Exhibit 10.3
EXECUTION COPY
EMPLOYMENT
AGREEMENT
AGREEMENT, dated as of June 2,
2008 (the “ Agreement ”), by and among Aleris
International, Inc. (the “ Company ”), Aurora
Acquisition Holdings, Inc. (the “ Parent ”) and
Galdino Claro (the “ Executive ”).
WHEREAS, the Company desires that
the Executive serve the Company as an Executive Vice President of
the Company and Chief Executive Officer, Aleris Americas, on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of
the premises and mutual covenants herein and for other good and
valuable consideration, the parties agree as follows:
1. Employment, Duties and
Agreements .
(a) The Company hereby agrees to
employ the Executive as an Executive Vice President of the Company
and the Chief Executive Officer of Aleris Americas responsible for
the management of all of the Company’s business operations in
North and South America, currently comprised of the Company’s
Rolled Products North America business and its Recycling Americas
business unit, , and the Executive hereby accepts such position and
agrees to serve the Company in such capacity during the employment
period fixed by Section 3 hereof (the “ Employment
Period ”). The Executive shall have such duties and
responsibilities as are consistent with the Executive’s
position and as may be assigned by the Company from time to time.
During the Employment Period, the Executive shall be subject to,
and shall act in accordance with, all reasonable instructions and
directions and all applicable policies and rules of the
Company.
(b) During the Employment Period,
excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive shall devote his full working
time, energy and attention to the performance of his duties and
responsibilities hereunder and shall faithfully and diligently
endeavor to promote the business and best interests of the Company.
During the Employment Period, the Executive may not, without the
prior written consent of the Company, directly or indirectly,
operate, participate in the management, operations or control of,
or act as an executive, officer, consultant, agent or
representative of, any type of business or service (other than as
an executive of the Company). It shall not, however, be a violation
of the foregoing provisions of this Section 1(b) for the
Executive to (i) subject to the approval of the Board, serve
as an officer or director or otherwise participate in non-profit,
educational, welfare, social, religious and civil organizations, or
(ii) manage his personal, financial and legal affairs, so long
as any such activities in (i) and (ii) do not interfere
with the performance of his duties and responsibilities to the
Company as provided hereunder.
(c) In connection with the
Executive’s employment by the Company under this Agreement,
the Executive shall be based at the principal executive offices of
the Company, currently located in Beachwood, Ohio, except for such
travel as the performance of
the Executive’s duties in the business of
the Company may require. For a period of up to two years from the
date the Executive commences his employment with the Company, the
Company shall provide reimbursement for reasonable travel and
temporary housing expenses. These expenses will include the cost of
a temporary rental apartment in the Cleveland area, including
utilities and rented furnishings, and air transportation on a
weekly basis to and from Cleveland, consistent with Aleris’
travel policies. At the time of your relocation to Cleveland, your
moving, home sale and other relocation expenses will be provided
under the Aleris relocation policies.
2. Compensation .
(a) As compensation for the
agreements made by the Executive herein and the performance by the
Executive of his obligations hereunder, during the Employment
Period, the Company shall pay the Executive, pursuant to the
Company’s normal and customary payroll procedures, a base
salary at the rate of $500,000 per annum, (the “ Base
Salary ”). During the Employment Term, the Base Salary
will be reviewed annually and is subject to adjustment at the
discretion of the Board of Directors of the Company (the “
Board ”), but in no event shall the Company pay the
Executive a Base Salary less than that set forth above during the
Employment Term.
(b) In addition to the Base Salary,
during the Employment Period, but beginning for the fiscal year
ending December 31, 2008, the Executive shall be eligible to
participate in the annual incentive plan (the “ AIP
”) established and approved by the Board and, pursuant to the
AIP, the Executive may earn an annual bonus (the “ Annual
Bonus ”) in each fiscal year during the Employment
Period, with a target Annual Bonus of 75% of Base Salary up to a
maximum of 150% of Base Salary, based on the achievement of annual
performance objectives as set forth in the AIP, subject to the
Executive’s employment with the Company through the
applicable payment date for any such Annual Bonus (unless otherwise
provided herein); provided, however, Executive’s Annual Bonus
for 2008 shall be prorated based on the number of months Executive
was employed during 2008, and assuming an employment start date in
June 2008, will be $218,750. The 2008 prorated Annual Bonus amount
shall be fixed and guaranteed. To receive an Annual Bonus for 2008,
Executive must be an active employee with the Company through the
date of payout of AIP awards in 2009.
(c) In order to partially compensate
the Executive for equity and other compensation that the Executive
had to forego with the Executive’s prior employer, the
Company shall provide the Executive with:
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(i)
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A sign-on bonus of $1 million,
which shall be paid in monthly installments over 5 years, subject
to the conditions of this paragraph (the “Sign-on
Bonus”). In the event of the involuntary termination of the
Executive’s employment by the Company without Cause (as that
term is defined herein), the non-renewal of this Agreement by the
Company
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without Cause, the Executive’s
resignation for Good Reason (as that term is defined herein), the
Executive’s death, or the Executive’s Disability (as
that term is defined herein), prior to the payment of the last
installment, any unpaid installments shall be accelerated and paid
to you in a lump sum within thirty days following the date of such
termination. In the event of the Executive’s resignation
other than for Good Reason, voluntary retirement, or the
termination of your employment by Aleris for Cause, any unpaid
installments as of the date of such resignation, retirement or
termination for Cause shall be forfeited.
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(ii)
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8,000 shares of
restricted stock in Aleris’ parent company, the terms of
which are contained in a separate agreement.
