**Exhibit 10.02**

 

**HAYNES INTERNATIONAL, INC.**

**2009 RESTRICTED STOCK PLAN**

 

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# **ARTICLE I**

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# **ESTABLISHMENT AND PURPOSE**

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The Board of Directors ofHaynes International, Inc. (the “Company”) hereby establishes the HaynesInternational, Inc. 2009 Restricted Stock Plan (“Plan”), effective on thedate this plan is approved by the stockholders of the Company (the “EffectiveDate”), for the purpose of making Restricted Stock Awards to eligibleemployees.  The Plan is intended topromote the interests of the Company and the stockholders of the Company byproviding directors, executive officers and other senior management employeesof the Company with appropriate incentives and rewards to encourage them toenter into and continue in the employ of the Company, to acquire a proprietaryinterest in the long-term success of the Company and to reward the performanceof individuals in fulfilling their personal responsibilities for long-range andannual achievements.

 

# **ARTICLE II**

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# **DEFINITIONS**

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## Section .2.01.  Definitions.  Whenever capitalized herein, capitalizedterms shall have the following meanings:

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### (a)                                  “Affiliate” means any entity in which theCompany has a substantial direct or indirect equity interest (other than aSubsidiary), but only if expressly so designated by the Committee from time totime.

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### (b)                                 “Award Agreement” means the written agreementby and between the Company and a Participant granted a Restricted Stock Awardprescribing the terms, conditions, and restrictions applicable to theAward.  Each Award Agreement shall be subject tothe terms and conditions of the Plan and need not be identical.

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### (c)                                  “Beneficial Owner” shall have the meaning setforth in Rule 13d-3 under the Exchange Act.

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### (d)                                 “Board of Directors” means the Board ofDirectors of the Company, as constituted at any time.

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### (e)                                  “Change In Control” shall mean the occurrenceof any one of the following events:

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#### (i)            any Person other than an Existing SubstantialShareholder becomes the Beneficial Owner, directly or indirectly, of securitiesof the Company representing a majority of the combined voting power of theCompany’s then outstanding securities (assuming conversion of all outstandingnon-voting securities into voting securities and the exercise of alloutstanding options or other convertible securities);

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#### (ii)           the following individuals cease for anyreason to constitute a majority of the number of Directors then serving:individuals who, on the Effective Date, constitute the Board of Directors andany new Director (other than a Director whose initial assumption of office isin connection with an actual or threatened election contest, including but notlimited to, a consent solicitation, relating to the election of Directors ofthe Company) whose appointment or election by the

 

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#### Board or nomination for election by the Company’sstockholders 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 theEffective Date or whose appointment, election or nomination for election waspreviously so approved or recommended;

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#### (iii)          the consummation of a merger or consolidationof the Company or any 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 votingsecurities of the Company outstanding immediately prior to such merger orconsolidation continuing to represent, either by remaining outstanding or bybeing converted into voting securities of the surviving entity or any parentthereof, a majority of the combined voting power of the securities of theCompany or such surviving entity or any parent thereof outstanding immediatelyafter such merger or consolidation, or (y) a merger or consolidationeffected to implement a recapitalization of the Company (or similartransaction) in which no Person, is or becomes the Beneficial Owner, directlyor indirectly, of securities of the Company representing a majority of thecombined voting power of the Company’s then outstanding securities; or

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#### (iv)          the stockholders of the Company approve aplan of complete liquidation or dissolution of the Company or there isconsummated an agreement for the sale or disposition by the Company of all orsubstantially all of the Company’s assets, other than a sale or disposition bythe Company of all or substantially all of the Company’s assets to an entitycontrolled by an Existing Substantial Shareholder or any of its affiliates, or toan entity a majority of the combined voting power of the voting securities ofwhich is owned by substantially all of the stockholders of the Companyimmediately prior to such sale in substantially the same proportions as theirownership of the Company immediately prior to such sale.

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### (f)                                    “Cause” means the removal of a Director fromoffice pursuant to Article III, Section 14 of the Amended andRestated By-laws of Haynes International, Inc., as amended from time totime.

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### (g)                                 “Code” means the Internal Revenue Code of1986, as amended.

