STANDSTILL AND GOVERNANCE AGREEMENT

Exhibit 10.3

 

 

STANDSTILL AND GOVERNANCE AGREEMENT

between

CENTURY ALUMINUM COMPANY

AND

GLENCORE AG

dated as of July 7, 2008

 

 

TABLE OF CONTENTS

						Page #
ARTICLE 1 DEFINITIONS							3
SECTION 1.1				Certain Defined Terms			3
SECTION 1.2				Other Defined Terms			7
SECTION 1.3				Other Definitional Provisions			7
SECTION 1.4				Methodology for Calculations			7
ARTICLE 2 STANDSTILL							8
SECTION 2.1				Acquisition of Additional Voting Securities			8
SECTION 2.2				Certain Restrictions			10
SECTION 2.3				Press Releases, etc			12
ARTICLE 3 TRANSFER RESTRICTIONS							12
SECTION 3.1				General Transfer Restrictions			12
ARTICLE 4 VOTING							13
SECTION 4.1				Voting on Certain Matters			13
SECTION 4.2				Irrevocable Proxy			13
SECTION 4.3				Quorum			13
ARTICLE 5 CORPORATE GOVERNANCE							14
SECTION 5.1				Composition of the Board			14
ARTICLE 6 MISCELLANEOUS							14
SECTION 6.1				Conflicting Agreements			14
SECTION 6.2				Duration of Agreement			14
SECTION 6.3				Ownership Information			15
SECTION 6.4				Further Assurances			15
SECTION 6.5				Amendment and Waiver			16
SECTION 6.6				Severability			16
SECTION 6.7				Entire Agreement			16
SECTION 6.8				Successors and Assigns			16
SECTION 6.9				Counterparts			16
SECTION 6.10				Remedies			16
SECTION 6.11				Notices			16
SECTION 6.12				Governing Law; Arbitration			18

						Page #
SECTION 6.13				Legends			18
SECTION 6.14				Interpretation			19
SECTION 6.15				Effectiveness			19

STANDSTILL AND GOVERNANCE AGREEMENT

     STANDSTILL AND GOVERNANCE AGREEMENT dated as of July 7, 2008 between Century Aluminum Company, a Delaware corporation (the “ Company ”), and Glencore AG, a Swiss corporation (“ Glencore ”).

     WHEREAS, the Company and Glencore Investment Pty Ltd (“Glencore Investment”), an affiliate of Glencore, concurrently herewith are entering into a Stock Purchase Agreement (the “ Stock Purchase Agreement ”), pursuant to which the Company will sell, upon the closing thereof (the “ Closing ”) to Glencore Investment and Glencore Investment will purchase (the “ Purchase ”) newly-issued shares of the Company’s Series A Preferred Stock, par value $0.01 per share (the “ Series A Preferred Shares ”);

     WHEREAS, upon the consummation of the Closing, Glencore will Beneficially Own 11,706,307 shares of the outstanding Company Common Stock which will constitute approximately twenty-eight and one-half percent (28.5%) of the outstanding Company Common Stock; and

     WHEREAS, the parties hereto desire to enter into this Agreement to establish certain arrangements with respect to the Company Common Stock and other Equity Securities to be Beneficially Owned by Glencore and its Affiliates following the Closing or upon conversion of the Series A Preferred Shares, as well as restrictions on certain activities in respect of the Company Common Stock, corporate governance and other related corporate matters.

     NOW, THEREFORE, in consideration of the premises and of the mutual covenants and obligations hereinafter set forth, the parties hereto hereby agree as follows:

ARTICLE 1

DEFINITIONS

     SECTION 1.1 Certain Defined Terms . As used herein, the following terms shall have the following meanings:

     “ Affiliate ” means, with respect to any Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with, such specified Person; provided , however , that solely for purposes of this Agreement, notwithstanding anything to the contrary set forth herein, neither the Company nor any of its Subsidiaries shall be deemed to be a Subsidiary or Affiliate of Glencore solely by virtue of Glencore’s ownership of the Series A Preferred Stock or Common Stock or any other action taken by Glencore or its Affiliates which is permitted under this Agreement, in each case in accordance with the terms and conditions of, and subject to the limitations and restrictions set forth in, this Agreement (and irrespective of the characteristics of the aforesaid relationships and actions under applicable law or accounting principles).

