Exhibit 10.19
EXECUTION COPY
MANAGEMENT STOCKHOLDERS’
AGREEMENT
This MANAGEMENT STOCKHOLDERS’
AGREEMENT (this “ Agreement ”), dated as of
December 19, 2006, is by and among Aleris International, Inc.
(“ Aleris ”), Aurora Acquisition Holdings, Inc.
(the “ Parent ”, and together with Aleris, the
“ Company ”), the Majority Stockholder (as
defined below) and the individuals listed on Schedule A attached
hereto (each, a “ Management Stockholder
”).
WHEREAS, the Management Stockholder
may become the owner of shares of common stock of the Company,
$0.01 par value per share (“ Common Stock ”)
and/or may be granted options to purchase Common Stock (the “
Options ”), pursuant to Aurora Acquisition Holdings,
Inc. Management Equity Incentive Plan (the “ Plan
”); and
WHEREAS, as a condition to the
issuance of any shares of Common Stock by the Company to the
Management Stockholder, the Management Stockholder is required to
execute this Agreement; and
WHEREAS, the Management Stockholder,
the Majority Stockholder and the Company desire to enter into this
Agreement and to have this Agreement apply to any shares of Common
Stock acquired by the Management Stockholder from whatever source,
now or in the future (in the aggregate, the “ Shares
”).
NOW THEREFORE, in consideration of
the premises hereinafter set forth, and other good and valuable
consideration, the receipt of which is hereby acknowledged, the
parties hereto agree as follows.
1. Investment . The
Management Stockholder represents that the Shares are being
acquired for investment and not with a view toward the distribution
thereof.
2. Issuance of Shares . The
Management Stockholder acknowledges and agrees that the certificate
for the Shares shall bear the following legends (except that the
second paragraph of this legend shall not be required after the
Shares have been registered and except that the first paragraph of
this legend shall not be required after the termination of this
Agreement):
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The shares represented by this certificate are
subject to the terms and conditions of a Management
Stockholders’ Agreement dated as of December 19, 2006
and may not be sold, transferred, hypothecated, assigned or
encumbered, except as may be permitted by the aforesaid Agreement.
A copy of the Management Stockholders’ Agreement may be
obtained from the Secretary of the Company.
The shares represented by this
certificate have not been registered under the Securities Act of
1933. The shares have been acquired for investment and may not be
sold, transferred, pledged or hypothecated in the absence of an
effective registration statement for the shares under the
Securities Act of 1933 or an opinion of counsel for the Company
that registration is not required under said Act.
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Upon the termination of this
Agreement, or upon registration of the Shares under the Securities
Act of 1933 (the “ Securities Act ”), the
Management Stockholder shall have the right to exchange any Shares
containing the above legend (i) in the case of the
registration of the Shares, for Shares legended only with the first
paragraph described above and (ii) in the case of the
termination of this Agreement, for Shares legended only with the
second paragraph described above.
3. Transfer of Shares; Call
Rights .
(a) Transfer Restrictions .
The Management Stockholder agrees that he or she will not cause or
permit the Shares or his or her interest in the Shares to be sold,
transferred, hypothecated, assigned or encumbered except as
expressly permitted by this Section 3; provided ,
however , that the Shares or any such interest may be
Transferred (i) on the Management Stockholder’s death by
bequest or inheritance to the Management Stockholder’s
executors, administrators, testamentary trustees, legatees or
beneficiaries, (ii) subject to the prior written approval by
the Board of Directors of the Parent (the “ Board
”) and compliance with all applicable tax, securities and
other laws, any trust or custodianship created by the Participant,
the beneficiaries of which may include only the Participant, the
Participant’s spouse or the Participant’s lineal
descendants, and (iii) in accordance with Section 4 of
this Agreement, subject in any such case to the agreement by each
Transferee (other than the Company or as otherwise permitted by the
Company) in writing to be bound by the terms of this Agreement as
if such Transferee had been an original signatory hereto and
provided in any such case that no such Transfer that would cause
the Company to be required to register the Common Stock under
Section 12(g) of the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”), shall be
permitted.
(b) Call Rights .