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### (h)                                 “Committee” means the Compensation Committeeof the Board of Directors, and the composition of the Committee shall begoverned by the Compensation Committee Charter as adopted by the Board ofDirectors and as amended from time to time.

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### (i)                                     “Company” means Haynes International, Inc.

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### (j)                                     “Director” means any person serving on theBoard of Directors.

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### (k)                                  “Disability” means a Total and PermanentDisability as defined in the Haynes International, Inc. Pension Plan.

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### (l)                                     “Employee” means executive officers or othermembers of senior management employed by the Company or any Subsidiary. The payment of a Director’s fee by the Company shall not be sufficient toconstitute employment by the Company.

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### (m)                               “Exchange Act” means the Securities ExchangeAct of 1934, as amended.

 

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### (n)                                 “Existing Substantial Shareholder” means anyPerson that alone or together with its affiliates shall be the Beneficial Ownerof more than 15% of the Shares Outstanding as of the Effective Date.

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### (o)                                 “Fair Market Value” per Share as of aparticular date means the last reported sale price (on the last trading dayimmediately preceding such date) of the Shares quoted on the NASDAQ GlobalSelect Market, the NASDAQ Global Market or the NASDAQ Capital Market (or anyother exchange or national market system upon which price quotations for theShares are regularly available); provided, however, if price quotations for theShares are not regularly available on any exchange or national market system,Fair Market Value per share shall mean, as of any date, the fair market valueof such Shares on such date as determined in good faith by the Board ofDirectors or Committee.

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### (p)                                 “Non-Employee Director” means a Director whois a “non-employee director” within the meaning of Rule 16b-3 of theExchange Act and who is also an “outside director” within the meaning of Section 162(m) ofthe Code.

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### (q)                                 “Participant” means the Employee orNon-Employee Director who has entered into an Award Agreement with the Companypursuant to this Plan.

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### (r)                                    “Performance Goals” means performance criteriadetermined by reference to goals pre-established by the Committee in its solediscretion, based on one or more of the following (if applicable, such criteriashall be determined in accordance with generally accepted accounting principles(“GAAP”) or based upon the Company’s GAAP financial statements): (1) returnon total stockholder equity; (2) earnings per Share; (3) incomebefore taxes; (4) earnings before any or all of interest, taxes, minorityinterest, depreciation and amortization; (5) economic profit; (6) salesor revenues; (7) return on assets, capital or investment; (8) marketshare; (9) cost reduction goals; (10) implementation or completion ofcritical projects or processes; (11) operating cash flow; (12) free cash flow;and (13) any combination of, or a specified increase or decrease in, any of theforegoing. The Performance Goals may be based upon the performance of theCompany or of any Subsidiary or Affiliate of the Company (or any divisions orbusiness unit of such entity).  The PerformanceGoals may differ from Participant to Participant and from Award to Award. ThePerformance Goals may also be based upon the attainment of specified levels ofperformance under one or more of the criteria described above relative to theperformance of other comparable entities. To the extent permitted under Section 162(m) ofthe Code (including, without limitation, compliance with any requirements for stockholderapproval), the Committee in its sole discretion may designate additionalbusiness criteria on which the Performance Goals may be based or adjust, modifyor amend the aforementioned business criteria. Performance Goals may include athreshold level of performance below which no Award will be earned, a level ofperformance at which the target amount of an Award will be earned and a levelof performance at which the maximum amount of the Award will be earned.

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### (s)                                  “Person” shall have the meaning given in Section 3(a)(9) ofthe Exchange Act and used in Sections 13(d) and 14(d) thereof, exceptthat such term shall not include (i) the Company or any subsidiary of theCompany, (ii) a trustee or other fiduciary holding securities under anemployee benefit plan of the Company or any of its affiliates, (iii) anunderwriter temporarily holding securities pursuant to an offering of suchsecurities or (iv) a corporation owned, directly or indirectly, bysubstantially all of the stockholders of the Company in substantially the sameproportions as their ownership of stock of the Company.

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### (t)                                    “Plan” means this Haynes International, Inc.2009 Restricted Stock Plan, as set forth in this document, as amended from timeto time.

