined that it is in
the  best  interests  of the  Company  and of  Haynes  Holdings  to  foster  the
continuous  employment of Corporate  Officers and that the Company  should enter
into this  Agreement to reinforce  and  encourage  the  continued  attention and
dedication of the Employee to his or her duties,  free from  distractions  which
might arise in the event of a Change in Control (as defined in this  Agreement),
or a proposed Change in Control, of the Company or of Haynes Holdings.

     NOW, THEREFORE,  in consideration of the mutual covenants contained herein,
the Company and the undersigned Employee agree as follows:

     1. Term of Agreement:  This  Agreement  shall commence as of the date first
written  above and shall  continue  in effect  until  June 30,  2001;  provided,
however, that commencing on July 1, 2001 and on each July 1 thereafter, the term
of this Agreement shall  automatically  be extended for one (1) year (until June
30 of the year next  following)  unless either the Company or the Employee shall
have given  written  notice to the other at least sixty (60) days prior  thereto
that the term of this  Agreement  shall not be so extended;  provided,  further,
however,  the Company  shall not have the right to  terminate  or fail to extend
this  Agreement  in the event of a Change of  Control  (as  defined  in  Section
2(c)(1)  below) prior to the  expiration of twelve (12) months after such Change
in Control shall have occurred.  This Agreement shall automatically terminate if
the Employee's  employment  with the Company is terminated  prior to a Change in
Control;  provided,  however, if the Employee's  employment is terminated by the
Company  other than for Cause (and not due to the  Employee's  Disability  or by
reason of the Employee's death) and such termination of employment occurs within
ninety  (90)  days  before a Change  in  Control,  then the  termination  of the
Employee's employment shall be deemed to have occurred immediately following the
Change in Control and this Agreement shall remain in effect until the expiration
of twelve  (12)  months  after  such  Change in  Control  shall  have  occurred.
Notwithstanding  the  foregoing  provisions  or any  other  provisions  of  this
Agreement to the  contrary,  if a Change in Control  shall occur or be deemed to
have occurred during the term of this Agreement,  this Agreement shall remain in
effect until the Company and the Employee have fully  discharged all obligations
hereunder with respect to any termination of the Employee's  employment with the
Company to which the provisions hereof shall apply.

<PAGE>

     2. Termination Benefits:

          (a) If, within twelve (12) months  following a Change in Control,  and
     during  the term of this  Agreement  (including  any  extensions  or deemed
     extensions  thereof  as  provided  in  Section  1  above),  the  Employee's
     employment  with the Company  shall be  terminated,  the Employee  shall be
     entitled to the  following  compensation  and  benefits (in addition to any
     compensation and benefits provided for under any of the Company's  employee
     benefit plans, policies and practices or as required by law):

               (1) If the  Employee's  employment  with  the  Company  shall  be
          terminated  (A) by  reason  of the  Employee's  Disability,  or (B) by
          reason of the Employee's death, the Company shall within five (5) days
          after the Release  Effective  Date (as defined in Section  5(a) below)
          pay the  Employee  his full Base  Monthly  Salary  through the Date of
          Termination  at the rate in effect when the Notice of  Termination  is
          given  (or  the  Date of  Termination  in the  case of the  Employee's
          death),  plus any bonuses or incentive  compensation which pursuant to
          the terms of any compensation or benefit plan have been earned or have
          become payable as of the Date of  Termination,  but which have not yet
          been paid.

               (2) If the  Employee's  employment  with  the  Company  shall  be
          terminated  by the  Company  for  Cause,  the  Company  shall  pay the
          Employee his full Base Monthly  Salary through the Date of Termination
          at the rate in effect at the time Notice of Termination is given,  and
          the Company shall have no further  obligations  to the Employee  under
          this Agreement.