(i) The Company (or its designated
assignee) shall have the right, during the ninety-day period
following the later to occur of (x) the termination of the
Management Stockholder’s employment for any reason and
(y) the date on which the Management Stockholder or Transferee
has held the Shares most recently acquired to be sold pursuant to
this Section 3(b) for at least six (6) months, to
purchase from the Management Stockholder or the Management
Stockholder’s Transferee, and upon the exercise of such right
the Management Stockholder or such Transferee shall sell to the
Company (or its designated assignee), all or any portion of the
Shares acquired by the Management Stockholder or Transferee on the
exercise of Options and held by the Management Stockholder or
Transferee as of the date as of which such right is exercised at a
per Share price equal to the Fair Market Value (as defined in the
Plan) of a share of Common Stock determined as of the date as of
which such right is exercised. The Company (or its designated
assignee) shall exercise such right by delivering to the Management
Stockholder or Transferee, as applicable, a written notice
specifying its intent to purchase Shares held by the Management
Stockholder or Transferee (the “ Call Notice ”),
the date as of which such right is to be exercised and the number
of Shares to be purchased. Such purchase and sale shall occur on
such date as the Company (or its designated
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assignee) shall specify which date shall not be
later than ninety (90) days after the fiscal quarter-end
immediately following the date as of which the Company’s
right is exercised; provided that the Company may
delay any such payment in the event such payment will result in the
violation of the terms or provisions of, or result in a default or
event of default under, any guarantee, financing or security
agreement or document entered into by the Company or any of its
Affiliates and in effect on such date (hereinafter a “
Financing Agreement ”). In the event the payment of
the purchase price is delayed as a result of a restriction imposed
by a Financing Agreement as provided above, such payment shall be
made without the application of further conditions or impediments
as soon as practicable after the payment of such purchase price
would no longer result in the violation of the terms or provisions
of, or result in a default or event of default under, any Financing
Agreement, and such payment shall equal the amount that would have
been paid to the Management Stockholder or Transferee if no delay
had occurred plus interest for the period from the date on which
the purchase price would have been paid but for the delay in
payment provided herein to the date on which such payment is made
(the “ Delay Period ”), calculated at an annual
rate equal to the average annual prime rate charged during the
Delay Period by a nationally recognized bank designated by the
Board. Notwithstanding the foregoing, if the delayed payment is not
made within two (2) years after the date on which the Company
issues the Call Notice, the exercise of the call right pursuant to
the Call Notice shall be null and void, and the Shares specified in
such Call Notice shall no longer be subject to this
Section 3(b).
(ii) In the event that the
Management Stockholder or Transferee disagrees with the
Company’s determination of the Fair Market Value of a Share,
the Management Stockholder or Transferee shall have the right to
require the Company to seek an appraisal to determine the Fair
Market Value of a Share in lieu of the Board determination (an
“ Outside Appraisal ”). Any such Outside
Appraisal shall be made by a qualified person, which can be an
accounting firm or investment banking firm or similar firm (an
“ Appraiser ”), having substantial experience in
the valuation of similar enterprises in the United States. The
Company and the Management Stockholder or Transferee shall mutually
agree upon such Appraiser within 30 days of the Call Notice. The
Management Stockholder or Transferee and the Company shall each
bear 50% of the fees and expenses of the Appraiser; provided
, that in the event the Appraiser’s determination of Fair
Market Value of a Share is higher than the Company’s
determination of Fair Market Value of a Share by more than 10% of
the Company’s determination of Fair Market Value of a Share,
the Company shall bear 100% of the fees and expenses of the
Appraiser. The Company will have thirty (30) days following
the conclusion of the Outside Appraisal to exercise its call right
on the Shares of Common Stock originally designated in the Call
Notice, using the Fair Market Value determined in the Outside
Appraisal, subject in all cases to the Company’s right to
delay payment in accordance with the provisions of
Section 3(b)(i).
(c) If the Board receives the advice
of counsel selected by the Company and reasonably acceptable to the
Management Stockholder or any Transferee that the inclusion of the
call right described in this Section 3 would result in the
Option or Shares becoming subject to Section 409A of the Code,
the Board shall have the right to make such modifications or
amendments to this Section 3 as the Board determines are
reasonably necessary to avoid the application of Section 409A
of the Code without the consent of the Management Stockholder or
any Transferee. In making any such amendments or modifications, the
Board shall take all steps to put the parties in substantially same
economic position as they would have been in had such
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modifications or amendments not been made, to
the extent reasonably practical. The Management Stockholder and any
Transferee hereby stipulate that Cleary Gottlieb Steen &
Hamilton LLP is acceptable counsel for purposes of this
Section 3(c).
4. Certain Rights
.
(a) Drag Along Rights . If
the Majority Stockholder desires to sell all or substantially all
of its shares of Common Stock or a portion of its shares of Common
Stock representing Control of the Company, in either case to a good
faith independent purchaser (a “ Purchaser ”)
(other than any other investment partnership, limited liability
company or other entity established for investment purposes and
controlled by one or more of the members or the principals of the
Majority Stockholder or any of its affiliates and other than any
employees of the Majority Stockholder hereinafter referred to as a
“ Permitted Transferee ”) and said Purchaser
desires to acquire all or substantially all of the issued and
outstanding shares of Common Stock (or all or substantially all of
the assets
