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EXHIBIT 10.1
FORM OF
TERMINATION BENEFITS AGREEMENT
THIS TERMINATION BENEFITS AGREEMENT ("AGREEMENT") is executed as
of the date set forth below to be effective as of ___________ (the
"EFFECTIVE DATE") (defined below) by and between Haynes
International, Inc., a Delaware corporation (the "COMPANY"), and
____________, an individual residing in the State of Indiana (the
"EMPLOYEE").
WITNESSETH
WHEREAS, the Board of Directors of the Company (the "BOARD") has
determined that it is in the best interests of the Company and its
shareholders for the Company to agree to provide benefits under
circumstances described below to the Employee in connection with
employment by the Company and due to Employee’s
responsibility for policy-making functions within the Company and
in exchange for the Employee’s agreements in Sections 6 and 7
hereof;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the
receipt and sufficiency of which is hereby recognized, the Company
and the Employee agree as follows:
AGREEMENT
1.
TERM OF AGREEMENT. This Agreement shall commence as of
the Effective Date and shall continue in effect until September 30,
2007; provided, however, that commencing on October 1, 2007 (the
"RENEWAL DATE") and on each two-year anniversary thereafter, the
term of this Agreement shall automatically be extended for two (2)
years (until the two-year anniversary of the Renewal Date 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
(the "TERM").
2.
TERMINATION BENEFITS.
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a.
If, during the Term of this Agreement, the
Employee’s employment with the Company shall be terminated,
the Employee shall be entitled to receive 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):
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i.
TERMINATION WITHOUT CAUSE, FOR GOOD REASON, OR DUE
TO DISABILITY OR DEATH. If the Employee’s
employment with the Company shall be terminated by the
Company without Cause, by the Employee for Good Reason, or by
reason of the Employee’s Disability or death:
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1.
the Employee or the Employee’s heirs, estate,
personal representative or legal guardian, as appropriate, shall be
entitled to receive a lump sum cash payment equal to the sum
of:
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a.
the Employee’s accrued but unpaid Base Salary
through the Date of Termination;
b.
any accrued but unpaid compensation, including but
not limited to any unpaid bonus compensation and reimbursement, in
accordance with the then prevailing reimbursement practices of the
Company, for all reasonable and customary business expenses
incurred by the Employee in connection with his employment by the
Company as of the Date of Termination; and
c.
a bonus for the fiscal year in which the Date of
Termination occurs in an amount equal to the Employee’s
target bonus for such fiscal year under the bonus or incentive
compensation plan maintained by the Company, calculated as if the
Employee earned one hundred percent (100%) of such target bonus
(the "SEVERANCE BONUS"), multiplied by a fraction, the numerator of
which is the number of days the Employee worked in the fiscal year
in which the Date of Termination occurs and the denominator of
which is three hundred sixty five (365); and
2
a. on a termination of
employment by the Company without Cause or by the Employee for Good
Reason, any unvested stock options held by the Employee will
terminate immediately and all vested stock options held by the
Employee will remain exercisable for six (6) months following the
Date of Termination, but in no event later than the expiration date
of the stock options as specified in the applicable grant letter,
and
b.
upon a termination of employment by reason of the
Employee’s Disability or death, any unvested stock options
held by the Employee will vest immediately and all options held by
the Employee will remain exercisable for six (6) months from the
Date of Termination, but in
no event later than the expiration date of such stock options as
specified in the applicable grant letter.
ii.
TERMINATION FOR CAUSE, WITHOUT GOOD REASON, OR DUE
TO RETIREMENT. If the Employee’s employment with the Company
shall be terminated by the Company for Cause, by the Employee
without Good Reason, or by reason of the Employee’s
Retirement:
iii.
TERMINATION WITHOUT CAUSE OR FOR GOOD REASON
FOLLOWING A CHANGE IN CONTROL. If the Employee’s employment
with the Company shall be terminated by the Company without Cause
or by the Employee for Good Reason 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):
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1.
the Employee shall be entitled to receive a lump sum
cash payment equal to the sum of:
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a.
the Employee’s accrued but unpaid Base Salary
through the Date of Termination;
b.
the Employee’s Base Salary that would be
payable for the period from the Date of Termination through the
first (1st) anniversary thereof (the "SEVERANCE
PERIOD");
c.
any accrued but unpaid compensation, including but
not limited to any unpaid bonus compensation and reimbursement, in
accordance with the then prevailing reimbursement practices of the
Company, for all reasonable and customary business expenses
incurred by the Employee in connection with his employment by the
Company as of the Date of Termination; and
d.
the Severance Bonus;
2.
any unvested stock options held by the Employee will
vest immediately and all stock options held by the Employee will
remain exercisable for one (1) year from the Date of Termination,
but in no event later than the expiration date of the stock options
as specified in the applicable grant letter; and
3.
during the Severance Period, the Company shall
provide to the Employee and Employee’s dependents any
medical, hospitalization and life insurance benefits that the
Employee received from the Company immediately prior to the Date of
Termination; PROVIDED, HOWEVER, that any such benefits coverage
shall cease to the extent that the Employee obtains comparable
medical, hospitalization or life insurance benefits (as the case
may be) from any other employer during such Severance
Period.