               (3) If the  Employee's  employment  with  the  Company  shall  be
          terminated by the Company or the Employee  (other than for Cause or as
          a result of  Disability  or by reason of the  Employee's  death),  the
          Company shall:

                    (i) within  five (5) days after the Release  Effective  Date
               pay the Employee his full Base Monthly Salary through the Date of
               Termination  at the greater of the rate in effect at the time the
               Change in Control occurs or Notice of Termination is given,  plus
               any bonuses or incentive compensation which pursuant to the terms
               of any  compensation  or  benefit  plan have been  earned or have
               become payable as of the Date of Termination,  but which have not
               yet been paid;

                    (ii) within five (5) days after the Release  Effective  Date
               pay the Employee a lump sum cash payment equal to [insert  months
               from Exhibit A] times the Employee's  Base Monthly Salary (at the
               greater  of the rate in effect at the time the  Change in Control
               occurs  or  when  Notice  of  Termination  is  given);  provided,
               however,  that the Company may at its election pay such amount to
               the  Employee  in [insert  months from  Exhibit A] equal  monthly
               installments  commencing  on the  fifth  day  after  the  Release
               Effective Date and on the same day of the month thereafter;

                                     - 2 -
<PAGE>

                    (iii)   continue  to  provide  for  the   Employee  and  his
               dependents, for a period of [insert months from Exhibit A] months
               following the Date of Termination,  life  insurance,  medical and
               hospitalization  benefits  comparable  to those  provided  by the
               Company to the Employee and his dependents  immediately  prior to
               the  Change  in  Control,  provided  that any  coverage  provided
               pursuant to this  subsection  (iii) shall terminate to the extent
               that the Employee obtains  comparable life insurance,  medical or
               hospitalization  benefits coverage from any other employer during
               such [insert  months from Exhibit A] month  period.  The benefits
               provided under this subsection (iii) shall not be materially less
               favorable  to the Employee in terms of amounts,  deductibles  and
               costs to him, if any, than such benefits  provided by the Company
               to the Employee and his  dependents  as of the date of the Change
               in Control.  This subsection (iii) shall not be interpreted so as
               to limit any benefits to which the Employee or his dependents may
               be  entitled  under  the  Company's  life   insurance,   medical,
               hospitalization,   dental  or  disability   plans  following  the
               Employee's  Date of  Termination  and shall be in addition to any
               COBRA rights under federal law; and

                    (iv) within five (5) days after the Release  Effective  Date
               pay the Outplacement Assistance Payment to Employee.

          (b) The  Employee  shall not be required to mitigate the amount of any
     payment  provided  for in this  Section 2 by seeking  other  employment  or
     otherwise, nor, except as provided in Section 2(a)(3)(iii) above, shall the
     amount of any  payment or benefit  provided  for in Section 2 be reduced by
     any  compensation  earned by the Employee or benefit made  available to the
     Employee as the result of employment by another  employer after the Date of
     Termination or otherwise.

          (c) For purposes of this Agreement,  the following  definitions  shall
     apply:

                                     - 3 -
<PAGE>

               (1) A "Change in  Control"  shall be deemed to occur (i) when any
          person  (as  such  term is used in  Sections  13(e)  and  14(d) of the
          Securities  Exchange Act of 1934,  as amended (the  "Exchange  Act")),
          other than the holders of any of the Company's shares of capital stock
          on the date first written above is or becomes the beneficial owner (as
          defined in Rule 13d-3  promulgated under the Exchange Act) directly or
          indirectly of securities  of the Company  representing  50% or more of
          the combined voting power of the Company's then outstanding securities
          (assuming  conversion of all  outstanding  nonvoting  securities  into
          voting securities and the exercise of all outstanding options or other
          convertible securities); (ii) when any person (as such term is used in
          Sections 13(e) and 14(d) of the Exchange Act),  other than the holders
          of any of Haynes  Holdings'  shares of capital stock on the date first
          written above is or becomes the  beneficial  owner (as defined in Rule
          13d-3  promulgated  under the Exchange  Act) directly or indirectly of
          securities of Haynes Holdings representing 50% or more of the combined
          voting power of Haynes Holdings then outstanding  securities (assuming
          conversion  of  all  outstanding   nonvoting  securities  into  voting
          securities  and the  exercise  of all  outstanding  options  or  other
          convertible  securities);  or (iii) upon the approval by the Company's
          or Haynes  Holdings'  shareholders of (A) a merger or consolidation of
          the Company or Haynes Holdings with or into another corporation (other
          than a merger or consolidation in which the Company or Haynes Holdings
          is the surviving  corporation and which does not result in any capital
          reorganization or reclassification or other change in the ownership of
          the Company's or Haynes Holdings' then outstanding  shares which would
          be deemed a Change in Control  pursuant to  subsection(s)  (i) or (ii)
          hereof),  (B) a sale or disposition of all or substantially all of the
          Company's  assets,  or (C) a plan of liquidation or dissolution of the
          Company or Haynes Holdings.

