EX-10.2



 





Exhibit 10.2




Form
of Horsehead Holding Corp. Stock Option

Grant Agreement



This Grant Agreement (the “Grant Agreement”), dated as of January 16, 2007 (the “Effective Date”),
evidences the grant of an option pursuant to the provisions of the 2006 Long-Term Equity Incentive
Plan (the “Plan”) of Horsehead Holding Corp. (the “Company”) to the individual whose name appears
below (the “Optionee”), covering the specific number of shares of the Common Stock, par value $0.01
per share, of the Company (the “Shares”) set forth below and on the following terms and conditions:





	1.	 	Name of the Optionee:
	 
	2.	 	Number of Shares subject to this option:
	 
	3.	 	Exercise price per Share subject to this option:
	 
	4.	 	Date of grant of this option:
	 
	5.	 	Type of option: Non-qualified Option
	 
	6.	 	Vesting:






	 	a.	 	Except as otherwise expressly provided in Section 6 b hereof, 20% of the total
number of Shares subject to this option shall vest as of
[                  ] of each year
(commencing on the first such date occurring after the Effective Date and becoming
fully vested on the fifth such date occurring after the Effective Date).
	 
	 	b.	 	Notwithstanding anything to the contrary contained in Section 6 a hereof, 100%
of the total number of Shares subject to this option shall vest immediately prior to
the consummation of a Change in Control (as defined in Section 6 e below) (i) that is
consummated after November 30, 2007; (ii) in which the consideration paid to the
Company or to its stockholders, as the case may be, consists primarily of cash (as
determined by the Board or the Committee (each as defined in the Plan) in its sole
discretion); and (iii) following which Sun Capital Partners, Inc. and its affiliates
(“Sun Capital”) will hold fewer than 1% of the outstanding shares of the common stock
of the Company.
	 
	 	c.	 	In the event of a Change in Control that is consummated after November 30,
2007, the Committee (as in place immediately prior to the Change in Control) may, in
its sole discretion, terminate (i) any vested Options (including Options that would
vest upon a Change in Control) without payment of any kind provided that the Optionee
shall first be given notice of such termination and of the proposed Change in Control
and shall be given at least 15 days prior to such Change in Control to exercise all
vested Options (and all Options that would vest upon the Change in Control) that are to
be so terminated or (ii) any vested Options (including Options that would vest upon a
Change in Control) for a payment of cash or (iii) without payment of any kind any
vested Option (including Options that would vest upon a Change in Control) that on the
date of such Change in Control has an exercise price that exceeds or is equal to the
Fair Market Value of a share of Common Stock of the Company.




 









 






	 	d.	 	Notwithstanding anything to the contrary contained herein, (i) this option
shall not be exercisable, and shall be void and of no further force and effect, (x)
after the expiration of the option term, and (y) except with respect to Section 9
below, on and after the start of the date on which the Optionee’s employment is
terminated for Cause (as defined in the Plan), (ii) except as provided in Section 7
below, this option shall be exercisable only if the Optionee is, at the time of
exercise, an employee of the Company, (iii) this option shall in no event be
exercisable for more than the total number of Shares provided for in Section 2 hereof
and (iv) vesting shall cease immediately upon termination of
employment for any reason, and any portion of this option that has not vested on or
prior to the date of such termination is forfeited on such date. Once vesting has
occurred, the vested portion of this option can be exercised at the time or times
specified in Section 7 below.
	 
	 	e.	 	For purposes of this Agreement, “Change in Control” shall mean:






	 	(i)	 	if any “person” or “group” as those terms are used in Sections 13(d)
and 14(d) of the Exchange Act or any successors thereto, other than an Exempt
Person (as defined in the Plan), is or becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act or any successor thereto), directly or
indirectly, of securities of the Company representing 50% or more of the combined
voting power of the Company’s then outstanding securities;
	 
	 	(ii)	 	consummation of a merger or consolidation of the Company with any other
entity, other than a merger or consolidation (A) which would result in all or a
portion of the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (B) by which
the corporate existence of the Company is not affected and following which the
Company’s chief executive officer and directors retain their positions with the
Company (and constitute at least a majority of the Board); or
	 
	 	(iii)	 	consummation of a plan of complete liquidation of the Company or a
sale or disposition by the Company of all or substantially all the Company’s
assets, other than a sale to an Exempt Person.






