Unassociated Document


    EXECUTION
      COPY

    


    EXECUTIVE
      EMPLOYMENT AGREEMENT

    


    THIS
      EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”)
      is
      entered into as of June 8, 2007, by and between Haynes International, Inc.
      (the
“Company”),
      a
      Delaware corporation, and Francis J. Petro (the “Executive”).

    


    PRELIMINARY
      STATEMENTS

    


    WHEREAS,
      the Company and the Executive previously entered into that certain Amended
      and
      Restated Executive Employment Agreement, dated as of August 31, 2007 (the
“Prior
      Agreement”),
      which
      Prior Agreement shall terminate on September 30, 2007;

    


    WHEREAS,
      the Company desires to continue to employ the Executive, and the Executive
      desires to continue to be employed by the Company, on the terms and conditions
      set forth herein such that this Agreement shall supersede and replace the Prior
      Agreement effective as of October 1, 2007 (the “Effective
      Date”).

    


    NOW,
      THEREFORE, in consideration of the mutual promises, covenants and agreements
      contained herein and other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the parties hereto hereby agree
      as
      follows:

    


    AGREEMENT

    


    Section
      1. Employment.

    


    (a) Prior
      Agreements.
      Effective as of the Effective Date, the Executive’s employment with the Company
      and benefits upon a termination of employment shall be governed by this
      Agreement, which supersedes and replaces the Prior Agreement.

    


    (b) Offer
      and Acceptance.
      During
      the “Employment Term” (as defined in Section
      1(d)
      below),
      the Company agrees to employ the Executive in the position of President and
      Chief Executive Officer of the Company upon the terms and subject to the
      conditions set forth herein, and the Executive agrees to remain in the employ
      of
      the Company on such terms and conditions.

    


    (c) Duties.
      The
      Executive’s duties shall include those duties that are consistent with his
      position as President and Chief Executive Officer of the Company as well as
      those reasonably assigned to him from time to time, in good faith, by the Board
      of Directors of the Company (the “Board”).
      The
      Executive shall (i) devote his working hours, on a full-time basis, to his
      duties under this Agreement; (ii) faithfully, industriously and loyally serve
      the Company; (iii) comply in all material respects with the lawful and
      reasonable directions and instructions given to him by the Board; (iv) use
      his
      reasonable best efforts to promote and serve the interests of the Company;
      and
      (v) assist the Board with succession planning. The Executive shall comply in
      all
      material respects with all applicable laws, rules and regulations relating
      to
      the performance of the Executive’s duties and responsibilities hereunder. The
      Executive agrees to serve as (i) a member of the Board and on any of the board
      of directors of any subsidiary or affiliate of the Company, and (ii) as an
      officer of any subsidiary or affiliate of the Company, without any additional
      compensation while he is employed by the Company. Upon termination of the
      Executive’s employment by the Company for any reason, the Executive shall
      immediately resign from the Board and any other position as a member of the
      board of directors or as an officer of any such subsidiary or affiliate of
      the
      Company.


    
      
         

      

      
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    (d) Employment
      Term.
      The
      Executive’s employment by the Company under this Agreement shall commence on the
      Effective Date and shall continue thereafter and shall terminate on September
      30, 2008 (the “Employment
      Term”),
      unless renewed by a subsequent written agreement of the parties. The Executive’s
      employment by the Company shall be subject to termination at any time during
      the
      Employment Term as provided in subsection (f) of this Section
      1.
      As used
      herein, the term “Employment
      Term”
shall
      mean the actual period of time during which the Executive is employed by the
      Company under the terms and conditions of this Agreement.

    


    (e) Compensation
      and Benefits.
      During
      the Employment Term, the Company shall pay and provide the following
      compensation and other benefits to the Executive as full compensation for all
      services rendered by the Executive as an employee of the Company under the
      terms
      and conditions of this Agreement. All payments made to the Executive hereunder
      shall be subject to appropriate payroll deductions and other withholdings
      required by law.

    


    (i) Annual
      Salary.
      During
      the Employment Term, the Company shall pay to the Executive, in accordance
      with
      the then prevailing payroll practices of the Company, a base salary (the
“Annual
      Salary”)
      at the
      annual rate of Five Hundred Twenty Thousand Dollars ($520,000) per
      year.