               (2)  "Disability"  means the Employee is totally and  permanently
          disabled as defined in the Haynes International, Inc. Pension Plan.

               (3) "Retirement"  means the voluntary  retirement of the Employee
          under the terms of the Haynes International, Inc. Pension Plan.

               (4) A termination  for "Cause"  means a termination  by reason of
          the Board's good faith  determination  that the Employee (i) willfully
          and continually  failed to  substantially  perform his duties with the
          Company (other than a failure resulting from the Employee's incapacity
          due to physical or mental illness),  (ii) willfully engaged in conduct
          which  constituted a material  breach of Section 7 of this  Agreement,
          (iii) engaged in conduct which constituted a crime of moral turpitude,
          (iv) perpetuated a fraud or embezzlement against the Company or Haynes
          Holdings,  or (v) willfully  engaged in conduct which is  demonstrably
          and materially injurious to the Company or Haynes Holdings, monetarily
          or otherwise.  No act, or failure to act, on the Employee's part shall
          be considered  "willful"  unless he has acted or failed to act with an
          absence of good faith and without a reasonable  belief that his action
          or failure to act was in or at least not opposed to the best interests
          of the Company and Haynes Holdings. Notwithstanding the foregoing, the
          Employee shall not be deemed to have been  terminated for Cause unless
          there shall have been delivered to the Employee a copy of a resolution
          duly  adopted by the  affirmative  vote of not less than a majority of
          the entire membership of the Board at a meeting of the Board.

                                     - 4 -
<PAGE>

               (5)  "Haynes  Holdings"  shall  mean  Haynes  Holdings,  Inc.,  a
          Delaware  corporation and the parent corporation of the Company on the
          date of this Agreement.

               (6) A "Notice of Termination" means a notice which shall indicate
          the  specific  termination   provision  in  this  Agreement  which  is
          applicable  and  shall set forth in  reasonable  detail  the facts and
          circumstances  claimed  to  provide  a basis  for  termination  of the
          Employee's  employment under the provision so indicated.  For purposes
          of this Agreement,  no such purported  termination  shall be effective
          without such Notice of Termination.  Any purported  termination by the
          Company or by the Employee shall be  communicated by written notice of
          termination  to the other party  hereto in  accordance  with Section 6
          hereof.

               (7) "Date of Termination" means (i) if the Employee's  employment
          is  terminated  for  Disability,  thirty  (30)  days  after  Notice of
          Termination  is given  (provided  that  the  Employee  shall  not have
          returned to the  performance of his duties on a full-time basis during
          such thirty (30) day period), and (ii) if the Employee's employment is
          terminated  for any other reason,  the date specified in the Notice of
          Termination  (which,  in the case of a termination for Cause shall not
          be less than thirty (30) days from the date such Notice of Termination
          is given); provided that within thirty (30) days after any such Notice
          of Termination is given the party receiving such Notice of Termination
          notifies  the  other  party  that  a  dispute  exists  concerning  the
          termination,  the Date of  Termination  shall be the date on which the
          dispute is finally  determined,  either by mutual written agreement of
          the  parties,  or by the final  judgment,  order or degree of court of
          competent  jurisdiction  (the time for appeal therefrom having expired
          and no appeal having been taken).

               (8)  "Outplacement  Assistance  Payment"  means  the  payment  of
          $12,000.00 to the Employee to be used at the Employee's discretion for
          outplacement career counseling and job search costs and expenses.