	7.	 	The vested portion of this option can be exercised at any time and from time to time after
November 30, 2007 and before the earliest of the following dates:






	 	a.	 	January 24, 2017;
	 
	 	b.	 	the date on which the Optionee’s employment terminates; provided that if the
Optionee’s employment has terminated: (i) other than due to death, Disability,
Retirement (each as defined in the Plan) or Cause, then any portion of the option
exercisable pursuant to this Section 7 b may also be exercised on or after the date of
termination but on or before the 30th day following the date of termination, (ii) due
to death or Disability, then any portion of the option exercisable pursuant to this
Section 7 b may also be exercised on or after the date of termination but on or before
the date that is six months after the date of termination or death or (iii) due to his
or her Retirement, then any portion of the option exercisable pursuant to this Section
7 b may also be exercised on or after the date of termination but on or before the 90th
day after the date of Retirement.




 









 












	8.	 	It is the Company’s intent that the option not be treated as a nonqualified deferred
compensation plan that fails to meet the requirements of Code Sections 409A(2), (3) or (4),
and the Company may make any changes to this Grant Agreement it determines are necessary to
effectuate that intent without the consent of the Optionee.
	 
	9.	 	If the Optionee exercises any portion of this option and, within one year thereafter, either
(i) is terminated from the Company or a Subsidiary (as defined in the Plan) for any of the
reasons specified in the definition of Cause, or (ii) breaches any of the covenants or
agreements set forth in Annex A hereto, then the Board or Committee may, in its discretion,
require Optionee to pay the Company the gain represented by the difference between the
aggregate selling price of the shares of Common Stock acquired upon the exercise of options
(or, if such shares of Common Stock were not then sold, their aggregate Fair Market Value (as
defined in the Plan) on the date of exercise) and the aggregate exercise price of the options
exercised (the “Option Gain”), without regard to any subsequent increase or decrease in the
Fair Market Value of the
Common Stock. In addition, the Company may, in its discretion, deduct from any payment of
any kind (including salary or bonus) otherwise due to any such participant an amount equal
to the Option Gain.
	 
	10.	 	The Optionee agrees to abide by the covenants and agreements set forth in Annex A hereto and
incorporated by reference herein, and acknowledges that the option being granted herein
constitutes adequate and sufficient consideration in support of such covenants and agreements.
	 
	11.	 	The Optionee hereby acknowledges, understands, and agrees that by signing this Grant
Agreement, the Optionee voluntarily and irrevocably forfeits any and all rights, title, and
interests the Optionee has or may have had in, to and under (a) any option agreement, option
letter, or other similar document pursuant to which the Company (or any Subsidiary or
affiliate thereof) may have previously granted, or offered to grant, options in the Company
(or any Subsidiary or affiliate thereof) to the Optionee and (b) any oral or written
commitment or promise regarding options that the Company (or any Subsidiary or affiliate
thereof) may have made to the Optionee, except as to any options that have been previously
exercised and paid for by the Optionee.
	 
	12.	 	If the Optionee is entitled to exercise the vested portion of this option, and wishes to do
so, in whole or in part, the Optionee shall submit to the Company a notice of exercise, in the
form attached as Annex B hereto or such other form as may hereinafter be designated by the
Company (in its sole discretion), specifying the exercise date and the number of Shares to be
purchased pursuant to such exercise, and shall remit to the Company in a form satisfactory to
the Company (in its sole discretion) the exercise price, plus an amount sufficient to satisfy
any withholding tax obligations of the Company that arise in connection with such exercise (as
determined by the Company).
	 
	 	 	The Optionee may not exercise this option for a fraction of a share of Common Stock.
	 
	13.	 	Unless the Board or Committee determines otherwise, the Optionee may transfer the option
granted hereunder only by will or the laws of descent and distribution. Unless the context
requires otherwise, references herein to the Optionee are deemed to include any permitted
transferee under this paragraph 13. Unless the Board or Committee determines otherwise, the
option may be exercised only by the Optionee; or by the Optionee’s executor or administrator;
or








 









 







	 	 	by any person to whom the option is transferred by will or the laws of descent and
distribution; or by the guardian or representative of any of the foregoing.
	 
