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Exhibit 10.21
FORM OF
DIRECTOR INDEMNIFICATION AGREEMENT
This Director Indemnification Agreement (this " Agreement
"), dated as of this day of August, 2006,
is made by and between Haynes International, Inc., a Delaware
corporation (the " Company "), and
(" Indemnitee ").
RECITALS:
WHEREAS, Section 141 of the Delaware General Corporation Law
provides that a corporation’s business and affairs shall be
managed by or under the direction of its board of directors;
WHEREAS, by virtue of the managerial prerogatives vested
in the directors of a Delaware corporation, directors act as
fiduciaries of the corporation and its stockholders;
WHEREAS, it is critically important to the Company and
its stockholders that the Company be able to attract and retain the
most capable persons reasonably available to serve as directors of
the Company;
WHEREAS, in recognition of the need for corporations to
be able to induce capable and responsible persons to accept
positions in corporate management, Delaware law authorizes (and in
some instances requires) corporations to indemnify their directors
and officers, and further authorizes corporations to purchase and
maintain insurance for the benefit of their directors and
officers;
WHEREAS, the number of lawsuits challenging the judgment
and actions of directors of corporations, the costs of defending
those lawsuits and the threat to directors’ personal assets
have all materially increased over the past several years, chilling
the willingness of capable persons to undertake the
responsibilities imposed on corporate directors;
WHEREAS, recent federal legislation and rules adopted by
the Securities and Exchange Commission have imposed additional
disclosure and corporate governance obligations on directors of
public companies and have exposed such directors to new and
substantially broadened liabilities;
WHEREAS, Indemnitee is a director of the Company and his
or her willingness to serve in such capacity is predicated, in
substantial part, upon the Company’s willingness to indemnify
him or her in accordance with the principles reflected above, to
the fullest extent permitted by the laws of the state of Delaware,
and upon the other undertakings set forth in this Agreement;
and
WHEREAS, in recognition of the need to provide Indemnitee
with substantial protection against personal liability, in order to
procure Indemnitee’s continued service as a director of the
Company and to enhance Indemnitee’s ability to serve the
Company in an effective manner, and in order to provide such
protection pursuant to express contract rights (intended to be
enforceable irrespective of, among other things, any amendment to
the Company’s certificate of
incorporation or bylaws (collectively, the " Governance
Documents "), any change in the composition of the
Company’s Board of Directors (the " Board ") or any
change-in-control or business combination transaction relating to
the Company), the Company desires to provide in this Agreement for
the indemnification of and the advancement of Expenses (as defined
in Section 1.01(f) ) to Indemnitee as set forth in this
Agreement and for the continued coverage of Indemnitee under the
Company’s directors’ and officers’ liability
insurance policies;
NOW, THEREFORE, in consideration of the promises and the
covenants contained herein, the Company and Indemnitee do hereby
covenant and agree as follows:
AGREEMENT :
ARTICLE I
Section 1.01.
Definitions . In addition to terms defined elsewhere herein,
the terms hereinafter set forth when used herein shall have the
following meanings and the following definitions shall be equally
applicable to both the singular and plural forms of any of the
terms herein defined:
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(iii)
consummation of a reorganization, merger, statutory share exchange
or consolidation or similar corporate transaction involving the
Company or any of its Subsidiaries, a sale or other disposition of
all or substantially all of the assets of the Company or an
acquisition of assets or stock of another entity by the Company or
any of its Subsidiaries (each a " Business Combination ")
unless, in each case, following such Business Combination (i) all
or substantially all of the individuals and entities that were the
beneficial owners of the Outstanding Common Stock and Outstanding
Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than
fifty percent (50%) of the then-outstanding shares of common stock
and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including a corporation that, as a result of such
Business Combination, owns the Company or all or substantially all
of the Company’s assets either directly or through one or
more Subsidiaries) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the
Outstanding Company Common Stock and the Outstanding Company Voting
Securities, as the case may be, (ii) no person or entity (excluding
(A) any entity resulting from such Business Combination or (B) any
employee benefit plan (or related trust) of the Company or
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly fifteen (15%) or more of either the
then- outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting
power of the then-outstanding voting securities of such
corporation, except to the extent that such ownership existed prior
to such Business Combination, and (iii) at least a majority of the
members of the board of directors of the corporation resulting from
such Business Combination were Incumbent Directors at the time of
the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or
(iv)
the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company.
(b)
" Claim " means: (i) any threatened, asserted, pending or
completed claim, demand, action, suit or proceeding, arbitration,
alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or proceeding, including any and all
appeals, whether civil, criminal, administrative, arbitrative,
investigative or other, whether formal or informal, and whether
made pursuant to federal, state or other law; and (ii) any
threatened, pending or completed inquiry or investigation, whether
made, instituted or conducted by the Company or any other person,
including any federal, state or other governmental entity, that
Indemnitee determines might lead to the institution of any such
claim, demand, action, suit or proceeding. For purposes of this
definition, the term "threatened" will be deemed to include
Indemnitee’s good faith belief that a claim or other
assertion may lead to a Claim.