     “ Agreement ” means this Standstill and Governance Agreement as it may be amended, supplemented, restated or modified from time to time.

     “ Beneficial Ownership ” by a Person of any securities means that such Person has or shares, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, (i) voting power, which means the power to vote, or to direct the voting of, such security; and/or (ii) investment power, which means the power to dispose, or to direct the disposition of, such security; and shall otherwise be interpreted in accordance with the term “beneficial ownership” as defined in Rule 13d-3 adopted by the Commission under the Exchange Act; provided that for purposes of determining Beneficial Ownership, a Person shall be deemed to be the Beneficial Owner of any securities which may be acquired by such Person (irrespective of whether the right to acquire such securities is exercisable’ immediately or only after the passage of time, including the passage of time in excess of 60 days, the satisfaction of any conditions, the occurrence of any event or any combination of the foregoing) pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise. For purposes of this Agreement, a Person shall be deemed to Beneficially Own any securities Beneficially Owned by its Affiliates or any Group of which such Person or any such Affiliate is a member.

     “ Board ” means the Board of Directors of the Company.

     “ Business Combination Proposal ” means any proposal with respect to a merger, combination or consolidation in which the Company is a constituent corporation or a sale, lease, exchange or mortgage of all or substantially all of the assets of the Company and its Subsidiaries taken as a whole and pursuant to any of which transactions all of the Company Common Stock (other than those, if any, which are Beneficially Owned by Glencore) would be exchanged for cash, securities or other property, or a tender or exchange offer for less than all of the outstanding Company Common Stock not Beneficially Owned by Glencore.

     “ Business Day ” shall mean any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by law to be closed in San Francisco, California or New York, New York.

     “ By-Laws ” means the By-Laws of the Company, as amended or supplemented from time to time.

     “ Capital Stock ” means, with respect to any Person at any time, any and all shares, interests, participations or other equivalents (however designated, whether voting or non-voting) of capital stock, partnership interests (whether general or limited) or equivalent ownership interests in or issued by such Person.

     “ Certificate of Designation ” means the Certificate of Designation for the Series A Preferred Stock, the form of which is set forth in Exhibit A to the Stock Purchase Agreement, as amended or supplemented from time to time.

     “ Change of Control ” means (i) any Person becomes the Beneficial Owner of more than 50% of the total voting power of the outstanding Voting Securities of the Company, (ii) during any period of two consecutive years, individuals who were either Independent Directors at the beginning of such period or whose election or nomination for election was approved by at least a majority of the Directors who were Independent Directors at the beginning of such period or who

subsequently became Independent Directors and whose election or nomination for election was approved by at least a majority of Independent Directors, cease for any reason to constitute a majority of the Independent Directors of the Company then in office, (iii) a merger or consolidation of the Company with or into another Person or the merger or consolidation of another Person into the Company, as a result of which transaction or series of related transactions (A) any Person becomes the Beneficial Owner of more than 50% of the total voting power of all Voting Securities of the Company (or, if the Company is not the surviving or transferee company of such transaction or transactions, of such surviving or transferee company) outstanding immediately after such transaction or transactions, or (B) the shares of Company Common Stock outstanding immediately prior to such transaction or transactions do not represent a majority of the voting power of all Voting Securities of the Company (or such surviving or transferee company, if not the Company) outstanding immediately after such transaction or transactions, (iv) the sale, lease, exchange or mortgage of all or substantially all of the assets of the Company and its Subsidiaries, or (v) the approval by the stockholders of the Company of a plan of liquidation or dissolution of the Company.

     “ Commission ” means the United States Securities and Exchange Commission.

     “ Company Common Stock ” means the common stock, par value $0.01 per share, of the Company and any securities issued in exchange or substitution therefor, including in any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization.

     “ control ” (including the terms “ controlled by ” and “ under common control with ”), with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities or by contract or any other means.

     “ Director ” means any member of the Board (other than any advisory, honorary or other non-voting member of the Board).

     “ Equity Securities ” means any and all shares of Capital Stock of the Company, securities of the Company convertible into, or exchangeable for, such shares, and options, warrants or other rights to acquire such shares (regardless of whether such securities, options, warrants or other rights are then exercisable or convertible).

     “ Exchange Act ” means the Securities Exchange Act of 1934, as amended (or any successor statute).