	14.	 	In the event of a reorganization, recapitalization, stock split, stock dividend, combination
of shares, merger, consolidation, distribution of assets, or any other change in the corporate
structure or shares of the Company, the Board or Committee shall make such adjustments as it
deems appropriate in the number and kind of shares reserved for issuance under the Plan, the
number and kind of shares covered by this option and the exercise price specified herein.
Without limitation of the foregoing, in connection with any transaction of the type specified
by clause (iii) of the definition of a Change in Control in paragraph 6 e., the Board or
Committee may, in its discretion, (i) cancel any or all outstanding Option Shares (as defined
in the Plan) in consideration for payment to the Optionee of an amount equal to the portion of
the consideration that would have been payable to the Optionee pursuant to such transaction if
the option had been fully exercised immediately prior to such transaction, less the aggregate
exercise price that would have been payable therefor, or (ii) if the amount that would have
been payable to the Optionee pursuant to such transaction if the option had been fully
exercised immediately prior thereto would be less than the aggregate exercise price that would
have been payable therefor, cancel any or all such Option Shares for no consideration or
payment of any kind. Payment of any amount payable pursuant to the preceding sentence may be
made in cash or, in the event that the consideration to be received in such transaction
includes securities or other property, in cash and/or securities or other property in the
Board’s or Committee’s discretion.
	 
	15.	 	The Optionee hereby acknowledges receipt of a copy of the Plan attached hereto as Annex C as
presently in effect. All of the terms and conditions of the Plan are incorporated herein by
reference and this option is
subject to such terms and conditions in all respects. Capitalized terms that are used but
not otherwise defined herein shall have the meanings given to such terms in the Plan.
Inconsistencies between this Grant Agreement and the Plan shall be resolved in accordance
with the terms of this Grant Agreement. This Grant Agreement and the Plan constitute the
entire agreement of the parties with respect to the subject matter hereof, and supersede any
prior written or oral agreements.
	 
	16.	 	Except as otherwise provided herein and notwithstanding anything to the contrary in the Plan,
any provision of this Grant Agreement may be amended or waived with the prior written consent
of the Company and either (i) the Optionee or (ii) the Plan participants who have been granted
options to purchase a majority of the options under the Plan (based on the number of
underlying shares of Common Stock issuable upon the exercise of all such options) theretofore
granted under the Plan (unless the Optionee will be treated in a manner different from other
Plan participants, in which case the Optionee’s written consent will also be required).
	 
	17.	 	The Optionee hereby acknowledges, agrees and confirms that, upon his or her exercise of this
option, the Optionee will be deemed to be a party to the Securityholders’ Agreement attached
hereto as Annex D and shall have all of the rights and obligations of the “Minority
Securityholders” thereunder as if the Optionee had executed the Securityholders’ Agreement.
The Optionee hereby ratifies, as of the date hereof, and agrees to be bound by, all of the
terms, provisions and conditions contained in the Securityholders’ Agreement.




Nothing in this Agreement shall interfere with or limit in any way the right of the Company to
terminate the Optionee’s employment or other performance of services at any time (with or without
Cause), nor confer upon the Optionee any right to continue in the employ or as a director or
officer of, or in the performance of other services for, the Company or a Subsidiary for any period
of time, or to continue the






 









 




Optionee’s present (or any other) rate of compensation or level of
responsibility, and in the event of termination of employment or other performance of services
(including, but not limited to, termination without Cause and other than termination due to death,
Disability or, if the Board or Committee so provides, Retirement), any portion of the Option that
was not previously vested and exercisable shall expire and be forfeited. Nothing in this Agreement
shall confer upon the Optionee any right to be selected again as a Plan participant, and nothing in
the Plan or this Agreement shall provide for any adjustment to the number of Option Shares subject
to the Option upon the occurrence of subsequent events except as provided in paragraph 15 above.




[Signature page follows.]




 









 






	 	 	 	 	 	 	 	 	 	 	 
	Accepted and Agreed:

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Horsehead Holding Corp.
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	Signature of Optionee

	 	 	 	Name:	 	 	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 	 	 






	 	 	 
	Attachments:

	 	Annex A (Covenants and Agreements of Optionee)
	 

	 	Annex B (Form of Exercise Notice)
	 

	 	Annex C (The Plan)
	 

	 	Annex D (Securityholders’ Agreement)







 









 