    


    (ii) Bonuses.
      During
      the Employment Term, the Executive shall be eligible to receive an annual bonus
      based upon the achievement by the Company of specific performance requirements
      (e.g. earnings per share, EBITDA benchmarks and working capital targets) which
      shall be determined by the Compensation Committee of the Board (the
“Committee”)
      in its
      sole and absolute discretion prior to or at the commencement of the Employment
      Term (the “Bonus”).
      The
      target amount for the Bonus shall be eighty percent (80%) of the Annual Salary
      (the “Target
      Bonus”);
      provided, however, the Executive shall be eligible to receive a minimum Bonus
      in
      an amount equal to forty percent (40%) of the Annual Salary if threshold
      performance requirements are achieved and a maximum Bonus in an amount equal
      to
      one hundred twenty percent (120%) of the Annual Salary if maximum performance
      requirements are achieved. The Bonus, if any, shall be paid to the Executive
      by
      the Company no later than December 15, 2008.

    


    (iii) Benefits.
      During
      the Employment Term, the Executive shall be eligible to participate in all
      employee health and welfare benefit plans in which senior executives of the
      Company are entitled to participate, but participation shall be subject to
      all
      of the terms and conditions of such plans applicable to all such senior
      executives, including all waiting periods, eligibility requirements,
      contributions, exclusions and other similar conditions or limitations. In the
      case of any disability plan, the Company agrees that such plan will provide
      the
      benefits contemplated by Section
      1(e)(iv)
      or in
      lieu of such plan participation, the Company will provide to the Executive
      the
      disability insurance coverage contemplated by Section
      1(e)(iv).


    
      
         

      

      
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    (iv) Insurance.
      During
      the Employment Term, the Executive shall be entitled to receive long-term
      disability insurance coverage and the amount of the benefit payments under
      such
      insurance coverage shall be not less than sixty percent (60%) of the Annual
      Salary then in effect (the “Disability
      Insurance”).
      The
      Company shall pay all premiums related to the Disability Insurance as long
      as
      the Executive is employed by Company hereunder. In addition, the Company shall
      provide the Executive with a life insurance policy in a face amount equal to
      five (5) times the Annual Salary then in effect (the “Life
      Insurance”),
      which
      policy shall be convertible to an individual policy at the election of the
      Executive upon termination of the Executive’s employment by the Company. The
      Company shall be the owner of the Life Insurance and shall pay all premiums
      related thereto prior to termination of the Executive’s employment by the
      Company.

    


    (v) Expenses.
      The
      Company shall reimburse the Executive, in accordance with the then prevailing
      reimbursement practices of the Company, for all reasonable and customary
      business expenses incurred by the Executive in connection with his employment
      by
      the Company, including, but not limited to, all reasonable and customary
      travel-related expenses incurred in connection with periodic trips to Syracuse,
      New York, provided, in any case, that the Executive complies with the standard
      reporting and reimbursement policies as may be established by the Company from
      time to time.

    


    (vi). Vacation.
      The
      Executive shall be entitled to five (5) weeks of vacation, measured on a
      calendar year basis. The Executive shall schedule vacation periods at reasonable
      times in accordance with the Company’s vacation policy for senior executives.
      The Executive shall accrue and receive full compensation and benefits during
      his
      vacation periods. Unused vacation leave time shall not entitle the Executive
      to
      any additional compensation and may not be carried over to a subsequent calendar
      year.

    


    (vii) SERP.
      The
      Executive shall be entitled to participate in the Company’s Supplemental
      Executive Retirement Plan on the terms and conditions as set forth in the
      Participation Agreement entered into by and between the Executive and the
      Company dated December 13, 2002 as amended as of the date hereof (the
“SERP”).

    


    (viii) Company
      Car.
      During
      the Employment Term, the Company shall provide the Executive with the use of
      an
      automobile owned or leased by the Company at its expense for Company-related
      purposes (the “Company
      Car”).
      The
      Company shall pay or reimburse the Executive for all expenses incurred in
      connection with the Executive’s use of the Company Car, including, but not
      limited to, insurance, gasoline, registration taxes and maintenance. The Company
      Car shall be a Buick Lucerne or an automobile of a similar class. The Executive
      agrees that the use of the Company Car for personal-related matters will result
      in imputed income to the Executive and at the end of each calendar year, the
      Company and its accountants shall reasonably determine the amount of such income
      to be included in the Executive’s compensation in connection with the personal
      use of the Company Car and the Executive agrees that he shall be responsible
      for
      any and all taxes imposed on such imputed income.

    
 


    
      
         

      

      
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    (ix) Country
      Club Membership.
      During
      the Employment Term, the Company shall reimburse the Executive for all regular
      monthly membership dues and business-related charges incurred by the Executive
      in connection with his membership at a country club. The Executive agrees that
      he shall be responsible for any and all taxes imposed on the reimbursements
      made
      pursuant to the preceding sentence.