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### (u)                                 “Restricted Stock Award” or “Award” means anaward of Shares subject to the terms, conditions, and restrictions described inthis Plan and the Award Agreement.

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### (v)                                 “Share” means a share of common stock, $0.001par value, of the Company, as may be adjusted in accordance with Section 5.05below.

 

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### (w)                               “Shares Outstanding” means the total numberof Shares outstanding on a fully diluted basis, as reflected in the Company’sfinancial statements for purposes of determining earnings per share.

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### (x)                                   “Subsidiary” and “Subsidiaries” used hereinmeans a company or companies of which 80% or more of the total voting power ofthe equity of each such company and 80% or more of the total value of theequity of each such company are owned by the Company or a Subsidiary of theCompany.

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### (y)                                 “Terminate Employment” or “Termination ofEmployment” means, in the case of an Employee, a complete termination of theemployment relationship between an Employee and the Company and allSubsidiaries, or, in the case of a Non-Employee Director, such Non-EmployeeDirector ceasing to serve on the Board of Directors.  For purposes of this definition, aParticipant who is employed by an entity that ceases to be a Subsidiary or abusiness unit within a Subsidiary shall be deemed to have Terminated Employmentas of the date such entity ceased to be a Subsidiary or a business unit withina Subsidiary, unless the Participant is also employed by the Company or anentity that continues to be a Subsidiary or a business unit within a Subsidiary.

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## Section .2.02.  Rules ofConstruction.

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### (a)                                  Words used herein in the masculine gendershall be construed to include the feminine gender, where appropriate, and wordsused herein in the singular or plural shall be construed as being in the pluralor singular, where appropriate.

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### (b)                                 The Plan shall be construed, enforced, andadministered and the validity thereof determined in accordance with the laws ofthe State of Indiana.

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# **ARTICLE III**

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# **ADMINISTRATION OF THE PLAN**

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The Plan shall beadministered by the Committee.  TheCommittee may establish and adopt resolutions, rules, and regulations,including revisions thereto, not inconsistent with the provisions of the Plan,and construe and interpret provisions of the Plan, as it deems appropriate tomake the Plan and Restricted Stock Awards effective and to provide for theadministration of the Plan, and it may take such other action with regard tothe Plan and Restricted Stock Awards as it deems appropriate, including, butnot limited to adopting and authorizing the Company to enter into AwardAgreements.  All such actions shall befinal, conclusive, and binding on all persons, and no member of the Committeeor the Board of Directors shall be liable for any action or determination madein good faith with respect to the Plan or any Restricted Stock Award grantedhereunder.

 

In furtherance, and not inlimitation, of the above, the Committee shall have the authority in its solediscretion, subject to and not inconsistent with the express provisions of thePlan, to administer the Plan and to exercise all the powers and authoritieseither specifically granted to it under the Plan or necessary or advisable inthe administration of the Plan, including, without limitation, the authority togrant Restricted Stock Awards; to determine the persons to whom and the time ortimes at which Restricted Stock Awards shall be granted; to determine the typeand number of Restricted Stock Awards to be granted, the number of Shares towhich a Restricted Stock Award may relate and the terms, conditions,restrictions and performance criteria relating to any Restricted Stock Award;to determine Performance Goals no later than such time as required to ensurethat an underlying Restricted Stock Award which is intended to comply with therequirements of Section 162(m) of the Code so complies; to determinewhether, to what extent, and under what circumstances a Restricted Stock Awardmay be settled, cancelled, forfeited, exchanged, or surrendered; and to makeadjustments in the terms and conditions of, and the Performance Goals (if any)included in, Awards.

 

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# **ARTICLE IV**

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# **ELIGIBILITY**

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## Section .4.01.  Eligibility.Restricted Stock Awards may be made from time to time in the discretion of theCommittee to any Employee or Non-Employee Director.  In determining the Employees and Non-EmployeeDirectors to receive Awards and the extent of their participation in the Awardsgranted under this Plan, the Committee shall take into account such factors asthe Committee deems relevant in its discretion in furtherance of the purposesof this Plan.  The Committee shall, inits sole discretion, determine the number of Shares subject to each RestrictedStock Award, subject, however, to the terms and conditions of the Plan.