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)(iii)(3) 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:
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i.
"DISABILITY" means the Employee is totally and
permanently disabled as defined in the Haynes International, Inc.
Pension Plan.
ii.
"RETIREMENT" means the voluntary retirement of the
Employee after having reached age fifty-five (55) and having
completed at least five (5) years of service with the Company, but
in no event prior to September 1, 2009.
iii.
A termination for "CAUSE" means a termination by
reason of the good faith determination of the Company’s Board
of Directors (the "BOARD") that the Employee (1) continually failed
to substantially perform his duties with the Company (other than a
failure resulting from the Employee’s medically documented
incapacity due to physical or mental illness), including, without
limitation, repeated refusal to follow the reasonable directions of
the Company’s Chief Executive Officer, knowing violation of
the law in the course of performance of the Employee’s duties
with the Company, repeated absences from work without a reasonable
excuse, or intoxication with alcohol or illegal drugs while on the
Company’s premises during regular business hours, (2) engaged
in conduct which constituted a material breach of SECTION 6 or
SECTION 7 of this Agreement, (3) was indicted (or equivalent under
applicable law), convicted of, or entered a plea of nolo contendere
to the commission of a felony or crime involving dishonesty or
moral turpitude, (4) engaged in conduct which is demonstrably and
materially injurious to the financial condition, business
reputation, or otherwise of the Company or its subsidiaries or
affiliates, or (5) perpetuated a fraud or embezzlement against the
Company or its subsidiaries or affiliates, and in each case the
particular act or omission was not cured, if curable, in all
material respects by the Employee within thirty (30) days after
receipt of written notice from the Board which shall set forth in
reasonable detail the nature of the facts and circumstances which
constitute Cause. 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 Board. If the Company has reasonable belief that the
Employee has committed any of the acts described above, it may
suspend the Employee (with or without pay) while it investigates
whether it has or could have Cause to terminate the Employee. The
Company may terminate the Employee for Cause prior to the
completion of its investigation; provided, that, if it is
ultimately determined that the Employee has not committed an act
which would constitute Cause, the Employee shall be treated as if
he were terminated without Cause.
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iv.
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 5 hereof.
v.
"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 without Cause shall not be less than
thirty (30) days from the date such Notice of Termination is
given); provided that if 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 decree of a court of competent jurisdiction (the time for appeal
therefrom having expired and no appeal having been
taken).
vi.
"BASE SALARY" means the annual 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, as amended (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.
vii. "GOOD REASON" shall mean the occurrence, during the Term of
this Agreement, of any of the following actions or failures to act,
but in each case only if it is not consented to by the Employee in
writing: (i) a material adverse change in the Employee’s
duties, reporting responsibilities, titles or elected or appointed
offices as in
effect immediately prior to the effective date of such change;
or (ii) a material reduction by the Company in the
Employee’s Base Salary or annual bonus opportunity in effect
immediately prior to the effective date of such reduction, not
including any reduction resulting from changes in the market value
of securities or other instruments paid or payable to the
Employee. For purposes of this definition, none of the
actions described in clauses (i) and (ii) above shall constitute
"Good Reason" with respect to the Employee if it was an isolated
and inadvertent action not taken in bad faith by the Company and if
it is remedied by the Company within thirty (30) days after receipt
of written notice thereof given by the Employee (or, if the matter
is not capable of remedy within thirty (30) days, then within a
reasonable period of time following such thirty (30) day period,
provided that the Company has commenced such remedy within said
thirty (30) day period); provided, that "GOOD REASON" shall cease
to exist for any action described in clauses (i) and (ii) above on
the sixtieth (60th) day following the later of the occurrence of
such action or the Employee’s knowledge thereof, unless the
Employee has given the Company written notice thereof prior to such
date.
viii.
"CHANGE IN CONTROL" shall mean the first to occur of
the following: (i) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing a
majority of the combined voting power of the Company’s then
outstanding securities (assuming conversion of all outstanding
non-voting securities into voting securities and the exercise of
all outstanding options or other convertible securities);
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors then serving:
individuals who, on the Effective Date, constitute the Board and
any new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by
the Company’s stockholders was approved or recommended by a
vote of at least two-thirds (2/3) of the directors then still in
office who either were directors on the Effective Date or whose
appointment, election or nomination for election was previously so
approved or recommended; (iii) there is consummated a merger
or consolidation of the Company or any direct or indirect
subsidiary of the Company with any other corporation other than (x)
a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent, either by
remaining outstanding or by being converted into voting securities
of the surviving entity or any parent thereof,
a majority of the combined voting power of the securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (y) a
merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person, is or
becomes the Beneficial O
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