    


    (x) Options.
      On
      March 30, 2007, the Executive was granted options to acquire 24,000 shares
      of
      the Company’s common stock pursuant to the terms of the Company’s 2007 Stock
      Option Plan and the grant letter pursuant to which such options were
      granted.

    


    (xi) Death
      Benefit Plan.
      During
      the Employment Term, the Executive shall be eligible to participate in the
      Company’s Death Benefit Plan, as amended, pursuant to the terms and conditions
      set forth in such plan.

    


    (f) Termination
      of Employment.
      Subject
      to the terms of Section 1(g) below, the Executive’s employment by the Company
      may be terminated as follows:

    


    (i) Termination
      upon the Expiration of the Employment Term.
      The
      Executive’s employment shall terminate on September 30, 2008 unless terminated
      earlier pursuant to this Section
      1(f).
      In the
      event that the Executive’s employment terminates upon the expiration of the
      Employment Term, then the Executive shall be entitled to receive the
      compensation and benefits set forth in Section
      1(g)(i).
      

    


    (ii) Termination
      for Cause.
      The
      Company may immediately terminate, at any time, Executive’s employment by the
      Company for “Cause”. A termination for “Cause”
means
      a
      termination by reason of the Board’s good faith determination that the Executive
      (i) continually failed to substantially perform his duties with the Company
      (other than a failure resulting from the Executive’s medically documented
      incapacity due to physical or mental illness) including, without limitation,
      repeated refusal to follow the reasonable directions of the Board, knowing
      violation of the law in the course of performance of the Executive’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
      2
      or
Section
      3
      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 Executive 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 Executive shall not be deemed to have been
      terminated for Cause unless there shall have been delivered to the Executive
      a
      copy of a resolution duly adopted by the Board. If the Company has reasonable
      belief that the Executive has committed any of the acts described above, it
      may
      suspend the Executive (with or without pay) while it investigates whether it
      has
      or could have Cause to terminate the Executive. The Company may terminate the
      Executive for Cause prior to the completion of its investigation; provided,
      that, if it is ultimately determined that the Executive has not committed an
      act
      which would constitute Cause, the Executive shall be treated as if he were
      terminated without Cause.


    
      
         

      

      
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    (iii) Termination
      Without Cause.
      The
      Company, may, at any time, terminate the Executive’s employment by Company
      without Cause by providing prior written notice thereof to the
      Executive.

    


    (iv) Resignation
      for Good Reason.
      The
      Executive may terminate his employment by the Company for Good Reason (as
      defined below) by providing written notice thereof to the Company (the
“Resignation
      Notice”)
      at
      least forty-five (45) days prior to the effective date of the resignation,
      which
      notice shall set forth in reasonable detail the nature of the facts and
      circumstances which constitute Good Reason and the Company shall have thirty
      (30) days after receipt of the Resignation Notice to cure in all material
      respects the facts and circumstances which constitute Good Reason. For purposes
      of this Agreement, “Good
      Reason”
shall
      mean the occurrence, during the Employment Term, of any of the following actions
      or failures to act, but in each case only if it is not consented to by the
      Executive in writing: (a) a material adverse change in the Executive’s duties,
      reporting responsibilities, titles or elected or appointed offices as in effect
      immediately prior to the effective date of such change; (b) a material reduction
      by the Company in the Executive’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 Executive; or (c) any change of more than
      50
      miles in the location of the principal place of employment of the Executive
      immediately prior to the effective date of such change. For purposes of this
      definition, none of the actions described in clauses (a) and (b) above shall
      constitute “Good Reason” with respect to the Executive 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 Executive (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 (a) and (b) above on the sixtieth
      (60th)
      day
      following the later of the occurrence of such action or the Executive’s
      knowledge thereof, unless the Executive has given the Company
      written notice thereof prior to such date.


    
      
         

      

      
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    (v) Resignation
      Without Good Reason.
      The
      Executive may, at any time, terminate the Executive’s employment by the Company
      without Good Reason by providing thirty (30) days’ prior written notice thereof
      to the Company.

    


    (vi) Death;
      Disability or Retirement.
      The
      Executive’s employment shall terminate immediately upon the Executive’s death,
      Disability, or Retirement (each as defined below). For purposes of this
      Agreement, “Disability”
means
      the Executive is totally and permanently disabled as defined in the Company’s
      Pension Plan and “Retirement”
means
      a
      resignation by the Executive after having reached age fifty-five (55), but
      in no
      event prior to September 30, 2008.