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(d) During the Employment Period:
(i) except as provided in the last sentence of this
Section 2(c), the Executive and/or the Executive’s
family, as the case may be, shall be entitled to participate in all
employee benefit plans, practices, policies, programs and
arrangements of the Company which are made available generally to
other executive officers of the Company and/or their families, as
the case may be, including, without limiting the Company’s
right to terminate, modify or amend such plans in accordance with
their terms or as provided in the immediately succeeding sentence,
the Company’s benefits restoration program, life insurance,
long-term disability and health plans and (ii) the Executive
shall be entitled to the perquisites and other fringe benefits that
are made available by the Company to its senior executives
generally, subject to any applicable terms and conditions of any
specific perquisite or other fringe benefit.
(e) The Company shall reimburse the
Executive for all reasonable business expenses upon the
presentation of statements of such expenses in accordance with the
Company’s policies and procedures now in force or as such
policies and procedures may be modified with respect to all senior
executive officers of the Company.
In the event the Company or the
Parent engages in a significant subsequent corporate transaction
with another entity, the Board will reconsider the size of the
equity pool, taking into account the larger size of the resultant
entity and taking into account all relevant circumstances,
including competitive market data for companies of similar size and
circumstance.
3. Employment Period
.
The Employment Period shall commence
on June 2, 2008 (the “ Effective Date ”)
and shall terminate on the third anniversary of the Effective Date,
provided that on the third anniversary of the Effective Date and on
each anniversary thereafter, the Employment Period shall
automatically be extended for additional one-year periods unless
either party provides the other party with a Notice of Termination
in accordance with Section 4(a) at least sixty (60) days
before any such anniversary (the anniversary date on which the
Employment Period terminates shall be referred to herein as the
“ Scheduled Termination Date ”). Notwithstanding
the
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foregoing, the Executive’s employment
hereunder may be terminated during the Employment Period prior to
the Scheduled Termination Date upon the earliest to occur of any
one of the following events (at which time the Employment Period
shall be terminated):
(a) Death. The Executive’s
employment hereunder shall terminate upon his death.
(b) Disability. The Company shall be
entitled to terminate the Executive’s employment hereunder
for “ Disability ” if, as a result of the
Executive’s incapacity due to physical or mental illness or
injury, the Executive (i) shall become eligible to receive a
benefit under the Company’s long-term disability plan
applicable to the Executive, or (ii) if no such long-term
disability plan is applicable to the Executive, the Executive shall
have been unable to perform his duties hereunder for a period of
ninety (90) consecutive days or a period of ninety
(90) days in any one hundred eighty (180) day
period.
(c) Cause. The Company may terminate
the Executive’s employment hereunder for Cause. For purposes
of this Agreement, the term “ Cause ” shall
mean: (i) a material breach by the Executive of this
Agreement; (ii) other than as a result of physical or mental
illness or injury, the willful and continued failure of the
Executive to perform substantially the Executive’s duties
with the Company or one of its affiliates; (iii) the
Executive’s willful and continued misconduct or gross
negligence which is materially injurious to the Company or an
affiliate of the Company; or (iv) the indictment by the
Executive of, or a plea by the Executive of nolo contendere to, a
felony involving moral turpitude or other serious crime involving
moral turpitude. In the case of clauses (i) and
(ii) above, the Company shall provide notice to the Executive
indicating in reasonable detail the events or circumstances that it
believes constitute Cause hereunder and, if such breach or failure
is reasonably susceptible to cure, provide the Executive with a
reasonable period of time (not to exceed thirty (30) days) to
cure such breach or failure. If, subsequent to the
Executive’s termination of employment hereunder for other
than Cause, it is determined in good faith by the Board that the
Executive’s employment could have been terminated for Cause
pursuant to clause (iv) of this Section 3(c), the
Executive’s employment shall, at the election of the Board,
be deemed to have been terminated for Cause retroactively to the
date the events giving rise to Cause occurred.
(d) Without Cause. The Company may
terminate the Executive’s employment hereunder during the
Employment Period without Cause.
(e) Voluntarily. The Executive may
voluntarily terminate his employment hereunder, with or without
Good Reason, provided that the Executive provides the Company with
notice of his intent to terminate his employment at least 60 days
in advance of the Date of Termination (as defined in
Section 4(b) below) (and, in the case of a termination by the
Executive for Good Reason, complies with all requirements of such a
termination as provided hereunder).
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4. Termination Procedure
.
(a) Notice of Termination. Any
termination of the Executive’s employment by the Company or
by the Executive during the Employment Period (other than a
termination on account of the death of the Executive) shall be
communicated by written “ Notice of Termination
” to the other party hereto in accordance with
Section 11(a).
(b) Date of Termination. “
Date of Termination ” shall mean (i) if the
Executive’s employment is terminated by his death, the date
of his death, (ii) if the Executive’s employment is
terminated pursuant to Section 3(b), on the date the Executive
receives Notice of Termination from the Company, (iii) if the
Executive voluntarily terminates his employment (whether or not for
Good Reason), the date specified in the notice given pursuant to
Section 3(e) herein which shall not be less than 90 days after
the Notice of Termination, and (iv) if the Executive’s
employment is terminated for any other reason, the date on which a
Notice of Termination is given or any later date (within thirty
(30) days, or any alternative time period agreed upon by the
parties, after the giving of such notice) set forth in such Notice
of Termination.
5. Termination Payments
.
(a) Without Cause. In the event the
Employment Period terminates under this Agreement as a result of
the Company terminating the Executive without Cause or the
Executive terminating his employment for Good Reason, the Executive
shall be en