(c)
" Controlled Affiliate " means any corporation, limited
liability company, partnership, joint venture, trust or other
entity or enterprise, whether or not for profit, that
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is directly or indirectly controlled by the
Company. For purposes of this definition, "control" means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of an entity or
enterprise, whether through the ownership of voting securities,
through other voting rights, by contract or otherwise;
provided that direct or indirect beneficial ownership
of capital stock or other interests in an entity or enterprise
entitling the holder to cast twenty percent (20%) or more of the
total number of votes generally entitled to be cast in the election
of directors (or persons performing comparable functions) of such
entity or enterprise shall be deemed to constitute control for
purposes of this definition.
(d)
" Disinterested Director " means a director of the Company
who is not and was not a party to the Claim in respect of which
indemnification is sought by Indemnitee.
(e)
" Exchange Act " shall mean the Securities Exchange Act of
1934, as amended.
(f)
" Expenses " means all attorney’s fees, disbursements
and retainers, court costs, transcript costs, fees of experts,
witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, fax transmission
charges, secretarial services, delivery service fees and all other
disbursements or expenses paid or incurred in connection with
prosecuting, defending, preparing to prosecute or defend,
investigating, being or preparing to be a witness in, or otherwise
participating in, an Indemnifiable Claim, or in connection with
seeking indemnification under this Agreement. Expenses will also
include Expenses paid or incurred in connection with any appeal
resulting from any Indemnifiable Claim, including the premium,
security for and other costs relating to any appeal bond or its
equivalent. Expenses, however, will not include amounts paid in
settlement by Indemnitee or the amount of judgments or fines
against Indemnitee
(g)
" Incumbent Directors " means the individuals who, as of the
date hereof, are directors of the Company and any individual
becoming a director subsequent to the date hereof whose election,
nomination for election by the Company’s stockholders, or
appointment, was approved by a vote of at least two-thirds (2/3) of
the then Incumbent Directors (either by a specific vote or by
approval of the proxy statement of the Company in which such person
is named as a nominee for director, without objection to such
nomination); provided , however , that an individual
shall not be an Incumbent Director if such individual’s
election or appointment to the Board occurs as a result of an
actual or threatened election contest (as described in Rule
14a-12(c) of the Exchange Act) with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the
Board.
(h)
" Indemnifiable Claim " means any Claim based upon, arising
out of or resulting from: (i) any actual, alleged or suspected act
or failure to act by Indemnitee in his or her capacity as a
director, officer, employee or agent of the Company or as a
director, officer, employee, member, manager, trustee or agent of
any other corporation, limited liability company, partnership,
joint venture, trust or other entity or enterprise, whether or not
for profit, as to which Indemnitee is or was serving at the request
of the
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Company as a director, officer, employee, member, manager,
trustee or agent; (ii) any actual, alleged or suspected act or
failure to act by Indemnitee in respect of any business,
transaction, communication, filing, disclosure or other activity of
the Company or any other entity or enterprise referred to in clause
(i) of this sentence; or (iii) Indemnitee’s status as a
current or former director, officer, employee or agent of the
Company or as a current or former director, officer, employee,
member, manager, trustee or agent of the Company or any other
entity or enterprise referred to in clause (i) of this sentence or
any actual, alleged or suspected act or failure to act by
Indemnitee in connection with any obligation or restriction imposed
upon Indemnitee by reason of such status. In addition to any
service at the actual request of the Company, for purposes of this
Agreement, Indemnitee shall be deemed to be serving or to have
served at the request of the Company as a director, officer,
employee, member, manager, trustee or agent of another entity or
enterprise if Indemnitee is or was serving as a director, officer,
employee, member, manager, trustee or agent of such entity or
enterprise and (a) such entity or enterprise is or at the time of
such service was a Controlled Affiliate, (b) such entity or
enterprise is or at the time of such service was an employee
benefit plan (or related trust) sponsored or maintained by the
Company or a Controlled Affiliate or (c) the Company or a
Controlled Affiliate directly or indirectly caused or authorized
Indemnitee to be nominated, elected, appointed, designated,
employed, engaged or selected to serve in such capacity.
(i)
" Indemnifiable Losses " means any and all Losses relating
to, arising out of or resulting from any Indemnifiable Claim.