    


    (g) Effect
      of Termination

    


    (i) Termination
      upon the Expiration of the Employment Term.
      Upon
      the termination of the Executive’s employment pursuant to Section
      1(f)(i),
      the
      Executive will be entitled to (A) payment of that portion of the Executive’s
      then effective Annual Salary which has been earned but not yet paid through
      and
      including the last day of the Executive’s employment (the “Termination
      Date”);
      (B)
      payment of any Bonus earned by the Executive under the terms and conditions
      of
      this Agreement prior to the Termination Date that remains unpaid; (C)
      reimbursement of any reimbursable business expenses under Section
      1(e)(v),
      which
      were incurred by the Executive through and including the Termination Date;
      (D)
      continuation of benefits to which the Executive is entitled under Section
      1(e)(iii)
      and
Section
      1(e)(iv)
      through
      and including the Termination Date and; (E) the SERP that the Executive is
      entitled to under Section
      1(e)(vii)
      (collectively, the “Accrued
      Benefits”).

    


    (ii) Termination
      for Cause or Resignation Without Good Reason.
      Upon
      the Company’s termination of the Executive’s employment for Cause pursuant to
Section
      1(f)(ii)
      or the
      Executive’s resignation without Good Reason pursuant to Section
      1(f)(v),
      Executive will be entitled to the Accrued Benefits.

    


    Termination
      Without Cause or Resignation for Good Reason.
      Upon
      the Company’s termination of the Executive’s employment without Cause pursuant
      to Section
      1(f)(iii)
      or the
      Executive’s resignation for Good Reason pursuant to 

    Section
      1(f)(iv),
      the
      Executive shall be entitled to receive the Accrued Benefits and a lump sum
      payment equal to (A) the amount of the Annual Base Salary the Executive would
      have earned if he had continued to be employed with the Company during the
      period commencing on the day following the Termination Date and ending on the
      expiration of the Employment Term (the “Severance
      Period”)
      plus
      (B) the Target Bonus.

    


    The
      Executive shall also be entitled to receive continuation of medical and
      hospitalization benefits to which the Executive is entitled under Section
      1(e)(iii)
      during
      the Severance Period; provided, however, that such benefits shall terminate
      to
      the extent that the Executive obtains comparable benefits coverage from another
      employer during the Severance Period.


    
      
         

      

      
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    (iii) Death;
      Disability or Retirement.
      Upon
      termination of the Executive’s employment pursuant to Section
      1(f)(vi),
      the
      Executive or the Executive’s heirs, estate, personal representative or legal
      guardian, as appropriate, will be entitled to receive the Accrued
      Amounts.

    


    (iv) Timing
      of Payment and Release.
      As a
      condition of receiving from the Company the payments and benefits provided
      for
      under this Section
      1(g)
      which
      the Executive otherwise would not be entitled to receive, the Executive
      understands and agrees that, on the Termination Date, he will be required to
      execute (and not revoke) a release of all claims against the Company in
      substantially the form attached hereto as Exhibit 1 (the “Release”)
      as may
      be modified by the Company in good faith to reflect changes in law or its
      employment practices. The Executive acknowledges that he has been advised in
      writing to consult with an attorney prior to executing the Release. The
      Executive agrees that he will consult with his attorney prior to executing
      the
      Release.  The
      Executive and the Company agree that the Executive 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”).
      The
      Company shall make all payments required under this Agreement, except to the
      extent that such payments are to be made over time, within five (5) business
      days following the Release Effective Date. In the event of a termination for
      Cause or by reason of the Executive’s death, the Company shall make any payments
      under this Section
      1(g)
      within
      five (5) business days of the Termination Date, except to the extent that such
      payments are to be made over time. The Executive understands that as used in
      this Section
      1(g)(iv),
      the
“Company” includes its past, present and future officers, directors, trustees,
      shareholders, employees, agents, subsidiaries, affiliates, distributors,
      successors, and assigns, any and all employee benefit plans (and any fiduciary
      of such plans) sponsored by the Company, and any other person related to the
      Company.

    


    Except
      as
      specifically provided in this Section
      1(g)
      or
      required under applicable law, the Executive will not be eligible to receive
      any
      salary, bonus or other compensation or benefits described in Section
      1(e)
      with
      respect to any future periods after the Termination Date; provided, however,
      the
      Executive shall have the right to receive all compensation and benefits to
      which
      he is entitled under any benefit plans of the Company to the extent he is fully
      vested as of the effective date of the termination of the Executive’s employment
      by the Company pursuant to the terms and conditions of such employee benefit
      plans.

