SEPARATION AGREEMENT

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Exhibit 10.11

SEPARATION AGREEMENT

SEPARATION AGREEMENT (the "Agreement"), made and entered into as of July

31, 2004 and effective as of July 1, 2004 (the "Effective Date"), by and between

Haynes International, Inc., a Delaware corporation (the "Company"), and

Calvin S. McKay (the "Employee").

W I T N E S S E T H:

WHEREAS, the Employee has served as Chief Financial Officer of the Company

pursuant to an employment offer letter, dated December 21, 2001 (the "Offer

Letter"), that provides for payment of severance upon a termination of

employment with the Company;

WHEREAS, the Employee and the Company have entered into a Severance

Agreement, dated as of February 26, 2004 (the "Severance Agreement") that

provides for payment of severance upon a termination of employment in connection

with a change in control (as defined in the Severance Agreement);

WHEREAS, the Company and the Employee have mutually agreed that the

Employee will resign from his employment as of the Effective Date;

WHEREAS, the parties hereto desire to enter into this Agreement in order to

settle fully and finally all matters between them, including but not limited to

any matters arising out of Employee's employment with the Company and his

separation therefrom; and

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 Employee agree as follows:

1. PRIOR AGREEMENTS.

Effective as of the Effective Date, the Employee's benefits upon a

termination of employment shall be governed by this Agreement, which restates

and supersedes the Offer Letter and the Severance Agreement. For the avoidance

of doubt, as of the Effective Date, the Offer Letter and the Severance Agreement

shall be of no further force and effect, and this Agreement shall constitute the

full and final understanding of the parties relating to severance benefits upon

termination of Employee's employment with the Company.

2. RESIGNATION.

Effective as of the Effective Date, the Employee hereby resigns from his

employment with the Company and his position as an officer and a member of the

board of directors of the Company (the "Board"). Except as provided herein, the

Employee shall no longer be entitled to any compensation or benefits in respect

of his services as an employee of the Company or a member of the Board.

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3. PAYMENTS IN CONNECTION WITH RESIGNATION.

(a) In connection with the Employee's resignation, the Employee shall be

entitled to receive the following payments and benefits:

(i) payment of accrued but unpaid Base Salary and fees as a

member of the Board and reimbursement of proper business expenses and

expenses incurred in connection with his position as a member of the Board,

in each case, in accordance with Company policy;

(ii) subject to paragraph (b) below and Section 6(b) hereof,

continued medical,(1) hospitalization and basic life insurance coverage for

a period ending on June 30, 2005 or such earlier date as the Employee

obtains comparable medical, hospitalization or life insurance coverage (as

the case may be) from any other employer;

(iii) subject to paragraph (b) below and Section 6(b) hereof, a

cash payment equal to (A) one year of the Employee's base salary as in

effect immediately prior to the Effective Date, such amount to be paid, in

the sole discretion of the Company, either in a lump sum within five (5)

business days following the Release Effective Date (as hereinafter

defined), or in equal monthly installments in accordance with Company

payroll practices, plus (B) the Employee's bonus for fiscal year 2004 under

the Management Incentive Plan, such amount to be paid at such time as

employee bonuses under the Management Incentive Plan are paid to other

participants in such plan; and

(iv) subject to paragraph (b) below and Section 6(b) hereof, a

payment of twelve thousand dollars ($12,000) (net of taxes, if applicable)

to be paid by the Company in a lump sum payment within five (5) days of the

Effective Date; such amount to be used at Employee's discretion for

outplacement career counseling and job search costs.

(b) RELEASE. As a condition of the Employee's entitlement to any of the

payments and benefits provided in clauses (ii), (iii) and (iv) of paragraph (a)

above, the Employee shall execute on the Effective Date and shall not have

revoked prior to the Release Effective Date (as hereinafter defined) a release

of claims against the Company substantially in the form attached hereto as

EXHIBIT A (the "Release"). Employee acknowledges that he has been advised in

writing to consult with an attorney prior to executing the Release. Employee and

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"). Except as specifically provided in Section 3(a) or required

under applicable law, Employee will not be eligible to receive any salary, bonus

or other compensation described in Section 3(a) with respect to any future

periods after the Effective Date; provided, however, Employee shall have the

right to receive all compensation that he is entitled under any benefit

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(1) Participation in the Company's Medical Plan will be at the same level of

current participation. The value of the benefit will be calculated based upon

average cost per participant in the plan. The difference between the premium

paid by the individual and the value of the benefit will be counted as imputed

income. This amount will be "grossed up" for compensation purposes. A

recalculation of average cost will be effective on January 1, 2005.