               (9) "Base  Monthly  Salary"  means the monthly base salary of the
          Employee from the Company, but determined without regard to any salary
          reduction  agreement of the Employee under Sections  401(k) and 125 of
          the  Internal  Revenue  Code of 1986 (the  "Code")  (or  corresponding
          provisions  of  subsequent  federal  income  tax  laws) or any  salary
          deferral  agreement of the Employee under any  non-qualified  deferred
          compensation  program that may be available to the Employee  from time
          to time, and excludes (i) incentive or additional  cash  compensation;
          (ii) any amounts  included  in income  because of Sections 79 or 89 of
          the Code; and (iii) any amounts paid to the Employee for reimbursement
          for expenses or discharging tax liabilities.

                                     - 5 -
<PAGE>

     3. Successors; Binding Agreement:

          (a) This  Agreement  shall be binding on the Company and any successor
     to all or substantially all of its business or assets. Without limiting the
     effect of the prior  sentence,  the Company will  require any  successor or
     assign (whether direct or indirect, by purchase,  merger,  consolidation or
     otherwise) to all or substantially all of the business and/or assets of the
     Company to expressly assume and agree to perform this Agreement in the same
     manner and to the same extent that the Company would be required to perform
     it if no such  succession  or assignment  had taken place.  As used in this
     Agreement, "Company" shall mean the Company as hereinbefore defined and any
     successor  or assign to its  business  and/or  assets  as  aforesaid  which
     assumes  and  agrees  to  perform  this  Agreement  or which  is  otherwise
     obligated  under this Agreement by the first sentence of this Section 3, by
     operation of law or otherwise.

          (b) This Agreement shall inure to the benefit of and be enforceable by
     the   Employee's   personal   and   legal    representatives,    executors,
     administrators,  successors, heirs, distributees, devisees and legatees. If
     the  Employee  should die while any  amounts  would still be payable to him
     hereunder if he had continued to live, all such amounts,  unless  otherwise
     provided  herein,  shall  be paid in  accordance  with  the  terms  of this
     Agreement to the Employee's devisee,  legatee or other designee or if there
     is no such devisee, legatee or designee, to the Employee's estate.

     4.  Fees and  Expenses;  Acceleration  Right:  The  Company  shall  pay all
reasonable  legal fees and  related  expenses  (including  the costs of experts,
evidence  and  counsel)  incurred by the  Employee  as a result of the  Employee
seeking to obtain or enforce any right or benefit  provided by this Agreement or
by any other plan or  arrangement  maintained  by the  Company  under  which the
Employee  is or may be entitled to receive  benefits,  unless the Company  shall
ultimately  prevail  in  establishing  that the  Company  terminated  Employee's
employment  for Cause.  In the event the Company  fails to make any  installment
payment due and payable  under  Section  2(a)(3)(ii)  hereof,  and such  default
continues for a period of more than fifteen (15) days  following  written notice
from the  Employee to the  Company of such  default,  the entire  balance of the
amount payable under Section 2(a)(3)(ii) hereof shall immediately become due and
payable to the Employee.

     5. Release and Right to Employment:

          (a) As a condition  of  receiving  from the Company the  payments  and
     benefits  provided for hereunder,  which payments and benefits the Employee
     is not otherwise entitled to receive,  the Employee  understands and agrees
     that he will be  required  to execute a release of all claims  against  the
     Company in the form  attached  hereto as Exhibit 1 (the  "Release")  on the
     Date of  Termination.  Employee  acknowledges  that he has been  advised in
     writing to consult  with an attorney  prior to executing  the Release.  The
     Employee  agrees that he will consult with his attorney  prior to executing
     the Release.  The Employee and the Company agree that Employee has a period
     of seven (7) days  following the  execution of the Release  within which to
     revoke the Release. The parties also acknowledge and agree that the Release
     shall not be effective or  enforceable  until the seven (7) day  revocation
     period  expires.  The date on which this seven (7) day period expires shall
     be the effective date of the Release (the "Release Effective Date").

                                     - 6 -
<PAGE>

          (b) The  Employee  understands  that as used in this  Section  5,  the
     "Company"  includes  its past,  present  and  future  officers,  directors,
     trustees,   shareholders,    parent   corporations,    employees,   agents,
     subsidiaries,  affiliates,  distributors,  successors, and assigns, and any
     other persons related to the Company.