    


    Section
      2. Confidentiality.
      For
      purposes of this Section
      2,
      the
      term “Company” shall include, in addition to the Company, its affiliates,
      subsidiaries and any of their respective predecessors, successors and assigns.
      The term “Company’s Business” shall mean the business of developing,
      manufacturing, selling or distributing high-performance alloys for service
      in
      severe corrosion and high temperature applications.

    


     


    
      
         

      

      
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    (a) Confidential
      Information.
      As used
      in this Agreement, “Confidential
      Information”
means
      any and all confidential, proprietary or other information, whether or not
      originated by the Executive or the Company, which is in any way related to
      the
      past or present Company’s Business 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 the Company’s existing
      and potential customers and vendors; (ii) any contacts (including the existence
      and contents thereof and parties thereto) to which the Company is a party or
      is
      bound; (iii) information regarding products and services being purchased or
      leased by or provided to the Company; (iv) information received by the Company
      from third parties under an obligation of confidentiality, restricted,
      disclosure or restricted use; (v) personnel and financial information of the
      Company; (vi) information with respect to the 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 the Company; and (viii) any other information relating
      to the Company which was obtained by the Executive in connection with his
      employment by the Company, whether before, on or after the Effective
      Date.

    


    (b) Non-Disclosure
      and Non-Use of Confidential Information.
      The
      Executive acknowledges that the Confidential Information of the Company is
      a
      valuable, unique asset of the Company and the Executive’s unauthorized use or
      disclosure thereof could cause irreparable harm to the Company for which no
      remedy at law could be adequate. Accordingly, the Executive agrees that he
      shall
      hold all Confidential Information of the Company in strict confidence and solely
      for the benefit of the 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) as required for the performance of the Executive’s duties
      hereunder, (ii) with the express written consent of the Company, (iii) to the
      extent that any such information is in or becomes in the public domain other
      than as a result of the Executive’s breach of any of his obligations hereunder,
      or (iv) where required to be disclosed by court order, subpoena or other
      government process and in such event, the Executive shall cooperate with the
      Company in attempting to keep such information confidential. The Executive
      shall
      follow all Company policies and procedures to protect all Confidential
      Information and take any additional precautions necessary to preserve and
      protect the use or disclosure of any Confidential Information at all times.
      The
      Company shall reimburse the Executive for all reasonable expenses and costs
      he
      may incur as a result of cooperating under this Section
      2(b),
      upon
      receipt of proper documentation.

    


    (c) Ownership
      of Confidential Information.
      The
      Executive acknowledges and agrees that all Confidential Information is and
      shall
      remain the exclusive property of the Company, whether or not prepared in whole
      or in part by the Executive and whether or not disclosed to or entrusted to
      the
      custody of the Executive. Upon the termination or resignation of his employment
      by the Company, or at any other time at the request of the Company, the
      Executive shall promptly deliver to the Company all documents, tapes, disks,
      or
      other storage media and any other materials, and all copies thereof in whatever
      form, in the possession of the Executive pertaining to the Company’s Business,
      including, but not limited to, any containing Confidential
      Information.

    


    (d) Survival.
      The
      Executive’s obligations set forth in this Section
      2,
      and the
      Company’s rights and remedies with respect hereto, shall indefinitely survive
      the termination of this Agreement and the Executive’s employment by the Company,
      regardless of the reason therefor.


    
      
         

      

      
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    Section
      3. Restricted
      Covenants.
      For
      purposes of this Section
      3,
      the
      term “Company” shall include, in addition to the 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 (c) below), the Executive shall not, directly or indirectly, perform
      on behalf of any Competitor (as defined in subsection (c) below) the same or
      similar services as those that the Executive performed for the Company during
      the Executive’s employment by the Company or otherwise. In addition, the
      Executive shall not, during the Restricted Period or within the Restricted
      Area,
      directly or indirectly engage in, own, manage, operate, join, control, lend
      money or other assistance to, or participate in or be connected with (as an
      officer, director, member, manager, partner, shareholder, consultant, employee,
      agent, or otherwise), any Competitor.

    


    (b) Non-Solicitation.
      During
      the Restricted Period, the Executive shall not, directly or indirectly, for
      himself or on behalf of any Person (as defined in subsection (c) below), (i)
      solicit or attempt to solicit any Customers (as defined in subsection (c) below)
      or prospective Customers with whom the Executive had contact at any time during
      the Executive’s employment by the Company; (ii) divert or attempt to divert any
      business of the Company to any other Person; (iii) solicit or attempt to solicit
      for employment, endeavor to entice away from the Company, recruit, hire, or
      otherwise interfere with the Company’s relationship with, any Person who is
      employed by or otherwise engaged to perform services for the Company (or was
      employed or otherwise engaged to perform services for the Company, as of any
      given time, within the immediately preceding twenty-four (24) month period);
      (iv) cause or assist, or attempt to cause or assist, any employee or other
      service provider to leave the Company; or (v) otherwise interfere in any manner
      with the employment or business relationships of the Company or the business
      or
      operations then being conducted by the Company.