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## Section .4.02.  Participationby Director.  Members of theCommittee who are eligible either for Restricted Stock Awards or have beengranted Restricted Stock Awards may vote on any matters affecting theadministration of the Plan or the grant of any Restricted Stock Awards pursuantto the Plan, except that no such member shall act upon the granting of aRestricted Stock Award to himself, but any such member may be counted indetermining the existence of a quorum at any meeting of the Committee and maybe counted as part of an action by unanimous written consent during or withrespect to which action is taken to grant Restricted Stock Awards to him orher.

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# **ARTICLE V**

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# **RESTRICTED STOCK AWARDS**

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## Section .5.01.  Grantof Restricted Stock Awards.  Subjectto the terms, provisions, and conditions of the Plan, the Committee shall, inits sole discretion, select those Employees and Non-Employee Directors to whomRestricted Stock Awards are to be granted. The Committee shall also have exclusive power to determine (i) whenRestricted Stock Awards will be made, (ii) the number of Shares covered byeach Restricted Stock Award, (iii) when the restrictions applicable to theRestricted Stock Award will lapse, (iv) the Performance Goals applicableto any Restricted Stock Award, (v) any other terms of Restricted StockAwards, and (vi) the form of Award Agreements.  Restricted Stock Awards may be made to thesame person on more than one occasion.

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## Section .5.02.  Termsand Conditions of Restricted Stock Awards. Each Restricted Stock Award made under the Plan shall contain thefollowing terms, conditions, and restrictions and such additional terms,conditions, and restrictions as may be determined by the Committee:

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### (a)                                  Restrictions. Until the restrictions set forth in this Subsection (a) lapsepursuant to Subsection (b), (c), (d) or (e), Shares awarded to aParticipant in accordance with a Restricted Stock Award and which are stillsubject to such restrictions shall not be sold, assigned, transferred, pledged,hypothecated, or otherwise disposed of.

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### (b)                                 Lapse of Restrictions for Grants to Employees. Except as set forth in Subsections (d) and (e), the restrictionsset forth in Subsection (a) shall begin to lapse on or after (but notbefore) the first anniversary of the date of any Restricted Stock Award made toan Employee at such times and to such extent as the Committee may designate inthe Award Agreement (including, without limitation, the attainment ofPerformance Goals).

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### (c)                                  Lapse of Restrictions for Grants toNon-Employee Directors.  Except as set forth in Subsections (d) and(e), the restrictions set forth in Subsection (a) shall lapse for anyRestricted Stock Award made to a Non-Employee Director upon the earlier of (i) thethird anniversary of the date of the grant of the Restricted Stock Award or (ii) thefailure of such Non-Employee Director to be re-elected at an annual meeting ofthe stockholders of the Company as a result of such Non-Employee Director beingexcluded from the nominations for any reason other than Cause.

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### (d)                                 Termination of Employment by Reason of Deathor Disability.  Notwithstanding any provision of Subsection (a) tothe contrary, if (i) an Employee who has been in the continuousemployment, or (ii) a Non-Employee Director who has served on the Board ofDirectors, of the Company and/or a

 

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### Subsidiary for at least one year since the date of aRestricted Stock Award, either dies or Terminates Employment because of hisDisability while in such employment, then the restrictions set forth inSubsection (a) shall lapse on the day of such event as to all Sharessubject to such Restricted Stock Award.

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### (e)                                  Change in Control. Notwithstanding any other provision of this Plan, all restrictions withrespect to Shares subject to a Restricted Stock Award shall lapse upon a Changein Control.

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### (f)                                    Agreement by Employee Regarding WithholdingTaxes.  Each Employee granted a Restricted StockAward shall agree that the Company and its Subsidiaries shall, to the extentpermitted by law, have the right to deduct from any payments of any kindotherwise due or to become due to an Employee any federal, state, or localtaxes of any kind required by law to be withheld with respect to Shares subjectto the Restricted Stock Award, or if there are no such payments due or tobecome due to the Employee, the Employee will pay to the Company, or makearrangements satisfactory to the Committee, regarding payment of any federal,state, or local taxes of any kind required by law to be withheld with respectto Shares subject to the Restricted Stock Award.