(j)
" Independent Counsel " means a law firm, or a member of a
law firm, that is experienced in matters of corporation law and
neither presently is, nor in the past five (5) years has been,
retained to represent: (i) the Company (or any Subsidiary), the
Board (or any committee) or Indemnitee in any matter material to
either such party (other than with respect to matters concerning
the Indemnitee under this Agreement, or of other indemnitees under
similar indemnification agreements); or (ii) any other named (or,
as to a threatened matter, reasonably likely to be named) party to
the Indemnifiable Claim giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term "Independent
Counsel" shall not include any person who, under the applicable
standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or
Indemnitee in an action to determine Indemnitee’s rights
under this Agreement.
(k)
" Losses " means any and all Expenses, damages, losses,
liabilities, judgments, fines, penalties (whether civil, criminal
or other) and amounts paid in settlements, including all interest,
assessments and other charges paid or payable in connection with or
in respect of any of the foregoing.
(l)
" Subsidiary " means an entity in which the Company directly
or indirectly beneficially owns fifty percent (50%) or more of the
outstanding voting securities.
Section 1.02.
Indemnification
Obligation . Subject to Section 1.07 , the Company
shall indemnify, defend and hold harmless Indemnitee, to the
fullest extent permitted or required by the Company’s
Governance Documents and the laws of the State of Delaware in
effect on the
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date hereof or as the same may from time to time hereafter be
amended, interpreted or replaced to increase the scope of such
permitted indemnification, against any and all Indemnifiable Claims
and Indemnifiable Losses; provided , however , that,
except as provided in Sections 1.04 and 1.23 ,
Indemnitee shall not be entitled to indemnification pursuant to
this Agreement in connection with any Claim initiated by Indemnitee
against the Company or any director or officer of the Company
unless the Company has joined in or consented to the initiation of
such Claim.
Section 1.03.
Advancement of
Expenses . Indemnitee shall have the right to advancement
by the Company to the fullest extent permitted by the laws of the
State of Delaware prior to the final disposition of any
Indemnifiable Claim of any and all Expenses relating to, arising
out of or resulting from any Indemnifiable Claim paid or incurred
by Indemnitee or which Indemnitee determines are reasonably likely
to be paid or incurred by Indemnitee. Indemnitee’s right to
such advancement is not subject to the satisfaction of any standard
of conduct. Without limiting the generality or effect of the
foregoing, within five (5) business days after any request by
Indemnitee, the Company shall, in accordance with such request (but
without duplication): (a) pay such Expenses on behalf of
Indemnitee; (b) advance to Indemnitee funds in an amount sufficient
to pay such Expenses; or (c) reimburse Indemnitee for such
Expenses; provided that Indemnitee shall repay,
without interest any amounts actually advanced to Indemnitee that,
at the final disposition of the Indemnifiable Claim to which the
advance related, were in excess of amounts paid or payable by
Indemnitee in respect of Expenses relating to, arising out of or
resulting from such Indemnifiable Claim. In connection with any
such payment, advancement or reimbursement, Indemnitee shall
execute and deliver to the Company an undertaking, which need not
be secured and shall be accepted without reference to
Indemnitee’s ability to repay the Expenses, by or on behalf
of the Indemnitee, to repay any amounts paid, advanced or
reimbursed by the Company of Expenses relating to, arising out of
or resulting from any Indemnifiable Claim of which it shall have
been determined, following the final disposition of such
Indemnifiable Claim and in accordance with Section 1.07 ,
that Indemnitee is not entitled to indemnification hereunder.
Section 1.04.
Indemnification for
Additional Expenses . Without limiting the generality or
effect of the foregoing, the Company shall indemnify and hold
harmless Indemnitee against and, if requested by Indemnitee, shall
reimburse Indemnitee for, or advance to Indemnitee, within five (5)
business days of such request, any and all Expenses paid or
incurred by Indemnitee or which Indemnitee determines are
reasonably likely to be paid or incurred by Indemnitee in
connection with any Claim made, instituted or conducted by
Indemnitee for: (a) indemnification or reimbursement or advance
payment of Expenses by the Company under any provision of this
Agreement, or under any other agreement or provision of the
Governance Documents now or hereafter in effect relating to
Indemnifiable Claims; and/or (b) recovery under any
directors’ and officers’ liability insurance policies
maintained by the Company, regardless in each case of whether
Indemnitee ultimately is determined to be entitled to such
indemnification, reimbursement, advance or insurance recovery, as
the case may be; provided , however , that Indemnitee
shall return, without interest, any such advance of Expenses (or
portion thereof) that remains unspent at the final disposition of
the Claim to which the advance related.
Section 1.05.
Partial
Indemnity . If Indemnitee is entitled under any provision
of this Agreement to indemnification by the Company for some or a
portion of any Indemnifiable Loss,
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but not for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled.
Section 1.06.
Procedure for
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