    


    (c) Definitions.
      For
      purposes of this Section
      3,
      the
      following definitions have the following meanings:

    


    (i) “Competitor”
means
      any Person that engages in a business that is the same as, or similar to, the
      Company’s Business.

     

    (ii) “Customer”
means
      any Person which, as of any given date, used or purchased or contracted to
      use
      or purchase any services or products from Company within the immediately
      preceding twenty-four (24) month period.

    


    (iii) “Person”
means
      any individual, corporation, partnership, joint venture, association, limited
      liability company, joint-stock company, trust or unincorporated organization,
      or
      any governmental agency, officer, department, commission, board, bureau, or
      instrumentality thereof.

    


     


    
      
         

      

      
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    (iv) “Restricted
      Area”
means,
      because the market for the Company’s Business is global or has the potential of
      being global, and is not dependent upon the physical location or presence
      of the Company, the Executive, or any individual or entity that may be in
      violation of this Agreement, the broadest geographic region enforceable by
      law
      (excluding any location where this type of restriction is prohibited by law)
      as
      follows: (A) everywhere in the world that has access to the Company’s Business
      because of the availability of the Internet; (B) everywhere in the world that
      the Executive has the ability to compete with the Company’s Business through the
      Internet; (C) each state, commonwealth, territory, province and other political
      subdivision located in North America; (D) each state, commonwealth, territory
      and other political subdivision of the United States of America; (E) Indiana
      and
      any state in which the Executive has performed any services for the Company;
      (F)
      any geographical area in which the Company has performed any services or sold
      any products; (G) any geographical area in which the Company or any of its
      subsidiaries have engaged in the Company’s Business which has resulted in
      aggregate sales revenue of at least $25,000 during any year in the five (5)
      year
      period immediately preceding the commencement of the Restricted Period; (H)
      any
      state or other jurisdiction where the Company had an office at any time during
      the Executive’s employment by the Company; (I) within one hundred (100) miles of
      any location in which the Company had an office at any time during the
      Executive’s employment by the Company; and (J) within one hundred (100) miles of
      any location in which the Executive provided services for the
      Company.

    


    (v) “Restricted
      Period”
means
      the period of time during the Executive’s employment by the Company plus a
      period of twelve (12) months from the Termination Date. In the event of a breach
      of this Agreement by the Executive, the Restricted Period will be extended
      automatically by the period of the breach.

    


    (d) Survival.
      The
      Executive’s obligations set forth in this Section
      3,
      and the
      Company’s rights and remedies with respect thereto, will remain in full force
      and effect during the Restricted Period and until full resolution of any dispute
      related to the performance of the Executive’s obligations during the Restricted
      Period.

    


    (e) Public
      Company Exception.
      The
      prohibitions contained in this Section
      3
      do not
      prohibit the Executive’s ownership of stock which is publicly traded provided
      that (1) the investment is passive, (2) the Executive has no other involvement
      with the company, (3) the Executive’s interest is less than five percent (5%) of
      the shares of the company, and (4) the Executive makes full disclosure to the
      Company of the stock at the time that the Executive acquires the shares of
      stock.

    


    Section
      4. Assignment
      of Inventions.
      Any and
      all inventions, improvements, discoveries, designs, works of authorship,
      concepts or ideas, or expressions thereof; whether or not subject to patents,
      copyrights, trademarks or service mark protections, and whether or not reduced
      to practice, that are conceived or developed by the Executive while employed
      with the Company and which relate to or result from the actual or anticipated
      business, work, research or investigation of the Company (collectively,
“Inventions”),
      shall
      be the sole and exclusive property of the Company. The Executive shall do all
      things reasonably requested by the Company to assign to and vest in the Company
      the entire right, title and interest to any such Inventions and to obtain full
      protection therefor. Notwithstanding the foregoing, the provisions of this
      Agreement do not apply to an Invention for which no equipment, supplies,
      facility, or  Confidential Information of the Company was used and which
      was developed entirely on the Executive’s own time, unless (a) the Invention
      relates (i) to the Company’s Business, or (ii) or the Company’s actual or
      demonstrably anticipated research or development, or (b) the Invention results
      from any work performed by the Executive for the Company.