          (c) Notwithstanding  anything in this Agreement to the contrary,  this
     Agreement  shall not affect the Company's right or ability to terminate the
     employment of the Employee,  subject to any other written  contract between
     the Company and the Employee to the contrary.

          (d) Notwithstanding  anything in this Agreement to the contrary,  this
     Agreement  shall not affect in any manner the rights and obligations of the
     Employee,  the  Company or Haynes  Holdings  with  respect to any shares of
     stock of Haynes Holdings or options for shares of stock of Haynes Holdings.

          (e) The Employee  agrees that execution and delivery to the Company of
     any release or  disclaimer  agreement  requested  by the  Company  which is
     consistent  with the  provisions  of this  Section 5 and the passage of all
     necessary  waiting periods in connection  therewith shall be a condition to
     the  receipt of any  payment or  benefits  to be  provided  by the  Company
     following the termination of the Employee's employment with the Company.

     6.  Notices:  For the  purposes  of this  Agreement,  notices and all other
communications  provided for in the  Agreement  shall be in writing and shall be
deemed to have been duly given when  personally  delivered  or sent by certified
mail, return receipt  requested,  postage prepaid,  or by expedited  (overnight)
courier with  established  national  reputation,  shipping  prepaid or billed to
sender, in either case addressed to the respective  addresses last given by each
party to the other  (provided  that all notices to the Company shall be directed
to the attention of the Board with a copy of the Secretary of the Company) or to
such other address as either party may have furnished to the other in writing in
accordance herewith.  All notices and communication shall be deemed to have been
received on the date of delivery  thereof,  on the third  business day after the
mailing  thereof,  or on the second day after deposit  thereof with an expedited
courier service, except that notice of change of address shall be effective only
upon receipt.

                                     - 7 -
<PAGE>

     7.  Non-Competition:   The  Employee  agrees  that  during  the  Employee's
employment  with the Company and, in the event of  termination of the Employee's
employment  with  the  Company  by  reason  of  the  Employee's   Disability  or
Retirement,  by the  Company  for Cause or by the  Employee  within  twelve (12)
months following a Change in Control,  for an additional  period of one (1) year
immediately following termination of the Employee's employment with the Company,
the  Employee  shall  not  directly  or  indirectly,  as an  individual  or as a
director, officer, contractor, employee, consultant, partner, investor or in any
other  capacity  with any  corporation,  partnership  or other person or entity,
other than the  Company,  engage in the business of  developing,  manufacturing,
selling or distributing  high  performance  nickel base or cobalt base alloys in
competition  with the business of the Company or any of its subsidiaries as such
business are constitutes from time to time during the Employee's employment with
the Company,  and thereafter,  as such businesses are constituted at the time of
termination of the Employee's employment;  provided,  however, in the event of a
termination of the Employee's  employment  within twelve (12) months following a
Change in Control the foregoing restriction shall only relate to the business of
the Company or any of its  subsidiaries  as such  business  existed  immediately
prior to the Change in Control.  The restrictions of this Section 7 shall not be
deemed to  prevent  the  Employee  from  owning  less than 5% of the  issued and
outstanding  shares of any class of securities of an issuer whose securities are
listed on a national securities exchange or registered pursuant to Section 12(g)
of the  Exchange  Act.  The  restrictions  of  this  Section  7,  to the  extent
applicable following  termination of the Employee's employment with the Company,
shall only apply within the  geographical  area served  either by the Company or
its subsidiaries during the two (2) years prior to termination of the Employee's
employment with the Company;  provided,  however, in the event of termination of
the  Employee's  employment  within  twelve  (12)  months  following a Change in
Control the geographical area shall only include the geographical area served by
the  Company  or any of its  subsidiaries  immediately  prior to the  Change  in
Control.  In the event a court of  competent  jurisdiction  determines  that the
foregoing  restriction is unreasonable in terms of geographic scope or otherwise
then the court is hereby  authorized to reduce the scope of said restriction and
enforce this Section 7 as so reduced. If any sentence, word or provision of this
Section 7 shall be  determined  to be  unenforceable,  the same shall be severed
herefrom and the remainder shall be enforced as if the  unenforceable  sentence,
word or provision did not exist.