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plans of Company to the extent he is fully vested as of the Effective Date

pursuant to the terms and conditions of such employee benefit plans.

4. CONFIDENTIALITY. For purposes of this Section 4, the term "Company"

shall include, in addition to Company, its affiliates, subsidiaries and any of

their respective predecessors, successors and assigns.

(a) CONFIDENTIAL INFORMATION. As used in this Agreement, "Confidential

Information" means any and all confidential, proprietary or other information,

whether or not originated by Employee or Company, which is in any way related to

the past or present Company's Business (as defined below) and is either

designated as confidential or not generally known by or available to the public.

Confidential Information includes, but is not limited to (whether or not reduced

to writing or designated as confidential) (i) information regarding Company's

existing and potential customers and vendors; (ii) any contacts (including the

existence and contents thereof and parties thereto) to which Company is a party

or is bound; (iii) information regarding products and services being purchased

or leased by or provided to Company; (iv) information received by Company from

third parties under an obligation of confidentiality, restricted, disclosure or

restricted use; (v) personnel and financial information of Company; (vi)

information with respect to Company's products, services, facilities, business

methods, systems, trade secrets, technical know-how, and other intellectual

property; (vii) marketing and developmental plans and techniques, price and cost

data, forecasts and forecast assumptions, and potential strategies of Company;

and (viii) any other information relating to Company which was obtained by

Employee in connection with his employment by Company, whether before, on or

after the Effective Date.

(b) NON-DISCLOSURE AND NON-USE OF CONFIDENTIAL INFORMATION. Employee

acknowledges that the Confidential Information of Company is a valuable, unique

asset of Company and Employee's unauthorized use or disclosure thereof could

cause irreparable harm to Company for which no remedy at law could be adequate.

Accordingly, Employee agrees that he shall hold all Confidential Information of

Company in strict confidence and solely for the benefit of Company, and that he

shall not, directly or indirectly, disclose or use or authorize any third party

to disclose or use any Confidential Information, except (i) with the express

written consent of Company, (ii) to the extent that any such information is in

or becomes in the public domain other than as a result of Employee's breach of

any of his obligations hereunder, or (iii) where required to be disclosed by

court order, subpoena or other government process and in such event, Employee

shall cooperate with Company in attempting to keep such information

confidential. The Company shall reimburse Employee for all reasonable expenses

and costs he may incur as a result of cooperating under this Section 4(b), upon

receipt of proper documentation.

(c) OWNERSHIP OF CONFIDENTIAL INFORMATION. Employee acknowledges and

agrees that all Confidential Information is and shall remain the exclusive

property of Company, whether or not prepared in whole or in part by Employee and

whether or not disclosed to or entrusted to the custody of Employee. Employee

has delivered to Company all documents, tapes, disks, or other storage media and

any other materials, and all copies thereof in whatever form, in the possession

of Employee pertaining to the Company's Business, including, but not limited to,

any containing Confidential Information.

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(d) SURVIVAL. Employee's obligations set forth in this Section 4, and

Company's rights and remedies with respect hereto, shall survive indefinitely

following the Effective Date.

5. RESTRICTIVE COVENANTS.

For purposes of this Section 5, the term "Company" shall include, in

addition to Company, its affiliates, subsidiaries and any of their respective

predecessors, successors and assigns.

(a) NON-COMPETITION. During the Restricted Period and within the

Restricted Area (each as defined in subsection (d) below), Employee shall not,

directly or indirectly, perform on behalf of any Competitor (as defined in

subsection (d) below) the same or similar services as those that Employee

performed for Company during Employee's employment by Company or otherwise. In

addition, Employee shall not, during the Restricted Period or within the

Restricted Area, directly or indirectly engage in, own, manage, operate, join,

control, l