     “ Group ” shall have the meaning assigned to it in Section 13(d)(3) of the Exchange Act.

     “ Independent Director ” means (except as set forth in the proviso hereto) any Director who is not an Affiliate or a past or present officer, director or employee of, and was not nominated by, Glencore or any of its Affiliates, and is not associated with an entity that performs substantial services for any of the foregoing; provided that, solely when used with respect to any action to be taken by the Board relating to a transaction or proposed transaction with, or otherwise relating to any other holder of 10% or more of the outstanding Company Common Stock (or 10% or more of any other class of Voting Securities of the Company), the term

Independent Director shall mean any director who is not an Affiliate or a past or present officer, director or employee of, and was not nominated by, such stockholder (or other securityholder) or any of its Affiliates, and is not associated with an entity that performs substantial services for any of the foregoing.

     “ Independent Investment Banking Firm ” means an investment banking firm of nationally recognized standing that is, in the reasonable judgment of the Person or Persons engaging such firm, independent of such Person or Persons and qualified to perform the task for which it has been engaged.

     “ Ownership Percentage ” means, at any time, the ratio, expressed as a percentage, (i) of the total Equity Securities Beneficially Owned by Glencore and its Affiliates (excluding the Series A Preferred Shares) to (ii) the sum of (x) the total number of outstanding Company Common Stock and (y) any Company Common Stock that is issuable upon conversion, exchange or exercise of any Equity Securities included in clause (i).

     “ Permitted Ownership Percentage ” means, immediately following the Closing and until April 7, 2009, an Ownership Percentage of twenty-eight and one-half percent (28.5%), and for the period of time from April 8, 2009 to January 7, 2010, an Ownership Percentage of forty-nine percent (49%).

     “ Person ” means any individual, corporation, limited liability company, limited or general partnership, joint venture, association, joint-stock company, trust, unincorporated organization, other entity, government or any agency or political subdivision thereof or any Group comprised of two or more of the foregoing.

     “ Qualifying Rights Plan ” means (i) a stockholders’ rights plan which (x) is triggered upon the acquisition of Beneficial Ownership of the Equity Securities of the Company representing 20% or more of the Voting Securities of the Company and would result in such Beneficial Ownership being materially and adversely economically diluted on terms substantially consistent with market practice, (y) does not contain exceptions from the definitions of “Acquiring Person”, “Triggering Event” or similar terms relating to the class of potential acquirors subject to the rights plan and the events which would trigger the rights plan, respectively, for any Third Party or its Affiliates, directors or officers as contemplated by Section 2.1(b) or Section 6.2(ii)(D), and therefore would be triggered upon acquisition of aggregate Beneficial Ownership of Equity Securities by such Third Party or its Affiliates, directors or executive officers beyond the triggering level specified in the stockholders rights plan, and (z) would not be triggered in connection with any transaction by Glencore or its Affiliates in accordance with Section 2.1(b), but (ii) only so long as no order restraining, enjoining or otherwise prohibiting adoption or requiring repeal thereof has been issued (and has not been immediately stayed pending appeal) or such rights plan has not otherwise been repealed.

     “ Series A Preferred Stock ” means the Series A Convertible Preferred Stock, par value $0.01 per share, of the Company and any securities issued in exchange or substitution therefor, including in any reclassification, recapitalization, merger, consolidation, exchange or other similar reorganization.

     “ Subsidiary ” means, with respect to any Person, any corporation or other organization, whether incorporated or unincorporated, of which (x) such Person or any other Subsidiary of such Person is a general partner (excluding partnerships where the general partnership interests held by such Person or any Subsidiary of such Person do not have a majority of the voting interests in such partnership), or (y) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly Beneficially Owned by such Person and/or any one or more of its Subsidiaries.

     “ Transfer ” means, directly or indirectly, to sell, transfer, assign or similarly dispose of or pledge, mortgage or similarly encumber (by operation of law or otherwise), either voluntarily or involuntarily.

     “ Voting Securities ” means at any time shares of any class of Capital Stock or other securities of the Company which are then entitled to vote generally in the election of Directors and not solely upon the occurrence and during the continuation of certain specified events.