     8. Miscellaneous: No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by the Employee and such officer as may be specifically designated by
the  Board.  No waiver by either  party  hereto at any time of any breach by the
other party hereto of, or  compliance  with,  any condition or provision of this
Agreement  to be  performed  by such  other  party  shall be  deemed a waiver of
similar or  dissimilar  provisions  or conditions at the same or at any prior to
subsequent time. No agreement or representations,  oral or otherwise, express or
implied,  with respect to the subject matter hereof may have been made by either
party which are not expressly set forth in this Agreement.

                                     - 8 -
<PAGE>

     9.  Applicable  Law and Forum:  This Agreement has been entered into in the
State of Indiana and shall be governed by and construed in  accordance  with the
laws of the State of Indiana  without  regard to any  Choice of Laws  provisions
thereof.  The parties  agree that any action in law or equity  brought by either
party  arising from or in connection  with this  Agreement or arising from or in
connection  with the  performance by either party of its  obligations  hereunder
shall be  brought  only in the United  States  District  Court for the  Southern
District  of  Indiana,  Indianapolis  Division  or the  Circuit  Court of Howard
County,  Indiana,  and the parties  hereto consent to the  jurisdiction  of such
forums.

     10.  Severability:  The  provisions  of  this  Agreement  shall  be  deemed
severable and the  invalidity  or  unenforceability  of any provision  shall not
affect the validity or enforceability of the other provisions hereof.

     11. Entire  Agreement:  This  Agreement  constitutes  the entire  agreement
between the parties hereto, and supersedes all prior agreements,  understandings
and  arrangements,  oral or written,  between the parties hereto with respect to
the severance of the  employment of the  undersigned  Employee from the Company,
except as may be provided herein.

                                     - 9 -

<PAGE>

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Employee has executed this Agreement,  to be
effective as of the day and year first above written.

                                    COMPANY:
                                    HAYNES INTERNATIONAL, INC.

                                    --------------------------------------------
                                    By:  Francis J. Petro, President and CEO

ATTEST:

------------------------------------
R. Steven Linne, Secretary

                                    EMPLOYEE:

                                    --------------------------------------------
WITNESS:

------------------------------------

                                     - 10 -
<PAGE>

                                    Exhibit 1

                              RELEASE OF ALL CLAIMS

     In  consideration  of  receiving  from  Haynes  International,   Inc.  (the
"Company")  the  payments and  benefits  provided for in that certain  Severance
Agreement  dated as of July ___, 2000 (the  "Severance  Agreement")  between the
Company and the undersigned  (the  "Employee"),  which payments and benefits the
Employee was not  otherwise  entitled to receive,  the Employee  unconditionally
releases and discharges  the Company from any and all claims,  causes of action,
demands,  lawsuits or other charges  whatsoever,  known or unknown,  directly or
indirectly related to the Employee's employment with the Company, except for (i)
a breach of the Company's  obligations under the Severance  Agreement,  (ii) any
claims  relating  to, or rights of the  Employee  appurtenant  to, any shares of
stock of, or options for shares of stock of, Haynes  Holdings,  Inc.,  and (iii)
the right of the  Employee  to elect  continuation  of group  medical and dental
benefits  for  the  Employee  and his  eligible  dependents  who  are  qualified
beneficiaries under the Consolidated Omnibus Budget  Reconciliation Act of 1985,
as amended ("COBRA"),  at the Employee's expense,  pursuant to COBRA. The claims
or actions  released  herein  include,  but are not limited  to,  those based on
allegations  of wrongful  discharge,  breach of contract,  promissory  estoppel,
defamation,  infliction of emotional distress, and those alleging discrimination
on the basis of race, color, sex, religion, national origin, age, disability, or
any other basis, including,  but not limited to, any claim or action under Title
VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act of
1967, the  Rehabilitation  Act of 1973, the Americans with  Disabilities  Act of
1990,  the Equal Pay Act of 1963,  the Civil  Rights Act of 1991,  the  Employee
Retirement  Income  Security Act of 1974, or any other federal,  state, or local
law, rule, ordinance,  or regulation as presently enacted or adopted and as each
may hereafter be amended.