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With respect to any Restricted Stock Award,the Committee may, in its discretion and subject to such rules as theCommittee may adopt, permit the Employee to elect to satisfy, in whole or inpart, any withholding tax obligation that may arise in connection with theShares subject to the Restricted Stock Award by having the Company retain oraccept from the Employee delivery of Shares having a Fair Market Value equal tothe amount of the withholding tax to be satisfied by such retention ordelivery.

 

### (g)                                 Forfeiture of Award.  AnyShares as to which the restrictions of Section 5.03(a) have notlapsed in accordance with this Section 5.03 as of the date of aParticipant’s Termination of Employment shall be forfeited and returned to theCompany as of such date without the payment of consideration by the Company.

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## Section .5.03.  RightsWith Respect to Shares.  AParticipant to whom a Restricted Stock Award has been made shall have absolutebeneficial ownership of the Shares awarded to him, including the right to votethe shares and to receive dividends thereon; subject, however, to the terms,conditions, and restrictions described in the Plan and/or the Award Agreement.The certificate(s) for such shares, with restrictive legends thereon,shall be held by the Company for the Participant’s benefit until therestrictions lapse, whereupon certificates without restrictive legends shall beissued and delivered to him.

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## Section .5.04.   RestrictiveLegends.  Certificates for Sharesissued pursuant to Restricted Stock Awards shall bear an appropriate legendreferring to the terms, conditions, and restrictions described in the Plan andthe Award Agreement.  Any attempt todispose of any Shares in contravention of the terms, conditions, andrestrictions described in the Plan or the Award Agreement shall be ineffective.

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## Section .5.05.  Adjustmentof Shares.  Subject to any requiredaction by the stockholders of the Company, (i) the number of Sharescovered by each outstanding Restricted Stock Award, (ii) the number ofShares which have been authorized for issuance under the Plan but as to whichno Restricted Stock Awards have yet been granted or which have been returned tothe Plan upon cancellation or expiration of a Restricted Stock Award, and (iii) thePerformance Goals applicable to outstanding Restricted Stock Awards, shall beproportionately adjusted for any increase or decrease in the number of issuedShares resulting from a stock split, reverse stock split, stock dividend,combination or reclassification of the Shares (including any such change in thenumber of Shares effected in connection with a change in domicile of theCompany), other extraordinary dividend or other distribution (whether in theform of cash, other securities, or other property), recapitalization,reclassification, spin-off, or exchange of Shares or other securities of theCompany, issuance of warrants or other rights to purchase Shares or othersecurities of the Company, or other similar corporate transaction or event (an “Event”)or any other increase or decrease in the number of issued Shares effectedwithout receipt of consideration by the Company; provided, however, thatconversion of any convertible securities of the Company shall not be deemed tohave been “effected without receipt of consideration”.  The Committee shall take all actionsnecessary or desirable to effect such and the actions of the Committee in thatrespect shall be final, binding and conclusive. If any of the foregoing adjustments shall result in a fractional Share,the fraction shall be disregarded, and the Company shall have no obligation tomake any cash or other payment with respect to such a fractional Share.

 

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## Section .5.06.  Terminationof Awards Under Certain Conditions. The Committee may cancel any unexpired outstanding Awards at any time,if the grantee is not in compliance with all applicable provisions of this Planor with any Award Agreement or if the grantee engages in any of the followingactivities without the prior written consent of the Company:

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### (a)                                  Directly or indirectly renders services to orfor an organization, or engages in a business, that is, in the judgment of theCommittee, in competition with the Company.

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### (b)                                 Discloses to anyone outside of the Company,or uses for any purpose other than the Company’s business, any confidential orproprietary information or material relating to the Company.

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The Committee may, in itsdiscretion and as a condition to the exercise of an Award, require a grantee toacknowledge in writing that he is in compliance with all applicable provisionsof this Plan and of any Award Agreement and has not engaged in any activitiesreferred to in clauses (a) and (b) above.