     SECTION 1.2 Other Defined Terms . The following terms shall have the meanings defined for such terms in the Sections set forth below:

Term		Section
Acquisition Restrictions		Section 2.1(a)
Acquisition Restrictions Termination Events		Section 2.1(b)
Closing		Recitals
Company		Preamble
Company Transaction Proposal		Section 2.2(a)(ii)
Glencore		Preamble
Notice		Section 5.11
Purchase		Preamble
Series A Preferred Shares		Recitals
Stock Purchase Agreement		Recitals
Term		Section 5.2
Third Party		Section 2.1(b)

     SECTION 1.3 Other Definitional Provisions.

          (a) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Article, Section, Schedule and Exhibit references are to this Agreement unless otherwise specified.

          (b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.

     SECTION 1.4 Methodology for Calculations . For purposes of calculating the number of outstanding shares of Company Common Stock, Equity Securities or Voting Securities and the number of shares of Company Common Stock, Equity Securities or Voting Securities

Beneficially Owned by Glencore and its Affiliates as of any date, any Company Common Stock, Equity Securities or Voting Securities held in the Company’s treasury or belonging to any Subsidiaries of the Company which are not entitled to be voted or counted for purposes of determining the presence of a quorum pursuant to Section 160(c) of the Delaware General Corporation Law (or any successor statute) shall be disregarded.

ARTICLE 2

STANDSTILL

     SECTION 2.1 Acquisition of Additional Voting Securities.

          (a) Except as provided in paragraphs (b) and (c) of this Section 2.1 and Section 2.2(c) below, for a period ending January 7, 2010, Glencore covenants and agrees with the Company that it shall not, directly or indirectly, including through any Affiliate, acquire, offer or propose to acquire or agree to acquire, whether by purchase, tender or exchange offer, through the acquisition of control of another Person (including by way of merger or consolidation), by joining a partnership, syndicate or other Group or otherwise, the Beneficial Ownership of any Voting Securities (excluding any acquisition through conversions of Series A Preferred Stock as permitted by the Certificate of Designation or by way of stock dividends, stock reclassifications or other distributions or offerings made available to holders of Company Common Stock generally) that would cause its Beneficial Ownership of Voting Securities (including any Voting Securities previously acquired through conversions of Series A Preferred Stock as permitted by the Certificate of Designation or by way of stock dividends, stock reclassifications or other distributions or offerings made available to holders of Company Common Stock generally) to exceed the applicable Permitted Ownership Percentage (the “ Acquisition Restrictions ”). Notwithstanding the foregoing provisions of this Section 2.1(a), if during the period from the Closing Date to April 7, 2009, the Company shall make a widely-distributed public offering of Company Common Stock for cash and shall determine not to afford to Glencore and its Affiliates the opportunity to purchase shares in such offering in an amount which would maintain Glencore’s economic interest in the Company to a level which is at least equal to forty-seven percent (47%) of the entire economic interests in the Company, then Glencore may purchase in the open market such number of additional shares of Company Common Stock as shall be sufficient to cause its aggregate economic interest in the Company to be equal to forty-seven percent (47%); provided that any such additional shares of Company Common Stock so acquired shall, for the period ending April 7, 2009, be subject to the provisions of Section 2.1(c); and provided further, that any such shares so acquired shall be included in the shares to be taken into account in determining Glencore’s compliance with the Permitted Ownership Percentage requirement in respect of the period from April 8, 2009 to January 7, 2010. As used in this section, the percentage of Glencore and its Affiliates “economic interests” will be calculated as the total number of shares of Company Common Stock, plus the total number of shares of Company Common Stock issuable upon conversion of then outstanding Series A Preferred Stock, in each case held by them, compared to the total number of outstanding shares of Company Common Stock plus the shares of Company Common Stock issuable upon conversion of the then outstanding Series A Preferred Shares.

          (b) The foregoing Acquisition Restrictions will not apply if (i) a third party who is not an Affiliate of Glencore (a “ Third Party ,” which term shall include any Group, other than a Group which includes Glencore or any of its Affiliates as a member), commences a bona fide tender or exchange offer for more than 50% of the outstanding Company Common Stock and (ii) the Board does not both (x) recommend against the tender or exchange offer within ten Business Days after the commencement thereof or such longer or shorter period as shall then be permitted under the Commission’s rules and (y) within ten Business Days after the commencement thereof adopt (if the Company does