    
      
         

      

      
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    Section
      5. General

    


    (a) Reasonableness.
      The
      Executive has carefully considered the nature, extent and duration of the
      restrictions and obligations contained in this Agreement, including, without
      limitation, the geographical coverage contained in Section
      3,
      and the
      time periods contained in Section
      2
      and
Section
      3,
      and
      acknowledges and agrees that such restrictions are fair and reasonable in all
      respects to protect the legitimate interests of the Company and that these
      restrictions are designed for the reasonable protection of the Company’s
      Business.

    


    (b) Remedies.
      The
      Executive recognizes that any breach of this Agreement shall cause irreparable
      injury to the Company, inadequately compensable in monetary damages.
      Accordingly, in addition to any other legal or equitable remedies that may
      be
      available to the Company, the Executive agrees that the Company shall be able
      to
      seek and obtain injunctive relief in the form of a temporary restraining order,
      preliminary injunction, or permanent injunction, in each case without notice
      or
      bond, against the Executive to enforce this Agreement. The Company shall not
      be
      required to demonstrate actual injury or damage to obtain injunctive relief
      from
      the courts. To the extent that any damages are calculable resulting from the
      breach of this Agreement, the Company shall also be entitled to recover damages,
      including, but not limited to, any lost profits of the Company and/or its
      affiliates or subsidiaries. For purposes of this Agreement, lost profits of
      the
      Company shall be deemed to include all gross revenues resulting from any
      activity of the Executive in violation of this Agreement and all such revenues
      shall be held in trust for the benefit of the Company. Any recovery of damages
      by the Company shall be in addition to and not in lieu of the injunctive relief
      to which the Company is entitled. In no event will a damage recovery be
      considered a penalty in liquidated damages. In addition, in any action at law
      or
      in equity arising out of this Agreement, the prevailing party shall be entitled
      to recover, in addition to any damages caused by a breach of this Agreement,
      all
      costs and expenses, including, but not limited to, reasonable attorneys’ fees,
      expenses, and court costs incurred by such party in connection with such action
      or proceeding. Without limiting the Company’s rights under this Section
      5(b)
      or any
      other remedies of the Company, if a court of competent jurisdiction determines
      that the Executive breached any of the provisions of Section
      2
      or
Section
      3,
      Company
      will have the right to cease making any payments or providing any benefits
      otherwise due to the Executive under the terms and conditions of this
      Agreement.

    


    (c) Claims
      by Executive.
      The
      Executive acknowledges and agrees that any claim or cause of action by the
      Executive against the Company shall not constitute a defense to the enforcement
      of the restrictions and covenants set forth in this Agreement and shall not
      be
      used to prohibit injunctive relief.

    


    (d) Amendments.
      This
      Agreement may not be modified, amended, or waived in any manner except by an
      instrument in writing signed by both parties to this Agreement.


    
      
         

      

      
        11

        
          

        

      

      
         

      

    


    


    (e) Waiver.
      The
      waiver by either party of compliance by the other party with any provision
      of
      this Agreement shall not operate or be construed as a waiver of any other
      provision of this Agreement (whether or not similar), or a continuing waiver,
      or
      a waiver of any subsequent breach by a party of any provision of this
      Agreement.

    


    (f) Governing
      Law; Jurisdiction.
      The
      laws of the State of New York shall govern the validity, performance,
      enforcement, interpretation, and other aspects of this Agreement,
      notwithstanding any state’s choice of law provisions to the contrary. The
      parties intend the provisions of this Agreement to supplement but not displace,
      their respective obligations and responsibilities under the New York and Indiana
      Uniform Trade Secrets Act. Any proceeding to enforce, interpret, challenge
      the
      validity of, or recover for the breach of any provision of, this Agreement
      may
      be filed in the courts of the State of Indiana or the United States District
      Court sitting in Indianapolis, Indiana, and the parties hereto expressly waive
      any and all objections to personal jurisdiction, service of processor venue
      in
      connection therewith.

    


    (g) Complete
      Agreement; Release.
      This
      Agreement constitutes a complete and total integration of the understanding
      of
      the parties with respect to the subject matter hereof and thereof and supersedes
      all prior or contemporaneous negotiations, commitments, agreements, writings,
      and discussions with respect to the subject matter of this Agreement, including
      but not limited to the Prior Agreement. The Executive hereby unconditionally
      releases and discharges the Company from any and all claims, causes of action,
      demands, lawsuits or other charges whatsoever, known or unknown, directly or
      indirectly related to the Prior Agreement.