ANNEX A




COVENANTS AND AGREEMENTS OF OPTIONEE



1. Optionee acknowledges the time and expense incurred by the Company in connection with developing
proprietary and confidential information in connection with the Company’s business and operations.
Optionee agrees that Optionee will not, whether during Optionee’s service as an employee of the
Company or its Subsidiaries or at any time thereafter, divulge, communicate, or use to the
detriment of Sun Capital or the Company and their respective Subsidiaries and affiliates (the
“Group”) or any other person, firm or entity, confidential information or trade secrets relating to
any member of the Group, including, without limitation, business strategies, operating plans,
acquisition strategies (including the identities of (and any other information concerning) possible
acquisition candidates), financial information, market analyses, acquisition terms and conditions,
personnel information, know-how, customer lists and relationships, supplier lists and
relationships, or other non-public proprietary and confidential information relating to any member
of the Group. The foregoing confidentiality agreement shall not apply if the communication (i) is
required in the course of performing Optionee’s duties as an employee of the Company or its
Subsidiaries, (ii) is made with the Board of Directors’ written consent, (iii) relates to
information that is or becomes generally known by the public other than as a result of a breach
hereof, or (iv) is required by law or judicial or administrative process.



2. During Optionee’s service as an employee of the Company or its Subsidiaries and for the
period thereafter, Optionee shall not, to the detriment of any member of the Group, directly or
indirectly, for Optionee or on behalf of any other person, firm or entity: (i) solicit, hire,
employ, engage, retain or enter into a business affiliation with any person who at any time during
the preceding 12 month period was an employee of, the Company or any of its Subsidiaries, or (ii)
encourage, induce or attempt to encourage or induce any person who at any time during the preceding
12 month period was a supplier or customer of the Company or any of its Subsidiaries to cease doing
business with the Company or any of its Subsidiaries or to decrease the amount of business such
supplier or customer does with the Company or any of its Subsidiaries.



3. During Optionee’s service as an employee of the Company or its Subsidiaries and for the
period (or for such period during which Optionee receives severance from the Company, if longer)
thereafter, Optionee shall not, directly or indirectly, engage in, or serve as a principal,
partner, joint venturer, member, manager, trustee, agent, stockholder, director, officer or
employee of, or advisor to, or in any other capacity, or in any manner, own, control, manage,
operate, or otherwise participate, invest, or have any interest in, or be connected with, any
person, firm or entity that engages in any activity which competes directly or indirectly with any
business of the Company or its subsidiary or parent companies (collectively, the “Company
Business”) anywhere in the United States of America or any other country in which the Company
Business was conducted or related sales were effected during the preceding two years. THIS
PARAGRAPH 4 WILL NOT APPLY AND WILL NOT BE ENFORCED BY THE COMPANY WITH RESPECT TO POST-TERMINATION
ACTIVITY BY OPTIONEE THAT OCCURS IN CALIFORNIA OR IN ANY OTHER STATE IN WHICH THIS PROHIBITION IS
NOT ENFORCEABLE UNDER APPLICABLE LAW.



4. Whether during or after the term of Optionee’s employment or service, Optionee shall not
disparage, defame or discredit any member of the Group or engage in any activity which would have
the effect of disparaging, defaming or discrediting any member of the Group.



5. Optionee acknowledges that Optionee’s service as an employee of the Company or its Subsidiaries,
as the case may be, and the agreements herein are reasonable and necessary for the protection of
Sun Capital and the Company and its Subsidiaries and affiliates and are an essential inducement to
the Company’s grant of the







 









 





Option. Accordingly, Optionee shall be bound by the provisions hereof
to the maximum extent permitted by law, it being the intent and spirit of the parties that the
foregoing shall be fully enforceable. However, the parties further agree that, if any of the
provisions hereof shall for any reason be held to be excessively broad as to duration, geographical
scope, property or subject matter, such provision shall be construed by limiting and reducing it so
as to be enforceable to the extent compatible with the applicable law as it shall herein pertain.



6. Optionee acknowledges that the services to be rendered by Optionee to the Company or its
Subsidiaries are of a unique nature and that it would be difficult or impossible to replace such
services and that by reason thereof Optionee agrees and consents that if Optionee violates the
provisions of this Annex A, Sun Capital and the Company or its Subsidiaries and affiliates, in
addition to any other rights and remedies available under this Grant Agreement or otherwise, shall
be entitled to an injunction to be issued or specific performance to be required restricting
Optionee from committing or continuing any such violation.




 









 






ANNEX B




Stock Option Plan of Horsehead Holding Corp.




Notice of Exercise of Stock Option




     1. Exercise of Option. Pursuant to the 2006 Long-Term Equity Incentive Plan of
Horsehead Holding Corp. (the “Plan”) and my agreement with Horsehead Holding Corp. (the
“Company”) dated January 24, 2007 (the “Grant Agreement”), I hereby elect to exercise my
nonqualified stock option (the “Option”) to the extent of                      shares of Common Stock of
the Company (the “Shares”).



