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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
Company and the Employee previously entered into that certain
Severance Agreement (the "SEVERANCE
AGREEMENT") dated as of June 29, 2000
whereby the rights and obligations of the
Employee in the event of a termination
associated with a change in control of the
Company were set forth; and
WHEREAS, on
March 29, 2004, the Company filed a voluntary petition for
bankruptcy under Chapter 11 of Title 11 of
the U.S. Code (11 USC Section 101,
et. seq.) in the U.S. Bankruptcy Court for
the Southern District of Indiana (the
"BANKRUPTCY"); and
WHEREAS, the
Company and the Employee desire to amend and restate such
Severance Agreement to set forth the rights
and obligations of the parties with
respect to a termination of the Employee's
employment with the Company following
the Company's emergence from
Bankruptcy.
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. PRIOR AGREEMENT. Effective
as of effective date of the Company's plan
of reorganization (the "PLAN OF
REORGANIZATION") as filed with the U.S.
Bankruptcy Court for the Southern District
of Indiana (the "EFFECTIVE DATE"),
the Employee's benefits upon a termination
of employment shall be governed by
this Agreement, which restates and
supersedes the Severance Agreement.
2. 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").
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3. TERMINATION BENEFITS.
(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):
(1) 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:
(i) 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:
(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
(ii) (A) upon 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
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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.
(2) 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:
(i) the Employee
shall be entitled to receive a lump sum
cash payment equal to the sum of:
(A) the Employee's
accrued but unpaid Base Salary
through the Date of Termination; and
(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
(ii) (A) upon a termination of employment
by the Company
for Cause or by the Employee without Good Reason, all vested
and
unvested stock options held by the Employee shall terminate
immediately, and (B) upon the Employee's Retirement, all
unvested
stock options held by the Employee shall terminate immediately
and any vested
stock options held by the Employee shall remain
exercisable for six (6) months following the Date of
Termination
but in no event later than the expiration date of such stock
options as specified in the applicable grant letter.
(3) 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 2 above):
(i) 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;
(ii) 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
(iii) 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 3 by seeking other employment or
otherwise, nor,
except as provided in SECTION 3(a)(3)(iii) above, shall the
amount of any
payment or benefit provided for in SECTION 3 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:
(1) "DISABILITY" means
the Employee is totally and permanently
disabled as defined in the Haynes International, Inc. Pension
Plan.
(2) "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 30, 2007.
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(3) 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 (i) 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,
(ii) engaged in conduct which constituted a material breach of
SECTION
7 or SECTION 8 of this Agreement, (iii) 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, or (iv) 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 (v)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.
(4) 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.
(5) "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
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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).
(6) "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.
(7) "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.
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(8) "CHANGE IN
CONTROL" shall mean the first to occur of the
following:
(i) any Person
other than an Existing Substantial
Shareholder 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 with an Existing Substantial
Shareholder or any of its affiliates), 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 Owner, directly or indirectly, of
securities of the Company representing a majority of the
combined
voting power of the Company's then outstanding secur