    


    (h) Severability.
      If a
      court having proper jurisdiction holds a particular provision of this Agreement
      unenforceable or invalid for any reason, that provision shall be modified only
      to the extent necessary in the opinion of such court to make it enforceable
      and
      valid and the remainder of this Agreement shall be deemed valid and enforceable
      and shall be enforced to the greatest extent possible under the then existing
      law. In the event the court determines such modification is not possible, the
      provision shall be deemed severable and deleted, and all other provisions of
      this Agreement shall remain unchanged and in full force and effect.

    


    (i) Enforceability
      in Jurisdictions.
      The
      parties hereto intend to and herby confer jurisdiction to enforce the covenants
      contained in Section
      2 and 3
      above
      upon the courts of any state within the geographical scope of such covenants.
      If
      the courts of any one or more of such states shall hold any of the previous
      covenants unenforceable by reason of the breadth of such scope or otherwise,
      it
      is the intention of the parties hereto that such determination not bar or in
      any
      way affect the Company’s rights to the relief provided above in the courts of
      any other states within the geographical scope of such covenants, as to breaches
      of such covenants in such other respective jurisdictions, the above covenants
      as
      they relate to each state being, for this purpose, severable into diverse and
      independent covenants.

    


    (j) Fair
      Dealing.
      The
      Executive acknowledges that the Company has negotiated this Agreement in good
      faith and has been fair in its dealing with the Executive. The Executive shall
      not raise any defense and expressly waives any defense against the Company
      based
      upon any alleged breach of good faith or fair dealing by the Company in
      connection with this Agreement.


    
      
         

      

      
        12

        
          

        

      

      
         

      

    


     

    


    (k) Counterparts.
      This
      Agreement may be executed in two (2) counterparts, each of which shall be deemed
      an original but both of which together shall constitute one and the same
      Agreement. Facsimile transmission of the executed version of this Agreement
      or
      any counterpart hereof shall have the same force and effect as the
      original.

    


    (l) Executive
      Warranties.
      The
      Executive warrants and represents to the Company that the execution and
      performance of this Agreement does not and shall not violate any express or
      implied obligations of the Executive to any other person and that all Executive
      shall inform any prospective employer about the existence of this Agreement
      before accepting employment by such employer.

    


    (m) Headings.
      The
      heads of the Sections of this Agreement are inserted for convenience only and
      shall not be deemed to constitute part of this Agreement or to affect the
      construction of this Agreement.

    


    (n) Third
      Party Beneficiaries.
      The
      Company’s affiliates and subsidiaries are expressly made third party
      beneficiaries of this Agreement.

    


    (o) Notices.
      Any
      notice required or permitted hereunder shall be personally delivered or mailed
      by certified mail, return receipt requested, to the addresses of the parties
      set
      out on the signature page hereto, or as changed from time to time by notice
      as
      provided herein.

    


    (p) Successors
      and Assigns.
      The
      Executive shall not assign or transfer any of his rights or obligations under
      this Agreement to any individual or entity. The Company may assign its rights
      hereunder to any of its affiliates or to any individual or entity who or that
      shall acquire or succeed to, by operation of law, or otherwise, all or
      substantially all of the assets of the Company or the Company’s Business. All
      provisions of this Agreement are binding upon, shall inure to the benefit of,
      and are enforceable by or against, the parties and their respective heirs,
      executors, administrators or other legal representatives and permitted
      successors and assigns.

    


    (q) OPPORTUNITY
      TO CONSUULT COUNSEL.
      THE
      EXECUTIVE ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT AND HAS BEEN
      GIVEN ADEQUATE OPPORTUNITY, AND HAS BEEN ENCOURAGED BY THE COMPANY, TO CONSULT
      WITH LEGAL COUNSEL OF HIS CHOICE CONCERNING THE TERMS HEREOF BEFORE EXECUTING
      THIS AGREEMENT.

    


    [SIGNATURE
      PAGE FOLLOWS].

    



    
      
         

      

      
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    IN
      WITNESS WHEREOF,
      the
      parties have entered into this Agreement as of the date first written
      above.

    


    
      	 	
              HAYNES
                INTERNATIONAL, INC.

            
	 	 	 
	 	 	 
	 	
              By:

            	
              /ss/
                John
                C. Corey

            
	 	
              Name:
                John C. Corey

              Title:
                Chairman, Board of Directors

            
	 
	 	 	 
	 	 	 
	 	
              EXECUTIVE
                

            
	 	 	 
	 	 	 
	 	
              By:

            	
              /ss/
                Francis
                J. Petro

            
	 	 	
              Francis
                J. Petro

            
	 	 	
              4957
                Belrush Road

            
	 	 	
              Syracuse,
                NY 13215

            


    

    


    
      
         

      

      
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