     2. Delivery of Payment. I hereby deliver to the Company a cashier’s check in the
amount of $                     in full payment of the purchase price of the Shares determined by multiplying
(a) the exercise price per Share as set forth in my Grant Agreement, by (b) the number of Shares as
to which I am exercising the Option and in satisfaction of my obligation to remit to the Company an
amount sufficient to satisfy any withholding tax obligations of the Company that arise in
connection with this exercise, or through such other payment method agreed to by the Company and
permitted under the terms of the Plan.



     3. Representations. In connection with my exercise of the Option, I hereby represent
to the Company as follows:



          (a) I am acquiring the Shares solely for investment purposes, with no present intention of
distributing or reselling any of the Shares or any interest therein. I acknowledge that the Shares
have not been registered under the Securities Act of 1933, as amended (the “Securities Act”).




          (b) I am aware of the Company’s business affairs and financial condition and have acquired
sufficient information about the Company to reach an informed and knowledgeable decision to acquire
the Shares.




          (c) I understand that the Shares are “restricted securities” under applicable U.S. federal and
state securities laws and that, pursuant to these laws, I must hold the Shares indefinitely unless
they are registered with the Securities and Exchange Commission and qualified by state authorities,
or unless an exemption from such registration and qualification requirements is available. I
acknowledge that the Company has no obligation to register or qualify the Shares for resale. I
further acknowledge that if an exemption from registration or qualification is available, it may be
conditioned on various requirements including, but not limited to, the time and manner of sale, the
holding period for the Shares, and requirements relating to the Company which are outside of my
control, and which the Company is under no obligation to and may not be able to satisfy.




          (d) I understand that there is no public market for the Shares, that no market may ever
develop for them, and that the Shares have not been approved or disapproved by the Securities and
Exchange Commission or any other federal, state or other governmental agency.




          (e) I understand that the Shares are subject to certain restrictions on transfer set forth in
the Plan. Both the Plan and the Grant Agreement are incorporated herein by reference.




          (f) I understand that any Shares purchased hereunder shall be subject to the Securityholders’
Agreement of the Company dated as of December 23, 2003, as it may be amended from time to time
(“Securityholders’ Agreement”), a copy of which has been provided to me, and that it is a condition
to the exercise of my Option that I execute the attached signature page of the Securityholders’








 









 





          Agreement, agreeing to be bound thereby. I have had a full and fair opportunity to review the
Securityholders’ Agreement prior to exercising the Option.




          (g) I understand that the certificate representing the Shares will be imprinted with the
following legends:





THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW AND MAY NOT
BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THE SECURITIES,
REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES LAWS.




THIS CERTIFICATE AND THE SECURITIES REPRESENTED HEREBY ARE HELD SUBJECT TO
THE TERMS, COVENANTS AND CONDITIONS OF A SECURITYHOLDERS’ AGREEMENT DATED AS
OF DECEMBER 23, 2003, AS SUCH AGREEMENT MAY BE AMENDED, BY AND AMONG THE
STOCKHOLDERS OF HORSEHEAD HOLDING CORP., AND MAY NOT BE TRANSFERRED OR
DISPOSED OF EXCEPT IN ACCORDANCE WITH THE TERMS AND PROVISIONS THEREOF. A
COPY OF SAID AGREEMENT AND ALL AMENDMENTS THERETO IS ON FILE AND MAY BE
INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.



          (h) I have consulted my own tax advisors in connection with my exercise of this Option and I
am not relying upon the Company for any tax advice.




          (i) I am presently an employee of the Company.




[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]




 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Submitted by the Optionholder:
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date:

	 	 	 	 	 	By:	 	 	 	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	Print Name:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Address:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Social Security No.	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Received and Accepted by the Company:
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Holding Corp.	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Print Name:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Title:	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 




Note: If options are being exercised on behalf of a deceased Plan participant, then this
Notice must be signed by such participant’s personal representative and must be accompanied by a
certificate issued by an appropriate authority evidencing that the individual signing this Notice
has been duly appointed and is currently serving as the participant’s personal representative under
applicable local law governing decedents’ estates.




 









 





ANNEX C




2006 LONG-TERM EQUITY INCENTIVE PLAN




(See attached.)




 









 





ANNEX D




SECURITYHOLDERS’ AGREEMENT




(See attached.)