         With  respect to any claim that the  Employee  might have under the Age
Discrimination in Employment Act of 1967, as amended:

     (i) The  Employee  does not waive rights or claims that may arise after the
date of this Release;

     (ii)  The  Employee's  waiver  of  said  rights  or  claims  under  the Age
Discrimination  in Employment  Act of 1967 is in exchange for the  consideration
reflected in this Release;

     (iii) The  Employee  acknowledges  that he has been  advised  in writing to
consult  with an  attorney  prior  to  executing  this  Release  and that he has
consulted with his attorney prior to executing this Release;

     (iv) The Employee  acknowledges that he has been given a period of at least
twenty-one (21) days within which to consider this Release; and

     (v) The  Employee  and the Company  agree that the Employee has a period of
seven (7) days  following the  execution of this Release  within which to revoke
the Release.

<PAGE>

The parties also  acknowledge and agree that this Release shall not be effective
or enforceable  until the seven (7) day revocation  period expires.  The date on
which this  seven (7) day period  expires  shall be the  effective  date of this
Release.

     The Employee further agrees, in consideration of receiving the payments and
benefits provided for in the Severance  Agreement,  not to initiate or instigate
any claims,  causes of action or demands against the Company in any way directly
or  indirectly  related to the  Employee's  employment  with the  Company or the
termination of his employment  except for a breach of the Company's  obligations
under the  Severance  Agreement or claims or rights of the Employee  relating to
any shares of stock of, or  options  for  shares of stock of,  Haynes  Holdings,
Inc.,  and the  Employee  agrees to  reimburse,  defend,  and hold  harmless the
Company against any such claims, causes of action or demands.

     The  Employee  understands  that as used in  this  Release,  the  "Company"
includes  its  past,   present  and  future   officers,   directors,   trustees,
shareholders, parent corporations, employees, agents, subsidiaries,  affiliates,
distributors,  successors,  and assigns, any and all employee benefit plans (and
any  fiduciary of such plans)  sponsored by the Company,  and any other  persons
related to the Company.

                                    --------------------------------------------
                                    (Employee)

                                    --------------------------------------------
                                    Date Signed

WITNESS:

------------------------------------

                                     - 2 -AUGUST 2000 AMENDMENT TO
                            THE HAYNES HOLDINGS, INC.
                           EMPLOYEE STOCK OPTION PLAN

     WHEREAS,  the Board of Directors and the shareholders holding more than 75%
of the then  outstanding  shares of common  stock of Haynes  Holdings,  Inc.,  a
Delaware corporation,  (hereinafter the "Company"), have previously established,
in August 1989, and subsequently amended form time to time, the Haynes Holdings,
Inc. Employee Stock Option Plan (which, as amended,  is hereinafter the "Plan");
and

     WHEREAS, the Board of Directors of the Company and the shareholders holding
more than 75% of the now outstanding  shares of common stock of the Company have
determined  that it is in the best  interest  of the  Company to again amend the
Plan to increase the number of Options available to be granted;

     NOW THEREFOR, the Plan shall be amended as set forth below:

     1.  Section  5(a) of the Plan shall be replaced in its  entirety to read as
follows:

          (a) Number of Shares.  Subject to adjustment as provided in subsection
     5(c) hereof,  the aggregate  number of Common Shares over which Options may
     be granted to  Participants  under this Plan shall be 1,415,880,  including
     Options to purchase  556,004  Common  Shares  which were granted to certain
     individuals pursuant to that certain Stock Subscription  Agreement dated as
     of August 1, 1989 (and  subsequently  amended),  which  agreement  has been
     terminated.

          If any  Option  terminates  without  having  been  exercised  in full,
     whether by expiration, cancellation, surrender, or otherwise, the number of
     Common Shares as to which such Option was not exercised  shall be available
     for  future  grants of  Options.  During the period  that  Options  granted
     hereunder are  outstanding,  the Company  shall reserve and keep  available
     such  number of Common  Shares as will be  sufficient  to satisfy  all such
     outstanding Options, to the extent not yet exercised.

All other provisions of the Plan shall remain unaffected by this Amendment.

                                    EXHIBIT A

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