 

# **ARTICLE VI**

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# **COMPLIANCE WITH LAW ANDOTHER CONDITIONS**

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## Section .6.01.  Issuanceof Shares and Compliance with Securities Laws.  The Company may postpone the issuance anddelivery of certificates representing Shares until (i) the admission of suchshares to listing on any stock exchange on which Shares are then listed and (ii) thecompletion of such registration or other qualification of such shares under anystate or federal law, rule, or regulation as the Company shall determine to benecessary or advisable, which registration or other qualification the Companyshall use its best efforts to complete.

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## Section .6.02.  RestrictionsUpon Resale of Unregistered Stock. If the Shares that have been awarded to a Participant pursuant to theterms of the Plan are not registered under the Securities Act of 1933, asamended, pursuant to an effective registration statement, the Committee mayrequire such Participant to represent and agree in writing that (i) anyShares acquired by such Participant pursuant to the Plan will not be soldexcept pursuant to an effective registration statement under the Securities Actof 1933, as amended, or pursuant to an exemption from registration under saidAct and (ii) such Participant is acquiring such Shares for his own accountand not with a view to the distribution thereof.

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# **ARTICLE VII**

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# **AMENDMENT OR TERMINATION OFPLAN**

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The Committee may amend orterminate the Plan and may thereupon change terms and conditions, in accordancewith such amendments, of any Restricted Stock Awards not theretofore issued,and, with the consent of the grantee, of any previously issued Restricted StockAwards.

 

# **ARTICLE VIII**

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# **SHARES OF COMMON STOCK SUBJECT TO THE PLAN**

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## Section .8.01.  Number.  Subject to adjustment as provided in Section 5.05of this Plan, the maximum aggregate number of Shares which may be issuedpursuant to Awards granted under the Plan shall not exceed four hundredthousand (400,000) Shares.  To the extentany Award granted under the Plan shall, in whole or in part, terminate for anyreason, or Shares subject to an Award are withheld to satisfy tax withholdingobligations or otherwise returned to the Company prior to the lapse of therestrictions hereunder, the Shares that are subject to restrictions hereunderat the time of termination or return shall revert to the Company and thereafterbe available for future grants under the Plan.

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## Section .8.02.  FutureTransactions.  The existence of thePlan, any Award Agreement and the Awards granted hereunder shall not affect orrestrict in any way the right or power of the Company or the shareholders ofthe

 

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## Company to make or authorize any adjustment,recapitalization, reorganization or other change in the Company’s capitalstructure or its business, any merger or consolidation of the Company, anyissue of stock or of Awards, warrants or rights to purchase stock or of bonds,debentures, preferred or prior preference stocks whose rights are superior toor affect the Shares or the rights thereof or which are convertible into orexchangeable for Shares, or the dissolution or liquidation of the Company, orany sale or transfer of all or any part of its assets or business, or any othercorporate act or proceeding, whether of a similar character or otherwise.

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# **ARTICLE IX**

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# **MISCELLANEOUS PROVISIONS**

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## Section .9.01.  SharesDerived From Restricted Stock.  AnyShares issued as a stock dividend on, or as a result of stock splits,combinations, exchanges of shares, reorganizations, mergers, consolidations orotherwise with respect to, Shares issued pursuant to a Restricted Stock Awardshall have the same status and bear the same legend as the shares issuedpursuant to the Restricted Stock Award.

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## Section .9.02.  Notices.  Except as specifically set forth in thisPlan, all notices and other communications hereunder shall be in writing andshall be deemed to have been duly given if delivered in person or sent byregistered or certified mail, postage prepaid.

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## Section .9.03.  NoEmployment Rights.  Nothing containedin the Plan or any Award Agreement executed pursuant to the Plan shall conferupon the Participant any right to continued employment by the Company or aSubsidiary or any right to continue to be a member of or to be nominated forelection to the Board, or limit in any way the right of the Company or aSubsidiary to terminate his employment, with or without cause, at any time.

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## Section .9.04.  Successor.  This Plan and the obligations hereunder shallbe binding on any successor of the Company.

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## Section .9.05.  EffectiveDate and Term of the Plan.  The Planshall become effective as provided herein, and no Restricted Stock Awards shallbe granted under the Plan after the tenth (10th)anniversary of the Effective Date.

 

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